LIVONIA, Mich., Feb. 20 -- Valassis, the leading company in marketing services and Connective Media(TM), reported results for the fourth quarter and year ended December 31, 2002 in line with its published projections. Fourth-quarter earnings per share (EPS), before one-time charges, was up 15.4%, at $.60, with revenues for the quarter up 11.9%, at $230.6 million. Year-end earnings per share, before one-time charges, increased 7% to $2.43, with revenues for the year up slightly at $853.0 million. Valassis' year-end EPS was in the middle of their published range of $2.32 to $2.54, provided by the company in October 2001. "We are very pleased with our earnings for 2002," said Alan F. Schultz, Valassis chairman, president and CEO. "We had an exceptional fourth quarter, fueled by unit growth in the co-op free-standing insert (FSI) industry and the broadening of our product and customer base. While we anticipate these trends will continue into 2003, we are addressing the competitive state of the FSI industry, specifically the continuing market share pressure from our competitor. Despite the present environment, we expect to generate between $105 million to $115 million in free cash flow in 2003." Valassis also announced the acquisition of NCH Marketing Services, Inc. on February 13, 2003. This acquisition, which adds new marketing capabilities and provides an international platform for future growth, is expected to have a positive impact on 2003 EPS of $.07. Mass-Distributed Products -- Products which provide mass reach at low cost: Co-op free-standing insert (FSI) revenues were up 6.5% to $140.3 million for the quarter fueled by industry unit growth. FSI revenues for the year were flat at $575.8 million. Run of press (ROP) revenues were up 6.7% for the quarter and 28.8% for the year to $41.1 million. This offering, the brokering of advertising space on behalf of newspapers, has experienced growth as a result of additional sales focus. Cluster Targeted Products -- Products targeted around geographic and demographic clusters: Cluster targeted product revenues increased 34.6% for the quarter to $71.9 million, and ended the year up slightly at $198.5 million. Solo insert revenues continue to grow, in part, due to new customers in the retail category. Polybag sampling and advertising experienced lower revenues due to fewer new product introductions in 2002. 1 to 1 Products -- Products and services that pinpoint individuals to build loyalty to a brand: 1 to 1 revenues are comprised of PreVision Marketing, a customer relationship marketing (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. 1 to 1 revenues were down 6.4% for the year to $36.8 million, primarily as a result of the overall reduction in CRM demand. Positive results were posted in the direct mail category for the quarter and the year due to focused sales efforts across a wider breadth of industries. Costs and Expenses: Co-op FSI costs (on a CPM basis) were down for the quarter and the year, due primarily to decreases in paper costs. Interest expense was down 24.6% for the year at $13.3 million. This decrease was a result of the company's convertible debt issuance and retirement of its 9.55% bonds, due in 2003, as well as overall lower interest rates. SG&A expenses were up 6.2% for the year, due primarily to the consolidation of VRMS in July of 2002. Share Repurchase/Debt Position: During the fourth quarter, the company repurchased 969,200 shares of its stock, bringing the total number of shares repurchased in 2002 to 2,844,000. The company's debt position, net of cash, was $160.1 million as of year-end. SFAS No. 142 "Goodwill and Other Intangible Assets": In accordance with accounting guidelines, goodwill is no longer amortized, but is instead tested annually for impairment. In conjunction with this required goodwill impairment testing, the company recognized impairment charges, after taxes, of $16.5 million for VRMS and $16.3 million for PreVision Marketing during the fourth quarter. While these businesses have not developed as quickly as anticipated, management believes the capabilities and expertise acquired will drive future revenue and earnings growth. Outlook: In its third-quarter earnings release, the company provided full- year EPS guidance for 2003, stating that EPS is expected to be down 8% to 18% versus 2002. This EPS guidance was revised to be down 5% to 15% due to the NCH acquisition on February 13, 2003. Management is now providing the following quarterly projections for 2003: * Q1: 48 cents to 54 cents EPS * Q2: 55 cents to 61 cents EPS * Q3: 50 cents to 56 cents EPS * Q4: 54 cents to 60 cents EPS