By Susan Kelly of Raine Consulting March 7th, 2003 –Lisle, IL-based Wallace (NYSE: WCS) announced second quarter results for year 2003. Wallace reported their operating income was $28.5 million for their second quarter on revenues of $380 million. The second quarter operating income performance has improved from first quarter 2003 of $24.2 million as well as second quarter 2002 with had an operating loss of $6.1 million. Wallace was able to improve operating income despite lower revenues as first quarter 2003 was $385 million and second quarter 2002 was $396 million. Topics include: * Summary Financial Results * Wallace Sales and Marketing Focus * Q & A Chairman and Chief Executive Officer, David Jones, kicked off the call to explain why the revenues have been declining, quarter-to-quarter and year-over-year. He cited the following reasons: • Customer businesses shut down for the 2002 year-end holidays and were very slow to return to business therefore revenues suffered; • Four fewer days in this quarter and sales per day are actually in good shape; • Paper price increases had to be fully absorbed; and • Adjustment of $16 million in sales is required due to plant closures. Mr. Jones maintains that sales wins exceeds sales losses and that customers are not buying as much these days. Summary Financial Results Ms. Vicki Avril, Wallace’s Senior Vice President and CFO, reported diluted earnings per share of $0.35 for the second quarter of 2003. This compares to earnings of $0.29 per diluted share in the first quarter 2003 and a loss of $0.18 per diluted share reported in the second quarter of 2002. Ms. Avril restated the press release revenues and operating income financials for the two divisions: Forms & Labels, and Integrated Graphics. Forms & Labels performance was flat on both the top and bottom line. They gave guidance that they expect to experience operating margins to exceed 10% for the balance of 2003. Integrated Graphics declined in sales, however doubled their profitability over same quarter 2002, from 2.1% to 5.2%. Numbers excluded Kmart’s bankruptcy provisions, merger costs, and restructuring costs. Cash increased by $59 million in second quarter 2003 and debt was $209 million. Due to the pending merger, Wallace is not in a position to repurchase shares or to look at acquisitions at this time. Wallace is focused on getting incremental market share and will not provide earnings guidance for the balance of 2003 given the pending merger. Wallace Sales and Marketing Focus Mr. Michael Duffield, President and Chief Operating Officer, stated that Wallace’s’ contract sales are up 1% in Forms & Labels and up 6% in Integrated Graphics. “Transactional sales are hardest hit but our gains on contracts have offset our losses for the most part”. Mr. Duffield stated that Wallace has signed $30 million in new business which will hit this quarter and next. In addition he reported that over 400 customers attended their Ink & Technology Fairs which exhibited Wallace’s WIN products. The volume of kitting revenue is increasing and they will expand their network of solution centers. Wallace will increase their order fulfillment offerings and will change some of their existing facilities to solution centers. Their product focus is on digital color documents and fulfillment and they have created the sales and marketing tools to go after customer’s print needs around CRM, Employee and Business communication tools. Last year they closed 5 printing plants. Wallace is not anticipating any further paper price increases for 2003. The reorganization and cost reductions are starting to see the benefits in 2003. Mr. Duffield stated that “We’re proud of the numbers but believe we can do better. Quoting activity is very high and the strategy is now focused on improving operating earnings, growing revenues and completing the merger.” Q&A 1. One analyst asked if Wallace believed that their current business environment has deteriorated from the first quarter. David Jones reiterated that customers had shut down earlier during the holidays and stay closed longer which impacted second quarter results. They did agree that the Integrated Graphics group was hit worse than Forms & Labels because Integrated Graphics is primarily transactional sales. 2. No change is expected in Wallace’s approach to their customers, markets, or operations. There has been no significant affect on their sales because of the merger announcement. All customer feedback has been positive to date. 3. Merger Process with Moore: File with SEC and get approval, get proxy together (i.e. S4 that is currently filed is a preliminary proxy), schedule the meetings, and Moore needs to get its financing in order. Waiting period has expired for the merger therefore they expect the merger will close by the end of the second calendar quarter 2003.