UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SERCURITES
----- EXCHANGE ACT OF 1934
For the period ended December 31, 2002
----- TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------- --------
Commission file number 1-8014
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
WALLACE COMMERCIAL PRINT 401(K) RETIREMENT PLAN
-----------------------------------------------
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Moore Wallace Incorporated
C/O Executive Offices
One Canterbury Green
Stamford, CT 06901
Telephone: 203-406-3700
REQUIRED INFORMATION
Wallace Commercial Print 401(k) Retirement Plan (the "Plan") is subject to the
Employee Retirement Income Security Act of 1974 ("ERISA"). Therefore, in lieu of
the requirements of Items 1-3 of Form 11-K, the financial statements of the Plan
for the fiscal years ended December 31, 2002 and 2001 and schedules of the Plan
for the fiscal year ended December 31, 2002, which have been prepared in
accordance with the financial reporting requirements of ERISA, are attached
hereto as Exhibit II and incorporated herein by this reference.
SIGNATURE
The Plan
--------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
WALLACE COMMERCIAL PRINT 401(K) RETIREMENT PLAN
By: Wallace Retirement Plans Committee
/s/ Lewis M. Jacobson June 27, 2003
---------------------------------
Lewis M. Jacobson
Plan Committee Member
2
CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(SUBSECTIONS (a) AND (b) OF SECTION 1350, CHAPTER 63 OF TITLE 18,
UNITED STATES CODE)
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections
(a) and (b) of section 1350, chapter 63 of title 18, United States Code), the
undersigned officer of Moore Wallace Incorporated, a corporation continued under
the laws of Canada, hereby certifies, to such officer's knowledge, that:
The Annual Report on Form 11-K for the Wallace Commercial Print 401(K)
Retirement Plan (the "Plan") for the year ended December 31, 2002 (the "Report")
fully complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934 and information contained in the Report fairly presents, in
all material respects, the financial condition and results of operations of the
Plan.
Dated: June 27, 2003 /s/ Mark A. Angelson
-------------------------------
Name: Mark A. Angelson
Title: Chief Executive Officer
The foregoing certification is being furnished solely pursuant to section 906 of
the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter
63 of title 18, United States Code) and is not being filed as part of the Report
or as a separate disclosure document.
3
CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(SUBSECTIONS (a) AND (b) OF SECTION 1350, CHAPTER 63 OF TITLE 18,
UNITED STATES CODE)
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections
(a) and (b) of section 1350, chapter 63 of title 18, United States Code), the
undersigned officer of Moore Wallace Incorporated, a corporation continued under
the laws of Canada, hereby certifies, to such officer's knowledge, that:
The Annual Report on Form 11-K for the Wallace Commercial Print 401(K)
Retirement Plan (the "Plan") for the year ended December 31, 2002 (the "Report")
fully complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934 and information contained in the Report fairly presents, in
all material respects, the financial condition and results of operations of the
Plan.
Dated: June 27, 2003 /s/ Mark S. Hiltwein
------------------------------
Name: Mark S. Hiltwein
Title: Executive Vice President and
Chief Financial Officer
The foregoing certification is being furnished solely pursuant to section 906 of
the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter
63 of title 18, United States Code) and is not being filed as part of the Report
or as a separate disclosure document.
4
EXHIBIT INDEX
Exhibit I- Consent of Independent Public Accountants Page 6
Exhibit II - Wallace Commercial Print 401(k) Retirement Plan
Financial Statements as of December 31, 2002 and 2001 Page 7-23
5
EXHIBIT I
---------
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation of our
report dated May 23, 2003, included in or made a part of this Form 11-K, into
Moore Wallace Incorporated's previously filed Form S-8 Registration Statement
(105757) for the Wallace Commercial Print 401(k) Retirement Plan.
We have not audited any financial statements of the Wallace Commercial Print
401(k) Retirement Plan subsequent to December 31, 2002 or performed any audit
procedures subsequent to the date of our report.
WASHINGTON, PITTMAN & MCKEEVER, LLC
CHICAGO, ILLINOIS
JUNE 25, 2003
6
EXHIBIT II
----------
WALLACE COMMERCIAL PRINT 401(K) RETIREMENT PLAN
-----------------------------------------------
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
-----------------------------------------------
DECEMBER 31, 2002 AND 2001
--------------------------
TOGETHER WITH AUDITOR'S REPORT
------------------------------
7
WALLACE COMMERCIAL PRINT 401(K) RETIREMENT PLAN
-----------------------------------------------
FINANCIAL STATEMENTS
--------------------
DECEMBER 31, 2002 AND 2001
--------------------------
T A B L E O F C O N T E N T S
---------------------------------
P A G E
-------
INDEPENDENT AUDITOR'S REPORT 9
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS AS OF
DECEMBER 31, 2002 AND 2001 10
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR
BENEFITS FOR THE YEAR ENDED DECEMBER 31, 2002 AND 2001 11
NOTES TO FINANCIAL STATEMENTS 12 - 19
SUPPLEMENTAL INFORMATION:
SCHEDULE G - PART III, SCHEDULE OF NONEXEMPT
TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2002 21
(Schedule I)
SCHEDULE H - ITEM 4i, SCHEDULE OF ASSETS HELD 22
FOR INVESTMENT PURPOSES AS OF DECEMBER 31, 2002
(Schedule II)
SCHEDULE H - ITEM 4j, SCHEDULE OF REPORTABLE
TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2002
(Schedule III) 23
8
INDEPENDENT AUDITOR'S REPORT
----------------------------
To the Retirement Plans Committee of the Wallace Commercial Print 401(k)
Retirement Plan
We have audited the accompanying statements of net assets available for benefits
of the WALLACE COMMERCIAL PRINT 401(K) RETIREMENT PLAN (the "Plan") as of
December 31, 2002 and 2001 and the related statements of changes in net assets
available for benefits for the years then ended. These financial statements and
supplemental schedules are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2002 and 2001, and the changes in its net assets available for
benefits for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes, and reportable transactions as of and for the year
ended December 31, 2002, are presented for purposes of additional analysis and
are not a required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974, as amended. The supplemental schedules have been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, are fairly stated, in all material respects, in relation to the basic
financial statements taken as a whole.
WASHINGTON, PITTMAN & MCKEEVER, LLC
CHICAGO, ILLINOIS
MAY 23, 2003
9
WALLACE COMMERCIAL PRINT 401(K) RETIREMENT PLAN
-----------------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
----------------------------------------------
AS OF DECEMBER 31, 2002 AND 2001
--------------------------------
(EMPLOYER IDENTIFICATION NUMBER 58-1101633, PLAN NUMBER 001)
------------------------------------------------------------
2002 2001
---- ----
ASSETS
Cash $ 70,788 $ -
Investments, at fair value:
Investment in Wallace Defined Contribution
Master Custody Arrangement 39,345,477 42,259,455
Mutual Funds 26,925,384 36,133,079
Participant loans 1,653,991 1,500,150
-------------- ----------------
28,579,375 37,633,229
-------------- ----------------
Total Investments 67,924,852 79,892,684
-------------- ----------------
Receivables:
Company contribution 15,683 33,417
Participant contribution 76,357 119,277
-------------- ----------------
Total Receivables 92,040 152,694
-------------- ----------------
TOTAL ASSETS 68,087,680 80,045,378
-------------- ----------------
LIABILITIES
Due to broker for securities purchased 70,788 -
Excess contributions payable 11,405 -
-------------- ----------------
TOTAL LIABILITIES 82,193 -
-------------- ----------------
NET ASSETS AVAILABLE FOR BENEFITS $ 68,005,487 $ 80,045,378
=============== ================
The accompanying notes are an integral part of these financial statements.
10
WALLACE COMMERCIAL PRINT 401(K) RETIREMENT PLAN
-----------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
---------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 2002 AND 2001
---------------------------------------------
(EMPLOYER IDENTIFICATION NUMBER 58-1101633, PLAN NUMBER 001)
2002 2001
---- ----
ADDITIONS TO NET ASSETS:
Investment Income (loss) -
Interest $ 96,281 $ 110,923
Dividends 205,122 230,290
Net depreciation in fair value of investments
(mutual funds) (6,524,766) (4,448,278)
Net investment income from the Wallace Defined
Contribution Master Custody Arrangement 15,485 955,525
------------- -------------
Total investment loss (6,207,878) (3,151,540)
------------- -------------
Contributions
Participant contributions 5,435,017 6,782,859
Rollover contributions 372,485 685,820
Employer contributions 1,653,279 1,983,252
------------- -------------
Total contributions 7,460,781 9,451,931
------------- -------------
Total additions 1,252,903 6,300,391
------------- -------------
DEDUCTIONS FROM NET ASSETS:
Benefits paid to participants 13,145,113 7,531,303
Administrative expense
147,681 130,044
------------- -------------
Total deductions
13,292,794 7,661,347
------------- -------------
Net decrease (12,039,891) (1,360,956)
NET ASSETS, BEGINNING OF YEAR 80,045,378 81,406,334
------------- --------------
NET ASSETS, END OF YEAR $ 68,005,487 $ 80,045,378
============= ==============
The accompanying notes are an integral part of these financial statements.
11
WALLACE COMMERCIAL PRINT 401(K) RETIREMENT PLAN
-----------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 2002 AND 2001
--------------------------
NOTE 1 - PLAN DESCRIPTION
-------------------------
The following brief description of the Wallace Commercial Print 401(k)
Retirement Plan (the "Plan") of Wallace Integrated Graphics, Inc. (the
"Company") is provided for general information only. The Company is a subsidiary
of Moore Wallace USA, Inc. (formerly known as Wallace Computer Services, Inc.).
Participants should refer to the Plan document for more complete information.
The Plan is a defined contribution plan covering all full-time regular employees
with 31 days of service, except those belonging to a collective bargaining unit
who has not negotiated to be in this Plan. It is subject to the provisions of
the Employment Retirement Income Security Act of 1974 (ERISA), as amended.
Effective January 1, 2001, enrollment in the Plan is automatic for all eligible
employees unless the Company is notified in writing that the employee declines
participation.
CONTRIBUTIONS
-------------
Participants are eligible to make pre-tax contributions of up to a maximum of
15% of covered compensation after 31 days of service. The Company makes matching
contributions of one-half of the first 4% of compensation that a participant
contributes after the first six months of employment. The Company, at its
discretion, can also make annual profit sharing contributions: none were made
for 2002 or 2001. Participants can allocate their voluntary contributions among
six investment funds. Effective January 1, 2002: a provision was added for
401(k) catch up contributions for participants age 50 and older; the
contribution limit for all employees was raised to 85% of covered compensation,
not to exceed $40,000; and participants were able to make after-tax
contributions.
ADMINISTRATION
--------------
The Plan is administered by Mellon HR Solutions (formerly known as Dreyfus
Retirement Services). The custodian is Boston Safe Deposit and Trust Company.
TRUSTEE
-------
Effective December 31, 2002, Mellon Bank, N.A. was appointed successor
Trustee of the Wallace Retirement Plans Master Trust and the Trustee for the
Plan.
PARTICIPANT ACCOUNTS
--------------------
Each participant's account is credited with the participant's contribution and
allocations of (a) the Company's contribution, (b) investment funds earnings or
losses, and (c) forfeitures of terminated participants' nonvested accounts, and
charged with an allocation of administrative expenses. Allocations are based on
participant earnings or account balances, as defined. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's vested account. Allocations of investment return are based on
participant account balances in each fund.
12
WALLACE COMMERCIAL PRINT 401(K) RETIREMENT PLAN
-----------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 2002 AND 2001
--------------------------
NOTE 1 - PLAN DESCRIPTION (CONTINUED)
-------------------------------------
VESTING
-------
Participants are immediately vested in their contributions plus actual earnings
thereon. Vesting in the Company's matching contribution and forfeiture
allocations to their accounts, plus actual earnings thereon, is based on years
of continuous service. Company matching contributions under the 401(k) option
and forfeiture allocations are fully vested in 20% annual increments for the
first five completed years of service.
In addition, if a participant reaches the age of 60, terminates employment due
to total disability, or dies before completing the five years of service, his or
her account becomes 100% vested.
INVESTMENT OPTIONS
------------------
The Company's Retirement Plans Committee, which is appointed by the Board of
Directors of Moore Wallace USA, Inc, (formerly know as Wallace Computer
Services, Inc.), establishes the overall investment objectives of the Plan
assets, selects investment advisors and/or pooled investment vehicles for each
of the funds.
The Plan has six investment funds, including the Moore Wallace Company Stock
Fund. Participants may direct their investments between the following six
options:
STABLE VALUE FUND--This fund provides current income consistent with
yield on short-term government bonds, but with little or no change in
principal value.
BALANCED FUND--This fund combines the opportunity for income and
long-term capital growth, by investing in a diversified portfolio of
both stocks and bonds. The fund is managed by five investment managers,
each having a separate portfolio with differing objectives and styles.
LONG-TERM GROWTH FUND--This fund seeks long-term capital growth, with
income at a level similar to the yield on the S&P 500. It invests
primarily in a diversified portfolio of large cap common stocks.
EQUITY INDEX FUND--This fund seeks to replicate the characteristics and
performance of a core stock market index, the S&P500. The fund may also
use futures or options on the index as an unleveraged alternative to
holding individual securities.
AGGRESSIVE GROWTH FUND--This fund seeks long-term capital appreciation,
with income as a minor consideration. It invests in small and mid-cap
domestic stocks that have risks significantly higher than the broad
stock market, as measured by the S&P 500.
13
WALLACE COMMERCIAL PRINT 401(K) RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 2002 AND 2001
--------------------------
NOTE 1 - PLAN DESCRIPTION (CONTINUED)
-------------------------------------
MOORE WALLACE COMPANY STOCK FUND--Invests primarily in the common stock
of Moore Wallace Incorporated. Effective February 3, 2001, the Moore
Wallace Company Stock Fund is limited to one transfer either in or out,
in any 30-day period.
PARTICIPANT LOANS
-----------------
The minimum amount participants may borrow from their fund accounts is $1,000.
The maximum participants may borrow is the lesser of $50,000 or 50% of their
account balances. Loan terms range from one to five years. The loans are secured
by the balance in the participant's account and bear interest at a rate equal to
the prime rate plus 1%. The interest rate for the loans during 2002 ranged from
a low of 5.25% to a high of 5.75%. Principal and interest are paid ratably
through weekly or semi-monthly payroll deductions.
PAYMENT OF BENEFITS
-------------------
A participant's account becomes distributable upon termination from the Company.
If the termination is due to retirement, total disability or death, the entire
account balance becomes distributable to the participant. For other
terminations, the participant receives his own contributions plus earnings
thereon and the vested portion of the Company contributions and forfeitures plus
earnings thereon.
NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------
BASIS OF ACCOUNTING
-------------------
The financial statements of the Plan are prepared under the accrual method of
accounting in accordance with accounting principles generally accepted in the
United States of America.
NEW ACCOUNTING PRONOUNCEMENTS
-----------------------------
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities," to establish accounting and reporting
standards for derivatives. SFAS No. 133 was subsequently amended by SFAS No. 137
and SFAS No. 138. These new standards require that all derivatives be recognized
at their fair value as either assets or liabilities on the balance sheet and
specify the accounting for changes in fair value depending upon the intended use
of the derivative. The Plan was required to adopt SFAS No. 133, as amended, in
the fiscal year ended December 31, 2001.
The Plan's utilization of derivative instruments for trading or non-trading
purposes is minimal, and the provisions of these statements are not applied
because the impact on the Plan's financial statements is not material.
14
WALLACE COMMERCIAL PRINT 401(K) RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 2002 AND 2001
--------------------------
NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
--------------------------------------------------------------
USE OF ESTIMATES
----------------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities and changes therein, and disclosure of contingent assets and
liabilities. Actual results could differ from those estimates.
RECLASSIFICATION
----------------
Certain accounts in the 2001 financial statements have been reclassified for
comparative purposes to conform with the presentation in the 2002 financial
statements. These reclassifications have no effect on the net assets available
for benefits at December 31, 2001.
INVESTMENT VALUATION AND INCOME RECOGNITION
-------------------------------------------
The Plan's investments, other than guaranteed investment contracts, are carried
at fair market value as determined by the custodian based upon quoted market
prices. Guaranteed investment contracts are stated at contract value as reported
by the respective insurance companies; contract values approximate fair market
values at December 31, 2002 and 2001.
The fair value of the Plan's investment in the Wallace Defined Contribution
Master Custody Arrangement is based on the beginning of year value of the Plan's
interest in the Trust plus actual contributions and investment income less
actual distributions and allocated administrative expenses (Note 5). Quoted
market prices are used to value investments in the Master Trust.
Interest and dividends are recorded on the accrual basis and dividend income is
accrued on the ex dividend date.
Purchases and sales of securities are recorded on a trade-date basis. Realized
gains and losses from securities transactions are reported on the average cost
method.
ADMINISTRATIVE EXPENSES
-----------------------
All expenses directly related to the Plan, such as fees of the custodian and
investment advisors, are paid by the Plan.
PAYMENT OF BENEFITS
-------------------
Benefits are recorded when paid.
15
WALLACE COMMERCIAL PRINT 401(K) RETIREMENT PLAN
-----------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 2002 AND 2001
--------------------------
NOTE 3 - INVESTMENTS
--------------------
The fair value of investments that represent 5% or more of the Plan's net assets
available for Plan benefits at December 31, 2002 and 2001, are as follows:
2002 2001
------------------ --------------------
Mutual Funds:
Dreyfus Apprec FD INC: Long
Term Growth $14,640,358 $19,755,661
Dreyfus Emerging Leaders FD:
Aggressive Growth 7,951,864 10,693,891
Dreyfus/Laurel FDS Inc S&P 500
Stock Index Fund: Equity Index 4,333,162 5,683,527
During 2002 and 2001, the Plan's investments, including investments bought or
sold, as well as held, during the year, depreciated in value by $(6,524,766) and
$(4,448,278), respectively, as follows:
2002 2001
------------------- --------------------
Mutual Funds $(6,524,766) $(4,448,278)
The Plan provides for investments in common stock and mutual funds that, in
general, are exposed to various risks, such as interest rate, credit and overall
market volatility risk. Due to the level of risk associated with certain
investment securities, it is reasonably possible that changes in the values of
investments securities will occur in the near term and that such changes could
affect the amounts reported in the Statements of Net Assets Available for
Benefits.
NOTE 4 - INVESTMENT CONTRACTS
-----------------------------
The Plan invests in fully benefit-responsive investment contracts that are
valued at contract value, which represents the principal balance of the
investment contracts, plus accrued interest at the stated contract rate, less
payments received and contract charges by the insurance company. Under the terms
of the investment contracts, the crediting interest rate is determined
semiannually based on the insurance company's applicable rate schedule. The
aggregate average interest rate for the investment contracts as of December 31,
2002 and 2001 was 5.90.% and 6.34%, respectively. The recorded contract value of
the investment contracts approximates fair market value as of December 31, 2002
and 2001.
16
WALLACE COMMERCIAL PRINT 401(K) RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 2002 AND 2001
--------------------------
NOTE 5 - INTEREST IN WALLACE DEFINED CONTRIBUTION MASTER CUSTODY ARRANGEMENT
----------------------------------------------------------------------------
Certain assets of the Plan are in the Wallace Defined Contribution Master
Custody Arrangement (the "Arrangement") which was established for the investment
of assets of the Plan and another Wallace Computer Services, Inc. sponsored
retirement plan. Each plan has an undivided interest in the Arrangement. The
assets of the Arrangement are held by Boston Safe Deposit and Trust Company (the
"Asset Custodian"). The Plan's interest in the net assets of the Arrangement is
based on the individual plan participants' investment balances.
Investment income is allocated on a daily basis through a valuation performed by
the Asset Custodian. Administrative expenses relating to the Arrangement are
allocated to the individual funds based upon average quarterly balances invested
by each plan. At December 31, 2002 and 2001, the Plan's interest in the net
assets of the Arrangement was approximately 12%.
The Arrangement held the following investments as of December 31, 2002 and 2001:
2002 2001
--------------------- --------------------
Investments at market value-
Wallace Company Stock Fund $ 18,840,919 $ 15,594,845
Stable Value Fund 189,219,775 171,933,099
Balanced Fund 125,314,328 166,036,585
--------------------- --------------------
Total $333,375,022 $ 353,564,529
===================== ====================
Investment income for the Arrangement is as follows for the years ended December 31, 2002 and 2001:
2002 2001
--------------------- --------------------
Net (depreciation) appreciation in fair value of
investments-
Common stock $ (15,212,670) $ (9,221,600)
Fixed income securities- Investment contracts 10,426,293 11,130,987
--------------------- --------------------
Net (depreciation) appreciation (4,786,377) 1,909,387
Interest and dividends 513,911 580,284
--------------------- --------------------
Total investment (loss) income $ (4,272,466) $ 2,489,671
===================== ====================
NOTE 6 - DERIVATIVE FINANCIAL INSTRUMENTS
-----------------------------------------
The Plan has limited involvement with derivative financial instruments and does
not use them for trading purposes. The Plan owns shares in a commingled
international equity fund. The mangers of these funds may, from time to time,
use currency futures and forward contracts to manage the fund's currency
position.
17
WALLACE COMMERCIAL PRINT 401(K) RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 2002 AND 2001
--------------------------
NOTE 6 - DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
-----------------------------------------------------
The Plan also invests in commingled domestic equity funds. The managers of this
fund have the authority to invest in Standards & Poor's 500 futures to create
exposure to equity securities as part of the fund's cash management strategy.
Daily margin settlement for future contracts results in maintaining a zero
market value for the contracts.
NOTE 7 - INCOME TAX STATUS
--------------------------
The Plan obtained a determination letter on July 1, 2002, in which the Internal
Revenue Service stated that the Plan and related trust, as then designed, were
in compliance with the applicable requirements of the Internal Revenue Code
("IRC"). The Plan has been amended since receiving the determination letter.
However, the Plan administrator and the Plan's tax counsel believe that the Plan
is currently designed and being operated in compliance with the applicable
requirements of the IRC. Therefore, no provision for income taxes has been
included in the Plan's financial statements.
NOTE 8 - PLAN TERMINATION
-------------------------
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100% vested in their accounts.
NOTE 9 - SUBSEQUENT EVENTS
--------------------------
On May 15, 2003, at special meeting of stockholders of Wallace Computer
Services, Inc., ("Wallace") a merger was approved between Wallace, Moore
Corporation Limited ("Moore"), a corporation continued under the laws of Canada,
Moore Holdings U.S.A. Inc., a Delaware corporation and a wholly owned subsidiary
of Moore, and M-W Acquisition, Inc., a Delaware corporation and a wholly owned
subsidiary of Moore.
In the merger, M-W Acquisition merged with and into Wallace. Under the merger
agreement, Wallace stockholders had the right to elect to receive for each
Wallace common share, subject to proration, either:
o A number of common shares of Moore equal to 1.05 plus the quotient
of 14.40 divided by the average of the high and low sales prices
per share of Moore on the New York Stock Exchange Composite Tape
on the last trading day before the closing day of the merger; or
o Cash in an amount equal to $14.40 plus the product of 1.05
multiplied by the average of the high and low sales prices per
share of Moore on the New York Stock Exchange Composite Tape on
the last trading day before the closing of the merger.
Immediately after the effective time of the merger, Moore caused the surviving
corporation in the merger to merge, in a second merger, with and into a newly
created limited liability company wholly owned by Moore Holdings U.S.A. Inc., a
wholly owned subsidiary of Moore.
18
WALLACE COMMERCIAL PRINT 401(K) RETIREMENT PLAN
-----------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 2002 AND 2001
--------------------------
NOTE 9 - SUBSEQUENT EVENTS (CONTINUED)
--------------------------------------
Wallace Defined Contribution Master Custody Arrangement (see Note 5) held
858,786 shares of Wallace company stock at December 31, 2002. The Retirement
Plan Committee determined to elect the stock only option because the stock fund
will be continued after the merger.
Effective May 15, 2003, the Plan was amended to provide 100% vesting in Employer
Contributions, forfeiture allocations and earnings thereon for participants who
terminate employment with the Company on or after May 15, 2003.
19
SUPPLEMENTAL INFORMATION
------------------------
20
WALLACE COMMERCIAL PRINT 401(K) RETIREMENT PLAN
-----------------------------------------------
SCHEDULE G, PART III--SCHEDULE OF NONEXEMPT TRANSACTIONS
--------------------------------------------------------
AS OF DECEMBER 31, 2002
-----------------------
EMPLOYER IDENTIFICATION NUMBER: 58-1101633, PLAN NUMBER: 001
SCHEDULE I
----------
Description of Transaction,
Relationship of Plan, Including Maturity Date, Rate Interest
Identity of Employer or Other of Interest, Collateral, Par or Amount Incurred
Party Involved Party In Interest Maturity Value Loaned on Loan
---------------------- ----------------------- -------------------------------------- ----------- ---------
Wallace Integrated Plan sponsor Lending of monies from the $ 23,871 (a) $ - (b)
Graphics, Inc. Plan to the Employer ======== =====
(Contributions not remitted
to the Plan in a timely
manner).
NOTES:
(a) This represents total amount of contributions that have been
withheld from employees, but not remitted timely into the trust
by the Plan sponsor. "Timely" is defined as no later than the
15th business day of the months following the month in which the
contributions are withheld.
(b) Total earnings were negative for the periods of the nonexempt
transactions, and as such, no interest was calculated.
21
WALLACE COMMERCIAL PRINT 401(K) RETIREMENT PLAN
-----------------------------------------------
SCHEDULE H, ITEM 4I.--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
---------------------------------------------------------------------
AS OF DECEMBER 31, 2002
-----------------------
EMPLOYER IDENTIFICATION NUMBER: 58-1101633, PLAN NUMBER: 001
SCHEDULE II
-----------
NO. OF SHARES CURRENT
OR UNITS DESCRIPTION OF SECURITY COST VALUE
---------------- ----------------------- ---- -----
MUTUAL FUNDS
* 469,242 units Dreyfus Apprec FD INC - $19,810,218 $ 14,640,358
Long term growth
* 236,785 units Dreyfus/Laurel FDS Inc -- 6,316,114 4,333,162
S&P 500 Stock Index- Equity Index
* 286,450 units Dreyfus Emerging Leaders FD - 9,936,970 7,951,864
Aggressive Growth ----------- ------------
Total Mutual Funds 36,063,302 26,925,384
PARTICIPANT LOANS
1,653,991 Loans -(Interest rates range - 1,653,991
from 5.25% - 5.75%) ----------- ------------
TOTAL ASSETS HELD FOR INVESTMENT PURPOSES $ 36,063,302 $ 28,579,375
============ ============
*A party-in-interest to the Plan
22
WALLACE COMMERCIAL PRINT 401(K) RETIREMENT PLAN
-----------------------------------------------
SCHEDULE H, ITEM 4J.--SCHEDULE OF REPORTABLE TRANSACTIONS
---------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 2002
------------------------------------
EMPLOYER INDENTIFICATION NUMBER: 58-1101633, PLAN NUMBER 001
SCHEDULE III
------------
PURCHASES SALES
----------- ---------------------------------------------------
NO. OF SHARES DESCRIPTION PURCHASE COST OF SELLING NET GAIN
OR UNITS OF SECURITY PRICE ASSETS PRICE (LOSS)
------------------ ----------- ----------- --------- ----------- ------
106,877 Dreyfus Apprec Fd Inc $ - $ 4,590,146 $ 3,797,229 $ (792,917)
23