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FORM 10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

For the fiscal year ended March 31, 2004

OR

Commission File Number 0-16148

MULTI-COLOR CORPORATION

425 Walnut Street, Suite 1300

Cincinnati, Ohio 45202

(513) 381-1480

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, no par value

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K    ¨.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  x

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately $38,646,000, based upon the closing market price of $14.73 per share of the Common Stock on the Nasdaq National Market System as of September 30, 2003, the last business day of the registrant’s most recently completed second fiscal quarter.

As of June 16, 2004, 6,195,546 shares of no par value Common Stock were issued and 6,166,746 shares of no par value Common Stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s proxy statement to be filed pursuant to Regulation 14A of the Exchange Act for its 2004 Annual Meeting of Shareholders to be held on August 19, 2004 are incorporated by reference into Parts II and III of Form 10-K.

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INDEX TO ANNUAL REPORT ON FORM 10-K

FORWARD-LOOKING STATEMENTS

The Company believes certain statements contained in this report that are not historical facts constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbors created by that Act. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially from those expressed or implied. Any forward-looking statement speaks only as of the date made. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which they are made.

Statements concerning expected financial performance, on-going business strategies, and possible future action which the Company intends to pursue in order to achieve strategic objectives constitute forward-looking information. Implementation of these strategies and the achievement of such financial performance are each subject to numerous conditions, uncertainties and risk factors. Factors which could cause actual performance by the Company to differ materially from these forward-looking statements include, without limitation, factors discussed in conjunction with a forward-looking statement; changes in general economic and business conditions; the ability to integrate acquisitions; the success of its significant customers; competition; acceptance of new product offerings; changes in business strategy or plans; quality of management; availability, terms and development of capital; availability of raw materials; business abilities and judgment of personnel; changes in, or the failure to comply with, government regulations, and other factors. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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PART I

ITEM 1. BUSINESS

Multi-Color is a premier supplier of decorative label solutions and packaging services to consumer product and food and beverage companies, retailers and container manufacturers. Our customers include many of the world’s largest manufacturers of household, fabric and personal care, automotive and lawn care, and food and beverage products representing over 330 of the world’s most well known and respected brands. We currently provide products and services to more than 250 customers in the United States, Canada, Mexico, Central and South America and Asia.

Multi-Color is an Ohio-based corporation that was incorporated in 1985, succeeding to the predecessor business that began producing paper labels in 1918. We use the term “Multi-Color” to refer to Multi-Color Corporation.

Our common stock, no par value, is listed on the Nasdaq National Market System under the symbol “LABL”. See “Item 5 – Market for the Registrant’s Common Stock, Related Stockholder Matters and Issuer Repurchases of Equity Securities.” We also maintain a website (www.multicolorcorp.com) which includes additional information about the Company. The website was recently expanded to include corporate governance information for our shareholders. Our code of ethics can be found on our website under the corporate governance section. Shareholders can obtain, free of charge, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after Multi-Color electronically files such materials with or furnishes materials to the Securities and Exchange Commission (“SEC”).

PRODUCTS

We provide a wide range of products and services for the packaging needs of our customers through two segments. Our Decorating Solutions Segment is the world’s largest producer of in-mold labels (IMLs) and heat transfer labels (HTLs) and a major manufacturer of high-quality pressure sensitive and shrink sleeve labels. The Decorating Solutions Segment also provides digital, graphic and pre-press services, and produces printing cylinders and plates. Our Packaging Services Segment is a leading provider of promotional packaging, assembly and fulfillment services.

Decorating Solutions Segment:

In-Mold labels (IMLs):

In 1980, Multi-Color invented the in-mold label (IML) in response to the increasing use of blow-molded plastic containers. Working in conjunction with both a customer and a leading supplier of blow-molded plastic containers, Multi-Color developed the label and the method of applying the heat-activated adhesive to the label.

The in-mold process applies a label to a plastic container as the container is being formed in the mold cavity. The finished IML product is a finely detailed label that performs consistently well for plastic container manufacturers and adds marketing value and product security for consumer product companies.

Each component of the label production process requires a special expertise for success. The components include the substrate (the base material for the label), the cylinder (a laser-exposed gravure cylinder), inks (up to eight colors), overcoats and adhesives. We believe that our strength lies in several areas, two of which are the substrates used in the printing process and the production of the gravure cylinder (discussed below under Graphic Services). Multi-Color has developed proprietary substrates that we use in the printing process. There are several critical characteristics of a successful substrate. The material needs a proper coefficient of friction so that the finished label is easily and consistently picked up and applied to the blow-molded container. A second is the ability to hold the label’s inks, including metallics and flourescents, overlay varnishes and adhesives. Still another characteristic is the ability to lay smoothly, without wrinkle or bulge, when applied to a very hot, just molded plastic container that will quickly shrink, along with the label, as its temperature falls. We continually search for new substrates to be used in the in-mold process in order to improve label performance and capabilities as well as to reduce substrate costs. A recent technology advance for Multi-Color in this area is the use of peel-away IML coupons.

A product line that continues to gain interest is injection in-mold labeling. Historically, injection molded products have been decorated with pressure sensitive or direct print products. However, several years ago, injection in-mold technology was successfully developed in Europe. Several U.S. injection molding companies are exploring IML as a decorating method and we are a supplier of this technology. The majority of these products are printed using the lithographic printing process which is one of the technologies utilized at our Batavia, Ohio location.

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Pressure Sensitive labels:

In December 1999, Multi-Color began offering pressure sensitive labels to customers in conjunction with the acquisition of Buriot International, Inc. This Batavia, OH plant is equipped with ultraviolet (UV) drying equipment and hot foil and rotary screen capabilities. We further expanded our production of pressure sensitive labels through the acquisition of Premiere Labels, Inc., in October 2001. This Troy, OH plant houses flexographic presses with smaller web widths and is capable of handling smaller runs efficiently.

Pressure sensitive labels adhere to a surface with pressure. The label will usually consist of four elements - a base material, which may include paper, foil or plastic; an adhesive, which may be permanent or removable; a release coating; and a backing material to protect the adhesive against premature contact with other surfaces. The release coating and protective backing are removed prior to application to the container, exposing the adhesive, and the label is pressed or rolled into place. We have added several new application features in this area such as promotional neckbands, peel-away coupon labels and resealable labels.

The pressure sensitive market is the largest single component of the overall label market and represents a significant growth opportunity. Our strategy is to be a premier supplier of pressure sensitive labels in categories that demand high impact graphics or are otherwise technically challenging.

Shrink Sleeve labels:

In June 2000, Multi-Color began offering shrink sleeve labels and tamper-evident neckbands in conjunction with the acquisition of Uniflex Corporation. We are currently producing shrink sleeve labels in our Scottsburg, IN plant.

Shrink sleeve labels are produced in colorful, cutting edge styles and materials. The labels are manufactured as sleeves, slid over glass or plastic bottles and then heated to conform precisely to the contours of the container. The 360-degree label and tamper resistance feature of the label are marketing advantages that many of our customers look for when choosing this label type.

The shrink sleeve market is a fast growing decorating technology as consumer product companies look for ways to differentiate their products. A variety of markets within the consumer goods industry have adopted this decorating technology. Demand in the food and personal care markets continues to grow and should broaden the sales opportunities for shrink sleeve labels.

Heat Transfer labels (HTLs):

The Framingham, MA plant has produced heat transfer labels for more than 40 years and became part of Multi-Color’s portfolio in January 2003 through the acquisition of the Decorating Technologies Division of Avery Dennison Corporation. Therimage^TM is the plant’s pioneer heat transfer label technology developed for plastic containers and health and beauty aid products. The addition of the revolutionary Clear ADvantage^TM brand provides premium graphics on both glass and plastic containers for the health and beauty aid, beverage, household chemical and promotional markets.

Heat transfer labels are reverse printed and transferred off of a special release liner onto the container using heat and pressure. The labels are a composition of inks and lacquers tailored to the customer’s specific application needs. These labels are gravure printed for color flexibility and photographic replication. They are then shipped to blow molders and/or contract decorators who transfer the labels by way of Therimage^TM heat transfer machinery. Once applied, the labels are permanently adhered to the container. The graphics capabilities include fine vignettes, metallic and color change inks, as well as the patented “frost”, giving the appearance of acid-etch. HTLs provide the ultimate “no label” look. We recently added the new “ink only” and flameless heat transfer label technology to our capabilities in this area.

Graphic Services:

Manufacturing technology for gravure cylinder and plate-making is another key competitive advantage for Multi-Color. At Multi-Color’s Laser Graphic Systems plant in Erlanger, KY, we employ laser-exposing and chemical-engraved gravure cylinder technology developed by Think Laboratories of Japan. Currently, Multi-Color is the only cylinder manufacturer in the United States with this technology. The Laser Graphic Systems facility is essentially an integrated supplier of cylinders and plates to the Company’s other facilities. Minimal sales of cylinders and plates are made to outside third parties.

The Think process uses a laser to expose the cylinder directly from the computer without ever having to generate films. The cylinders are then chemically etched to produce very fine and highly accurate cells. This completely digital process is quicker and less costly than other engraving processes as several process steps are removed. Equally important, this technology creates cells with fineness of depth and surface size to eliminate the stair step edges previously limiting the application of gravure printing. It creates smooth and feathered patterns of color and clear definition of small type sizes, required as companies add more information and more languages to their labels. We also use a copper ballard shell technology that cuts cost and time from cylinder production.

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Packaging Services Segment:

Our Quick Pak facility, located in Cincinnati, Ohio, is a leading provider of promotional packaging design, sourcing and custom assembly services to major health and beauty brands, consumer product manufacturers and national retailers. Because many of Multi-Color’s customers utilize these types of packaging services, the addition of Quick Pak in May 2002 enabled us to expand the service component of our business strategy and broaden our revenue stream by providing complimentary consumer packaging services that support our customers’ marketing strategies.

Quick Pak provides a broad range of assembly technologies, including automated shrink banding and shrink wrapping, cartoning and labeling. The facility operates over 20 flexible assembly lines per shift, to provide superior speed to market. Quick Pak relies on temporary associates as well as a permanent workforce to meet the staffing needs of these assembly lines.

Quick Pak also provides on-site packaging design with turnkey promotional experience in primary and secondary packaging and original packaging development.

RESEARCH AND DEVELOPMENT

Multi-Color’s product leadership group is comprised of 13 employees who focus on research and development, product commercialization and technical equipment support. The group includes chemical, packaging and field engineers who are responsible for developing and commercializing innovative label and application solutions. Technical service personnel also assist customers and container manufacturers with improving bottle and label performance. In this manner, we differentiate ourselves from many of our competitors and are often chosen for the most challenging projects.

Multi-Color’s research and development expenditures totaled $2,626,000 in fiscal 2004, $1,320,000 in fiscal 2003 and $554,000 in fiscal 2002.

SALES AND MARKETING

Multi-Color provides a complete line of label solutions, offering a variety of packaging, assembly and technical and graphic services. Our vision is to be a premier global resource of packaging services and decorating solutions. We sell to a broad range of consumer product and food and beverage companies located in North and South America and Asia. Our sales organization is divided along segment lines. The Decorating Solutions Segment sales organization has recently been re-aligned to match our primary customer types; national accounts, end users and container manufacturers. While a consumer product or food and beverage company is our primary customer, Multi-Color has a close working relationship with various container manufacturers to ensure a customer’s product goes to market. We employ a total sales staff of 20 people across all segments. The sales organization includes representatives in the US, Canada and Mexico, maintaining a strong sales presence in those regions

The sales strategy for the Decorating Solutions Segment is a consultative selling approach. As consultants, the sales organization reviews the requirements of the container and offers a number of alternative decorating methods. Thereby, Multi-Color is viewed as an expert source of both materials and methods, able to evaluate numerous technologies and offer the most cost effective solution. The sales strategy for the Packaging Services Segment is to provide turnkey resources that keep the consumer atop of the competitive marketplace. The sales organization is designed to service the customer’s constantly changing promotional packaging needs.

Approximately 36% of our sales in fiscal 2004 were to The Procter & Gamble Company (divided among five separate purchasing groups). Another 10% of our sales were to Limited Brands (divided among three purchasing groups). The loss or substantial reduction of the business of any of the major customers in a particular year could have a material adverse effect on the Company.

MANUFACTURING

Multi-Color’s current printing equipment in the Decorating Solutions Segment consists of three gravure printing presses in our Scottsburg, IN plant, an offset press and two flexographic presses in our Batavia, OH plant, five flexographic presses in our Troy, OH plant, and seven gravure printing presses in our Framingham, MA plant. All of our presses are capable of multi-color, high-speed and high-quality graphic printing. We are currently in the process of installing a new gravure printing press in our Scottsburg, IN plant. The new press is expected to be operational in July 2004. We also have a wide variety of cutting and finishing equipment used to process printed material. The wide range of capabilities and versatility of our equipment enhances our ability to respond rapidly to changing customer needs, including the development of new products. We believe we have sufficient capacity to meet the expected demand for our products over the next several years.

In March 2004, we closed our Las Vegas plant and moved the operations to one of our other plants. The decision to close our Las Vegas plant was announced in December 2003 and was made in order to consolidate manufacturing operations and fully utilize press capacity at other plants. The plant closure was completed ahead of schedule and by March 31, 2004, all business had been moved to one of our other plants.

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On March 31, 2004 and March 31, 2003, the label backlog for the Decorating Solutions Segment was approximately $7,300,000 and $4,900,000, respectively. The label backlog represents 3-4 weeks of production volume at current staffing levels.

Multi-Color’s equipment in the Packaging Services Segment consists primarily of automatic conveyors, shrink wrap ovens, heat guns, jet coders and hot melt glue equipment. This segment relies primarily on manual labor in order to meet customers’ packaging and fulfillment needs. On March 31, 2004 and March 31, 2003, the backlog was approximately $2,351,000 and $1,100,000. This backlog represents 6-8 weeks of production volume at current staffing levels.

All backlogs as of March 31, 2004 are expected to be completed in the next fiscal year.

EMPLOYEES

As of March 31, 2004, Multi-Color had approximately 540 employees. We consider our labor relations to be good and have not experienced any work stoppages during the previous ten years. Our Packaging Services Segment relies heavily on temporary labor personnel throughout the year. We have good, long-term relationships with several temporary staffing businesses to meet these needs. All human resource and compensation systems have been developed to align Multi-Color with the goals and objectives of our customers and shareholders.

RAW MATERIALS

Common to the printing industry, our Decorating Solutions Segment purchases proprietary products from a number of printing suppliers. To prevent potential disruptions to our manufacturing facilities, we have developed relationships with more than one supply source for each of our critical raw materials. Our raw material suppliers are major corporations, each demonstrating successful historical performance. Although it is the intention to prevent any long term business interruption due to the inability of obtaining raw materials, there could be short term manufacturing disruptions during the customer qualification period for any new raw material source.

Our Packaging Services Segment purchases various packaging materials such as corrugate, foam, plastics, adhesives and film. These materials are readily available and can be obtained from a wide variety of vendors.

ACQUISITIONS

We are continually in pursuit of acquisitions that may contribute to Multi-Color’s growth. We believe that acquisitions are a method of increasing our presence in existing markets, expanding into new markets, gaining new product offerings and improving operating efficiencies through economies of scale. Through acquisitions, we plan to broaden Multi-Color’s revenue stream by providing complimentary consumer packaging services that support our customers’ marketing strategies. The printing industry is highly fragmented and offers many opportunities for acquisitions.

During fiscal 2004, we completed the acquisition of the heat transfer business of the International Playing Card and Label Co. This acquisition further increased the number of customers for which we are providing heat transfer labels from our Framingham, MA plant.

During fiscal 2003, we completed two acquisitions. In May 2002, we completed the acquisition of certain assets and assumption of certain liabilities of Quick Pak, Inc. Quick Pak is based in Cincinnati, Ohio and supplies packaging services to the consumer packaging industry. This acquisition enabled us to expand the service component of Multi-Color’s business strategy and broaden Multi-Color’s revenue stream by providing complimentary consumer packaging services that support our customers’ marketing strategies. In January 2003, we acquired specific assets and assumed certain liabilities of the North and South American Decorating Technologies Division (“Dec Tech”) of Avery Dennison Corporation. Dec Tech is a supplier of heat transfer labels to the health & beauty aids, food and beverage industries.

We actively seek to identify and evaluate potential acquisition candidates and, from time to time, engage in discussions with such candidates. Completion of future acquisitions may or may not occur.

COMPETITION

Multi-Color has a large number of competitors in the traditional and pressure sensitive label markets and several principal competitors in each of the in-mold, shrink sleeve and heat transfer label markets. Some of these competitors in the traditional and pressure sensitive label markets have greater financial and other resources than us. The competitors in the in-mold, shrink sleeve and heat transfer label markets are either private companies or subsidiaries of public companies and we cannot assess the financial resources of these organizations. Multi-Color could be adversely affected should a competitor develop labels similar or technologically superior to our in-mold label. We believe competition is principally dependent upon product performance, service, pricing and technical support. Customer service, quality and qualification requirements present barriers to new entrants into Multi-Color’s markets.

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Similar to the Decorating Solutions Segment, the Packaging Services Segment’s competition is largely dependant on customer service and price as well as the ability to demonstrate unrestricted capacity and superior quality.

PATENTS AND LICENSES

We own a number of United States patents and patent applications that relate to the products and services we offer to our customers. Although these patents are important to us, we are not dependant upon any one patent. We believe that these patents, collectively, along with our ability to be a single source provider of many packaging needs provide us with a competitive advantage over our competition. The expiration or unenforceability of any of our patents would not have a material adverse effect on Multi-Color.

REGULATION

Our operations are subject to regulation by federal and state environmental protection agencies. To insure ongoing compliance with federal and state environmental protection agency requirements, we have retained an outside environmental consultant to monitor environmental compliance. Additionally, Multi-Color continues to make capital investments to maintain compliance with federal and state environmental requirements and to improve our existing equipment as part of our ongoing environmental compliance strategy.

The United States Food and Drug Administration regulates the raw materials used in labels for food products. These regulations apply to the consumer product companies for which Multi-Color produces labels. Multi-Color uses materials specified by the consumer product companies in producing labels for food products.

ITEM 2. PROPERTIES

All of our properties are in good condition, are well maintained, and are adequate for Multi-Color’s intended uses.

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ITEM 3. LEGAL PROCEEDINGS

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None during the fourth quarter of the fiscal year ending March 31, 2004.

PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER REPURCHASES OF EQUITY SECURITIES

Multi-Color’s shares trade in the over-the-counter market under the NASDAQ-NMS symbol LABL. The following table sets forth the high and low sales prices of Multi-Color’s common stock (“Common Stock”) as reported in the NASDAQ National Market System during fiscal years 2003 and 2004. Prices have been adjusted to reflect Multi-Color’s 3-for-2 stock split effective November 30, 2003. Multi-Color’s stock is thinly traded. Accordingly, the prices below may not be indicative of prices at which a large number of shares can be traded or reflective of prices that would prevail in a more active market.

As of June 16, 2004, there were approximately 370 shareholders of record of the Common Stock.

We currently intend to retain Multi-Color’s earnings to fund the growth of our business and do not anticipate paying any cash dividends on Common Stock in the foreseeable future. Multi-Color’s financing agreements currently prohibit the payment of Common Stock cash dividends.

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ITEM 6. SELECTED FINANCIAL DATA (THOUSANDS, EXCEPT PER SHARE DATA)

Refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of the impact of acquisitions completed during recent fiscal years that would impact the comparability of the selected financial data noted above. In fiscal 2000, we acquired our Batavia, OH plant. In fiscal 2001, we acquired the Las Vegas, NV plant which was subsequently closed during fiscal 2004 and business moved to another of our plant locations. In fiscal 2002, we acquired our Troy, OH plant. In fiscal 2003, we acquired the Framingham, MA plant as well as the Quick Pak plant located in Cincinnati, OH.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The following discussion and analysis should be read in conjunction with Multi-Color’s Consolidated Financial Statements and notes thereto appearing elsewhere herein. In the accompanying analysis of financial information, we refer to certain data and information derived from our financial statements that are not required by U.S. generally accepted accounting principles (“GAAP”) to be presented in financial statements. Certain of these data are considered to be “non-GAAP financial measures” under the SEC regulations. The SEC regulations required supplemental explanation and reconciliation which can be found at the end of this Item 7.

RESULTS OF OPERATIONS

The following table shows, for the periods indicated, certain components of Multi-Color’s consolidated statements of income as a percentage of net sales.

EXECUTIVE OVERVIEW

We provide a wide range of products and services for the packaging needs of our customers through two segments. Our Decorating Solutions Segment provides a complete line of label solutions for consumer product and food and beverage companies. Our Packaging Services Segment provides promotional packaging design, sourcing and custom assembly services to consumer product companies and national retailers. Our vision is to be a premier global resource of packaging services and decorating solutions. Currently, our customers are located throughout North and South America. We monitor and analyze trends in the packaging industry in order to ensure that we are providing appropriate products and services to our customers. Factors that influence our business are: consumer spending; new product introductions; new packaging technologies and demographics.

We achieved record revenues of $127 million and continued our record over the past six years of double digit annual sales growth and solid operating income growth. However, we experienced operational challenges at our Las Vegas plant during fiscal 2004. In spite of the challenges, our net income increased $.2 million over fiscal 2003. We successfully integrated our Dec Tech acquisition (January 2003) into our existing Decorating Solutions Segment. Our Packaging Services Segment continues to achieve significant organic growth. Due to this growth, we expanded the main facility for our Packaging Services Segment, Quick Pak, to 215,000 sq. ft. from 126,000 sq. ft. In December 2003, we announced a manufacturing consolidation plan that included the closure of our Las Vegas plant. We moved the business of our Las Vegas plant to one of our other plants to better utilize capacity across our various plant locations. This plant closure was originally expected to be completed during the first quarter of fiscal 2005 but we were able to close the plant by March 31, 2004. Productivity improvements at our Scottsburg, IN plant created capacity for the integration of the Las Vegas business. However, job start-ups and the scope and complexity of the integration caused disruptions in the plant’s normal production schedule. We expect the remaining issues to be resolved during the second quarter of fiscal 2005 as a result of operational improvements. Excluding the plant closure costs and impairment charge recorded in connection with the Las Vegas plant closure, our net income would have increased $.7 million or 14% over fiscal 2003. Our diluted earnings per share would have been $1.09 for fiscal 2004, an increase of 10% over the prior year.

The label markets we serve through our Decorating Solutions Segment continue to experience a competitive environment and price pressures. We have initiated many cost reduction programs to meet the demands of the market while minimizing the impact on our margins. We continually search for ways to reduce our costs through improved production and labor efficiencies, reduced substrate waste, new substrate options and lower substrate pricing. We have completed several Six Sigma projects in fiscal 2004 to focus on these efforts and will continue these types of projects in fiscal 2005.

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Over the past four years, we have made progress in expanding our customer base and portfolio of products, services and manufacturing locations in order to address issues related to the concentration of business. We continue to examine business strategies to diversify our business.

Also during fiscal 2004, we were able to pay down our long-term debt by over $5.8 million and successfully completed the purchase of our Scottsburg, IN plant which was previously leased through a capital lease. The purchase of the building, financed through a mortgage loan, reduced our interest expense by over $.4 million per year. We also completed our second three for two stock split in two years and achieved share value appreciation of 77%.

COMPARISON OF FISCAL YEARS ENDED MARCH 31, 2004 and MARCH 31, 2003

Net Sales

Acquisitions completed in fiscal 2003 and 2004 accounted for approximately 60% of the total annual growth in net sales in fiscal 2004 with organic growth accounting for the remainder of the growth. Our Packaging Services Segment has experienced increased activity with existing customers as well as gaining new customers. The growth in the Decorating Solutions Segment was primarily a result of the Dec Tech acquisition completed in January 2003. The consolidated organic growth rate in fiscal 2004 of 11% was primarily due to the significant growth experienced by the Packaging Services Segment. We believe our historical growth rates ranging from 7% to 9% are more sustainable.

Gross Profit

The increase in consolidated gross profit is a result of the increase in sales. The decrease in the gross profit as a percentage of sales for the consolidated company as well as the Decorating Solutions Segment is due to the unfavorable operating results of the Las Vegas plant. This plant experienced operational difficulties and in conjunction with our manufacturing consolidation plan announced in December 2003, this plant was closed in March 2004. All existing heat shrink business was transferred to one of our other plants to better utilize press capacity. Excluding the gross profit shortfall generated by the Las Vegas plant, our consolidated gross profit for fiscal 2004 was $25,187 and consolidated gross profit as a percentage of sales was 20%, an improvement over fiscal 2003.

The increase in the Packaging Services Segment’s gross profit as a percentage of sales is due to increased volume and improved productivity on the product assembly lines.

SG&A

Selling, general and administrative expenses increased due to our continued investment in sales and marketing programs as well as additional expenses of acquisitions. We have also increased administrative staffing to effectively manage our recent growth.

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Plant Closure Costs and Impairment Loss

As discussed above, we closed the Las Vegas plant in March 2004. When the announcement was made in December 2003 of the plant closure, we reviewed our assets in the Las Vegas plant for impairment issues. We recorded an impairment loss of $199 for certain assets that were not expected to be utilized in our other operating plants. At March 31, 2004, the plant had been closed and all related plant closure costs have been recorded. Total severance costs of $77 were included in the plant closure costs and these severance costs have substantially been paid in full at March 31, 2004. Any remaining payments will be made during the first quarter of fiscal 2005.

Interest and Other Expense

Interest expense decreased $314 in fiscal 2004 due to the continued reduction in debt resulting from scheduled debt payments made during the fiscal year. A portion of the decrease in interest expense relates to the interest savings realized by Multi-Color in conjunction with the November 2003 purchase of the Scottsburg, IN plant. We previously leased this plant and had recorded the lease as a capital lease. We obtained a term loan for $3,600 in order to finance the purchase at interest rates substantially below those in the capital lease.

Other expense increased in fiscal 2004 due to losses recorded on the disposal of certain pieces of equipment by both segments.

Income Tax Expense

Income tax expense and the effective tax rate decreased from fiscal 2003 in spite of increased pre tax income due to Multi-Color earning and recognizing state tax investment credits. The effective tax rate for fiscal 2004 is 37.5% versus 38.0% for fiscal 2003.

COMPARISON OF FISCAL YEARS ENDED MARCH 31, 2003 and MARCH 31, 2002

Net Sales

The acquisition of Dec Tech in January 2003 contributed to approximately 40% of the increase in Decorating Solutions Segment net sales. The remainder of the growth in the Decorating Solutions Segment was a result of growth from the existing customer base in the segment. All of the growth in the Packaging Services Segment was due to the acquisition of Quick Pak in May 31, 2002. Due to this acquisition, this segment was started in fiscal year 2003.

Gross Profit

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Approximately 48% of the consolidated gross profit increase was due to acquisitions completed in 2003. In 2003, gross profit as a percentage of sales for the Decorating Solutions Segment was 21% as compared to 20% in the prior year. The improvement in gross profit was due to favorable customer and product mix. Gross profit as a percentage of sales for the Packaging Services Segment was 11% in 2003, its first year of operation under Multi-Color.

SG&A

The majority of the increase from 2002 was due to an increase in sales personnel during 2003. In 2002, the Company employed 12 sales people. In 2003, 23 sales people were employed. This increase in sales personnel occurred in order for the Company to maximize sales opportunities in the marketplace. Increases in selling expense were offset by administrative efficiencies and synergistic savings as a result of the Company’s growth which resulted in a decline of selling, general and administrative expense as a percentage of net sales.

Interest and Other Expense

Multi-Color experienced an overall increase in long-term debt of $5,562. The increased debt was due to acquisition related debt and was offset by the continued pay down of long-term debt. In 2003, we paid down $4,093 in long-term debt. Interest rates continued to decrease in 2003 and were at record lows during 2003.

Other expense in 2002 was offset by recorded gains on the sale of various pieces of equipment. These gains did not reoccur in 2003.

Income Tax Expense

The increase in income tax expense in 2003 was primarily due to the related increase in net income. The effective tax rates for fiscal 2003 and 2002 were 38% and 36%, respectively. The increase in the effective tax rate in 2003 is due to the 2002 tax rate reflecting tax credits that did not reoccur in 2003.

Critical Accounting Policies and Estimates

Our financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. This requires us to establish accounting policies and to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of our financial statements. We base our estimates on historical experience and on other assumptions that we believe to be relevant under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.

Critical accounting policies include those policies that involve may significant judgments and uncertainties. We believe that the following policies are critical accounting policies. For further information on these policies and other significant accounting policies, see Note 2 in the notes to the Consolidated Financial Statements.

Accounts Receivable

Our customers are primarily major consumer brand companies and container manufacturers. Accounts receivable consist of amounts due to us from our customers in connection with our normal business activities. Accounts receivable include an allowance for doubtful accounts to reflect the expected losses of accounts receivable based on past collection history and specific individual risks identified in our accounts receivable detail. Losses may also depend to some degree on future economic conditions. Although these conditions are unknown to us and may result in additional credit losses, we do not anticipate significant adverse credit circumstances in fiscal 2005.

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Goodwill and Other Acquired Intangible Assets

We test goodwill and other intangible assets for impairment annually and whenever events or circumstances make it more likely than not that an impairment may have occurred. The impairment test is completed based upon our assessment of the estimated fair value of goodwill and other intangible assets. For purposes of these tests, we determined that each segment of Multi-Color is one reporting unit.

The annual review for impairment of goodwill requires the use of estimates and assumptions which we believe are appropriate. Application of different estimates and assumptions or reviewing goodwill at a different reporting unit level could produce different results.

Impairment of Long-Lived Assets

We review long-lived assets for impairment whenever events or changes in circumstances indicate that assets might be impaired and the related carrying amounts may not be recoverable. The determination of whether an impairment has occurred involves various estimates and assumptions, including the determination of the undiscounted cash flows estimated to be generated by the assets involved in the review. The cash flow estimates are based upon our historical experience, adjusted to reflect future market and operating conditions. Measurement of an impairment loss requires a determination of fair value. We base our estimates of fair values on quoted market prices when available, independent appraisals as appropriate and industry trends or other market knowledge.

Income Taxes

We follow SFAS No. 109 “Accounting for Income Taxes.” Under SFAS No. 109 income taxes are recorded based on the current year amounts payable or refundable, as well as the consequences of events that give rise to deferred tax assets and liabilities. Deferred tax assets and liabilities result from temporary differences between the tax basis and reported book basis of assets and liabilities and result in taxable or deductible amounts in future years. Our accounting for deferred taxes involves certain estimates and assumptions that we believe are appropriate. Future changes in regulatory tax laws and/or different positions held by taxing authorities may affect the value recorded for deferred taxes.

Liquidity and Capital Resources

Cash flows from operations were $9,964 in 2004 and $11,884 in 2003. The cash flow generated in 2004 was reduced from the cash flow generated in 2003 primarily due to an increase in working capital related to our growth and acquisitions completed in 2003 and 2004.

Cash flows used in investing activities were $6,490 in 2004 and $10,130 in 2003. Cash used in 2004 and 2003 was due to the acquisition of the heat transfer business of The International Playing Card and Label Company in fiscal 2004 and the acquisitions of Quick Pak and Dec Tech in fiscal 2003.

Capital expenditures were $6,248 in 2004 and $2,036 in 2003. Capital expenditures were funded either through cash flow from operations or through the Company’s revolving credit agreement. Capital expenditures were significant in 2004 and related primarily to a new gravure press being installed in our Scottsburg, IN plant and a new company wide business enterprise system. Budgeted capital expenditures for 2005 of approximately $5,000 are expected to be funded from operating cash flows in 2005.

Multi-Color had available under a Revolving Credit Agreement $6,000 at March 31, 2004 to provide for additional cash needs. We entered into the current credit agreement with PNC Bank, Key Bank, LaSalle Bank and Harris Trust and Savings Bank on July 12, 2002. The credit agreement provides for a revolving line of credit up to a maximum of $6,000 and an acquisition facility of $15,000, which was partially utilized in July 2002 in connection with the acquisition of Quick Pak. The acquisition facility expired in July 2003. Under the terms of the credit agreement, Multi-Color is subject to several financial covenants. The financial covenants require Multi-Color to maintain certain leverage and fixed charge ratios as well as maintain a minimum tangible net worth. We were in compliance with all covenants during 2004. We are prohibited from declaring dividends on the common stock of Multi-Color under the agreement. The credit agreement expires in July 2005. We expect to enter into an amended credit facility with the bank group described above by the end of our fiscal 2005 first quarter. The amended credit facility provides for expanded borrowing capabilities with a revolving line of credit availability of $10,000 and an acquisition facility of up to $20,000. The financial covenants and other terms and conditions of the new facility will substantially the same as the current facility.

We believe that cash flow from operations and availability under the revolving line of credit, as amended, are sufficient to meet our capital requirements and debt service requirements for fiscal 2005 and for the next several fiscal years. From time to time we review potential acquisitions of businesses. While we has no present commitments to acquire any businesses that would have a material impact on Multi-Color’s financial position or results of operations, such an acquisition may require us to issue additional equity or incur additional debt.

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The following table summarizes our contractual obligations as of March 31, 2004:

Contractual Obligations (thousands)

Aggregated Information about Contractual Obligations and Other Commitments

Inflation

We do not believe that our operations have been materially affected by inflation.

Financial Measures That Supplement GAAP

We referred to data derived from consolidated financial statements but not required by GAAP to be presented in financial statements. Certain of these data are considered to be “non-GAAP financial measures” under the SEC regulations. Specifically, we referred to net income excluding the plant closure costs and impairment loss and gross profit excluding the gross profit shortfall generated by the Las Vegas plant. We believe these costs to be unusual items and believe that investors may find it helpful to see the measures noted above.

ITEM 7A. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (THOUSANDS)

Multi-Color is exposed to market risks from changes in interest rates in certain of its outstanding debt. The outstanding loan balance under our bank credit facility bears interest at a variable rate based on prevailing short-term interest rates in the United States and Europe. Based on the average outstanding debt in fiscal 2004, a 100 basis point change in the interest rate would change interest expense by approximately $247. In fiscal 2004 we did not use financial or derivative instruments to manage our interest risks. We recently entered into an amended credit facility with our bank group and as part of the new credit facility we will be using financial instruments to manage our interest risks. Multi-Color has minimal foreign exchange risks.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (THOUSANDS, EXCEPT PER SHARE DATA)

Index to Consolidated Financial Statements and Financial Statement Schedules

CONSOLIDATED FINANCIAL STATEMENTS

All Financial Statement Schedules have been omitted because either they are not required or the information is included in the financial statements and notes thereto.

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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Stockholders and Directors of Multi-Color Corporation:

We have audited the accompanying consolidated balance sheets of Multi-Color Corporation (an Ohio corporation) and subsidiaries as of March 31, 2004 and 2003, and the related consolidated statements of income, stockholders’ equity and cash flows for each of the three years in the period ended March 31, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Multi-Color Corporation as of March 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2004, in conformity with accounting principles generally accepted in the United States of America.

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CONSOLIDATED STATEMENTS OF INCOME

For the Years Ended March 31

(Thousands, except per share data)

The accompanying notes to financial statements are an integral part of these statements.

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CONSOLIDATED BALANCE SHEETS

As of March 31

(Thousands, except per share data)

The accompanying notes to financial statements are an integral part of these statements.

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Years Ended March 31

(Thousands, except per share data)