10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________

FORM 10-Q

_______________________________________

(Mark One)

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended September 30, 2013

¨ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 1-10991

_______________________________________

VALASSIS COMMUNICATIONS, INC.

(Exact Name of Registrant as Specified in its Charter)

_______________________________________

Delaware	38-2760940
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification Number)

19975 Victor Parkway

Livonia, Michigan 48152

(Address of Principal Executive Offices)

Registrant’s Telephone Number: (734) 591-3000

_______________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days:    Yes  x   No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files):     Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer	x		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):    Yes  ¨    No  x

As of November 1, 2013, there were 38,490,114 shares of the Registrant’s Common Stock outstanding.

VALASSIS COMMUNICATIONS, INC.

Index to Quarterly Report on Form 10-Q

Quarter Ended September 30, 2013

		Page
	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets at September 30, 2013 and December 31, 2012	1
	Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2013 and 2012	2
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2013 and 2012	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2013 and 2012	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	38
	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	39
Signature		40

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VALASSIS COMMUNICATIONS, INC.

Condensed Consolidated Balance Sheets

(U.S. dollars in thousands, except share amounts)

(unaudited)

	September 30, 2013			December 31, 2012
Assets
Current assets:
Cash and cash equivalents	$	74,985		$	94,711
Accounts receivable, net (Note 1)	408,322			426,899
Inventories (Note 1)	36,705			43,253
Prepaid expenses and other	49,006			36,589
Total current assets	569,018			601,452
Property, plant and equipment, net (Note 1)	109,826			125,832
Goodwill (Note 2)	632,438			632,438
Other intangible assets, net (Note 2)	203,984			215,171
Other assets	13,436			14,142
Total assets	$	1,528,702		$	1,589,035
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion long-term debt (Note 3)	$	33,750		$	22,500
Accounts payable	264,144			281,320
Progress billings	38,084			39,595
Accrued expenses (Note 4)	96,342			107,467
Total current liabilities	432,320			450,882
Long-term debt (Note 3)	502,650			565,061
Deferred income taxes	57,968			57,258
Other non-current liabilities	38,002			42,271
Total liabilities	1,030,940			1,115,472
Commitments and contingencies (Note 5)
Stockholders’ equity:
Preferred stock ($0.01 par value; 25,000,000 shares authorized; no shares issued or outstanding at September 30, 2013 and December 31, 2012)	—			—
Common stock ($0.01 par value; 100,000,000 shares authorized; 65,394,999 shares issued at September 30, 2013 and December 31, 2012; 38,430,931 and 38,766,530 shares outstanding at September 30, 2013 and December 31, 2012, respectively)	654			654
Additional paid-in capital	84,866			102,373
Retained earnings	1,169,075			1,128,540
Accumulated other comprehensive income	3,796			3,574
Treasury stock, at cost (26,964,068 and 26,628,469 shares at September 30, 2013 and December 31, 2012, respectively)	(760,629		)	(761,578		)
Total stockholders’ equity	497,762			473,563
Total liabilities and stockholders’ equity	$	1,528,702		$	1,589,035

See accompanying notes to condensed consolidated financial statements.

1

VALASSIS COMMUNICATIONS, INC.

Condensed Consolidated Statements of Income

(U.S. dollars in thousands, except per share data)

(unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Revenues	$	489,383		$	523,822		$	1,467,792		$	1,582,645
Costs and expenses:
Cost of sales	361,337			388,284			1,086,648			1,180,905
Selling, general and administrative	74,577			73,358			228,632			234,498
Amortization expense	3,729			3,245			11,187			9,557
Goodwill impairment (Note 10)	—			—			—			7,585
Total costs and expenses	439,643			464,887			1,326,467			1,432,545
Earnings from operations	49,740			58,935			141,325			150,100
Other expenses and income:
Interest expense	7,287			7,563			22,464			21,372
Interest income	(30		)	(46		)	(138		)	(174		)
Other expenses (income), net	(1,713		)	249			(2,636		)	(525		)
Total other expenses, net	5,544			7,766			19,690			20,673
Earnings before income taxes	44,196			51,169			121,635			129,427
Income tax expense (Note 1)	16,483			14,429			45,467			44,559
Net earnings	$	27,713		$	36,740		$	76,168		$	84,868
Net earnings per common share, basic (Note 6)	$	0.73		$	0.94		$	1.98		$	2.08
Net earnings per common share, diluted (Note 6)	$	0.70		$	0.90		$	1.91		$	2.00
Weighted-average common shares outstanding, basic (Note 6)	37,460			39,047			37,818			40,777
Weighted-average common shares outstanding, diluted (Note 6)	38,684			40,832			39,147			42,532
Dividends declared per common share	$	0.31		$	—		$	0.93		$	—

See accompanying notes to condensed consolidated financial statements.

2

VALASSIS COMMUNICATIONS, INC.

Condensed Consolidated Statements of Comprehensive Income

(U.S. dollars in thousands)

(unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Net earnings	$	27,713		$	36,740		$	76,168		$	84,868
Other comprehensive income (loss), net of tax:
Unrealized changes in fair value of cash flow hedges	(251		)	(862		)	(169		)	(1,841		)
Realized losses on cash flow hedges reclassified from accumulated other comprehensive income into earnings	451			656			1,320			656
Foreign currency translation adjustment	707			197			(929		)	750
Total other comprehensive income (loss)	907			(9		)	222			(435		)
Comprehensive income	$	28,620		$	36,731		$	76,390		$	84,433

See accompanying notes to condensed consolidated financial statements.

3

VALASSIS COMMUNICATIONS, INC.

Condensed Consolidated Statements of Cash Flows

(U.S. dollars in thousands)

(unaudited)

	Nine Months Ended
	September 30,
	2013			2012
Cash flows from operating activities:
Net earnings	$	76,168		$	84,868
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	35,797			43,022
Amortization of debt issuance costs	1,801			1,438
Provision for losses on accounts receivable	1,994			1,231
Goodwill impairment	—			7,585
Loss on derivatives, net	132			194
Loss on sale of property, plant and equipment	846			400
Stock-based compensation expense	9,401			7,021
Deferred income taxes	93			1,513
Changes in assets and liabilities:
Accounts receivable, net	16,583			52,260
Inventories	6,548			9,260
Prepaid expenses and other	(12,680		)	(16,877		)
Other assets	(1,518		)	(1,038		)
Accounts payable	(17,176		)	(51,616		)
Progress billings	(1,511		)	577
Accrued expenses	(7,340		)	(21,626		)
Other non-current liabilities	(3,317		)	(7,018		)
Total adjustments	29,653			26,326
Net cash provided by operating activities	105,821			111,194
Cash flows from investing activities:
Additions to property, plant and equipment	(14,746		)	(15,783		)
Digital acquisitions, net of cash acquired	—			(18,344		)
Proceeds from sale of property, plant and equipment	5,288			256
Net cash used in investing activities	(9,458		)	(33,871		)
Cash flows from financing activities:
Repayments of long-term debt	(51,161		)	(11,250		)
Dividends paid on common shares and restricted stock	(35,732		)	—
Repurchases of common stock	(60,325		)	(87,130		)
Proceeds from stock option exercises	31,205			8,956
Net cash used in financing activities	(116,013		)	(89,424		)
Effect of exchange rate changes on cash and cash equivalents	(76		)	474
Net decrease in cash and cash equivalents	(19,726		)	(11,627		)
Cash and cash equivalents at beginning of period	94,711			101,971
Cash and cash equivalents at end of period	$	74,985		$	90,344
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	24,689		$	24,923
Cash paid during the period for income taxes	$	55,987		$	67,016

See accompanying notes to condensed consolidated financial statements.

4

VALASSIS COMMUNICATIONS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the information contained herein reflects all adjustments necessary for a fair presentation of the information presented. All such adjustments are of a normal recurring nature. The results of operations for the interim periods are not necessarily indicative of results to be expected for the fiscal year. For further information, refer to the consolidated financial statements and footnotes thereto included in the Valassis Communications, Inc. (“Valassis,” “we,” and “our”) Annual Report on Form 10-K for the year ended December 31, 2012 (the “2012 Form 10-K”).

Significant Accounting Policies

Accounts Receivable

The allowance for doubtful accounts was $6.3 million and $6.4 million as of September 30, 2013 and December 31, 2012, respectively.

Income Taxes

We are required to adjust our effective tax rate each quarter to be consistent with our estimated annual effective tax rate. We are also required to record the tax impact of certain unusual or infrequently occurring items, including the effects of changes in tax laws or rates, in the interim period in which they occur. The effective tax rate during a particular quarter may be higher or lower as a result of the timing of actual earnings versus annual projections.

Inventories

Inventories are accounted for at the lower of cost, determined on a first in, first out basis, or market. Inventories included on the condensed consolidated balance sheets consisted of:

(in thousands of U.S. dollars)	September 30, 2013		December 31, 2012
Raw materials	$	27,844	$	30,960
Work in progress	8,861		12,293
Inventories	$	36,705	$	43,253

Property, Plant and Equipment

The following table summarizes the costs and ranges of useful lives of the major classes of property, plant and equipment and the total accumulated depreciation related to property, plant and equipment, net included on the condensed consolidated balance sheets:

	Useful Lives	September 30, 2013			December 31, 2012
	(in years)	(in thousands of U.S. dollars)
Land, at cost	N/A	$	7,182		$	7,185
Buildings, at cost	10 - 30	38,118			37,961
Machinery and equipment, at cost	3 - 20	222,413			228,605
Office furniture and equipment, at cost	3 - 10	244,562			233,948
Leasehold improvements, at cost	5 - 10	29,154			28,916
		541,429			536,615
Less accumulated depreciation		(431,603		)	(410,783		)
Property, plant and equipment, net		$	109,826		$	125,832

5

VALASSIS COMMUNICATIONS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Recent Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2013-11 to clarify the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This guidance is effective for fiscal periods, and interim periods within those years, beginning after December 15, 2013, and is to be applied prospectively to all unrecognized tax benefits that exist at the effective date with retrospective application also permitted. We will comply with this guidance as of January 1, 2014, and do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In March 2013, the FASB issued ASU No. 2013-05 to clarify the applicable guidance for a parent company’s accounting for the release of the cumulative translation adjustment into net income upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. This guidance is effective for fiscal periods beginning after December 15, 2013, and is to be applied prospectively to derecognition events occurring after the effective date. We will comply with this guidance as of January 1, 2014, and do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In February 2013, the FASB issued ASU No. 2013-02, which amends the reporting of amounts reclassified out of accumulated other comprehensive income (“AOCI”). These amendments do not change the current requirements for reporting net income or other comprehensive income in the financial statements. However, the guidance requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component, either on the face of the financial statement where net income is presented or in the notes to the financial statements. This guidance is effective for fiscal periods

beginning after December 15, 2012, and is to be applied prospectively. We have complied with this guidance as of January 1, 2013, and the adoption of the guidance did not have a material impact on our consolidated financial statements.

2. GOODWILL AND OTHER INTANGIBLE ASSETS

The following table summarizes, by reportable segment, the gross amount, accumulated impairment losses and net carrying amount of goodwill included on the condensed consolidated balance sheets as of September 30, 2013 and December 31, 2012. There were no changes in the carrying amount of goodwill for the nine months endedSeptember 30, 2013.

(in thousands of U.S. dollars)	Shared Mail			Neighborhood Targeted			Free-standing Inserts		International, Digital Media & Services			Total
Total goodwill acquired	$	721,384		$	5,325		$	22,357	$	96,957		$	846,023
Accumulated impairment losses	(187,200		)	(3,985		)	—		(22,400		)	(213,585		)
Goodwill	$	534,184		$	1,340		$	22,357	$	74,557		$	632,438

The components of other intangible assets, net included on the condensed consolidated balance sheets consisted of:

	September 30, 2013								December 31, 2012
(in thousands of U.S. dollars)	Gross Amount		Accumulated Amortization			Net Amount		Weighted Average Remaining Useful Life (in years)	Gross Amount		Accumulated Amortization			Net Amount		Weighted Average Remaining Useful Life (in years)
Finite-lived intangible assets:
Mailing lists, non-compete agreements and other	$	47,320	$	(16,152	)	$	31,168	11.9	$	47,320	$	(13,025	)	$	34,295	12.2
Customer relationships	142,200		(63,326		)	78,874		7.4	142,200		(55,266		)	86,934		8.2
Total	$	189,520	$	(79,478	)	110,042			$	189,520	$	(68,291	)	121,229
Indefinite-lived intangible assets:
Valassis name, tradenames, trademarks and other						93,942								93,942
Other intangible assets, net						$	203,984							$	215,171

6

VALASSIS COMMUNICATIONS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

3. LONG-TERM DEBT

Long-term debt included on the condensed consolidated balance sheets consisted of:

(in thousands of U.S. dollars)	September 30, 2013		December 31, 2012
Senior Secured Revolving Credit Facility	$	15,000	$	50,000
Senior Secured Term Loan A	262,500		277,500
Senior Secured Convertible Notes due 2033, net of discount	—		61
6 5/8% Senior Notes due 2021	258,900		260,000
Total debt	536,400		587,561
Current portion long-term debt	33,750		22,500
Long-term debt	$	502,650	$	565,061

Senior Secured Credit Facility

General

On June 27, 2011, we entered into a senior secured credit facility with JPMorgan Chase Bank, N.A., as administrative agent, and a syndicate of lenders jointly arranged by J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and RBS Securities Inc. (the “Senior Secured Credit Facility”). The Senior Secured Credit Facility and related loan documents replaced and terminated our prior credit agreement, dated as of March 2, 2007, as amended (the “Prior Senior Secured Credit Facility”), by and among Valassis, Bear Stearns Corporate Lending Inc., as Administrative Agent, and a syndicate of lenders jointly arranged by Bear, Stearns & Co. Inc. and Banc of America Securities LLC. In connection with the termination of the Prior Senior Secured Credit Facility, all obligations and rights under the related guarantee, security and collateral agency agreement, dated as of March 2, 2007, as amended (the “Prior Security Agreement”), by Valassis and certain of its domestic subsidiaries signatory thereto, as grantors, in favor of Bear Stearns Corporate Lending Inc., in its capacity as collateral agent for the benefit of the Secured Parties (as defined in the Prior Security Agreement), were also simultaneously terminated.

The Senior Secured Credit Facility consists of:

• a five-year term loan A in an aggregate principal amount equal to $300.0 million, with principal repayable in quarterly installments at a rate of 5.0% during each of the first two years from issuance, 10.0% during the third year from issuance, 15.0% during the fourth year from issuance and 11.25% during the fifth year from issuance, with the remaining 53.75% due at maturity (the “Term Loan A”);

• a five-year revolving credit facility in an aggregate principal amount of $100.0 million (the “Revolving Line of Credit”), including $15.0 million available in Euros, Pounds Sterling or Canadian Dollars, $50.0 million available for letters of credit and a $20.0 million swingline loan subfacility, of which $50.0 million was drawn at closing and $15.0 million remains outstanding as of September 30, 2013 (exclusive of outstanding letters of credit described below); and

• an incremental facility pursuant to which, prior to the maturity of the Senior Secured Credit Facility, we may incur additional indebtedness in an amount up to $150.0 million under the Revolving Line of Credit or the Term Loan A or a combination thereof, subject to certain conditions, including receipt of additional lending commitments for such additional indebtedness. The terms of the incremental facility will be substantially similar to the terms of the Senior Secured Credit Facility, except with respect to the pricing of the incremental facility, the interest rate for which could be higher than that for the Revolving Line of Credit and the Term Loan A.

All borrowings under our Senior Secured Credit Facility, including, without limitation, amounts drawn under the Revolving Line of Credit, are subject to the satisfaction of customary conditions, including absence of a default and accuracy of representations and warranties. As of September 30, 2013, we had approximately $78.3 million available under the Revolving Line of Credit portion of our Senior Secured Credit Facility (after giving effect to the reductions in availability pursuant to $6.7 million in standby letters of credit outstanding as of September 30, 2013).

7

VALASSIS COMMUNICATIONS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Interest and Fees

Borrowings under our Senior Secured Credit Facility bear interest, at our option, at either the alternate base rate (defined as the higher of the prime rate announced by the Administrative Agent, the federal funds effective rate or one-month LIBOR, in each case, plus an applicable interest rate margin) (the “Base Rate”) or at the Eurodollar Rate (one-, two-, three- or six-month LIBOR, at our election, as defined in the credit agreement governing the Senior Secured Credit Facility), except for borrowings made in alternate currencies which may not accrue interest based upon the alternate base rate, in each case, plus an applicable interest rate margin. The applicable margins are currently 0.75% per annum for Base Rate loans and 1.75% per annum for Eurodollar Rate loans. The margins applicable to the borrowings under our Senior Secured Credit Facility may be adjusted based on our consolidated leverage ratio, with 1.00% being the maximum Base Rate margin and 2.00% being the maximum Eurodollar Rate margin. See Note 7, Derivative Financial Instruments and Fair Value Measurements, for discussion regarding our various interest rate swap agreements.

Guarantees and Security

Our Senior Secured Credit Facility is guaranteed by certain of our existing and future domestic restricted subsidiaries pursuant to a Guarantee and Collateral Agreement. In addition, our obligations under our Senior Secured Credit Facility and the guarantee obligations of the subsidiary guarantors are secured by first priority liens on substantially all of our and our subsidiary guarantors’ present and future assets and by a pledge of all of the equity interests in our domestic subsidiary guarantors and 65% of the capital stock of certain of our existing and future foreign subsidiaries.

Prepayments

The Senior Secured Credit Facility also contains a requirement that we make mandatory principal prepayments on the Term Loan A and Revolving Line of Credit in certain circumstances, including, without limitation, with 100% of the aggregate net cash proceeds from certain asset sales, casualty events or condemnation recoveries (in each case, to the extent not otherwise used for reinvestment in our business or related business and subject to certain other exceptions). The Senior Secured Credit Facility further provides that, subject to customary notice and minimum amount conditions, we may make voluntary prepayments without payment of premium or penalty.

Covenants

Subject to customary and otherwise agreed upon exceptions, our Senior Secured Credit Facility contains affirmative and negative covenants, including, but not limited to:

• the payment of other obligations;

• the maintenance of organizational existences, including, but not limited to, maintaining our property and insurance;

• compliance with all material contractual obligations and requirements of law;

• limitations on the incurrence of indebtedness;

• limitations on creation and existence of liens;

• limitations on certain fundamental changes to our corporate structure and nature of our business, including mergers;

• limitations on asset sales;

• limitations on restricted payments, including certain dividends and stock repurchases and redemptions;

• limitations on capital expenditures;

• limitations on any investments, provided that certain “permitted acquisitions” and strategic investments are allowed;

• limitations on optional prepayments and modifications of certain debt instruments;

• limitations on modifications to organizational documents;

• limitations on transactions with affiliates;

• limitations on entering into certain swap agreements;

• limitations on negative pledge clauses or clauses restricting subsidiary distributions;

• limitations on sale-leaseback and other lease transactions; and

• limitations on changes to our fiscal year.

8

VALASSIS COMMUNICATIONS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Our Senior Secured Credit Facility also requires us to comply with:

• a maximum consolidated leverage ratio, as defined in our Senior Secured Credit Facility (generally, the ratio of our consolidated total debt to consolidated earnings before interest, taxes, depreciation and amortization, or EBITDA, for the most recent four quarters), of 3.50:1.00; and

• a minimum consolidated interest coverage ratio, as defined in our Senior Secured Credit Facility (generally, the ratio of our consolidated EBITDA to consolidated interest expense for the most recent four quarters), of 3.00:1.00.

The following table shows the required and actual financial ratios under our Senior Secured Credit Facility as of September 30, 2013:

	Required Ratio	Actual Ratio
Maximum consolidated leverage ratio	No greater than 3.50:1.00	1.95:1.00
Minimum consolidated interest coverage ratio	No less than 3.00:1.00	10.20:1.00

In addition, we are required to give notice to the administrative agent and the lenders under our Senior Secured Credit Facility of defaults under the facility documentation and other material events, make any new wholly-owned domestic subsidiary (other than an immaterial subsidiary) a subsidiary guarantor and pledge substantially all after-acquired property as collateral to secure our and our subsidiary guarantors’ obligations in respect of the facility.

Events of Default

Our Senior Secured Credit Facility contains customary events of default, including upon a change in control. If such an event of default occurs, the lenders under our Senior Secured Credit Facility would be entitled to take various actions, including in certain circumstances increasing the effective interest rate and accelerating the amounts due under our Senior Secured Credit Facility.

6 ⁵/8% Senior Notes due 2021

On January 28, 2011, we issued in a private placement $260.0 million aggregate principal amount of our 6 ⁵/8% Senior Notes due 2021 (the “2021 Notes”). Interest on the 2021 Notes is payable every six months on February 1 and August 1. The 2021 Notes are fully and unconditionally guaranteed, jointly and severally, by substantially all of our existing and future domestic restricted subsidiaries on a senior unsecured basis. We capitalized related debt issuance costs of approximately $5.1 million, which are being amortized over the term of the 2021 Notes.

In July 2011, in accordance with the terms of the registration rights agreement between us and the initial purchasers of the 2021 Notes, we completed an exchange offer to exchange the original notes issued in the private placement for a like principal amount of exchange notes registered under the Securities Act of 1933, as amended. An aggregate principal amount of $260.0 million, or 100%, of the original notes were exchanged for exchange notes in the exchange offer. The exchange notes are substantially identical to the original notes, except that the exchange notes are not subject to certain transfer restrictions.

The 2021 Notes were issued under an indenture with Wells Fargo Bank, National Association, as trustee (the “2021 Indenture”). Subject to a number of exceptions, the 2021 Indenture restricts our ability and the ability of our restricted subsidiaries (as defined in the 2021 Indenture) to incur or guarantee additional indebtedness, transfer or sell assets, make certain investments, pay dividends or make distributions or other restricted payments, create certain liens, merge or consolidate, repurchase stock, create or permit restrictions on the ability of our restricted subsidiaries to pay dividends or make other distributions to us and enter into transactions with affiliates.

We may redeem all or a portion of the 2021 Notes at our option at any time prior to February 1, 2016, at a redemption price equal to 100% of the principal amount of 2021 Notes to be redeemed, plus a make-whole premium as described in the 2021 Indenture, plus accrued and unpaid interest to the redemption date, if any. At any time on or after February 1, 2016, we may redeem all or a portion of the 2021 Notes at our option at the following redemption prices (expressed as percentages of the principal amount thereof) if redeemed during the twelve-month period commencing on February 1 of the years set forth below:

Year	Percentage
2016	103.313%
2017	102.208%
2018	101.104%
2019 and thereafter	100.000%

9

VALASSIS COMMUNICATIONS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

In addition, we must pay accrued and unpaid interest to the redemption date, if any. On or prior to February 1, 2014, we may also redeem at our option up to 35% of the principal amount of the outstanding 2021 Notes with the proceeds of certain equity offerings at the redemption price specified in the 2021 Indenture, plus accrued and unpaid interest to the date of redemption, if any. Upon the occurrence of a change of control, as defined in the 2021 Indenture, we must make a written offer to purchase all of the 2021 Notes for cash at a purchase price equal to 101% of the principal amount of the 2021 Notes, plus accrued and unpaid interest to the date of repurchase, if any.

Senior Secured Convertible Notes due 2033

During the three and nine months endedSeptember 30, 2013, we redeemed all of the then-outstanding Senior Secured Convertible Notes due 2033.

Additional Provisions

The 2021 Indenture contains a cross-default provision which becomes applicable if we (a) fail to pay the stated principal amount of any of our indebtedness at its final maturity date, or (b) default under any of our indebtedness and the default results in the acceleration of indebtedness, and, in each case, the principal amount of any such indebtedness, together with the principal amount of any other such indebtedness under which there has been a payment default or the maturity of which has been so accelerated, aggregates $50.0 million or more. Our credit agreement contains a cross-default provision which becomes applicable if we (a) fail to make any payment under any indebtedness for money borrowed by us (other than the obligations under such credit agreement) in an aggregate outstanding principal amount of at least $50.0 million or, (b) otherwise default under any such indebtedness, or trigger another event which causes such indebtedness to become due or to be repurchased, prepaid, defeased or redeemed or become subject to an offer to repurchase, prepay, defease or redeem such indebtedness prior to its stated maturity.

Repurchases of Debt

Subject to applicable limitations in our Senior Secured Credit Facility and indentures, we may from time to time repurchase our debt in the open market, through tender offers, through exchanges for debt or equity securities, in privately negotiated transactions or otherwise. During the three and nine months endedSeptember 30, 2013, we made voluntary repayments and repurchases of our then-outstanding debt in aggregate principal amounts of $21.1 million and $36.1 million, respectively.

Covenant Compliance

As of September 30, 2013, we were in compliance with all of our indenture and Senior Secured Credit Facility covenants.

4. ACCRUED EXPENSES

Accrued expenses included on the condensed consolidated balance sheets consisted of:

(in thousands of U.S. dollars)	September 30, 2013		December 31, 2012
Accrued interest	$	2,972	$	7,275
Accrued compensation and benefits	43,986		50,305
Dividends payable	11,912		12,011
Other accrued expenses	37,472		37,876
Accrued expenses	$	96,342	$	107,467

5. CONTINGENCIES

The application and interpretation of applicable state sales tax laws to certain of our products is uncertain. Accordingly, we may be exposed to additional sales tax liability to the extent various state jurisdictions determine that certain of our products are subject to such jurisdictions’ sales tax. As of September 30, 2013, we have recorded a liability of $7.6 million, reflecting our best estimate of our potential sales tax liability.

In addition to the above matter, we are involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material effect on our financial position, results of operations or liquidity.

10

VALASSIS COMMUNICATIONS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

6. EARNINGS PER SHARE

Our restricted stock awards are deemed participating securities, which, under the applicable accounting standards, require the computation of earnings per share using the two-class method. The following table provides the calculations of earnings per common share, basic and earnings per common share, diluted included in the unaudited condensed consolidated statements of income:

		Three Months Ended						Nine Months Ended
		September 30,						September 30,
	(in thousands, except per share data and percentages)	2013			2012			2013			2012
	Numerator:
	Net earnings	$	27,713		$	36,740		$	76,168		$	84,868
	Less: Dividends declared — common shares and restricted shares (participating securities)	(11,912		)	—			(35,632		)	—
	Undistributed earnings	15,801			36,740			40,536			84,868
	Percentage allocated to common shares1	98.3		%	100.0		%	98.3		%	100.0		%
	Undistributed earnings — common shares	15,532			36,740			39,847			84,868
	Add: Dividends declared — common shares	11,714			—			35,028			—
	Numerator for basic and diluted earnings per share	$	27,246		$	36,740		$	74,875		$	84,868
	Denominator:
	Denominator for basic earnings per common share — weighted-average common shares	37,460			39,047			37,818			40,777
	Incremental shares for stock awards2	1,224			1,785			1,329			1,755
	Denominator for diluted earnings per common share — adjusted weighted-average common shares and assumed conversion	38,684			40,832			39,147			42,532
	Net earnings per common share, basic	$	0.73		$	0.94		$	1.98		$	2.08
	Net earnings per common share, diluted	$	0.70		$	0.90		$	1.91		$	2.00
1	Weighted-average common shares outstanding	37,460			39,047			37,818			40,777
	Weighted-average restricted shares outstanding (participating securities)	642			—			653			—
	Total	38,102			39,047			38,471			40,777
	Percentage allocated to common shares	98.3		%	100.0		%	98.3		%	100.0		%
2	Anti-dilutive shares excluded from calculation of weighted-average incremental shares for stock awards	2,560			3,184			2,611			3,397

11

VALASSIS COMMUNICATIONS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

7. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

We are exposed to market risks arising from adverse changes in foreign exchange rates and interest rates. We manage these risks through a variety of strategies which include the use of derivatives. Certain derivatives are designated as cash flow hedges and qualify for hedge accounting treatment, while others do not qualify or have not been designated as hedges and are marked to market through earnings. The notional amounts of derivative financial instruments and related fair values measured on a recurring basis and included in the condensed consolidated balance sheets were as follows:

	Notional Amounts				Fair Values
(in millions of U.S. dollars)	September 30, 2013		December 31, 2012		September 30, 2013			December 31, 2012			Balance Sheet Location
Derivatives designated as cash flow hedging instruments:
Interest rate swap contract	$	169.4	$	180.6	$	(3.9	)	$	(5.8	)	Accrued expenses / Other non-current liabilities
Foreign exchange contracts	11.9		6.4		—			0.1			Prepaid expenses
Derivatives not receiving hedge accounting treatment:
Foreign exchange contracts	—		4.7		—			0.3			Prepaid expenses
Total derivative financial instruments	$	181.3	$	191.7	$	(3.9	)	$	(5.4	)

The fair values of our interest rate swap contract and foreign exchange contracts are determined based on third-party valuation models and observable foreign exchange forward contract rates, respectively, both of which represent Level 2 fair value inputs.

The following tables summarize the impact of derivative financial instruments on the unaudited condensed consolidated financial statements for the indicated periods:

	Three Months Ended
	September 30,
	2013			2012			2013			2012			2013			2012
(in millions of U.S. Dollars)	Amount of Pre-tax Gain Recognized in Earnings*						Amount of Pre-tax Loss Recognized in OCI						Amount of Pre-tax Loss Reclassified from AOCI into Earnings*
Derivatives designated as cash flow hedging instruments:
Interest rate swap contract	$	—		$	—		$	(0.3	)	$	(1.0	)	$	(0.7	)	$	(0.7	)
Foreign exchange contracts	—			—			(0.1		)	—			—			—
Derivatives not receiving hedge accounting treatment:
Foreign exchange contracts	—			0.5			—			—			—			—
Total	$	—		$	0.5		$	(0.4	)	$	(1.0	)	$	(0.7	)	$	(0.7	)
	Nine Months Ended
	September 30,
	2013			2012			2013			2012			2013			2012
(in millions of U.S. Dollars)	Amount of Pre-tax Gain (Loss) Recognized in Earnings*						Amount of Pre-tax Loss Recognized in OCI						Amount of Pre-tax Loss Reclassified from AOCI into Earnings*
Derivatives designated as cash flow hedging instruments:
Interest rate swap contract	$	—		$	—		$	(0.2	)	$	(2.6	)	$	(2.1	)	$	(0.7	)
Foreign exchange contracts	—			—			(0.1		)	—			—			—
Derivatives not receiving hedge accounting treatment:
Interest rate swap contracts	—			(0.1		)	—			—			—			—
Foreign exchange contracts	(0.3		)	1.4			—			—			—			—
Total	$	(0.3	)	$	1.3		$	(0.3	)	$	(2.6	)	$	(2.1	)	$	(0.7	)

* Amounts recognized in earnings related to interest rate swap contracts are included in interest expense in the unaudited condensed consolidated statements of income and amounts recognized in earnings related to foreign exchange contracts are included in cost of sales in the unaudited condensed consolidated statements of income.

12

VALASSIS COMMUNICATIONS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Interest Rate Swaps

On December 17, 2009, we entered into an interest rate swap agreement with an initial notional amount of $300.0 million to fix three-month LIBOR at 2.005%, for an effective rate of 4.255%, including the applicable margin, for an equivalent portion of our variable rate debt under our Prior Senior Secured Credit Facility. The effective date of this agreement was December 31, 2010. The notional amount of $300.0 million amortized by $40.0 million at the end of every quarter until it reached $100.0 million for the quarter ended June 30, 2012, the expiration date. The swap was designated as, and qualified as, a cash flow hedge through the termination of the Prior Senior Secured Credit Facility on June 27, 2011. Changes in the fair value of this swap subsequent to the termination of hedge accounting were recognized in earnings as a component of interest expense until expiration of the swap.

On July 6, 2011, we entered into an interest rate swap agreement with an initial notional amount of $186.3 million. The effective date of this agreement was June 30, 2012. Under the swap agreement, we are required to make quarterly payments at a fixed interest rate of 1.8695% per annum to the counterparty on an amortizing notional amount in exchange for receiving variable payments based on the three-month LIBOR interest rate for the same notional amount. After giving effect to the swap agreement, our effective interest rate for the notional amount, based on the current applicable margin under our Senior Secured Credit Facility, is 3.6195% per annum. The initial notional amount of $186.3 million amortizes quarterly by (i) $2.8 million from the effective date through the quarter ending September 30, 2013, (ii) $5.6 million from September 30, 2013 through the quarter ending September 30, 2014, and (iii) $8.4 million from September 30, 2014 until June 30, 2015, the expiration date of the agreement. The swap is designated as and qualifies as a cash flow hedge.

Foreign Currency

Currencies to which we have exposure are the Mexican peso, Canadian dollar, British pound, Polish zloty and Euro. Currency restrictions are not expected to have a significant effect on our cash flows, liquidity, or capital resources. We purchase the Mexican peso and Polish zloty under two to twelve-month forward foreign exchange contracts to stabilize the cost of production. As of September 30, 2013, we had a commitment to purchase $11.1 million in Mexican pesos and $0.8 million in Polish zlotys over the next year.

Long-Term Debt

The estimated fair market value of our long-term debt was $5.4 million below carrying value as of September 30, 2013 and $12.6 million above carrying value as of December 31, 2012. Our 2021 Notes are traded in an active market with the fair value determined based on quoted active market prices, which represents a Level 1 fair value input. Borrowings under our Senior Secured Credit Facility are not traded in an active market and are valued based on an implied price derived from industry averages and relative loan performance, which represent Level 3 fair value inputs.

Cash and Cash Equivalents

The carrying amounts of cash and cash equivalents and accruals approximate fair value due to the near-term maturity of these instruments.

8. REPURCHASES OF COMMON STOCK

The following table summarizes our repurchases of common stock during the indicated periods:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands, except per share data)	2013		2012		2013		2012
Shares repurchased	243		838		2,231		4,133
Aggregate repurchase price	$	6,914	$	21,229	$	60,325	$	87,130
Average price paid per share	$	28.49	$	25.34	$	27.04	$	21.08

As of September 30, 2013, we had authorization to repurchase an additional 6.1 million shares of our common stock under the share repurchase program approved by our Board of Directors.

13

VALASSIS COMMUNICATIONS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

9. BRAND.NET ACQUISITION

On June 20, 2012, we acquired, through a wholly-owned subsidiary, Brand.net, an online display, video and mobile advertising platform. The acquisition was accounted for as a purchase under the acquisition method in accordance with FASB Accounting Standards Codification No. 805, Business Combinations. The total purchase price was approximately $18.0 million and did not include direct acquisition costs of approximately $0.7 million. The acquisition was recorded by allocating the purchase price to the assets acquired, including identifiable intangible assets and liabilities assumed, based on their estimated fair values at the date of acquisition.

10. 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 in 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.

14

VALASSIS COMMUNICATIONS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

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

	Three Months Ended
	September 30,
(in millions of U.S. dollars)	Shared Mail		FSI		Neighborhood Targeted			International, Digital Media & Services			Total
2013
Revenues from external customers	$	342.5	$	75.5	$	23.7		$	47.7		$	489.4
Intersegment revenues	$	5.0	$	10.6	$	17.2		$	—		$	32.8
Depreciation/amortization	$	5.3	$	2.4	$	0.8		$	2.6		$	11.1
Segment profit (loss)	$	47.5	$	7.7	$	(2.1	)	$	(2.4	)	$	50.7
2012
Revenues from external customers	$	331.4	$	72.2	$	75.8		$	44.4		$	523.8
Intersegment revenues	$	4.3	$	9.3	$	15.7		$	—		$	29.3
Depreciation/amortization	$	7.7	$	3.2	$	1.0		$	2.0		$	13.9
Segment profit (loss)	$	52.3	$	7.6	$	(1.1	)	$	0.1		$	58.9
	Nine Months Ended
	September 30,
(in millions of U.S. dollars)	Shared Mail		FSI		Neighborhood Targeted			International, Digital Media & Services			Total
2013
Revenues from external customers	$	1,005.6	$	241.4	$	75.8		$	145.0		$	1,467.8
Intersegment revenues	$	13.2	$	31.5	$	50.4		$	—		$	95.1
Depreciation/amortization	$	17.5	$	8.0	$	2.7		$	7.6		$	35.8
Segment profit (loss)	$	130.3	$	28.2	$	(8.0	)	$	(6.8	)	$	143.7
2012
Revenues from external customers	$	1,008.2	$	219.0	$	225.5		$	129.9		$	1,582.6
Intersegment revenues	$	12.7	$	29.4	$	42.3		$	—		$	84.4
Depreciation/amortization	$	24.2	$	9.6	$	3.1		$	6.1		$	43.0
Segment profit (loss)	$	147.0	$	20.3	$	(5.1	)	$	5.2		$	167.4

15

VALASSIS COMMUNICATIONS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

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				Nine Months Ended
	September 30,				September 30,
(in millions of U.S. dollars)	2013		2012		2013		2012
Total segment profit	$	50.7	$	58.9	$	143.7	$	167.4
Unallocated amounts:
Goodwill impairment	—		—		—		7.6
Restructuring costs and other non-recurring charges	1.0		—		2.4		9.7
Earnings from operations	$	49.7	$	58.9	$	141.3	$	150.1

The $1.0 million and $2.4 million of restructuring costs and other non-recurring charges recognized during the three and nine months endedSeptember 30, 2013, respectively, reflected severance and related costs, of which $0.7 million and $1.6 million were included in selling, general and administrative expenses in the unaudited, condensed consolidated statements of income during the three and nine months endedSeptember 30, 2013, respectively, and $0.3 million and $0.8 million were included in cost of sales in the unaudited, condensed consolidated statements of income during the three and nine months endedSeptember 30, 2013, respectively.

The goodwill impairment charges of $7.6 million recognized during the nine months endedSeptember 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 costs and other non-recurring charges recognized during the nine months endedSeptember 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 the nine months endedSeptember 30, 2012.

Domestic and foreign revenues were as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions of U.S. dollars)	2013		2012		2013		2012
United States	$	479.3	$	514.6	$	1,433.2	$	1,550.5
Foreign	10.1		9.2		34.6		32.1
Revenues	$	489.4	$	523.8	$	1,467.8	$	1,582.6

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

(in millions of U.S. dollars)	September 30, 2013		December 31, 2012
United States	$	102.1	$	118.1
Foreign	7.7		7.7
Property, plant and equipment, net	$	109.8	$	125.8

16

VALASSIS COMMUNICATIONS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

11. GUARANTOR AND NON-GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

The following information is presented in accordance with Rule 3-10 of Regulation S-X. The operating and investing activities of the separate legal entities included in the consolidated financial statements are fully interdependent and integrated. Revenues and operating expenses of the separate legal entities include intercompany charges for management and other services. The 2021 Notes issued by Valassis (referred to for purposes of this note only as the “Parent Company”) are guaranteed by substantially all of the Parent Company’s domestic wholly-owned subsidiaries (collectively, the “Guarantor Subsidiaries”) on a senior unsecured basis. Each of the Guarantor Subsidiaries is 100% owned, directly or indirectly, by the Parent Company and has guaranteed the 2021 Notes on a joint and several, full and unconditional basis, subject to certain customary exceptions. Pursuant to the terms of the 2021 Indenture, the Guarantor Subsidiaries are subject to release under certain customary conditions as described below. Non-wholly-owned subsidiaries, joint ventures, partnerships and foreign subsidiaries (collectively, the “Non-Guarantor Subsidiaries”) are not guarantors of these obligations. Substantially all of the Guarantor Subsidiaries also guarantee the Parent Company’s Senior Secured Credit Facility.

The 2021 Indenture provides for a Guarantor Subsidiary to be automatically and unconditionally released and discharged from its guarantee obligations in certain circumstances, including:

• The sale or other transfer or disposition of all of the Guarantor Subsidiary's capital stock to any person that is not an affiliate of the Parent Company;

• The sale or other transfer of all or substantially all the assets or capital stock of a Guarantor Subsidiary, by way of merger, consolidation or otherwise, to any person that is not an affiliate of the Parent Company;

• If a Guarantor Subsidiary ceases to be a “Domestic Restricted Subsidiary” for purposes of the indenture covenants; and

• Legal defeasance or covenant defeasance of the indenture obligations when provision has been made for them to be fully satisfied.

17

VALASSIS COMMUNICATIONS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Condensed Consolidating Balance Sheet

September 30, 2013

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Assets
Current assets:
Cash and cash equivalents	$	41,025		$	14,329		$	19,631		$	—		$	74,985
Accounts receivable, net	100,152			282,914			25,256			—			408,322
Inventories	27,249			9,453			3			—			36,705
Prepaid expenses and other (including intercompany)	1,971,516			5,232,562			3,085			(7,158,157		)	49,006
Total current assets	2,139,942			5,539,258			47,975			(7,158,157		)	569,018
Property, plant and equipment, net	19,014			89,854			958			—			109,826
Goodwill	23,700			601,750			6,988			—			632,438
Other intangible assets, net	11,517			192,467			—			—			203,984
Investments	717,055			19,912			—			(732,964		)	4,003
Intercompany note receivable (payable)	326,622			(314,292		)	(12,330		)	—			—
Other assets	6,392			3,029			12			—			9,433
Total assets	$	3,244,242		$	6,131,978		$	43,603		$	(7,891,121	)	$	1,528,702
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion, long-term debt	$	33,750		$	—		$	—		$	—		$	33,750
Accounts payable and intercompany payable	2,132,824			5,271,181			18,296			(7,158,157		)	264,144
Progress billings	13,128			15,065			9,891			—			38,084
Accrued expenses	52,508			35,842			7,992			—			96,342
Total current liabilities	2,232,210			5,322,088			36,179			(7,158,157		)	432,320
Long-term debt	502,650			—			—			—			502,650
Deferred income taxes	(3,421		)	65,398			(4,009		)	—			57,968
Other non-current liabilities	15,041			31,020			(8,059		)	—			38,002
Total liabilities	2,746,480			5,418,506			24,111			(7,158,157		)	1,030,940
Stockholders’ equity	497,762			713,472			19,492			(732,964		)	497,762
Total liabilities and stockholders’ equity	$	3,244,242		$	6,131,978		$	43,603		$	(7,891,121	)	$	1,528,702

18

VALASSIS COMMUNICATIONS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Condensed Consolidating Balance Sheet

December 31, 2012

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Assets
Current assets:
Cash and cash equivalents	$	62,836		$	10,745		$	21,130		$	—		$	94,711
Accounts receivable, net	116,821			287,230			22,848			—			426,899
Inventories	35,421			7,829			3			—			43,253
Prepaid expenses and other (including intercompany)	1,520,526			3,706,682			1,998			(5,192,617		)	36,589
Total current assets	1,735,604			4,012,486			45,979			(5,192,617		)	601,452
Property, plant and equipment, net	19,159			105,667			1,006			—			125,832
Goodwill	23,699			601,750			6,989			—			632,438
Other intangible assets, net	11,534			203,637			—			—			215,171
Investments	645,411			15,375			—			(658,355		)	2,431
Intercompany note receivable (payable)	364,921			(360,830		)	(4,091		)	—			—
Other assets	7,543			4,157			11			—			11,711
Total assets	$	2,807,871		$	4,582,242		$	49,894		$	(5,850,972	)	$	1,589,035
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion, long-term debt	$	22,500		$	—		$	—		$	—		$	22,500
Accounts payable and intercompany payable	1,653,928			3,804,209			15,800			(5,192,617		)	281,320
Progress billings	16,459			7,758			15,378			—			39,595
Accrued expenses	61,741			38,878			6,848			—			107,467
Total current liabilities	1,754,628			3,850,845			38,026			(5,192,617		)	450,882
Long-term debt	565,061			—			—			—			565,061
Deferred income taxes	(4,131		)	65,398			(4,009		)	—			57,258
Other non-current liabilities	18,750			22,722			799			—			42,271
Total liabilities	2,334,308			3,938,965			34,816			(5,192,617		)	1,115,472
Stockholders’ equity	473,563			643,277			15,078			(658,355		)	473,563
Total liabilities and stockholders’ equity	$	2,807,871		$	4,582,242		$	49,894		$	(5,850,972	)	$	1,589,035

19

VALASSIS COMMUNICATIONS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Condensed Consolidating Statement of Comprehensive Income

Three Months EndedSeptember 30, 2013

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Revenues	$	126,994		$	453,902		$	13,813		$	(105,326	)	$	489,383
Costs and expenses:
Cost of sales	100,190			308,615			9,893			(57,361		)	361,337
Selling, general and administrative	23,682			95,278			3,582			(47,965		)	74,577
Amortization expense	6			3,723			—			—			3,729
Total costs and expenses	123,878			407,616			13,475			(105,326		)	439,643
Earnings from operations	3,116			46,286			338			—			49,740
Other expenses and income:
Interest expense	7,287			—			—			—			7,287
Interest income	(18		)	—			(12		)	—			(30		)
Intercompany interest	(9,082		)	9,082			—			—			—
Other income, net	(816		)	(835		)	(62		)	—			(1,713		)
Total other expenses (income), net	(2,629		)	8,247			(74		)	—			5,544
Earnings before income taxes	5,745			38,039			412			—			44,196
Income tax expense	684			15,557			242			—			16,483
Equity in net earnings of subsidiaries	22,652			170			—			(22,822		)	—
Net earnings	$	27,713		$	22,652		$	170		$	(22,822	)	$	27,713
Other comprehensive income (loss)	907			(707		)	(707		)	1,414			907
Comprehensive income (loss)	$	28,620		$	21,945		$	(537	)	$	(21,408	)	$	28,620

20

VALASSIS COMMUNICATIONS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Condensed Consolidating Statement of Comprehensive Income

Three Months EndedSeptember 30, 2012

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Revenues	$	172,888		$	445,063	$	12,868		$	(106,997	)	$	523,822
Costs and expenses:
Cost of sales	145,467			286,533		9,093			(52,809		)	388,284
Selling, general and administrative	23,033			101,614		2,899			(54,188		)	73,358
Amortization expense	6			3,239		—			—			3,245
Total costs and expenses	168,506			391,386		11,992			(106,997		)	464,887
Earnings from operations	4,382			53,677		876			—			58,935
Other expenses and income:
Interest expense	7,563			—		—			—			7,563
Interest income	(20		)	3		(29		)	—			(46		)
Intercompany interest	(9,062		)	9,062		—			—			—
Other expenses, net	49			197		3			—			249
Total other expenses (income), net	(1,470		)	9,262		(26		)	—			7,766
Earnings before income taxes	5,852			44,415		902			—			51,169
Income tax expense (benefit)	(3,429		)	17,632		226			—			14,429
Equity in net earnings of subsidiaries	27,459			4,276		—			(31,735		)	—
Net earnings	$	36,740		$	31,059	$	676		$	(31,735	)	$	36,740
Other comprehensive income (loss)	(9		)	197		197			(394		)	(9		)
Comprehensive income	$	36,731		$	31,256	$	873		$	(32,129	)	$	36,731

21

VALASSIS COMMUNICATIONS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Condensed Consolidating Statement of Comprehensive Income

Nine Months EndedSeptember 30, 2013

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Revenues	$	399,108		$	1,342,934		$	46,112		$	(320,362	)	$	1,467,792
Costs and expenses:
Cost of sales	312,523			909,324			33,065			(168,264		)	1,086,648
Selling, general and administrative	73,578			296,882			10,270			(152,098		)	228,632
Amortization expense	17			11,170			—			—			11,187
Total costs and expenses	386,118			1,217,376			43,335			(320,362		)	1,326,467
Earnings from operations	12,990			125,558			2,777			—			141,325
Other expenses and income:
Interest expense	22,464			—			—			—			22,464
Interest income	(70		)	—			(68		)	—			(138		)
Intercompany interest	(20,315		)	20,315			—			—			—
Other income, net	(874		)	(1,459		)	(303		)	—			(2,636		)
Total other expenses (income), net	1,205			18,856			(371		)	—			19,690
Earnings before income taxes	11,785			106,702			3,148			—			121,635
Income tax expense	2,220			42,582			665						45,467
Equity in net earnings of subsidiaries	66,603			2,483						(69,086		)	—
Net earnings	$	76,168		$	66,603		$	2,483		$	(69,086	)	$	76,168
Other comprehensive income	222			929			929			(1,858		)	222
Comprehensive income	$	76,390		$	67,532		$	3,412		$	(70,944	)	$	76,390

22

VALASSIS COMMUNICATIONS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Condensed Consolidating Statement of Comprehensive Income

Nine Months EndedSeptember 30, 2012

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Revenues	$	515,716		$	1,332,741		$	44,754		$	(310,566	)	$	1,582,645
Costs and expenses:
Cost of sales	435,750			864,353			34,637			(153,835		)	1,180,905
Selling, general and administrative	76,842			305,097			9,290			(156,731		)	234,498
Amortization expense	17			9,540			—			—			9,557
Goodwill impairment	3,985			3,600			—			—			7,585
Total costs and expenses	516,594			1,182,590			43,927			(310,566		)	1,432,545
Earnings (loss) from operations	(878		)	150,151			827			—			150,100
Other expenses and income:
Interest expense	21,372			—			—			—			21,372
Interest income	(80		)	3			(97		)	—			(174		)
Intercompany interest	(19,817		)	19,770			47			—			—
Other expenses (income), net	34			(526		)	(33		)	—			(525		)
Total other expenses (income), net	1,509			19,247			(83		)	—			20,673
Earnings (loss) before income taxes	(2,387		)	130,904			910			—			129,427
Income tax expense (benefit)	(6,016		)	49,540			1,035			—			44,559
Equity in net earnings of subsidiaries	81,239			3,475			—			(84,714		)	—
Net earnings (loss)	$	84,868		$	84,839		$	(125	)	$	(84,714	)	$	84,868
Other comprehensive income (loss)	(435		)	750			750			(1,500		)	(435		)
Comprehensive income	$	84,433		$	85,589		$	625		$	(86,214	)	$	84,433

23

VALASSIS COMMUNICATIONS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Condensed Consolidating Statement of Cash Flows

Nine Months EndedSeptember 30, 2013

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments		Consolidated Total
Net cash provided by (used in) operating activities	$	11,300		$	95,666		$	(1,145	)	$	—	$	105,821
Cash flows from investing activities:
Additions to property, plant and equipment	(1,744		)	(12,715		)	(287		)	—		(14,746		)
Proceeds from sale of property, plant and equipment	79			5,200			9			—		5,288
Net cash used in investing activities	(1,665		)	(7,515		)	(278		)	—		(9,458		)
Cash flows from financing activities:
Cash provided by (used in) intercompany activity	84,567			(84,567		)	—			—		—
Repayments of long-term debt	(51,161		)	—			—			—		(51,161		)
Dividends paid on common shares and restricted stock	(35,732		)	—			—			—		(35,732		)
Repurchases of common stock	(60,325		)	—			—			—		(60,325		)
Proceeds from stock options exercises	31,205			—			—			—		31,205
Net cash used in financing activities	(31,446		)	(84,567		)	—			—		(116,013		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(76		)	—		(76		)
Net increase (decrease) in cash and cash equivalents	(21,811		)	3,584			(1,499		)	—		(19,726		)
Cash and cash equivalents at beginning of period	62,836			10,745			21,130			—		94,711
Cash and cash equivalents at end of period	$	41,025		$	14,329		$	19,631		$	—	$	74,985

24

VALASSIS COMMUNICATIONS, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Condensed Consolidating Statement of Cash Flows

Nine Months EndedSeptember 30, 2012

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments		Consolidated Total
Net cash provided by (used in) operating activities	$	153,569		$	(40,611	)	$	(1,764	)	$	—	$	111,194
Cash flows from investing activities:
Additions to property, plant and equipment	(4,472		)	(11,100		)	(211		)	—		(15,783		)
Digital acquisitions, net of cash acquired	—			(18,344		)	—			—		(18,344		)
Proceeds from sale of property, plant and equipment	250			—			6			—		256
Net cash used in investing activities	(4,222		)	(29,444		)	(205		)	—		(33,871		)
Cash flows from financing activities:
Cash provided by (used in) intercompany activity	(70,042		)	70,042			—			—		—
Repayments of long-term debt	(11,250		)	—			—			—		(11,250		)
Repurchases of common stock	(87,130		)	—			—			—		(87,130		)
Proceeds from stock option exercises	8,956			—			—			—		8,956
Net cash provided by (used in) financing activities	(159,466		)	70,042			—			—		(89,424		)
Effect of exchange rate changes on cash and cash equivalents	—			—			474			—		474
Net decrease in cash and cash equivalents	(10,119		)	(13		)	(1,495		)	—		(11,627		)
Cash and cash equivalents at beginning of period	68,887			7,543			25,541			—		101,971
Cash and cash equivalents at end of period	$	58,768		$	7,530		$	24,046		$	—	$	90,344

25

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This document contains “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 our actual results, performance or achievements 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 our existing competitors; new competitors in any of our businesses; possible consolidation in our client base, a significant decrease in the number of stores in our in-store retailer network or a shift in client preferences for different promotional materials, strategies or coupon delivery methods, including, without limitation, as a result of declines in newspaper circulation and/or increased competition from new media formats including digital; an unforeseen increase in paper or postal costs; changes which affect the businesses of our clients and lead to reduced sales promotion spending, including, without limitation, a decrease of marketing budgets which are generally discretionary in nature and easier to reduce in the short-term than other expenses; our substantial indebtedness, and ability to refinance such indebtedness, if necessary, and our ability to incur additional indebtedness, may affect our financial health; the financial condition, including bankruptcies, of our clients, suppliers, senior secured credit facility lenders or other counterparties; certain covenants in our debt documents could adversely restrict our financial and operating flexibility; fluctuations in the amount, timing, pages, weight and kinds of advertising pieces from period to period, due to a change in our clients' promotional needs, inventories and other factors; our failure to attract and retain qualified personnel may affect our business and results of operations; a rise in interest rates could increase our borrowing costs; governmental regulation or litigation affecting aspects of our business, including laws and regulations related to the internet, internet-related technologies and activities, privacy and data security; potential security measure breaches or attacks; clients experiencing financial difficulties, or otherwise being unable to meet their obligations as they become due, could affect our results of operations and financial condition; uncertainty in the application and interpretation of applicable state sales tax laws may expose us to additional sales tax liability; a reduction in, or discontinuance of, dividend payments or stock repurchases; and general economic conditions, whether nationally, internationally, or in the market areas in which we conduct our business, including any resulting impact on the marketing expenditures and activities of our clients and prospective clients as well as our vendors, on whom we rely to provide us with quality materials at the right prices and in a timely manner.These and other risks and uncertainties related to our business are described in greater detail in our Annual Report on Form 10-K for the year ended December 31, 2012, or the 2012 Form 10-K, and other filings by us with the United States Securities and Exchange Commission, or the SEC, and this Quarterly Report on Form 10-Q should be read in conjunction with these filings. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

Valassis Communications, Inc. (referred to herein as “Valassis,” “we,” and “our”) is a leader in intelligent media delivery, providing over 15,000 advertisers proven and innovative media solutions to influence consumers wherever they plan, shop, buy and share. By integrating online and offline data combined with powerful insights, Valassis precisely targets its clients' most valuable shoppers, offering unparalleled reach and scale. Our subsidiaries include Brand.net, a Valassis Digital Company, and NCH Marketing Services Inc. (“NCH”). RedPlum® is our consumer brand.

Our products and services are positioned to help our clients reach their customers through mass-delivered or targeted programs. We provide our clients with blended media solutions, including shared mail, newspaper, in-store and digital delivery. We offer the only national shared mail distribution network in the industry. We utilize a proprietary patent pending targeting tool that provides our clients with multi-media recommendations and optimization. We are committed to providing innovative marketing solutions to maximize the efficiency and effectiveness of promotions for our clients.

26

Consolidated Results of Operations

The following table sets forth our consolidated results of operations for the periods indicated:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in thousands of U.S. dollars, except per share data)	2013			2012		2013			2012
Revenues:
Shared Mail	$	342,538		$	331,356	$	1,005,573		$	1,008,249
Free-standing Inserts	75,490			72,201		241,400			219,030
Neighborhood Targeted	23,664			75,823		75,815			225,490
International, Digital Media & Services	47,691			44,442		145,004			129,876
Total revenues	489,383			523,822		1,467,792			1,582,645
Cost of sales	361,337			388,284		1,086,648			1,180,905
Gross profit	128,046			135,538		381,144			401,740
Selling, general and administrative	74,577			73,358		228,632			234,498
Amortization expense	3,729			3,245		11,187			9,557
Goodwill impairment	—			—		—			7,585
Earnings from operations	49,740			58,935		141,325			150,100
Other expenses and income:
Interest expense, net	7,257			7,517		22,326			21,198
Other expense (income), net	(1,713		)	249		(2,636		)	(525		)
Total other expenses, net	5,544			7,766		19,690			20,673
Earnings before income taxes	44,196			51,169		121,635			129,427
Income tax expense	16,483			14,429		45,467			44,559
Net earnings	$	27,713		$	36,740	$	76,168		$	84,868
Net earnings per common share, diluted	$	0.70		$	0.90	$	1.91		$	2.00
Weighted-average common shares outstanding, diluted	38,684			40,832		39,147			42,532

27

Revenues

Revenues were $489.4 million and $523.8 million for the three months endedSeptember 30, 2013 and 2012, respectively, a decrease of 6.6%, and $1,467.8 million and $1,582.6 million for the nine months endedSeptember 30, 2013 and 2012, respectively, a decrease of 7.3%. These decreases reflect an anticipated decline in revenues resulting from the change in certain client contracts to a fee-based media placement model within the Neighborhood Targeted segment and the impact of exiting our newspaper polybag advertising and sampling and solo direct mail businesses in 2012, all of which were offset, in part, by increased revenues in our Free-standing Inserts (FSI) segment and our in-store and digital businesses within International, Digital Media & Services.

The change in certain contracts to a fee-based media placement model and the impact of exiting our newspaper polybag advertising and sampling and solo direct mail businesses in 2012 affect the comparability of revenues for the three and nine months endedSeptember 30, 2013 and 2012. The following table provides a reconciliation of adjusted revenues, a non-GAAP financial measure that we define as revenues adjusted to (i) a net basis, for client contracts to which we were a principal and recorded revenues on a gross basis in 2012 that, in 2013, transitioned to a fee-based media placement model and were recorded on a net basis ("gross to net revenues adjustment"), and (ii) exclude revenues related to discontinued businesses, to GAAP revenues for the three and nine months endedSeptember 30, 2013 and 2012:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in millions of U.S. dollars)	2013		2012			2013		2012
Revenues	$	489.4	$	523.8		$	1,467.8	$	1,582.6
Adjustments:
Gross to net revenues adjustment	—		(51.5		)	—		(145.6		)
Revenues related to discontinued businesses	—		(2.9		)	—		(9.1		)
Adjusted revenues	$	489.4	$	469.4		$	1,467.8	$	1,427.9

Adjusted revenues were $489.4 million and $469.4 million for the three months endedSeptember 30, 2013 and 2012, respectively, an increase of 4.3%, and $1,467.8 million and $1,427.9 million for the nine months endedSeptember 30, 2013 and 2012, respectively, an increase of 2.8%. Additional information with respect to adjusted revenues is provided in Non-GAAP Financial Measures below.

Cost of Sales

Cost of sales was $361.3 million and $388.3 million for the three months endedSeptember 30, 2013 and 2012, respectively, and $1,086.6 million and $1,180.9 million for the nine months endedSeptember 30, 2013 and 2012, respectively. These decreases were due primarily to the aforementioned change in certain client contracts in the Neighborhood Targeted segment to a fee-based media placement model. Gross profit as a percentage of revenues was 26.2% and 25.9% for the three months endedSeptember 30, 2013 and 2012, respectively, and 26.0% and 25.4% for the nine months endedSeptember 30, 2013 and 2012, respectively. Cost of sales and gross margin as a percentage of revenues included $0.3 million and $0.8 million of restructuring charges recorded during the three and nine months endedSeptember 30, 2013, respectively, reflecting severance and related costs, compared to $3.7 million of restructuring and other non-recurring charges, which included lease termination, severance, asset impairment and other costs associated with exiting our solo direct mail business and our newspaper polybag advertising and sampling business, recorded during the nine months endedSeptember 30, 2012.

Selling, General and Administrative (“SG&A”) Expenses

SG&A expenses were $74.6 million and $73.4 million for the three months endedSeptember 30, 2013 and 2012, respectively, an increase of 1.6%, and $228.6 million and $234.5 million for the nine months endedSeptember 30, 2013 and 2012, respectively, a decrease of 2.5%. SG&A expenses included $0.7 million and $1.6 million of restructuring charges recorded during the three and nine months endedSeptember 30, 2013, respectively, reflecting severance and related costs, compared to $6.0 million of restructuring and other non-recurring charges, which included severance and related costs and Brand.net acquisition costs, recorded during the nine months endedSeptember 30, 2012.

Goodwill Impairment

During the nine months endedSeptember 30, 2012, we recognized a non-cash goodwill impairment charge of $7.6 million, which resulted from our decision to exit the newspaper polybag advertising and sampling business, a reporting unit within our Neighborhood Targeted reportable segment, and the solo direct mail business, a reporting unit within International, Digital Media & Services.

28

Income Tax Expense

Income tax expense represented 37.3% and 28.2% of earnings before income taxes for the three months endedSeptember 30, 2013 and 2012, respectively, and 37.4% and 34.4% for the nine months endedSeptember 30, 2013 and 2012, respectively. These increases in our effective tax rate reflect the nonrecurrence of a favorable income tax adjustment recognized during the three and nine months ended September 30, 2012 resulting from the expiration of certain tax reserves. We are required to adjust our effective tax rate each quarter to be consistent with our estimated annual effective tax rate. We are also required to record the tax impact of certain unusual or infrequently occurring items, including the effects of changes in tax laws or rates, in the interim period in which they occur. The effective tax rate during a particular quarter may be higher or lower as a result of the timing of actual earnings versus annual projections.

Net Earnings and Net Earnings per Common Share, Diluted

Net earnings were $27.7 million and $36.7 million for the three months endedSeptember 30, 2013 and 2012, respectively, or $0.70 and $0.90, respectively, per common share, diluted ("diluted EPS"). Net earnings and diluted EPS were unfavorably impacted by restructuring and other non-recurring charges, which totaled $0.6 million, net of tax, recognized during the three months endedSeptember 30, 2013 and the nonrecurrence of a favorable income tax adjustment of $5.0 million resulting from the expiration of certain tax reserves recognized during the three months endedSeptember 30, 2012.

Net earnings were $76.2 million and $84.9 million for the nine months endedSeptember 30, 2013 and 2012, respectively, or diluted EPS of $1.91 and $2.00, respectively. Net earnings and diluted EPS were favorably impacted by (i) reduced restructuring costs and other non-recurring charges, which totaled $1.5 million, net of tax, for the nine months endedSeptember 30, 2013, as compared to $6.0 million, net of tax, for the nine months endedSeptember 30, 2012 and (ii) the nonrecurrence of the $7.6 million goodwill impairment charge discussed above. These favorable impacts to net earnings and diluted EPS were offset by the nonrecurrence of a favorable income tax adjustment of $5.0 million resulting from the expiration of certain tax reserves recognized during the nine months endedSeptember 30, 2012.

In addition, as further discussed in Segment Results below, these decreases in net earnings and diluted EPS for the three and nine months endedSeptember 30, 2013 as compared to the three and nine months endedSeptember 30, 2012 reflect (i) gross margin declines within our Shared Mail segment, (ii) continued margin pressure within our Neighborhood Targeted segment and (iii) losses in our in-store and digital businesses within International, Digital Media & Services. These decreases in net earnings and diluted EPS were offset, in part, by increased page volume and average book size within our FSI segment and increased coupon redemption volumes experienced by NCH Marketing Services, Inc. (NCH), our coupon clearing and analytics business. Diluted EPS for the three and nine months endedSeptember 30, 2013 as compared to the three and nine months endedSeptember 30, 2012 was also favorably impacted by the repurchases of our common stock in 2012 and during the three and nine months endedSeptember 30, 2013, which was the primary driver in the reduction of our weighted-average common shares outstanding, diluted.

The aforementioned restructuring costs and other non-recurring charges, goodwill impairment charge and tax benefit due to the expiration of certain tax reserves affect the comparability of net earnings and diluted EPS for the three and nine months endedSeptember 30, 2013 and 2012. In Non-GAAP Financial Measures below, we compare net earnings and diluted EPS for the three and nine months endedSeptember 30, 2013 and 2012 excluding these items.

Non-GAAP Financial Measures

We define adjusted revenues as revenues adjusted to (i) a net basis, for client contracts to which we were a principal and recorded revenues on a gross basis in 2012 that, in 2013, transitioned to a fee-based media placement model and were recorded on a net basis, and (ii) exclude revenues related to discontinued businesses. We define adjusted net earnings and adjusted diluted EPS as net earnings and diluted EPS excluding restructuring costs and other non-recurring charges, net of tax, goodwill impairment charge, net of tax, and the tax benefit due to the expiration of certain tax reserves. Adjusted revenues, adjusted net earnings and adjusted diluted EPS are non-GAAP financial measures commonly used by financial analysts, investors, rating agencies and other interested parties in evaluating companies, including marketing services companies. Accordingly, management believes that these non-GAAP measures may be useful in assessing our operating performance and our ability to meet our debt service requirements. In addition, these non-GAAP measures are used by management to measure and analyze our operating performance and, along with other data, as our internal measure for setting annual operating budgets, assessing financial performance of business segments and as performance criteria for incentive compensation. Additionally, because of management's focus on generating shareholder value, of which profitability is a primary driver, management believes these non-GAAP measures, as defined above, provide an important measure of our results of operations.

29

Adjusted revenues, adjusted net earnings and adjusted diluted EPS are not calculated or presented in accordance with U.S. GAAP and have limitations as analytical tools and should not be considered in isolation from, or as alternatives to, operating income, net income, cash flow, EPS or other income or cash flow data prepared in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using these non-GAAP financial measures only supplementally. Further, other companies, including companies in our industry, may calculate adjusted revenues, adjusted net earnings and adjusted diluted EPS differently and as the differences in the way two different companies calculate these measures increase, the degree of their usefulness as comparative measures correspondingly decreases.

The following tables reconcile net earnings and diluted EPS to adjusted net earnings and adjusted diluted EPS for the three and nine months endedSeptember 30, 2013 and 2012 (the reconciling items included in the tables below are presented net of an estimated tax rate of 38.0%):

	Three Months Ended
	September 30,
	2013				2012
	U.S. Dollars in Millions		Per Common Share, Diluted		U.S. Dollars in Millions			Per Common Share, Diluted
Net earnings	$	27.7	$	0.70	$	36.7		$	0.90
Excluding:
Restructuring costs and other non-recurring charges, net of tax of $0.4 million	0.6		0.02		—			—
Tax benefit due to expiration of certain tax reserves	—		—		(5.0		)	(0.12		)
Adjusted net earnings	$	28.3	$	0.72	$	31.7		$	0.78

	Nine Months Ended
	September 30,
	2013				2012
	U.S. Dollars in Millions		Per Common Share, Diluted		U.S. Dollars in Millions			Per Common Share, Diluted
Net earnings	$	76.2	$	1.91	$	84.9		$	2.00
Excluding:
Goodwill impairment, net of tax of $2.9 million	—		—		4.7			0.11
Restructuring costs and other non-recurring charges, net of tax of $0.9 million and $3.7 million for the nine months ended September 30, 2013 and 2012, respectively	1.5		0.04		6.0			0.14
Tax benefit due to expiration of certain tax reserves	—		—		(5.0		)	(0.12		)
Adjusted net earnings	$	77.7	$	1.95	$	90.6		$	2.13

Adjusted net earnings were $28.3 million and $31.7 million for the three months endedSeptember 30, 2013 and 2012, respectively, or adjusted diluted EPS of $0.72 and $0.78, respectively. Adjusted net earnings were $77.7 million and $90.6 million for the nine months endedSeptember 30, 2013 and 2012, respectively, or adjusted diluted EPS of $1.95 and $2.13, respectively. These decreases in adjusted net earnings and adjusted diluted EPS reflect, as further discussed in Segment Results below, (i) volume decreases within our Shared Mail segment, (ii) continued margin pressure within our Neighborhood Targeted segment and (iii) losses in our in-store and digital businesses within International, Digital Media & Services. These decreases in net earnings and diluted EPS were offset, in part, by increased page volume and average book size within our FSI segment and increased coupon redemption volumes experienced by NCH. Adjusted diluted EPS for the three and nine months endedSeptember 30, 2013 as compared to the three and nine months endedSeptember 30, 2012 was also favorably impacted by the repurchases of our common stock in 2012 and during the three and nine months endedSeptember 30, 2013, which was the primary driver in the reduction of our weighted-average common shares outstanding, diluted.

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Segment Results

We currently operate our business in the following reportable segments:

• Shared Mail – Products that have the ability to reach 9 out of 10 U.S. households through shared mail distribution. Our Shared Mail programs combine the individual print advertisements of various clients into a single shared mail package delivered primarily through the United States Postal Service (“USPS”).

• Free-standing Inserts – Four-color booklets that contain promotions, primarily coupons, from multiple advertisers (cooperative), which we publish and distribute to approximately 60 million households through newspapers and shared mail.

• Neighborhood Targeted – Products that are targeted to specific newspaper zones or neighborhoods based on geographic and demographic characteristics.

In addition, all other lines of business that are not separately reported are captioned as International, Digital Media & Services, which includes Brand.net, a Valassis Digital Company, NCH Marketing Services, Inc. (NCH), our coupon clearing and analytics business, Valassis Canada, Inc., Promotion Watch, and our in-store business.

We evaluate reportable segment performance based on segment profit, which we define as earnings from operations excluding unusual or non-recurring items. For additional information, see Note 10 to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Shared Mail

Shared Mail revenues were $342.5 million and $331.4 million for the three months ended September 30, 2013 and 2012, respectively, an increase of 3.3%, and $1,005.6 million and $1,008.2 million for the nine months ended September 30, 2013 and 2012, respectively, a decrease of 0.3%. The increase in revenues for the three months ended September 30, 2013 as compared to the three months ended September 30, 2012 resulted from increased volume largely due to distribution alliances, increased revenues associated with our variable data postcard product and the postal rate increase effective in January 2013 that was passed through to our clients. These increases were partially offset by lower direct core volume and softness in the RedPlum^® wrap product. Shared Mail revenues were essentially flat for the nine months ended September 30, 2013 compared to the nine months ended September 30, 2012.

Shared Mail pieces were 9.4 billion and 27.7 billion for the three and nine months ended September 30, 2013, respectively, increasing 3.3% and 1.1%, respectively, from the three and nine months ended September 30, 2012. Shared Mail packages delivered increased 1.9% to 0.9 million packages for the three months ended September 30, 2013 as compared to the three months ended September 30, 2012, and decreased 0.9% to 2.7 million packages for the nine months ended September 30, 2013 as compared to the nine months ended September 30, 2012. Shared Mail average pieces per package were 10.2 pieces and 10.0 pieces for the three and nine months ended September 30, 2013, respectively, increasing 2.0% and 2.3%, respectively, from the three and nine months ended September 30, 2012.

Gross margin as a percentage of revenues was 26.4% and 29.2% for the three months ended September 30, 2013 and 2012, respectively, and 26.2% and 28.6% for the nine months ended September 30, 2013 and 2012, respectively. Gross margin as a percentage of revenues for both the three and nine months ended September 30, 2013 was unfavorably impacted by product mix shift toward lower margin products, including our variable data postcard product and volume associated with our distribution alliances, the reduction in RedPlum^® wrap product revenues, the postal rate increase and higher operational costs due to start-up costs associated with new distribution alliances. Offsetting the unfavorable impact in gross margin as a percentage of revenues were efficiencies in unused postage driven by our business optimization efforts, including savings from distribution alliances. Unused postage decreased to 13.8% and 14.3% for the three and nine months ended September 30, 2013, respectively, as compared 15.2% and 16.0% for the three and nine months ended September 30, 2012, respectively.

Segment profit was $47.5 million and $52.3 million for the three months ended September 30, 2013 and 2012, respectively, a decrease of 9.2%, and $130.3 million and $147.0 million for the nine months ended September 30, 2013 and 2012, respectively, a decrease of 11.4%. Segment profit as a percentage of revenues was 13.9% and 15.8% for the three months ended September 30, 2013 and 2012, respectively, and 13.0% and 14.6% for the nine months ended September 30, 2013 and 2012, respectively. The decrease in segment profit and segment profit as a percentage of revenues was due to the gross margin decline and was partially offset by lower SG&A costs.

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Free-standing Inserts

FSI revenues were $75.5 million and $72.2 million for the three months endedSeptember 30, 2013 and 2012, respectively, an increase of 4.6%, and $241.4 million and $219.0 million for the nine months endedSeptember 30, 2013 and 2012, respectively, an increase of 10.2%. FSI segment profit was $7.7 million and $7.6 million for the three months endedSeptember 30, 2013 and 2012, respectively, an increase of 1.3%, and $28.2 million and $20.3 million for the nine months endedSeptember 30, 2013 and 2012, respectively, an increase of 38.9%. These increases in revenues and segment profit reflect increases in total pages sold and pages per book driven by industry growth and increased market share, which were offset, in part, by a decrease in price.

Neighborhood Targeted

Neighborhood Targeted revenues were $23.7 million and $75.8 million for the three months endedSeptember 30, 2013 and 2012, respectively, a decrease of 68.7%, and $75.8 million and $225.5 million for the nine months endedSeptember 30, 2013 and 2012, respectively, a decrease of 66.4%. These decreases reflect the change in certain client contracts to a fee-based media placement model and the impact of exiting our newspaper polybag advertising and sampling business in the second quarter of 2012. Segment loss was $2.1 million and $1.1 million for the three months endedSeptember 30, 2013 and 2012, respectively, and $8.0 million and $5.1 million for the nine months endedSeptember 30, 2013 and 2012, respectively. The segment losses reflect continued margin pressure associated with the products in this segment.

International, Digital Media & Services

International, Digital Media & Services revenues were $47.7 million and $44.4 million for the three months endedSeptember 30, 2013 and 2012, respectively, an increase of 7.4%, and $145.0 million and $129.9 million, for the nine months endedSeptember 30, 2013 and 2012, respectively, an increase of 11.6%. These increases in International, Digital Media & Services revenues were driven by increased coupon clearing volumes experienced by NCH and growth in our in-store and digital businesses. Segment loss was $2.4 million for the three months endedSeptember 30, 2013 as compared to segment profit of $0.1 million for the three months endedSeptember 30, 2012. Segment loss was $6.8 million for the nine months endedSeptember 30, 2013 as compared to segment profit of $5.2 million for the nine months endedSeptember 30, 2012. Despite increased International, Digital Media & Services revenues, segment performance has declined primarily as the result of losses in our in-store and digital businesses. Specifically, the performance of our in-store business has been adversely impacted by the cost of building and maintaining a relevant retail network within a competitive market, while the performance of Brand.net, the most significant component of our digital business, has been negatively impacted by the costs necessary to enhance its platform, including migrating from an audience targeting approach to targeting based on the combination of geography and our proprietary offline data, which have outpaced the growth in its revenues.

Financial Condition, Liquidity and Sources of Capital

Our operating cash flows are our primary source of liquidity. We believe we will generate sufficient cash flows from operating activities and will have sufficient existing cash balances and lines of credit available to meet currently anticipated liquidity needs, including the working capital requirements of our operations, interest and required repayments of indebtedness and capital expenditures necessary to support growth and productivity improvement. We may consider other uses for our cash flows from operating activities and other sources of cash (such as additional borrowings under our Senior Secured Credit Facility), including, without limitation, future acquisitions, dividends and repurchases of our common stock.

The following table presents our available sources of liquidity as of September 30, 2013:

(in millions of U.S. dollars)	Facility Amount		Amount Outstanding		Available
Cash and cash equivalents					$	75.0	(a)
Debt facilities:
Senior Secured Revolving Credit Facility	$	100.0	21.7	(b)	78.3
Total Available					$	153.3

(a) The foreign subsidiaries for which we have elected to permanently reinvest earnings outside of the U.S. held $19.6 million of cash and cash equivalents as of September 30, 2013. In the event we alter our current position and repatriate funds in the future, we may be required to accrue and pay U.S. taxes on a portion thereof.

(b) Represents $15.0 million outstanding under our Revolving Line of Credit (as defined below) and $6.7 million in outstanding letters of credit.

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Sources and Uses of Cash and Cash Equivalents

The following table summarizes the decrease in cash and cash equivalents for the indicated period:

	Nine Months Ended
(in thousands of U.S. dollars)	September 30, 2013
Net cash provided by operating activities	$	105,821
Net cash used in investing activities	(9,458		)
Net cash used in financing activities	(116,013		)
Effect of exchange rate changes on cash and cash equivalents	(76		)
Net decrease in cash and cash equivalents	(19,726		)
Cash and cash equivalents at beginning of period	94,711
Cash and cash equivalents at end of period	$	74,985

Operating Activities – Net cash provided by operating activities was $105.8 million for the nine months endedSeptember 30, 2013. In addition to cash received related to our net earnings, the following changes in assets and liabilities affected cash from operating activities for the nine months endedSeptember 30, 2013:

• net cash inflows of $16.6 million associated with the decrease in accounts receivable, net, which was offset by net cash outflows of $17.2 million related to the decrease in accounts payable, both of which reflect customary fluctuations in the timing of working capital inflows and outflows; and

• net cash outflows of $12.7 million associated with the increase in prepaid expenses and other, which primarily reflects the timing of certain tax payments and prepaid postage.

Investing Activities – Net cash used in investing activities was $9.5 million for the nine months endedSeptember 30, 2013, which reflects $14.7 million of capital acquisitions of property, plant and equipment, which were offset, in part, by $5.3 million of net proceeds received from the sale of plant, property and equipment.

Financing Activities – Net cash used in financing activities was $116.0 million for the nine months endedSeptember 30, 2013, which resulted from $51.2 million of principal payments of long-term debt, which included voluntary prepayments of $36.1 million, $35.7 million of dividends paid on common shares and restricted stock and the repurchase of $60.3 million, or 2.2 million shares of our common stock at an average price of $27.04 per share, which were offset, in part, by $31.2 million of proceeds from stock option exercises.

Current and Long-term Debt

As of September 30, 2013, we had outstanding $536.4 million in aggregate indebtedness, which consisted of $258.9 million of our unsecured 6 ⁵/8% Senior Notes due 2021, or the 2021 Notes and $262.5 million and $15.0 million under the Term Loan A and Revolving Line of Credit portions of our Senior Secured Credit Facility, respectively. As of September 30, 2013, we had total outstanding letters of credit of approximately $6.7 million.

Senior Secured Credit Facility

General – On June 27, 2011, we entered into a senior secured credit facility with JPMorgan Chase Bank, N.A., as administrative agent, and a syndicate of lenders jointly arranged by J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and RBS Securities Inc. (the “Senior Secured Credit Facility”). The Senior Secured Credit Facility and related loan documents replaced and terminated our prior credit agreement, dated as of March 2, 2007, as amended (the “Prior Senior Secured Credit Facility”), by and among Valassis, Bear Stearns Corporate Lending Inc., as Administrative Agent, and a syndicate of lenders jointly arranged by Bear, Stearns & Co. Inc. and Banc of America Securities LLC. In connection with the termination of the Prior Senior Secured Credit Facility, all obligations and rights under the related guarantee, security and collateral agency agreement, dated as of March 2, 2007, as amended (the “Prior Security Agreement”), by Valassis and certain of its domestic subsidiaries signatory thereto, as grantors, in favor of Bear Stearns Corporate Lending Inc., in its capacity as collateral agent for the benefit of the Secured Parties (as defined in the Prior Security Agreement), were also simultaneously terminated.

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The Senior Secured Credit Facility consists of:

• a five-year term loan A in an aggregate principal amount equal to $300.0 million, with principal repayable in quarterly installments at a rate of 5.0% during each of the first two years from issuance, 10.0% during the third year from issuance, 15.0% during the fourth year from issuance and 11.25% during the fifth year from issuance, with the remaining 53.75% due at maturity (the “Term Loan A”);

• a five-year revolving credit facility in an aggregate principal amount of $100.0 million (the “Revolving Line of Credit”), including $15.0 million available in Euros, Pounds Sterling or Canadian Dollars, $50.0 million available for letters of credit and a $20.0 million swingline loan subfacility, of which $50.0 million was drawn at closing and $15.0 million remains outstanding as of September 30, 2013 (exclusive of outstanding letters of credit described below); and

• an incremental facility pursuant to which, prior to the maturity of the Senior Secured Credit Facility, we may incur additional indebtedness in an amount up to $150.0 million under the Revolving Line of Credit or the Term Loan A or a combination thereof, subject to certain conditions, including receipt of additional lending commitments for such additional indebtedness. The terms of the incremental facility will be substantially similar to the terms of the Senior Secured Credit Facility, except with respect to the pricing of the incremental facility, the interest rate for which could be higher than that for the Revolving Line of Credit and the Term Loan A.

All borrowings under our Senior Secured Credit Facility, including, without limitation, amounts drawn under the Revolving Line of Credit, are subject to the satisfaction of customary conditions, including absence of a default and accuracy of representations and warranties. As of September 30, 2013, we had approximately $78.3 million available under the Revolving Line of Credit portion of our Senior Secured Credit Facility (after giving effect to the reductions in availability pursuant to $6.7 million in standby letters of credit outstanding as of September 30, 2013).

Interest and Fees – Borrowings under our Senior Secured Credit Facility bear interest, at our option, at either the alternate base rate (defined as the higher of the prime rate announced by the Administrative Agent, the federal funds effective rate plus 0.5% or one-month LIBOR plus 1%) (the “Base Rate”) or at the Eurodollar Rate (one-, two-, three- or six-month LIBOR, at our election, as defined in the credit agreement governing the Senior Secured Credit Facility), except for borrowings made in alternate currencies which may not accrue interest based upon the alternate base rate, in each case, plus an applicable interest rate margin. The applicable margins are currently 0.75% per annum for Base Rate loans and 1.75% per annum for Eurodollar Rate loans. The margins applicable to the borrowings under our Senior Secured Credit Facility may be adjusted based on our consolidated leverage ratio, with 1.00% being the maximum Base Rate margin and 2.00% being the maximum Eurodollar Rate margin. See Note 7 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for discussion regarding our various interest rate swap agreements.

Guarantees and Security – Our Senior Secured Credit Facility is guaranteed by certain of our existing and future domestic restricted subsidiaries pursuant to a Guarantee and Collateral Agreement. In addition, our obligations under our Senior Secured Credit Facility and the guarantee obligations of the subsidiary guarantors are secured by first priority liens on substantially all of our and our subsidiary guarantors’ present and future assets and by a pledge of all of the equity interests in our domestic subsidiary guarantors and 65% of the capital stock of certain of our existing and future foreign subsidiaries.

Prepayments – The Senior Secured Credit Facility also contains a requirement that we make mandatory principal prepayments on the Term Loan A and Revolving Line of Credit in certain circumstances, including, without limitation, with 100% of the aggregate net cash proceeds from certain asset sales, casualty events or condemnation recoveries (in each case, to the extent not otherwise used for reinvestment in our business or related business and subject to certain other exceptions). The Senior Secured Credit Facility further provides that, subject to customary notice and minimum amount conditions, we may make voluntary prepayments without payment of premium or penalty.

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Covenants – Subject to customary and otherwise agreed upon exceptions, our Senior Secured Credit Facility contains affirmative and negative covenants, including, but not limited to:

• the payment of other obligations;

• the maintenance of organizational existences, including, but not limited to, maintaining our property and insurance;

• compliance with all material contractual obligations and requirements of law;

• limitations on the incurrence of indebtedness;

• limitations on creation and existence of liens;

• limitations on certain fundamental changes to our corporate structure and nature of our business, including mergers;

• limitations on asset sales;

• limitations on restricted payments, including certain dividends and stock repurchases and redemptions;

• limitations on capital expenditures;

• limitations on any investments, provided that certain “permitted acquisitions” and strategic investments are allowed;

• limitations on optional prepayments and modifications of certain debt instruments;

• limitations on modifications to organizational documents;

• limitations on transactions with affiliates;

• limitations on entering into certain swap agreements;

• limitations on negative pledge clauses or clauses restricting subsidiary distributions;

• limitations on sale-leaseback and other lease transactions; and

• limitations on changes to our fiscal year.

Our Senior Secured Credit Facility also requires us to comply with:

• a maximum consolidated leverage ratio, as defined in our Senior Secured Credit Facility (generally, the ratio of our consolidated total debt to consolidated earnings before interest, taxes, depreciation and amortization, or EBITDA, for the most recent four quarters), of 3.50:1.00; and

• a minimum consolidated interest coverage ratio, as defined in our Senior Secured Credit Facility (generally, the ratio of our consolidated EBITDA to consolidated interest expense for the most recent four quarters), of 3.00:1.00.

The following table shows the required and actual financial ratios under our Senior Secured Credit Facility as of September 30, 2013:

	Required Ratio	Actual Ratio
Maximum consolidated leverage ratio	No greater than 3.50:1.00	1.95:1.00
Minimum consolidated interest coverage ratio	No less than 3.00:1.00	10.20:1.00

In addition, we are required to give notice to the administrative agent and the lenders under our Senior Secured Credit Facility of defaults under the facility documentation and other material events, make any new wholly-owned domestic subsidiary (other than an immaterial subsidiary) a subsidiary guarantor and pledge substantially all after-acquired property as collateral to secure our and our subsidiary guarantors’ obligations in respect of the facility.

Events of Default – Our Senior Secured Credit Facility contains customary events of default, including upon a change in control. If such an event of default occurs, the lenders under our Senior Secured Credit Facility would be entitled to take various actions, including in certain circumstances increasing the effective interest rate and accelerating the amounts due under our Senior Secured Credit Facility.

6 ⁵/8% Senior Notes due 2021

On January 28, 2011, we issued in a private placement $260.0 million aggregate principal amount of our 2021 Notes. Interest on the 2021 Notes is payable every six months on February 1 and August 1. The 2021 Notes are fully and unconditionally guaranteed, jointly and severally, by substantially all of our existing and future domestic restricted subsidiaries on a senior unsecured basis.

In July 2011, in accordance with the terms of the registration rights agreement between us and the initial purchasers of the 2021 Notes, we completed an exchange offer to exchange the original notes issued in the private placement for a like principal amount of exchange notes registered under the Securities Act of 1933, as amended. An aggregate principal amount of $260.0

35

million, or 100%, of the original notes were exchanged for exchange notes in the exchange offer. The exchange notes are substantially identical to the original notes, except that the exchange notes are not subject to certain transfer restrictions.

The 2021 Notes were issued under an indenture with Wells Fargo Bank, National Association, as trustee (the “2021 Indenture”). Subject to a number of exceptions, the 2021 Indenture restricts our ability and the ability of our restricted subsidiaries (as defined in the 2021 Indenture) to incur or guarantee additional indebtedness, transfer or sell assets, make certain investments, pay dividends or make distributions or other restricted payments, create certain liens, merge or consolidate, repurchase stock, create or permit restrictions on the ability of our restricted subsidiaries to pay dividends or make other distributions to us and enter into transactions with affiliates.

We may redeem all or a portion of the 2021 Notes at our option at any time prior to February 1, 2016, at a redemption price equal to 100% of the principal amount of 2021 Notes to be redeemed, plus a make-whole premium as described in the 2021 Indenture, plus accrued and unpaid interest to the redemption date, if any. At any time on or after February 1, 2016, we may redeem all or a portion of the 2021 Notes at our option at the following redemption prices (expressed as percentages of the principal amount thereof) if redeemed during the twelve-month period commencing on February 1 of the years set forth below:

Year	Percentage
2016	103.313%
2017	102.208%
2018	101.104%
2019 and thereafter	100.000%

In addition, we must pay accrued and unpaid interest to the redemption date, if any. On or prior to February 1, 2014, we may also redeem at our option up to 35% of the principal amount of the outstanding 2021 Notes with the proceeds of certain equity offerings at the redemption price specified in the 2021 Indenture, plus accrued and unpaid interest to the date of redemption, if any. Upon the occurrence of a change of control, as defined in the 2021 Indenture, we must make a written offer to purchase all of the 2021 Notes for cash at a purchase price equal to 101% of the principal amount of the 2021 Notes, plus accrued and unpaid interest to the date of repurchase, if any.

Senior Secured Convertible Notes due 2033

During the three and nine months endedSeptember 30, 2013, we redeemed all of the then-outstanding Senior Secured Convertible Notes due 2033.

Additional Provisions

The 2021 Indenture contains a cross-default provision which becomes applicable if we (a) fail to pay the stated principal amount of any of our indebtedness at its final maturity date, or (b) default under any of our indebtedness and the default results in the acceleration of indebtedness, and, in each case, the principal amount of any such indebtedness, together with the principal amount of any other such indebtedness under which there has been a payment default or the maturity of which has been so accelerated, aggregates $50.0 million or more. Our credit agreement contains a cross-default provision which becomes applicable if we (a) fail to make any payment under any indebtedness for money borrowed by us (other than the obligations under such credit agreement) in an aggregate outstanding principal amount of at least $50.0 million or, (b) otherwise default under any such indebtedness, or trigger another event which causes such indebtedness to become due or to be repurchased, prepaid, defeased or redeemed or become subject to an offer to repurchase, prepay, defease or redeem such indebtedness prior to its stated maturity.

Repurchases of Debt

Subject to applicable limitations in our Senior Secured Credit Facility and indentures, we may from time to time repurchase our debt in the open market, through tender offers, through exchanges for debt or equity securities, in privately negotiated transactions or otherwise. During the three and nine months endedSeptember 30, 2013, we made voluntary repayments and repurchases of our then-outstanding debt in aggregate principal amounts of $21.1 million and $36.1 million, respectively.

Covenant Compliance

As of September 30, 2013, we were in compliance with all of our indenture and Senior Secured Credit Facility covenants.

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Other Indebtedness

We have entered into various interest rate swap agreements. For further detail regarding these agreements, see Note 7 to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Off-balance Sheet Arrangements

As of September 30, 2013, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Capital Expenditures

Capital expenditures were $14.7 million for the nine months endedSeptember 30, 2013, and are expected to be an aggregate amount of approximately $20.0 million for the 2013 fiscal year. It is expected these expenditures will be made using funds provided by operations.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that in certain circumstances affect amounts reported in the accompanying unaudited condensed consolidated financial statements. The SEC has defined a company’s most critical accounting policies as the ones that are most important to the portrayal of the company’s financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Our critical accounting policies have not changed materially from those disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2012 Form 10-K.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our principal market risks are interest rates on various debt instruments and foreign exchange rates at our international subsidiaries.

Interest Rates

As of September 30, 2013, $277.5 million of aggregate indebtedness remained outstanding under our Senior Secured Credit Facility and was subject to variable interest rates. However, on July 6, 2011, we entered into an interest rate swap agreement with an initial notional amount of $186.3 million. The effective date of this agreement was June 30, 2012. This interest rate swap agreement effectively fixes, at 3.6195% (including the current applicable margin), the interest rate for the portion of our variable rate debt outstanding under our Senior Secured Credit Facility equal to the outstanding notional amount of the interest rate swap agreement. The initial notional amount of $186.3 million amortizes quarterly by (i) $2.8 million from the effective date through the quarter ending September 30, 2013, (ii) $5.6 million from September 30, 2013 through the quarter ending September 30, 2014, and (iii) $8.4 million from September 30, 2014 until June 30, 2015, the expiration date of the agreement.

As of September 30, 2013, the variable rate indebtedness outstanding under our Senior Secured Credit Facility in excess of the $169.4 million outstanding notional amount of the effective interest rate swap agreement described above was an aggregate principal amount of $108.1 million, and is subject to interest rate risk, as our interest payments will fluctuate as the underlying interest rate changes. If there is a 1% increase in the Eurodollar Rate, the interest rate currently applicable to this variable rate indebtedness, and we do not alter the terms of our current interest rate swap agreement or enter into a new interest rate swap agreement, our debt service obligations on our variable rate indebtedness would increase by a total of $2.5 million between October 1, 2013 and June 27, 2016, the maturity date of the Senior Secured Credit Facility, which would affect our cash flows and results of operations. If we borrow additional amounts under the Revolving Line of Credit portion of our Senior Secured Credit Facility, our interest rate risk may increase.

Foreign Currency

Currencies to which we have exposure are the Mexican peso, Canadian dollar, Polish zloty, British pound and Euro. Currency restrictions are not expected to have a significant effect on our cash flows, liquidity, or capital resources. Actual exchange losses or gains are recorded against production expense when the contracts are executed. As of September 30, 2013, we had commitments to purchase $11.1 million in Mexican pesos and $0.8 million in Polish zlotys over the next 12 months.

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ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our Disclosure Committee, including our Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures pursuant to Rule 13a-15 of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of such period, the disclosure controls and procedures are effective in ensuring that the information required to be disclosed in the reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There has been no change in our internal control over financial reporting during the three months endedSeptember 30, 2013 that has materially affected, or is likely to materially affect, internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material effect on our financial position, results of operations or liquidity.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our 2012 Form 10-K, which could materially affect our business, financial condition and future results. The risks described in our 2012 Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table reflects our repurchases of our common stock during the three months endedSeptember 30, 2013:

Period	Total Number of Shares Purchased	Average Price Paid per Share (including broker commissions)		Total Number of Shares Purchased as Part of Publicly Announced Plan (a)	Maximum Number of Shares that May Yet be Purchased under the Plan (b)
July 1, 2013 to July 31, 2013	—	$	—	—	6,383,623
August 1, 2013 to August 31, 2013	81,712	$	28.28	81,712	6,301,911
September 1, 2013 to September 30, 2013	161,000	$	28.59	161,000	6,140,911
	242,712	$	28.49	242,712

(a) On August 25, 2005, our Board of Directors approved the repurchase of 5 million shares of our common stock. This share repurchase plan was suspended in February 2006. On May 6, 2010, our Board of Directors reinstated this share repurchase plan. In May 2011, our Board of Directors approved an increase of 6 million shares to this share repurchase plan. In May 2012, our Board of Directors approved an additional increase of 6 million shares to this share repurchase plan. On May 3, 2013, our Board of Directors approved an additional increase of 6 million shares to this share repurchase plan.

(b) Our ability to make share repurchases may be limited by the documents governing our indebtedness.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

38

ITEM 6. EXHIBITS

Exhibit Number	Description
31.1	Section 302 Certification of Robert A. Mason
31.2	Section 302 Certification of Robert L. Recchia
32.1	Section 906 Certification of Robert A. Mason
32.2	Section 906 Certification of Robert L. Recchia
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

39

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: November 5, 2013

Valassis Communications, Inc. (Registrant)
By:	/s/ Robert L. Recchia
Robert L. Recchia
Executive Vice President and Chief Financial Officer
Signing on behalf of the Registrant and as principal financial and accounting officer.

40

EXHIBIT INDEX

Exhibit Number	Description
31.1	Section 302 Certification of Robert A. Mason
31.2	Section 302 Certification of Robert L. Recchia
32.1	Section 906 Certification of Robert A. Mason
32.2	Section 906 Certification of Robert L. Recchia
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

41

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Robert A. Mason, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Valassis Communications, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation;

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 5, 2013

/s/ Robert A. Mason

Robert A. Mason

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Robert L. Recchia, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Valassis Communications, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation;

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 5, 2013

/s/ Robert L. Recchia

Robert L. Recchia

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. 1350

(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Valassis Communications, Inc. (the “Company”), does hereby certify, to the best of his knowledge and belief that:

(1) The Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	November 5, 2013	/s/ Robert A. Mason
		Robert A. Mason Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. 1350

(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Valassis Communications, Inc. (the “Company”), does hereby certify, to the best of his knowledge and belief that:

(1) The Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	November 5, 2013	/s/ Robert L. Recchia
		Robert L. Recchia Chief Financial Officer

XML

GUARANTOR AND NON-GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

9 Months Ended

Sep. 30, 2013

GUARANTOR AND NON-GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

GUARANTOR AND NON-GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

The following information is presented in accordance with Rule 3-10 of Regulation S-X. The operating and investing activities of the separate legal entities included in the consolidated financial statements are fully interdependent and integrated. Revenues and operating expenses of the separate legal entities include intercompany charges for management and other services. The 2021 Notes issued by Valassis (referred to for purposes of this note only as the “Parent Company”) are guaranteed by substantially all of the Parent Company’s domestic wholly-owned subsidiaries (collectively, the “Guarantor Subsidiaries”) on a senior unsecured basis. Each of the Guarantor Subsidiaries is 100% owned, directly or indirectly, by the Parent Company and has guaranteed the 2021 Notes on a joint and several, full and unconditional basis, subject to certain customary exceptions. Pursuant to the terms of the 2021 Indenture, the Guarantor Subsidiaries are subject to release under certain customary conditions as described below. Non-wholly-owned subsidiaries, joint ventures, partnerships and foreign subsidiaries (collectively, the “Non-Guarantor Subsidiaries”) are not guarantors of these obligations. Substantially all of the Guarantor Subsidiaries also guarantee the Parent Company’s Senior Secured Credit Facility.

The 2021 Indenture provides for a Guarantor Subsidiary to be automatically and unconditionally released and discharged from its guarantee obligations in certain circumstances, including:

• The sale or other transfer or disposition of all of the Guarantor Subsidiary's capital stock to any person that is not an affiliate of the Parent Company;

• The sale or other transfer of all or substantially all the assets or capital stock of a Guarantor Subsidiary, by way of merger, consolidation or otherwise, to any person that is not an affiliate of the Parent Company;

• If a Guarantor Subsidiary ceases to be a “Domestic Restricted Subsidiary” for purposes of the indenture covenants; and

• Legal defeasance or covenant defeasance of the indenture obligations when provision has been made for them to be fully satisfied.

Condensed Consolidating Balance Sheet

September 30, 2013

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Assets
Current assets:
Cash and cash equivalents	$	41,025		$	14,329		$	19,631		$	—		$	74,985
Accounts receivable, net	100,152			282,914			25,256			—			408,322
Inventories	27,249			9,453			3			—			36,705
Prepaid expenses and other (including intercompany)	1,971,516			5,232,562			3,085			(7,158,157		)	49,006
Total current assets	2,139,942			5,539,258			47,975			(7,158,157		)	569,018
Property, plant and equipment, net	19,014			89,854			958			—			109,826
Goodwill	23,700			601,750			6,988			—			632,438
Other intangible assets, net	11,517			192,467			—			—			203,984
Investments	717,055			19,912			—			(732,964		)	4,003
Intercompany note receivable (payable)	326,622			(314,292		)	(12,330		)	—			—
Other assets	6,392			3,029			12			—			9,433
Total assets	$	3,244,242		$	6,131,978		$	43,603		$	(7,891,121	)	$	1,528,702
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion, long-term debt	$	33,750		$	—		$	—		$	—		$	33,750
Accounts payable and intercompany payable	2,132,824			5,271,181			18,296			(7,158,157		)	264,144
Progress billings	13,128			15,065			9,891			—			38,084
Accrued expenses	52,508			35,842			7,992			—			96,342
Total current liabilities	2,232,210			5,322,088			36,179			(7,158,157		)	432,320
Long-term debt	502,650			—			—			—			502,650
Deferred income taxes	(3,421		)	65,398			(4,009		)	—			57,968
Other non-current liabilities	15,041			31,020			(8,059		)	—			38,002
Total liabilities	2,746,480			5,418,506			24,111			(7,158,157		)	1,030,940
Stockholders’ equity	497,762			713,472			19,492			(732,964		)	497,762
Total liabilities and stockholders’ equity	$	3,244,242		$	6,131,978		$	43,603		$	(7,891,121	)	$	1,528,702

Condensed Consolidating Balance Sheet

December 31, 2012

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Assets
Current assets:
Cash and cash equivalents	$	62,836		$	10,745		$	21,130		$	—		$	94,711
Accounts receivable, net	116,821			287,230			22,848			—			426,899
Inventories	35,421			7,829			3			—			43,253
Prepaid expenses and other (including intercompany)	1,520,526			3,706,682			1,998			(5,192,617		)	36,589
Total current assets	1,735,604			4,012,486			45,979			(5,192,617		)	601,452
Property, plant and equipment, net	19,159			105,667			1,006			—			125,832
Goodwill	23,699			601,750			6,989			—			632,438
Other intangible assets, net	11,534			203,637			—			—			215,171
Investments	645,411			15,375			—			(658,355		)	2,431
Intercompany note receivable (payable)	364,921			(360,830		)	(4,091		)	—			—
Other assets	7,543			4,157			11			—			11,711
Total assets	$	2,807,871		$	4,582,242		$	49,894		$	(5,850,972	)	$	1,589,035
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion, long-term debt	$	22,500		$	—		$	—		$	—		$	22,500
Accounts payable and intercompany payable	1,653,928			3,804,209			15,800			(5,192,617		)	281,320
Progress billings	16,459			7,758			15,378			—			39,595
Accrued expenses	61,741			38,878			6,848			—			107,467
Total current liabilities	1,754,628			3,850,845			38,026			(5,192,617		)	450,882
Long-term debt	565,061			—			—			—			565,061
Deferred income taxes	(4,131		)	65,398			(4,009		)	—			57,258
Other non-current liabilities	18,750			22,722			799			—			42,271
Total liabilities	2,334,308			3,938,965			34,816			(5,192,617		)	1,115,472
Stockholders’ equity	473,563			643,277			15,078			(658,355		)	473,563
Total liabilities and stockholders’ equity	$	2,807,871		$	4,582,242		$	49,894		$	(5,850,972	)	$	1,589,035

Condensed Consolidating Statement of Comprehensive Income

Three Months EndedSeptember 30, 2013

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Revenues	$	126,994		$	453,902		$	13,813		$	(105,326	)	$	489,383
Costs and expenses:
Cost of sales	100,190			308,615			9,893			(57,361		)	361,337
Selling, general and administrative	23,682			95,278			3,582			(47,965		)	74,577
Amortization expense	6			3,723			—			—			3,729
Total costs and expenses	123,878			407,616			13,475			(105,326		)	439,643
Earnings from operations	3,116			46,286			338			—			49,740
Other expenses and income:
Interest expense	7,287			—			—			—			7,287
Interest income	(18		)	—			(12		)	—			(30		)
Intercompany interest	(9,082		)	9,082			—			—			—
Other income, net	(816		)	(835		)	(62		)	—			(1,713		)
Total other expenses (income), net	(2,629		)	8,247			(74		)	—			5,544
Earnings before income taxes	5,745			38,039			412			—			44,196
Income tax expense	684			15,557			242			—			16,483
Equity in net earnings of subsidiaries	22,652			170			—			(22,822		)	—
Net earnings	$	27,713		$	22,652		$	170		$	(22,822	)	$	27,713
Other comprehensive income (loss)	907			(707		)	(707		)	1,414			907
Comprehensive income (loss)	$	28,620		$	21,945		$	(537	)	$	(21,408	)	$	28,620

Condensed Consolidating Statement of Comprehensive Income

Three Months EndedSeptember 30, 2012

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Revenues	$	172,888		$	445,063	$	12,868		$	(106,997	)	$	523,822
Costs and expenses:
Cost of sales	145,467			286,533		9,093			(52,809		)	388,284
Selling, general and administrative	23,033			101,614		2,899			(54,188		)	73,358
Amortization expense	6			3,239		—			—			3,245
Total costs and expenses	168,506			391,386		11,992			(106,997		)	464,887
Earnings from operations	4,382			53,677		876			—			58,935
Other expenses and income:
Interest expense	7,563			—		—			—			7,563
Interest income	(20		)	3		(29		)	—			(46		)
Intercompany interest	(9,062		)	9,062		—			—			—
Other expenses, net	49			197		3			—			249
Total other expenses (income), net	(1,470		)	9,262		(26		)	—			7,766
Earnings before income taxes	5,852			44,415		902			—			51,169
Income tax expense (benefit)	(3,429		)	17,632		226			—			14,429
Equity in net earnings of subsidiaries	27,459			4,276		—			(31,735		)	—
Net earnings	$	36,740		$	31,059	$	676		$	(31,735	)	$	36,740
Other comprehensive income (loss)	(9		)	197		197			(394		)	(9		)
Comprehensive income	$	36,731		$	31,256	$	873		$	(32,129	)	$	36,731

Condensed Consolidating Statement of Comprehensive Income

Nine Months EndedSeptember 30, 2013

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Revenues	$	399,108		$	1,342,934		$	46,112		$	(320,362	)	$	1,467,792
Costs and expenses:
Cost of sales	312,523			909,324			33,065			(168,264		)	1,086,648
Selling, general and administrative	73,578			296,882			10,270			(152,098		)	228,632
Amortization expense	17			11,170			—			—			11,187
Total costs and expenses	386,118			1,217,376			43,335			(320,362		)	1,326,467
Earnings from operations	12,990			125,558			2,777			—			141,325
Other expenses and income:
Interest expense	22,464			—			—			—			22,464
Interest income	(70		)	—			(68		)	—			(138		)
Intercompany interest	(20,315		)	20,315			—			—			—
Other income, net	(874		)	(1,459		)	(303		)	—			(2,636		)
Total other expenses (income), net	1,205			18,856			(371		)	—			19,690
Earnings before income taxes	11,785			106,702			3,148			—			121,635
Income tax expense	2,220			42,582			665						45,467
Equity in net earnings of subsidiaries	66,603			2,483						(69,086		)	—
Net earnings	$	76,168		$	66,603		$	2,483		$	(69,086	)	$	76,168
Other comprehensive income	222			929			929			(1,858		)	222
Comprehensive income	$	76,390		$	67,532		$	3,412		$	(70,944	)	$	76,390

Condensed Consolidating Statement of Comprehensive Income

Nine Months EndedSeptember 30, 2012

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Revenues	$	515,716		$	1,332,741		$	44,754		$	(310,566	)	$	1,582,645
Costs and expenses:
Cost of sales	435,750			864,353			34,637			(153,835		)	1,180,905
Selling, general and administrative	76,842			305,097			9,290			(156,731		)	234,498
Amortization expense	17			9,540			—			—			9,557
Goodwill impairment	3,985			3,600			—			—			7,585
Total costs and expenses	516,594			1,182,590			43,927			(310,566		)	1,432,545
Earnings (loss) from operations	(878		)	150,151			827			—			150,100
Other expenses and income:
Interest expense	21,372			—			—			—			21,372
Interest income	(80		)	3			(97		)	—			(174		)
Intercompany interest	(19,817		)	19,770			47			—			—
Other expenses (income), net	34			(526		)	(33		)	—			(525		)
Total other expenses (income), net	1,509			19,247			(83		)	—			20,673
Earnings (loss) before income taxes	(2,387		)	130,904			910			—			129,427
Income tax expense (benefit)	(6,016		)	49,540			1,035			—			44,559
Equity in net earnings of subsidiaries	81,239			3,475			—			(84,714		)	—
Net earnings (loss)	$	84,868		$	84,839		$	(125	)	$	(84,714	)	$	84,868
Other comprehensive income (loss)	(435		)	750			750			(1,500		)	(435		)
Comprehensive income	$	84,433		$	85,589		$	625		$	(86,214	)	$	84,433

Condensed Consolidating Statement of Cash Flows

Nine Months EndedSeptember 30, 2013

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments		Consolidated Total
Net cash provided by (used in) operating activities	$	11,300		$	95,666		$	(1,145	)	$	—	$	105,821
Cash flows from investing activities:
Additions to property, plant and equipment	(1,744		)	(12,715		)	(287		)	—		(14,746		)
Proceeds from sale of property, plant and equipment	79			5,200			9			—		5,288
Net cash used in investing activities	(1,665		)	(7,515		)	(278		)	—		(9,458		)
Cash flows from financing activities:
Cash provided by (used in) intercompany activity	84,567			(84,567		)	—			—		—
Repayments of long-term debt	(51,161		)	—			—			—		(51,161		)
Dividends paid on common shares and restricted stock	(35,732		)	—			—			—		(35,732		)
Repurchases of common stock	(60,325		)	—			—			—		(60,325		)
Proceeds from stock options exercises	31,205			—			—			—		31,205
Net cash used in financing activities	(31,446		)	(84,567		)	—			—		(116,013		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(76		)	—		(76		)
Net increase (decrease) in cash and cash equivalents	(21,811		)	3,584			(1,499		)	—		(19,726		)
Cash and cash equivalents at beginning of period	62,836			10,745			21,130			—		94,711
Cash and cash equivalents at end of period	$	41,025		$	14,329		$	19,631		$	—	$	74,985

Condensed Consolidating Statement of Cash Flows

Nine Months EndedSeptember 30, 2012

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments		Consolidated Total
Net cash provided by (used in) operating activities	$	153,569		$	(40,611	)	$	(1,764	)	$	—	$	111,194
Cash flows from investing activities:
Additions to property, plant and equipment	(4,472		)	(11,100		)	(211		)	—		(15,783		)
Digital acquisitions, net of cash acquired	—			(18,344		)	—			—		(18,344		)
Proceeds from sale of property, plant and equipment	250			—			6			—		256
Net cash used in investing activities	(4,222		)	(29,444		)	(205		)	—		(33,871		)
Cash flows from financing activities:
Cash provided by (used in) intercompany activity	(70,042		)	70,042			—			—		—
Repayments of long-term debt	(11,250		)	—			—			—		(11,250		)
Repurchases of common stock	(87,130		)	—			—			—		(87,130		)
Proceeds from stock option exercises	8,956			—			—			—		8,956
Net cash provided by (used in) financing activities	(159,466		)	70,042			—			—		(89,424		)
Effect of exchange rate changes on cash and cash equivalents	—			—			474			—		474
Net decrease in cash and cash equivalents	(10,119		)	(13		)	(1,495		)	—		(11,627		)
Cash and cash equivalents at beginning of period	68,887			7,543			25,541			—		101,971
Cash and cash equivalents at end of period	$	58,768		$	7,530		$	24,046		$	—	$	90,344

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Condensed Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Revenues	$ 489,383	$ 523,822	$ 1,467,792	$ 1,582,645
Costs and expenses:
Cost of sales	361,337	388,284	1,086,648	1,180,905
Selling, general and administrative	74,577	73,358	228,632	234,498
Amortization expense	3,729	3,245	11,187	9,557
Goodwill impairment (Note 10)	0	0	0	7,585
Total costs and expenses	439,643	464,887	1,326,467	1,432,545
Earnings (loss) from operations	49,740	58,935	141,325	150,100
Other expenses and income:
Interest expense	7,287	7,563	22,464	21,372
Interest income	(30)	(46)	(138)	(174)
Other income, net	(1,713)	249	(2,636)	(525)
Total other expenses (income), net	5,544	7,766	19,690	20,673
Earnings (loss) before income taxes	44,196	51,169	121,635	129,427
Income tax expense (Note 1)	16,483	14,429	45,467	44,559
Net earnings	$ 27,713	$ 36,740	$ 76,168	$ 84,868
Net earnings per common share, basic (Note 6)	$ 0.73	$ 0.94	$ 1.98	$ 2.08
Net earnings per common share, diluted (Note 6)	$ 0.70	$ 0.90	$ 1.91	$ 2.00
Weighted-average common shares outstanding, basic (Note 6)	37,460	39,047	37,818	40,777
Weighted-average common shares outstanding, diluted (Note 6)	38,684	40,832	39,147	42,532
Common Stock, Dividends, Per Share, Declared	$ 0.31	$ 0	$ 0.93	$ 0

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ACCRUED EXPENSES

9 Months Ended

Sep. 30, 2013

ACCRUED EXPENSES

ACCRUED EXPENSES

Accrued expenses included on the condensed consolidated balance sheets consisted of:

(in thousands of U.S. dollars)	September 30, 2013		December 31, 2012
Accrued interest	$	2,972	$	7,275
Accrued compensation and benefits	43,986		50,305
Dividends payable	11,912		12,011
Other accrued expenses	37,472		37,876
Accrued expenses	$	96,342	$	107,467

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DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2013

Notional Amounts of Derivative Financial Instruments and Related Fair Values Measured on Recurring Basis

The notional amounts of derivative financial instruments and related fair values measured on a recurring basis and included in the condensed consolidated balance sheets were as follows:

	Notional Amounts				Fair Values
(in millions of U.S. dollars)	September 30, 2013		December 31, 2012		September 30, 2013			December 31, 2012			Balance Sheet Location
Derivatives designated as cash flow hedging instruments:
Interest rate swap contract	$	169.4	$	180.6	$	(3.9	)	$	(5.8	)	Accrued expenses / Other non-current liabilities
Foreign exchange contracts	11.9		6.4		—			0.1			Prepaid expenses
Derivatives not receiving hedge accounting treatment:
Foreign exchange contracts	—		4.7		—			0.3			Prepaid expenses
Total derivative financial instruments	$	181.3	$	191.7	$	(3.9	)	$	(5.4	)

Impact of Derivative Financial Instruments on Condensed Consolidated Financial Statements

The following tables summarize the impact of derivative financial instruments on the unaudited condensed consolidated financial statements for the indicated periods:

	Three Months Ended
	September 30,
	2013			2012			2013			2012			2013			2012
(in millions of U.S. Dollars)	Amount of Pre-tax Gain Recognized in Earnings*						Amount of Pre-tax Loss Recognized in OCI						Amount of Pre-tax Loss Reclassified from AOCI into Earnings*
Derivatives designated as cash flow hedging instruments:
Interest rate swap contract	$	—		$	—		$	(0.3	)	$	(1.0	)	$	(0.7	)	$	(0.7	)
Foreign exchange contracts	—			—			(0.1		)	—			—			—
Derivatives not receiving hedge accounting treatment:
Foreign exchange contracts	—			0.5			—			—			—			—
Total	$	—		$	0.5		$	(0.4	)	$	(1.0	)	$	(0.7	)	$	(0.7	)
	Nine Months Ended
	September 30,
	2013			2012			2013			2012			2013			2012
(in millions of U.S. Dollars)	Amount of Pre-tax Gain (Loss) Recognized in Earnings*						Amount of Pre-tax Loss Recognized in OCI						Amount of Pre-tax Loss Reclassified from AOCI into Earnings*
Derivatives designated as cash flow hedging instruments:
Interest rate swap contract	$	—		$	—		$	(0.2	)	$	(2.6	)	$	(2.1	)	$	(0.7	)
Foreign exchange contracts	—			—			(0.1		)	—			—			—
Derivatives not receiving hedge accounting treatment:
Interest rate swap contracts	—			(0.1		)	—			—			—			—
Foreign exchange contracts	(0.3		)	1.4			—			—			—			—
Total	$	(0.3	)	$	1.3		$	(0.3	)	$	(2.6	)	$	(2.1	)	$	(0.7	)

* Amounts recognized in earnings related to interest rate swap contracts are included in interest expense in the unaudited condensed consolidated statements of income and amounts recognized in earnings related to foreign exchange contracts are included in cost of sales in the unaudited condensed consolidated statements of income.

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2013

Accounts Receivable

Accounts Receivable

The allowance for doubtful accounts was $6.3 million and $6.4 million as of September 30, 2013 and December 31, 2012, respectively.

Income Taxes

Income Taxes

We are required to adjust our effective tax rate each quarter to be consistent with our estimated annual effective tax rate. We are also required to record the tax impact of certain unusual or infrequently occurring items, including the effects of changes in tax laws or rates, in the interim period in which they occur. The effective tax rate during a particular quarter may be higher or lower as a result of the timing of actual earnings versus annual projections.

Inventories

Inventories

Inventories are accounted for at the lower of cost, determined on a first in, first out basis, or market. Inventories included on the condensed consolidated balance sheets consisted of:

(in thousands of U.S. dollars)	September 30, 2013		December 31, 2012
Raw materials	$	27,844	$	30,960
Work in progress	8,861		12,293
Inventories	$	36,705	$	43,253

Property, Plant and Equipment

Property, Plant and Equipment

The following table summarizes the costs and ranges of useful lives of the major classes of property, plant and equipment and the total accumulated depreciation related to property, plant and equipment, net included on the condensed consolidated balance sheets:

	Useful Lives	September 30, 2013			December 31, 2012
	(in years)	(in thousands of U.S. dollars)
Land, at cost	N/A	$	7,182		$	7,185
Buildings, at cost	10 - 30	38,118			37,961
Machinery and equipment, at cost	3 - 20	222,413			228,605
Office furniture and equipment, at cost	3 - 10	244,562			233,948
Leasehold improvements, at cost	5 - 10	29,154			28,916
		541,429			536,615
Less accumulated depreciation		(431,603		)	(410,783		)
Property, plant and equipment, net		$	109,826		$	125,832

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2013-11 to clarify the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This guidance is effective for fiscal periods, and interim periods within those years, beginning after December 15, 2013, and is to be applied prospectively to all unrecognized tax benefits that exist at the effective date with retrospective application also permitted. We will comply with this guidance as of January 1, 2014, and do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In March 2013, the FASB issued ASU No. 2013-05 to clarify the applicable guidance for a parent company’s accounting for the release of the cumulative translation adjustment into net income upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. This guidance is effective for fiscal periods beginning after December 15, 2013, and is to be applied prospectively to derecognition events occurring after the effective date. We will comply with this guidance as of January 1, 2014, and do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In February 2013, the FASB issued ASU No. 2013-02, which amends the reporting of amounts reclassified out of accumulated other comprehensive income (“AOCI”). These amendments do not change the current requirements for reporting net income or other comprehensive income in the financial statements. However, the guidance requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component, either on the face of the financial statement where net income is presented or in the notes to the financial statements. This guidance is effective for fiscal periods

beginning after December 15, 2012, and is to be applied prospectively. We have complied with this guidance as of January 1, 2013, and the adoption of the guidance did not have a material impact on our consolidated financial statements.

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Domestic and Foreign Revenues (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Segment Reporting Information [Line Items]
Revenues	$ 489,383	$ 523,822	$ 1,467,792	$ 1,582,645
UNITED STATES
Segment Reporting Information [Line Items]
Revenues	479,300	514,600	1,433,200	1,550,500
Foreign
Segment Reporting Information [Line Items]
Revenues	$ 10,100	$ 9,200	$ 34,600	$ 32,100

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CONTINGENCIES - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013
Contingencies Disclosure [Line Items]
Contingent sales tax liability	$ 7.6

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GUARANTOR AND NON-GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Tables)

9 Months Ended

Sep. 30, 2013

Condensed consolidating balance sheet

Condensed Consolidating Balance Sheet

September 30, 2013

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Assets
Current assets:
Cash and cash equivalents	$	41,025		$	14,329		$	19,631		$	—		$	74,985
Accounts receivable, net	100,152			282,914			25,256			—			408,322
Inventories	27,249			9,453			3			—			36,705
Prepaid expenses and other (including intercompany)	1,971,516			5,232,562			3,085			(7,158,157		)	49,006
Total current assets	2,139,942			5,539,258			47,975			(7,158,157		)	569,018
Property, plant and equipment, net	19,014			89,854			958			—			109,826
Goodwill	23,700			601,750			6,988			—			632,438
Other intangible assets, net	11,517			192,467			—			—			203,984
Investments	717,055			19,912			—			(732,964		)	4,003
Intercompany note receivable (payable)	326,622			(314,292		)	(12,330		)	—			—
Other assets	6,392			3,029			12			—			9,433
Total assets	$	3,244,242		$	6,131,978		$	43,603		$	(7,891,121	)	$	1,528,702
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion, long-term debt	$	33,750		$	—		$	—		$	—		$	33,750
Accounts payable and intercompany payable	2,132,824			5,271,181			18,296			(7,158,157		)	264,144
Progress billings	13,128			15,065			9,891			—			38,084
Accrued expenses	52,508			35,842			7,992			—			96,342
Total current liabilities	2,232,210			5,322,088			36,179			(7,158,157		)	432,320
Long-term debt	502,650			—			—			—			502,650
Deferred income taxes	(3,421		)	65,398			(4,009		)	—			57,968
Other non-current liabilities	15,041			31,020			(8,059		)	—			38,002
Total liabilities	2,746,480			5,418,506			24,111			(7,158,157		)	1,030,940
Stockholders’ equity	497,762			713,472			19,492			(732,964		)	497,762
Total liabilities and stockholders’ equity	$	3,244,242		$	6,131,978		$	43,603		$	(7,891,121	)	$	1,528,702

Condensed Consolidating Balance Sheet

December 31, 2012

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Assets
Current assets:
Cash and cash equivalents	$	62,836		$	10,745		$	21,130		$	—		$	94,711
Accounts receivable, net	116,821			287,230			22,848			—			426,899
Inventories	35,421			7,829			3			—			43,253
Prepaid expenses and other (including intercompany)	1,520,526			3,706,682			1,998			(5,192,617		)	36,589
Total current assets	1,735,604			4,012,486			45,979			(5,192,617		)	601,452
Property, plant and equipment, net	19,159			105,667			1,006			—			125,832
Goodwill	23,699			601,750			6,989			—			632,438
Other intangible assets, net	11,534			203,637			—			—			215,171
Investments	645,411			15,375			—			(658,355		)	2,431
Intercompany note receivable (payable)	364,921			(360,830		)	(4,091		)	—			—
Other assets	7,543			4,157			11			—			11,711
Total assets	$	2,807,871		$	4,582,242		$	49,894		$	(5,850,972	)	$	1,589,035
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion, long-term debt	$	22,500		$	—		$	—		$	—		$	22,500
Accounts payable and intercompany payable	1,653,928			3,804,209			15,800			(5,192,617		)	281,320
Progress billings	16,459			7,758			15,378			—			39,595
Accrued expenses	61,741			38,878			6,848			—			107,467
Total current liabilities	1,754,628			3,850,845			38,026			(5,192,617		)	450,882
Long-term debt	565,061			—			—			—			565,061
Deferred income taxes	(4,131		)	65,398			(4,009		)	—			57,258
Other non-current liabilities	18,750			22,722			799			—			42,271
Total liabilities	2,334,308			3,938,965			34,816			(5,192,617		)	1,115,472
Stockholders’ equity	473,563			643,277			15,078			(658,355		)	473,563
Total liabilities and stockholders’ equity	$	2,807,871		$	4,582,242		$	49,894		$	(5,850,972	)	$	1,589,035

Condensed consolidating statement of comprehensive income

Condensed Consolidating Statement of Comprehensive Income

Nine Months EndedSeptember 30, 2012

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Revenues	$	515,716		$	1,332,741		$	44,754		$	(310,566	)	$	1,582,645
Costs and expenses:
Cost of sales	435,750			864,353			34,637			(153,835		)	1,180,905
Selling, general and administrative	76,842			305,097			9,290			(156,731		)	234,498
Amortization expense	17			9,540			—			—			9,557
Goodwill impairment	3,985			3,600			—			—			7,585
Total costs and expenses	516,594			1,182,590			43,927			(310,566		)	1,432,545
Earnings (loss) from operations	(878		)	150,151			827			—			150,100
Other expenses and income:
Interest expense	21,372			—			—			—			21,372
Interest income	(80		)	3			(97		)	—			(174		)
Intercompany interest	(19,817		)	19,770			47			—			—
Other expenses (income), net	34			(526		)	(33		)	—			(525		)
Total other expenses (income), net	1,509			19,247			(83		)	—			20,673
Earnings (loss) before income taxes	(2,387		)	130,904			910			—			129,427
Income tax expense (benefit)	(6,016		)	49,540			1,035			—			44,559
Equity in net earnings of subsidiaries	81,239			3,475			—			(84,714		)	—
Net earnings (loss)	$	84,868		$	84,839		$	(125	)	$	(84,714	)	$	84,868
Other comprehensive income (loss)	(435		)	750			750			(1,500		)	(435		)
Comprehensive income	$	84,433		$	85,589		$	625		$	(86,214	)	$	84,433

Condensed Consolidating Statement of Comprehensive Income

Nine Months EndedSeptember 30, 2013

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Revenues	$	399,108		$	1,342,934		$	46,112		$	(320,362	)	$	1,467,792
Costs and expenses:
Cost of sales	312,523			909,324			33,065			(168,264		)	1,086,648
Selling, general and administrative	73,578			296,882			10,270			(152,098		)	228,632
Amortization expense	17			11,170			—			—			11,187
Total costs and expenses	386,118			1,217,376			43,335			(320,362		)	1,326,467
Earnings from operations	12,990			125,558			2,777			—			141,325
Other expenses and income:
Interest expense	22,464			—			—			—			22,464
Interest income	(70		)	—			(68		)	—			(138		)
Intercompany interest	(20,315		)	20,315			—			—			—
Other income, net	(874		)	(1,459		)	(303		)	—			(2,636		)
Total other expenses (income), net	1,205			18,856			(371		)	—			19,690
Earnings before income taxes	11,785			106,702			3,148			—			121,635
Income tax expense	2,220			42,582			665						45,467
Equity in net earnings of subsidiaries	66,603			2,483						(69,086		)	—
Net earnings	$	76,168		$	66,603		$	2,483		$	(69,086	)	$	76,168
Other comprehensive income	222			929			929			(1,858		)	222
Comprehensive income	$	76,390		$	67,532		$	3,412		$	(70,944	)	$	76,390

Condensed Consolidating Statement of Comprehensive Income

Three Months EndedSeptember 30, 2012

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Revenues	$	172,888		$	445,063	$	12,868		$	(106,997	)	$	523,822
Costs and expenses:
Cost of sales	145,467			286,533		9,093			(52,809		)	388,284
Selling, general and administrative	23,033			101,614		2,899			(54,188		)	73,358
Amortization expense	6			3,239		—			—			3,245
Total costs and expenses	168,506			391,386		11,992			(106,997		)	464,887
Earnings from operations	4,382			53,677		876			—			58,935
Other expenses and income:
Interest expense	7,563			—		—			—			7,563
Interest income	(20		)	3		(29		)	—			(46		)
Intercompany interest	(9,062		)	9,062		—			—			—
Other expenses, net	49			197		3			—			249
Total other expenses (income), net	(1,470		)	9,262		(26		)	—			7,766
Earnings before income taxes	5,852			44,415		902			—			51,169
Income tax expense (benefit)	(3,429		)	17,632		226			—			14,429
Equity in net earnings of subsidiaries	27,459			4,276		—			(31,735		)	—
Net earnings	$	36,740		$	31,059	$	676		$	(31,735	)	$	36,740
Other comprehensive income (loss)	(9		)	197		197			(394		)	(9		)
Comprehensive income	$	36,731		$	31,256	$	873		$	(32,129	)	$	36,731

Condensed Consolidating Statement of Comprehensive Income

Three Months EndedSeptember 30, 2013

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated Total
Revenues	$	126,994		$	453,902		$	13,813		$	(105,326	)	$	489,383
Costs and expenses:
Cost of sales	100,190			308,615			9,893			(57,361		)	361,337
Selling, general and administrative	23,682			95,278			3,582			(47,965		)	74,577
Amortization expense	6			3,723			—			—			3,729
Total costs and expenses	123,878			407,616			13,475			(105,326		)	439,643
Earnings from operations	3,116			46,286			338			—			49,740
Other expenses and income:
Interest expense	7,287			—			—			—			7,287
Interest income	(18		)	—			(12		)	—			(30		)
Intercompany interest	(9,082		)	9,082			—			—			—
Other income, net	(816		)	(835		)	(62		)	—			(1,713		)
Total other expenses (income), net	(2,629		)	8,247			(74		)	—			5,544
Earnings before income taxes	5,745			38,039			412			—			44,196
Income tax expense	684			15,557			242			—			16,483
Equity in net earnings of subsidiaries	22,652			170			—			(22,822		)	—
Net earnings	$	27,713		$	22,652		$	170		$	(22,822	)	$	27,713
Other comprehensive income (loss)	907			(707		)	(707		)	1,414			907
Comprehensive income (loss)	$	28,620		$	21,945		$	(537	)	$	(21,408	)	$	28,620

Condensed consolidating statement of cash flows

Condensed Consolidating Statement of Cash Flows

Nine Months EndedSeptember 30, 2012

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments		Consolidated Total
Net cash provided by (used in) operating activities	$	153,569		$	(40,611	)	$	(1,764	)	$	—	$	111,194
Cash flows from investing activities:
Additions to property, plant and equipment	(4,472		)	(11,100		)	(211		)	—		(15,783		)
Digital acquisitions, net of cash acquired	—			(18,344		)	—			—		(18,344		)
Proceeds from sale of property, plant and equipment	250			—			6			—		256
Net cash used in investing activities	(4,222		)	(29,444		)	(205		)	—		(33,871		)
Cash flows from financing activities:
Cash provided by (used in) intercompany activity	(70,042		)	70,042			—			—		—
Repayments of long-term debt	(11,250		)	—			—			—		(11,250		)
Repurchases of common stock	(87,130		)	—			—			—		(87,130		)
Proceeds from stock option exercises	8,956			—			—			—		8,956
Net cash provided by (used in) financing activities	(159,466		)	70,042			—			—		(89,424		)
Effect of exchange rate changes on cash and cash equivalents	—			—			474			—		474
Net decrease in cash and cash equivalents	(10,119		)	(13		)	(1,495		)	—		(11,627		)
Cash and cash equivalents at beginning of period	68,887			7,543			25,541			—		101,971
Cash and cash equivalents at end of period	$	58,768		$	7,530		$	24,046		$	—	$	90,344

Condensed Consolidating Statement of Cash Flows

Nine Months EndedSeptember 30, 2013

(in thousands of U.S. dollars)

	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments		Consolidated Total
Net cash provided by (used in) operating activities	$	11,300		$	95,666		$	(1,145	)	$	—	$	105,821
Cash flows from investing activities:
Additions to property, plant and equipment	(1,744		)	(12,715		)	(287		)	—		(14,746		)
Proceeds from sale of property, plant and equipment	79			5,200			9			—		5,288
Net cash used in investing activities	(1,665		)	(7,515		)	(278		)	—		(9,458		)
Cash flows from financing activities:
Cash provided by (used in) intercompany activity	84,567			(84,567		)	—			—		—
Repayments of long-term debt	(51,161		)	—			—			—		(51,161		)
Dividends paid on common shares and restricted stock	(35,732		)	—			—			—		(35,732		)
Repurchases of common stock	(60,325		)	—			—			—		(60,325		)
Proceeds from stock options exercises	31,205			—			—			—		31,205
Net cash used in financing activities	(31,446		)	(84,567		)	—			—		(116,013		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(76		)	—		(76		)
Net increase (decrease) in cash and cash equivalents	(21,811		)	3,584			(1,499		)	—		(19,726		)
Cash and cash equivalents at beginning of period	62,836			10,745			21,130			—		94,711
Cash and cash equivalents at end of period	$	41,025		$	14,329		$	19,631		$	—	$	74,985

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SEGMENT REPORTING (Tables)

9 Months Ended

Sep. 30, 2013

Revenues, Depreciation/Amortization and Segment Profit

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

	Three Months Ended
	September 30,
(in millions of U.S. dollars)	Shared Mail		FSI		Neighborhood Targeted			International, Digital Media & Services			Total
2013
Revenues from external customers	$	342.5	$	75.5	$	23.7		$	47.7		$	489.4
Intersegment revenues	$	5.0	$	10.6	$	17.2		$	—		$	32.8
Depreciation/amortization	$	5.3	$	2.4	$	0.8		$	2.6		$	11.1
Segment profit (loss)	$	47.5	$	7.7	$	(2.1	)	$	(2.4	)	$	50.7
2012
Revenues from external customers	$	331.4	$	72.2	$	75.8		$	44.4		$	523.8
Intersegment revenues	$	4.3	$	9.3	$	15.7		$	—		$	29.3
Depreciation/amortization	$	7.7	$	3.2	$	1.0		$	2.0		$	13.9
Segment profit (loss)	$	52.3	$	7.6	$	(1.1	)	$	0.1		$	58.9
	Nine Months Ended
	September 30,
(in millions of U.S. dollars)	Shared Mail		FSI		Neighborhood Targeted			International, Digital Media & Services			Total
2013
Revenues from external customers	$	1,005.6	$	241.4	$	75.8		$	145.0		$	1,467.8
Intersegment revenues	$	13.2	$	31.5	$	50.4		$	—		$	95.1
Depreciation/amortization	$	17.5	$	8.0	$	2.7		$	7.6		$	35.8
Segment profit (loss)	$	130.3	$	28.2	$	(8.0	)	$	(6.8	)	$	143.7
2012
Revenues from external customers	$	1,008.2	$	219.0	$	225.5		$	129.9		$	1,582.6
Intersegment revenues	$	12.7	$	29.4	$	42.3		$	—		$	84.4
Depreciation/amortization	$	24.2	$	9.6	$	3.1		$	6.1		$	43.0
Segment profit (loss)	$	147.0	$	20.3	$	(5.1	)	$	5.2		$	167.4

Reconciliation of Operating Profit (Loss) from Segments to Consolidated

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				Nine Months Ended
	September 30,				September 30,
(in millions of U.S. dollars)	2013		2012		2013		2012
Total segment profit	$	50.7	$	58.9	$	143.7	$	167.4
Unallocated amounts:
Goodwill impairment	—		—		—		7.6
Restructuring costs and other non-recurring charges	1.0		—		2.4		9.7
Earnings from operations	$	49.7	$	58.9	$	141.3	$	150.1

Domestic and Foreign Revenues

Domestic and foreign revenues were as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions of U.S. dollars)	2013		2012		2013		2012
United States	$	479.3	$	514.6	$	1,433.2	$	1,550.5
Foreign	10.1		9.2		34.6		32.1
Revenues	$	489.4	$	523.8	$	1,467.8	$	1,582.6

Domestic and Foreign Long-Lived Assets (Property, Plant and Equipment, Net)

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

(in millions of U.S. dollars)	September 30, 2013		December 31, 2012
United States	$	102.1	$	118.1
Foreign	7.7		7.7
Property, plant and equipment, net	$	109.8	$	125.8

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Revenues, Depreciation/Amortization and Segment Profit by Segment (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Segment Reporting Information [Line Items]
Revenues from external customers	$ 489,383	$ 523,822	$ 1,467,792	$ 1,582,645
Intersegment revenues	32,800	29,300	95,100	84,400
Depreciation and amortization	11,100	13,900	35,797	43,022
Segment Reporting Information, Net Income (Loss)	50,700	58,900	143,700	167,400
Shared Mail
Segment Reporting Information [Line Items]
Revenues from external customers	342,538	331,356	1,005,573	1,008,249
Intersegment revenues	5,000	4,300	13,200	12,700
Depreciation and amortization	5,300	7,700	17,500	24,200
Segment Reporting Information, Net Income (Loss)	47,500	52,300	130,300	147,000
Free-standing Inserts (FSI)
Segment Reporting Information [Line Items]
Revenues from external customers	75,490	72,201	241,400	219,030
Intersegment revenues	10,600	9,300	31,500	29,400
Depreciation and amortization	2,400	3,200	8,000	9,600
Segment Reporting Information, Net Income (Loss)	7,700	7,600	28,200	20,300
Neighborhood Targeted
Segment Reporting Information [Line Items]
Revenues from external customers	23,664	75,823	75,815	225,490
Intersegment revenues	17,200	15,700	50,400	42,300
Depreciation and amortization	800	1,000	2,700	3,100
Segment Reporting Information, Net Income (Loss)	(2,100)	(1,100)	(8,000)	(5,100)
International, Digital Media and Services
Segment Reporting Information [Line Items]
Revenues from external customers	47,691	44,442	145,004	129,876
Intersegment revenues	0	0	0	0
Depreciation and amortization	2,600	2,000	7,600	6,100
Segment Reporting Information, Net Income (Loss)	$ (2,400)	$ 100	$ (6,800)	$ 5,200

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Long-Term Debt - Additional Information (Detail) (USD $)	3 Months Ended	9 Months Ended															9 Months Ended									9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Jun. 27, 2011 Incremental Credit Facility	Jun. 27, 2011 Term Loan A	Jun. 27, 2011 Term Loan A Principal Repayment Percentage in Each of First Two Years from Issuance [Member]	Jun. 27, 2011 Term Loan A Principal Repayment Percentage in Third Year from Issuance [Member]	Jun. 27, 2011 Term Loan A Principal Repayment Percentage in Fourth Year from Issuance [Member]	Jun. 27, 2011 Term Loan A Principal Repayment Percentage in Fifth Year from Issuance [Member]	Jun. 27, 2011 Term Loan A Principal repayable at maturity	Sep. 30, 2013 Senior Secured Revolving Credit Facility	Jun. 27, 2011 Senior Secured Revolving Credit Facility	Jun. 27, 2011 Senior Secured Revolving Credit Facility Foreign Denominated	Jun. 27, 2011 Senior Secured Revolving Credit Facility Letter of Credit	Jun. 27, 2011 Senior Secured Revolving Credit Facility Revolving Line of Credit	Sep. 30, 2013 Senior Secured Credit Facility	Jun. 27, 2011 Senior Secured Credit Facility	Sep. 30, 2013 Senior Secured Credit Facility Base Rate	Jun. 27, 2011 Senior Secured Credit Facility Base Rate	Sep. 30, 2013 Senior Secured Credit Facility Euro Dollar Rate	Jun. 27, 2011 Senior Secured Credit Facility Euro Dollar Rate	Sep. 30, 2013 Senior Secured Revolving Credit Facility	Dec. 31, 2012 Senior Secured Revolving Credit Facility	Jun. 27, 2011 Senior Secured Revolving Credit Facility	Sep. 30, 2013 Senior Notes due 2021	Dec. 31, 2012 Senior Notes due 2021	Jan. 28, 2011 Senior Notes due 2021	Jan. 28, 2011 Senior Notes due 2021 Senior Notes Redeemable Prior to February 1, 2014 [Member]	Jan. 28, 2011 Senior Notes due 2021 Senior Notes Redeemable Prior To February 1, 2016 Member	Jan. 28, 2011 Senior Notes due 2021 Senior Notes Redeemable Upon Change in Control [Member]
Debt Outstanding [Line Items]
Principal Redeemable with Equity Offering Proceeds																													35.00%
Debt Instrument, Redemption Price																														100.00%	101.00%
Cross-Default Accelerated Indebtedness Amount																	$ 50,000,000									$ 50,000,000
Debt Instrument, Interest Rate, Stated Percentage																										6.625%	6.625%
Debt Instrument, Face Amount						300,000,000																						260,000,000
Principal repayment, percentage							5.00%	10.00%	15.00%	11.25%	53.75%
Line of credit, aggregate principal amount													100,000,000	15,000,000	50,000,000	20,000,000
Line of Credit Facility, Amount Outstanding													50,000,000
Line of credit, incremental facility					150,000,000
Line of Credit Facility, Remaining Borrowing Capacity												78,300,000
Repayments of long-term debt		51,161,000	11,250,000
Standby letters of credit outstanding	6,700,000	6,700,000
Senior secured debt, applicable margin rate																			0.75%		1.75%
Senior secured debt, maximum applicable margin rate																				1.00%		2.00%
Percentage of capital stock of foreign subsidiaries pledged as a guarantee																		65.00%
Mandatory principal prepayments from aggregate net cash proceeds from certain asset sales, casualty events or condemnation recoveries, percentage																									100.00%
Long-term Debt	536,400,000	536,400,000		587,561,000																			15,000,000	50,000,000		258,900,000	260,000,000
Capitalized debt issuance costs																												5,100,000
Voluntary Repayments of Long-Term Debt	$ 21,100,000	$ 36,100,000

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Notional Amounts of Derivative Financial Instruments and Related Fair Values Measured on Recurring Basis (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Derivatives, Fair Value [Line Items]
Notional amount of derivatives	$ 181.3	$ 191.7
Total derivative financial instruments, fair value (net)	(3.9)	(5.4)
Designated as Hedging Instrument | Interest rate swap contract
Derivatives, Fair Value [Line Items]
Notional Amounts of Derivative Instruments, Liability	169.4	180.6
Designated as Hedging Instrument | Interest rate swap contract | Other non-current liabilities
Derivatives, Fair Value [Line Items]
Fair value of Derivative Instruments, Liability	(3.9)	(5.8)
Designated as Hedging Instrument | Foreign exchange contracts
Derivatives, Fair Value [Line Items]
Notional Amounts of Derivative Instruments, Asset	11.9	6.4
Designated as Hedging Instrument | Foreign exchange contracts | Prepaid expenses and other [Member]
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset	0	0.1
Not Designated as Hedging Instrument | Foreign exchange contracts
Derivatives, Fair Value [Line Items]
Notional Amounts of Derivative Instruments, Asset	0	4.7
Not Designated as Hedging Instrument | Foreign exchange contracts | Prepaid expenses and other [Member]
Derivatives, Fair Value [Line Items]
Derivative Asset, Fair Value, Gross Asset	$ 0	$ 0.3

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Domestic and Foreign Long-Lived Assets (Property, Plant and Equipment, Net) (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Revenues from External Customers and Long-Lived Assets [Line Items]
Property, plant and equipment, net (Note 1)	$ 109,826	$ 125,832
UNITED STATES
Revenues from External Customers and Long-Lived Assets [Line Items]
Property, plant and equipment, net (Note 1)	102,100	118,100
Foreign
Revenues from External Customers and Long-Lived Assets [Line Items]
Property, plant and equipment, net (Note 1)	$ 7,700	$ 7,700

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Goodwill (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Goodwill [Line Items]
Goodwill, Gross	$ 846,023		$ 846,023
Goodwill, Impairment Loss	0	0	0	(7,585)
Goodwill, Impaired, Accumulated Impairment Loss	(213,585)		(213,585)
Goodwill	632,438		632,438		632,438
Shared Mail
Goodwill [Line Items]
Goodwill, Gross	721,384		721,384
Goodwill, Impaired, Accumulated Impairment Loss	(187,200)		(187,200)
Goodwill	534,184		534,184
Neighborhood Targeted
Goodwill [Line Items]
Goodwill, Gross	5,325		5,325
Goodwill, Impaired, Accumulated Impairment Loss	(3,985)		(3,985)
Goodwill	1,340		1,340
Free-standing Inserts (FSI)
Goodwill [Line Items]
Goodwill, Gross	22,357		22,357
Goodwill, Impaired, Accumulated Impairment Loss	0		0
Goodwill	22,357		22,357
International, Digital Media and Services
Goodwill [Line Items]
Goodwill, Gross	96,957		96,957
Goodwill, Impaired, Accumulated Impairment Loss	(22,400)		(22,400)
Goodwill	$ 74,557		$ 74,557

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Repurchase of Common Stock (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Equity, Class of Treasury Stock [Line Items]
Shares repurchased	243	838	2,231	4,133
Aggregate repurchase price	$ 6,914	$ 21,229	$ 60,325	$ 87,130
Average price paid per share	$ 28.49	$ 25.34	$ 27.04	$ 21.08

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REPURCHASES OF COMMON STOCK (Tables)

9 Months Ended

Sep. 30, 2013

REPURCHASES OF COMMON STOCK

The following table summarizes our repurchases of common stock during the indicated periods:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands, except per share data)	2013		2012		2013		2012
Shares repurchased	243		838		2,231		4,133
Aggregate repurchase price	$	6,914	$	21,229	$	60,325	$	87,130
Average price paid per share	$	28.49	$	25.34	$	27.04	$	21.08

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Cash flows from operating activities:
Net earnings	$ 76,168	$ 84,868
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	35,797	43,022
Amortization of debt issuance costs	1,801	1,438
Provision for losses on accounts receivable	1,994	1,231
Goodwill, Impairment Loss	0	7,585
Loss (gain) on derivatives, net	132	194
Gain (loss) on sale of property, plant and equipment	846	400
Stock-based compensation expense	9,401	7,021
Deferred income taxes	93	1,513
Changes in assets and liabilities:
Accounts receivable, net	16,583	52,260
Inventories	6,548	9,260
Prepaid expenses and other	(12,680)	(16,877)
Other assets	(1,518)	(1,038)
Accounts payable	(17,176)	(51,616)
Progress billings	(1,511)	577
Accrued expenses	(7,340)	(21,626)
Other non-current liabilities	(3,317)	(7,018)
Total adjustments	29,653	26,326
Net cash provided by (used in) operating activities	105,821	111,194
Cash flows from investing activities:
Additions to property, plant and equipment	(14,746)	(15,783)
Digital acquisitions, net of cash acquired	0	(18,344)
Proceeds from sale of property, plant and equipment	5,288	256
Net cash provided by (used in) investing activities	(9,458)	(33,871)
Net Cash Provided by (Used in) Financing Activities [Abstract]
Repayments of long-term debt	(51,161)	(11,250)
Dividends paid on common shares and restricted stock	(35,732)	0
Repurchases of common stock	(60,325)	(87,130)
Proceeds from Stock Options Exercised	31,205	8,956
Net cash provided (used in) by financing activities	(116,013)	(89,424)
Effect of exchange rate changes on cash and cash equivalents	(76)	474
Net increase (decrease) in cash and cash equivalents	(19,726)	(11,627)
Cash and cash equivalents at beginning of period	94,711	101,971
Cash and cash equivalents at end of period	74,985	90,344
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	24,689	24,923
Cash paid during the period for income taxes	$ 55,987	$ 67,016

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GOODWILL AND OTHER INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2013

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL AND OTHER INTANGIBLE ASSETS

The following table summarizes, by reportable segment, the gross amount, accumulated impairment losses and net carrying amount of goodwill included on the condensed consolidated balance sheets as of September 30, 2013 and December 31, 2012. There were no changes in the carrying amount of goodwill for the nine months endedSeptember 30, 2013.

(in thousands of U.S. dollars)	Shared Mail			Neighborhood Targeted			Free-standing Inserts		International, Digital Media & Services			Total
Total goodwill acquired	$	721,384		$	5,325		$	22,357	$	96,957		$	846,023
Accumulated impairment losses	(187,200		)	(3,985		)	—		(22,400		)	(213,585		)
Goodwill	$	534,184		$	1,340		$	22,357	$	74,557		$	632,438

The components of other intangible assets, net included on the condensed consolidated balance sheets consisted of:

	September 30, 2013								December 31, 2012
(in thousands of U.S. dollars)	Gross Amount		Accumulated Amortization			Net Amount		Weighted Average Remaining Useful Life (in years)	Gross Amount		Accumulated Amortization			Net Amount		Weighted Average Remaining Useful Life (in years)
Finite-lived intangible assets:
Mailing lists, non-compete agreements and other	$	47,320	$	(16,152	)	$	31,168	11.9	$	47,320	$	(13,025	)	$	34,295	12.2
Customer relationships	142,200		(63,326		)	78,874		7.4	142,200		(55,266		)	86,934		8.2
Total	$	189,520	$	(79,478	)	110,042			$	189,520	$	(68,291	)	121,229
Indefinite-lived intangible assets:
Valassis name, tradenames, trademarks and other						93,942								93,942
Other intangible assets, net						$	203,984							$	215,171

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CONTINGENCIES

9 Months Ended

Sep. 30, 2013

CONTINGENCIES

CONTINGENCIES

The application and interpretation of applicable state sales tax laws to certain of our products is uncertain. Accordingly, we may be exposed to additional sales tax liability to the extent various state jurisdictions determine that certain of our products are subject to such jurisdictions’ sales tax. As of September 30, 2013, we have recorded a liability of $7.6 million, reflecting our best estimate of our potential sales tax liability.

In addition to the above matter, we are involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material effect on our financial position, results of operations or liquidity.

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LONG-TERM DEBT

9 Months Ended

Sep. 30, 2013

LONG-TERM DEBT

LONG-TERM DEBT

Long-term debt included on the condensed consolidated balance sheets consisted of:

(in thousands of U.S. dollars)	September 30, 2013		December 31, 2012
Senior Secured Revolving Credit Facility	$	15,000	$	50,000
Senior Secured Term Loan A	262,500		277,500
Senior Secured Convertible Notes due 2033, net of discount	—		61
6 5/8% Senior Notes due 2021	258,900		260,000
Total debt	536,400		587,561
Current portion long-term debt	33,750		22,500
Long-term debt	$	502,650	$	565,061

Senior Secured Credit Facility

General

On June 27, 2011, we entered into a senior secured credit facility with JPMorgan Chase Bank, N.A., as administrative agent, and a syndicate of lenders jointly arranged by J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and RBS Securities Inc. (the “Senior Secured Credit Facility”). The Senior Secured Credit Facility and related loan documents replaced and terminated our prior credit agreement, dated as of March 2, 2007, as amended (the “Prior Senior Secured Credit Facility”), by and among Valassis, Bear Stearns Corporate Lending Inc., as Administrative Agent, and a syndicate of lenders jointly arranged by Bear, Stearns & Co. Inc. and Banc of America Securities LLC. In connection with the termination of the Prior Senior Secured Credit Facility, all obligations and rights under the related guarantee, security and collateral agency agreement, dated as of March 2, 2007, as amended (the “Prior Security Agreement”), by Valassis and certain of its domestic subsidiaries signatory thereto, as grantors, in favor of Bear Stearns Corporate Lending Inc., in its capacity as collateral agent for the benefit of the Secured Parties (as defined in the Prior Security Agreement), were also simultaneously terminated.

The Senior Secured Credit Facility consists of:

• a five-year term loan A in an aggregate principal amount equal to $300.0 million, with principal repayable in quarterly installments at a rate of 5.0% during each of the first two years from issuance, 10.0% during the third year from issuance, 15.0% during the fourth year from issuance and 11.25% during the fifth year from issuance, with the remaining 53.75% due at maturity (the “Term Loan A”);

• a five-year revolving credit facility in an aggregate principal amount of $100.0 million (the “Revolving Line of Credit”), including $15.0 million available in Euros, Pounds Sterling or Canadian Dollars, $50.0 million available for letters of credit and a $20.0 million swingline loan subfacility, of which $50.0 million was drawn at closing and $15.0 million remains outstanding as of September 30, 2013 (exclusive of outstanding letters of credit described below); and

• an incremental facility pursuant to which, prior to the maturity of the Senior Secured Credit Facility, we may incur additional indebtedness in an amount up to $150.0 million under the Revolving Line of Credit or the Term Loan A or a combination thereof, subject to certain conditions, including receipt of additional lending commitments for such additional indebtedness. The terms of the incremental facility will be substantially similar to the terms of the Senior Secured Credit Facility, except with respect to the pricing of the incremental facility, the interest rate for which could be higher than that for the Revolving Line of Credit and the Term Loan A.

All borrowings under our Senior Secured Credit Facility, including, without limitation, amounts drawn under the Revolving Line of Credit, are subject to the satisfaction of customary conditions, including absence of a default and accuracy of representations and warranties. As of September 30, 2013, we had approximately $78.3 million available under the Revolving Line of Credit portion of our Senior Secured Credit Facility (after giving effect to the reductions in availability pursuant to $6.7 million in standby letters of credit outstanding as of September 30, 2013).

Interest and Fees

Borrowings under our Senior Secured Credit Facility bear interest, at our option, at either the alternate base rate (defined as the higher of the prime rate announced by the Administrative Agent, the federal funds effective rate or one-month LIBOR, in each case, plus an applicable interest rate margin) (the “Base Rate”) or at the Eurodollar Rate (one-, two-, three- or six-month LIBOR, at our election, as defined in the credit agreement governing the Senior Secured Credit Facility), except for borrowings made in alternate currencies which may not accrue interest based upon the alternate base rate, in each case, plus an applicable interest rate margin. The applicable margins are currently 0.75% per annum for Base Rate loans and 1.75% per annum for Eurodollar Rate loans. The margins applicable to the borrowings under our Senior Secured Credit Facility may be adjusted based on our consolidated leverage ratio, with 1.00% being the maximum Base Rate margin and 2.00% being the maximum Eurodollar Rate margin. See Note 7, Derivative Financial Instruments and Fair Value Measurements, for discussion regarding our various interest rate swap agreements.

Guarantees and Security

Our Senior Secured Credit Facility is guaranteed by certain of our existing and future domestic restricted subsidiaries pursuant to a Guarantee and Collateral Agreement. In addition, our obligations under our Senior Secured Credit Facility and the guarantee obligations of the subsidiary guarantors are secured by first priority liens on substantially all of our and our subsidiary guarantors’ present and future assets and by a pledge of all of the equity interests in our domestic subsidiary guarantors and 65% of the capital stock of certain of our existing and future foreign subsidiaries.

Prepayments

The Senior Secured Credit Facility also contains a requirement that we make mandatory principal prepayments on the Term Loan A and Revolving Line of Credit in certain circumstances, including, without limitation, with 100% of the aggregate net cash proceeds from certain asset sales, casualty events or condemnation recoveries (in each case, to the extent not otherwise used for reinvestment in our business or related business and subject to certain other exceptions). The Senior Secured Credit Facility further provides that, subject to customary notice and minimum amount conditions, we may make voluntary prepayments without payment of premium or penalty.

Covenants

Subject to customary and otherwise agreed upon exceptions, our Senior Secured Credit Facility contains affirmative and negative covenants, including, but not limited to:

• the payment of other obligations;

• the maintenance of organizational existences, including, but not limited to, maintaining our property and insurance;

• compliance with all material contractual obligations and requirements of law;

• limitations on the incurrence of indebtedness;

• limitations on creation and existence of liens;

• limitations on certain fundamental changes to our corporate structure and nature of our business, including mergers;

• limitations on asset sales;

• limitations on restricted payments, including certain dividends and stock repurchases and redemptions;

• limitations on capital expenditures;

• limitations on any investments, provided that certain “permitted acquisitions” and strategic investments are allowed;

• limitations on optional prepayments and modifications of certain debt instruments;

• limitations on modifications to organizational documents;

• limitations on transactions with affiliates;

• limitations on entering into certain swap agreements;

• limitations on negative pledge clauses or clauses restricting subsidiary distributions;

• limitations on sale-leaseback and other lease transactions; and

• limitations on changes to our fiscal year.

Our Senior Secured Credit Facility also requires us to comply with:

• a maximum consolidated leverage ratio, as defined in our Senior Secured Credit Facility (generally, the ratio of our consolidated total debt to consolidated earnings before interest, taxes, depreciation and amortization, or EBITDA, for the most recent four quarters), of 3.50:1.00; and

• a minimum consolidated interest coverage ratio, as defined in our Senior Secured Credit Facility (generally, the ratio of our consolidated EBITDA to consolidated interest expense for the most recent four quarters), of 3.00:1.00.

The following table shows the required and actual financial ratios under our Senior Secured Credit Facility as of September 30, 2013:

	Required Ratio	Actual Ratio
Maximum consolidated leverage ratio	No greater than 3.50:1.00	1.95:1.00
Minimum consolidated interest coverage ratio	No less than 3.00:1.00	10.20:1.00

In addition, we are required to give notice to the administrative agent and the lenders under our Senior Secured Credit Facility of defaults under the facility documentation and other material events, make any new wholly-owned domestic subsidiary (other than an immaterial subsidiary) a subsidiary guarantor and pledge substantially all after-acquired property as collateral to secure our and our subsidiary guarantors’ obligations in respect of the facility.

Events of Default

Our Senior Secured Credit Facility contains customary events of default, including upon a change in control. If such an event of default occurs, the lenders under our Senior Secured Credit Facility would be entitled to take various actions, including in certain circumstances increasing the effective interest rate and accelerating the amounts due under our Senior Secured Credit Facility.

6 ⁵/8% Senior Notes due 2021

On January 28, 2011, we issued in a private placement $260.0 million aggregate principal amount of our 6 ⁵/8% Senior Notes due 2021 (the “2021 Notes”). Interest on the 2021 Notes is payable every six months on February 1 and August 1. The 2021 Notes are fully and unconditionally guaranteed, jointly and severally, by substantially all of our existing and future domestic restricted subsidiaries on a senior unsecured basis. We capitalized related debt issuance costs of approximately $5.1 million, which are being amortized over the term of the 2021 Notes.

In July 2011, in accordance with the terms of the registration rights agreement between us and the initial purchasers of the 2021 Notes, we completed an exchange offer to exchange the original notes issued in the private placement for a like principal amount of exchange notes registered under the Securities Act of 1933, as amended. An aggregate principal amount of $260.0 million, or 100%, of the original notes were exchanged for exchange notes in the exchange offer. The exchange notes are substantially identical to the original notes, except that the exchange notes are not subject to certain transfer restrictions.

The 2021 Notes were issued under an indenture with Wells Fargo Bank, National Association, as trustee (the “2021 Indenture”). Subject to a number of exceptions, the 2021 Indenture restricts our ability and the ability of our restricted subsidiaries (as defined in the 2021 Indenture) to incur or guarantee additional indebtedness, transfer or sell assets, make certain investments, pay dividends or make distributions or other restricted payments, create certain liens, merge or consolidate, repurchase stock, create or permit restrictions on the ability of our restricted subsidiaries to pay dividends or make other distributions to us and enter into transactions with affiliates.

We may redeem all or a portion of the 2021 Notes at our option at any time prior to February 1, 2016, at a redemption price equal to 100% of the principal amount of 2021 Notes to be redeemed, plus a make-whole premium as described in the 2021 Indenture, plus accrued and unpaid interest to the redemption date, if any. At any time on or after February 1, 2016, we may redeem all or a portion of the 2021 Notes at our option at the following redemption prices (expressed as percentages of the principal amount thereof) if redeemed during the twelve-month period commencing on February 1 of the years set forth below:

Year	Percentage
2016	103.313%
2017	102.208%
2018	101.104%
2019 and thereafter	100.000%

In addition, we must pay accrued and unpaid interest to the redemption date, if any. On or prior to February 1, 2014, we may also redeem at our option up to 35% of the principal amount of the outstanding 2021 Notes with the proceeds of certain equity offerings at the redemption price specified in the 2021 Indenture, plus accrued and unpaid interest to the date of redemption, if any. Upon the occurrence of a change of control, as defined in the 2021 Indenture, we must make a written offer to purchase all of the 2021 Notes for cash at a purchase price equal to 101% of the principal amount of the 2021 Notes, plus accrued and unpaid interest to the date of repurchase, if any.

Senior Secured Convertible Notes due 2033

During the three and nine months endedSeptember 30, 2013, we redeemed all of the then-outstanding Senior Secured Convertible Notes due 2033.

Additional Provisions

The 2021 Indenture contains a cross-default provision which becomes applicable if we (a) fail to pay the stated principal amount of any of our indebtedness at its final maturity date, or (b) default under any of our indebtedness and the default results in the acceleration of indebtedness, and, in each case, the principal amount of any such indebtedness, together with the principal amount of any other such indebtedness under which there has been a payment default or the maturity of which has been so accelerated, aggregates $50.0 million or more. Our credit agreement contains a cross-default provision which becomes applicable if we (a) fail to make any payment under any indebtedness for money borrowed by us (other than the obligations under such credit agreement) in an aggregate outstanding principal amount of at least $50.0 million or, (b) otherwise default under any such indebtedness, or trigger another event which causes such indebtedness to become due or to be repurchased, prepaid, defeased or redeemed or become subject to an offer to repurchase, prepay, defease or redeem such indebtedness prior to its stated maturity.

Repurchases of Debt

Subject to applicable limitations in our Senior Secured Credit Facility and indentures, we may from time to time repurchase our debt in the open market, through tender offers, through exchanges for debt or equity securities, in privately negotiated transactions or otherwise. During the three and nine months endedSeptember 30, 2013, we made voluntary repayments and repurchases of our then-outstanding debt in aggregate principal amounts of $21.1 million and $36.1 million, respectively.

Covenant Compliance

As of September 30, 2013, we were in compliance with all of our indenture and Senior Secured Credit Facility covenants.

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Impact of Derivative Financial Instruments on Condensed Consolidated Financial Statements (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Pre-tax Gain (Loss) Recognized in Earnings	$ 0	$ 0.5	$ (0.3)	$ 1.3
Amount of Pre-tax (Loss) Recognized in OCI	(0.4)	(1.0)	(0.3)	(2.6)
Amount of Pre-tax Loss Reclassified from AOCI into Earnings	(0.7)	(0.7)	(2.1)	(0.7)
Designated as Hedging Instrument | Interest rate swap contract
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Pre-tax Gain (Loss) Recognized in Earnings	0	0	0	0
Amount of Pre-tax (Loss) Recognized in OCI	(0.3)	(1.0)	(0.2)	(2.6)
Amount of Pre-tax Loss Reclassified from AOCI into Earnings	(0.7)	(0.7)	(2.1)	(0.7)
Designated as Hedging Instrument | Foreign exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Pre-tax Gain (Loss) Recognized in Earnings	0	0	0	0
Amount of Pre-tax (Loss) Recognized in OCI	(0.1)	0	(0.1)	0
Amount of Pre-tax Loss Reclassified from AOCI into Earnings	0	0	0	0
Not Designated as Hedging Instrument | Interest rate swap contract
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Pre-tax Gain (Loss) Recognized in Earnings			0	(0.1)
Amount of Pre-tax (Loss) Recognized in OCI			0	0
Amount of Pre-tax Loss Reclassified from AOCI into Earnings			0	0
Not Designated as Hedging Instrument | Foreign exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Pre-tax Gain (Loss) Recognized in Earnings	0	0.5	(0.3)	1.4
Amount of Pre-tax (Loss) Recognized in OCI	0	0	0	0
Amount of Pre-tax Loss Reclassified from AOCI into Earnings	$ 0	$ 0	$ 0	$ 0

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for Doubtful Accounts Receivable, Current	$ 6.3	$ 6.4

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Components of Other Intangible Assets, Net (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Intangible Assets by Major Class [Line Items]
Finite-lived intangible assets, Gross Amount	$ 189,520	$ 189,520
Finite-lived intangible assets, Accumulated Amortization	(79,478)	(68,291)
Finite-lived intangible assets, Net Amount	110,042	121,229
Indefinite-lived intangible assets, Net Amount	93,942	93,942
Other intangible assets, Net Amount	203,984	215,171
Mailing lists, non compete agreements and other
Intangible Assets by Major Class [Line Items]
Finite-lived intangible assets, Gross Amount	47,320	47,320
Finite-lived intangible assets, Accumulated Amortization	(16,152)	(13,025)
Finite-lived intangible assets, Net Amount	31,168	34,295
Weighted average remaining useful life	11 years 11 months	12 years 2 months
Customer relationships
Intangible Assets by Major Class [Line Items]
Finite-lived intangible assets, Gross Amount	142,200	142,200
Finite-lived intangible assets, Accumulated Amortization	(63,326)	(55,266)
Finite-lived intangible assets, Net Amount	$ 78,874	$ 86,934
Weighted average remaining useful life	7 years 5 months	8 years 2 months

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Accrued Expenses (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Schedule of Accrued Liabilities [Line Items]
Accrued interest	$ 2,972	$ 7,275
Accrued compensation and benefits	43,986	50,305
Dividends Payable, Current	11,912	12,011
Other accrued expenses	37,472	37,876
Accrued expenses	$ 96,342	$ 107,467

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Condensed Consolidating Balance Sheets (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 74,985	$ 94,711	$ 90,344	$ 101,971
Accounts receivable, net	408,322	426,899
Inventories	36,705	43,253
Prepaid expenses and other (including intercompany)	49,006	36,589
Total current assets	569,018	601,452
Property, plant and equipment, net	109,826	125,832
Goodwill	632,438	632,438
Other intangible assets, net	203,984	215,171
Investments	4,003	2,431
Intercompany note receivable (payable)	0	0
Other assets	9,433	11,711
Total assets	1,528,702	1,589,035
Current liabilities:
Current portion, long-term debt	33,750	22,500
Accounts payable and intercompany payable	264,144	281,320
Progress billings	38,084	39,595
Accrued expenses	96,342	107,467
Total current liabilities	432,320	450,882
Long-term debt	502,650	565,061
Deferred income taxes	57,968	57,258
Other non-current liabilities	38,002	42,271
Total liabilities	1,030,940	1,115,472
Stockholders' equity	497,762	473,563
Total liabilities and stockholders' equity	1,528,702	1,589,035
Parent Company
Current assets:
Cash and cash equivalents	41,025	62,836	58,768	68,887
Accounts receivable, net	100,152	116,821
Inventories	27,249	35,421
Prepaid expenses and other (including intercompany)	1,971,516	1,520,526
Total current assets	2,139,942	1,735,604
Property, plant and equipment, net	19,014	19,159
Goodwill	23,700	23,699
Other intangible assets, net	11,517	11,534
Investments	717,055	645,411
Intercompany note receivable (payable)	326,622	364,921
Other assets	6,392	7,543
Total assets	3,244,242	2,807,871
Current liabilities:
Current portion, long-term debt	33,750	22,500
Accounts payable and intercompany payable	2,132,824	1,653,928
Progress billings	13,128	16,459
Accrued expenses	52,508	61,741
Total current liabilities	2,232,210	1,754,628
Long-term debt	502,650	565,061
Deferred income taxes	(3,421)	(4,131)
Other non-current liabilities	15,041	18,750
Total liabilities	2,746,480	2,334,308
Stockholders' equity	497,762	473,563
Total liabilities and stockholders' equity	3,244,242	2,807,871
Guarantor Subsidiaries
Current assets:
Cash and cash equivalents	14,329	10,745	7,530	7,543
Accounts receivable, net	282,914	287,230
Inventories	9,453	7,829
Prepaid expenses and other (including intercompany)	5,232,562	3,706,682
Total current assets	5,539,258	4,012,486
Property, plant and equipment, net	89,854	105,667
Goodwill	601,750	601,750
Other intangible assets, net	192,467	203,637
Investments	19,912	15,375
Intercompany note receivable (payable)	(314,292)	(360,830)
Other assets	3,029	4,157
Total assets	6,131,978	4,582,242
Current liabilities:
Current portion, long-term debt	0	0
Accounts payable and intercompany payable	5,271,181	3,804,209
Progress billings	15,065	7,758
Accrued expenses	35,842	38,878
Total current liabilities	5,322,088	3,850,845
Long-term debt	0	0
Deferred income taxes	65,398	65,398
Other non-current liabilities	31,020	22,722
Total liabilities	5,418,506	3,938,965
Stockholders' equity	713,472	643,277
Total liabilities and stockholders' equity	6,131,978	4,582,242
Non-Guarantor Subsidiaries
Current assets:
Cash and cash equivalents	19,631	21,130	24,046	25,541
Accounts receivable, net	25,256	22,848
Inventories	3	3
Prepaid expenses and other (including intercompany)	3,085	1,998
Total current assets	47,975	45,979
Property, plant and equipment, net	958	1,006
Goodwill	6,988	6,989
Other intangible assets, net	0	0
Investments	0	0
Intercompany note receivable (payable)	(12,330)	(4,091)
Other assets	12	11
Total assets	43,603	49,894
Current liabilities:
Current portion, long-term debt	0	0
Accounts payable and intercompany payable	18,296	15,800
Progress billings	9,891	15,378
Accrued expenses	7,992	6,848
Total current liabilities	36,179	38,026
Long-term debt	0	0
Deferred income taxes	(4,009)	(4,009)
Other non-current liabilities	(8,059)	799
Total liabilities	24,111	34,816
Stockholders' equity	19,492	15,078
Total liabilities and stockholders' equity	43,603	49,894
Consolidating Adjustments
Current assets:
Cash and cash equivalents	0	0	0	0
Accounts receivable, net	0	0
Inventories	0	0
Prepaid expenses and other (including intercompany)	(7,158,157)	(5,192,617)
Total current assets	(7,158,157)	(5,192,617)
Property, plant and equipment, net	0	0
Goodwill	0	0
Other intangible assets, net	0	0
Investments	(732,964)	(658,355)
Intercompany note receivable (payable)	0	0
Other assets	0	0
Total assets	(7,891,121)	(5,850,972)
Current liabilities:
Current portion, long-term debt	0	0
Accounts payable and intercompany payable	(7,158,157)	(5,192,617)
Progress billings	0	0
Accrued expenses	0	0
Total current liabilities	(7,158,157)	(5,192,617)
Long-term debt	0	0
Deferred income taxes	0	0
Other non-current liabilities	0	0
Total liabilities	(7,158,157)	(5,192,617)
Stockholders' equity	(732,964)	(658,355)
Total liabilities and stockholders' equity	$ (7,891,121)	$ (5,850,972)

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BRAND.NET ACQUISITION (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Business Acquisition [Line Items]
Digital acquisitions, net of cash acquired	$ 0	$ 18,344
Brand.net [Member]
Business Acquisition [Line Items]
Digital acquisitions, net of cash acquired		18,000
Cost of Sales [Member]
Business Acquisition [Line Items]
Business Combination, Acquisition Related Costs		$ 700

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	25,000,000	25,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	65,394,999	65,394,999
Common stock, shares outstanding	38,430,931	38,766,530
Treasury stock, shares	26,964,068	26,628,469

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REPURCHASES OF COMMON STOCK

9 Months Ended

Sep. 30, 2013

REPURCHASES OF COMMON STOCK

REPURCHASES OF COMMON STOCK

The following table summarizes our repurchases of common stock during the indicated periods:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands, except per share data)	2013		2012		2013		2012
Shares repurchased	243		838		2,231		4,133
Aggregate repurchase price	$	6,914	$	21,229	$	60,325	$	87,130
Average price paid per share	$	28.49	$	25.34	$	27.04	$	21.08

As of September 30, 2013, we had authorization to repurchase an additional 6.1 million shares of our common stock under the share repurchase program approved by our Board of Directors.

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Condensed Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Net earnings	$ 27,713	$ 36,740	$ 76,168	$ 84,868
Other comprehensive income, net of tax:
Unrealized changes in fair value of cash flow hedges	(251)	(862)	(169)	(1,841)
Realized losses on cash flow hedges reclassified from AOCI into earnings	451	656	1,320	656
Foreign currency translation adjustment	707	197	(929)	750
Total other comprehensive income (loss)	907	(9)	222	(435)
Comprehensive income	$ 28,620	$ 36,731	$ 76,390	$ 84,433

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 74,985	$ 94,711
Accounts receivable, net (Note 1)	408,322	426,899
Inventories (Note 1)	36,705	43,253
Prepaid expenses and other	49,006	36,589
Total current assets	569,018	601,452
Property, plant and equipment, net (Note 1)	109,826	125,832
Goodwill (Note 2)	632,438	632,438
Other intangible assets, net (Note 2)	203,984	215,171
Other assets	13,436	14,142
Total assets	1,528,702	1,589,035
Current liabilities:
Current portion long-term debt (Note 3)	33,750	22,500
Accounts payable	264,144	281,320
Progress billings	38,084	39,595
Accrued expenses (Note 4)	96,342	107,467
Total current liabilities	432,320	450,882
Long-term debt (Note 3)	502,650	565,061
Deferred income taxes	57,968	57,258
Other non-current liabilities	38,002	42,271
Total liabilities	1,030,940	1,115,472
Commitments and contingencies (Note 5)
Stockholders' equity:
Preferred stock ($0.01 par value; 25,000,000 shares authorized; no shares issued or outstanding at September 30, 2013 and December 31, 2012)	0	0
Common stock ($0.01 par value; 100,000,000 shares authorized; 65,394,999 shares issued at September 30, 2013 and December 31, 2012; 38,430,931 and 38,766,530 shares outstanding at September 30, 2013 and December 31, 2012, respectively)	654	654
Additional paid-in capital	84,866	102,373
Retained earnings	1,169,075	1,128,540
Accumulated other comprehensive income	3,796	3,574
Treasury stock, at cost (26,964,068 and 26,628,469 shares at September 30, 2013 and December 31, 2012, respectively)	(760,629)	(761,578)
Total stockholders' equity	497,762	473,563
Total liabilities and stockholders' equity	$ 1,528,702	$ 1,589,035

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Condensed Consolidating Statement of Income (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Schedule of Condensed Consolidating Statement of Operations [Line Items]
Revenues	$ 489,383	$ 523,822	$ 1,467,792	$ 1,582,645
Costs and expenses:
Cost of sales	361,337	388,284	1,086,648	1,180,905
Selling, general and administrative	74,577	73,358	228,632	234,498
Amortization expense	3,729	3,245	11,187	9,557
Goodwill, Impairment Loss	0	0	0	7,585
Total costs and expenses	439,643	464,887	1,326,467	1,432,545
Earnings (loss) from operations	49,740	58,935	141,325	150,100
Other expenses and income:
Interest expense	7,287	7,563	22,464	21,372
Interest income	(30)	(46)	(138)	(174)
Intercompany interest	0	0	0	0
Other income, net	(1,713)	249	(2,636)	(525)
Total other expenses (income), net	(5,544)	(7,766)	(19,690)	(20,673)
Earnings (loss) before income taxes	44,196	51,169	121,635	129,427
Income tax (benefit) expense	16,483	14,429	45,467	44,559
Equity in net earnings (loss) of subsidiaries	0	0	0	0
Net earnings	27,713	36,740	76,168	84,868
Other Comprehensive Income (Loss), Net of Tax	907	(9)	222	(435)
Comprehensive income	28,620	36,731	76,390	84,433
Parent Company
Schedule of Condensed Consolidating Statement of Operations [Line Items]
Revenues	126,994	172,888	399,108	515,716
Costs and expenses:
Cost of sales	100,190	145,467	312,523	435,750
Selling, general and administrative	23,682	23,033	73,578	76,842
Amortization expense	6	6	17	17
Goodwill, Impairment Loss				3,985
Total costs and expenses	123,878	168,506	386,118	516,594
Earnings (loss) from operations	3,116	4,382	12,990	(878)
Other expenses and income:
Interest expense	7,287	7,563	22,464	21,372
Interest income	(18)	(20)	(70)	(80)
Intercompany interest	(9,082)	(9,062)	(20,315)	(19,817)
Other income, net	(816)	49	(874)	34
Total other expenses (income), net	2,629	1,470	(1,205)	(1,509)
Earnings (loss) before income taxes	5,745	5,852	11,785	(2,387)
Income tax (benefit) expense	684	(3,429)	2,220	(6,016)
Equity in net earnings (loss) of subsidiaries	22,652	27,459	66,603	81,239
Net earnings	27,713	36,740	76,168	84,868
Other Comprehensive Income (Loss), Net of Tax	907	(9)	222	(435)
Comprehensive income	28,620	36,731	76,390	84,433
Guarantor Subsidiaries
Schedule of Condensed Consolidating Statement of Operations [Line Items]
Revenues	453,902	445,063	1,342,934	1,332,741
Costs and expenses:
Cost of sales	308,615	286,533	909,324	864,353
Selling, general and administrative	95,278	101,614	296,882	305,097
Amortization expense	3,723	3,239	11,170	9,540
Goodwill, Impairment Loss				3,600
Total costs and expenses	407,616	391,386	1,217,376	1,182,590
Earnings (loss) from operations	46,286	53,677	125,558	150,151
Other expenses and income:
Interest expense	0	0	0	0
Interest income	0	3	0	3
Intercompany interest	9,082	9,062	20,315	19,770
Other income, net	(835)	197	(1,459)	(526)
Total other expenses (income), net	(8,247)	(9,262)	(18,856)	(19,247)
Earnings (loss) before income taxes	38,039	44,415	106,702	130,904
Income tax (benefit) expense	15,557	17,632	42,582	49,540
Equity in net earnings (loss) of subsidiaries	170	4,276	2,483	3,475
Net earnings	22,652	31,059	66,603	84,839
Other Comprehensive Income (Loss), Net of Tax	(707)	197	929	750
Comprehensive income	21,945	31,256	67,532	85,589
Non-Guarantor Subsidiaries
Schedule of Condensed Consolidating Statement of Operations [Line Items]
Revenues	13,813	12,868	46,112	44,754
Costs and expenses:
Cost of sales	9,893	9,093	33,065	34,637
Selling, general and administrative	3,582	2,899	10,270	9,290
Amortization expense	0	0	0	0
Goodwill, Impairment Loss				0
Total costs and expenses	13,475	11,992	43,335	43,927
Earnings (loss) from operations	338	876	2,777	827
Other expenses and income:
Interest expense	0	0	0	0
Interest income	(12)	(29)	(68)	(97)
Intercompany interest	0	0	0	47
Other income, net	(62)	3	(303)	(33)
Total other expenses (income), net	74	26	371	83
Earnings (loss) before income taxes	412	902	3,148	910
Income tax (benefit) expense	242	226	665	1,035
Equity in net earnings (loss) of subsidiaries	0	0		0
Net earnings	170	676	2,483	(125)
Other Comprehensive Income (Loss), Net of Tax	(707)	197	929	750
Comprehensive income	(537)	873	3,412	625
Consolidating Adjustments
Schedule of Condensed Consolidating Statement of Operations [Line Items]
Revenues	(105,326)	(106,997)	(320,362)	(310,566)
Costs and expenses:
Cost of sales	(57,361)	(52,809)	(168,264)	(153,835)
Selling, general and administrative	(47,965)	(54,188)	(152,098)	(156,731)
Amortization expense	0	0	0	0
Goodwill, Impairment Loss				0
Total costs and expenses	(105,326)	(106,997)	(320,362)	(310,566)
Earnings (loss) from operations	0	0	0	0
Other expenses and income:
Interest expense	0	0	0	0
Interest income	0	0	0	0
Intercompany interest	0	0	0	0
Other income, net	0	0	0	0
Total other expenses (income), net	0	0	0	0
Earnings (loss) before income taxes	0	0	0	0
Income tax (benefit) expense	0	0		0
Equity in net earnings (loss) of subsidiaries	(22,822)	(31,735)	(69,086)	(84,714)
Net earnings	(22,822)	(31,735)	(69,086)	(84,714)
Other Comprehensive Income (Loss), Net of Tax	1,414	(394)	(1,858)	(1,500)
Comprehensive income	$ (21,408)	$ (32,129)	$ (70,944)	$ (86,214)

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Inventories (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Schedule of Inventory [Line Items]
Raw materials	$ 27,844	$ 30,960
Work in progress	8,861	12,293
Inventories	$ 36,705	$ 43,253

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2013

Earnings Per Common Share Data

		Three Months Ended						Nine Months Ended
		September 30,						September 30,
	(in thousands, except per share data and percentages)	2013			2012			2013			2012
	Numerator:
	Net earnings	$	27,713		$	36,740		$	76,168		$	84,868
	Less: Dividends declared — common shares and restricted shares (participating securities)	(11,912		)	—			(35,632		)	—
	Undistributed earnings	15,801			36,740			40,536			84,868
	Percentage allocated to common shares1	98.3		%	100.0		%	98.3		%	100.0		%
	Undistributed earnings — common shares	15,532			36,740			39,847			84,868
	Add: Dividends declared — common shares	11,714			—			35,028			—
	Numerator for basic and diluted earnings per share	$	27,246		$	36,740		$	74,875		$	84,868
	Denominator:
	Denominator for basic earnings per common share — weighted-average common shares	37,460			39,047			37,818			40,777
	Incremental shares for stock awards2	1,224			1,785			1,329			1,755
	Denominator for diluted earnings per common share — adjusted weighted-average common shares and assumed conversion	38,684			40,832			39,147			42,532
	Net earnings per common share, basic	$	0.73		$	0.94		$	1.98		$	2.08
	Net earnings per common share, diluted	$	0.70		$	0.90		$	1.91		$	2.00
1	Weighted-average common shares outstanding	37,460			39,047			37,818			40,777
	Weighted-average restricted shares outstanding (participating securities)	642			—			653			—
	Total	38,102			39,047			38,471			40,777
	Percentage allocated to common shares	98.3		%	100.0		%	98.3		%	100.0		%
2	Anti-dilutive shares excluded from calculation of weighted-average incremental shares for stock awards	2,560			3,184			2,611			3,397

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Repurchase of Common Stock - Additional Information (Detail) In Millions, unless otherwise specified	Sep. 30, 2013
Equity, Class of Treasury Stock [Line Items]
Repurchase of common stock, additional authorized shares	6.1

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Earnings Per Common Share Data (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Earnings Per Share Disclosure [Line Items]
Net earnings	$ 27,713	$ 36,740	$ 76,168	$ 84,868
Distributed Earnings	(11,912)	0	(35,632)	0
Undistributed Earnings, Basic	15,801	36,740	40,536	84,868
Percentage of Undistributed Earnings Allocated to Common Shares	98.30%	100.00%	98.30%	100.00%
Undistributed Earnings Allocated to Common Shares	15,532	36,740	39,847	84,868
Dividends, Common Stock, Cash	11,714	0	35,028	0
Net Income (Loss) Available to Common Stockholders	$ 27,246	$ 36,740	$ 74,875	$ 84,868
Weighted Average Number of Shares Outstanding, Basic	37,460	39,047	37,818	40,777
Incremental Common Shares Attributable to Participating Nonvested Shares with Non-forfeitable Dividend Rights	642	0	653	0
Weighted-average common shares outstanding, diluted	38,684	40,832	39,147	42,532
Earnings Per Share, Basic	$ 0.73	$ 0.94	$ 1.98	$ 2.08
Net earnings per common share, diluted	$ 0.70	$ 0.90	$ 1.91	$ 2.00
Incremental Common Shares Attributable to Share-based Payment Arrangements	1,224	1,785	1,329	1,755
Weighted Average Number of Shares Outstanding, Total	38,102	39,047	38,471	40,777
Anti-dilutive options excluded from calculation of weighted-average common shares outstanding, diluted	2,560	3,184	2,611	3,397

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Required and Actual Financial Ratios Under Senior Secured Credit Facility (Detail) (Senior Secured Credit Facility)	Sep. 30, 2013
Required Ratio | Maximum [Member]
Debt Disclosure [Line Items]
Maximum consolidated leverage ratio	3.50
Required Ratio | Minimum [Member]
Debt Disclosure [Line Items]
Minimum consolidated interest coverage ratio	3.00
Scenario, Actual [Member] | Maximum [Member]
Debt Disclosure [Line Items]
Maximum consolidated leverage ratio	1.95
Scenario, Actual [Member] | Minimum [Member]
Debt Disclosure [Line Items]
Minimum consolidated interest coverage ratio	10.20

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Redemption Prices (Expressed as Percentages of the Principal Amount Thereof) (Detail) (Senior Notes due 2021)	Jan. 28, 2011
2016
Debt Instrument [Line Items]
Debt Instrument Redemption Price	103.313%
2017
Debt Instrument [Line Items]
Debt Instrument Redemption Price	102.208%
2018
Debt Instrument [Line Items]
Debt Instrument Redemption Price	101.104%
2019 and Thereafter
Debt Instrument [Line Items]
Debt Instrument Redemption Price	100.00%

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DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2013

DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

We are exposed to market risks arising from adverse changes in foreign exchange rates and interest rates. We manage these risks through a variety of strategies which include the use of derivatives. Certain derivatives are designated as cash flow hedges and qualify for hedge accounting treatment, while others do not qualify or have not been designated as hedges and are marked to market through earnings. The notional amounts of derivative financial instruments and related fair values measured on a recurring basis and included in the condensed consolidated balance sheets were as follows:

	Notional Amounts				Fair Values
(in millions of U.S. dollars)	September 30, 2013		December 31, 2012		September 30, 2013			December 31, 2012			Balance Sheet Location
Derivatives designated as cash flow hedging instruments:
Interest rate swap contract	$	169.4	$	180.6	$	(3.9	)	$	(5.8	)	Accrued expenses / Other non-current liabilities
Foreign exchange contracts	11.9		6.4		—			0.1			Prepaid expenses
Derivatives not receiving hedge accounting treatment:
Foreign exchange contracts	—		4.7		—			0.3			Prepaid expenses
Total derivative financial instruments	$	181.3	$	191.7	$	(3.9	)	$	(5.4	)

The fair values of our interest rate swap contract and foreign exchange contracts are determined based on third-party valuation models and observable foreign exchange forward contract rates, respectively, both of which represent Level 2 fair value inputs.

The following tables summarize the impact of derivative financial instruments on the unaudited condensed consolidated financial statements for the indicated periods:

	Three Months Ended
	September 30,
	2013			2012			2013			2012			2013			2012
(in millions of U.S. Dollars)	Amount of Pre-tax Gain Recognized in Earnings*						Amount of Pre-tax Loss Recognized in OCI						Amount of Pre-tax Loss Reclassified from AOCI into Earnings*
Derivatives designated as cash flow hedging instruments:
Interest rate swap contract	$	—		$	—		$	(0.3	)	$	(1.0	)	$	(0.7	)	$	(0.7	)
Foreign exchange contracts	—			—			(0.1		)	—			—			—
Derivatives not receiving hedge accounting treatment:
Foreign exchange contracts	—			0.5			—			—			—			—
Total	$	—		$	0.5		$	(0.4	)	$	(1.0	)	$	(0.7	)	$	(0.7	)
	Nine Months Ended
	September 30,
	2013			2012			2013			2012			2013			2012
(in millions of U.S. Dollars)	Amount of Pre-tax Gain (Loss) Recognized in Earnings*						Amount of Pre-tax Loss Recognized in OCI						Amount of Pre-tax Loss Reclassified from AOCI into Earnings*
Derivatives designated as cash flow hedging instruments:
Interest rate swap contract	$	—		$	—		$	(0.2	)	$	(2.6	)	$	(2.1	)	$	(0.7	)
Foreign exchange contracts	—			—			(0.1		)	—			—			—
Derivatives not receiving hedge accounting treatment:
Interest rate swap contracts	—			(0.1		)	—			—			—			—
Foreign exchange contracts	(0.3		)	1.4			—			—			—			—
Total	$	(0.3	)	$	1.3		$	(0.3	)	$	(2.6	)	$	(2.1	)	$	(0.7	)

* Amounts recognized in earnings related to interest rate swap contracts are included in interest expense in the unaudited condensed consolidated statements of income and amounts recognized in earnings related to foreign exchange contracts are included in cost of sales in the unaudited condensed consolidated statements of income.

Interest Rate Swaps

On December 17, 2009, we entered into an interest rate swap agreement with an initial notional amount of $300.0 million to fix three-month LIBOR at 2.005%, for an effective rate of 4.255%, including the applicable margin, for an equivalent portion of our variable rate debt under our Prior Senior Secured Credit Facility. The effective date of this agreement was December 31, 2010. The notional amount of $300.0 million amortized by $40.0 million at the end of every quarter until it reached $100.0 million for the quarter ended June 30, 2012, the expiration date. The swap was designated as, and qualified as, a cash flow hedge through the termination of the Prior Senior Secured Credit Facility on June 27, 2011. Changes in the fair value of this swap subsequent to the termination of hedge accounting were recognized in earnings as a component of interest expense until expiration of the swap.

On July 6, 2011, we entered into an interest rate swap agreement with an initial notional amount of $186.3 million. The effective date of this agreement was June 30, 2012. Under the swap agreement, we are required to make quarterly payments at a fixed interest rate of 1.8695% per annum to the counterparty on an amortizing notional amount in exchange for receiving variable payments based on the three-month LIBOR interest rate for the same notional amount. After giving effect to the swap agreement, our effective interest rate for the notional amount, based on the current applicable margin under our Senior Secured Credit Facility, is 3.6195% per annum. The initial notional amount of $186.3 million amortizes quarterly by (i) $2.8 million from the effective date through the quarter ending September 30, 2013, (ii) $5.6 million from September 30, 2013 through the quarter ending September 30, 2014, and (iii) $8.4 million from September 30, 2014 until June 30, 2015, the expiration date of the agreement. The swap is designated as and qualifies as a cash flow hedge.

Foreign Currency

Currencies to which we have exposure are the Mexican peso, Canadian dollar, British pound, Polish zloty and Euro. Currency restrictions are not expected to have a significant effect on our cash flows, liquidity, or capital resources. We purchase the Mexican peso and Polish zloty under two to twelve-month forward foreign exchange contracts to stabilize the cost of production. As of September 30, 2013, we had a commitment to purchase $11.1 million in Mexican pesos and $0.8 million in Polish zlotys over the next year.

Long-Term Debt

The estimated fair market value of our long-term debt was $5.4 million below carrying value as of September 30, 2013 and $12.6 million above carrying value as of December 31, 2012. Our 2021 Notes are traded in an active market with the fair value determined based on quoted active market prices, which represents a Level 1 fair value input. Borrowings under our Senior Secured Credit Facility are not traded in an active market and are valued based on an implied price derived from industry averages and relative loan performance, which represent Level 3 fair value inputs.

Cash and Cash Equivalents

The carrying amounts of cash and cash equivalents and accruals approximate fair value due to the near-term maturity of these instruments.

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Summary of Costs and Ranges of Useful Lives of the Major Classes of Property, Plant and Equipment and Total Accumulated Depreciation related to Property, Plant and Equipment, Net (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 541,429	$ 536,615
Less accumulated depreciation	(431,603)	(410,783)
Property, plant and equipment, net	109,826	125,832
Land, at cost
Property, Plant and Equipment [Line Items]
Property, plant and equipment	7,182	7,185
Buildings, at cost
Property, Plant and Equipment [Line Items]
Property, plant and equipment	38,118	37,961
Machinery and equipment, at cost
Property, Plant and Equipment [Line Items]
Property, plant and equipment	222,413	228,605
Office furniture and equipment, at cost
Property, Plant and Equipment [Line Items]
Property, plant and equipment	244,562	233,948
Leasehold improvements, at cost
Property, Plant and Equipment [Line Items]
Property, plant and equipment	$ 29,154	$ 28,916
Minimum [Member] | Buildings, at cost
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Useful life	10 years	10 years
Minimum [Member] | Machinery and equipment, at cost
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Useful life	3 years	3 years
Minimum [Member] | Office furniture and equipment, at cost
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Useful life	3 years	3 years
Minimum [Member] | Leasehold improvements, at cost
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Useful life	5 years	5 years
Maximum [Member] | Buildings, at cost
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Useful life	30 years	30 years
Maximum [Member] | Machinery and equipment, at cost
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Useful life	20 years	20 years
Maximum [Member] | Office furniture and equipment, at cost
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Useful life	10 years	10 years
Maximum [Member] | Leasehold improvements, at cost
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Useful life	10 years	10 years

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DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS - Additional Information (Detail) (USD $) In Millions, unless otherwise specified			9 Months Ended
	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2013 Currency, Mexican Pesos	Sep. 30, 2012 Currency, Polish Zloty	Dec. 17, 2009 Interest Rate Swap with Three Month LIBOR at 2.005% Plus Applicable Margin	Jul. 06, 2011 Interest Rate Swap with Three Month LIBOR at 1.8695% Plus Applicable Margin	Jul. 06, 2011 Interest Rate Swap with Three Month LIBOR at 1.8695% Plus Applicable Margin July 2011 Through September 2013	Jul. 06, 2011 Interest Rate Swap with Three Month LIBOR at 1.8695% Plus Applicable Margin September 2013 Through September 2014	Jul. 06, 2011 Interest Rate Swap with Three Month LIBOR at 1.8695% Plus Applicable Margin September 2014 Through June 2015
Derivative [Line Items]
Notional amount of derivatives	$ 181.3	$ 191.7			$ 300.0	$ 186.3
Fixed interest rate under swap agreement					2.005%	1.8695%
Effective Interest Rate of Variable Rate Debt					4.255%	3.6195%
Amortization of Notional Amount					40.0		2.8	5.6	8.4
Minimum notional amount of interest rate swap at the date of expiration					100.0
Purchase commitment to be settled with foreign currency, dollar value			11.1	0.8
Long-term Debt, Fair Value	$ (5.4)	$ 12.6

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SEGMENT REPORTING

9 Months Ended

Sep. 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 in 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
	September 30,
(in millions of U.S. dollars)	Shared Mail		FSI		Neighborhood Targeted			International, Digital Media & Services			Total
2013
Revenues from external customers	$	342.5	$	75.5	$	23.7		$	47.7		$	489.4
Intersegment revenues	$	5.0	$	10.6	$	17.2		$	—		$	32.8
Depreciation/amortization	$	5.3	$	2.4	$	0.8		$	2.6		$	11.1
Segment profit (loss)	$	47.5	$	7.7	$	(2.1	)	$	(2.4	)	$	50.7
2012
Revenues from external customers	$	331.4	$	72.2	$	75.8		$	44.4		$	523.8
Intersegment revenues	$	4.3	$	9.3	$	15.7		$	—		$	29.3
Depreciation/amortization	$	7.7	$	3.2	$	1.0		$	2.0		$	13.9
Segment profit (loss)	$	52.3	$	7.6	$	(1.1	)	$	0.1		$	58.9
	Nine Months Ended
	September 30,
(in millions of U.S. dollars)	Shared Mail		FSI		Neighborhood Targeted			International, Digital Media & Services			Total
2013
Revenues from external customers	$	1,005.6	$	241.4	$	75.8		$	145.0		$	1,467.8
Intersegment revenues	$	13.2	$	31.5	$	50.4		$	—		$	95.1
Depreciation/amortization	$	17.5	$	8.0	$	2.7		$	7.6		$	35.8
Segment profit (loss)	$	130.3	$	28.2	$	(8.0	)	$	(6.8	)	$	143.7
2012
Revenues from external customers	$	1,008.2	$	219.0	$	225.5		$	129.9		$	1,582.6
Intersegment revenues	$	12.7	$	29.4	$	42.3		$	—		$	84.4
Depreciation/amortization	$	24.2	$	9.6	$	3.1		$	6.1		$	43.0
Segment profit (loss)	$	147.0	$	20.3	$	(5.1	)	$	5.2		$	167.4

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				Nine Months Ended
	September 30,				September 30,
(in millions of U.S. dollars)	2013		2012		2013		2012
Total segment profit	$	50.7	$	58.9	$	143.7	$	167.4
Unallocated amounts:
Goodwill impairment	—		—		—		7.6
Restructuring costs and other non-recurring charges	1.0		—		2.4		9.7
Earnings from operations	$	49.7	$	58.9	$	141.3	$	150.1

The $1.0 million and $2.4 million of restructuring costs and other non-recurring charges recognized during the three and nine months endedSeptember 30, 2013, respectively, reflected severance and related costs, of which $0.7 million and $1.6 million were included in selling, general and administrative expenses in the unaudited, condensed consolidated statements of income during the three and nine months endedSeptember 30, 2013, respectively, and $0.3 million and $0.8 million were included in cost of sales in the unaudited, condensed consolidated statements of income during the three and nine months endedSeptember 30, 2013, respectively.

The goodwill impairment charges of $7.6 million recognized during the nine months endedSeptember 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 costs and other non-recurring charges recognized during the nine months endedSeptember 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 the nine months endedSeptember 30, 2012.

Domestic and foreign revenues were as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions of U.S. dollars)	2013		2012		2013		2012
United States	$	479.3	$	514.6	$	1,433.2	$	1,550.5
Foreign	10.1		9.2		34.6		32.1
Revenues	$	489.4	$	523.8	$	1,467.8	$	1,582.6

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

(in millions of U.S. dollars)	September 30, 2013		December 31, 2012
United States	$	102.1	$	118.1
Foreign	7.7		7.7
Property, plant and equipment, net	$	109.8	$	125.8

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2013

EARNINGS PER SHARE

EARNINGS PER SHARE

Our restricted stock awards are deemed participating securities, which, under the applicable accounting standards, require the computation of earnings per share using the two-class method. The following table provides the calculations of earnings per common share, basic and earnings per common share, diluted included in the unaudited condensed consolidated statements of income:

		Three Months Ended						Nine Months Ended
		September 30,						September 30,
	(in thousands, except per share data and percentages)	2013			2012			2013			2012
	Numerator:
	Net earnings	$	27,713		$	36,740		$	76,168		$	84,868
	Less: Dividends declared — common shares and restricted shares (participating securities)	(11,912		)	—			(35,632		)	—
	Undistributed earnings	15,801			36,740			40,536			84,868
	Percentage allocated to common shares1	98.3		%	100.0		%	98.3		%	100.0		%
	Undistributed earnings — common shares	15,532			36,740			39,847			84,868
	Add: Dividends declared — common shares	11,714			—			35,028			—
	Numerator for basic and diluted earnings per share	$	27,246		$	36,740		$	74,875		$	84,868
	Denominator:
	Denominator for basic earnings per common share — weighted-average common shares	37,460			39,047			37,818			40,777
	Incremental shares for stock awards2	1,224			1,785			1,329			1,755
	Denominator for diluted earnings per common share — adjusted weighted-average common shares and assumed conversion	38,684			40,832			39,147			42,532
	Net earnings per common share, basic	$	0.73		$	0.94		$	1.98		$	2.08
	Net earnings per common share, diluted	$	0.70		$	0.90		$	1.91		$	2.00
1	Weighted-average common shares outstanding	37,460			39,047			37,818			40,777
	Weighted-average restricted shares outstanding (participating securities)	642			—			653			—
	Total	38,102			39,047			38,471			40,777
	Percentage allocated to common shares	98.3		%	100.0		%	98.3		%	100.0		%
2	Anti-dilutive shares excluded from calculation of weighted-average incremental shares for stock awards	2,560			3,184			2,611			3,397

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2013

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the information contained herein reflects all adjustments necessary for a fair presentation of the information presented. All such adjustments are of a normal recurring nature. The results of operations for the interim periods are not necessarily indicative of results to be expected for the fiscal year. For further information, refer to the consolidated financial statements and footnotes thereto included in the Valassis Communications, Inc. (“Valassis,” “we,” and “our”) Annual Report on Form 10-K for the year ended December 31, 2012 (the “2012 Form 10-K”).

Significant Accounting Policies

Accounts Receivable

The allowance for doubtful accounts was $6.3 million and $6.4 million as of September 30, 2013 and December 31, 2012, respectively.

Income Taxes

We are required to adjust our effective tax rate each quarter to be consistent with our estimated annual effective tax rate. We are also required to record the tax impact of certain unusual or infrequently occurring items, including the effects of changes in tax laws or rates, in the interim period in which they occur. The effective tax rate during a particular quarter may be higher or lower as a result of the timing of actual earnings versus annual projections.

Inventories

Inventories are accounted for at the lower of cost, determined on a first in, first out basis, or market. Inventories included on the condensed consolidated balance sheets consisted of:

(in thousands of U.S. dollars)	September 30, 2013		December 31, 2012
Raw materials	$	27,844	$	30,960
Work in progress	8,861		12,293
Inventories	$	36,705	$	43,253

Property, Plant and Equipment

The following table summarizes the costs and ranges of useful lives of the major classes of property, plant and equipment and the total accumulated depreciation related to property, plant and equipment, net included on the condensed consolidated balance sheets:

	Useful Lives	September 30, 2013			December 31, 2012
	(in years)	(in thousands of U.S. dollars)
Land, at cost	N/A	$	7,182		$	7,185
Buildings, at cost	10 - 30	38,118			37,961
Machinery and equipment, at cost	3 - 20	222,413			228,605
Office furniture and equipment, at cost	3 - 10	244,562			233,948
Leasehold improvements, at cost	5 - 10	29,154			28,916
		541,429			536,615
Less accumulated depreciation		(431,603		)	(410,783		)
Property, plant and equipment, net		$	109,826		$	125,832

Recent Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2013-11 to clarify the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This guidance is effective for fiscal periods, and interim periods within those years, beginning after December 15, 2013, and is to be applied prospectively to all unrecognized tax benefits that exist at the effective date with retrospective application also permitted. We will comply with this guidance as of January 1, 2014, and do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In March 2013, the FASB issued ASU No. 2013-05 to clarify the applicable guidance for a parent company’s accounting for the release of the cumulative translation adjustment into net income upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. This guidance is effective for fiscal periods beginning after December 15, 2013, and is to be applied prospectively to derecognition events occurring after the effective date. We will comply with this guidance as of January 1, 2014, and do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In February 2013, the FASB issued ASU No. 2013-02, which amends the reporting of amounts reclassified out of accumulated other comprehensive income (“AOCI”). These amendments do not change the current requirements for reporting net income or other comprehensive income in the financial statements. However, the guidance requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component, either on the face of the financial statement where net income is presented or in the notes to the financial statements. This guidance is effective for fiscal periods

beginning after December 15, 2012, and is to be applied prospectively. We have complied with this guidance as of January 1, 2013, and the adoption of the guidance did not have a material impact on our consolidated financial statements.

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Condensed Consolidating Statement of Cash Flows (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Schedule of Condensed Consolidating Statement of Cash Flows [Line Items]
Net cash provided by (used in) operating activities	$ 105,821	$ 111,194
Cash flows from investing activities:
Additions to property, plant and equipment	(14,746)	(15,783)
Proceeds from sale of property, plant and equipment	5,288	256
Digital acquisitions, net of cash acquired	0	(18,344)
Proceeds from sale of available-for-sale securities		256
Net cash provided by (used in) investing activities	(9,458)	(33,871)
Cash flows from financing activities:
Cash provided by (used in) intercompany activity	0	0
Repayments of long-term debt	(51,161)	(11,250)
Dividends paid on common shares and restricted stock	(35,732)	0
Repurchases of common stock	(60,325)	(87,130)
Proceeds from Stock Options Exercised	31,205	8,956
Net cash provided (used in) by financing activities	(116,013)	(89,424)
Effect of exchange rate changes on cash and cash equivalents	(76)	474
Net increase (decrease) in cash and cash equivalents	(19,726)	(11,627)
Cash and cash equivalents at beginning of period	94,711	101,971
Cash and cash equivalents at end of period	74,985	90,344
Parent Company
Schedule of Condensed Consolidating Statement of Cash Flows [Line Items]
Net cash provided by (used in) operating activities	11,300	153,569
Cash flows from investing activities:
Additions to property, plant and equipment	(1,744)	(4,472)
Proceeds from sale of property, plant and equipment	79
Digital acquisitions, net of cash acquired		0
Proceeds from sale of available-for-sale securities		250
Net cash provided by (used in) investing activities	(1,665)	(4,222)
Cash flows from financing activities:
Cash provided by (used in) intercompany activity	84,567	(70,042)
Repayments of long-term debt	(51,161)	(11,250)
Dividends paid on common shares and restricted stock	35,732
Repurchases of common stock	(60,325)	(87,130)
Proceeds from Stock Options Exercised	31,205	8,956
Net cash provided (used in) by financing activities	(31,446)	(159,466)
Effect of exchange rate changes on cash and cash equivalents	0	0
Net increase (decrease) in cash and cash equivalents	(21,811)	(10,119)
Cash and cash equivalents at beginning of period	62,836	68,887
Cash and cash equivalents at end of period	41,025	58,768
Guarantor Subsidiaries
Schedule of Condensed Consolidating Statement of Cash Flows [Line Items]
Net cash provided by (used in) operating activities	95,666	(40,611)
Cash flows from investing activities:
Additions to property, plant and equipment	(12,715)	(11,100)
Proceeds from sale of property, plant and equipment	5,200
Digital acquisitions, net of cash acquired		18,344
Proceeds from sale of available-for-sale securities		0
Net cash provided by (used in) investing activities	(7,515)	(29,444)
Cash flows from financing activities:
Cash provided by (used in) intercompany activity	(84,567)	70,042
Repayments of long-term debt	0	0
Dividends paid on common shares and restricted stock	0
Repurchases of common stock	0	0
Proceeds from Stock Options Exercised	0	0
Net cash provided (used in) by financing activities	(84,567)	70,042
Effect of exchange rate changes on cash and cash equivalents	0	0
Net increase (decrease) in cash and cash equivalents	3,584	(13)
Cash and cash equivalents at beginning of period	10,745	7,543
Cash and cash equivalents at end of period	14,329	7,530
Non-Guarantor Subsidiaries
Schedule of Condensed Consolidating Statement of Cash Flows [Line Items]
Net cash provided by (used in) operating activities	(1,145)	(1,764)
Cash flows from investing activities:
Additions to property, plant and equipment	(287)	(211)
Proceeds from sale of property, plant and equipment	9
Digital acquisitions, net of cash acquired		0
Proceeds from sale of available-for-sale securities		6
Net cash provided by (used in) investing activities	(278)	(205)
Cash flows from financing activities:
Cash provided by (used in) intercompany activity	0	0
Repayments of long-term debt	0	0
Dividends paid on common shares and restricted stock	0
Repurchases of common stock	0	0
Proceeds from Stock Options Exercised	0	0
Net cash provided (used in) by financing activities	0	0
Effect of exchange rate changes on cash and cash equivalents	(76)	474
Net increase (decrease) in cash and cash equivalents	(1,499)	(1,495)
Cash and cash equivalents at beginning of period	21,130	25,541
Cash and cash equivalents at end of period	19,631	24,046
Consolidating Adjustments
Schedule of Condensed Consolidating Statement of Cash Flows [Line Items]
Net cash provided by (used in) operating activities	0	0
Cash flows from investing activities:
Additions to property, plant and equipment	0	0
Proceeds from sale of property, plant and equipment	0
Digital acquisitions, net of cash acquired		0
Proceeds from sale of available-for-sale securities		0
Net cash provided by (used in) investing activities	0	0
Cash flows from financing activities:
Cash provided by (used in) intercompany activity	0	0
Repayments of long-term debt	0	0
Dividends paid on common shares and restricted stock	0
Repurchases of common stock	0	0
Proceeds from Stock Options Exercised	0	0
Net cash provided (used in) by financing activities	0	0
Effect of exchange rate changes on cash and cash equivalents	0	0
Net increase (decrease) in cash and cash equivalents	0	0
Cash and cash equivalents at beginning of period	0	0
Cash and cash equivalents at end of period	$ 0	$ 0

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SEGMENT REPORTING Reconciliation of Operating Profit (Loss) from Segments to Consolidated (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Segment Reporting Information, Net Income (Loss)	$ 50,700	$ 58,900	$ 143,700	$ 167,400
Goodwill, Impairment Loss	0	0	0	7,585
Restructuring Charges	1,000	0	2,400	9,653
Earnings (loss) from operations	49,740	58,935	141,325	150,100
Cost of Sales [Member]
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Restructuring Charges	300		800	3,682
Business Combination, Acquisition Related Costs				700
Selling, General and Administrative Expenses [Member]
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Restructuring Charges	700		1,600	5,321
Business Combination, Acquisition Related Costs				$ 650

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Long-Term Debt (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Total Debt	$ 536,400	$ 587,561
Current portion, long-term debt	33,750	22,500
Long-term debt	502,650	565,061
Senior Secured Revolving Credit Facility
Debt Instrument [Line Items]
Total Debt	15,000	50,000
Senior Secured Term Loan A
Debt Instrument [Line Items]
Total Debt	262,500	277,500
Senior Secured Convertible Notes due 2033, net of discount
Debt Instrument [Line Items]
Total Debt	0	61
Senior Notes due 2021
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	6.625%	6.625%
Total Debt	$ 258,900	$ 260,000

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2013

Inventories

Inventories included on the condensed consolidated balance sheets consisted of:

(in thousands of U.S. dollars)	September 30, 2013		December 31, 2012
Raw materials	$	27,844	$	30,960
Work in progress	8,861		12,293
Inventories	$	36,705	$	43,253

Property, Plant and Equipment, net

The following table summarizes the costs and ranges of useful lives of the major classes of property, plant and equipment and the total accumulated depreciation related to property, plant and equipment, net included on the condensed consolidated balance sheets:

	Useful Lives	September 30, 2013			December 31, 2012
	(in years)	(in thousands of U.S. dollars)
Land, at cost	N/A	$	7,182		$	7,185
Buildings, at cost	10 - 30	38,118			37,961
Machinery and equipment, at cost	3 - 20	222,413			228,605
Office furniture and equipment, at cost	3 - 10	244,562			233,948
Leasehold improvements, at cost	5 - 10	29,154			28,916
		541,429			536,615
Less accumulated depreciation		(431,603		)	(410,783		)
Property, plant and equipment, net		$	109,826		$	125,832

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BRAND.NET ACQUISITION

9 Months Ended

Sep. 30, 2013

BRAND.NET ACQUISITION [Abstract]

Brand.net Acquisition

BRAND.NET ACQUISITION

On June 20, 2012, we acquired, through a wholly-owned subsidiary, Brand.net, an online display, video and mobile advertising platform. The acquisition was accounted for as a purchase under the acquisition method in accordance with FASB Accounting Standards Codification No. 805, Business Combinations. The total purchase price was approximately $18.0 million and did not include direct acquisition costs of approximately $0.7 million. The acquisition was recorded by allocating the purchase price to the assets acquired, including identifiable intangible assets and liabilities assumed, based on their estimated fair values at the date of acquisition.

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ACCRUED EXPENSES (Tables)

9 Months Ended

Sep. 30, 2013

Accrued Expenses

Accrued expenses included on the condensed consolidated balance sheets consisted of:

(in thousands of U.S. dollars)	September 30, 2013		December 31, 2012
Accrued interest	$	2,972	$	7,275
Accrued compensation and benefits	43,986		50,305
Dividends payable	11,912		12,011
Other accrued expenses	37,472		37,876
Accrued expenses	$	96,342	$	107,467

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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2013

Goodwill

The following table summarizes, by reportable segment, the gross amount, accumulated impairment losses and net carrying amount of goodwill included on the condensed consolidated balance sheets as of September 30, 2013 and December 31, 2012. There were no changes in the carrying amount of goodwill for the nine months endedSeptember 30, 2013.

(in thousands of U.S. dollars)	Shared Mail			Neighborhood Targeted			Free-standing Inserts		International, Digital Media & Services			Total
Total goodwill acquired	$	721,384		$	5,325		$	22,357	$	96,957		$	846,023
Accumulated impairment losses	(187,200		)	(3,985		)	—		(22,400		)	(213,585		)
Goodwill	$	534,184		$	1,340		$	22,357	$	74,557		$	632,438

Components of Other Intangible Assets, Net

The components of other intangible assets, net included on the condensed consolidated balance sheets consisted of:

	September 30, 2013								December 31, 2012
(in thousands of U.S. dollars)	Gross Amount		Accumulated Amortization			Net Amount		Weighted Average Remaining Useful Life (in years)	Gross Amount		Accumulated Amortization			Net Amount		Weighted Average Remaining Useful Life (in years)
Finite-lived intangible assets:
Mailing lists, non-compete agreements and other	$	47,320	$	(16,152	)	$	31,168	11.9	$	47,320	$	(13,025	)	$	34,295	12.2
Customer relationships	142,200		(63,326		)	78,874		7.4	142,200		(55,266		)	86,934		8.2
Total	$	189,520	$	(79,478	)	110,042			$	189,520	$	(68,291	)	121,229
Indefinite-lived intangible assets:
Valassis name, tradenames, trademarks and other						93,942								93,942
Other intangible assets, net						$	203,984							$	215,171

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Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Nov. 01, 2013
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3
Trading Symbol	VCI
Entity Registrant Name	VALASSIS COMMUNICATIONS INC
Entity Central Index Key	0000883293
Document Period End Date	Sep. 30, 2013
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		38,490,114

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LONG-TERM DEBT (Tables)

9 Months Ended

Sep. 30, 2013

Long-Term Debt

Long-term debt included on the condensed consolidated balance sheets consisted of:

(in thousands of U.S. dollars)	September 30, 2013		December 31, 2012
Senior Secured Revolving Credit Facility	$	15,000	$	50,000
Senior Secured Term Loan A	262,500		277,500
Senior Secured Convertible Notes due 2033, net of discount	—		61
6 5/8% Senior Notes due 2021	258,900		260,000
Total debt	536,400		587,561
Current portion long-term debt	33,750		22,500
Long-term debt	$	502,650	$	565,061

Required and Actual Financial Ratios Under Senior Secured Credit Facility

The following table shows the required and actual financial ratios under our Senior Secured Credit Facility as of September 30, 2013:

	Required Ratio	Actual Ratio
Maximum consolidated leverage ratio	No greater than 3.50:1.00	1.95:1.00
Minimum consolidated interest coverage ratio	No less than 3.00:1.00	10.20:1.00

Redemption Prices (Expressed as Percentages of the Principal Amount Thereof)

At any time on or after February 1, 2016, we may redeem all or a portion of the 2021 Notes at our option at the following redemption prices (expressed as percentages of the principal amount thereof) if redeemed during the twelve-month period commencing on February 1 of the years set forth below:

Year	Percentage
2016	103.313%
2017	102.208%
2018	101.104%
2019 and thereafter	100.000%