Valassis Reports Net Earnings Increase, Revenue Decline
Liquidity: Third-quarter 2009 cash flows from operating activities was $14.0 million with a decrease in debt of $40.9 million. Year to date, we have paid down $150.1 million in debt. As of Sept. 30, 2009, our net debt position was $941.6 million. During the quarter, we completed four “modified Dutch” auctions in which we repurchased and retired $39.3 million of our outstanding term loan B and delayed draw term loans under our senior secured credit facility at an average discount of 2.6% to par resulting in an after-tax net gain of $0.4 million.
Interest Expense: Cash interest expense for the quarter was $19.3 million compared to $23.0 million for the prior year quarter, a decrease of 16.1%. Total interest expense for the third quarter decreased by $0.8 million from the prior year quarter and includes $2.8 million of non-cash interest expense related to the fair value of the interest rate swap contracts.
News America Lawsuits: As announced on July 23, 2009, a Wayne County Circuit Court jury awarded Valassis $300 million for compensatory damages in the first of three lawsuits against News America Incorporated (“News America”). This award accumulates interest on a compounding basis beginning March 9, 2007. Our Federal trial against News America is scheduled for Feb. 2, 2010 in the U.S. District Court, Eastern District of Michigan.
Settlement of (ADVO) Shareholder Lawsuit: On Oct. 28, 2009, the parties to the securities class action Kelleher v. ADVO, Inc. et al. entered into an agreement providing for the settlement of the action and filed papers seeking preliminary approval of the settlement agreement in the U.S. District Court for the District of Connecticut. The settlement is subject to approval by the court, and the settlement amount of $12.5 million will be paid from the proceeds of ADVO’s directors and officers’ insurance policy, with no adverse impact to our financial statements. The complaint alleged that certain former ADVO executives, who left the company at the time of the ADVO merger, made false and misleading statements concerning ADVO’s business and financial results in connection with the proposed merger with Valassis.