EX-99.1 2 dex991.htm INVESTOR PRESENTATION Investor Presentation
®
Delivering Value to Consumers –
how, when and where they want
Deutsche Bank Leveraged Finance Conference
September 24, 2008
Exhibit 99.1

2
®
Safe Harbor
Certain
statements
found
in
this
document
constitute
“forward-looking
statements”
within
the
meaning
of
the
Private
Securities
Litigation
Reform
Act
of
1995.
Such
forward-looking
statements
involve
known
and
unknown
risks
and
uncertainties
and
other
factors
which
may
cause
the
actual
results,
performance
or
achievements
of
Valassis
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
customer
preference
for
different
promotional
materials,
promotional
strategies
or
coupon
delivery
methods
including
as
a
result
of
declines
in
newspaper
circulations;
an
unforeseen
increase
in
our
paper
or
postal
costs;
changes
which
affect
the
businesses
of
our
clients
and
lead
to
reduced
sales
promotion
spending
including
a
decrease
in
marketing
budgets
which
are
generally
discretionary
in
nature
and
easier
to
reduce
in
the
short-term
than
other
expenses;
challenges
and
costs
of
achieving
synergies
and
cost
savings
in
connection
with
the
ADVO
acquisition
and
integrating
ADVO’s
operations
may
be
greater
than
expected;
our
substantial
indebtedness,
and
our
ability
to
incur
additional
indebtedness,
may
affect
our
financial
health;
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;
the
outcome
of
ADVO’s
pending
shareholder
lawsuits;
possible
governmental
regulation
or
litigation
affecting
aspects
of
our
business;
and
general
economic
conditions,
whether
nationally
or
in
the
market
areas
in
which
we
conducts
business,
may
be
less
favorable
than
expected.
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.
Additional
risks
include,
but
are
not
limited
to
those
risk
factors
described
in
our
Annual
Report
on
Form
10-K
for
the
year
ended
Dec.
31,
2007
(the
2007
Form
10-K)
and
our
other
filings
with
the
United
States
Securities
and
Exchange
Commission
(“SEC”).

3
®
Delivering value to consumers…
In-store
Industry Size: $1 billion
Strategy: Growth
Interactive
Industry Size: $18 billion
Strategy: Growth
Newspaper
Industry Size/Valassis Revenue*:
ROP: $25 billion/$147 million
FSI: $1 billion/$401 million
Preprint: $14 billion/$279 million
Strategy: Grow Share
Sampling
Industry Size: $2 billion
Valassis Revenue*:  $54 million
Strategy: Grow Share
Shared Mail
Direct Mail Industry Size: $33 billion
Valassis Revenue*: $1.4 billion
Strategy: Growth and Grow Share
*Revenue figures based on Valassis 2007 revenue (including pre-acquisition ADVO revenue for Jan/Feb, 2007).
how,
when
and
where
they
want

Shared Mail
Free-standing insert (FSI) -
Co-op newspaper inserts
Coupon and promotion clearing
European and Canadian media operations
Sweepstakes/security consulting
In-store partnerships
China: minority interest in point-of-sale marketing company
Direct mail sampling/advertising
Loyalty marketing software
Internet-delivered promotions
Preprinted inserts
On-page newspaper advertising (ROP)
Newspaper polybag sampling/advertising
Door hanger sampling/advertising (Direct-to-Door)
Shared mail wrap
Targeted inserts
Saturation mail
List services
MailCoups/Mail Marketing Systems, Inc. (MMSI)
Neighborhood Targeted
Market Delivered
International, Digital
Media & Services
$480.5M
$401.2M
$177.1M
$1,406.8M
2007 Revenue
2007 Total Revenue
$2,465.6M
*Includes ADVO Jan & Feb
‘07 pre-acquisition revenue.
$208.5M
$187.3M
$ 89.5M
$706.7M
1H08 Revenue
1H08 Total Revenue
$1,192.0M
-0.4% vs. 1H07
The segments previously known as International and Services and Household Targeted were aggregated into one segment, International, Digital Media
and Services, due to their immateriality versus the remaining segments. Also as of Jan. 1, 2008, the ADVO Canada business previously accounted for in
the Shared Mail segment was merged into Valassis Canada and is now included in International, Digital Media and Services.  Prior
year pro forma
revenue has been reclassified here for comparison purposes.
+3.7% vs. 1H07
-5.5% vs. 1H07
-10.1% vs. 1H07
+3.6% vs. 1H07

5
®
Diversification -
2007
Revenue by Product
Revenue by Client

ADVO acquisition completes are long-term strategy to diversify customer base.
“Strategic Accounts”
and “Local Accounts”
Objective to have 4,000 new local customers in 2008
Clients
2006           2007
Consumer
Packaged
Goods
Total
17.9%
17.4%             
Consumer
Services
Total
9.4%
9.1%
Direct
Marketers
Total
6.8%
6.6%
Financial
Total
1.8%
3.0%
Food
Service
Total
13.7%
13.3%
Grocery
and
Drug
Total
17.6%
17.2%
Satellite
Total
2.0%
1.6%
Telecom
Total
7.3%
8.1%
Specialty
Retail
Total
15.0%
15.5%
Discount
Stores
Total
5.4%
5.4%
Other
Totals
3.2%
2.8%
Grand
Total
100%
100%
Products 2006 vs. 2007
(Pro Forma Revenue) 2006        2007    
Shared
Mail
Inserts
43.9%
53%
FSI
17.7%
19%
Neighborhood
Targeted
12.7%
21%
International
and
Services
4.5%
5%
Household
Targeted
2.4%
2%
Shared
Mail
Zone
Products
9.3%
In
’07,
moved
to
“Shared
Mail
Inserts”
category
ROP
4.7%
In
’07,
moved
to
“Neighborhood
Targeted”
category
Other
4.9%
In
’07,
moved
to
“Shared
Mail
Inserts”

6
®
We have relationships with more than 15,000 advertisers worldwide in various industries.
“Blue Chip”
Client Base

•
Combined 15,000 customers
•
Long-term customers; stable; biggest in the industry;
•
These logos represent strategic accounts

7
®
Second Half 2008 Strategy
•
Marketers need to move product and consumers seek
deals
–
Valassis products drive traffic and move product
–
We believe the current economic environment will have a more
permanent effect on consumer behavior
–
72%
of
consumers
are
using
more
coupons
1
–
Consumers are searching on “coupon”
44% more often than in
previous
years
2
•
Launch of Integrated Media Optimization facilitates
cross selling and gains audience with client
•
Increase share by cross selling and new client
acquisition
•
Successful cost management
1
Prospectiv Study, August 2008
2
Google Trends, September 2008 U.S. “Coupon”
search; July 2007 –
August 2008 vs. January 2004 vs. June 2007

•
Valassis
products drive traffic and move inventory
•
We believe this recession will have a more permanent affect on consumer behavior now and in the future
•
A new study finds that 72% of consumers are using more coupons than they did six months ago (Source: Prospectiv
Study,
August 2008)
•
Consumers are seeking more value-oriented content.  They are searching for coupons 44% more over the last year vs. the
previous three years (Source: Google Trends, September 2008 U.S.
“Coupon”
search; July 2007 –
August 2008 vs. January
2004 vs. June 2007)

8
®
Long-term Growth Strategy
•
Diversify and extend product portfolio
•
As newspaper circulation declines, migrate newspaper-
delivered content to Shared Mail and online
•
Value Proposition:
The only company to blend a one-of-a-
kind national shared mail network and newspaper
distribution
Execution = Long-term Profitable Revenue Growth

9
®
Cost Synergies Update
Paper
$ 4
$ 0
$ 0
Print
4
15
15
Media
2
2
5
Newspaper Alliances
0
3
7
Facility Consolidation
2
4
4
Data Center
0
0
4
SG&A
14
14
14
Total
$26
$38
$49
2007A
2008E
2009E
($ in millions)
A = Actual
E = Estimate

10
®
Why Invest in Valassis?
•
Consumer demand for value-oriented media
•
Value proposition
–
shared mail and newspaper blended solution
–
one-of-a-kind shared mail distribution
•
Cross-sell opportunity
–
extensive product portfolio
–
expansive client base
•
Sustainable, profitable revenue growth
–
long-term newspaper circulation declines = shift to shared mail (improved
margins)
•
Outperforming print media peers
•
Capital structure
•
Cash flow
•
Experienced, results-oriented management team

®
Appendix

12
®
Net Earnings to Adjusted EBITDA and Cash
Flow from Operations
1
($ in millions)
1
For reconciliation of non-GAAP measures see slide 17.
Three Months Ended
Six Months Ended
6/30/2008
6/30/2008
Net Earnings -
GAAP
7.3
$                  
19.7
$                  
plus:
Income
taxes
5.0
12.8
Interest and other expense, net
22.4
44.5
Depreciation and amortization
17.2
34.8
EBITDA
51.9
$                
111.8
$              
Stock-based compensation expense
(SFAS No. 123R)
2.0
3.4
Amortization of customer contract incentive
1.2
2.4
Restructuring costs
0.8
1.5
Adjusted EBITDA
55.9
$                
119.1
$              
Interest and other expense, net
(22.4)
(44.5)
Income taxes
(5.0)
(12.8)
Restructuring costs, cash
(0.8)
(1.5)
Changes in operating assets and liabilities
49.9
20.7
Cash Flow from Operations
77.6
$                
81.0
$                  

13
®
Capital Structure
($ in millions)
$191.8
Senior Secured Debt:
Senior Notes
$100.0
6-5/8%
1/15/2009
fixed rate
Senior Secured Credit Facility –
fixed portion
480.0
6.80%
3/31/2014
swaps expire 12/31/10
Senior
Secured
Credit
Facility
–
floating
portion
(1)
162.6                4.55%
(2)
3/31/2014 
LIBOR
+175
Senior Convertible Notes
.1
1-5/8%
5/22/2033
fixed rate
Senior
Secured
Revolving
Credit
Facility
–
$120mm
(3)
0.0
5.05%
(2)
3/31/2012
LIBOR
+225
Total Secured Debt
$742.7
Senior Unsecured Notes
540.0
8-1/4%
3/31/2015
fixed rate
Total Debt
$1,282.7
Total Net Debt
$1,090.9
Current Market Capitalization
$395.5
48.05 mm shares at 9/19/08
Total Capitalization
$1,486.4
As of
6/30/08
Rate
Due
Comments
closing price of $8.23
(1)
On
July
3,
2008,
we
applied
net
proceeds
of
$28.8
million
from
sale
and
leaseback
of
our
Windsor,
CT
locations
to
our
term
loan
portion
of
our
Senior
Secured
Credit
Facility,
as
required
by
our
Senior
Secured
Credit
Facility
(see
10-K
for
details).
(2) Based on three-month LIBOR as of 8/13/08 of 2.8% plus spread.
(3) $120 million (less approx. $11.2 million in letters of credit) is current available credit.
Cash
and
equivalents
(1)

14
®
Covenant Analysis
As of 6/30/08
Consolidated Senior Secured Leverage Ratio:
Senior Secured Debt
$742.7
Adjusted
EBITDA
(LTM)
(1)
$261.0
Covenant
Ratio
Level
(2)
4.00x
Consolidated Senior Secured Leverage Ratio
2.85x
Test
Pass
Covenant EBITDA Cushion %
28.9%
Consolidated Interest Coverage Ratio:
As of 6/30/08
Consolidated Interest Expense (LTM)
$92.8
Adjusted
EBITDA
(LTM)
(1)
$261.0
Covenant
Ratio
Level
(3)
1.60x
Consolidated Interest Coverage Ratio
2.81x
Test
Pass
Covenant EBITDA Cushion %
43.1%
(1) Calculated pursuant to the terms of the senior secured credit facility for the trailing twelve-month period ended March 31. 2008.  Adjusted EBITDA
under the senior secured credit facility is calculated differently than the Company’s publicly disclosed Adjusted EBITDA because the senior
secured credit facility definition does not permit certain adjustments the Company has included in its publicly disclosed Adjusted EBITDA.
(2) Ratio decreases to 3.75x on Dec. 31, 2008.
(3) Ratio increases to 1.75x on Dec. 31, 2008.
($ in millions)

15
®
Unique Value Proposition
Mail
Shared Mail
Loyalty Mail
Newspaper
Preprinted Inserts             
Run of Press                     
Polybag/Sampling              
Co-op FSI
Direct-to-Door
Internet
(Value-oriented Content)              
In Store
In Aisle
Perimeter                           
Point-of-Sale (POS)
Ad
Agencies
Large Metro
Newspapers
We
offer
the
only
industry
turnkey
solution
including
targeting,
media
optimization
and
placement, printing and back-end analytics.
Distribution Channel

•
No competitor has the product portfolio that rivals ours within the marketing services industry
•
We also have 2 major distribution channels (newspaper and shared
mail) and can supplement with in-store, internet and
direct-to-door
•
Also, vertically integrated and can do everything from targeting, media optimization and placement, printing and back-end
analytics.
•
We can also provide integrated solutions utilizing a variety of products, targeting levels and distribution methods to more
efficiently reach the consumer---The most complete solution.
•
Lots of upside in the segments we compete in. For example:
Run of press-$25 billion industry excluding classifieds-we place $250 million
Preprinted inserts-$13.7 billion industry –
we handle $260 million
Sampling -
$1.8 Billion industry –
we do $50 million
Direct mail -
$32.8 Billion –
we do $1.5 Billion with ADVO
•
Targeting
Media planning and promotional services
Response & ROI optimization
•
Portfolio
Multi-channel media
Breadth of products and formats
•
Scale
Largest customer of newspapers and the USPS
Coast-to-coast national reach with household level targeting

®
Strong Execution Dictates Success –
Elasticity Within Ad Recession
Sources:
Industry Ad Spend, TNS 2007
Valassis Revenue, Internal Tracking
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
1998
1999
2000
2001
2002
2003
2004
2005
2006
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Industry Ad Spending Total (millions)
Valassis Revenue (millions)
2001 Ad Recession
Industry:  -3.2%
Valassis:  +1.0%

•
2000 vs. 2001 total industry is 3.2% decrease –
Valassis 1.0% increase.
•
Legacy Valassis 1.5% increase; legacy ADVO .7% increase
•
Studies on recessions from 1947 through 1985 reveal short-term and long-term effects when advertisers cut ad spending…
•
sales and profits dropped off at companies that cut back on advertising -
after the recession those companies
continued to fall behind the ones that maintained their ad spending levels.
•
companies that did not cut their budgets or chose to increase spending experienced significantly higher sales during
and after the 1981-82 recession
•
at the end of 1985, those companies that had maintained or increased their advertising during the recession enjoyed
an average sales growth of 275 percent over the preceding five years, while those that had decreased their advertising
had to settle for an average sales increase of only 19 percent
•
Increase market share (91-92 recession)…
•
a 1993 study among 127 brands showed that the brands that increased ad spending by an average of 7percent
enjoyed an average 1.1 percent increase in market share, while those that
•
reduced spending by 8 percent on average lost 1.6 percent of market share
•
A recession provides a prime opportunity for increasing your market share, so
•
monitor your market share, not just your sales volume. If you are aggressive when
•
your competitors are cutting back their ad spending, you may enjoy your greatest gain in market share.
•
Those who cut their budgets decrease their chances to improve their market share
•
for as many as five years after a recession.

17
®
We
define
adjusted
EBITDA
as
earnings
before
net
interest
and
other
expenses,
income
taxes,
depreciation,
amortization,
acquisition/litigation-related
expenses,
stock-based
compensation
expense
associated
with
SFAS
No.
123R,
amortization
of
a
customer
contract
incentive
and
other
non-cash
and
non-recurring
charges.
We
define
adjusted
free
cash
flow
as
net
earnings
plus
depreciation,
amortization,
stock-based
compensation
expense,
acquisition/litigation-related
expenses
and
other
non-cash
and
non-recurring
items,
less
capital
expenditures.
Adjusted
EBITDA
and
adjusted
free
cash
flow
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
adjusted
free
cash
flow
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
determine
our
operating
performance
and,
along
with
other
data,
as
internal
measures
for
setting
annual
operating
budgets,
assessing
financial
performance
of
numerous
business
segments
and
as
a
measurement
component
of
incentive
compensation.
However,
these
non-GAAP
financial
measures
have
limitations
as
analytical
tools
and
should
not
be
considered
in
isolation
from,
or
as
an
alternative
to,
operating
income,
cash
flow
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
does
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;
•
adjusted
free
cash
flow
does
not
represent
our
residual
cash
flow
available
for
discretionary
expenditures
since
we
have
mandatory
debt
service
requirements
and
other
required
expenditures
that
are
not
deducted
from
adjusted
free
cash
flow;
•
adjusted
free
cash
flow
does
not
capture
debt
repayment
and/or
the
receipt
of
proceeds
from
the
issuance
of
debt;
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
a
comparative
measure
correspondingly
decreases.
Because
of
these
limitations,
adjusted
EBITDA
and
adjusted
free
cash
flow
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
as
a
supplement.
Reconciliation of Non-GAAP Measures