October 2004
Safe Harbor Statement
Certain statements found in this document constitute “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks and uncertainties and
other factors which may cause the actual results, performance or achievements of the
Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such factors
include, among others, the following: price competition from the Company's existing
competitors; new competitors in any of the Company’s businesses; a shift in customer
preference for different promotional materials, strategies or coupon delivery methods;
an unforeseen increase in the Company’s paper costs; economic disruptions caused
by terrorist activity, armed conflict or changes in general economic conditions; or
changes which affect the businesses of our customers and lead to reduced sales
promotion spending. The Company disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new information, future
events or otherwise.
Valassis — Connecting People to Brands™
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Agenda

Overview

Favorable Macro Trends

Mass Products

Cluster Targeted Products

1 to 1 Products

International & Services

Financial Summary and Guidance

Summary
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Overview: What Do We Do?

We specialize in home-delivered promotion and
advertising media

Our unique differences include:
– a call to action
– a responsive environment
“Connecting People to Brands™”
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Overview: Valassis Product Portfolio
Mass
(Markets)
• Co-op newspaper
inserts (Freestanding Inserts)
• On-page newspaper
advertising (ROP)
Cluster Targeted
1 to 1
(Neighborhoods)
(Households)
• Newspaper-delivered
product sampling
• Direct mail
sampling/advertising
• Newspaper polybag
advertising
• Customized frequent
shopper direct mail
• Preprinted inserts
• Customer relationship
management software
• Direct-to-door
sampling/advertising
• Internet-delivered
promotions
International & Services
• Coupon clearing
(NCH Marketing
Services)
• European
operations (NCH)
• Sweepstakes/
security consulting
(Promotion Watch)
• Valassis Canada
Integrated Solutions
Connecting People to Brands™
Valassis — Connecting People to Brands™
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Overview: Share of Revenue
First Half - 2004
2003*
Cluster
Targeted
27%
1 to 1
4%
International
& Services
9%
1 to 1
6%
Cluster
Targeted
22%
International &
Services 10%
ROP
10%
FSI 52%
ROP
6%
FSI 54%
*NCH Marketing Services, Inc. was acquired February 13, 2003
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Overview: Customer Base
Our customer base is strong, diverse and continues to grow.
Direct Marketers
9%
Consumer
Services
7%
Grocery Retail*
5%
Other
4%
Franchise Food
10%
Specialty Retail
15%
Consumer Packaged Goods
50%
% of Revenue by Customer Segment for 2003
*Also includes Drug, Wholesale & Mass Merchants
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Overview: Customers
Valassis does business with 80% of Advertising Age’s list
of the 100 Leading National Advertisers.
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Favorable Macro Trends
Dollars shifting to home-delivered promotional media

Economic recovery drives new product
development and increased marketing budgets

Push for ROI justification on marketing spending;
our products perform exceptionally well

Broadcast fragmentation continues to be a
challenge; marketers are looking for more effective
alternatives to reach the masses
Valassis — Connecting People to Brands™
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Favorable Macro Trends

Consumer evasiveness toward unwanted ad
messages
—
“Do Not Call” registry and commercial blocking technology
—
Cable and satellite radio

Private label brands increase power; national
brands need to compete for price-sensitive
consumers

Coupons driving strong results among highprofile CPG companies; competition will follow
Valassis — Connecting People to Brands™
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Mass Products
Products which provide mass market reach at a low cost

Co-op Free-standing Inserts (FSIs)

Run of Press (ROP)
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Mass: Free-standing Inserts (FSIs)

Mass reach at a low cost (nearly 60 million households)

86% of all CPG coupons distributed

FSI industry unit (page) growth above 6% for 2003

Gross margins in the 40% range

High barriers to entry
—
Significant operating leverage related to media costs
—
Long-term contracts
—
Low-cost producer
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Mass: Free-standing Inserts (FSIs)

Two-player industry

Low-risk price improvement initiative

Co-op FSI pricing environment update will be
provided on 10/21/04

2004 market share goal: 46% - 48%
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Mass: Free-standing Inserts (FSIs)
2004 Guidance

FSI revenue: down 1% to 5%
̶
1st Half 2004 revenue: $259.6 million, up 1%

Traditional co-op FSI circulation:
58.5 million households

Traditional co-op FSI date schedule:
flat at 40 dates

Custom co-ops (single customer FSIs): approx. 11

CGS: relatively flat on a CPM basis
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Mass: Run of Press (ROP)
Brokering of advertising space on behalf of newspapers

Continued expansion of customer base

2004 guidance: revenue up over 80%

—
Changing fee structure for some contracts
—
2004 improved operating margin dollars of 10% to 15%
1st Half 2004 revenue: $48.6 million, up 111%
Valassis — Connecting People to Brands™
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Cluster Targeted Products
Products targeted around geographic and demographic
clusters at a neighborhood level

Includes preprinted inserts, polybag sampling &
advertising and door hangers

Expanding customer base

2004 guidance: revenue up less than
10% with margins improving slightly

1st Half 2004 revenue: $109.2 million, flat
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1 to 1 Products
Products and services that pinpoint individuals or
households to build brand loyalty

Direct Mail
—

Valassis Relationship Marketing Systems (VRMS)
—

Database-driven direct mail programs
Provider of loyalty marketing software for frequent shopper
data
PreVision Marketing
—
Direct marketing agency
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1 to 1 Products


Purchased Catalina Marketing’s Direct Marketing
Services (DMS) business
Relationships with retailers
̶
Kroger
-
Safeway
̶
Food Lion
-
Albertsons
̶
Winn Dixie

2004 guidance: revenue up over 25%

1st Half 2004 revenue: $28.4 million, up 45%
Valassis — Connecting People to Brands™
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International & Services

NCH Marketing Services, Inc.
– Promotion information management products,
marketing services and coupon clearing
– Operations in the United States, France, Germany,
Italy, Spain, the United Kingdom and Mexico

Valassis Canada
– Promotional products and services available in
Canada

Promotion Watch
– Promotion and sweepstakes security consulting
services
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International & Services

2004 guidance: revenue up low-single digits (pro forma
including a full year of NCH)

1st Half 2004 revenue: $48.3 million, up 25.5%

Testing media products and services in Europe
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Financials: 2004 Guidance

Revenue: up mid-single digits

1st Half 2004 revenue: $494.1, up 10%

Free cash flow: $82 million to $92 million

Capital expenditures: $20 million

SG&A: up 3% to 5%

EPS range: $1.73 to $1.85
Quarter
1
2
3
4
Projected
EPS Range
$0.44 to $0.50
$0.44 to $0.50
$0.37 to $0.43
$0.38 to $0.44
Valassis — Connecting People to Brands™
Actual
EPS
$0.47
$0.51
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Financials: Balance Sheet

Cash position: $164.4 million as of 6/30/04

Net debt position: $109.0 million as of 6/30/04

Net debt/EBITDA: less than 1:1
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Financials: Uses of Cash

Continue to strengthen the balance sheet

Authorized to repurchase shares up to 75% of FCF

Continue to invest in strategic businesses supporting
the long-term growth plan
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Summary

Macro trends will drive
growth in home-delivered
promotional media

Broad product portfolio
uniquely positions us to
offer integrated solutions

Current co-op FSI pricing
environment is irrational

Cash flow and balance
sheet are strong
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Questions?
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