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Wallace Reports Q2 Results: Focused on Merger with Moore

Press release from the issuing company

LISLE, Ill. --March 7, 2003-- Wallace Corporation, a leading national provider of total print management products and services, today reported diluted earnings per share of $0.35 for the second quarter of fiscal 2003. This compares to earnings of $0.29 per diluted share in the first quarter of fiscal 2003 and a loss of $0.18 per diluted share reported in the second quarter of fiscal 2002. Reported operating income for the second quarter of fiscal 2003 was $28.5 million including $0.8 million, or $0.01 per diluted share, in expenses incurred in connection with the Company's previously-announced merger with Moore Corporation Limited. This compares to first quarter fiscal 2003 operating income of $24.2 million, which included residual restructuring charges of $0.6 million, a contract dispute settlement charge totaling $7.6 million and merger-related expenses of $1.3 million. Together, these expenses impacted first quarter fiscal 2003 earnings by $9.5 million or $0.14 per diluted share. Results for the second quarter of fiscal 2002 reflected an operating loss of $6.1 million, which included restructuring charges of $30.3 million and $2.8 million in reserves for accounts receivable and inventory related to Kmart's 2002 bankruptcy filing, which together totaled $0.50 per diluted share Revenues for the second quarter of fiscal 2003 totaled $380 million compared to $385 million in the first quarter of fiscal 2003 and $396 million in the second quarter of fiscal 2002. After adjusting for $16 million in sales lost due to plant closures and the exit of low margin business associated with the 2002 restructuring, sales were flat year over year. Commenting on the Company's recent results, Wallace Chairman and Chief Executive Officer David Jones said, "We are pleased with our overall operating performance in the second quarter. Although sales in the second quarter came in lower than expected, sales were actually up 5% on a per day basis versus the first quarter of fiscal 2003. There were four fewer working days in the second quarter than there were in the first quarter. Operating margins within Forms & Labels returned to normal levels after a strong first quarter, while margins within Integrated Graphics continued to improve both sequentially and year over year. "Moving forward," Jones continued, "our strategic focus remains on improving operating margins, growing revenues, and completing our previously-announced merger with Moore Corporation Limited. The Company's performance year-to-date has been consistent with our prior fiscal 2003 earnings guidance of $1.50 to $1.60 per diluted share, excluding unusual items, and we expect our performance going forward to continue on a similar track." On January 17, 2003, Wallace announced that it had entered into a definitive merger agreement to be acquired by Moore Corporation Limited for average consideration of US$14.40 in cash and 1.05 shares of Moore for each outstanding share of Wallace. The transaction is subject to customary closing conditions, including Wallace stockholder approval and normal regulatory review. The transaction has cleared the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and Moore Corporation Limited filed a registration statement on Form S-4 with the Securities and Exchange Commission on February 13, 2003.