-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LPCsMii523GvqWlLkAq1qEdNQAtM6rzH9+ow6CC5dZGAG3oTZCSzV99TWYD+gDO/ 3UG78kUh9veYYiaY4SeReg== 0001275287-06-003884.txt : 20060727 0001275287-06-003884.hdr.sgml : 20060727 20060727091756 ACCESSION NUMBER: 0001275287-06-003884 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060727 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060727 DATE AS OF CHANGE: 20060727 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VALASSIS COMMUNICATIONS INC CENTRAL INDEX KEY: 0000883293 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING [7310] IRS NUMBER: 382760940 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10991 FILM NUMBER: 06983105 BUSINESS ADDRESS: STREET 1: 19975 VICTOR PARKWAY CITY: LIVONIA STATE: MI ZIP: 48152 BUSINESS PHONE: 3135913000 MAIL ADDRESS: STREET 1: 19975 VICTOR PARKWAY CITY: LIVONIA STATE: MI ZIP: 48152 8-K 1 vc6548.txt FORM 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (Date of Earliest Event Reported) JULY 27, 2006 VALASSIS COMMUNICATIONS, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 1-10991 38-2760940 ---------------------------- ------------ ------------------- (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 19975 Victor Parkway, Livonia, Michigan 48152 ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's Telephone Number, Including Area Code 734-591-3000 -------------------------------------------------------------- (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION On July 27, 2006, Valassis issued a press release (the "Press Release") announcing results for the quarter ended and six months ended June 30, 2006. Furnished hereto as Exhibit 99.1 to this Current Report is a copy of the Press Release. The information in Item 2.02 of the Current Report and the accompanying exhibit shall not be incorporated by reference into any filing by Valassis, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. (d) Exhibits EXHIBIT NUMBER DESCRIPTION - ------- --------------------------------------- 99.1 Press release dated as of July 27, 2006 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. VALASSIS COMMUNICATIONS, INC. ----------------------------- (Registrant) Dated: July 27, 2006 /s/ Robert L. Recchia ----------------------------- Robert L. Recchia Executive Vice President and Chief Financial Officer EX-99.1 2 vc6548ex991.txt EXHIBIT 99.1 Exhibit 99.1 VALASSIS REPORTS REVENUES OF $260.6 MILLION IN THE SECOND QUARTER COMPANY ENGAGED IN PLANS TO INTEGRATE ADVO LIVONIA, Mich., July 27 /PRNewswire-FirstCall/ -- Valassis (NYSE: VCI), the leading company in marketing services and Connective Media(TM), today announced financial results for the second quarter ended June 30, 2006. The company reported quarterly revenues of $260.6 million, down 5.7% from the second quarter of 2005. Second-quarter net earnings were $19.7 million, or $0.41 in earnings per share (EPS), within the company's revised EPS guidance range for the quarter of $0.38 to $0.42. EPS for the first six months of 2006 was $0.79 compared to $1.05* in 2005. "The first half of 2006 has been disappointing for our business and the industry in general," said Alan F. Schultz, Chairman, President and CEO of Valassis. "We are working toward improved revenue results and cost control for the back half of 2006. We are excited about the prospects of our pending acquisition of ADVO and the positive impact we believe the combination will have in creating value for both customers and shareholders." Quarterly Highlights -- Entered into a definitive merger agreement to acquire ADVO, Inc., the nation's leading direct mail media company. The combined company will be positioned to capture growth across the expanded product and service portfolio, delivering customized, targeted marketing solutions on a national, regional, ZIP code, sub-ZIP code and household basis. -- Signed a strategic alliance with Insignia Systems, Inc., a developer and marketer of in-store promotions, enabling Valassis to sell the Insignia POPSigns product line as a complement to the company's existing product portfolio. -- Elected Joseph B. Anderson, Jr., Chairman and CEO of TAG Holdings, LLC, to the Valassis Board of Directors. Anderson's success in building businesses in the United States and Asia and his experience and accomplishments as a leader will prove an asset to shareholders and employees. -- Named to IndustryWeek's "50 Best Manufacturing Companies" list for the third consecutive year. Valassis was distinguished for its outstanding manufacturing and financial performance. Financial Highlights
Three Months Ended Six Months Ended ------------------------------------- ------------------------------------- June 30, June 30, June 30, June 30, 2006 2005 % Change 2006 2005 % Change ---------- ---------- ---------- ---------- ---------- ---------- Total Revenues $ 260.6 $ 276.4 -5.7% $ 508.2 $ 555.7 -8.5% Net Earnings $ 19.7 $ 25.5* -22.9% $ 37.7 $ 53.8* -29.8% EPS, diluted $ 0.41 $ 0.50* -18.0% $ 0.79 $ 1.05* -24.8%
* Excludes the pro-forma effect of stock option expense; including this expense, earnings for the three months ended June 30, 2005 would have been $23.7 million and EPS would have been $0.47, while earnings for the six months ended June 30, 2005 would have been $50.1 million and EPS would have been $0.98. -- SG&A expense was down 12.0%, despite an additional $1.3 million in stock option expense, to $30.7 million for the second quarter due to reductions in headcount and incentive compensation expenses. -- Cash and auction-rate securities at the end of the quarter were $148.7 million. -- The company's debt position, net of cash and auction-rate securities, was $111.3 million at quarter-end. The company noted that on June 6, 2006, the majority holders of the remaining Valassis Zero Coupon Senior Convertible Notes due 2021 put their notes to the company for $14.4 million in cash. The remaining $97,000 of these notes was called by Valassis on June 28, 2006 with an expected settlement in cash during the third quarter. -- Capital expenditures through the first six months of 2006 were $4.4 million in comparison to $15.8 million for the first six months of 2005. -- On July 6, 2006 the company announced it entered into a definitive merger agreement to acquire all outstanding common shares of ADVO stock for $37 per share in cash. The fully financed transaction is valued at approximately $1.3 billion (on a diluted basis), including approximately $125 million in existing ADVO debt which Valassis expects to refinance. Business Segment Discussion -- Market Delivered Free-standing Insert (FSI): Co-op FSI revenues for the second quarter were $117.0 million, down 12.9% from the second quarter of 2005. This decrease was due to a reduction in FSI pricing and a decline in industry volume, coupled with a slight decrease in market share, compared to the second quarter of 2005. Management noted that FSI cost of goods sold was down by a percentage in the mid-single digits for the quarter on a cost per thousand (CPM) basis due to a slight reduction in the cost of paper and a decrease in media costs resulting from higher page counts per book during the quarter and lower negotiated media rates. -- Market Delivered Run of Press (ROP): ROP revenues, generated from the brokering of advertising space on behalf of newspapers, were up 26.0% in the second quarter to $34.4 million due to a rebound in business from the telecommunications industry and new business from the pharmaceutical customer category. The ROP business segment earned $3.7 million in profit for the quarter, an increase of 146.7% over the second quarter of 2005. -- Neighborhood Targeted Products (Cluster Targeted): Neighborhood Targeted product revenues decreased 6.6% for the quarter to $67.4 million. This segment was impacted by a pullback in spending due to industry consolidations in the telecommunications and appliance manufacturing industries, and the reduction in spending of a specialty retail customer. The company also noted the timing of large sampling programs is skewed to the third quarter compared to 2005. Segment gross margin percentage declined over 300 basis points due to lower volumes and pricing pressure. -- Household Targeted Products (1 to 1): Household Targeted product revenues for the second quarter were $14.2 million, down 15.0% primarily due to the discontinuance of PreVision's agency business. The Household Targeted product segment was profitable for the quarter. -- International & Services: International & Services revenues are comprised of NCH Marketing Services, Valassis Canada and Promotion Watch. International & Services reported revenues of $27.6 million for the second quarter, up 7.0%, driven by new media products in France and Germany and increased revenue from Valassis Canada. Management also noted that the U.S. coupon clearing revenue and profit were down as a result of a reduced number of coupons distributed and redeemed. Outlook On June 26, 2006, the company announced that it lowered its diluted earnings per share (EPS) range for 2006 to be between $1.60 and $1.80. This EPS range excludes any impact of the pending acquisition of ADVO. Due to this pending acquisition expected to close in the September to October 2006 timeframe, the company has not provided specific guidance for the third and fourth quarter. The company expects to provide 2007 earnings guidance for the combined company before calendar year end, assuming the acquisition is closed. Conference Call Information Valassis will hold an investor call today to discuss its second-quarter results at 11 a.m. (EDT). The call-in number is (800) 218-0204. The call will simulcast on the company's Web site, at http://www.valassis.com , and replay through Aug. 9, 2006 at (800) 405-2236, pass code 11040294. This press release and the webcast will be archived on the company's Web site under "Investor." 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' products and services portfolio includes: newspaper-delivered promotions and advertisements such as inserts, sampling, polybags and on-page advertisements; direct-to-door advertising and sampling; direct mail; Internet-delivered marketing; loyalty marketing software; coupon and promotion clearing; and promotion planning and analytic services. Valassis has been listed as one of FORTUNE magazine's "Best Companies to Work For" for nine consecutive years. Valassis subsidiaries include Valassis Canada, Promotion Watch, Valassis Relationship Marketing Systems, LLC and NCH Marketing Services, Inc. For additional information, visit the company Web site 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 Valassis 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 Valassis' existing competitors; new competitors in any of Valassis' businesses; a shift in customer preference for different promotional materials, strategies or coupon delivery methods; an unforeseen increase in Valassis' paper costs; economic disruptions caused by terrorist activity, armed conflict or changes in general economic conditions; changes which affect the businesses of Valassis customers and lead to reduced sales promotion spending; the ability and timing for the closing conditions to be satisfied in connection with Valassis' merger agreement with ADVO; and the ability for Valassis to achieve synergies in connection with the merger and the integration of ADVO successfully into its business. Valassis disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. VALASSIS COMMUNICATIONS, INC. Consolidated Balance Sheets (in thousands) June 30, Dec. 31, Assets 2006 2005 - ------------------------------------------- ------------ ----------- Current assets: Cash and cash equivalents $ 58,828 $ 64,320 Auction-rate securities 89,902 72,031 Accounts receivable 261,228 273,863 Inventories 28,709 25,235 Refundable income taxes 3,129 - Deferred income taxes 2,577 2,573 Other 18,307 12,894 Total current assets 462,680 450,916 Property, plant and equipment, at cost 257,242 255,472 Less accumulated depreciation (151,039) (147,325) Net property, plant and equipment 106,203 108,147 Intangible assets 208,689 208,689 Less accumulated amortization (75,001) (74,724) Net intangible assets 133,688 133,965 Investments 676 614 Other assets 9,892 4,041 Total assets $ 713,139 $ 697,683 VALASSIS COMMUNICATIONS, INC. Consolidated Balance Sheets, Continued (in thousands) June 30, Dec. 31, Liabilities and Stockholders' Equity 2006 2005 - ------------------------------------------- ------------ ------------ Current liabilities: Current portion, long-term debt $ 97 $ 14,260 Accounts payable and accruals 256,320 264,877 Progress billings 37,643 44,314 Total current liabilities 294,060 323,451 Long-term debt 259,913 259,896 Other liabilities 10,661 10,811 Stockholders' equity: Common stock 632 632 Additional paid-in capital 40,493 38,177 Retained earnings 624,673 586,927 Treasury stock (520,376) (523,600) Accumulated other comprehensive gain 3,083 1,389 Total stockholders' equity 148,505 103,525 Total liabilities and stockholders' equity $ 713,139 $ 697,683 VALASSIS COMMUNICATIONS, INC. Consolidated Statements of Operations (in thousands, except per share data)
Quarter Ended Quarter Ended ------------------------------ June 30, June 30, % 2006 2005 Change ------------- ------------- ------------- Revenues $ 260,593 $ 276,427 - 5.7% Costs and expenses: Costs of products sold 197,972 200,009 - 1.0% Selling, general and administrative 30,653 34,830 - 12.0% Total costs and expenses 228,625 234,839 - 2.6% Earnings from operations 31,968 41,588 - 23.1% Other expenses and income: Interest expense 2,216 2,695 - 17.8% Other (income) and expenses (728) (746) - 2.4% Total other expenses and income 1,488 1,949 - 23.7% Earnings before income taxes 30,480 39,639 - 23.1% Income taxes 10,791 14,115 - 23.5% Net earnings $ 19,689 $ 25,524 - 22.9% Net earnings per common share, diluted $ 0.41 $ 0.50 - 18.0% Weighted average shares outstanding, diluted 47,863 50,808 - 5.8% Supplementary Data Amortization $ 138 $ 185 Depreciation 3,542 3,672 Capital expenditures 2,552 6,742
VALASSIS COMMUNICATIONS, INC. Consolidated Statements of Operations (in thousands, except per share data)
6 Months Ended 6 Months Ended June 30, June 30, % 2006 2005 Change -------------- -------------- ------------- Revenue $ 508,238 $ 555,711 - 8.5% Costs and expenses: Costs of products sold 383,241 399,665 - 4.1% Selling, general and administrative 63,533 68,897 - 7.8% Total costs and expenses 446,774 468,562 - 4.6% Earnings from operations 61,464 87,149 - 29.5% Other expenses and income: Interest expense 5,071 5,372 - 5.6% Other (income) and expenses (2,082) (1,820) + 14.4% Total other expenses and income 2,989 3,552 - 15.9% Earnings before income taxes 58,475 83,597 - 30.1% Income taxes 20,729 29,831 - 30.5% Net earnings $ 37,746 $ 53,766 - 29.8% Net earnings per common share, diluted $ 0.79 $ 1.05 - 24.8% Weighted average shares outstanding, diluted 47,812 51,120 - 6.5% Supplementary Data Amortization $ 278 $ 321 Depreciation 7,081 7,329 Capital expenditures 4,386 15,796
SOURCE Valassis -0- 07/27/2006 /CONTACT: Sherry Lauderback of Valassis, +1-734-591-7374, Fax: +1-734-591-4503, lauderbacks@valassis.com / /Web site: http://www.valassis.com / -----END PRIVACY-ENHANCED MESSAGE-----