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Wallace Reports Q1 Earnings, Restructuring Initiatives Deliver Results

Press release from the issuing company

LISLE, Ill.--Dec. 9, 2002-- WALLACE, the leading national provider of total print management products and services, today reported first quarter diluted earnings per share of $0.29. This compares to a loss of $3.19 per diluted share in the first quarter of fiscal 2002. Included in the results for the first quarter of fiscal 2003 are residual restructuring charges of $0.6 million and a previously-disclosed contract settlement totaling $7.6 million. Excluding these charges, first quarter fiscal 2003 diluted earnings per share were $0.41. This compares favorably to earnings in the first quarter of fiscal 2002, after excluding restructuring charges and the cumulative effect of an accounting change, of $0.32 per diluted share. Revenues for the first quarter of fiscal 2003 totaled $385 million, down 5.8% versus reported first quarter fiscal 2002 revenues of $408 million. After adjusting for $19 million in sales lost due to plant closures and the exit of low margin business associated with the 2002 restructuring, first quarter fiscal 2003 sales were down about 1% versus the year-ago quarter. Reported operating income for the first quarter of fiscal 2003 was $24.2 million compared to $25.0 million in the first quarter of fiscal year 2002. Excluding the contract settlement and restructuring charges, first quarter operating incomewas $32.5 million, a 17.8% increase over operating income, excluding restructuring charges, of $27.6 million in the first quarter of fiscal 2002. Commenting on the Company's recent results, Wallace Chairman and Chief Executive Officer David Jones said, "We are pleased with our operating performance in the first quarter of fiscal 2003. The favorable impact of our restructuring efforts and continuing cost savings programs produced the highest operating earnings in six quarters. "Operating margins improved in both Forms & Labels and Integrated Graphics as our cost reduction efforts delivered savings to the bottom line," Jones continued. "We were also encouraged by increased customer demand for distribution, kitting and fulfillment services, as well as growing interest in our @winXS system, Wallace's next-generation internet-based information solution." "Moving forward," Jones continued, "our strategic focus remains on improving operating margins, particularly within our Integrated Graphics segment, growing revenues from contracted services with existing and prospective customers, and continued investment in new technologies to enhance customer service and support future growth." "Although financial conditions are expected to remain relatively unchanged in the second quarter of fiscal 2003," said Wallace Chief Financial Officer Vicki Avril, "we remain guardedly optimistic about the prospects for economic recovery in the second half of the year. With the 2002 restructuring now complete and cost savings initiatives firmly on track, we are focused on growing earnings and capturing incremental market share. As we move forward in fiscal 2003, we expect modest sales growth, adjusted for plant closures associated with the 2002 restructuring, and anticipate that diluted earnings per share for the second quarter of fiscal 2003 will be in a range of $0.37 to $0.41. For the full fiscal year 2003, excluding restructuring and the settlement charge, we anticipate diluted earnings per share in a range of $1.50 to $1.60." On December 4, 2002, the Wallace Board of Directors approved the next quarterly cash dividend payment at the rate of $0.165 per share. The previously-announced dividend will be paid on March 20, 2003, to shareholders of record as of March 3, 2003.