LIVONIA, Mich., Feb. 7 -- Valassis today announced financial results for the fourth quarter and year ended Dec. 31, 2006. Valassis reported quarterly revenues of $286.4 million, down 7.4% from the fourth quarter of 2005. Fourth-quarter net earnings were $6.9 million, or $0.14 in earnings per share (EPS). Earnings prior to charges of $13.7 million (net of tax of $0.8 million) related to the pending acquisition of ADVO and non-recurring items were $20.6 million, or $0.43 in EPS. Full-year revenues were down 7.7% to $1,043.5 million. Reported annual net earnings were $51.3 million, or $1.07 in EPS. Without the ADVO transaction-related charges and non-recurring items, earnings for the year were $77.3 million, or $1.62 in EPS.
"In 2006, we acted upon our strategy to further diversify our product portfolio and customer base with the pending acquisition of ADVO, Inc.," said Alan F. Schultz, Valassis Chairman, President and CEO. "This acquisition will enable us to offer our customers unique and diverse media plans of unmatched scale and reach and allow us to build market share in the product segments and customer verticals in which we compete and serve. We will be positioned to provide optimal results to customers seeking measurable performance. At the close of the transaction, our plan will include: maximizing free cash flow; reducing our debt; capitalizing on the best revenue-producing opportunities; and ensuring a seamless transition as our integration planning efforts progress. I believe there is significant upside and we intend to seize the opportunity to grow our business while making the combined company a great place to work."
Management currently expects to close the ADVO transaction during the first half of March, 2007. The following information is presented on a pro- forma basis, assuming that the closing of the ADVO acquisition occurred on Jan. 1, 2007. Actual results for 2007 will differ from such expectations set forth below as they will only reflect the actual partial year impact of the acquisition.
* Pro-forma combined revenue of $2.5 billion to $2.6 billion
* Pro-forma combined EBITDA of $255.0 to $265.0 million (includes synergies)
* Expected cost synergies of $18.0 million for the remaining 10 months of 2007; expected to increase to $32.0 million for 2008 and $40.0 million for 2009
* Expected one time cost-to-achieve synergies of $25.0 million to be incurred in 2007, which includes $10.5 million of capital expenditures included in the $60.5 million below.
* Expected capital expenditures for 2007 of $60.5 million; 2008 and 2009 are expected to be approximately $35.0 million each year
* Expected depreciation and amortization for 2007 of $65.7 million (does not include any effect of purchase accounting)
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