Valassis First Quarter 2001 Sales Up 7.3%

Connective Media(TM) Products Perform Despite Tightening Economy



Apr 26, 2001, 01:00 ET from Valassis

    LIVONIA, Mich., April 26 /PRNewswire/ Valassis (NYSE:   VCI) announced net
 sales of $227.7 million for the first quarter ended March 31, 2001, up 7.3%
 from the year ago quarter. Earnings per share were 60 cents, within the
 company's published range. The 7.7% EPS decrease was due primarily to
 increased costs, as well as planned decreases in free-standing insert direct
 response pages, designed to improve pricing in its direct response client
 base. The company reported that pricing in this segment has begun to improve
 as a result of the strategy.
     Valassis will hold an investor call today, to discuss the first quarter
 results and highlight its customer relationship marketing initiatives, at 11
 a.m. (EST). The call-in number is 800/218-0530. The call will also be
 simulcast on the Valassis website, at www.valassis.com .
 
     FINANCIAL HIGHLIGHTS (in millions, except per share data)
 
                                          Three Months Ended
                                    Mar. 31,2001   Mar. 31, 2000  % change
     Revenues:
     Net Sales                           $227.7         $212.3       +7.3%
     Other Revenues                          .1          26.7*
     Total revenues                      $227.8          239.0       -4.7%
     Earnings before one-time event        32.5           36.7      -11.4%
     EPS before one-time event, diluted     .60            .65       -7.7%
     Net Earnings                          32.5          53.4*      -11.4%
     Net EPS, diluted                       .60           .94*      -36.2%
 
     *NOTE: First quarter 2000 results include the effect of a lawsuit
 settlement
 
     Alan F. Schultz, Chairman, President and CEO said: "Unlike traditional
 media companies, who are experiencing significant revenue reductions, we've
 been able to post healthy first quarter revenue increases. We also project
 earnings improvements in the second half. Overall, I continue to be pleased
 with the performance of our connective media products. "
 
     Mass-Distributed Products - Products which provide mass reach at low cost:
     Free-standing insert revenue was down 3.2%, to $159.0 million for the
 first quarter. Management estimates that the effect of decreasing direct
 response pages, in addition to lower levels of e-commerce client
 participation, resulted in an approximate $10 million revenue shortfall for
 the period versus the year ago. Demand from its core client base of consumer
 package goods marketers, however, remained strong. There were no custom co-ops
 (single client FSI programs) produced in the first quarter 2001, versus one
 produced in the prior year period.
     Schultz commented, "We believe that the long term benefit of protecting
 direct response price integrity far outweighs the short term negative effect
 to revenue and earnings as a result of lessening pages. And, our strategy is
 working, as we've witnessed improved direct response pricing."
     Run-of-Press revenues were also down 6%, to $4.7 million, but are expected
 to maintain revenue levels of $20 - $25 million for the year.
 
     Cluster-Targeted Products -- Products targeted around geographic and
 demographic clusters:
     The company recently combined its former Valassis Impact Promotions and
 Targeted Marketing Services divisions into a single group, led by Executive
 Vice President, Mary Ann Rivers. The move was prompted by the similarities in
 growth and margin structures, product lines and clients, and is expected to
 create internal efficiencies, drive additional client demand, and create a
 smoother growth pattern in the longer term. Revenues for cluster-targeted
 products were $54.6 million for the quarter, up 29.4% from the year ago,
 driven primarily by strong revenues in its sampling/advertising polybag
 programs.
     A chart of 2000 quarterly revenues by former division definitions follows,
 for comparison purposes.
 
                                         Calendar 2000 ($in millions)
     Mass:                        1Q          2Q        3Q       4Q     Total
     FSI                       164.2       160.7     134.5    143.6     603.0
     ROP                         5.0         6.2       4.5     10.0      25.7
     Total                     169.2       166.9     139.0    153.6     628.7
     Cluster-targeted:
     VIP                        33.9        27.9      33.7     40.6     136.1
     Sampling/Advertising        8.3        15.0      15.6     16.6      55.5
     Total                      42.2        42.9      49.3     57.2     191.6
     One-to-One:
     Direct Mail                 0.2         0.2       0.3      0.9       1.6
     PreVision                     -           -       1.5      9.0      10.5
     Promotion Watch             0.7         0.8       0.9      0.6       3.0
     Total                       0.9         1.0       2.7     10.5      15.1
     Other income (interest)     0.2         0.3       0.1      0.6       1.2
     Total                     212.5       211.1     191.1    221.9     836.6
 
     One-to-one Products - Products and services that pinpoint individuals to
 build loyalty to a brand:
     This highly targeted product grouping includes the company's fast-growing,
 technology-based businesses of customer relationship marketing and internet
 promotions. Consolidated revenues include PreVision Marketing and Promotion
 Watch consulting services. Non-consolidated revenues include Valassis
 Relationship Marketing Systems, Save.com , Coupons.com and Independent
 Delivery Services. One-to-one revenues for the first quarter were
 $9.5 million.
 
     Costs and Expenses:
     Both costs and expenses were up during the quarter, due to media and
 printing inefficiencies resulting from fewer FSI direct response pages, and
 the addition of PreVision Marketing employees and sales personnel to SG&A
 expenses. Paper costs have stabilized, and will show more marked improvement
 in the second half of the year.
 
     Share Repurchase/Debt Position:
     During the first quarter, Valassis repurchased 269,700 shares of its
 stock. As of the end of the first quarter, the company had purchased 2,945,400
 shares under its current 5 million share repurchase authorization, and plans
 to continue to allocate approximately 50% of free cash flow for this use going
 forward. The company ended the first quarter with total debt, net of cash, of
 $294.7 million.
 
     Outlook:
     Valassis continues to project 2001 earnings per share to be up 10% - 15%
 over 2000, and projects the year to be back-half loaded, due to the timing of
 client and supplier contracts already in place, and the expected decrease in
 the cost of paper. Management also reaffirmed its former quarterly guidance
 for 2001:
 
                          Quarter            Projected EPS Range
                             1                  $0.59 - $0.65
                             2                  $0.62 - $0.68
                             3                  $0.57 - $0.63
                             4                  $0.60 - $0.66
 
 
     Valassis connects people to brands through our wide range of marketing
 services programs offered to a variety of premier manufacturers and retailers.
 From mass, cluster targeted, to one-to-one communications, Valassis leads the
 industry in providing Connective Media(TM) solutions. The company does
 business with the majority of the nation's top advertisers, and holds the
 leading position in all the markets in which it competes. These include
 newspaper-delivered co-op and specialty inserts, advertising, product
 sampling, direct mail, direct-to-door, on-line promotions, customer
 relationship marketing programs, and consulting services -- all of which build
 relationships with consumers on behalf of a brand. Established in 1970,
 Valassis is headquartered in Livonia, Michigan, with printing and
 manufacturing facilities in Michigan, North Carolina, Kansas, and Mexico,
 providing the company low-cost producer status. The company's innovative
 employee practices have resulted in many awards, including status as Fortune
 Magazine's 26th Best Company to Work for in America. Valassis subsidiaries and
 investments include Valassis Canada, PreVision Marketing(R), LLC, Independent
 Delivery Services, Inc., Save.com LLC, Coupons.com, and Valassis Relationship
 Marketing Systems, LLC. For additional information, visit the company website
 at www.valassis.com .
 
     Certain statements found in this document constitute "forward-looking
 statements" within the meaning of the Private Securities Litigation Reform Act
 of 1995. Such forward-looking statements involve known and unknown risks and
 uncertainties and other factors which may cause the actual results,
 performance or achievements of the Company to be materially different from any
 future results, performance or achievements expressed or implied by such
 forward-looking statements. Such factors include, among others, the following:
 new competitors in any of the Company's businesses; a shift in customer
 preference for different promotional materials, strategies or coupon delivery
 methods; an unforeseen increase in the Company's paper costs; or general
 business and economic conditions. The Company disclaims any intention or
 obligation to update or revise any forward-looking statements, whether as a
 result of new information, future events or otherwise.
 
 
 
                                                             VALASSIS
                                                   Consolidated Balance Sheets
                                                         (in thousands)
 
     Assets                                          Mar. 31,        Dec. 31,
                                                       2001           2000
     Current Assets:
 
       Cash and cash equivalents                       $9,496        $11,140
       Accounts receivable                            114,940        114,554
       Inventories                                     28,642         27,880
       Deferred income taxes                            3,356          3,356
       Other                                            6,017         10,729
 
         Total current assets                         162,451        167,659
 
     Property, plant and equipment, at cost           181,061        179,303
 
       Less accumulated depreciation                 (121,595)      (119,265)
 
       Net property, plant and equipment               59,466         60,038
 
     Intangible assets                                192,893        192,893
 
       Less accumulated amortization                 (120,885)      (120,030)
 
         Net intangible assets                         72,008         72,863
 
     Investments and advances to investees             23,923         18,136
     Deferred income taxes                              3,938          3,938
     Other assets                                       3,817          3,083
 
     Total assets                                    $325,603       $325,717
 
 
 
 
                                                            VALASSIS
                                            Consolidated Balance Sheets, Cont.
                                                         (in thousands)
 
 
     Liabilities and Stockholders' Deficit            Mar. 31,      Dec. 31,
                                                       2001           2000
     Current Liabilities:
 
     Accounts payable and accruals                   $ 96,580      $ 121,002
     Progress billings                                 52,445         49,029
     Income taxes payable                              18,011          1,019
 
       Total current liabilities                      167,036        171,050
 
     Long-term debt                                   304,199        325,490
 
     Other non-current liabilities                        480          1,681
 
     Stockholders' deficit:
 
       Common stock                                       630            629
       Additional paid-in capital                      86,737         85,032
       Retained earnings                              106,421         73,963
       Treasury stock                                (339,305)      (331,668)
       Foreign currency translation adjustments          (595)          (460)
 
         Total stockholders' deficit                 (146,112)      (172,504)
 
     Total liabilities and stockholders' deficit     $325,603       $325,717
 
 
 
                                                    VALASSIS
                                     Consolidated Statements of Operations
                                     (in thousands, except per share data)
 
 
                                                   Three Months Ended
                                     Mar. 31,       Mar. 31,            %
                                       2001           2000           Change
 
     Revenue:
     Net sales                      $227,729        $212,288         +7.3%
     Other revenue                        81          26,749*
     Total revenue                   227,810         239,037         -4.7%
 
     Costs and expenses:
     Cost of products sold           145,060         128,838        +12.6%
     Selling, general and
       administrative                 23,598          18,274        +29.1%
     Amortization of
       intangible assets                 856             865         -1.0%
     Interest                          5,713           5,285         +8.1%
     Losses on investments               625             664         -5.9%
     175,852                         153,926          +14.2%
     Earnings before taxes            51,958          85,111        -39.0%
 
     Income taxes                     19,500          31,700        -38.5%
 
     Net earnings                   $ 32,458        $ 53,411*       -39.2%
 
     Net earnings per common share,
       diluted                          $.60            $.94*       -36.2%
 
     Weighted average shares
       outstanding, diluted           54,426          56,677         -4.0%
 
     Supplementary Data
       Amortization                     $856            $865
       Depreciation                    2,442           1,923
       Capital Expenditures            1,955           1,692
 
     *NOTE: First quarter 2000 results include the effect of a lawsuit
 settlement
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X66985861
 
 

SOURCE Valassis
    LIVONIA, Mich., April 26 /PRNewswire/ Valassis (NYSE:   VCI) announced net
 sales of $227.7 million for the first quarter ended March 31, 2001, up 7.3%
 from the year ago quarter. Earnings per share were 60 cents, within the
 company's published range. The 7.7% EPS decrease was due primarily to
 increased costs, as well as planned decreases in free-standing insert direct
 response pages, designed to improve pricing in its direct response client
 base. The company reported that pricing in this segment has begun to improve
 as a result of the strategy.
     Valassis will hold an investor call today, to discuss the first quarter
 results and highlight its customer relationship marketing initiatives, at 11
 a.m. (EST). The call-in number is 800/218-0530. The call will also be
 simulcast on the Valassis website, at www.valassis.com .
 
     FINANCIAL HIGHLIGHTS (in millions, except per share data)
 
                                          Three Months Ended
                                    Mar. 31,2001   Mar. 31, 2000  % change
     Revenues:
     Net Sales                           $227.7         $212.3       +7.3%
     Other Revenues                          .1          26.7*
     Total revenues                      $227.8          239.0       -4.7%
     Earnings before one-time event        32.5           36.7      -11.4%
     EPS before one-time event, diluted     .60            .65       -7.7%
     Net Earnings                          32.5          53.4*      -11.4%
     Net EPS, diluted                       .60           .94*      -36.2%
 
     *NOTE: First quarter 2000 results include the effect of a lawsuit
 settlement
 
     Alan F. Schultz, Chairman, President and CEO said: "Unlike traditional
 media companies, who are experiencing significant revenue reductions, we've
 been able to post healthy first quarter revenue increases. We also project
 earnings improvements in the second half. Overall, I continue to be pleased
 with the performance of our connective media products. "
 
     Mass-Distributed Products - Products which provide mass reach at low cost:
     Free-standing insert revenue was down 3.2%, to $159.0 million for the
 first quarter. Management estimates that the effect of decreasing direct
 response pages, in addition to lower levels of e-commerce client
 participation, resulted in an approximate $10 million revenue shortfall for
 the period versus the year ago. Demand from its core client base of consumer
 package goods marketers, however, remained strong. There were no custom co-ops
 (single client FSI programs) produced in the first quarter 2001, versus one
 produced in the prior year period.
     Schultz commented, "We believe that the long term benefit of protecting
 direct response price integrity far outweighs the short term negative effect
 to revenue and earnings as a result of lessening pages. And, our strategy is
 working, as we've witnessed improved direct response pricing."
     Run-of-Press revenues were also down 6%, to $4.7 million, but are expected
 to maintain revenue levels of $20 - $25 million for the year.
 
     Cluster-Targeted Products -- Products targeted around geographic and
 demographic clusters:
     The company recently combined its former Valassis Impact Promotions and
 Targeted Marketing Services divisions into a single group, led by Executive
 Vice President, Mary Ann Rivers. The move was prompted by the similarities in
 growth and margin structures, product lines and clients, and is expected to
 create internal efficiencies, drive additional client demand, and create a
 smoother growth pattern in the longer term. Revenues for cluster-targeted
 products were $54.6 million for the quarter, up 29.4% from the year ago,
 driven primarily by strong revenues in its sampling/advertising polybag
 programs.
     A chart of 2000 quarterly revenues by former division definitions follows,
 for comparison purposes.
 
                                         Calendar 2000 ($in millions)
     Mass:                        1Q          2Q        3Q       4Q     Total
     FSI                       164.2       160.7     134.5    143.6     603.0
     ROP                         5.0         6.2       4.5     10.0      25.7
     Total                     169.2       166.9     139.0    153.6     628.7
     Cluster-targeted:
     VIP                        33.9        27.9      33.7     40.6     136.1
     Sampling/Advertising        8.3        15.0      15.6     16.6      55.5
     Total                      42.2        42.9      49.3     57.2     191.6
     One-to-One:
     Direct Mail                 0.2         0.2       0.3      0.9       1.6
     PreVision                     -           -       1.5      9.0      10.5
     Promotion Watch             0.7         0.8       0.9      0.6       3.0
     Total                       0.9         1.0       2.7     10.5      15.1
     Other income (interest)     0.2         0.3       0.1      0.6       1.2
     Total                     212.5       211.1     191.1    221.9     836.6
 
     One-to-one Products - Products and services that pinpoint individuals to
 build loyalty to a brand:
     This highly targeted product grouping includes the company's fast-growing,
 technology-based businesses of customer relationship marketing and internet
 promotions. Consolidated revenues include PreVision Marketing and Promotion
 Watch consulting services. Non-consolidated revenues include Valassis
 Relationship Marketing Systems, Save.com , Coupons.com and Independent
 Delivery Services. One-to-one revenues for the first quarter were
 $9.5 million.
 
     Costs and Expenses:
     Both costs and expenses were up during the quarter, due to media and
 printing inefficiencies resulting from fewer FSI direct response pages, and
 the addition of PreVision Marketing employees and sales personnel to SG&A
 expenses. Paper costs have stabilized, and will show more marked improvement
 in the second half of the year.
 
     Share Repurchase/Debt Position:
     During the first quarter, Valassis repurchased 269,700 shares of its
 stock. As of the end of the first quarter, the company had purchased 2,945,400
 shares under its current 5 million share repurchase authorization, and plans
 to continue to allocate approximately 50% of free cash flow for this use going
 forward. The company ended the first quarter with total debt, net of cash, of
 $294.7 million.
 
     Outlook:
     Valassis continues to project 2001 earnings per share to be up 10% - 15%
 over 2000, and projects the year to be back-half loaded, due to the timing of
 client and supplier contracts already in place, and the expected decrease in
 the cost of paper. Management also reaffirmed its former quarterly guidance
 for 2001:
 
                          Quarter            Projected EPS Range
                             1                  $0.59 - $0.65
                             2                  $0.62 - $0.68
                             3                  $0.57 - $0.63
                             4                  $0.60 - $0.66
 
 
     Valassis connects people to brands through our wide range of marketing
 services programs offered to a variety of premier manufacturers and retailers.
 From mass, cluster targeted, to one-to-one communications, Valassis leads the
 industry in providing Connective Media(TM) solutions. The company does
 business with the majority of the nation's top advertisers, and holds the
 leading position in all the markets in which it competes. These include
 newspaper-delivered co-op and specialty inserts, advertising, product
 sampling, direct mail, direct-to-door, on-line promotions, customer
 relationship marketing programs, and consulting services -- all of which build
 relationships with consumers on behalf of a brand. Established in 1970,
 Valassis is headquartered in Livonia, Michigan, with printing and
 manufacturing facilities in Michigan, North Carolina, Kansas, and Mexico,
 providing the company low-cost producer status. The company's innovative
 employee practices have resulted in many awards, including status as Fortune
 Magazine's 26th Best Company to Work for in America. Valassis subsidiaries and
 investments include Valassis Canada, PreVision Marketing(R), LLC, Independent
 Delivery Services, Inc., Save.com LLC, Coupons.com, and Valassis Relationship
 Marketing Systems, LLC. For additional information, visit the company website
 at www.valassis.com .
 
     Certain statements found in this document constitute "forward-looking
 statements" within the meaning of the Private Securities Litigation Reform Act
 of 1995. Such forward-looking statements involve known and unknown risks and
 uncertainties and other factors which may cause the actual results,
 performance or achievements of the Company to be materially different from any
 future results, performance or achievements expressed or implied by such
 forward-looking statements. Such factors include, among others, the following:
 new competitors in any of the Company's businesses; a shift in customer
 preference for different promotional materials, strategies or coupon delivery
 methods; an unforeseen increase in the Company's paper costs; or general
 business and economic conditions. The Company disclaims any intention or
 obligation to update or revise any forward-looking statements, whether as a
 result of new information, future events or otherwise.
 
 
 
                                                             VALASSIS
                                                   Consolidated Balance Sheets
                                                         (in thousands)
 
     Assets                                          Mar. 31,        Dec. 31,
                                                       2001           2000
     Current Assets:
 
       Cash and cash equivalents                       $9,496        $11,140
       Accounts receivable                            114,940        114,554
       Inventories                                     28,642         27,880
       Deferred income taxes                            3,356          3,356
       Other                                            6,017         10,729
 
         Total current assets                         162,451        167,659
 
     Property, plant and equipment, at cost           181,061        179,303
 
       Less accumulated depreciation                 (121,595)      (119,265)
 
       Net property, plant and equipment               59,466         60,038
 
     Intangible assets                                192,893        192,893
 
       Less accumulated amortization                 (120,885)      (120,030)
 
         Net intangible assets                         72,008         72,863
 
     Investments and advances to investees             23,923         18,136
     Deferred income taxes                              3,938          3,938
     Other assets                                       3,817          3,083
 
     Total assets                                    $325,603       $325,717
 
 
 
 
                                                            VALASSIS
                                            Consolidated Balance Sheets, Cont.
                                                         (in thousands)
 
 
     Liabilities and Stockholders' Deficit            Mar. 31,      Dec. 31,
                                                       2001           2000
     Current Liabilities:
 
     Accounts payable and accruals                   $ 96,580      $ 121,002
     Progress billings                                 52,445         49,029
     Income taxes payable                              18,011          1,019
 
       Total current liabilities                      167,036        171,050
 
     Long-term debt                                   304,199        325,490
 
     Other non-current liabilities                        480          1,681
 
     Stockholders' deficit:
 
       Common stock                                       630            629
       Additional paid-in capital                      86,737         85,032
       Retained earnings                              106,421         73,963
       Treasury stock                                (339,305)      (331,668)
       Foreign currency translation adjustments          (595)          (460)
 
         Total stockholders' deficit                 (146,112)      (172,504)
 
     Total liabilities and stockholders' deficit     $325,603       $325,717
 
 
 
                                                    VALASSIS
                                     Consolidated Statements of Operations
                                     (in thousands, except per share data)
 
 
                                                   Three Months Ended
                                     Mar. 31,       Mar. 31,            %
                                       2001           2000           Change
 
     Revenue:
     Net sales                      $227,729        $212,288         +7.3%
     Other revenue                        81          26,749*
     Total revenue                   227,810         239,037         -4.7%
 
     Costs and expenses:
     Cost of products sold           145,060         128,838        +12.6%
     Selling, general and
       administrative                 23,598          18,274        +29.1%
     Amortization of
       intangible assets                 856             865         -1.0%
     Interest                          5,713           5,285         +8.1%
     Losses on investments               625             664         -5.9%
     175,852                         153,926          +14.2%
     Earnings before taxes            51,958          85,111        -39.0%
 
     Income taxes                     19,500          31,700        -38.5%
 
     Net earnings                   $ 32,458        $ 53,411*       -39.2%
 
     Net earnings per common share,
       diluted                          $.60            $.94*       -36.2%
 
     Weighted average shares
       outstanding, diluted           54,426          56,677         -4.0%
 
     Supplementary Data
       Amortization                     $856            $865
       Depreciation                    2,442           1,923
       Capital Expenditures            1,955           1,692
 
     *NOTE: First quarter 2000 results include the effect of a lawsuit
 settlement
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X66985861
 
 SOURCE  Valassis