LIVONIA, Mich., Feb. 16 -- Valassis, the leading company in marketing services and Connective Media(TM), today announced financial results for the fourth quarter and year ended Dec. 31, 2005. Fourth-quarter revenues were up 2.3% from the fourth quarter of 2004 to record quarterly revenues of $309.2 million. Earnings prior to a $4.5 million (net of tax) non-recurring restructuring charge taken in the fourth quarter were $24.8 million, or $0.52 in earnings per share (EPS). Fourth-quarter net earnings were $20.3 million, or $0.42 in EPS, after the non-recurring restructuring charge. Full-year revenues were up 8.3% to $1,131.0 million. Without the restructuring charge, earnings for the year would have been $99.9 million, or $1.99 in EPS, within the previously published EPS guidance range of $1.96 to $2.08. Reported annual net earnings were $95.4 million, or $1.90 in EPS. "In 2005, we grew revenue in every product segment. Our diversified products and services and our broadened customer base enabled Valassis to deliver record revenues," said Alan F. Schultz, Chairman, President and CEO. "I am especially proud of our accomplishments in our Neighborhood Targeted business segment where our revenues grew 23% during 2005. For 2006, we have repositioned the company to be leaner and more efficient." Quarterly Highlights -- Sold 118 integrated solutions, campaigns utilizing three or more Valassis products synergistically, in 2005, compared to 65 in 2004 and 20 in 2003. -- Drove continued success in the Neighborhood Targeted product segment in the fourth quarter, representing the sixth consecutive quarter of double-digit revenue growth. -- Recognized by FORTUNE magazine as one of the "100 Best Companies to Work For" for the ninth consecutive year. FORTUNE magazine evaluates companies on factors such as leadership credibility, fairness, employee satisfaction and camaraderie. -- Ranked among "The 50 Best Companies to Sell For" by Selling Power magazine. Selling Power judged companies across a broad range of industries against criteria such as product knowledge, selling skills, training opportunities, turnover and promotions. -- Continued to test products internationally. In addition to expanding the Coupons & Mehr product in Germany, the company began testing the new Vales y Mucho Mas product in Spain. -- Implemented a plan to reduce Selling, General and Administrative (SG&A) costs across all business lines. -- Promotion Watch, Inc., a Valassis subsidiary, received the "Brand Guardian" award for its promotion controls and security services provided to McDonald's Corp. -- Launched ZIP+4, a targeting capability for direct mail that provides customers with an effective means for identifying and reaching high opportunity consumers when used in conjunction with Valassis integrated solutions. -- Passed the SAS 70 (Statement on Auditing Standards No. 70) Type II examination for financial controls within NCH Marketing Services, Inc.'s clearing operations to assist its U.S. customers in their controls evaluation. Financial Highlights -- Annual revenues were up 8.3% driven by growth in all business segments, with substantial growth in the Neighborhood Targeted and Run of Press (ROP) business segments. Fourth-quarter revenues were up 2.3% over the prior year fourth quarter. -- Net interest expense was $1.7 million for the quarter and $7.4 million for the year. -- SG&A expense was up 7.6% to $40.9 million for the fourth quarter and up 7.4% to $143.3 million for the year due to $6.9 million in restructuring charges related to the full integration of the components of our Household Targeted business segment resulting in the elimination of PreVision as a stand-alone entity, right-sizing of the coupon-clearing operations primarily in Europe and other efficiency-related headcount reductions. Without these restructuring charges, SG&A expense would have been down 10.5% for the fourth quarter and up 2.2% for the year. -- Cash and auction-rate securities at the end of the year were $136.4 million. -- The company's debt position, net of cash and auction-rate securities, was $137.8 million as of Dec. 31, 2005. -- The company repurchased 764,000 shares of its stock during the fourth quarter of 2005, bringing the total share repurchase for the year to 4,584,858 shares, compared to 1,870,517 shares for the full year of 2004. The company has 6,229,125 of remaining shares as of Dec. 31, 2005 under its current share repurchase authorizations. Business Segment Discussion -- Market Delivered Free-standing Insert (FSI): Co-op free-standing insert (FSI) revenues for the fourth quarter were $124.4 million, up 6.2% due to industry unit growth and an increase in market share. Co-op FSI pricing was up slightly for the quarter. FSI revenues for the year were $504.5 million, up 2.2%. Management noted that unit growth in the co-op FSI industry was in the mid-single digits for the year, offsetting the slight reduction in co-op FSI pricing. FSI cost of goods sold was up slightly for the fourth quarter and for the year on a cost per thousand (CPM) basis due to increased paper costs. -- Market Delivered Run of Press (ROP): ROP revenues, generated from the brokering of advertising space on behalf of newspapers, were down in the fourth quarter from $44.0 million to $35.3 million year over year. Revenues were up 7.3% for the year to $122.5 million. Segment profitability increased 16.2% over 2004, exceeding management's expectations. -- Neighborhood Targeted Products (Cluster Targeted): Neighborhood Targeted product revenues increased 12.4% for the quarter to $104.8 million, and ended the year up 23.2% at $339.0 million. The increase in revenues was primarily attributed to growth in preprints from the retail, food service and manufacturer customer verticals. "We are having success in selling solutions to customers who demand an effective and efficient means of targeting, as well as the delivery of positive top-line results and return on their investment," said Rob Mason, National Vice President of Retail & Services Sales. -- Household Targeted Products (1 to 1): Household Targeted product revenues decreased 21.6% for the quarter to $14.9 million due to a decrease in direct-mail pieces distributed. Full-year revenues were $63.2 million, up 2.3% from the prior year. -- International & Services: International & Services revenues are comprised of NCH Marketing Services (NCH), Valassis Canada and Promotion Watch. International & Services reported revenues of $29.9 million for the fourth quarter, up 2.7%. International & Services reported revenues for the year of $101.8 million, up 2.7%. Outlook In its Oct. 20, 2005 third-quarter earnings release, the company provided the following full-year EPS guidance for 2006. For the full-year 2006, the company expects earnings per share (EPS) to be between $1.95 and $2.15 after the expensing of stock options in accordance with SFAS 123R. Capital expenditures will be approximately $20 million in 2006.