LIVONIA, Mich., April 28 -- Valassis, the leading company in marketing services and Connective Media(TM), announced results for the first quarter ended March 31, 2003 in line with its published guidance. The company reported quarterly revenues of $205.0 million, up slightly from the first quarter of 2002. First-quarter net earnings were $26.0 million, or $0.50 in earnings per share (EPS), within the company's first-quarter EPS range of $0.48 to $0.54. "While we continue to execute our plan to regain co-op free-standing insert (FSI) market share, competitive pricing pressure for the co-op FSI has intensified," said Alan F. Schultz, Chairman, President and CEO. "We are pleased with the unit growth in all of our lines of business and we continue to make real progress toward providing integrated solutions for our customers. We are also successfully implementing our integration plan for NCH Marketing Services, and all of our acquisition expectations are being met." Valassis will hold an investor call today to discuss the first-quarter results and outlook at 11:00 a.m. (EDT). The call-in number is 800-218-0530. The call will also simulcast on the company's website, at www.valassis.com , and be replayed through May 12, at 800-405-2236, pass code 515287. FINANCIAL HIGHLIGHTS (in millions, except per share data) March 31, March 31, % 2003 2002 Change Total Revenues $205.0 $203.8 +0.6% Net Earnings $26.0 $32.6 -20.1% Net EPS, diluted $0.50 $0.60 -16.5% Mass Marketing Products - Products that provide mass reach at low cost: Free-standing insert (FSI) revenue was down 13.2% for the first quarter to $127.7 million, due to the reduction in market share and price. Management noted that unit growth in the co-op FSI industry continued to be strong. Run of press (ROP) revenue, generated from the brokering of advertising space on behalf of newspapers, was down 12.6% for the quarter to $7.6 million. Management reaffirms their previous 2003 ROP guidance of annual revenue growth of 10% to 15%. Cluster Targeted Products - Products targeted around geographic and demographic clusters: Cluster targeted product revenues were up 21.2%, versus the first quarter of 2002, to $45.8 million. Solo insert revenues continue to grow due to an expanding customer base. Polybag sampling and advertising also performed well, due to a slight rebound of customer new product introductions and advertising spending, in addition to a growing customer base. 1 to 1 Products - Products and services that pinpoint individuals to build loyalty to a brand: The 1 to 1 product group is comprised of PreVision Marketing, a customer relationship marketing (CRM) agency; Valassis Relationship Marketing Systems (VRMS), promotions based on grocery frequent shopper card data; and direct mail database marketing programs. 1 to 1 revenues increased to $10.5 million, a 36.4% increase over the first quarter of 2002. This growth is attributed to positive results in the direct mail category and the consolidation of VRMS starting in July of 2002. During the first quarter, the company increased its ownership of VRMS to 100%. International & Services - Marketing services and products available internationally: International & Services, a new product group, is comprised of NCH Marketing Services (NCH), a wholly-owned subsidiary purchased by Valassis on February 13, 2003, providing promotion information products, marketing services and coupon clearing; Valassis Canada, previously included in mass marketing FSI figures; and Promotion Watch, providing promotion security services, previously included in 1 to 1 product figures. International & Services revenues were $13.5 million for the first quarter, up from $2.4 million for the first quarter of 2002. A consolidating balance sheet for NCH has been included as part of this release. Costs and Expenses FSI costs (on a CPM basis) were down for the quarter due to decreases in paper costs. Interest expense remains stable at $3.3 million for the quarter. SG&A expenses were up 23.0%, to $27.3 million, due primarily to the consolidation of NCH and VRMS. Share Repurchase/Debt Reduction The Valassis Board of Directors reaffirmed its long-term commitment to repurchase shares of up to 75% of the company's free cash flow. Due to the purchase of NCH, share repurchase was at a minimum during the first quarter. The company's debt position, net of cash, was $190.3 million at quarter-end. The company ended the quarter with $67.9 million in cash. Outlook 2003 guidance remains as previously announced. Management provided previous guidance that EPS is expected to be down 5% to 15% for 2003. Management provided the following quarterly projections in its Fourth Quarter 2002 release on February 20, 2003: Quarter Projected EPS Range Actual Results 1 $0.48 - 0.54 $0.50 2 $0.55 - 0.61 3 $0.50 - 0.56 4 $0.54 - 0.60