LISLE, Ill.--Sept. 26, 2002--Wallace, the leading national provider of comprehensive total print management products and services, today reported fourth quarter diluted earnings per share of $0.32. Fourth quarter earnings, before restructuring charges of $5.1 million, were $0.39 per diluted share, up 11% over third quarter 2002 earnings of $0.35 per diluted share and consistent with management's previous estimates. Pro forma diluted earnings per share for the fourth quarter of 2001, which included a number of one-time items, were $0.17. Revenues for the fourth quarter of 2002 were $372 million, compared to $405 million in the year-ago quarter. A lower tax rate favorably impacted the current quarter by $0.03 per share.
For the full year ended July 31, 2002, after charges for restructuring and goodwill impairment associated with the adoption of FAS 142, the Company posted a loss of $115 million or ($2.75) per diluted share. Full year earnings per share, before restructuring charges and the change in accounting principle, were $1.34 per diluted share, compared with pro forma diluted earnings per share of $1.48 in fiscal 2001. Pro forma full-year net income was $56 million versus $61 million a year ago. Revenues for 2002 totaled $1.5 billion, down 8.5% from the prior year.
Commenting on the Company's recent results, Wallace Chairman and Chief Executive Officer David Jones said, "We are pleased with our results for the fourth quarter, as we conclude a pivotal year of taking costs out of the business to restore our profitability and position Wallace for future growth. Clearly the impact of our restructuring and cost-savings initiatives is beginning to take hold. Operating income for the second half of the year was almost 13% higher than the first half, on 8% lower sales. During the second half of 2002, our operating margin, on a consolidated basis before restructuring, was 7.9% -- its highest level since the first half of fiscal 2001."
A reconciliation of reported pre-tax income to pro forma net income is detailed at www.wallace.com
"We've made significant strides this year in strengthening Wallace's balance sheet and improving our cash flows," said Vicki Avril, Wallace Senior Vice President and Chief Financial Officer. "Cash flow from operations, after deducting for capital expenditures and acquisitions, totaled $113 million for the year. More than $27 million of this was returned to shareholders in the form of dividends and debt has been paid down to a four-year low. We also continue to focus on managing our working capital. Inventory turns have increased and days sales outstanding on receivables have decreased compared to last year." Total debt at the end of the fiscal year was $211 million, down $77 million from the end of 2001.
"We feel good about our accomplishments in the second half of 2002," Jones concluded. "As we enter the new fiscal year, we are well positioned to continue our growth in earnings through both cost reductions and focused selling of our Total Print Management capabilities. At the same time, we are working to create new growth engines for the future."
Avril commented that the Company expects financial conditions to remain relatively unchanged in the first quarter of fiscal 2003. The Company anticipates that diluted earnings per share in first quarter, before residual charges related to the fiscal 2002 restructuring, will be in a range of $0.35 to $0.40 per share.
Subsequent to year-end, Wallace received notice of termination of a contract with a third party at one of our plants. The Company is working to resolve matters surrounding the termination. However, a claim could potentially be made against the Company to which the Company believes it would have adequate defenses. Jones commented, "We believe that the matter will be resolved in an acceptable way."
On September 10, 2002, the Wallace Board of Directors approved the next quarterly cash dividend payment at a rate of $0.165 per share. This previously announced dividend will be paid on December 20, 2002, to shareholders of record as of December 3, 2002.
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