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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 10-Q/A
___________________________
(Mark One)
/X/ Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 1998
______ 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 (IRS Employer Identification Number)
Incorporation or Organization)
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 ________
As of April 30, 1998, there were 39,199,521 shares of the Registrant's
Common Stock outstanding.
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The Company is amending Item 1 - Financial Statements contained in its
Form 10-Q for the quarter ended March 31, 1998, due to the following:
The caption identifying the prior year column on both the Consolidated
Statements of Operations and the Consolidated Statements of Cash Flows
has been corrected to the appropriate date of March 31, 1997 instead of
December 31, 1997 as was reported previously.
2
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
VALASSIS COMMUNICATIONS, INC.
Condensed Consolidated Balance Sheets
(dollars in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
ASSETS (unaudited) (note)
-------- --------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10,519 $ 35,437
Accounts receivable (less allowance
for doubtful accounts of $1,396 at
March 31, 1998 and $1,171 at
December 31, 1997) 100,029 81,681
Inventories:
Raw materials 13,884 10,975
Work in progress 10,474 15,720
Prepaid expenses and other 8,818 4,536
Deferred income taxes 1,966 1,966
Refundable income taxes --- 772
-------- --------
Total current assets 145,690 151,087
-------- --------
Property, plant and equipment, at cost:
Land and buildings 20,132 20,133
Machinery and equipment 112,341 108,167
Office furniture and equipment 17,521 17,995
Automobiles 971 1,012
Leasehold improvements 1,022 1,022
-------- --------
151,987 148,329
-------- --------
Less accumulated depreciation
and amortization (107,929) (108,098)
-------- --------
Net property, plant and equipment 44,058 40,231
-------- --------
Intangible assets:
Goodwill 68,594 68,594
Other intangibles 83,387 83,387
-------- --------
151,981 151,981
Less accumulated amortization (106,733) (104,709)
-------- --------
Net intangible assets 45,248 47,272
-------- --------
Other assets (primarily debt issuance costs) 2,189 2,295
-------- --------
Total assets $237,185 $240,885
======== ========
</TABLE>
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VALASSIS COMMUNICATIONS, INC.
Condensed Consolidated Balance Sheets, Continued
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
Liabilities and Stockholders' Deficit (unaudited) (note)
--------- ---------
<S> <C> <C>
Current liabilities:
Accounts payable $76,601 $59,226
Accrued interest 8,546 5,098
Income taxes payable 6,250 ---
Accrued expenses 14,546 25,890
Progress billings 43,278 58,239
Current portion, long-term debt 108,009 ---
--------- ---------
Total current liabilities 257,230 148,453
--------- ---------
Long-term debt 254,903 367,075
Deferred income taxes 2,315 2,315
Minority interest 6 9
Stockholders' deficit:
Common stock of $.01 par value.
Authorized 100,000,000 shares; issued
45,743,812 at March 31, 1998 and
44,515,599 at December 31, 1997; out-
standing 39,292,912 at March 31,1998
and 39,515,599 at December 31, 1997 457 445
Additional paid-in capital 102,368 72,399
Accumulated deficit (210,578) (236,625)
Foreign currency translations (310) (146)
Treasury stock, at cost (6,450,900
shares at March 31, 1998 and
5,000,000 shares at December 31, 1997) (169,206) (113,040)
--------- ---------
Total stockholders' deficit (277,269) (276,967)
--------- ---------
Total liabilities and
stockholders' deficit $237,185 $240,885
========= =========
</TABLE>
NOTE: The balance sheet at December 31, 1997 has been derived from the
audited financial statements at that date but does not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
See accompanying notes to condensed consolidated financial statements.
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VALASSIS COMMUNICATIONS, INC.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended
March 31, March 31,
1998 1997
--------- ---------
<S> <C> <C>
Revenues:
Net sales $204,951 $189,307
Other 732 652
--------- ---------
Total revenues 205,683 189,959
Costs and expenses:
Cost of products sold 133,902 123,607
Selling, general and administrative 18,453 17,045
Amortization of intangible assets 2,024 2,544
Interest 9,007 10,099
--------- ---------
Total costs and expenses 163,386 153,295
--------- ---------
Earnings before income taxes 42,297 36,664
Income taxes 16,250 14,366
--------- ---------
Net earnings $26,047 $22,298
========= =========
Net earnings per common share, basic $ .65 $ .53
========= =========
Net earnings per common share, diluted $ .64 $ .53
========= =========
Shares used in computing net earnings
per share, basic 40,113,479 41,870,395
========== ==========
Shares used in computing net earnings
per share, diluted 40,556,560 42,170,455
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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VALASSIS COMMUNICATIONS, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended
March 31, March 31,
1998 1997
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $26,047 $22,298
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 3,939 4,332
Provision for losses on accounts receivable 225 225
Minority interest (3) 10
Loss on sale of property, plant and equipment 6 154
Changes in assets and liabilities which
increase (decrease) cash flow:
Accounts receivable (18,573) 7,293
Inventories 2,337 1,507
Prepaid expenses and other (4,282) (1,127)
Other assets 105 (93)
Accounts payable 17,375 2,330
Accrued expenses and interest (7,896) (1,666)
Income taxes 14,915 13,074
Progress billings (14,961) (10,477)
--------- ---------
Total adjustments (6,812) 15,562
--------- ---------
Net cash provided by operating activities 19,235 37,860
--------- ---------
Cash flows from investing activities:
Additions to property, plant and equipment (5,770) (5,786)
Other (121) 113
--------- ---------
Net cash used in investing activities (5,891) (5,673)
--------- ---------
Cash flows from financing activities:
Repayment of long-term debt (4,184) (18,690)
Proceeds from the issuance of common stock 22,088 1,555
Repurchase of common stock (56,166) (14,323)
--------- ---------
Net cash used in financing activities (38,262) (31,458)
--------- ---------
Net increase/(decrease) in cash (24,918) 729
Cash at beginning of period 35,437 60,172
--------- ---------
Cash at end of period $10,519 $60,901
========= =========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 5,559 $ 7,434
Cash paid during the period for income taxes $ 1,335 $ 1,292
Dividends declared but unpaid $ --- $ ---
Common stock repurchase commitment $ --- $14,323
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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VALASSIS COMMUNICATIONS, INC.
Notes to Condensed Consolidated Financial Statements
1. Basis of Presentation
-----------------------
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles 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 generally accepted accounting principles 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 Company's Annual Report on Form
10-K for the year ended December 31, 1997.
2. Accounting Change
-------------------
During the quarter ended March 31, 1998, the Company changed its
method of accounting for inventories from the last-in, first-out
(LIFO) method to the first-in, first-out (FIFO) method. The Company
believes the change is preferable because the FIFO method better
reflects the economic reality of its inventory management practices
and provides a better matching of current costs with revenues.
The change in method of inventory costing has been applied
retroactively. Due to debit balance LIFO reserves and corresponding
lower-of-cost-or-market reserves, the change had no effect on the
balance sheet at December 31, 1997 or the income statement for the
quarter ended March 31, 1997.
3. Contingencies
---------------
The Company is 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
adverse effect on the Company's financial position.
4. Earnings Per Share
--------------------
The Company adopted Statement of Financial Accounting Standards No.
128 "Earnings per Share," effective for the annual period ending
after December 15, 1997. This standard revised the calculation of
EPS and requires the Company to report diluted EPS in addition to
basic EPS. Basic EPS is based on the average shares outstanding
while diluted EPS gives effect to all dilutive potential common
shares outstanding.
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VALASSIS COMMUNICATIONS, INC.
Notes to Condensed Consolidated Financial Statements
5. Comprehensive Income
----------------------
The Company adopted Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income," beginning January 1, 1998.
The effect of this pronouncement is not material to the Company's
financial statements.
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Signatures
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: June 2, 1998
Valassis Communications, Inc.
(Registrant)
By: /s/Robert L. Recchia
----------------------------------
Robert L. Recchia
V.P. of Finance - Chief Financial
Officer
Signing on behalf of the Registrant
and as principal financial officer.
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