Valassis' 1Q profit falls

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Newspaper inserts distributor Valassis Communications Inc. reported a first-quarter profit drop last week after taking a charge related to its acquisition of Advo Inc.

First-quarter net income fell to $11.2 million from $18.1 million the same time a year ago. Revenue rose 45.9 percent to $361.3 million.

Livonia, MI-based Valassis acquired Advo on March 2.

Valassis also laid out a comprehensive plan for integrating the two companies and maximizing profitability.

Key components include driving Advo package and profit optimization by minimizing unused postage and eliminating unprofitable Advo distribution; executing a ShopWise - Advo's shared mail product - wrap sales improvement plan; and eliminate the detached address label by printing the address directly on the reformatted wrap effective the week of May 14.

The company is also planning to pass along related postal rate case cost increases -which also take effect May 14 - to clients; exceed planned cost synergies; and implement Valassis' strategic sourcing, capital expenditure and information technology project policies and approval processes throughout the combined company.

The company is also planning to print the ShopWise wrap in house at three manufacturing facilities; develop a proactive, comprehensive newspaper alliance strategy; rebuild Advo internal graphic print capability; integrate marketing for the combined company and create a companywide targeting system; stabilize and optimize business processes and enterprise systems; and align its associates' 'Total Rewards Program' to meet its goal of maximizing free cash flow.

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