Company Provides 2003 Outlook LIVONIA, Mich., Oct. 24-- Valassis, the leading company in marketing services and Connective Media, reported third quarter ended September 30, 2002 earnings per share of 61 cents, up 15.1% from the year ago quarter, on revenues of $214.3 million. Revenues increased by 8.0% versus the third quarter of 2001. Positive results were driven by revenue gains from increasing industry demand in free-standing newspaper inserts and on-page newspaper advertising, as well as a lower cost base. "We are very happy about our results for the quarter. Our highly- efficient, measurable products performed well once again, despite a backdrop of economic and world uncertainty," said Alan F. Schultz, Chairman, President and CEO of Valassis. "We provided our original 2002 earnings guidance back in October of last year, and have since been successful in making our published range for each reported quarter. We expect continued strong results for the fourth quarter, and feel confident we will be in the middle of our published range of $2.32 - $2.54 for the full year." In discussing the company's 2003 outlook, Schultz added: "We expect the underlying fundamentals and trends in our business to remain strong, including improving client demand and a favorable cost structure -- resulting in substantial cash flow. However, a 2003 market share issue for co-op free- standing inserts will result in a reduction in EPS next year." Mass-Distributed Products - Products which provide mass reach at low cost: Free-standing insert (FSI) revenues were $146.0 million, up 3.5% from the year ago quarter. Management noted that its September 2001 FSI revenues were unaffected by the events of September 11, indicating real growth in FSIs, rather than an easy comparison. Run-of-Press sales were $13.6 million, up 44.7% from the year ago period. This service, which brokers advertising space on behalf of newspapers, has experienced strong revenue gains for 2002 year- to-date. Cluster-Targeted Products - Products targeted around geographic and demographic clusters: Revenues for these products were $43.7 million, up 17.2% for the quarter. Increased revenues were attributed to stronger sales in the solo insert product line, which was up over 30% in the third quarter, and has shown steady improvement since the second quarter 2002. Polybag sampling/advertising continued to experience lower revenues due to fewer new product introductions. One-to-One Products - Products and Services that pinpoint individuals to build loyalty to a brand: One-to-One revenues are comprised of PreVision Marketing, a CRM agency; Valassis Relationship Marketing Systems (VRMS), promotions based on grocery frequent shopper card data; direct mail database marketing programs and Promotion Watch sweepstakes security consulting. One- to-one revenues for the quarter were $11.0 million, up 13.4% from the prior year quarter. This increase was driven primarily by the consolidation of VRMS. VRMS is a joint venture with Netherlands-based VNU, and was consolidated into the Valassis financials as of July 1, 2002. Both VRMS and direct mail were up significantly versus the third quarter of 2001. Costs: FSI costs (on a CPM basis) for the quarter were down versus the prior year quarter, driven primarily by the cost of paper. Share Repurchase/Debt Position: During the third quarter, Valassis repurchased 493,200 shares of its stock. The number of diluted shares at the end of the quarter was 53.4 million, down 2.3% from the year ago. The company ended the quarter with debt, net of cash, of $189.6 million. 2003 Outlook: For the full year 2003, the company expects earnings-per-share to be down 8% - 18% versus 2002, due primarily to a market share issue in co-op free- standing inserts. Previously, Valassis attempted to initiate a price increase that did not take hold. Competitive pricing pressure will cause Valassis to experience reduced market share in 2003. Total company revenues are expected to be down by a percentage in the mid-single digits. Alan F. Schultz commented: "Although an FSI market share issue will cause us to report a down year for 2003, we remain confident of our ability to generate over $100 million in cash flow, and to once again leverage our cash for the benefit of our shareholders. We continue to believe that the fundamentals of our business are solid, and we are committed to improving our FSI market share to approximately 50%, which is near traditional levels."