LIVONIA, Mich., April 22 -- Valassis, the leading company in marketing services and Connective Media(TM), today announced financial results for the first quarter ended March 31, 2004, in line with its published guidance. The company reported quarterly revenues of $237.4 million, up 15.8% from the first quarter of 2003. First-quarter net earnings were $24.6 million, or $0.47 in earnings per share (EPS), in the middle of the company's first-quarter EPS guidance range of $0.44 to $0.50. "Our long-term strategic plan is beginning to deliver sustainable revenue growth, even in a highly competitive co-op free-standing insert (FSI) environment," said Alan F. Schultz, Chairman, President and CEO. "We are committed to the FSI business and returning our market share to historical levels. We are further encouraged by the continued strong unit growth in the co-op FSI industry." Valassis will hold an investor call today to discuss its first-quarter results at 11 a.m. (EDT). The call-in number is (800) 366-7417. The call will simulcast on the company's Web site, at http://www.valassis.com , and replay through May 5, 2004 at (800) 405-2236, pass code 566832. This press release and the Webcast will be archived on the company's Web site under "Investor." Mass Products - Products that reach large markets at a low cost: Co-op free-standing insert (FSI) revenues for the first quarter were flat at $127.4 million. Management was encouraged by the seven consecutive quarters of unit growth in the co-op FSI industry. This unit growth, combined with the company's increased market share, mitigated the effect of continued competitive pricing pressure in the co-op FSI. Run of press (ROP) revenues, generated from the brokering of advertising space on behalf of newspapers, were up in the first quarter from $7.6 million to $21.7 million year over year. While some of this increase is attributed to a changing fee structure for certain contracts, the company continued to grow the customer base and outperformed its objective of a 10% to 15% increase in contribution margin dollars for the quarter. Cluster Targeted Products - Products that reach neighborhoods based on geographic and demographic characteristics: Cluster Targeted product revenues increased 15.8% for the quarter to $52.9 million, exceeding the company's revenue growth guidance of 10% to 15%. This increase in revenues was attributed to a continued rebound in customer product sampling, as well as growth in polybag advertising and newspaper preprints. Management noted that this revenue growth was accompanied by an improved gross margin, consistent with the company's guidance. 1 to 1 Products - Products and services that pinpoint individuals or households to build loyalty to a brand: The 1 to 1 product revenues are comprised of PreVision Marketing, Valassis Relationship Marketing Systems (VRMS) and direct mail. 1 to 1 revenues increased 16.2% to $12.2 million for the quarter, due to the company's enhanced retail relationships and growing direct mail business. Management believes the company will achieve its revenue growth target of 20% to 25% for the first half and full year of 2004. International & Services - Marketing products and services available in the United States, Canada, France, Germany, Italy, Mexico, Spain and the United Kingdom: International & Services is comprised of NCH Marketing Services (NCH), Valassis Canada and Promotion Watch. International & Services revenues were up from $13.5 million to $23.2 million for the first quarter with improved margins. Revenue growth in this segment was due to the full- quarter consolidation of NCH and positive results of Valassis Canada. As previously announced, the company is beginning to test new media products and services in Europe this year. Costs and Expenses FSI cost of goods sold was relatively flat for the first quarter on a CPM basis. While FSI paper costs increased slightly, media and printing/distribution costs declined on a CPM basis due to the increase in market share and co-op FSI book size. Net interest expense was down 9.7% to $2.8 million for the quarter. SG&A expense was up 12.1% to $30.5 million for the first quarter, due primarily to the full-quarter consolidation of NCH. Debt Position/Share Repurchase The company's debt position, net of cash, was $97.6 million at quarter- end. During the first quarter, the company repurchased 128,900 shares of its stock. The company ended the quarter with $214.5 million in cash. Outlook 2004 guidance remains as previously announced. The company expects 2004 EPS to be between $1.65 and $1.85.