SEGMENT REPORTING

6 Months Ended

Jun. 30, 2013

SEGMENT REPORTING

SEGMENT REPORTING

Our segments meeting the quantitative thresholds to be considered reportable are Shared Mail, Free-standing Inserts ("FSI") and Neighborhood Targeted. All other lines of business fall below a materiality threshold and are, therefore, combined together in an “other” segment named International, Digital Media & Services. These business lines include Brand.net, a Valassis Digital Company, NCH Marketing Services, Inc., our coupon clearing and analytics business, Valassis Canada, Inc., Promotion Watch and our in-store business. Our reportable segments are strategic business units that offer different products and services and are subject to regular review by our chief operating decision-maker. They are managed separately because each business requires different executional strategies and caters to different client marketing needs.

The accounting policies of the segments are the same as those described in the 2012 Form 10-K and Note 1, Basis of Presentation and Significant Accounting Policies. We evaluate reportable segment performance based on segment profit, which we define as earnings from operations excluding unusual or infrequently occurring items. Assets are not allocated to reportable segments and are not used to assess the performance of a reportable segment.

The following tables set forth, by segment, revenues, depreciation/amortization and segment profit (loss) for the indicated periods:

	Three Months Ended
	June 30,
(in millions of U.S. dollars)	Shared Mail		FSI		Neighborhood Targeted			International, Digital Media & Services			Total
2013
Revenues from external customers	$	335.9	$	80.2	$	28.9		$	50.9		$	495.9
Intersegment revenues	$	3.8	$	10.8	$	15.2		$	—		$	29.8
Depreciation/amortization	$	5.4	$	2.1	$	0.7		$	3.2		$	11.4
Segment profit (loss)	$	43.9	$	9.4	$	(1.5	)	$	(0.5	)	$	51.3
2012
Revenues from external customers	$	348.8	$	70.5	$	77.5		$	43.4		$	540.2
Intersegment revenues	$	3.9	$	10.1	$	13.6		$	—		$	27.6
Depreciation/amortization	$	8.2	$	3.2	$	1.0		$	2.0		$	14.4
Segment profit (loss)	$	52.3	$	7.3	$	(2.4	)	$	2.3		$	59.5
	Six Months Ended
	June 30,
(in millions of U.S. dollars)	Shared Mail		FSI		Neighborhood Targeted			International, Digital Media & Services			Total
2013
Revenues from external customers	$	663.0	$	165.9	$	52.2		$	97.3		$	978.4
Intersegment revenues	$	8.2	$	20.9	$	33.2		$	—		$	62.3
Depreciation/amortization	$	12.2	$	5.6	$	1.9		$	5.0		$	24.7
Segment profit (loss)	$	82.8	$	20.5	$	(5.9	)	$	(4.4	)	$	93.0
2012
Revenues from external customers	$	676.9	$	146.8	$	149.7		$	85.4		$	1,058.8
Intersegment revenues	$	8.4	$	20.1	$	26.6		$	—		$	55.1
Depreciation/amortization	$	16.5	$	6.4	$	2.1		$	4.1		$	29.1
Segment profit (loss)	$	94.8	$	12.7	$	(4.0	)	$	5.0		$	108.5

The following table provides reconciliations of total segment profit to earnings from operations for the indicated periods (nonoperating expenses are not allocated to reportable segments and are not used to assess the performance of a reportable segment):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions of U.S. dollars)	2013		2012		2013		2012
Total segment profit	$	51.3	$	59.5	$	93.0	$	108.5
Unallocated amounts:
Goodwill impairment	—		7.6		—		7.6
Restructuring and other charges	1.4		9.7		1.4		9.7
Earnings from operations	$	49.9	$	42.2	$	91.6	$	91.2

The $1.4 million of restructuring and other charges recognized during the three and six months endedJune 30, 2013 reflected severance and related costs, of which $0.9 million were included in selling, general and administrative expenses in the unaudited, condensed consolidated statements of income and $0.5 million were included in cost of sales in the unaudited, condensed consolidated statements of income. The goodwill impairment charges of $7.6 million recognized during the three and six months endedJune 30, 2012 resulted from our decision to exit our newspaper polybag advertising and sampling business, a reporting unit within our Neighborhood Targeted reportable segment, and our solo direct mail business, a reporting unit within International, Digital Media & Services. The $9.7 million of restructuring and other charges recognized during the three and six months endedJune 30, 2012 consisted of $5.3 million of severance and related costs and $0.7 million of Brand.net acquisition costs, both of which were included in selling, general and administrative expenses in the unaudited, condensed consolidated statements of income, and $3.7 million of lease termination, severance, asset impairment and other costs associated with our decision to exit our solo direct mail business and our newspaper polybag advertising and sampling business, which were included in cost of sales in the unaudited, condensed consolidated statements of income. The results of operations of these businesses were immaterial to our consolidated results of operations for each of the three and six months endedJune 30, 2012.

Domestic and foreign revenues were as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions of U.S. dollars)	2013		2012		2013		2012
United States	$	482.3	$	529.7	$	953.9	$	1,035.9
Foreign	13.6		10.5		24.5		22.9
Revenues	$	495.9	$	540.2	$	978.4	$	1,058.8

Domestic and foreign long-lived assets (property, plant and equipment, net) were as follows:

(in millions of U.S. dollars)	June 30, 2013		December 31, 2012
United States	$	105.1	$	118.1
Foreign	7.7		7.7
Property, plant and equipment, net	$	112.8	$	125.8