1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
October 31, 2000 1-6528
- ------------------------------------- ---------------------------------
For the quarterly period ended Commission file number
WALLACE COMPUTER SERVICES, INC.
-----------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 36-2515832
- ---------------------------------- ------------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2275 Cabot Drive Lisle, Illinois 60532
- ---------------------------------------------------- -------------
(Address of Principal Executive Offices) (ZIP CODE)
(630) 588-5000 40,462,535
- ---------------------------------- ----------------------------------------
(Registrant's Telephone Number, (Number of Common Shares Outstanding
Including Area Code) as of November 30, 2000)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
X Yes No
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Wallace Computer Services, Inc. Page 2
FORM 10-Q
For Quarterly Period Ended October 31, 2000
Part I Financial Information
Item 1. Financial Statements
The information furnished herein reflects all adjustments which are, in
the opinion of the management, necessary to a fair statement of the
results of operations and financial position for the three months ended
October 31, 2000, subject to year-end audit by independent public
accountants. These adjustments are of a normal, recurring nature.
Wallace Computer Services, Inc. and Subsidiaries
Consolidated Income Statement (Unaudited)
For the Three Months Ended
October 31
----------------------------------------------------
% %
2000 Sales 1999 Sales
----------------------------------------------------
Net Sales $ 407,813,000 100.0 $ 387,616,000 100.0
Cost and Expenses
Cost of goods sold (Note 1) 288,876,000 70.8 265,210,000 68.4
Selling and administrative expenses 63,650,000 15.6 65,318,000 16.9
Provision for depreciation and
amortization 19,371,000 4.7 19,586,000 5.1
Restructuring charges 392,000 0.1 0 0.0
------------- ----- ------------- -----
Total costs and expenses 372,289,000 91.3 350,114,000 90.3
------------- ----- ------------- -----
Operating Income 35,524,000 8.7 37,502,000 9.7
------------- ----- ------------- -----
Interest income (343,000) (0.1) (941,000) (0.2)
Interest expense 8,066,000 2.0 7,478,000 1.9
------------- ----- ------------- -----
Income before Income Taxes 27,801,000 6.8 30,965,000 8.0
Provision for Income Taxes 11,315,000 2.8 12,386,000 3.2
------------- ----- ------------- -----
Net Income 16,486,000 4.0 $ 18,579,000 4.8
============= ===== ============= =====
Basic Earnings per Share $ 0.41 $ 0.44
============= =============
Diluted Earnings per Share $ 0.41 $ 0.44
============= =============
Average Common Shares Outstanding 40,479,000 42,356,000
============= =============
Diluted Common Shares Outstanding 40,541,000 42,556,000
============= =============
Dividends Declared Per Share $ 0.165 $ 0.165
============= =============
The accompanying notes are an integral part of this statement.
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Wallace Computer Services, Inc. and Subsidiaries Page 3
Consolidated Balance Sheet
October 31, 2000 July 31, 2000
(Unaudited) (Audited)
Assets ---------------- ---------------
- ------
Current Assets
Cash and cash equivalents $ 1,486,000 $ 4,505,000
Accounts receivable 308,817,000 300,259,000
Less-allowance for doubtful accounts 6,300,000 5,906,000
-------------- --------------
Net receivables 302,517,000 294,353,000
Inventories (Note 1) 134,384,000 108,133,000
Prepaid taxes 16,017,000 27,732,000
Advances and prepaid expenses 7,062,000 8,110,000
-------------- --------------
Total current assets 461,466,000 442,833,000
-------------- --------------
Property, plant and equipment, at cost 865,094,000 856,827,000
Less-reserves for depreciation and amortization 457,572,000 443,981,000
-------------- --------------
Net property, plant and equipment 407,522,000 412,846,000
-------------- --------------
Intangible assets arising from acquisitions 294,754,000 296,745,000
Cash surrender value of life insurance 25,577,000 36,400,000
System development costs 57,443,000 55,727,000
Other assets 4,367,000 4,758,000
-------------- --------------
Total assets $1,251,129,000 $1,249,309,000
============== ==============
Liabilities and Stockholders' Equity
- ------------------------------------
Current Liabilities
Current portion long-term debt $2,078,000 $2,454,000
Short-term notes payable 12,985,000 12,991,000
Accounts payable 137,837,000 99,368,000
Accrued salaries, wages, profit sharing and other 78,302,000 81,277,000
-------------- --------------
Total current liabilities 231,202,000 196,090,000
-------------- --------------
Long-term debt 348,647,000 389,413,000
Deferred income taxes 69,541,000 69,912,000
Deferred compensation and retirement benefits 38,441,000 36,265,000
Other long-term liabilities 7,964,000 8,092,000
Stockholders' equity
Common stock (Note 2)- issued shares of
45,764,054 at October 31, 2000 and July 31, 2000 45,764,000 45,764,000
Additional capital 38,555,000 38,486,000
Deferred compensation 3,002,000 3,159,000
Retained earnings 568,531,000 558,933,000
Treasury stock (at cost)- 5,505,050 shares at
October 31, 2000 and 5,076,661 shares at
July 31, 2000 (100,518,000) (96,805,000)
-------------- --------------
Total stockholders' equity 555,334,000 549,537,000
-------------- --------------
Total liabilities and stockholders' equity $1,251,129,000 $1,249,309,000
============== ==============
The accompanying notes are an integral part of this statement.
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Wallace Computer Services, Inc. and Subsidiaries Page 4
Consolidated Statement of Cash Flows (Unaudited)
For the Three Months Ended
October 31
--------------------------------
2000 1999
Cash Flows from Operating Activities: ------------- ------------
Net income from operations $ 16,486,000 $ 18,579,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 19,371,000 19,586,000
Restructuring charges 81,000 0
Deferred taxes (371,000) (46,000)
Gain on disposal of property (3,000) (257,000)
Changes in assets and liabilities
Accounts receivable (8,164,000) (13,357,000)
Inventories (26,251,000) (3,570,000)
Advances and prepaid expenses 1,048,000 (435,000)
Prepaid taxes 11,715,000 12,347,000
Other assets 7,465,000 (5,426,000)
Accounts payable and other liabilities 35,430,000 (3,181,000)
Deferred compensation and retirement benefits 2,176,000 537,000
------------ ------------
Net cash provided by operating activities 58,983,000 24,777,000
------------ ------------
Cash Flows from Investing Activities:
Capital expenditures (10,903,000) (19,911,000)
Proceeds from disposal of property 779,000 975,000
------------ ------------
Net cash used in investing activities (10,124,000) (18,936,000)
------------ ------------
Cash Flows from Financing Activities:
Treasury stock transactions (4,137,000) (7,159,000)
Cash dividends paid (6,686,000) (6,787,000)
Proceeds from issuance of common stock 115,000 0
Net (retirements of)/proceeds from short-term debt (381,000) 25,740,000
Retirement of long-term debt (40,789,000) (12,281,000)
Proceeds from issuance of long-term debt 0 0
------------ ------------
Net cash (used in)/provided by financing activities (51,878,000) (487,000)
------------ ------------
Net changes in cash and cash equivalents (3,019,000) 5,354,000
Cash and cash equivalents at beginning of year 4,505,000 8,033,000
------------ ------------
Cash and cash equivalents at October 31 $ 1,486,000 $ 13,387,000
============ ============
Supplemental Disclosure:
Interest paid (net of interest capitalized) $ 11,426,000 $ 8,597,000
Income taxes paid (net of refunds received) 914,000 1,128,000
The accompanying notes are an integral part of this statement.
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Wallace Computer Services, Inc. and Subsidiaries Page 5
Notes to Consolidated Financial Statements
October 31, 2000
(Unaudited)
Note 1 - Inventories
Inventories at October 31, 2000, and July 31, 2000, were as follows:
October 31, 2000 July 31, 2000
---------------- -------------
Raw materials $ 20,056,000 $ 15,913,000
Work in process 41,615,000 22,148,000
Finished products 72,713,000 70,072,000
------------ ------------
$134,384,000 $108,133,000
============ ============
Certain inventories are stated on the last-in, first-out (LIFO) basis
for their labor and material content, and other inventories are stated
on the first-in, first-out (FIFO) basis.
Because the inventory determination under the LIFO method can only be
made at the end of each fiscal year based on the inventory levels and
costs at that time, interim period LIFO determinations must necessarily
be based upon management's estimates of expected year-end inventory
levels and costs.
Note 2 - Stock Options
As of October 31, 2000, options to purchase 3,402,370 shares of common
stock were outstanding and 2,023,234 shares of common stock were
available for future grants under the Company's Stock Incentive and
Employee Stock Purchase Plans.
The Company has authorized 100,000,000 shares of common stock and
issued 45,764,054 as of October 31, 2000. Of these shares, 5,505,050
were held in treasury as of October 31, 2000. The number of shares held
in treasury at July 31, 2000 was 5,076,661.
Note 3 - Segment Reporting
The Company adopted SFAS No. 131 for fiscal year-ended 1999. The
Company operates in two business segments. Each segment offers
distinctive products and services and are managed separately because of
their unique production, distribution, and marketing requirements. The
Company's two reportable segments are Forms and Labels, and Integrated
Graphics.
The principal products and services supplied by the Forms and Labels
Segment include the design, manufacture and sales of both paper based
and electronic business forms, the manufacture of both electronic data
processing (EDP) labels and prime labels, and the manufacture and
distribution of a standard line of office products. The principal
products and services supplied by the Integrated Graphics Segment
include the design and manufacture of high-color, high quality
marketing and promotional materials, and the manufacture of direct
response printing materials.
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Wallace Computer Services, Inc. and Subsidiaries Page 6
Notes to Consolidated Financial Statements
October 31, 2000
(Unaudited)
Note 3 - Segment Reporting (continued)
The Company's accounting policies for the segments are the same as
those described in the Summary of Significant Accounting Policies in
the Company's 2000 Annual Report. Management evaluates segment
performance based on segment profit or loss before interest and income
taxes. Net interest expense and income taxes are not allocated to
segments. Transfers between segments, which are not significant, are
accounted for at standard cost.
Summarized segment data and a reconciliation to the consolidated totals
for the quarters ended October 31, 2000 and 1999 are as follows:
Quarter Ended October 31, 2000 External Restructuring Income before
(Amounts in Thousands) Sales Charge Income Taxes
- -------------------------------------------------------------------------------------------------
Forms and Labels Segment $204,001 $0 $23,738
Integrated Graphics Segment 203,812 92 12,178
- -------------------------------------------------------------------------------------------------
Segment Total 407,813 92 35,916
- -------------------------------------------------------------------------------------------------
Corporate / (Net Interest Expense) 0 0 (7,723)
Restructuring Charge - Corporate 0 300 (392)
- -------------------------------------------------------------------------------------------------
Consolidated $407,813 $392 $27,801
=================================================================================================
Quarter Ended October 31, 1999 External Restructuring Income before
(Amounts in Thousands) Sales Charge Income Taxes
- -------------------------------------------------------------------------------------------------
Forms and Labels Segment $201,665 0 $25,402
Integrated Graphics Segment 185,951 0 12,100
- -------------------------------------------------------------------------------------------------
Segment Total 387,616 0 37,502
- -------------------------------------------------------------------------------------------------
Corporate / (Net Interest Expense) 0 0 (6,537)
Restructuring Charge - Corporate 0 0 0
- -------------------------------------------------------------------------------------------------
Consolidated $387,616 0 $30,965
=================================================================================================
There are no material changes in Segment Assets from Fiscal Year-End 2000.
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Wallace Computer Services, Inc. and Subsidiaries Page 7
Notes to Consolidated Financial Statements
October 31, 2000
(Unaudited)
Note 4 - Accounting for Derivative Instruments and Hedging Activities
Effective August 1, 2000, the Company adopted SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities", as amended by SFAS
No. 137 and SFAS No. 138. This standard requires that an entity
recognize derivatives as either assets or liabilities on its balance
sheet and measure those instruments at fair value. The Company had no
derivatives outstanding as of July 31, 2000 and thus, no transition
adjustment was required as a result of the adoption of SFAS No. 133.
Additionally, the Company had no derivative instruments, or embedded
derivatives as defined by SFAS No. 133, outstanding as of October 31,
2000.
Subsequent to October 31, 2000, the Company entered into interest rate
swap agreements which effectively convert $75 million of LIBOR floating
rate debt under the revolving Credit Facility ("Credit Facility") to
fixed rate debt. The purpose for entering into the swap agreements is
to better match the Company's assets and liabilities and reduce its
exposure to interest rate risk. The interest rate swap agreements have
a term that is one year or less from the date of inception. These swaps
will be considered hedging transactions and will be accounted for in
accordance with SFAS 133 beginning in the second quarter of fiscal
2001.
Note 5 - Restructuring and Other Charges
In February 2000, the Company announced a plan to restructure its
operations, which resulted in one-time pre-tax expense totaling $41.6
million for fiscal 2000. In the first quarter of fiscal 2001,
additional restructuring costs of $0.4 million were incurred primarily
related to ongoing cash charges related to plant closing activities and
restructuring administrative costs that could previously not be accrued
for in accordance with EITF 94-3. These costs are presented separately
as a component of income from operations in the Statement of
Operations.
The restructuring was undertaken in fiscal 2000 as the Company was
experiencing continued softness in the high-quality color marketing and
promotional printing market as well as issues relating to the
integration of the Graphic acquisition. Management reviewed its
operations and developed action plans relating to both segments that
dealt with under-performing facilities, underutilized assets,
rationalization of certain product lines and a reduction in management
positions at the corporate office. The Company's plan was approved,
committed to, and for the most part, executed in the third quarter of
fiscal 2000 with only minor charges incurred subsequent to that time.
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Wallace Computer Services, Inc. and Subsidiaries Page 8
Notes to Consolidated Financial Statements
October 31, 2000
(Unaudited)
Note 5 - Restructuring and Other Charges (continued)
The following table summarizes the activity in the restructuring
reserve during fiscal 2000 and the first quarter of fiscal 2001:
(Amounts in Thousands)
- ---------------------------------------------------------------------------------------------------------------------
Employee Termination Asset Write downs Other Cash Total
Benefits (non-cash) Charges Restructuring
- ---------------------------------------------------------------------------------------------------------------------
Restructuring Provision $ 6,350 $ 30,896 $ 1,650 $ 38,896
- ---------------------------------------------------------------------------------------------------------------------
Additional restructuring charges 291 639 1,725 2,655
Adjustments to Reserves - - - -
Cash Payments (4,562) - (2,245) (6,807)
Non-cash items - (31,535) - (31,535)
- ---------------------------------------------------------------------------------------------------------------------
Reserve balance July 31, 2000 $ 2,079 $ - $ 1,130 $ 3,209
- ---------------------------------------------------------------------------------------------------------------------
Additional restructuring charges - 81 311 392
Cash Payments (949) - (875) (1,824)
Non-cash items - (81) - (81)
- ---------------------------------------------------------------------------------------------------------------------
Reserve balance October 31, 2000 $ 1,130 $ - $ 566 $ 1,696
- ---------------------------------------------------------------------------------------------------------------------
The plan resulted in four plant closings, and resizing and
consolidation of other facilities. Exit costs are primarily comprised
of tangible and intangible asset write downs related to assets to be
disposed of and the sale of certain facilities, and severance and
severance-related costs. Under the plan, the Company terminated 445
employees, 388 of which are from plant locations and 57 from the
corporate headquarters.
Due to the changes described above, management performed a review of
its existing property and equipment, to determine impairment as
described in Statement of Financial Accounting Standards No. 121 (SFAS
121), "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of." Based on its evaluation,
management determined that significant impairment in goodwill and
long-lived assets associated with plants that were closed occurred
related to both segments. Certain assets that had no long-term
strategic value were considered held for disposal and either written
off or written down to estimated fair market value if the asset was
able to be sold. The amount of non-cash write offs related to impaired
assets is $20.5 million. The amount of allocated goodwill written off
related to plants acquired in the Graphics acquisition was $11.1
million.
The initiatives associated with this restructuring are substantially
complete as of October 31, 2000. The anticipated additional charges
related to this restructuring should continue to be minimal.
Note 6 - Income Taxes
It is expected that the annual effective tax rate for fiscal 2001 will
be 40.7%. The annual effective tax rate for fiscal 2000 was 54.5% due
primarily to the non-deductibility of certain restructuring charges.
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Wallace Computer Services, Inc. and Subsidiaries Page 9
Notes to Consolidated Financial Statements
October 31, 2000
(Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
For the three month period ended October 31, 2000, net sales increased
5.2% to $407.8 million from the quarter ended October 31, 1999. The
impact of acquisitions, divestitures, and plant closings on sales in
the quarter was not material to the results. The Company estimates that
unit growth is positive, with increasing material prices being
partially offset by pricing pressures brought on by competitive
conditions.
Roughly 30% of sales are sold to customers under a written contract
with the Company, which is down slightly from the first quarter a year
ago. Increased sales in the Office Products and Label divisions, which
are largely transactional (non-contractual) have helped transactional
business to increase at a faster rate than contract business. The
Company has also hired experienced sales representatives to continue to
capitalize on local transactional business in the Integrated Graphics
Segment. The combination of higher transactional sales and increased
contract sales is important in providing stability to the Company's
profitability and utilization rates. A significant portion of contract
sales are sales to customers managed by the W.I.N. system.
Net income for the first quarter decreased 11.3% to $16.5 million or 41
cents per share, from $18.6 million or 44 cents per share in the same
quarter a year ago.
The first quarter ended October 31, 2000 includes a $0.4 million pretax
charge for ongoing costs of a restructuring announced in the third
quarter ended April 30, 2000. The Company implemented the restructuring
program because of continued softness in the high-quality color
marketing and promotional printing market, along with issues relating
to the integration of the Graphic Industries acquisition. Management
reviewed its operations and developed action plans relating to both
segments that dealt with under-performing facilities, underutilized
assets, and rationalization of certain product lines. This charge,
which occurred primarily in fiscal 2000, includes the write-off of
goodwill associated with plants that were closed, the write-off of
abandoned software, the write-down to net realizable value of property
and equipment sold and severance and outplacement costs. The additional
restructuring charges incurred in the first quarter of fiscal 2001
relate primarily to ongoing cash charges related to plant closing
activities and restructuring administrative costs. Future charges
related to this restructuring should be minimal.
Cost of sales for the quarter was 70.8% of sales as compared to 68.4%
in the first quarter of last year. The LIFO charge in the first quarter
of both years was relatively consistent.
Year over year, the Forms and Labels segment's sales increased 1.2% to
$204.0 million, with operating income of $23.7 million and operating
margin of 11.6% versus operating income of $25.4 million and an
operating margin of 12.6% in the first quarter of last year.
Competitive market conditions have continued to put pressure on
operating margins in this segment. Since the third quarter of last
year, margins have improved sequentially, as the effects of cost
cutting measures initiated with the restructuring announced in that
quarter have taken effect.
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Wallace Computer Services, Inc. and Subsidiaries Page 10
Notes to Consolidated Financial Statements
October 31, 2000
(Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
The Integrated Graphics' segment sales increased 9.6% to $203.8
million, with operating income of $12.2 million and operating margin of
6.0% versus operating income of $12.1 million and an operating margin
of 6.5% in the first quarter of last year. The decrease in operating
margin can be attributed to two factors. Ongoing competitive pressures,
particularly in the northeastern United States, have caused margins to
decline. Also affecting margins was the fact that some of the sales
growth contained outsourced production with a higher material content
which, in this case, yielded lower than typical margins.
Selling and administration expenses for the quarter were 15.6% versus
16.9% last year. The restructuring charge in the third quarter of last
fiscal year, along with other cost reduction opportunities have helped
to decrease both selling and administrative expenses to the current
level as a percent of sales. Fourth quarter expenses as a percent of
sales were in the same range at 15.4%.
Depreciation and amortization for the quarter was $19.4 million or 4.7%
of sales versus $19.6 million or 5.1% of sales in the first quarter a
year ago. Depreciation expense has decreased as many underperforming
assets were disposed of and charged off in the restructuring.
Amortization expense is up over 6%, due primarily to ongoing
enhancements to the Company's order entry, customer service, and
inventory management system.
Interest expense for the quarter was $8.1 million, up from $7.5 million
last year. The majority of the increase in interest expense can be
attributed to increased interest rates. Interest income for the quarter
decreased $0.6 million from the first quarter of last year. The
decrease can be attributed to the surrender of several life insurance
policies, the proceeds of which were used to pay down debt.
Liquidity and Capital Resources
Working capital decreased by $16.5 million from July 31, 2000.
Increases in inventory were more than offset by increases in accounts
payable. The increase in inventory is temporary as multiple significant
jobs in the Integrated Graphics segment were in process at the end of
the quarter. The current ratio at October 31, 2000 was 2.0 to 1.
Current inventory levels are believed to be in-line with the inventory
levels necessary to satisfy customer demand. The Company anticipates
having adequate sources of supply of raw materials to meet future
business requirements.
Of the outstanding debt as of October 31, 2000, $140.0 million has been
borrowed under a five-year Credit Agreement ("Credit Facility"), which
provides for a maximum aggregate principal amount available to be
borrowed of $400 million. The borrowings under the Credit Facility are
classified as long-term debt as of October 31, 2000 since the Company
has the intent and ability to carry that debt long-term. The Company
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Wallace Computer Services, Inc. and Subsidiaries Page 11
Notes to Consolidated Financial Statements
October 31, 2000
(Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
has $200 million of Senior Term Notes with institutional investors with
a book value of $184.3 million classified as long-term debt with the
earliest maturity in 2006.
In addition to the credit facility and the senior notes, the Company
has unsecured money market lines of $125 million under which $13.0
million was borrowed at October 31, 2000. The $13.0 million from the
unsecured money market lines is classified as short-term debt.
Of the remaining long-term debt, $15.0 million is made up of industrial
revenue bonds at rates ranging from 4.35% to 4.45%. The balance of
$11.4 million relates to acquisitions.
Total debt currently represents 39.6% of total capitalization. The
maximum amount as authorized by the Board of Directors for total
borrowings is limited to $600 million.
Capital expenditures for the quarter totaled $10.9 million. For the
full fiscal year, capital expenditures are expected to be roughly $40
million, which are expected to be financed through internally generated
funds and by borrowing against our Credit Facility.
Corporate owned life insurance policies totaling $11.3 million were
surrendered in the current quarter, with the cash proceeds used to
reduce debt.
Stockholders' equity increased 1.1% to $555.3 million at October 31,
2000.
Common Stock
On September 8, 1999, the Board of Directors increased the annualized
dividend rate to $0.66 per share, a 3.1% increase from fiscal 1999. On
September 13, 2000, the Board of Directors maintained the annualized
dividend rate of $0.66 per share.
During the first quarter of fiscal 2001, the Company purchased 441,000
shares of Wallace common stock. Total repurchases through October 31,
2000 against the $100 million authorized by the Board in June 1997 have
been $95.5 million. On January 25, 2000 the Board of Directors approved
an additional $100 million share repurchase authorization. The Company
intends to repurchase shares in the near-term only to the extent
necessary to offset the dilutive effects of shares issued pursuant to
employee benefit plans.
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Wallace Computer Services, Inc. and Subsidiaries Page 12
Notes to Consolidated Financial Statements
October 31, 2000
(Unaudited)
Part II Other Information
Items 1 through 3 None
Item 4 Submission of Matters to a Vote of Security Holders
The Company held its annual meeting of stockholders on November 29, 2000. The
results of the three proposals put to a shareholder vote are as follows:
1) Election of directors for the class of directors
For Withheld
---------- --------
John C. Pope 31,772,256 903,437
William J. Devers, Jr. 31,715,222 960,471
2) Ratification of the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year 2001
For Against Abstain
---------- ------- -------
32,545,595 88,155 41,943
3) Approval of an amendment to the 1997 Stock Incentive Plan to increase the
number of shares of Common Stock reserved for issuance thereunder
For Against Abstain
---------- --------- -------
29,638,653 2,591,261 445,779
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Wallace Computer Services, Inc. and Subsidiaries Page 13
Notes to Consolidated Financial Statements
October 31, 2000
(Unaudited)
Item 5 Other Information
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: Certain statements in this filing and elsewhere (such as in other filings
by the Company with the Securities and Exchange Commission, press releases,
presentations by the Company or its management, and oral statements) may
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements, other than statements
of historical facts, that address activities, events, or developments that the
Company expects or anticipates may occur in the future, including such things as
future capital expenditures (including the amount and nature thereof), business
strategy and measures to implement strategy, competitive strengths, goals,
expansion and growth of the Company's and its subsidiaries' business and
operations, plans, references to future success and other such matters are
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, general
economic, market or business conditions, changes in laws or regulations; the
opportunities (or lack thereof) that may be presented to and pursued by the
Company and its subsidiaries; successful integration of acquisitions; labor
market 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.
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Employment Agreement between the Company and M. David
Jones entered into as of November 27, 2000, filed
herewith.
10.2 Amendment No. 1 to the Wallace Computer Services, Inc.
Amended and Restated Executive Incentive Plan, dated
November 29, 2000, filed herewith.
10.3 Indemnification Agreement with Director between the
Company and M. David Jones in the form previously
filed as part of Exhibit 10 to the Company's Annual
Report on Form 10-K for the fiscal year ended July 31,
1990, and incorporated herein by reference to such
Report.
10.4 Indemnification Agreement with Officer between the
Company and M. David Jones in the form previously
filed as part of Exhibit 10 to the Company's Annual
Report on Form 10-K for the fiscal year ended July 31,
1990, and incorporated herein by reference to such
Report.
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
14
Page 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WALLACE COMPUTER SERVICES, INC.
December 15, 2000 /s/ M. David Jones
--------------------------- ------------------------------------------
Date M. David Jones
Chairman of the Board and
Chief Executive Officer
December 15, 2000 /s/ John J. DeCoster
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Date John J. DeCoster
Vice President - Corporate Controller
(Principal Accounting Officer)