Advo Inc (801622) SEC Filing 10-Q Quarterly report for the period ending Saturday, December 30, 2006

Exhibit 99.1

[ADVO Letterhead]

ADVO Reports First Quarter Results

WINDSOR, CT – February 8, 2007 – ADVO, Inc. (NYSE: AD) today reported that revenue for its first fiscal quarter ended December 30, 2006 was $384.3 million versus $358.2 million in the prior year quarter, and operating income was $2.1 million versus $20.6 million in the prior year quarter. Diluted E.P.S. was $0.02 versus $0.38 in the prior year quarter. The quarter contained non-recurring costs related to the litigation and pending merger with Valassis, Inc. (NYSE: VCI) totaling $19.2 million in operating income and $0.37 in diluted E.P.S. Year-over-year growth in revenue was 7.3%, operating income declined 89.7% “as reported” and grew 3.4% excluding non-recurring costs, and E.P.S. declined 94.7% “as reported” and grew 2.6% excluding non-recurring costs.

During the first fiscal quarter of 2007 the Company’s shared advertising packages grew 3.5% over the prior year period to 1.1 billion. Total shared advertising piece volumes grew 6.2% over the prior year period to 9.2 billion, and pieces per package grew 2.6% to 8.6. Revenue per piece^(a) declined 2.9% to $37.00, driven by declines in zone products (ShopWise^® Wrap and Missing Child Card) revenue, increased remnant insert volume and lighter weight advertising inserts. First quarter zone products revenue declined $5.3 million year-over-year.

Gross margin as a percentage of revenue declined 0.5 percentage points over the prior year period, to 22.4%. Total distribution cost as a percent of revenue increased 2.2 percentage points over the prior year period, to 50.5%, driven by increases in shared advertising packages. Print and paper declined 1.2 percentage points as a percent of revenue versus the prior year period, and all other direct costs netted a 0.5 percentage point improvement. SG&A was up $22.6 million over the prior year quarter, including the $19.2 million of non-recurring costs. Operating income as a percent of revenue for the first fiscal quarter of 2007 was 0.6% (down 5.2 percentage points) on an “as reported” basis, and 5.6% (down 0.2 percentage points) excluding non-recurring costs related to the transaction with Valassis.

The Company’s debt balance at quarter-end was approximately $127 million and book cash was $24.8 million.

The Company will not be holding an analyst call to discuss its first quarter earnings due to the pending merger with Valassis.