Vertis reports $327M loss, restructuring plan

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On Monday, March 31, Vertis Communications Inc. reported a $327 million loss for 2007 and hired financial advisory firm Lazard Ltd. to help implement a financial restructuring plan.

The move comes after Vertis evaluated its $246.5 million in goodwill during the fourth quarter of 2007 and “determined that, because of the company's debt load, the value of the $246.5 million should be written off to assure technical compliance with the accounting rules,” according to Mike DuBose, chairman/CEO of Vertis.

As a result, he continued, “The net loss for the quarter grew to $246.5 million, from the $10.4 million loss that would have been incurred without the loss of the goodwill.” He added that during the same time last year, Vertis had a net income of $18.5 million.

Regardless, Vertis is profitable as measured by adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), which exceeded guidance and expectations for 2007 because of the operational turnaround beginning to take effect. DuBose said that “This target was achieved even though our entire industry was impacted by the combination of increased cost for paper, fuel prices and postal rate hikes.”

To that end, DuBose added, “All print companies need to keep pace with market demands and embrace new technologies. Vertis has invested in interactive solutions for our clients. Specifically, Vertis' Digital Solutions Group (DSG) can provide the in-house capabilities for creation of personalized URLs (PURLs), e-mail marketing and online insert conversion with Vertis Inserts2online.”

Vertis also offers other interactive media such as mobile marketing, Vertis Web Traffic Driver (online interactive games), widgets and search engine optimization (SEO).

While many in the advertising sector have noted Vertis' recent financial woes and the subsequent hiring of Lazard, the company first began restructuring efforts last year.

“In 2007, we implemented a multi-faceted operational turnaround strategy, which included significant investments in our business and much needed capital improvements. We also added critical customer service and sales personnel, accomplished significant management process improvements and successfully initiated a culture of lean and continuous improvement,” said DuBose, adding that the response from customers has been very positive.

Having successfully completed stage one, Vertis' strategy, in partnership with Lazard, is to build the appropriate capital structure to operate and grow its business.

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