Valassis Reports Healthy Growth in Revenues, Earnings

LIVONIA, MI—Oct. 28, 2010—Valassis today announced financial results for the third quarter ended Sept. 30, 2010. Quarterly revenues were $572.4 million, an increase of 5.2 percent compared to $544.1 million for the prior year quarter. Third-quarter net earnings were $27.0 million, an increase of 95.7 percent compared to $13.8 million in the prior year quarter. Adjusted EBITDA* was $79.8 million, an increase of 24.9 percent compared to $63.9 million for the prior year quarter.

“Our strong results this quarter are consistent with our long-term plan to deliver annual mid-single-digit revenue growth and double-digit EPS growth,” said Alan F. Schultz, Valassis Chairman, President and CEO.

Business Segment Discussion

Shared Mail: Revenues for the third quarter of 2010 were $326.1 million, an increase of 2.1 percent compared to the prior year quarter due primarily to an increase in insert volumes. Segment profit for the quarter was $39.3 million, an increase of 32.8 percent compared to the prior year quarter. The growth in segment profit is due to the increase in revenues, newspaper alliances and package optimization efforts.

Neighborhood Targeted: Revenues for the third quarter of 2010 were $114.0 million, an increase of 23.9 percent compared to the prior year quarter due to an increase in client spend in the energy, telecom and specialty retail verticals. Segment profit for the quarter was $7.2 million, an increase of 84.6 percent compared to the prior year quarter due to increased volume.

Free-standing Inserts (FSI): Revenues for the third quarter of 2010 were $89.2 million, a decrease of 3.7 percent compared to the prior year quarter. The revenue decline is due to two less FSI publications compared to the prior year quarter. Segment profit for the quarter was $4.9 million, an increase of 113.0 percent compared to $2.3 million in the prior year quarter. Segment profit improvement was due primarily to an increase in average pages per book and related cost efficiencies.

International, Digital Media & Services (IDMS): Revenues for the third quarter of 2010 were $43.1 million, an increase of 7.8 percent compared to the prior year quarter. Coupon clearing volume continues to be the primary driver of revenues for this segment. The increase in revenues for the third quarter was due primarily to growth in our In-Store and Digital businesses. Segment profit for the quarter was $4.5 million, a decrease of 34.8 percent compared to the prior year quarter due primarily to reduced volume in our European business and the continued investment in the Digital business.

About Valassis
Valassis is one of the nation's leading media and marketing services companies, offering unparalleled reach and scale to more than 15,000 advertisers. Its RedPlum media portfolio delivers value on a weekly basis to over 100 million shoppers across a multi-media platform - in-home, in-store and in-motion. Through its interactive offering - redplum.com - consumers will find compelling national and local deals online.

Headquartered in Livonia, MI, with approximately 7,000 associates in 28 states and eight countries, Valassis is widely recognized for its associate and corporate citizenship programs, including its America's Looking for Its Missing Children program. Valassis companies include Valassis Direct Mail, Inc., Valassis Canada, Promotion Watch, Valassis Relationship Marketing Systems, LLC and NCH Marketing Services, Inc. For more information, visit www.valassis.com or www.redplum.com.

Source: Financial release.