Exhibit 99.1
FOR IMMEDIATE RELEASE
VALASSIS EARNS $26 MILLION IN THE FIRST QUARTER
Meets Published Earnings Range
Livonia, MI, April 28, 2003: Valassis, (NYSE: VCI), the leading company in
marketing services and Connective Media(TM), announced results for the first
quarter ended March 31, 2003 in line with its published guidance. The company
reported quarterly revenues of $205.0 million, up slightly from the first
quarter of 2002. First-quarter net earnings were $26.0 million, or $0.50 in
earnings per share (EPS), within the company's first-quarter EPS range of $0.48
to $0.54.
"While we continue to execute our plan to regain co-op free-standing insert
(FSI) market share, competitive pricing pressure for the co-op FSI has
intensified," said Alan F. Schultz, Chairman, President and CEO. "We are pleased
with the unit growth in all of our lines of business and we continue to make
real progress toward providing integrated solutions for our customers. We are
also successfully implementing our integration plan for NCH Marketing Services,
and all of our acquisition expectations are being met."
Valassis will hold an investor call today to discuss the first-quarter results
and outlook at 11:00 a.m. (EDT). The call-in number is (800) 218-0530. The call
will also simulcast on the company's website, at www.valassis.com, and be
replayed through May 12, at (800) 405-2236, pass code 515287.
FINANCIAL HIGHLIGHTS (in millions, except per share data)
- ------------------------------------------------------------------------
March 31, March 31, %
2003 2002 Change
- ------------------------------------------------------------------------
Total Revenues $205.0 $203.8 +0.6%
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Net Earnings $26.0 $32.6 -20.1%
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Net EPS, diluted $0.50 $0.60 -16.5%
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Mass Marketing Products - Products that provide mass reach at low cost:
Free-standing insert (FSI) revenue was down 13.2% for the first quarter to
$127.7 million, due to the reduction in market share and price. Management noted
that unit growth in the co-op FSI industry continued to be strong. Run of press
(ROP) revenue, generated from the brokering of advertising space on behalf of
newspapers, was down 12.6% for the quarter to $7.6 million. Management reaffirms
their previous 2003 ROP guidance of annual revenue growth of 10% to 15%.
Cluster Targeted Products - Products targeted around geographic and demographic
clusters: Cluster targeted product revenues were up 21.2%, versus the first
quarter of 2002, to $45.8 million. Solo insert revenues continue to grow due to
an expanding customer base. Polybag sampling and advertising also performed
well, due to a slight rebound of customer new product introductions and
advertising spending, in addition to a growing customer base.
1 to 1 Products - Products and services that pinpoint individuals to build
loyalty to a brand: The 1 to 1 product group is comprised of PreVision
Marketing, a customer relationship marketing (CRM) agency; Valassis Relationship
Marketing Systems (VRMS), promotions based on grocery frequent shopper card
data; and direct mail database marketing programs. 1 to 1 revenues increased to
$10.5 million, a 36.4% increase over the first quarter of 2002. This growth is
attributed to positive results in the direct mail category and the consolidation
of VRMS starting in July of 2002. During the first quarter, the company
increased its ownership of VRMS to 100%.
International & Services - Marketing services and products available
internationally: International & Services, a new product group, is comprised of
NCH Marketing Services (NCH), a wholly-owned subsidiary
VCI 1Q03 Earnings
Page 2
purchased by Valassis on February 13, 2003, providing promotion information
products, marketing services and coupon clearing; Valassis Canada, previously
included in mass marketing FSI figures; and Promotion Watch, providing promotion
security services, previously included in 1 to 1 product figures. International
& Services revenues were $13.5 million for the first quarter, up from $2.4
million for the first quarter of 2002. A consolidating balance sheet for NCH has
been included as part of this release.
Costs and Expenses
FSI costs (on a CPM basis) were down for the quarter due to decreases in paper
costs. Interest expense remains stable at $3.3 million for the quarter. SG&A
expenses were up 23.0%, to $27.3 million, due primarily to the consolidation of
NCH and VRMS.
Share Repurchase/Debt Reduction
The Valassis Board of Directors reaffirmed its long-term commitment to
repurchase shares of up to 75% of the company's free cash flow. Due to the
purchase of NCH, share repurchase was at a minimum during the first quarter. The
company's debt position, net of cash, was $190.3 million at quarter-end. The
company ended the quarter with $67.9 million in cash.
Outlook
2003 guidance remains as previously announced. Management provided previous
guidance that EPS is expected to be down 5% to 15% for 2003. Management provided
the following quarterly projections in its Fourth Quarter 2002 release on
February 20, 2003:
Quarter Projected EPS Range Actual Results
1 $0.48 - 0.54 $0.50
2 $0.55 - 0.61
3 $0.50 - 0.56
4 $0.54 - 0.60
About Valassis
Valassis offers a wide range of marketing services to consumer packaged goods
manufacturers, retailers, technology companies and other customers with
operations in the United States, Europe, Mexico and Canada. Valassis' Connective
Media(TM) portfolio includes: newspaper advertising & inserts, sampling, direct
mail, 1 to 1 marketing programs, coupon clearing and consulting, and analytic
services. Valassis has been listed as one of Fortune magazine's "Best Companies
to Work for in America" for six consecutive years. Valassis subsidiaries and
investments include Valassis Canada, PreVision Marketing(R), LLC, Coupons, Inc.,
Promotion Watch, Valassis Relationship Marketing Systems, LLC and NCH Marketing
Services, Inc. For additional information, visit the company website at
http://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:
price competition from the Company's existing competitors; 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; economic disruptions caused by terrorist
activity, armed conflict or changes in general economic conditions; or changes
which affect the businesses of our customers and lead to reduced sales promotion
spending. 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.
Tables to follow...
VCI 1Q03 Earnings
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VALASSIS COMMUNICATIONS, INC.
Consolidated Balance Sheets
(in thousands)
Assets Mar. 31, Dec. 31,
2003 2002
--------- --------
Current assets:
Cash and cash equivalents $ 67,906 $ 97,156
Accounts receivable 176,773 114,248
Inventories 22,342 21,049
Deferred income taxes 5,005 2,223
Other 13,638 7,300
--------- --------
Total current assets
285,664 241,976
Property, plant and equipment, at cost 218,328 188,622
Less accumulated depreciation (129,834) (121,883)
--------- --------
Net property, plant and equipment 88,494 66,739
Intangible assets 201,548 136,319
Less accumulated amortization (73,672) (73,619)
--------- --------
Net intangible assets 127,876 62,700
Equity investments and advances to investees 3,781 3,781
Deferred income taxes 9,733 8,062
Other assets 4,870 2,821
--------- --------
Total assets $ 520,418 $386,079
========= ========
More tables to follow . . .
VCI 1Q03 Earnings
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VALASSIS COMMUNICATIONS, INC.
Consolidated Balance Sheets, Continued
(in thousands)
Liabilities and Stockholders' Deficit
Mar. 31, Dec. 31,
2003 2002
--------- ----------
Current liabilities:
Accounts payable and accruals $204,237 $128,073
progress billings 41,951 33,721
Income taxes payable 12,530 -
--------- ----------
Total current liabilities 258,718 161,794
Long-term debt 258,213 257,280
Other liabilities 8,019 292
Stockholders' deficit:
Common stock 631 630
Additional paid-in capital 34,369 33,869
Retained earnings 313,101 287,076
Treasury stock (353,762) (354,355)
Accumulated other comprehensive gain/(loss) 1,129 (507)
--------- ----------
Total stockholders' deficit (4,532) (33,287)
--------- ----------
Total liabilities and stockholders' deficit $520,418 $386,079
========= ==========
More tables to follow . . .
VCI 1Q03 Earnings
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VALASSIS COMMUNICATIONS, INC.
Consolidated Statement of Operations
(in thousands, except per share data)
Quarter Ended Quarter Ended
Mar. 31, Mar. 31, %
2003 2002 Change
-------------- ------------ --------
Revenue $ 205,045 $ 203,772 +0.6%
Costs and expenses:
Costs of products sold 134,501 126,816 +6.1%
Selling, general and administrative 27,255 22,229 +22.6%
Loss on investments - 1,031 -100%
-------------- ------------ --------
Total costs and expenses 161,756 150,076 +7.8%
Earnings from operations 43,289 53,696 -19.4%
Other expenses and income:
Interest expense 3,341 3,222 +3.7%
Other (income) and expenses * (902) (1,003) -10.1%
-------------- ------------ --------
Total other expenses and income 2,439 2,219 +9.9%
Earnings before income taxes 40,850 51,477 -20.6%
Income taxes 14,825 18,900 -21.6%
-------------- ------------ --------
Net earnings $ 26,025 $ 32,577 -20.1%
============== ============ ========
Net earnings per common share, diluted $ 0.50 $ 0.60 -16.5%
Weighted average shares outstanding, diluted 52,199 54,527 -4.3%
Supplementary Data
Amortization $ 54 $ 53
Depreciation 3,653 2,544
Capital expenditures 7,249 9,488
* Other income and expenses has been reclassified from total revenues as
previously presented
More tables to follow . . .
VCI 1Q03 Earnings
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VALASSIS COMMUNICATIONS, INC.
Consolidating Balance Sheet
(in thousands)
March 31, 2003
--------------------------------------------------
Valassis NCH Consolidated
Assets
Current assets:
Cash and cash equivalents $ 49,898 $ 18,008 $ 67,906
Accounts receivable 103,567 73,206 176,773
Other 35,776 5,209 40,985
---------- --------- -----------
Total current assets 189,241 96,423 285,664
Property, plant and equipment, net 70,109 18,385 88,494
Intangible assets, net 63,648 64,228 127,876
Investments/Other assets 14,384 * 4,000 18,384
---------- --------- -----------
Total assets $ 337,382 $ 183,036 $ 520,418
========== ========= ===========
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable and accruals $ 90,915 $ 113,322 $ 204,237
Progress billings 41,951 - 41,951
Other 12,530 - 12,530
---------- --------- -----------
Total current liabilities 145,396 113,322 258,718
Long-term debt 258,213 - 258,213
Other liabilities 245 7,774 8,019
Stockholders' deficit (66,472) * 61,940 (4,532)
Total liabilities and stockholders' deficit $ 337,382 $ 183,036 $ 520,418
========== ========= ===========
* Amounts are net of $60.0 million investment in NCH
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