Valassis Announces Strong Earnings Growth for 2009

Annual Adjusted EBITDA* Increased by $45.9 Million

LIVONIA, Mich., Feb. 22 /PRNewswire-FirstCall/ — Valassis (NYSE: VCI) today announced financial results for the fourth quarter and full-year ended Dec. 31, 2009. We reported quarterly revenue of $605.0 million, a decrease of 3.4% from $626.3 million for the prior year quarter.  Fourth-quarter net earnings was $24.0 million compared to a loss of $222.0 million for the prior year quarter which included a $245.7 million non-cash impairment charge ($223.4 million, net of tax) related to goodwill and other intangible assets.  Diluted earnings per share (EPS) for the quarter was $0.48 compared to a loss of $4.63 for the prior year quarter which included a loss of $4.66 in EPS (net of tax) due to the aforementioned impairment charge. Excluding this impairment charge, earnings for the fourth quarter 2008 would have been $1.4 million or $0.03 per share. For the fourth quarter of 2009, adjusted EBITDA* was $79.9 million, an increase of 27.6% compared to $62.6 million for the prior year quarter.

Full-year 2009 revenue was $2,244.2 million, a decrease of 5.8% from full-year 2008 revenue of $2,381.9 million.  Excluding revenue of $23.7 million from divested and discontinued businesses from the prior year, the revenue decline for full-year 2009 would have been 4.8%. Net earnings for full-year 2009 was $66.8 million, or $1.36 per share, compared to a full-year 2008 net loss of $209.7 million,(1) or $4.37 per share,(1) which included the aforementioned impairment charge.  Excluding this impairment charge, full-year 2008 earnings would have been $13.7 million or $0.29 per share.  Full-year 2009 adjusted EBITDA* was $262.7 million, up 21.2% from full-year 2008 adjusted EBITDA* of $216.8 million.

"Our team did a tremendous job growing earnings in a challenging economic environment," said Alan F. Schultz, Valassis Chairman, President and Chief Executive Officer.  "I have never been more optimistic about the future of our business.  As the combined forces of improved operating leverage and economic conditions come together, I believe we are in a strong position for future growth."

Some additional highlights include:
Cost Management: Fourth-quarter 2009 selling, general and administrative (SG&A) costs were $91.4 million, which includes $2.0 million in legal costs related to the recently settled News America lawsuits compared to prior year quarter SG&A costs of $97.9 million, which included $2.5 million in legal costs.
Capital Expenditures: Capital expenditures for the fourth quarter and full-year 2009 were $5.6 million and $19.1 million, respectively.
Fourth-quarter 2009 and full-year 2009 cash flows from operating activities were $60.1 million and $197.4 million, respectively.  During 2009, we reduced our debt by $191.5 million and our net debt (debt less cash) position was $881.2 million as of Dec. 31, 2009.
During the quarter, we completed three "modified Dutch" auctions in which we repurchased and retired $39.8 million of our outstanding term loan B and delayed draw term loans under our senior secured credit facility at an average discount of 2.6% to par resulting in an after-tax net gain of $0.4 million. For full-year 2009, we repurchased $133.5 million of our term loans through "modified Dutch" auctions at an average discount of 8.5% to par.  Our ability to repurchase our term loans pursuant to "modified Dutch" auctions ended on Dec. 31, 2009.
As announced in December 2009, we entered into an interest rate swap agreement effective Dec. 31, 2010 fixing $300 million of the variable rate debt under our senior secured credit facility at an effective rate of 3.76% per annum (compared to the current effective swap rate of 6.78% which expires on Dec. 31, 2010).  The notional amount of $300 million amortizes by $40 million per quarter through June 30, 2012.
As of Dec. 31, 2009 our debt covenant cushions were 48.7% for our senior secured leverage covenant and 41.1% for our interest coverage covenant. As previously stated, the full $500 million in settlement proceeds will be included in consolidated EBITDA under our senior secured credit facility for the calculation of debt covenants in 2010.

The following information was filed by Valassis Communications Inc (VCI) on Monday, February 22, 2010 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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