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Wallace to Restructure: Includes Plant Closings, 10% Staff Cut

Press release from the issuing company

Lisle, Ill.--Nov. 14, 2001--Wallace, the leading national provider of comprehensive total print management products and services, today announced a number of restructuring and cost reduction measures. Included in this initiative are the closing of six manufacturing facilities, one kitting and fulfillment center, one multi-use facility, workforce reductions in excess of 10% of total employees, the disposal of certain underutilized equipment, and other cost reduction projects. "Wallace has a long history of sales growth. However, our profitability recently has been declining,'' said David Jones, Chairman and Chief Executive Officer. "Profits in Integrated Graphics, which is composed of commercial print and targeted communications, have been the weaker of our two operating segments. Mike Duffield, President and Chief Operating Officer of Wallace, has taken direct control of commercial print.'' "We can no longer accept the under-performance of our commercial print division,'' said Duffield. "Commercial print continues to be an important part of our strategy. These moves will strengthen capabilities in our strategic locations and put greater focus on contract business. These actions are intended to reduce our cost structure and offset cost increases with efficiencies and cost reductions. Combined with emphasizing contract business, we intend to get our profits to the levels we know that we can achieve. We expect the economy to be weak for some time, making it even more important that we get on with our cost reduction work.'' Business in commercial print manufacturing plants in Charlotte, North Carolina and Silver Spring, Maryland will be merged with other commercial print facilities and the plants will be closed. Commercial print manufacturing plants in Austin, Texas, New Orleans, Louisiana and Rochester, New York will be sold. Sales not tied to the specific locations will be consolidated with other Wallace commercial print operations. Two facilities in Elk Grove Village, Illinois, one a kitting and fulfillment center and the other a targeted communications manufacturing operation, will be closed, and their operations consolidated within other facilities in Illinois. A multiple-use facility in Lodi, California will be phased out and closed over the next several months, with its production and distribution operations moved to other existing California locations. It is anticipated that this restructuring will result in annualized cost savings of approximately $13 million. Also, operating leaders have identified approximately $20 million in cost reduction opportunities in various areas. The company also believes that its first quarter results, to be released next month, will meet current street expectations. Details of the costs and financial impact of the restructuring program and cost reduction measures will be announced in conjunction with the release of first quarter earnings, which is scheduled for Tuesday, December 11, after the market closes.

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