Contact:  Mary Broaddus
Tel 734.591.7375
19975 Victor Parkway, Livonia, MI 48152
Earnings Release


Valassis Announces Results for the Fourth Quarter and Full Year Ended Dec. 31, 2008
Livonia, Mich., Feb. 17, 2009: Valassis (NYSE: VCI)
today announced financial results for the fourth quarter and full-year ended Dec. 31, 2008. We reported quarterly revenue of $626.3 million, down 5.3% from $661.5 million for the prior year quarter due primarily to the impact of the continued uncertainty in the global macroeconomic environment. For the fourth quarter of 2008, adjusted EBITDA* was $62.6 million, down from adjusted EBITDA* of $78.5 million for the prior year quarter.  During the fourth quarter of 2008, we reported a $245.7 million pre-tax, non-cash impairment charge related to goodwill and other intangible assets that resulted in a quarterly net loss of $222.0 million, or $4.63 per share, compared to net earnings of $20.6 million, or $0.43 per share, in the prior year quarter. Without the impairment charge, net earnings for the quarter would have been $1.4 million or $0.03 per share.

Full-year 2008 revenue was $2,381.9 million, up 6.2% from reported full-year 2007 revenue of $2,242.2 million (which excludes revenue for ADVO, Inc. for the period of Jan. 1, 2007 through March 1, 2007).  Full-year 2008 revenue decreased 3.4% compared to pro forma revenue for full-year 2007 of $2,465.7 million. Full-year 2008 adjusted EBITDA* was $216.8 million, as compared to full-year 2007 adjusted EBITDA* of $252.8 million. With the aforementioned impairment charge, full-year 2008 net loss was $207.5 million, or $4.32 per share, as compared to full-year 2007 net earnings of $58.0 million.  Net earnings for the year would have been $15.9 million, or $0.33 per share without this charge.

As the prolonged economic downturn continues to constrict client advertising budgets, we remain focused on what we can control – our strategy, execution and costs,” said Alan F. Schultz, Valassis Chairman, President and Chief Executive Officer.  “A number of our products are well positioned in this recessionary environment, as they deliver value to a growing list of today’s deal-seeking consumers.”

Some additional financial highlights include:
Achieved 2008 Cost Synergies: Total 2008 cost synergies resulting from our acquisition of ADVO, Inc., were $38.4 million compared to our target of $38.0 million.
Reduction of SG&A Costs: Fourth-quarter 2008 SG&A costs were $97.9 million, which includes $2.5 million in legal costs related to the News America lawsuit and $4.2 million in severance costs, compared to the prior year quarter SG&A costs of $107.1 million which included $7.6 million in non-recurring charges.  This 8.6% reduction was due primarily to decreases in incentive-based compensation, discretionary spending and staffing.
Reduction of Capital Expenditures: Capital expenditures for the fourth quarter of 2008 were $5.3 million. Full-year 2008 capital expenditures were $24.7 million, well below our full-year 2008 guidance of $35.0 million.
Liquidity: During 2008 we generated $96.3 million in Cash Flow from Operations and had a net decrease in debt of $108.0 million.  We subsequently paid off and cancelled our 6 5/8% Senior Secured Notes that matured on Jan. 15, 2009.  No other material debt maturities are scheduled until 2014.  We announced on Jan. 26, 2009, that we amended our senior secured credit facility to, among other things, permit us to use up to $125 million to repurchase from tendering lenders our outstanding term loans at prices below par through one or more “modified Dutch” auctions during 2009.  In addition, we also agreed to voluntarily reduce the availability on our revolving credit portion of the senior secured credit facility from $120 million to $100 million.  The amendment also permits us to exclude from the definition of Consolidated Interest Expense swap breakage costs in connection with any repurchases or payments on outstanding term loans.
Pre-Tax, Non-Cash, Impairment Charge: In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets,” we recorded a pre-tax, non-cash, impairment charge of $245.7 million.  The charge represents a decrease in the market value of our business and does not affect our cash flow or day-to-day operations.  In addition, we recorded a write-down of $4.8 million related to our investment in China.

The following information was filed by Valassis Communications Inc (VCI) on Tuesday, February 17, 2009 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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