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Cash Discipline Helps Moore Post Stronger Q3 Results

Thursday, October 24, 2002

Press release from the issuing company

MISSISSAUGA, Ontario & STAMFORD, Conn.--Oct. 23, 2002--Moore Corporation Limited announced improved results for the third quarter ended September 30, 2002. For the third quarter of 2002 the Company reported GAAP (Canadian Generally Accepted Accounting Principles) net earnings of $17.5 million, or $0.15 per share. This compares favorably to a GAAP net loss of $12.2 million, or $(0.14) per share for the same period in 2001, or normalized net earnings of $2.0 million or $0.02 per share. The results for the third quarter of 2002 include a one-time payment related to the early redemption of $100 million of senior guaranteed notes, gain on fixed asset dispositions and a reduction in the deferred tax valuation allowance, the net effect of which were not material. The normalized results for 2001 exclude the impact of restructuring and other non-recurring charges. Management believes the normalized results for 2001 are indicative of underlying operations and provide investors with a better means of comparing 2002 results. As required by the new accounting standards relating to goodwill and other intangible assets, effective January 1, 2002, goodwill is no longer amortized. If amortization relating to goodwill existing prior to the adoption of the standard had been recorded, third quarter 2002 GAAP net earnings would have been $0.5 million lower or $17.0 million. The Company's third quarter 2002 GAAP income from operations was $28.6 million compared to a GAAP operating loss of $1.8 million, or income from operations of $12.5 million on a normalized basis, for the same period last year. This improvement resulted from the Company's continued focus on cost containment, productivity enhancements, waste reduction initiatives and operational efficiencies. EBITDA (operating income plus depreciation and amortization) increased to $49.5 million in the third quarter 2002 versus normalized EBITDA of $38.0 million in the same period last year as the Company continued to generate strong cash flow. The Company's free cash flow (EBITDA less cash paid for interest, taxes, dividends, and capital expenditures, exclusive of the debt settlement payment and gain on fixed asset disposition) continued to show dramatic improvement as the Company generated positive free cash flow in the third quarter 2002 of $35.9 million versus normalized free cash flow of $21.6 million in the third quarter 2001. This marks the seventh consecutive quarter of significantly improved free cash flow. Net sales for the third quarter were $486.8 million compared to $510.6 million for the same period in 2001. The revenue decline resulted from the fourth quarter 2001 divestiture of Phoenix; volume declines in the prepaid telephone card market; the decision to exit certain non-core product lines and unprofitable customer contracts in the Forms and Labels business; and the devaluation of certain foreign currencies, partially offset by the acquisition of the Document Management Services business of IBM Canada Limited and of The Nielsen Company. For the nine months ended September 30, 2002, the Company reported GAAP net earnings of $45.2 million, or $0.40 per share. This compares favorably to a GAAP net loss of $274.0 million, or $(3.10) per share for the same period in 2001 and a net loss of $10.2 million or $(0.12) per share on a normalized basis. The 2001 normalized net loss excludes the impact of restructuring and other non-recurring charges. For the nine months ended September 30, 2002, GAAP operating income was $73.1 million versus a GAAP operating loss of $282.6 million ($17.0 million operating income on a normalized basis) for the same period in 2001. If amortization relating to goodwill existing prior to the date of adoption of the new accounting standard had been recorded for the nine months ended September 30, 2002 GAAP net earnings would have been $1.6 million lower or $43.6 million. EBITDA for the first nine months of 2002 was $138.7 million, an increase of $38.6 million versus normalized EBITDA of $100.1 million for the same prior year period. Revenues for the first nine months of 2002 were $1.5 billion compared to $1.6 billion in 2001 due to the factors discussed above. The Company's free cash flow for the first nine months of 2002 was $104.4 million versus normalized free cash flow of $38.5 million in the same period last year. Robert G. Burton, Chairman, President and Chief Executive Officer stated: "I am pleased to announce another quarter of strong operating performance with strong growth in earnings and free cash flow. We were able to exceed our financial targets and improve margins despite adverse economic conditions. The continued success of our "one-stop shopping" sales strategy, the continued sharp focus on cost reduction, and our exceptional cash discipline all contributed to another successful quarter." Mr. Burton continued: "The Company continues to generate strong free cash flow. We remain diligent in our efforts to improve day's sales outstanding and inventory turns. We have also been extremely prudent with all capital expenditures, with each request being required to hit strict hurdle rates and be personally signed off by me. These efforts, coupled with improved financial performance, have resulted in a dramatic improvement in free cash flow. We will continue to look for ways to increase shareholder value by investing these funds wisely and opportunistically by funding growth through acquisitions, capital investments and buying back company shares in accordance with the previously announced share repurchase program, in each case depending on market conditions." Mr. Burton concluded: "Even in a period of economic uncertainty, I continue to remain very optimistic regarding the prospects for our business. We continue to see across-the-board sales wins in all our markets. In the past few weeks alone, new and existing customers in the telecommunications, data processing, waste management, and supplemental insurance markets have awarded us over $50 million of incremental revenue. We continue to eliminate excess cost from our operating structure, as we fully leverage our purchasing and technology spends and improve manufacturing and operational efficiencies. With a strong sales pipeline in front of us and a tight rein over our operating costs, we remain comfortable with the financial targets we've communicated for the fourth quarter and next year." Summary of Third Quarter Results * Sales in the third quarter 2002 of $486.8 million compared to sales of $510.6 million in the third quarter 2001. * GAAP net earnings for the third quarter 2002 was $17.5 million or $ 0.15 per share compared to a normalized net earnings of $2.0 million or $0.02 per share for third quarter 2001. * GAAP income from operations of $28.6 million in the third quarter 2002, compared to normalized income from operations of $12.5 million for the same period in 2001. * Free cash flow in the third quarter 2002 of $35.9 million versus normalized free cash flow of $21.6 million in the same prior year period. * EBITDA in the third quarter 2002 of $49.5 million versus normalized EBITDA of $38.0 million in the same period last year. Summary of First Nine Months * Sales in the first nine months of 2002 of $1.5 billion compared to sales of $1.6 billion for the same period in 2001. * GAAP net earnings for the first nine months of 2002 of $45.2 million compared to a normalized net loss of $10.2 million for the same period last year. * GAAP income from operations of $73.1 million for the first nine months of 2002 compared to $17.0 million of normalized income from operations for the first nine months of 2001. * Free cash flow for the first nine months of $104.4 million versus normalized free cash flow of $38.5 million for the same period last year. * EBITDA for the first nine months of $138.7 million compared to normalized EBITDA of $100.1 million in the same prior year period.

 

 

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