Valassis Reports Revenue Declines for Fourth Quarter, Full Year

LIVONIA, MI—Feb. 16, 2012—Valassis announced financial results for the fourth quarter and full year ended Dec. 31, 2011:

• Fourth-quarter 2011 revenues were $595.3 million, a decrease of 5.7 percent from $631.2 million in the prior-year quarter. Full-year 2011 revenues were $2.24 billion, a decrease of 4.2 percent from $2.33 billion in full-year 2010. These decreases in revenues were due primarily to the previously announced shortfall in Run-of-Press (ROP) revenues within the Neighborhood Targeted segment and reduced spending by consumer packaged goods (CPG) clients across our various business segments.
• Fourth-quarter 2011 net earnings were $34.3 million, an increase of 38.2 percent from $24.8 million in the prior year quarter. Fourth-quarter 2011 net earnings were negatively impacted by charges in an aggregate amount of $14.0 million ($8.5 million, net of tax), primarily related to the restructuring of certain non-core businesses and the associated costs including write-offs of impaired assets, as well as the early termination of leases and severance costs.
• Full-year 2011 net earnings were $113.4 million and full-year 2010 net earnings were $385.4 million. Adjusted net earnings were $133.5 million, which excludes debt refinancing costs, net of tax, of $11.6 million and the charges described above, net of tax, of $8.5 million. Full-year 2010 adjusted net earnings* were $98.7 million, which excludes debt refinancing costs of $14.7 million, net of tax, and litigation settlement proceeds, net of tax and related payments, of $301.4 million.
• Fourth-quarter 2011 adjusted EBITDA was $91.3 million, an increase of 12 percent from $81.5 million in the prior year quarter. Full-year 2011 adjusted EBITDA was $316.6 million, a decrease of 0.6 percent from $318.6 million in 2010.

“Our fourth quarter adjusted EBITDA of $91.3 million is a single-quarter record for our company, which was driven by exceptional performance of our Shared Mail and NCH businesses. In 2012, we expect these two businesses to continue to generate positive results allowing us to invest in our new initiatives,” said Rob Mason, Valassis President and CEO.

Business Segment Discussion

• Shared Mail: Revenues for the fourth quarter of 2011 were $360.4 million, an increase of 5.4 percent compared to the prior year quarter. Segment profit for the quarter was $55.9 million, an increase of 23.4 percent compared to the prior year quarter. This improvement in segment results was driven primarily by an increase in pieces per package as well as incremental print revenue.

Full-year 2011 revenues were $1,350.8 million, an increase of 3.3 percent compared to full-year 2010. Full-year 2011 segment profit was $191.9 million, an increase of 22.4 percent compared to full-year 2010. Full-year 2011 segment results were driven primarily by an increase in pieces per package and a decrease in SG&A costs.

• Neighborhood Targeted: Revenues for the fourth quarter of 2011 were $118.9 million, a decrease of 20.7 percent compared to the prior year quarter. Segment profit for the quarter was $4.6 million, an increase of 360 percent compared to the prior year quarter, which included a $4.5 million charge to bad debt.

Full-year 2011 revenues were $374.7 million, a decrease of 21.9 percent compared to full-year 2010. Full-year 2011 segment profit was $7.7 million, a decrease of 62.6 percent compared to full-year 2010. Segment results for the full year were negatively impacted by the continued margin pressure in this segment and the previously announced revenue shortfall in ROP.

• Free-standing Inserts (FSI): Revenues for the fourth quarter of 2011 were $64.1 million, a decrease of 25.7 percent compared to the prior year quarter due primarily to the absence of custom co-op business and the decline in industry volume. Segment profit for the quarter was a loss of $0.8 million compared to the prior year quarter profit of $0.3 million.

Full-year 2011 revenues were $316.0 million, a decrease of 14.0 percent compared to the prior year. Segment profit for the full-year 2011 was$14.1 million, a decrease of 43.4 percent compared to the prior year.

Segment results for the quarter and full year were negatively impacted by the aforementioned absence of custom co-op business and industry volume declines.

• International, Digital Media & Services (IDMS): Revenues for the fourth quarter of 2011 were $51.9 million, a decrease of 2.3 percent compared to the prior year quarter.Segment profit for the quarter was $9.3 million a decrease of 3.1 percent compared to the prior year quarter.

Full-year 2011 revenues were $194.5 million, an increase of 8.8 percent compared to the prior year. NCH Marketing Services, Inc., our coupon clearing and analytics business, and our Digital business were the key drivers of growth in this segment. Full-year 2011 segment profit was $24.3 million, an increase of 7.0 percent compared to the prior year.

The improvement in full-year 2011 segment profit results was primarily driven by the positive effect of coupon redemptions on our coupon clearing and analytics business and was partially offset by pressure on the In-Store business resulting from the reduction in consumer packaged goods spend and our continued investment in new businesses.

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 digital offering, including redplum.com and save.com, consumers can 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.

Source: Valassis.