LIVONIA, Mich., April 26 Valassis (NYSE: VCI) announced net sales of $227.7 million for the first quarter ended March 31, 2001, up 7.3% from the year ago quarter. Earnings per share were 60 cents, within the company's published range. The 7.7% EPS decrease was due primarily to increased costs, as well as planned decreases in free-standing insert direct response pages, designed to improve pricing in its direct response client base. The company reported that pricing in this segment has begun to improve as a result of the strategy. NOTE: First quarter 2000 results include the effect of a lawsuit settlement Alan F. Schultz, Chairman, President and CEO said: "Unlike traditional media companies, who are experiencing significant revenue reductions, we've been able to post healthy first quarter revenue increases. We also project earnings improvements in the second half. Overall, I continue to be pleased with the performance of our connective media products. " Mass-Distributed Products - Products which provide mass reach at low cost: Free-standing insert revenue was down 3.2%, to $159.0 million for the first quarter. Management estimates that the effect of decreasing direct response pages, in addition to lower levels of e-commerce client participation, resulted in an approximate $10 million revenue shortfall for the period versus the year ago. Demand from its core client base of consumer package goods marketers, however, remained strong. There were no custom co-ops (single client FSI programs) produced in the first quarter 2001, versus one produced in the prior year period. Schultz commented, "We believe that the long term benefit of protecting direct response price integrity far outweighs the short term negative effect to revenue and earnings as a result of lessening pages. And, our strategy is working, as we've witnessed improved direct response pricing." Run-of-Press revenues were also down 6%, to $4.7 million, but are expected to maintain revenue levels of $20 - $25 million for the year. Cluster-Targeted Products -- Products targeted around geographic and demographic clusters: The company recently combined its former Valassis Impact Promotions and Targeted Marketing Services divisions into a single group, led by Executive Vice President, Mary Ann Rivers. The move was prompted by the similarities in growth and margin structures, product lines and clients, and is expected to create internal efficiencies, drive additional client demand, and create a smoother growth pattern in the longer term. Revenues for cluster-targeted products were $54.6 million for the quarter, up 29.4% from the year ago, driven primarily by strong revenues in its sampling/advertising polybag programs.