Contact:  Mary Broaddus Tel 734.591.7375 broaddusm@valassis.com 19975 Victor Parkway, Livonia, MI 48152     Earnings Release

FOR IMMEDIATE RELEASE

Valassis Announces Revenue Growth of 6.6% for the Second Quarter Ended June 30, 2010

Increases Full-year 2010 Adjusted EBITDA* Guidance to $320 Million

Livonia, Mich., July 29, 2010: Valassis (NYSE: VCI) today announced financial results for the second quarter ended June 30, 2010.  Quarterly revenues were $580.0 million, an increase of 6.6% compared to $544.0 million for the prior year quarter.  Second-quarter net earnings were $11.1 million, which included $14.7 million, net of tax, in costs related to the repurchase of $297.8 million of our Senior Notes due 2015. Without the effect of these debt repurchase costs, net earnings would have been $25.8 million, an increase of 62.3% compared to $15.9 million in the prior year quarter. Diluted earnings per share (EPS) for the quarter was $0.21 compared to $0.33 in the prior year quarter.  Without the debt repurchase costs, which accounted for $0.28 per share, net of tax, diluted EPS would have been $0.49, a 48.5% increase compared to the prior year quarter. Charges for non-cash stock-based compensation negatively impacted second-quarter 2010 earnings by $7.9 million, or $0.09 per share, compared to $1.7 million, or $0.02 per share, in the prior year period. For the second quarter of 2010, adjusted EBITDA* was $83.4 million, an increase of 28.3% compared to $65.0 million for the prior year quarter.

“Revenue growth across all four of our business segments this quarter was driven by strong consumer demand for value and our clients’ need to respond to this demand,” said Alan F. Schultz, Valassis Chairman, President and Chief Executive Officer.  “Our decision to raise guidance is reflective of our outlook on client spending on our media, and we believe we are well positioned to continue delivering mid-single digit revenue growth.”

Some additional highlights include:

· Selling, General and Administrative (SG&A) Costs: Second-quarter 2010 SG&A costs were $92.7 million, which included $0.1 million in legal costs (related to the recently settled litigation) and $7.9 million in non-cash stock-based compensation. This compares to prior year quarter SG&A costs of $86.7 million, which included $3.7 million in legal costs (related to the recently settled litigation) and $1.7 million in non-cash stock-based compensation.

· Capital Expenditures: Capital expenditures were $4.6 million during the second quarter.

· Liquidity:

- During the quarter, we repurchased $297.8 million in principal amount of our Senior Notes due 2015 through a tender offer and open market repurchases.  The aggregate principal amount of the Senior Notes due 2015 remaining outstanding as of June 30, 2010 was $242.2 million.  This debt reduction will result in an approximate net interest expense savings of $12.0 million in 2010 and $22.2 million in 2011.

- We ended the second quarter of 2010 with $228.7 million in cash and net debt (total debt less cash) of $481.1 million.

· Stock Repurchases: During the quarter, we repurchased 1,619,600 shares of our common stock at an aggregate cost of $54.6 million under the stock repurchase program reinstated in May 2010. Our 2010 stock repurchases are limited by our senior secured credit facility to an aggregate amount of $58.4 million.

Outlook

Consumer usage of value-oriented media like ours continues to strongly influence shopping behavior. Marketers have increased their promotional activity as shoppers have focused on value.  Based on our current results and outlook, we are increasing our full-year 2010 guidance as follows: adjusted EBITDA* from approximately $300 million to approximately $320 million and diluted cash EPS* from $2.79 to $3.14. We reiterate our previously announced full-year 2010 guidance of $25 million in capital expenditures.

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Business Segment Discussion

· Shared Mail:  Revenues for the second quarter of 2010 were $326.3 million, an increase of 4.0% compared to the prior year quarter due primarily to an increase in insert volumes. Segment profit for the quarter was $40.6 million, an increase of 73.5% compared to the prior year quarter. The growth in segment profit is due to the increase in revenues, newspaper alliances and package optimization efforts.

· Neighborhood Targeted:  Revenues for the second quarter of 2010 were $116.3 million, an increase of 17.5% compared to the prior year quarter due to an increase in Run-of-Press client spend in the energy and telecom verticals. Segment profit for the quarter was $5.3 million, a decrease of 47.0% compared to the prior year quarter due to a shift in both client and product mix and an increase in SG&A allocation.

· Free-standing Inserts (FSI):  Revenues for the second quarter of 2010 were $94.6 million, an increase of 2.7% compared to the prior year quarter.  Segment profit for the quarter was $11.4 million, an increase of 165.1% compared to $4.3 million in the prior year quarter. The improvement in segment results was primarily due to an increase in industry volume of 2.6% and cost reductions.

· International, Digital Media & Services (IDMS):  Revenues for the second quarter of 2010 were $42.8 million, an increase of 8.9% compared to the prior year quarter.  Coupon clearing volume continues to be the primary driver of revenue for this segment. Segment profit for the quarter was $3.1 million, a decrease of 51.6% compared to the prior year quarter due primarily to the continued investment in our In-store and Digital businesses.  According to NCH Marketing Services, Inc., our coupon-processing and analytics subsidiary, second quarter 2010 U.S. consumer packaged goods (CPG) coupon distribution was up 8.8% and coupon redemption volume was up 6.3% compared to the prior year quarter.  This marks the seventh consecutive quarter of CPG redemption volume growth.

Segment Results Summary

	Quarter Ended June 30,
Segment Revenues ($ in millions)	2010		2009		% Change
Shared Mail	$	326.3	$	313.6		4.0	%
Neighborhood Targeted	$	116.3	$	99.0		17.5	%
Free-standing Inserts	$	94.6	$	92.1		2.7	%
International, Digital Media & Services	$	42.8	$	39.3		8.9	%
Total Segment Revenues	$	580.0	$	544.0		6.6	%

	Quarter Ended June 30,
Segment Profit ($ in millions)	2010		2009		% Change
Shared Mail	$	40.6	$	23.4		73.5	%
Neighborhood Targeted	$	5.3	$	10.0		-47.0	%
Free-standing Inserts	$	11.4	$	4.3		165.1	%
International, Digital Media & Services	$	3.1	$	6.4		-51.6	%
Total Segment Profit	$	60.4	$	44.1		37.0	%

Conference Call Information

We will hold an investor call today to discuss our second-quarter results at 11 a.m. (ET). The call-in number is (877) 941-2332 (please reference conference #4319118). The call will be simulcast on our website at http://www.valassis.com and a telephonic replay of the call will be available through Aug. 5, 2010 at (800) 406-7325, pass code 4319118. This earnings release, webcast and a transcript of the conference call will be archived on our website under “Investor.”

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Non-GAAP Financial Measures

*We define adjusted EBITDA as net earnings before interest expense, net, other non-cash expenses (income), net, income taxes, gain or loss on retirement of debt, depreciation, amortization, stock-based compensation expense, non-recurring restructuring and severance costs and News America litigation settlement cash proceeds, net of related payments.  We define diluted cash EPS as net earnings plus depreciation, amortization, stock-based compensation expense and loss on retirement of debt, net of tax, less capital expenditures and News America litigation settlement cash proceeds, net of tax, divided by weighted diluted shares outstanding.  Adjusted EBITDA and diluted cash 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 adjusted EBITDA and diluted cash EPS may be useful in assessing our operating performance and our ability to meet our debt service requirements.  In addition, adjusted EBITDA is 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 a performance criteria for incentive compensation.  Management also believes that diluted cash EPS is useful to investors because it provides a measure of our profitability on a more comparable basis to historical periods and provides a more meaningful basis for forecasting future performance, by replacing non-cash amortization and depreciation expenses, which are currently running significantly higher than our annual capital needs, with actual and forecasted capital expenditures.  Additionally, because of management’s focus on generating shareholder value, of which profitability is a primary driver, management believes diluted cash EPS, as defined above, provides an important measure of our results of operations.

However, these non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, or as alternatives to, operating income, cash flow, EPS or other income or cash flow data prepared in accordance with GAAP. Some of these limitations are:

· adjusted EBITDA does not reflect our cash expenditures for capital equipment or other contractual commitments;

· although depreciation and amortization are non-cash charges, the assets being depreciated or amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements;

· adjusted EBITDA and diluted cash EPS do not reflect changes in, or cash requirements for, our working capital needs;

· adjusted EBITDA does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our indebtedness;

· adjusted EBITDA does not reflect income tax expense or the cash necessary to pay income taxes;

· adjusted EBITDA does not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations; and

· other companies, including companies in our industry, may calculate these measures differently and as the number of differences in the way two different companies calculate these measures increases, the degree of their usefulness as comparative measures correspondingly decreases.

Because of these limitations, adjusted EBITDA and diluted cash EPS should not be considered as measures of discretionary cash available to us to invest in the growth of our business or reduce indebtedness. We compensate for these limitations by relying primarily on our GAAP results and using these non-GAAP financial measures only supplementally.  Further important information regarding reconciliations of these non-GAAP financial measures to their respective most comparable GAAP measures can be found below.

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Reconciliation of Full-year 2010 Adjusted EBITDA Guidance to Full-year 2010 Net Earnings Guidance(1):

	Full-year 2010 Guidance ($ in millions)
Net Earnings	$	393.6
plus:   Interest expense, net		63.9
Income taxes		251.6
Depreciation and amortization		63.1
Loss on debt retirement		23.9
less:    Other non-cash income		(4.1	)
Litigation settlement proceeds, net of related payments		(490.1	)
EBITDA	$	301.9
plus: Stock-based compensation expense		18.1
Adjusted EBITDA	$	320.0

1Due to the forward-looking nature of 2010 adjusted EBITDA, information to reconcile 2010 adjusted EBITDA to cash flows from operating activities is not available without unreasonable effort. We believe that the information necessary to reconcile these measures is not reasonably estimable or predictable.

Reconciliation of Full-year 2010 Diluted Cash EPS Guidance to Full-year 2010 Diluted EPS Guidance:

	Full-year 2010 Guidance
Net Earnings (in millions)	$	393.6
Diluted EPS	$	7.58
plus effect of:
Depreciation		0.97
Amortization		0.25
Stock-based compensation expense		0.35
Loss on debt retirement, net of tax		0.28
less effect of:
Capital expenditures		(0.48	)
Litigation settlement proceeds, net of tax and related payments		(5.81	)
Diluted Cash EPS	$	3.14
Weighted Shares Outstanding (in thousands)		51,900

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Reconciliation of Adjusted EBITDA to Net Earnings and Cash Flows from Operating Activities

 (dollars in thousands)

Unaudited

	Three Months Ended
	June 30,
	2010			2009
Net Earnings - GAAP	$	11,105		$	15,948
plus:              Income taxes		8,361			9,666
Interest expense, net		17,589			21,231
Loss (gain) on retirement of debt		23,873			(1,348	)
Depreciation and amortization		15,144			17,407
less:              Other non-cash (income) expenses, net		(561	)		(1,418	)
EBITDA	$	75,511		$	61,486
Stock-based compensation expense		7,891			1,719
Restructuring costs / severance		-			1,773
Adjusted EBITDA	$	83,402		$	64,978
Income taxes		(8,361	)		(9,666	)
Interest expense, net		(17,589	)		(21,231	)
Restructuring costs, cash		-			(1,773	)
Changes in operating assets and liabilities		(120,892	)		51,426
Cash Flows from Operating Activities	$	(63,440	)	$	83,734

	Six Months Ended
	June 30,
	2010			2009
Net Earnings - GAAP	$	333,633		$	28,976
plus:              Income taxes		210,197			18,320
Interest expense, net		37,599			42,625
Loss (gain) on retirement of debt		23,873			(8,779	)
Depreciation and amortization		30,663			35,067
less:              Other non-cash (income) expenses, net		(2,351	)		(2,682	)
EBITDA	$	633,614		$	113,527
Stock-based compensation expense		13,782			2,768
Restructuring costs / severance		-			2,556
Litigation proceeds, net of related payments		(490,085	)		-
Adjusted EBITDA	$	157,311		$	118,851
Income taxes		(210,197	)		(18,320	)
Interest expense, net		(37,599	)		(42,625	)
Restructuring costs, cash		-			(2,556	)
Litigation proceeds, net of related payments		490,085			-
Changes in operating assets and liabilities		34,306			68,046
Cash Flows from Operating Activities	$	433,906		$	123,396

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About Valassis

Valassis is one of the nation’s leading media and marketing services companies, offering unparalleled reach and scale to more than 15,000 advertisers. Its RedPlum media portfolio delivers value on a weekly basis to over 100 million shoppers across a multi-media platform – in-home, in-store and in-motion. Through its interactive offering – redplum.com – consumers will find compelling national and local deals online. Headquartered in Livonia, Michigan with approximately 7,000 associates in 28 states and eight countries, Valassis is widely recognized for its associate and corporate citizenship programs, including its America’s Looking for Its Missing Children® program. Valassis companies include Valassis Direct Mail, Inc., Valassis Canada, Promotion Watch, Valassis Relationship Marketing Systems, LLC and NCH Marketing Services, Inc.  For more information, visit http://www.valassis.com or http://www.redplum.com.

Cautionary Statements Regarding Forward-looking Statements

Certain statements found in this document constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties and other factors which may cause 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; a shift in client preference for different promotional materials, strategies or coupon delivery methods, including, without limitation, as a result of declines in newspaper circulation; 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; ongoing disruptions in the credit markets that make it difficult for companies to secure financing; 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; we may be required to recognize additional impairment charges against goodwill and intangible assets in the future; possible governmental regulation or litigation affecting aspects of our business; the credit and liquidity crisis in the financial markets could continue to 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; and general economic conditions, whether nationally, internationally, or in the market areas in which we conduct our business, including the adverse impact of the ongoing economic downturn on the marketing expenditures and activities of our clients and prospective clients as well as our vendors, with whom we rely on 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 filings with the United States Securities and Exchange Commission, including our reports on Forms 10-K and 10-Q and the foregoing information 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.

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VALASSIS COMMUNICATIONS, INC.

Consolidated Balance Sheets

(dollars in thousands)

Unaudited

	June 30,			Dec. 31,
	2010			2009
Assets
Current assets:
Cash and cash equivalents	$	228,708		$	129,846
Accounts receivable		412,796			428,836
Inventories		33,274			40,472
Refundable income taxes		-			12,578
Other		34,217			37,046
Total current assets		708,995			648,778
Property, plant and equipment, at cost		505,483			499,775
Less accumulated depreciation		(323,866	)		(301,874	)
Net property, plant and equipment		181,617			197,901
Intangible assets, net		869,019			878,932
Investments		2,527			2,298
Other assets		12,012			16,113
Total assets	$	1,774,170		$	1,744,022

More tables to follow  . . .

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VALASSIS COMMUNICATIONS, INC.

Consolidated Balance Sheets, Continued

(dollars in thousands)

Unaudited

	June 30,			Dec. 31,
	2010			2009
Liabilities and Stockholders' Equity
Current liabilities:
Current portion, long-term debt	$	7,074		$	6,197
Accounts payable and accruals		408,101			466,054
Progress billings		33,137			40,532
Income taxes payable		59,025			-
Deferred income taxes		108			22
Total current liabilities		507,445			512,805
Long-term debt		702,686			1,004,875
Other liabilities		43,454			40,567
Deferred income taxes		89,527			87,914
Stockholders' equity:
Common stock		661			642
Additional paid-in capital		118,208			98,927
Retained earnings		856,364			522,731
Treasury stock		(541,658	)		(520,170	)
Accumulated other comprehensive loss		(2,517	)		(4,269	)
Total stockholders' equity		431,058			97,861
Total liabilities and stockholders' equity	$	1,774,170		$	1,744,022

More tables to follow  . . .

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VALASSIS COMMUNICATIONS, INC.

Consolidated Statements of Operations

(in thousands, except per share data)

Unaudited

	Quarter Ended
	June 30,						%
	2010			2009			Change
Revenues	$	579,950		$	544,037			+ 6.6	%
Costs and expenses:
Costs of products sold		423,765			410,043			+ 3.3	%
Selling, general and administrative		92,663			86,659			+ 6.9	%
Amortization		3,155			3,256			- 3.1	%
Total costs and expenses		519,583			499,958			+ 3.9	%
Operating income		60,367			44,079			+ 37.0	%
Other expenses and income:
Interest expense		17,837			21,385			- 16.6	%
Interest income		(248	)		(154	)		+ 61.0	%
Loss (gain) on extinguishment of debt		23,873			(1,348	)
Other income		(561	)		(1,418	)		- 60.4	%
Total other expenses and income		40,901			18,465			+ 121.5	%
Earnings before income taxes		19,466			25,614			- 24.0	%
Income taxes		8,361			9,666			- 13.5	%
Net earnings	$	11,105		$	15,948			- 30.4	%
Net earnings per common share, diluted	$	0.21		$	0.33			- 36.4	%
Weighted average shares outstanding, diluted		52,499			48,961			+ 7.2	%
Supplementary Data
Amortization	$	3,155		$	3,256
Depreciation		11,989			14,151
Capital expenditures		4,580			6,607

More tables to follow  . . .

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VALASSIS COMMUNICATIONS, INC.

Consolidated Statements of Operations

(in thousands, except per share data)

Unaudited

	Six Months Ended
	June 30,						%
	2010			2009			Change
Revenues	$	1,129,952		$	1,095,192			+ 3.2	%
Costs and expenses:
Costs of products sold		827,154			837,533			- 1.2	%
Selling, general and administrative		183,621			172,887			+ 6.2	%
Amortization		6,311			6,312			- 0.0	%
Total costs and expenses		1,017,086			1,016,732			+ 0.0	%
Gain from litigation settlement		490,085			-			N/A
Operating income		602,951			78,460			+ 668.5	%
Other expenses and income:
Interest expense		37,993			43,029			- 11.7	%
Interest income		(394	)		(404	)		- 2.5	%
Loss (gain) on extinguishment of debt		23,873			(8,779	)
Other income		(2,351	)		(2,682	)		- 12.3	%
Total other expenses and income		59,121			31,164			+ 89.7	%
Earnings before income taxes		543,830			47,296			+ 1049.8	%
Income taxes		210,197			18,320			+ 1047.4	%
Net earnings	$	333,633		$	28,976			+ 1051.4	%
Net earnings per common share, diluted	$	6.41		$	0.60			+ 968.3	%
Weighted average shares outstanding, diluted		52,028			48,693			+ 6.8	%
Supplementary Data
Amortization	$	6,311		$	6,312
Depreciation		24,352			28,755
Capital expenditures		8,401			8,643

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