Wallace Computer Services (WCS) DEFA14A Additional proxy soliciting materials

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.     )

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WALLACE COMPUTER SERVICES, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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TABLE OF CONTENTS

Wallace Computer Services, Inc. issued the following press release on March 7, 2003:

2275 CABOT DRIVE
LISLE, IL 60532-3630
T. 630.588.5000 F. 630.588.5115

[WALLACE LOGO] WALLACE NEWS RELEASE

FOR IMMEDIATE RELEASE

Wallace Reports Second Quarter Fiscal 2003 Results

Lisle, IL, March 7, 2003 —Wallace (NYSE: WCS), 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 (TSX, NYSE: MCL). 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 (TXS, NYSE: MCL) 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.

Wallace will hold a conference call to discuss its second quarter results on Friday, March 7, 2003, at 10 a.m. Central time. The toll free dial-in number for the call is 800-938-0061. The international dial-in number for the call is 706-634-5966. The call will be simultaneously webcast through a live audio-only link available through the company’s website at www.wallace.com.

For those unable to listen to the live call, an archived replay will be made available for approximately seven days, beginning approximately two hours after the conference call concludes, by dialing 800-642-1687 and entering conference ID #8728054. The international replay number is 706-645-9291.

This press release includes forward-looking statements covered by the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995, as amended. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” variations of such words and similar expressions are intend to identify such forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Company to materially differ from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among other things, the effect of the proposed merger with Moore if and when consummated; general economic, market or

business conditions; changes in postal rates and paper prices; the ability of the Company to retain its customers who generally do not operate under long-term contracts with the Company; the potential unpredictability of the Company’s net sales due to seasonal and other factors which can lead to fluctuations in quarterly and annual operating results; the ability of the Company to keep pace with technological advancements in the industry; the effect of technical advancements on the demand for the Company’s goods and services; and the risk of damage to the Company’s data centers and manufacturing facilities or interruptions in the Company’s telecommunications links; and other risks as described in the Company’s filings with the Securities and Exchange Commission.

About Wallace Computer Services

Wallace (NYSE: WCS) is a recognized leader in delivering a comprehensive suite of world-class print management services through its Total Print Management (TPM) program. Total Print Management enables Wallace to meet the unique communications challenges of its Fortune 1000 clients through a single-source solution that extends well beyond ink on paper. Offerings include traditional and digital print capabilities, distribution logistics, kitting and fulfillment, digital asset management, inventory management, print optimization, direct marketing and electronic commerce. Founded in 1908, Wallace is headquartered in Lisle, IL, with manufacturing, distribution and sales facilities throughout the United States. For more information, please visit http://www.wallace.com.

This communication is not a solicitation of a proxy from any security holder of Wallace Computer Services, Inc. Moore Corporation Limited has filed a registration statement on Form S-4 with the Securities and Exchange Commission containing a proxy statement/prospectus to be mailed to Wallace Computer Services security holders concerning the planned merger of Wallace Computer Services into a subsidiary of Moore Corporation. Information regarding the identity of the persons who may, under SEC rules, be deemed to be participants in the solicitation of stockholders of Wallace in connection with the proposed merger, and their interests in the solicitation, is set forth in a proxy statement/prospectus filed with the SEC. WE URGE INVESTORS IN WALLACE COMPUTER SERVICES TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors will be able to obtain the documents free of charge at the SEC’s website, www.sec.gov. In addition, documents filed with the SEC by Moore Corporation will be available free of charge from Moore Corporation Limited, c/o Moore Executive Offices, One Canterbury Green, Stamford, Connecticut 06901, Attention: Investor Relations, Tel. (203) 406-3700 or at www.moore.com. Documents filed with the SEC by Wallace Computer Services will be available free of charge from Investor Relations, Wallace Computer Services, Inc., 2275 Cabot Drive, Lisle, IL 60532-3630, Tel. (630) 588-5000.

####

Financial Tables Follow

Contact:	Susan H. Fisher
	Vice President — Investor Relations
	(630) 588-6405

A reconciliation of reported pre-tax income to adjusted net income and a summary of segment results is as follows:

Reconciliation of Reported Consolidated Results to Adjusted Results
(in thousands, except per share amounts)

	Q2 03		Q1 03		% Change			Q2 02			% Change
GAAP pre-tax income (loss), as reported	$	23,889	$	19,881		20.2	%	$	(11,794	)		n/m
Contract settlement		—		7,600		—			—			—
Merger costs		818		1,294		—			—			—
Restructuring charges		—		643		—			30,272			—
Kmart provisions for accounts receivable and inventory		—		—		—			2,833			—
Adjusted pre-tax income		24,707		29,418		-16.0	%		21,311			15.9	%
Income tax (see Note)		9,389		11,179					(8,311	)
Adjusted net income	$	15,318	$	18,239		-16.0	%	$	13,000			17.8	%
Diluted adjusted earnings per share	$	0.36	$	0.43		-16.3	%	$	0.32			12.5	%
Diluted shares		42,483		42,135					41,098

Note: Prior year actual tax rate was adjusted for the impact of the restructuring charges.

Summary of Segment Results
(in thousands)
Restructuring, contract dispute settlement, merger costs and the cumulative effect of an accounting change are not allocated to the segments and are only included at the corporate or consolidated level.

	Q2 03			Q1 03			% Change			Q2 02			% Change
Forms & Labels
Sales	$	200,184		$	202,911			-1.3	%	$	199,358			0.4	%
Operating Income	$	19,913		$	25,020			-20.4	%	$	20,005			-0.5	%
Operating Margin		9.9	%		12.3	%					10.0	%
Integrated Graphics
Sales	$	179,774		$	182,019			-1.2	%	$	197,022			-8.8	%
Operating Income	$	9,362		$	8,747			7.0	%	$	4,144			125.9	%
Operating Margin		5.2	%		4.8	%					2.1	%

Wallace Computer Services, Inc. and Subsidiaries
Condensed Consolidated Statement of Operations
(Unaudited)

			For the Three Months Ended
			January 31
(In thousands, except per share amounts)					%						%
			2003		Sales			2002			Sales
Net Sales			$	379,958		100.0	%	$	396,380			100.0	%
Cost and Expenses
	Cost of goods sold			277,271		73.0	%		292,908			73.9	%
	Selling and administrative expenses			58,957		15.5	%		62,347			15.7	%
	Provision for depreciation and amortization			15,273		4.0	%		16,976			4.3	%
	Restructuring charges			—		0.0	%		30,272			7.6	%
		Total costs and expenses		351,501		92.5	%		402,503			101.5	%
Operating income (loss)				28,457		7.5	%		(6,123	)		-1.5	%
	Net interest expense			4,568		1.2	%		5,671			1.5	%
Income (loss) before income taxes				23,889		6.3	%		(11,794	)		-3.0	%
	Provision (benefit) for income taxes			9,078		2.4	%		(4,447	)		-1.1	%
Net income (loss)			$	14,811		3.9	%	$	(7,347	)		-1.9	%
Earnings (Loss) per share
	Basic		$	0.35				$	(0.18	)
	Diluted		$	0.35				$	(0.18	)
Average common shares outstanding
	Basic			41,917					41,098
	Diluted			42,483					41,098

Preliminary

Wallace Computer Services, Inc. and Subsidiaries
Condensed Consolidated Statement of Operations
(Unaudited)

			For the Six Months Ended
			January 31
(In thousands, except per share amounts)					%						%
			2003		Sales			2002			Sales
Net Sales			$	764,888		100.0	%	$	804,813			100.0	%
Cost and Expenses
	Cost of goods sold			555,959		72.7	%		596,266			74.1	%
	Selling and administrative expenses			124,751		16.3	%		122,091			15.2	%
	Provision for depreciation and amortization			30,848		4.0	%		34,751			4.3	%
	Restructuring charges			643		0.1	%		32,832			4.1	%
		Total costs and expenses		712,201		93.1	%		785,940			97.7	%
Operating income				52,687		6.9	%		18,873			2.3	%
	Net interest expense			8,917		1.2	%		11,529			1.4	%
Income before income taxes and cumulative effect of a change in accounting principle				43,770		5.7	%		7,344			0.9	%
	Provision for income taxes			16,633		2.2	%		2,864			0.3	%
Income before the cumulative effect of a change in accounting principle — net of tax				27,137		3.5	%		4,480			0.6	%
	Cumulative effect of a change in accounting principle — net of tax			—		—			(144,078	)		-17.9	%
Net income (loss)			$	27,137		3.5	%	$	(139,598	)		-17.3	%
Earnings per share before cumulative effect
	Basic		$	0.65				$	0.11
	Diluted		$	0.64				$	0.11
Cumulative effect per share
	Basic		$	—				$	(3.51	)
	Diluted		$	—				$	(3.47	)
Earnings (Loss) per share
	Basic		$	0.65				$	(3.40	)
	Diluted		$	0.64				$	(3.36	)
Average common shares outstanding
	Basic			41,872					41,103
	Diluted			42,309					41,466

Preliminary

Wallace Computer Services, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(unaudited)

(Dollars in thousands, except par value)

			1/31/2003			7/31/2002
Assets
Current Assets
	Cash and cash equivalents		$	58,777		$	25,178
	Accounts receivable			239,148			254,575
	Less: allowance for doubtful accounts			9,266			9,434
		Net receivables		229,882			245,141
	Inventories			89,799			85,437
	Current and deferred income taxes			24,471			31,363
	Assets held for sale			7,342			12,467
	Advances and prepaid expenses			9,253			5,329
		Total current assets		419,524			404,915
Property, plant and equipment, at cost				830,217			820,933
Less: accumulated depreciation and amortization				522,472			502,595
	Net property, plant and equipment			307,745			318,338
Goodwill, net of amortization				139,101			139,098
Cash surrender value of life insurance				16,304			15,861
Systems development costs,net of accumulated amortization				45,523			49,003
Other assets				3,050			2,779
	Total Assets		$	931,247		$	929,994
Liabilities and Stockholders’ Equity
Current Liabilities
	Current maturities of long-term debt		$	679		$	1,233
	Accounts payable			68,942			78,403
	Accrued salaries, wages, profit sharing and other			86,241			89,840
		Total current liabilities		155,862			169,476
Long-term debt				208,228			209,303
Deferred income taxes				46,264			49,525
Deferred compensation and retirement benefits				42,687			43,130
Other long-term liabilities				9,223			9,431
Stockholders’ equity
	Common stock-$1.00 par value, authorized 100,000,000 shares; issued 45,764,055 shares and outstanding 41,993,771 shares at January 31, 2003 and 41,646,402 shares at July 31, 2002			45,764			45,764
	Additional capital			42,095			41,355
	Deferred compensation			3,152			3,095
	Retained earnings			438,703			426,067
	Treasury stock (at cost)- 3,770,284 shares at January 31, 2003 and 4,117,653 shares at July 31, 2002			(60,050	)		(66,471	)
	Accumulated other comprehensive loss			(681	)		(681	)
		Total stockholders’ equity		468,983			449,129
	Total Liabilities and Stockholders’ Equity		$	931,247		$	929,994

Preliminary

Wallace Computer Services, Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(Unaudited)

		For the Six Months Ended
(Dollars in thousands)		January 31
		2003			2002
Cash flows from operating activities:
Net income (loss)		$	27,137		$	(139,598	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
	Change in accounting principle		—			144,078
	Depreciation		25,264			29,123
	Amortization		5,584			5,628
	Restructuring charges, non-cash		(946	)		21,791
	Debt cost amortization		931			855
	Deferred taxes		(3,261	)		(3,415	)
	Tax benefit-stock option exercises		740			—
	Loss on disposal of property		196			47
Changes in assets and liabilities, net of effects of acquisitions and divestitures
	Accounts receivable		15,259			28,476
	Inventories		(4,362	)		2,873
	Advances and prepaid expenses		(4,191	)		(2,897	)
	Prepaid taxes		6,893			(14,936	)
	Other assets		(2,418	)		1,563
	Accounts payable and other liabilities		(13,284	)		(14,240	)
	Deferred compensation and retirement benefits		(443	)		1,952
Net cash provided by operating activities			53,099			61,300
Cash flows from investing activities:
	Capital expenditures		(15,067	)		(11,603	)
	Proceeds from disposal of property		6,134			3,069
Net cash used in investing activities			(8,933	)		(8,534	)
Cash flows from financing activities:
	Purchase of treasury stock		—			(4,481	)
	Cash dividends paid		(13,805	)		(13,567	)
	Proceeds from issuance of common stock		5,798			7,647
	Net retirements of short-term debt		(554	)		(1,298	)
	Retirement of long-term debt		(2,006	)		(61,067	)
	Proceeds from issuance of long-term debt		—			20,000
Net cash used in financing activities			(10,567	)		(52,766	)
Net changes in cash and cash equivalents			33,599			—
Cash and cash equivalents at beginning of year			25,178			—
Cash and cash equivalents at January 31		$	58,777		$	—