LIVONIA, Mich., For the third quarter ended September 30, 2000, Valassis Communications, Inc. (NYSE: VCI) reported earnings per share results in line with its September 21st projections, up 4.4%. The company posted revenue gains up almost 9%, due to strong performance in its Valassis Impact Promotions and Targeted Marketing Services divisions. Valassis chairman, president and CEO Alan F. Schultz summarized the company's recent performance, stating, "We are proud that our company expects to, again, post a record year of revenue and earnings, and free cash flow in excess of $120 million. The strong fundamentals of our three core businesses, combined with the promise of our new one-to-one marketing initiatives, make Valassis an 'all-weather stock' in an otherwise uncertain marketplace." Free-Standing Inserts (FSIs): For the third quarter ended September 30, 2000, FSI revenues experienced a slight increase of 0.4%. FSI industry growth for full-priced pages was approximately 4%. Valassis' revenue growth was slower than the industry due to a reduction in market share. A substantial drop in direct response/remnant pricing also affected revenues. However, remnant pricing reached its trough in the second quarter, and began to increase in the third quarter. Management noted that industry remnant page content declined during the third quarter. In an effort to continue improvement in remnant space pricing, Valassis management will accelerate its plan to reduce the direct response/remnant content in the FSI, beginning in December 2000. The company also published two custom co-ops in the third quarter. Custom co-ops, individual booklets sponsored by a single corporation, contain fewer pages than the standard co-op FSI, and thus, have higher media costs on a per-page basis. Overall, FSI unit costs were up approximately 3% for the quarter, due to increases in paper and the media costs associated with custom co-op programs. For the nine months ended September 30, 2000, FSI revenues were up 3%. Valassis Impact Promotions (VIP): VIP had $33.7 million in sales for the third quarter, a 33.7% increase over a year ago. Accelerated revenue and margin growth was due to the strength of its core franchise retail customer base, as well as sales from new categories, including telecommunications and computer hardware. VIP revenues were up 10% for the nine months, and the division continues to be on track for 15% revenue growth for the year. Customer Relationship Management (CRM): In August, Valassis made two strategic investments, which completed its CRM structure. First, Valassis acquired PreVision Marketing, a Massachusetts-based CRM firm that offers unique, one-to-one/loyalty programs in the broad retail industry, providing high-level strategic consulting with "real world" execution. In addition, Relationship Marketing Group (RMG) entered into a joint venture with Retail Marketing Systems (RMS) and VNU Marketing Information, Inc. The joint venture, which is named Valassis Relationship Marketing Systems (VRMS), rounded out Valassis' cooperative grocery retail CRM product. The venture added additional grocery retail relationships, integrated software and analytics to Valassis' consumer package goods relationships and variable image printing products. Valassis recorded $1.8 million in overall CRM revenue for the third quarter. Targeted Marketing Services (TMS): The company experienced a 56% rise in its sampling/advertising product lines in the third quarter, as well as margin expansion. Overall TMS division revenues increased 30%, since sales in other products in this division (run-of-press promotions and Promotion Watch consulting services) were relatively flat. For the nine months, the TMS division reported a 22.6% increase in revenues. Activity in this division is on track for a projected 20%-plus revenue increase for the year. In September, TMS added to its at-home sample delivery products with the acquisition and integration of a fully developed direct-to-door sample delivery service. "The fundamentals of all our business lines are strong. And, due to the outstanding performance of both our VIP and TMS divisions, our third quarter results came in as anticipated," said Alan F. Schultz. "We are better positioned than ever before to seize opportunities in specialty media, particularly CRM. I believe we have put together the industry's very best product offering for customer relationship management, and we are already seeing positive indicators that this will be a very successful endeavor for Valassis." Outlook: Valassis management continues to expect earnings for the year ended December 31, 2000, to be in the range of $2.22 - $2.28 per share. The company recently completed its FSI customer contract negotiations for 2001, and therefore expects market share to be relatively even in regard to the overall industry next year. Currently, management projects earnings per share to be up 10% - 15% in 2001. Valassis connects people to brands through our wide range of marketing services programs offered to manufacturers, retailers, and technology companies. From mass to one-to-one communications, Valassis leads the specialty media industry with connective media solutions, including newspaper-delivered co-op and specialty inserts, advertising, product sampling, direct mail, on-line promotions, loyalty marketing programs, and consulting services.