<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                           ---------------------------

                                    FORM 10-Q

                           ---------------------------

(Mark One)

 X      Quarterly report pursuant to Section 13 or 15(d) of the Securities
---     Exchange Act of 1934

        For the Quarterly Period Ended June 30, 2001

        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
     Incorporation or Organization)                 Identification Number)

                              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 August 7, 2001, there were 53,611,058 shares of the Registrant's Common
Stock outstanding.
<PAGE>

Part I - Financial Information
------------------------------

Item 1.  Financial Statements

                          VALASSIS COMMUNICATIONS, INC.
                      Condensed Consolidated Balance Sheets
                             (dollars in thousands)



                                                         June 30,   December 31,
Assets                                                     2001         2000
------                                                   ---------  -----------
                                                        (unaudited)
Current assets:
  Cash and cash equivalents                              $  10,908    $  11,140
  Accounts receivable (less allowance for doubtful
    accounts of $2,061 at June 30, 2001 and
    $1,322 at December 31, 2000)                           103,589      114,554
  Inventories:
    Raw materials                                           16,804       10,542
    Work in progress                                        11,366       17,338
  Prepaid expenses and other                                 5,977       10,729
  Deferred income taxes                                      3,356        3,356
                                                         ---------    ---------
                         Total current assets              152,000      167,659
                                                         ---------    ---------

Property, plant and equipment, at cost:
  Land and buildings                                        21,722       21,648
  Machinery and equipment                                  127,605      123,043
  Office furniture and equipment                            33,392       31,638
  Automobiles                                                1,028        1,117
  Leasehold improvements                                     2,050        1,857
                                                         ---------    ---------
                                                           185,797      179,303

  Less accumulated depreciation and amortization          (122,615)    (119,265)
                                                         ---------    ---------
                  Net property, plant and equipment         63,182       60,038
                                                         ---------    ---------

Intangible assets:
  Goodwill                                                 107,756      107,756
  Other intangibles                                         85,347       85,137
                                                         ---------    ---------
                                                           193,103      192,893

  Less accumulated amortization                           (121,742)    (120,030)
                                                         ---------    ---------
                  Net intangible assets                     71,361       72,863
                                                         ---------    ---------

Equity investments and advances to investees                31,138       18,136
Deferred income taxes                                        3,938        3,938
Other                                                        5,166        3,083
                                                         ---------    ---------
                         Total assets                    $ 326,785    $ 325,717
                                                         =========    =========


                                                                               2
<PAGE>

                          VALASSIS COMMUNICATIONS, INC.
                Condensed Consolidated Balance Sheets, Continued
                  (dollars in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                                   June 30,   December 31,
                                                                                     2001          2000
Liabilities and Stockholders' Deficit                                             ---------   -----------
-------------------------------------                                             (unaudited)
<S>                                                                               <C>           <C>
Current liabilities:
  Accounts payable                                                                 $  70,249    $  85,671
  Accrued interest                                                                     3,485        3,919
  Accrued expenses                                                                    23,752       31,412
  Progress billings                                                                   34,259       49,029
  Income taxes payable                                                                 7,665        1,019
                                                                                   ---------    ---------
                           Total current liabilities                                 139,410      171,050
                                                                                   ---------    ---------

Long-term debt                                                                       312,006      325,490
Other non-current liabilities                                                           --          1,681

Commitments and contingencies

Stockholders' deficit:
  Preferred stock of $.01 par value. Authorized 25,000,000 shares; no shares
    issued or outstanding at June 30, 2001 and December 31, 2000
  Common stock of $.01 par value. Authorized 100,000,000 shares; issued
    62,954,223 at June 30, 2001 and 62,932,556 at December 31, 2000; outstanding
    53,286,927 at June 30, 2001 and 53,562,676 at December 31, 2000                      630          629
  Additional paid-in capital                                                          88,857       87,015
  Deferred compensation                                                               (3,198)      (1,983)
  Retained earnings                                                                  140,159       73,963
  Foreign currency translations                                                         (562)        (460)
  Treasury stock, at cost (9,667,296 shares at June 30, 2001
    and 9,369,880 shares at December 31, 2000)                                      (350,517)    (331,668)
                                                                                   ---------    ---------
                           Total stockholders' deficit                              (124,631)    (172,504)
                                                                                   ---------    ---------
                           Total liabilities and stockholders' deficit             $ 326,785    $ 325,717
                                                                                   =========    =========

</TABLE>
NOTE:     The balance sheet at December 31, 2000 has been derived from the
          audited consolidated 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.


                                                                               3
<PAGE>

                          VALASSIS COMMUNICATIONS, INC.
                   Condensed Consolidated Statements of Income
                  (dollars in thousands, except per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                       Quarter Ended                   Six Months Ended
                                                  June 30,         June 30,        June 30,         June 30,
                                                    2001             2000           2001             2000
                                                 -----------     -----------     -----------     -----------
<S>                                              <C>             <C>             <C>             <C>
Revenues:
  Net sales                                      $   217,192     $   211,043     $   444,921     $   423,031
  Other (primarily legal settlement in 2000)              84              42             165          27,091
                                                 -----------     -----------     -----------     -----------

  Total revenues                                     217,276         211,085         445,086         450,122
                                                 -----------     -----------     -----------     -----------

Costs and expenses:
  Cost of products sold                              133,845         129,571         278,905         258,409
  Selling, general and administrative                 23,130          19,606          46,728          37,880
  Loss on investments                                    687           1,148           1,312           1,812
  Amortization of intangible assets                      858             711           1,714           1,576
  Interest                                             4,819           5,266          10,532          10,551
                                                 -----------     -----------     -----------     -----------
  Total costs and expenses                           163,339         156,302         339,191         310,228
                                                 -----------     -----------     -----------     -----------

Earnings before income taxes                          53,938          54,783         105,895         139,894

Income taxes                                          20,200          20,400          39,700          52,100
                                                 -----------     -----------     -----------     -----------

          Net earnings                           $    33,738     $    34,383     $    66,195     $    87,794
                                                 ===========     ===========     ===========     ===========

Net earnings per common share, basic             $      0.63     $      0.63     $      1.24     $      1.59
                                                 ===========     ===========     ===========     ===========

Net earnings per common share, diluted           $      0.62     $      0.62     $      1.22     $      1.56
                                                 ===========     ===========     ===========     ===========

Shares used in computing net earnings per
share, basic                                      53,430,534      54,782,687      53,477,624      55,212,423
                                                 ===========     ===========     ===========     ===========

Shares used in computing net earnings per
share, diluted                                    54,418,567      55,820,017      54,423,829      56,237,970
                                                 ===========     ===========     ===========     ===========

</TABLE>

See accompanying notes to condensed consolidated financial statements.


                                                                               4
<PAGE>

                          VALASSIS COMMUNICATIONS, INC.
                 Condensed Consolidated Statements of Cash Flows
                             (dollars in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                              Six Months Ended
                                                                                          ------------------------
                                                                                          June 30,        June 30,
                                                                                            2001           2000
                                                                                          ---------      ---------
<S>                                                                                       <C>            <C>
Cash flows from operating activities:
  Net earnings                                                                            $  66,195      $  87,794
  Adjustments to reconcile net earnings to net cash provided by operating activities:
    Depreciation and amortization                                                             6,572          5,531
    Provision for losses on accounts receivable                                                 739            458
    Deferred compensation                                                                    (1,214)        (1,799)
    (Gain)/loss on sale of property, plant and equipment                                        (88)            43
    Stock-based compensation charge                                                           1,585          2,807
    Changes in assets and liabilities which increase (decrease) cash flow:
            Accounts receivable                                                              10,226         (5,831)
            Inventories                                                                        (290)         3,995
            Prepaid expenses and other                                                        4,752         (2,748)
            Other liabilities                                                                (1,681)
            Other assets                                                                     (1,118)         1,826
            Accounts payable                                                                (15,420)       (13,526)
            Accrued expenses and interest                                                    (7,394)        (1,522)
            Income taxes                                                                      6,646          7,413
            Progress billings                                                               (14,770)       (23,898)
                                                                                          ---------      ---------
                          Total adjustments                                                 (11,455)       (27,251)
                                                                                          ---------      ---------

    Net cash provided by operating activities                                                54,740         60,543
                                                                                          ---------      ---------

Cash flows from investing activities:
  Additions to property, plant and equipment                                                 (8,092)        (3,085)
  Proceeds from sale of property, plant and equipment                                           192            128
  Investments and acquisitions                                                              (14,528)        (7,932)
  Other                                                                                        (102)           (25)
                                                                                          ---------      ---------
    Net cash used in investing activities                                                   (22,530)       (10,914)
                                                                                          ---------      ---------

Cash flows from financing activities:
  Repayment of long-term debt                                                                               (1,982)
  Borrowings of long-term debt                                                              150,000           --
  Net payments under revolving line of credit                                              (163,850)        (1,900)
  Repurchase of common stock                                                                (27,513)       (50,672)
  Proceeds from the issuance of common stock                                                  8,921          2,660
                                                                                          ---------      ---------
    Net cash used in financing activities                                                   (32,442)       (51,894)
                                                                                          ---------      ---------

Net decrease in cash                                                                           (232)        (2,265)
Cash at beginning of period                                                                  11,140         11,089
                                                                                          ---------      ---------

Cash at end of period                                                                     $  10,908      $   8,824
                                                                                          =========      =========

Supplemental disclosure of cash flow information:
  Cash paid during the period for interest                                                $   8,135      $  10,480
  Cash paid during the period for income taxes                                            $  33,135      $  45,135
  Non-cash financing activities:
    Stock issued under stock-based compensation plan                                      $   1,585      $   3,389
</TABLE>


See accompanying notes to condensed consolidated financial statements.


                                                                               5
<PAGE>

                          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 accounting principles generally accepted in the
United States of America 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, 2000. Certain amounts for 2000 have been reclassified to
conform to current period classifications.

2.   Recent Accounting Pronouncements
     --------------------------------

     During July 2001, the Financial Accounting Standards Board issued two
statements, Statement of Financial Accounting Standards ("SFAS") No. 141,
"Business Combinations", and SFAS No. 142, "Goodwill and Other Intangible
Assets", that amend APB Opinion No. 16, "Business Combinations," and supersede
APB Opinion No. 17, "Intangible Assets." The two statements modify the method of
accounting for business combinations entered into after June 30, 2001 and
address the accounting for intangible assets. Beginning January 1, 2002, we
anticipate the Company will no longer amortize its goodwill and intangible
assets, but will, however, evaluate them for impairment annually. We are
currently reviewing the statements to determine their effect on the Company.

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, results of operations or liquidity.

4.   Long-Term Debt
     --------------

     On June 6, 2001, the Company issued $150 million of zero coupon convertible
notes due 2021. The net proceeds from such offering were used to repay
outstanding indebtedness under the Credit Facility. The issue price of each note
represents a yield to maturity of 3.0% per year calculated from the issuance
date. In connection with the Company's issuance of its zero coupon convertible
notes, the Company reduced the amount permitted to be borrowed under its
Revolving Credit Facility from $230 million to $125 million.


                                                                               6
<PAGE>

5.   Segment Reporting
     -----------------

     The Company's products are broken into three types, as follows:

     1.   Mass-Distributed Products - products which provide mass reach at low
          cost, including:
          -    Free-standing inserts (FSI) - four color booklets containing
               promotions from multiple advertisers distributed through Sunday
               newspapers.
          -    Run-of-press (ROP) - on-page newspaper promotions
     2.   Cluster-Targeted Products - products targeted around geographic and
          demographic clusters, including:
          -    Targeted Print and Media Services (TPMS) - formerly Valassis
               Impact Promotions and Targeted Sampling & Media Solutions
               (polybag samples and advertising), which have recently been
               combined into one segment.
     3.   One-to-One Products - products and services that pinpoint individuals
          to build loyalty to a brand, including:
          -    Customer Relationship Marketing (which includes PreVision)
          -    Promotion Watch - security consulting
          -    Non-consolidated investments in Internet promotion companies

     The Company has two reportable segments, cooperative free-standing inserts
(FSIs) and cluster-targeted products. These reportable segments are strategic
business units that offer different products and services. They are managed
separately because each business requires different marketing strategies and
caters to a different customer base. Assets are not allocated to reportable
segments and are not used to assess the performance of a segment.

<TABLE>
<CAPTION>
(in millions)                                               Three Months Ended June 30
-------------                                ---------------------------------------------------------
                                              FSI       Cluster-Targeted    All Others*         Total
                                             ------     ----------------    -----------         ------
<S>                                          <C>        <C>                 <C>                 <C>
    2001
    ----
Revenues from external customers             $147.6         $ 51.7             $ 17.9           $217.2
Intersegment revenues                        $  -           $  -               $  -             $  -
Depreciation/amortization                    $  2.3         $  0.5             $  0.5           $  3.3
Segment profit                               $ 46.2         $  7.4             $  0.2           $ 53.8

    2000
    ----
Revenues from external customers             $160.7         $ 28.1             $ 21.9           $210.7
Intersegment revenues                        $  -           $  -               $  -             $  -
Depreciation/amortization                    $  2.3         $  0.5             $  -             $  2.8
Segment profit                               $ 46.6         $  2.9             $  4.9           $ 54.4
</TABLE>


*    Segments below the quantitative thresholds are primarily attributable to
     three segments of the Company. Those include a customer relationship
     marketing segment business, a run-of-press business, and a promotion
     security service. None of these segments has met any of the quantitative
     thresholds for determining reportable segments.


                                                                               7
<PAGE>

     Reconciliations to consolidated financial statement totals are as follows:

                                                  Three Months
                                                 Ended June 30,
                                                ----------------
                                                 2001      2000
                                                -----     -----
          Profit for reportable segments        $53.6     $49.5
          Profit for other segments               0.2       4.9
          Unallocated amounts:
             Interest income                      0.1       0.4
                                                -----     -----
          Earnings before taxes                 $53.9     $54.8
                                                =====     =====


     Domestic and foreign revenues for each of the three-month periods ended
June 30 were as follows:

                                            2001         2000
                                           ------       ------
          United States                    $215.7       $209.3
          Canada                              1.6          1.8
                                           ------       ------
          Total                            $217.3       $211.1
                                           ======       ======


<TABLE>
<CAPTION>

(in millions)                                                      Six Months Ended June 30
-------------                                       ------------------------------------------------------
                                                      FSI     Cluster-Targeted    All Others*        Total
                                                    ------    ----------------    -----------       ------
<S>                                                 <C>       <C>                 <C>               <C>
    2001
    ----
Revenues from external customers                    $306.6         $106.3           $ 32.1          $445.0
Intersegment revenues                               $  -           $  -             $  -            $  -
Depreciation/amortization                           $  4.6         $  1.0           $  1.0          $  6.6
Segment profit/(loss)                               $ 92.4         $ 13.5           $ (0.1)         $105.8

    2000
    ----
Revenues from external customers                    $325.0         $ 62.2           $ 35.8          $423.0
Intersegment revenues                               $  -           $  -             $  -            $  -
Depreciation/amortization                           $  4.6         $  0.9           $  -            $  5.5
Segment profit                                      $ 97.9         $  7.4           $  7.5          $112.8

</TABLE>

*    Segments below the quantitative thresholds are primarily attributable to
     three segments of the Company. Those include a customer relationship
     marketing segment business, a run-of-press business, and a promotion
     security service. None of these segments has met any of the quantitative
     thresholds for determining reportable segments.


                                                                               8
<PAGE>

     Reconciliations to consolidated financial statement totals are as follows:



                                                     Six Months
                                                    Ended June 30,
                                                 --------------------
                                                  2001          2000
                                                 ------        ------
          Profit for reportable segments         $105.9        $105.3
          (Loss)/Profit for other segments         (0.1)          7.5
          Unallocated amounts:
             Interest income                        0.1           0.6
             Other income                             -          26.5
                                                 ------        ------
          Earnings before taxes                  $105.9        $139.9
                                                 ======        ======

     Domestic and foreign revenues for each of the six-month periods ended June
30 were as follows:


                                                 2001        2000
                                                ------      ------
             United States                      $442.3      $446.9
             Canada                                2.8         3.2
                                                ------      ------
             Total                              $445.1      $450.1
                                                ======      ======


6.   Earnings Per Share
     ------------------

     Earnings per common share ("EPS") data were computed as follows:

<TABLE>
<CAPTION>
                                                                             Three Months
                                                                            Ended June 30,
                                                                        ----------------------
                                                                          2001          2000
                                                                        --------     ---------
<S>                                                                     <C>           <C>
Net Earnings                                                            $ 33,738      $ 34,383
                                                                        ========      ========
Basic EPS:
  Weighted average common shares outstanding                              53,431        54,783
                                                                        ========      ========
Earnings per common share - basic                                       $   0.63      $   0.63
                                                                        ========      ========
Diluted EPS:
  Weighted average common shares outstanding                              53,431        54,783
  Weighted average shares purchased on exercise of dilutive options        4,602         4,018
  Shares purchased with proceeds of options                               (3,664)       (3,000)
  Shares contingently issuable                                                50            19
                                                                        --------      --------
  Shares applicable to diluted earnings                                   54,419        55,820
                                                                        ========      ========
Earnings per common share - diluted                                     $   0.62      $   0.62
                                                                        ========      ========
</TABLE>


                                                                               9
<PAGE>

<TABLE>
<CAPTION>
                                                                             Six Months
                                                                            Ended June 30,
                                                                        ----------------------
                                                                          2001          2000
                                                                        --------      --------
<S>                                                                     <C>           <C>
Net Earnings                                                            $ 66,195      $ 87,794
                                                                        ========      ========

Basic EPS:
  Weighted average common shares outstanding                              53,478        55,212
                                                                        ========      ========

Earnings per common share - basic                                       $   1.24      $   1.59
                                                                        ========      ========

Diluted EPS:
  Weighted average common shares outstanding                              53,478        55,212
  Weighted average shares purchased on exercise of dilutive options        4,525         3,931
  Shares purchased with proceeds of options                               (3,629)       (2,924)
  Shares contingently issuable                                                50            19
                                                                        --------      --------
  Shares applicable to diluted earnings                                   54,424        56,238
                                                                        ========      ========

Earnings per common share - diluted                                     $   1.22      $   1.56
                                                                        ========      ========
</TABLE>


7.   Subsequent Events
     -----------------

     On July 27, 2001 a federal court jury returned a verdict against Dennis D.
Garberg & Associates, Inc. d/b/a The Sunflower Group (Sunflower) awarding the
Company $16.6 million which included damages for past and future lost profits.
The lawsuit, brought by the Company against Sunflower in February of 1999,
asserted that Sunflower wrongfully obtained proprietary information from the
Company's newspaper delivered sampling business. The jury found Sunflower liable
for misappropriating the Company's trade secrets and inducing an individual to
breach his duty of loyalty to the Company. The Company will request that the
judge enter a judgment on the verdict. A reasonable estimation of the Company's
ultimate recovery can not be made at this time and the Company has not recorded
any amount in its financial statements.


                                                                              10
<PAGE>

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations.

Certain statements under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations," 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 the Company 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: a
new competitor in the Company's core free-standing insert business and
consequent price war; new technology that would make free-standing inserts less
attractive; a shift in customer preference for different promotional materials,
promotional strategies or coupon delivery methods, including in-store
advertising systems and other forms of coupon delivery; an increase in the
Company's paper costs; or general business and economic conditions. The Company
disclaims any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.


Results of Operations

Three Months Ended June 30, 2001 and June 30, 2000
--------------------------------------------------

Net sales increased 2.9% from $211.0 million for the second quarter of 2000 to
$217.2 million for the second quarter of 2001. Free-standing insert (FSI)
revenues were down from $160.7 million for the quarter ended June 30, 2000 to
$147.6 million for the same quarter of 2001. This decrease is primarily the
result of a reduction in direct response pages as part of a price improvement
strategy, as well as lower levels of e-commerce client participation. Revenues
for cluster-targeted products increased 20.5% to $51.7 million for the quarter,
driven primarily by strong demand in sampling/advertising polybag programs and
solid results from solo inserts. Net sales of the Company included revenues of
$7.5 million from PreVision, which was acquired in August 2000.

Gross profit margin was 38.4% in the second quarter of 2001, down from 38.6% in
the second quarter of 2000. The decline in average pages per book due to our
strategy to reduce direct response pages in an effort to improve pricing
resulted in increased media and print costs on a per-thousand-page basis offset
by lower paper costs. Also, revenue increases in non-FSI products which command
lower margins contributed to the overall decrease.

Selling, general and administrative expenses increased 18.0% from $19.6 million
in the second quarter of 2000 to $23.1 million in the second quarter of 2001.
This increase is primarily the result of the significant SG&A expenses of
PreVision, and initiatives commenced during the later part of 2000 to increase
the sales force.

Net earnings were $33.7 million for the second quarter of 2001 versus $34.4
million for the same period last year.


                                                                              11
<PAGE>

Six Months Ended June 30, 2001 and June 30, 2000
------------------------------------------------

For the six months ended June 30, 2001, net sales increased 5.2% to $444.9
million from $423.0 million for the comparable period in 2000. Free-standing
insert (FSI) revenues were down from $325.0 million for the first six months of
2000 to $306.6 million for the first six months of 2001. This decrease is
primarily the result of a reduction in direct response pages as part of a price
improvement strategy, as well as lower levels of e-commerce client
participation. Revenues for cluster-targeted products increased 24.9% to $106.3
million for the six month period, driven primarily by strong demand in
sampling/advertising polybag programs. Net sales of the Company included
revenues of $14.0 million from PreVision, which was acquired in August 2000.
Other revenues decreased to $0.2 million for the six months ended June 30, 2001,
from $27.1 million for the comparable period as a result of the recording of the
settlement of a lawsuit in 2000.

Gross margin decreased to 37.3% for the first six months of 2001, from 39.0% for
the same period in 2000 (excluding the impact of a lawsuit settlement included
in other revenues in the first six months of 2000). The decline in average pages
per book due to our strategy to reduce direct response pages in an effort to
improve pricing resulted in increased media and print costs on a
per-thousand-page basis. Also, revenue increases in non-FSI products which
command lower margins contributed to the overall decrease.

Selling, general and administrative expenses were $46.7 million, versus $37.9
million for the comparable prior-year period. This increase is primarily the
result of the significant SG&A expenses of PreVision, and initiatives commenced
during the later part of 2000 to increase the sales force.

Net earnings were $66.2 million for the six months ended June 30, 2001 versus
$87.8 million for the same period last year. Excluding the impact of the
settlement of a lawsuit in the six months ended June 30, 2000, net earnings
would have decreased by 7.0%.

Financial Condition, Liquidity and Sources of Capital

The Company's liquidity requirements arise mainly from its working capital
needs, primarily accounts receivable, inventory and debt service requirements.
The Company does not offer financing to its customers. FSI customers are
generally billed for 75% of each order eight weeks in advance of the publication
date and are billed for the balance immediately prior to the publication date.
The Company inventories its work in progress at cost while it accrues progress
billings as a current liability at full sales value. Although the Company
receives considerable payments from its customers prior to publication of
promotions, revenue is recognized only upon publication dates. Therefore, the
progress billings on the balance sheet include any profits in the related
receivables and accordingly, the Company can operate with low, or even negative,
working capital.

Cash and cash equivalents totaled $10.9 million at June 30, 2001 versus $11.1
million at December 31, 2000. This was the result of cash provided by operating
activities of $54.7 million, and cash used in investing activities and financing
activities of $22.5 million and $32.4 million, respectively, during the first
six months of 2001.

Cash flow from operating activities decreased from $60.5 million at June 30,
2000 to $54.7 million at June 30, 2001, primarily due to decreased net earnings
for the comparable period.


                                                                              12
<PAGE>

As of June 30, 2001, the Company's debt has been reduced to $312.0, which
consists of $46.2 million under its Revolving Credit Facility and $265.8 million
in public debt. As discussed in Note 3, the Company issued $150 million of zero
coupon convertible notes 2021 in June 2001. The net proceeds from such offering
were used to repay outstanding indebtedness under the Revolving Credit Facility.

The Company intends to use cash generated by operations to meet interest and
principal repayment obligations, for general corporate purposes, to reduce its
indebtedness and from time to time to repurchase stock through the Company's
stock repurchase program.

As of June 30, 2001, the Company had authorization to repurchase an additional
2.0 million shares of its common stock under its existing share repurchase
program.

Management believes that the Company will generate sufficient funds from
operations and will have sufficient lines of credit available to meet currently
anticipated liquidity needs, including interest and required payments of
indebtedness.

Capital Expenditures - The Company operates three printing facilities. Capital
expenditures were $8.1 million for the six month period ended June 30, 2001.
Management expects future capital expenditure requirements of approximately $15
million over each of the next three to five years to meet increased capacity
needs and to replace or rebuild equipment as required. It is expected that
equipment will be purchased using funds provided by operations.


                                                                              13
<PAGE>

Part II - Other Information

Item 4.  Submission of Matters to a Vote of Security Holders

a.   The Company held its Annual Meeting of Stockholders on May 15, 2001.

b.   The election of the nominees for directors who will serve for a term to
     expire at the next Annual Meeting of Stockholders or until their respective
     successors have been duly elected and qualified was voted on by the
     stockholders. The nominees, all of whom were elected were: Richard N.
     Anderson, Patrick F. Brennan, Seth Goldstein, Brian J. Husselbee, Robert L.
     Recchia, Marcella A. Sampson, Alan F. Schultz and Faith Whittlesey. The
     Inspector of Election certified the following vote tabulations with respect
     thereto:


                Director              For          Withheld    Broker Non-Votes
                --------              ---          --------    ----------------
           Richard N. Anderson     43,610,672      4,963,286           0
           Patrick F. Brennan      48,545,482       28,476             0
           Seth Goldstein          48,544,832       29,126             0
           Brian J. Husselbee      48,540,482       33,476             0
           Robert L. Recchia       43,578,844      4,995,114           0
           Marcella A. Sampson     47,281,357      1,292,601           0
           Alan F. Schultz         44,869,519      3,704,839           0
           Faith Whittlesey        48,540,332       33,626             0

c.   A proposal to re-approve and extend the Company's Executive Restricted
     Stock Plan, as amended to satisfy certain Internal Revenue Code
     requirements was approved by the stockholders.

       The Inspector of Election certified the following vote tabulations:

              For             Against        Abstain        Broker Non-Votes
              ---             -------        -------        ----------------
           44,994,198        3,541,981       37,779                 0


d.   A proposal to re-approve the Company's Senior Executives Bonus Plan, as
     amended to satisfy certain Internal Revenue Code requirements was approved
     by the stockholders.

       The Inspector of Election certified the following vote tabulations:

              For             Against        Abstain        Broker Non-Votes
              ---             -------        -------        ----------------
           47,872,604         661,473        39,881                 0


                                                                              14
<PAGE>

e.   A proposal to ratify the selection of Deloitte & Touche LLP, as independent
     auditors of the Company for the 2001 fiscal year was approved by the
     stockholders.

       The Inspector of Election certified the following vote tabulations:

             For             Against        Abstain        Broker Non-Votes
             ---             -------        -------        ----------------
          48,161,430         383,578        28,950                 0



Item 6.  Exhibits and Reports on Form 8-K

a.   Exhibits

     (4.1) Indenture between Valassis Communications, Inc. and The Bank of New
           York dated as of June 6, 2001 relating to its Zero Coupon Convertible
           Senior Notes due 2021 (incorporated by reference to Valassis
           Communications, Inc.'s Registration Statement No. 333-30254).

     (4.2) Form of Zero Coupon Convertible Senior Note due 2021(included in
           Exhibit 4.1).

     (4.3) Registration Rights Agreement, dated June 6, 2001 between Valassis
           Communications, Inc. and Bear, Stearns & Co., Inc. (incorporated by
           reference to Valassis Communications, Inc.'s Registration Statement
           No. 333-30254).

b.   Form 8-K

     The Company filed a report on Form 8-K, dated May 24, 2001, announcing its
intent to raise approximately $150 million through an offering of 20-year, zero
coupon convertible senior notes to qualified investors.


                                                                              15
<PAGE>

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: August 8, 2001

                                       Valassis Communications, Inc.
                                                       (Registrant)


                                       By: /s/ Robert L. Recchia
                                           -------------------------------------
                                       Robert L. Recchia
                                       Executive Vice President and Chief
                                       Financial Officer


                                       Signing on behalf of the
                                       Registrant and as principal
                                       financial and accounting
                                       officer.


                                                                              16
[{"type": "10-Q", "sequence": "1", "filename": "d10q.txt", "description": "QUARTERLY REPORT", "secsgml_size_bytes": 49726}]
{"company-data": {"conformed-name": "VALASSIS COMMUNICATIONS INC", "cik": "0000883293", "assigned-sic": "7310", "irs-number": "382760940", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "001-10991", "film-number": "1701752"}, "business-address": {"street1": "19975 VICTOR PARKWAY", "city": "LIVONIA", "state": "MI", "zip": "48152", "phone": "3135913000"}, "mail-address": {"street1": "19975 VICTOR PARKWAY", "city": "LIVONIA", "state": "MI", "zip": "48152"}}
UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                           ---------------------------

                                    FORM 10-Q

                           ---------------------------

(Mark One)

 X      Quarterly report pursuant to Section 13 or 15(d) of the Securities
---     Exchange Act of 1934

        For the Quarterly Period Ended June 30, 2001

        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
     Incorporation or Organization)                 Identification Number)

                              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 August 7, 2001, there were 53,611,058 shares of the Registrant's Common
Stock outstanding.
Part I - Financial Information
------------------------------

Item 1.  Financial Statements

                          VALASSIS COMMUNICATIONS, INC.
                      Condensed Consolidated Balance Sheets
                             (dollars in thousands)

                                                         June 30,   December 31,
Assets                                                     2001         2000
------                                                   ---------  -----------
                                                        (unaudited)
Current assets:
  Cash and cash equivalents                              $  10,908    $  11,140
  Accounts receivable (less allowance for doubtful
    accounts of $2,061 at June 30, 2001 and
    $1,322 at December 31, 2000)                           103,589      114,554
  Inventories:
    Raw materials                                           16,804       10,542
    Work in progress                                        11,366       17,338
  Prepaid expenses and other                                 5,977       10,729
  Deferred income taxes                                      3,356        3,356
                                                         ---------    ---------
                         Total current assets              152,000      167,659
                                                         ---------    ---------

Property, plant and equipment, at cost:
  Land and buildings                                        21,722       21,648
  Machinery and equipment                                  127,605      123,043
  Office furniture and equipment                            33,392       31,638
  Automobiles                                                1,028        1,117
  Leasehold improvements                                     2,050        1,857
                                                         ---------    ---------
                                                           185,797      179,303

  Less accumulated depreciation and amortization          (122,615)    (119,265)
                                                         ---------    ---------
                  Net property, plant and equipment         63,182       60,038
                                                         ---------    ---------

Intangible assets:
  Goodwill                                                 107,756      107,756
  Other intangibles                                         85,347       85,137
                                                         ---------    ---------
                                                           193,103      192,893

  Less accumulated amortization                           (121,742)    (120,030)
                                                         ---------    ---------
                  Net intangible assets                     71,361       72,863
                                                         ---------    ---------

Equity investments and advances to investees                31,138       18,136
Deferred income taxes                                        3,938        3,938
Other                                                        5,166        3,083
                                                         ---------    ---------
                         Total assets                    $ 326,785    $ 325,717
                                                         =========    =========

                                                                               2
VALASSIS COMMUNICATIONS, INC.
                Condensed Consolidated Balance Sheets, Continued
                  (dollars in thousands, except per share data)
June 30,   December 31,
                                                                                     2001          2000
Liabilities and Stockholders' Deficit                                             ---------   -----------
-------------------------------------                                             (unaudited)
Current liabilities:
  Accounts payable                                                                 $  70,249    $  85,671
  Accrued interest                                                                     3,485        3,919
  Accrued expenses                                                                    23,752       31,412
  Progress billings                                                                   34,259       49,029
  Income taxes payable                                                                 7,665        1,019
                                                                                   ---------    ---------
                           Total current liabilities                                 139,410      171,050
                                                                                   ---------    ---------

Long-term debt                                                                       312,006      325,490
Other non-current liabilities                                                           --          1,681

Commitments and contingencies

Stockholders' deficit:
  Preferred stock of $.01 par value. Authorized 25,000,000 shares; no shares
    issued or outstanding at June 30, 2001 and December 31, 2000
  Common stock of $.01 par value. Authorized 100,000,000 shares; issued
    62,954,223 at June 30, 2001 and 62,932,556 at December 31, 2000; outstanding
    53,286,927 at June 30, 2001 and 53,562,676 at December 31, 2000                      630          629
  Additional paid-in capital                                                          88,857       87,015
  Deferred compensation                                                               (3,198)      (1,983)
  Retained earnings                                                                  140,159       73,963
  Foreign currency translations                                                         (562)        (460)
  Treasury stock, at cost (9,667,296 shares at June 30, 2001
    and 9,369,880 shares at December 31, 2000)                                      (350,517)    (331,668)
                                                                                   ---------    ---------
                           Total stockholders' deficit                              (124,631)    (172,504)
                                                                                   ---------    ---------
                           Total liabilities and stockholders' deficit             $ 326,785    $ 325,717
                                                                                   =========    =========
NOTE:     The balance sheet at December 31, 2000 has been derived from the
          audited consolidated 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.

                                                                               3
VALASSIS COMMUNICATIONS, INC.
                   Condensed Consolidated Statements of Income
                  (dollars in thousands, except per share data)
                                   (unaudited)
Quarter Ended                   Six Months Ended
                                                  June 30,         June 30,        June 30,         June 30,
                                                    2001             2000           2001             2000
                                                 -----------     -----------     -----------     -----------
Revenues:
  Net sales                                      $   217,192     $   211,043     $   444,921     $   423,031
  Other (primarily legal settlement in 2000)              84              42             165          27,091
                                                 -----------     -----------     -----------     -----------

  Total revenues                                     217,276         211,085         445,086         450,122
                                                 -----------     -----------     -----------     -----------

Costs and expenses:
  Cost of products sold                              133,845         129,571         278,905         258,409
  Selling, general and administrative                 23,130          19,606          46,728          37,880
  Loss on investments                                    687           1,148           1,312           1,812
  Amortization of intangible assets                      858             711           1,714           1,576
  Interest                                             4,819           5,266          10,532          10,551
                                                 -----------     -----------     -----------     -----------
  Total costs and expenses                           163,339         156,302         339,191         310,228
                                                 -----------     -----------     -----------     -----------

Earnings before income taxes                          53,938          54,783         105,895         139,894

Income taxes                                          20,200          20,400          39,700          52,100
                                                 -----------     -----------     -----------     -----------

          Net earnings                           $    33,738     $    34,383     $    66,195     $    87,794
                                                 ===========     ===========     ===========     ===========

Net earnings per common share, basic             $      0.63     $      0.63     $      1.24     $      1.59
                                                 ===========     ===========     ===========     ===========

Net earnings per common share, diluted           $      0.62     $      0.62     $      1.22     $      1.56
                                                 ===========     ===========     ===========     ===========

Shares used in computing net earnings per
share, basic                                      53,430,534      54,782,687      53,477,624      55,212,423
                                                 ===========     ===========     ===========     ===========

Shares used in computing net earnings per
share, diluted                                    54,418,567      55,820,017      54,423,829      56,237,970
                                                 ===========     ===========     ===========     ===========
See accompanying notes to condensed consolidated financial statements.

                                                                               4
VALASSIS COMMUNICATIONS, INC.
                 Condensed Consolidated Statements of Cash Flows
                             (dollars in thousands)
                                   (unaudited)
Six Months Ended
                                                                                          ------------------------
                                                                                          June 30,        June 30,
                                                                                            2001           2000
                                                                                          ---------      ---------
Cash flows from operating activities:
  Net earnings                                                                            $  66,195      $  87,794
  Adjustments to reconcile net earnings to net cash provided by operating activities:
    Depreciation and amortization                                                             6,572          5,531
    Provision for losses on accounts receivable                                                 739            458
    Deferred compensation                                                                    (1,214)        (1,799)
    (Gain)/loss on sale of property, plant and equipment                                        (88)            43
    Stock-based compensation charge                                                           1,585          2,807
    Changes in assets and liabilities which increase (decrease) cash flow:
            Accounts receivable                                                              10,226         (5,831)
            Inventories                                                                        (290)         3,995
            Prepaid expenses and other                                                        4,752         (2,748)
            Other liabilities                                                                (1,681)
            Other assets                                                                     (1,118)         1,826
            Accounts payable                                                                (15,420)       (13,526)
            Accrued expenses and interest                                                    (7,394)        (1,522)
            Income taxes                                                                      6,646          7,413
            Progress billings                                                               (14,770)       (23,898)
                                                                                          ---------      ---------
                          Total adjustments                                                 (11,455)       (27,251)
                                                                                          ---------      ---------

    Net cash provided by operating activities                                                54,740         60,543
                                                                                          ---------      ---------

Cash flows from investing activities:
  Additions to property, plant and equipment                                                 (8,092)        (3,085)
  Proceeds from sale of property, plant and equipment                                           192            128
  Investments and acquisitions                                                              (14,528)        (7,932)
  Other                                                                                        (102)           (25)
                                                                                          ---------      ---------
    Net cash used in investing activities                                                   (22,530)       (10,914)
                                                                                          ---------      ---------

Cash flows from financing activities:
  Repayment of long-term debt                                                                               (1,982)
  Borrowings of long-term debt                                                              150,000           --
  Net payments under revolving line of credit                                              (163,850)        (1,900)
  Repurchase of common stock                                                                (27,513)       (50,672)
  Proceeds from the issuance of common stock                                                  8,921          2,660
                                                                                          ---------      ---------
    Net cash used in financing activities                                                   (32,442)       (51,894)
                                                                                          ---------      ---------

Net decrease in cash                                                                           (232)        (2,265)
Cash at beginning of period                                                                  11,140         11,089
                                                                                          ---------      ---------

Cash at end of period                                                                     $  10,908      $   8,824
                                                                                          =========      =========

Supplemental disclosure of cash flow information:
  Cash paid during the period for interest                                                $   8,135      $  10,480
  Cash paid during the period for income taxes                                            $  33,135      $  45,135
  Non-cash financing activities:
    Stock issued under stock-based compensation plan                                      $   1,585      $   3,389
See accompanying notes to condensed consolidated financial statements.

                                                                               5
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 accounting principles generally accepted in the
United States of America 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, 2000. Certain amounts for 2000 have been reclassified to
conform to current period classifications.

2.   Recent Accounting Pronouncements
     --------------------------------

     During July 2001, the Financial Accounting Standards Board issued two
statements, Statement of Financial Accounting Standards ("SFAS") No. 141,
"Business Combinations", and SFAS No. 142, "Goodwill and Other Intangible
Assets", that amend APB Opinion No. 16, "Business Combinations," and supersede
APB Opinion No. 17, "Intangible Assets." The two statements modify the method of
accounting for business combinations entered into after June 30, 2001 and
address the accounting for intangible assets. Beginning January 1, 2002, we
anticipate the Company will no longer amortize its goodwill and intangible
assets, but will, however, evaluate them for impairment annually. We are
currently reviewing the statements to determine their effect on the Company.

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, results of operations or liquidity.

4.   Long-Term Debt
     --------------

     On June 6, 2001, the Company issued $150 million of zero coupon convertible
notes due 2021. The net proceeds from such offering were used to repay
outstanding indebtedness under the Credit Facility. The issue price of each note
represents a yield to maturity of 3.0% per year calculated from the issuance
date. In connection with the Company's issuance of its zero coupon convertible
notes, the Company reduced the amount permitted to be borrowed under its
Revolving Credit Facility from $230 million to $125 million.

                                                                               6
5.   Segment Reporting
     -----------------

     The Company's products are broken into three types, as follows:

     1.   Mass-Distributed Products - products which provide mass reach at low
          cost, including:
          -    Free-standing inserts (FSI) - four color booklets containing
               promotions from multiple advertisers distributed through Sunday
               newspapers.
          -    Run-of-press (ROP) - on-page newspaper promotions
     2.   Cluster-Targeted Products - products targeted around geographic and
          demographic clusters, including:
          -    Targeted Print and Media Services (TPMS) - formerly Valassis
               Impact Promotions and Targeted Sampling & Media Solutions
               (polybag samples and advertising), which have recently been
               combined into one segment.
     3.   One-to-One Products - products and services that pinpoint individuals
          to build loyalty to a brand, including:
          -    Customer Relationship Marketing (which includes PreVision)
          -    Promotion Watch - security consulting
          -    Non-consolidated investments in Internet promotion companies

     The Company has two reportable segments, cooperative free-standing inserts
(FSIs) and cluster-targeted products. These reportable segments are strategic
business units that offer different products and services. They are managed
separately because each business requires different marketing strategies and
caters to a different customer base. Assets are not allocated to reportable
segments and are not used to assess the performance of a segment.
(in millions)                                               Three Months Ended June 30
-------------                                ---------------------------------------------------------
                                              FSI       Cluster-Targeted    All Others*         Total
                                             ------     ----------------    -----------         ------
2001
    ----
Revenues from external customers             $147.6         $ 51.7             $ 17.9           $217.2
Intersegment revenues                        $  -           $  -               $  -             $  -
Depreciation/amortization                    $  2.3         $  0.5             $  0.5           $  3.3
Segment profit                               $ 46.2         $  7.4             $  0.2           $ 53.8

    2000
    ----
Revenues from external customers             $160.7         $ 28.1             $ 21.9           $210.7
Intersegment revenues                        $  -           $  -               $  -             $  -
Depreciation/amortization                    $  2.3         $  0.5             $  -             $  2.8
Segment profit                               $ 46.6         $  2.9             $  4.9           $ 54.4
*    Segments below the quantitative thresholds are primarily attributable to
     three segments of the Company. Those include a customer relationship
     marketing segment business, a run-of-press business, and a promotion
     security service. None of these segments has met any of the quantitative
     thresholds for determining reportable segments.

                                                                               7
Reconciliations to consolidated financial statement totals are as follows:

                                                  Three Months
                                                 Ended June 30,
                                                ----------------
                                                 2001      2000
                                                -----     -----
          Profit for reportable segments        $53.6     $49.5
          Profit for other segments               0.2       4.9
          Unallocated amounts:
             Interest income                      0.1       0.4
                                                -----     -----
          Earnings before taxes                 $53.9     $54.8
                                                =====     =====

     Domestic and foreign revenues for each of the three-month periods ended
June 30 were as follows:

                                            2001         2000
                                           ------       ------
          United States                    $215.7       $209.3
          Canada                              1.6          1.8
                                           ------       ------
          Total                            $217.3       $211.1
                                           ======       ======
(in millions)                                                      Six Months Ended June 30
-------------                                       ------------------------------------------------------
                                                      FSI     Cluster-Targeted    All Others*        Total
                                                    ------    ----------------    -----------       ------
2001
    ----
Revenues from external customers                    $306.6         $106.3           $ 32.1          $445.0
Intersegment revenues                               $  -           $  -             $  -            $  -
Depreciation/amortization                           $  4.6         $  1.0           $  1.0          $  6.6
Segment profit/(loss)                               $ 92.4         $ 13.5           $ (0.1)         $105.8

    2000
    ----
Revenues from external customers                    $325.0         $ 62.2           $ 35.8          $423.0
Intersegment revenues                               $  -           $  -             $  -            $  -
Depreciation/amortization                           $  4.6         $  0.9           $  -            $  5.5
Segment profit                                      $ 97.9         $  7.4           $  7.5          $112.8
*    Segments below the quantitative thresholds are primarily attributable to
     three segments of the Company. Those include a customer relationship
     marketing segment business, a run-of-press business, and a promotion
     security service. None of these segments has met any of the quantitative
     thresholds for determining reportable segments.

                                                                               8
Reconciliations to consolidated financial statement totals are as follows:

                                                     Six Months
                                                    Ended June 30,
                                                 --------------------
                                                  2001          2000
                                                 ------        ------
          Profit for reportable segments         $105.9        $105.3
          (Loss)/Profit for other segments         (0.1)          7.5
          Unallocated amounts:
             Interest income                        0.1           0.6
             Other income                             -          26.5
                                                 ------        ------
          Earnings before taxes                  $105.9        $139.9
                                                 ======        ======

     Domestic and foreign revenues for each of the six-month periods ended June
30 were as follows:

                                                 2001        2000
                                                ------      ------
             United States                      $442.3      $446.9
             Canada                                2.8         3.2
                                                ------      ------
             Total                              $445.1      $450.1
                                                ======      ======

6.   Earnings Per Share
     ------------------

     Earnings per common share ("EPS") data were computed as follows:
Three Months
                                                                            Ended June 30,
                                                                        ----------------------
                                                                          2001          2000
                                                                        --------     ---------
Net Earnings                                                            $ 33,738      $ 34,383
                                                                        ========      ========
Basic EPS:
  Weighted average common shares outstanding                              53,431        54,783
                                                                        ========      ========
Earnings per common share - basic                                       $   0.63      $   0.63
                                                                        ========      ========
Diluted EPS:
  Weighted average common shares outstanding                              53,431        54,783
  Weighted average shares purchased on exercise of dilutive options        4,602         4,018
  Shares purchased with proceeds of options                               (3,664)       (3,000)
  Shares contingently issuable                                                50            19
                                                                        --------      --------
  Shares applicable to diluted earnings                                   54,419        55,820
                                                                        ========      ========
Earnings per common share - diluted                                     $   0.62      $   0.62
                                                                        ========      ========
9
Six Months
                                                                            Ended June 30,
                                                                        ----------------------
                                                                          2001          2000
                                                                        --------      --------
Net Earnings                                                            $ 66,195      $ 87,794
                                                                        ========      ========

Basic EPS:
  Weighted average common shares outstanding                              53,478        55,212
                                                                        ========      ========

Earnings per common share - basic                                       $   1.24      $   1.59
                                                                        ========      ========

Diluted EPS:
  Weighted average common shares outstanding                              53,478        55,212
  Weighted average shares purchased on exercise of dilutive options        4,525         3,931
  Shares purchased with proceeds of options                               (3,629)       (2,924)
  Shares contingently issuable                                                50            19
                                                                        --------      --------
  Shares applicable to diluted earnings                                   54,424        56,238
                                                                        ========      ========

Earnings per common share - diluted                                     $   1.22      $   1.56
                                                                        ========      ========
7.   Subsequent Events
     -----------------

     On July 27, 2001 a federal court jury returned a verdict against Dennis D.
Garberg & Associates, Inc. d/b/a The Sunflower Group (Sunflower) awarding the
Company $16.6 million which included damages for past and future lost profits.
The lawsuit, brought by the Company against Sunflower in February of 1999,
asserted that Sunflower wrongfully obtained proprietary information from the
Company's newspaper delivered sampling business. The jury found Sunflower liable
for misappropriating the Company's trade secrets and inducing an individual to
breach his duty of loyalty to the Company. The Company will request that the
judge enter a judgment on the verdict. A reasonable estimation of the Company's
ultimate recovery can not be made at this time and the Company has not recorded
any amount in its financial statements.

                                                                              10
Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations.

Certain statements under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations," 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 the Company 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: a
new competitor in the Company's core free-standing insert business and
consequent price war; new technology that would make free-standing inserts less
attractive; a shift in customer preference for different promotional materials,
promotional strategies or coupon delivery methods, including in-store
advertising systems and other forms of coupon delivery; an increase in the
Company's paper costs; or general business and economic conditions. The Company
disclaims any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.

Results of Operations

Three Months Ended June 30, 2001 and June 30, 2000
--------------------------------------------------

Net sales increased 2.9% from $211.0 million for the second quarter of 2000 to
$217.2 million for the second quarter of 2001. Free-standing insert (FSI)
revenues were down from $160.7 million for the quarter ended June 30, 2000 to
$147.6 million for the same quarter of 2001. This decrease is primarily the
result of a reduction in direct response pages as part of a price improvement
strategy, as well as lower levels of e-commerce client participation. Revenues
for cluster-targeted products increased 20.5% to $51.7 million for the quarter,
driven primarily by strong demand in sampling/advertising polybag programs and
solid results from solo inserts. Net sales of the Company included revenues of
$7.5 million from PreVision, which was acquired in August 2000.

Gross profit margin was 38.4% in the second quarter of 2001, down from 38.6% in
the second quarter of 2000. The decline in average pages per book due to our
strategy to reduce direct response pages in an effort to improve pricing
resulted in increased media and print costs on a per-thousand-page basis offset
by lower paper costs. Also, revenue increases in non-FSI products which command
lower margins contributed to the overall decrease.

Selling, general and administrative expenses increased 18.0% from $19.6 million
in the second quarter of 2000 to $23.1 million in the second quarter of 2001.
This increase is primarily the result of the significant SG&A expenses of
PreVision, and initiatives commenced during the later part of 2000 to increase
the sales force.

Net earnings were $33.7 million for the second quarter of 2001 versus $34.4
million for the same period last year.

                                                                              11
Six Months Ended June 30, 2001 and June 30, 2000
------------------------------------------------

For the six months ended June 30, 2001, net sales increased 5.2% to $444.9
million from $423.0 million for the comparable period in 2000. Free-standing
insert (FSI) revenues were down from $325.0 million for the first six months of
2000 to $306.6 million for the first six months of 2001. This decrease is
primarily the result of a reduction in direct response pages as part of a price
improvement strategy, as well as lower levels of e-commerce client
participation. Revenues for cluster-targeted products increased 24.9% to $106.3
million for the six month period, driven primarily by strong demand in
sampling/advertising polybag programs. Net sales of the Company included
revenues of $14.0 million from PreVision, which was acquired in August 2000.
Other revenues decreased to $0.2 million for the six months ended June 30, 2001,
from $27.1 million for the comparable period as a result of the recording of the
settlement of a lawsuit in 2000.

Gross margin decreased to 37.3% for the first six months of 2001, from 39.0% for
the same period in 2000 (excluding the impact of a lawsuit settlement included
in other revenues in the first six months of 2000). The decline in average pages
per book due to our strategy to reduce direct response pages in an effort to
improve pricing resulted in increased media and print costs on a
per-thousand-page basis. Also, revenue increases in non-FSI products which
command lower margins contributed to the overall decrease.

Selling, general and administrative expenses were $46.7 million, versus $37.9
million for the comparable prior-year period. This increase is primarily the
result of the significant SG&A expenses of PreVision, and initiatives commenced
during the later part of 2000 to increase the sales force.

Net earnings were $66.2 million for the six months ended June 30, 2001 versus
$87.8 million for the same period last year. Excluding the impact of the
settlement of a lawsuit in the six months ended June 30, 2000, net earnings
would have decreased by 7.0%.

Financial Condition, Liquidity and Sources of Capital

The Company's liquidity requirements arise mainly from its working capital
needs, primarily accounts receivable, inventory and debt service requirements.
The Company does not offer financing to its customers. FSI customers are
generally billed for 75% of each order eight weeks in advance of the publication
date and are billed for the balance immediately prior to the publication date.
The Company inventories its work in progress at cost while it accrues progress
billings as a current liability at full sales value. Although the Company
receives considerable payments from its customers prior to publication of
promotions, revenue is recognized only upon publication dates. Therefore, the
progress billings on the balance sheet include any profits in the related
receivables and accordingly, the Company can operate with low, or even negative,
working capital.

Cash and cash equivalents totaled $10.9 million at June 30, 2001 versus $11.1
million at December 31, 2000. This was the result of cash provided by operating
activities of $54.7 million, and cash used in investing activities and financing
activities of $22.5 million and $32.4 million, respectively, during the first
six months of 2001.

Cash flow from operating activities decreased from $60.5 million at June 30,
2000 to $54.7 million at June 30, 2001, primarily due to decreased net earnings
for the comparable period.

                                                                              12
As of June 30, 2001, the Company's debt has been reduced to $312.0, which
consists of $46.2 million under its Revolving Credit Facility and $265.8 million
in public debt. As discussed in Note 3, the Company issued $150 million of zero
coupon convertible notes 2021 in June 2001. The net proceeds from such offering
were used to repay outstanding indebtedness under the Revolving Credit Facility.

The Company intends to use cash generated by operations to meet interest and
principal repayment obligations, for general corporate purposes, to reduce its
indebtedness and from time to time to repurchase stock through the Company's
stock repurchase program.

As of June 30, 2001, the Company had authorization to repurchase an additional
2.0 million shares of its common stock under its existing share repurchase
program.

Management believes that the Company will generate sufficient funds from
operations and will have sufficient lines of credit available to meet currently
anticipated liquidity needs, including interest and required payments of
indebtedness.

Capital Expenditures - The Company operates three printing facilities. Capital
expenditures were $8.1 million for the six month period ended June 30, 2001.
Management expects future capital expenditure requirements of approximately $15
million over each of the next three to five years to meet increased capacity
needs and to replace or rebuild equipment as required. It is expected that
equipment will be purchased using funds provided by operations.

                                                                              13
Part II - Other Information

Item 4.  Submission of Matters to a Vote of Security Holders

a.   The Company held its Annual Meeting of Stockholders on May 15, 2001.

b.   The election of the nominees for directors who will serve for a term to
     expire at the next Annual Meeting of Stockholders or until their respective
     successors have been duly elected and qualified was voted on by the
     stockholders. The nominees, all of whom were elected were: Richard N.
     Anderson, Patrick F. Brennan, Seth Goldstein, Brian J. Husselbee, Robert L.
     Recchia, Marcella A. Sampson, Alan F. Schultz and Faith Whittlesey. The
     Inspector of Election certified the following vote tabulations with respect
     thereto:

                Director              For          Withheld    Broker Non-Votes
                --------              ---          --------    ----------------
           Richard N. Anderson     43,610,672      4,963,286           0
           Patrick F. Brennan      48,545,482       28,476             0
           Seth Goldstein          48,544,832       29,126             0
           Brian J. Husselbee      48,540,482       33,476             0
           Robert L. Recchia       43,578,844      4,995,114           0
           Marcella A. Sampson     47,281,357      1,292,601           0
           Alan F. Schultz         44,869,519      3,704,839           0
           Faith Whittlesey        48,540,332       33,626             0

c.   A proposal to re-approve and extend the Company's Executive Restricted
     Stock Plan, as amended to satisfy certain Internal Revenue Code
     requirements was approved by the stockholders.

       The Inspector of Election certified the following vote tabulations:

              For             Against        Abstain        Broker Non-Votes
              ---             -------        -------        ----------------
           44,994,198        3,541,981       37,779                 0

d.   A proposal to re-approve the Company's Senior Executives Bonus Plan, as
     amended to satisfy certain Internal Revenue Code requirements was approved
     by the stockholders.

       The Inspector of Election certified the following vote tabulations:

              For             Against        Abstain        Broker Non-Votes
              ---             -------        -------        ----------------
           47,872,604         661,473        39,881                 0

                                                                              14
e.   A proposal to ratify the selection of Deloitte & Touche LLP, as independent
     auditors of the Company for the 2001 fiscal year was approved by the
     stockholders.

       The Inspector of Election certified the following vote tabulations:

             For             Against        Abstain        Broker Non-Votes
             ---             -------        -------        ----------------
          48,161,430         383,578        28,950                 0

Item 6.  Exhibits and Reports on Form 8-K

a.   Exhibits

     (4.1) Indenture between Valassis Communications, Inc. and The Bank of New
           York dated as of June 6, 2001 relating to its Zero Coupon Convertible
           Senior Notes due 2021 (incorporated by reference to Valassis
           Communications, Inc.'s Registration Statement No. 333-30254).

     (4.2) Form of Zero Coupon Convertible Senior Note due 2021(included in
           Exhibit 4.1).

     (4.3) Registration Rights Agreement, dated June 6, 2001 between Valassis
           Communications, Inc. and Bear, Stearns & Co., Inc. (incorporated by
           reference to Valassis Communications, Inc.'s Registration Statement
           No. 333-30254).

b.   Form 8-K

     The Company filed a report on Form 8-K, dated May 24, 2001, announcing its
intent to raise approximately $150 million through an offering of 20-year, zero
coupon convertible senior notes to qualified investors.

                                                                              15
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: August 8, 2001

                                       Valassis Communications, Inc.
                                                       (Registrant)

                                       By: /s/ Robert L. Recchia
                                           -------------------------------------
                                       Robert L. Recchia
                                       Executive Vice President and Chief
                                       Financial Officer

                                       Signing on behalf of the
                                       Registrant and as principal
                                       financial and accounting
                                       officer.

                                                                              16