FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended DECEMBER 29, 2001
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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Commission file number 1-11720
ADVO, INC.
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(Exact name of registrant as specified in its charter)
Delaware 06-0885252
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Univac Lane, P.O. Box 755, Windsor, CT 06095-0755
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (860) 285-6100
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
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As of January 26, 2002 there were 19,985,002 shares of common stock
outstanding.
ADVO, INC.
INDEX TO QUARTERLY REPORT
ON FORM 10-Q
QUARTER ENDED DECEMBER 29, 2001
Part I - Financial Information
Page
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Item 1. Financial Statements (Unaudited).
Consolidated balance sheets -
December 29, 2001 and September 29, 2001. 2
Consolidated statements of operations -
Three months ended December 29, 2001 and December 30, 2000. 3
Consolidated statements of cash flows -
Three months ended December 29, 2001 and December 30, 2000. 4
Notes to consolidated financial statements. 5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations. 8
Item 3. Quantitative and Qualitative Disclosures about
Market Risk. 11
Part II - Other Information
Item 4. Submission of Matters to a Vote of
Security Holders. 12
Item 6. Exhibits and Reports on Form 8-K. 13
Signatures 14
ADVO, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share data)
December 29, September 29,
ASSETS 2001 2001
--------- ---------
Current assets:
Cash and cash equivalents $ 9,360 $ 17,728
Accounts receivable, net 119,837 119,388
Inventories 2,411 2,840
Prepaid expenses and other current assets 9,419 7,282
Investment in deferred compensation plan 12,683 11,493
Deferred income taxes 11,967 11,319
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Total current assets 165,677 170,050
Property, plant and equipment 251,692 246,936
Less accumulated depreciation and amortization (133,039) (126,455)
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Net property, plant and equipment 118,653 120,481
Goodwill, net 21,600 21,525
Other assets 11,562 10,264
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TOTAL ASSETS $317,492 $ 322,320
========= =========
LIABILITIES
Current liabilities:
Current portion of long-term debt $ 15,000 $ 11,250
Notes payable - short term 1,715 2,390
Accounts payable 24,193 37,759
Accrued compensation and benefits 25,637 21,531
Deferred compensation plan 12,683 11,493
Other current liabilities 48,914 44,678
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Total current liabilities 128,142 129,101
Long-term debt 165,000 173,750
Notes payable - long term -- 1,715
Deferred income taxes 10,000 9,852
Other liabilities 4,918 4,949
STOCKHOLDERS' EQUITY
Series A Convertible preferred stock, $.01 par value
(Authorized 5,000,000 shares, none issued) -- --
Common stock, $.01 par value (Authorized
40,000,000 shares, issued 30,366,755
and 30,317,994 shares, respectively) 304 303
Additional paid-in capital 198,835 197,222
Accumulated earnings 31,405 19,321
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230,544 216,846
Less common stock held in
treasury, at cost (216,505) (208,620)
Accumulated other comprehensive loss (4,607) (5,273)
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Total stockholders' equity 9,432 2,953
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TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY $ 317,492 $ 322,320
========= =========
See Accompanying Notes.
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ADVO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
Three months ended
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December 29, December 30,
2001 2000
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REVENUES $286,936 $297,541
Costs and expenses:
Cost of sales 207,461 213,000
Selling, general and
administrative 54,359 54,970
Provision for bad debts 2,125 1,093
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OPERATING INCOME 22,991 28,478
Interest expense 3,515 4,638
Other expense, net 295 119
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Income before income taxes 19,181 23,721
Provision for income taxes 7,097 8,777
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NET INCOME $ 12,084 $ 14,944
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BASIC EARNINGS PER SHARE $ .61 $ .75
======== ========
DILUTED EARNINGS PER SHARE $ .60 $ .73
======== ========
Weighted average common shares 19,928 20,027
Weighted average diluted shares 20,287 20,588
See Accompanying Notes.
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ADVO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Three months ended
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December 29, December 30,
2001 2000
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NET CASH PROVIDED BY OPERATING ACTIVITIES $ 11,414 $ 12,870
Cash flows from investing activities:
Acquisition of property, plant and equipment (5,205) (7,418)
Proceeds from disposals of property, plant and equipment 38 21
Acquisitions/joint ventures, net of cash acquired -- (8,255)
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NET CASH USED BY INVESTING ACTIVITIES (5,167) (15,652)
Cash flows from financing activities:
Revolving line of credit - net (5,000) 4,000
(Decrease) increase in note payable - net (2,391) 4,030
Proceeds from exercise of stock options 661 2,637
Purchase of common stock for treasury (7,885) (2,407)
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NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES (14,615) 8,260
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(Decrease) increase in cash and cash equivalents (8,368) 5,478
Cash and cash equivalents at beginning of period 17,728 6,003
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9,360 $ 11,481
======== ========
Noncash activities:
Decrease (increase) in fair value of
interest rate swap liabilities 666 (1,576)
Change in noncash portion of deferred
compensation plan 932 (1,287)
See Accompanying Notes
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ADVO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. Operating results for the
three month period ended December 29, 2001 are not necessarily indicative of the
results that may be expected for the fiscal year ending September 28, 2002. For
further information, refer to the consolidated financial statements and
footnotes thereto included in ADVO's annual report on Form 10-K for the fiscal
year ended September 29, 2001. Certain reclassifications have been made in the
fiscal 2001 financial statements to conform with the fiscal 2002 presentation.
2. SUMMARY OF ACCOUNTING POLICIES
Long-lived assets
In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("Statement") No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets", which addresses financial
accounting and reporting for the impairment or disposal of long-lived assets and
for the disposal of a segment of a business. The Company expects to adopt
Statement No. 144 in fiscal 2003 and does not expect such adoption to have a
material effect on the Company's financial position and results of operations
3. GOODWILL AND OTHER INTANGIBLE ASSETS
Effective October 1, 2001, the Company adopted Statement No. 142, "Goodwill and
Other Intangible Assets". Under Statement No. 142, goodwill and intangible
assets that have indefinite useful lives are no longer subject to amortization.
Accordingly, the Company ceased amortization of all goodwill upon adoption.
Additionally, intangible assets that have a finite life continue to be amortized
over their useful lives.
Statement No. 142 also requires that goodwill be tested for impairment at least
annually. Impairment exists when the carrying amount of goodwill exceeds its
fair market value. The Company performed the impairment tests upon the adoption
of Statement No. 142 on October 1, 2001. Fair value was determined using the
discounted cash flow methodology. Based upon the initial impairment tests, the
Company has determined that no impairment of goodwill exists.
The following table reflects actual results of operations for the three month
period ended December 29, 2001 and pro-forma results of operations for the three
month period ended December 30, 2000 had the Company applied the
non-amortization provisions of Statement No. 142 in that period:
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ADVO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Three months ended
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December 29, December 30,
2001 2000
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(In thousands, except per share data)
Reported net income $ 12,084 $ 14,944
Add: Goodwill amortization, net of tax -- 205
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Adjusted net income $ 12,084 $ 15,149
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Reported basic earnings per share $ 0.61 $ 0.75
Add: Goodwill amortization, net of tax -- 0.01
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Adjusted basic earnings per share $ 0.61 $ 0.76
========== ==========
Reported diluted earnings per share $ 0.60 $ 0.73
Add: Goodwill amortization, net of tax -- 0.01
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Adjusted diluted earnings per share $ 0.60 $ 0.74
========== ==========
Intangible assets that continue to be subject to amortization are included in
other assets and consist primarily of customer based intangibles with a gross
carrying value of $3.9 million and accumulated amortization of $3.3 million at
December 29, 2001.
Amortization expense for the quarter ended December 29, 2001 was $0.1 million.
Amortization expense is estimated to be $0.3 million for the remainder of fiscal
2002, $0.4 million for fiscal 2003, and less than $0.1 million for fiscal 2004.
Subsequent to fiscal 2004, all intangible assets are expected to be fully
amortized.
The increase in the carrying amount of goodwill during the first quarter of
fiscal 2002 is the result of adjustments made to previously recorded
acquisitions.
4. COMPREHENSIVE INCOME
Comprehensive income for a period encompasses net income and all other changes
in a company's equity other than from transactions with the company's owners.
The Company's comprehensive income was as follows:
Three months ended
--------------------------
December 29, December 30,
2001 2000
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(in thousands)
Net income $ 12,084 $ 14,944
Other comprehensive income (loss):
Unrealized gain (loss) on derivative instruments 666 (1,576)
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Total comprehensive income $ 12,750 $ 13,368
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ADVO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
5. EARNINGS PER SHARE
Basic earnings per share excludes common stock equivalents, such as stock
options, and is computed by dividing earnings by the weighted average number of
common shares outstanding for the period. Diluted earnings per share reflect the
potential dilution that could occur if common stock equivalents, such as stock
options, were exercised.
Three months ended
------------------------------
December 29, December 30,
2001 2000
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(In thousands, except per share data)
Net income $ 12,084 $ 14,944
======== ========
Weighted average common shares 19,928 20,027
Effect of dilutive securities:
Stock options 317 523
Restricted stock 42 38
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Dilutive potential common shares 359 561
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Weighted average diluted shares 20,287 20,588
======== ========
Basic earnings per share $ .61 $ .75
======== ========
Diluted earnings per share $ .60 $ .73
======== ========
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ADVO, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section should be read in conjunction with the consolidated financial
statements of the Company and the notes thereto.
RESULTS OF OPERATIONS
REVENUES For the first quarter ended December 29, 2001, the Company reported
revenues of $286.9 million, which represented a 3.6%, or $10.6 million, decrease
from the same period in the prior year. The decrease in revenues was primarily
driven by volume declines in the Company's core shared mail business.
Contributing to this decline was the current economic climate, and retailers who
expected a soft holiday season and accordingly cut back on their advertising
expenditures. Partially offsetting this volume decline were pricing increases,
as well as, an 11.0% year over year revenue increase in the Company's A.N.N.E.
(ADVO National Network Extension) brokered distribution program. In addition,
the Company's acquisitions of Mail Marketing Systems, Inc., ("MMSI") and New
Jersey Shopper ("NJ Shopper") acquired during the first quarter and third
quarter, respectively, of fiscal 2001, offset the revenue decline by
approximately $3.1 million.
For the first quarter of fiscal 2002, average shared mail pieces per package
decreased 5.6% to 8.07 when compared to the first quarter of fiscal 2001 due to
the volume declines discussed above. Also affecting the average shared mail
pieces per package statistic was the dilutive effect of the additional packages
mailed during the first quarter relating to the new second in-home date programs
in three of the Company's markets. Shared mail packages were 799.7 million for
the quarter ended December 29, 2001 versus 790.4 million for the quarter ended
December 30, 2000, representing a 1.2% increase year over year. Shared mail
revenue per piece increased 1.2% to $40.44 for the first quarter of fiscal 2002
when compared to the same period in the prior year.
OPERATING EXPENSES Cost of sales as a percentage of revenues increased 0.7
percentage points to 72.3% for the first quarter of fiscal 2002, primarily
resulting from underweight postage costs incurred as a result of the decline in
average pieces per package. In absolute terms, cost of sales decreased $5.5
million for the quarter ended December 29, 2001 over the comparable period in
the prior year due to lower postage, printing and labor costs, along with
operational efficiencies in the Company's production facilities. Print costs
were favorable year over year due to the volume declines and lower paper prices.
Production costs at the Company's branches decreased for the first quarter of
fiscal 2002 versus the first quarter of fiscal 2001 due to temporary labor cost
reductions associated with the decrease in the number of shared mail pieces
processed and also due to operational efficiencies in the Company's production
facilities.
Selling, general and administrative costs (including the provision for bad
debts) increased 0.9 percentage points to 19.7% for the quarter ended December
29, 2001 from 18.8% for the comparable quarter of the prior year. The increase
was mainly attributable to approximately $2.2 million of organizational
realignment costs and incremental security costs incurred during the first
quarter of fiscal 2002. At the onset of the quarter, the Company established an
executive level Office of Safety and Security designed to ensure the safety of
the Company's operations for its associates, clients and consumers. Excluding
the $2.2 million charge, selling, general and administrative costs would have
remained relatively flat at 18.9% for the first quarter of fiscal 2002 when
compared to the first quarter of fiscal 2001.
In absolute terms, selling, general and administrative costs (including the
provision for bad debts) for the first quarter of fiscal 2002 increased $0.4
million over the first quarter of fiscal 2001. This increase includes the $2.2
million realignment and security costs described above, offset by stringent
fixed cost controls throughout the Company and lower incentive wages.
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ADVO, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OPERATING INCOME The activity detailed above resulted in the Company reporting
operating income of $23.0 million for the first quarter of fiscal 2002, a
decrease of $5.5 million from the first quarter of fiscal 2001.
INTEREST EXPENSE Interest expense was $3.5 million for the quarter ended
December 29, 2001 versus $4.6 million for the quarter ended December 30, 2000.
This decrease of $1.1 million was due to lower market rates of interest and a
decrease in the average outstanding debt balance.
INCOME TAXES The effective income tax rate for the three months ended December
29, 2001 and December 30, 2000 was 37% for both periods.
EARNINGS PER SHARE The Company reported diluted earnings per share of $0.60 for
the first quarter of fiscal 2002 versus $0.73 for the same period of the prior
year. This decrease was principally reflective of the Company's decreased
earnings.
FINANCIAL CONDITION
At December 29, 2001, working capital was $37.5 million, reflecting a decrease
of $3.4 million from September 29, 2001. The change in working capital resulted
from a $4.4 million decrease in current assets and a $1.0 million decrease in
current liabilities. The change in current assets was primarily attributable to
a lower ending cash balance at the end of December versus the end of September,
primarily due to $7.3 million of treasury stock purchases made under the
Company's buyback program.
The decrease in current liabilities associated with the working capital change
was comprised of several different components. Decreases in accounts payable due
to the seasonal timing of vendor payments were offset by increases in the
current portion of long-term debt due to scheduled debt repayments, increases in
accrued compensation and benefits due to the timing of payroll and related
payroll taxes, and increases in taxes payable due to timing of tax payments.
Stockholders' equity increased $6.4 million to $9.4 million at December 29, 2001
from $3.0 million at September 29, 2001. The increase was primarily attributable
to net earnings of $12.1 million. Also contributing to the increase was employee
related stock activity of $1.5 million and a positive $0.7 million change in the
fair value of derivative instruments during the quarter. Offsetting these
increases were $7.9 million of treasury stock purchases. The treasury stock
purchases consisted of $7.3 million made on the open market associated with the
Company's buyback program and $0.6 million pursuant to elections by employees to
satisfy withholding requirements under the Company's restricted stock and stock
option plans.
PROPERTY, PLANT & EQUIPMENT
Property, plant and equipment investments of $5.2 million for the quarter ended
December 29, 2001 consisted mainly of capital expenditures for the development
of new software for the order fulfillment, order management and targeting
solutions systems, and renovations at certain of the Company's facilities. The
Company expects its capital expenditures for the entire year to be approximately
$35.0 million.
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ADVO, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY
The Company's main source of liquidity continues to be funds generated from
operating activities. In addition, the Company has available unused credit
commitments of $113.9 million which may be used to fund working capital
requirements.
The net cash provided by operating activities for the three months ended
December 29, 2001 was $11.4 million versus $12.9 million for the same period of
the prior year. The year over year decrease was the result of changes in
accounts receivable, accounts payable and accrued compensation and benefits.
Overall cash and cash equivalents decreased $8.4 million for the quarter ended
December 29, 2001 which was comprised of net cash provided by operating
activities of $11.4 million offset by net investing activities of $5.2 million
and net financing activities of $14.6 million.
Investing activities for the three months ended December 29, 2001 were entirely
related to the capital expenditures detailed above. For the quarter ended
December 30, 2000, investing activities consisted of $7.4 million for capital
expenditures and $8.3 million for acquisitions and joint ventures, most notably
the acquisition of MMSI for $7.3 million, net of cash acquired.
Net cash used by financing activities primarily included net revolver repayments
of $5.0 million under the Company's credit agreement, payment of a $2.3 million
note resulting from the acquisition of MMSI in the prior year, and $7.9 million
of treasury stock purchases, $7.3 million of which were made on the open market
pursuant to the Company's buyback program.
Contractual and commercial commitments
In January 2002, the SEC issued financial reporting release, FR-61, which
provides specific considerations for the disclosure of liquidity and capital
resources in the management's discussion and analysis of financial condition
and results of operations section. The SEC recommends that contractual and
commercial commitments be disclosed as a separate component of liquidity. As
such the Company's contractual obligations are listed below.
(In millions) Long term debt Operating leases
-------------- ----------------
Less than one year $ 15.0 $ 14.6
One to three years 165.0 27.1
Four to five years -- 9.4
After five years -- 14.2
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Total $ 180.0 $ 65.3
======== =======
The Company's long-term debt obligations are discussed below in the "Financing
Arrangements" section. The Company leases property in its normal business
operations under noncancellable operating leases. Certain of these leases
contain renewal options and certain leases also provide for cost escalation
payments.
The Company has various agreements with International Business Machines
Corporation ("IBM") Global Services to provide systems development, technical
support, a customer support center and server farm management services to the
Company. The noncancellable portion of these contracts have lapsed allowing the
Company to cancel these contracts subject to termination charges ranging from
$9.6 million in fiscal 2002 to $1.7 million in fiscal 2006 depending on the year
in which the cancellation becomes effective.
The Company has outstanding letters of credit of approximately $6.1 million
under separate agreements primarily relating to its worker's compensation
program expiring in April 2002.
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ADVO, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company anticipates it will be able to meet its commitments detailed above
through funds generated from operations or from unused credit under its
revolving line of credit.
FINANCING ARRANGEMENTS
The Company maintains a credit agreement which provides for total credit
facilities of $300 million, consisting of a $135 million term loan and a $165
million revolving line of credit. At December 29, 2001 there was $180.0 million
of debt outstanding, with $15.0 million classified as current due to scheduled
principal payments commencing in March, 2002. The Company anticipates it will be
able to meet its debt obligations through funds generated from operations.
During January 2002, the Company had net borrowings of $20.0 million under the
revolving line of credit and $93.9 million of undrawn capacity.
Under the terms of the credit agreement, the Company is required to maintain
certain financial ratios. In addition, the credit agreement also places
restrictions on disposals of assets, mergers and acquisitions, dividend
payments, investments and additional debt.
NEW ACCOUNTING PRONOUNCEMENTS
Effective October 1, 2001, the Company adopted Statement of Financial Accounting
Standards ("Statement") No. 142, "Goodwill and Other Intangible Assets". Under
Statement No. 142, goodwill and intangible assets that have indefinite useful
lives are no longer subject to amortization. Accordingly, the Company ceased
amortization of all goodwill upon adoption. Additionally, intangible assets that
have a finite life continue to be amortized over their useful lives. Operating
income was $23.0 million and $28.5 million for the first quarters of fiscal 2002
and 2001, respectively. Had the Company applied the non-amortization provisions
of Statement No. 142 in the first quarter of fiscal 2001, operating income would
have been $28.8 million. See discussion in Note 3 of the "Notes to Consolidated
Financial Statements" of this report for a further discussion of the impact of
Statement No. 142 to the Company.
Statement No. 142 also requires that goodwill be tested for impairment at least
annually. Impairment exists when the carrying amount of goodwill exceeds its
fair market value. The Company performed the impairment tests upon the adoption
of Statement No. 142 on October 1, 2001. Fair value was determined using the
discounted cash flow methodology. Based upon the initial impairment tests, the
Company has determined that no impairment of goodwill exists. Additional
evaluations of goodwill may be performed in future periods should any
circumstances arise that would indicate that the carrying value of goodwill
might be impaired. The Company intends to comply with the requirements of
Statement No. 142 and test the carrying value of goodwill on an annual basis.
Impairment adjustments recognized after adoption, if any, are required to be
recognized as operating expenses.
In August 2001, the Financial Accounting Standards Board issued Statement No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets" , which
addresses financial accounting and reporting for the impairment or disposal of
long-lived assets and the disposal of a segment of a business. The Company
expects to adopt Statement No. 144 in fiscal 2003 and does not expect such
adoption will have a material effect on the Company's financial position and
results of operations.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's interest expense is sensitive to changes in interest rates. In
this regard, changes in interest rates affect the interest paid on its debt. To
mitigate the impact of interest rate fluctuations, the Company has historically
maintained interest rate swap agreements on notional amounts totaling $100
million, which is currently over 50% of its outstanding debt balance.
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ADVO, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company believes that the interest rate swap agreements limit substantial
risk if interest rates should fluctuate. If interest rates should change by 2
percentage points for the remainder of the 2002 fiscal year from those rates in
effect at December 29, 2001, and considering the effects of the Company's
interest rate swap agreements, interest expense would increase/decrease by
approximately $1.2 million. These amounts are determined by considering the
hypothetical interest rates on the Company's borrowing cost and interest rate
swap agreements. The sensitivity analysis also assumes no changes in the
Company's financial structure.
FORWARD LOOKING STATEMENTS
Except for the historical information stated herein, the matters discussed in
this Management's Discussion and Analysis of Financial Condition and Results of
Operations contain forward looking statements within the meaning of Section 21E
of the Securities Exchange Act of 1934, as amended. Such forward looking
statements are based on current information and expectations and are subject to
risks and uncertainties which could cause the Company's actual results to differ
materially from those in the forward looking statements. Such risks and
uncertainties include but are not limited to: changes in customer demand and
pricing, the possibility of consolidation throughout the retail sector, the
impact of economic and political conditions on retail advertising spending and
our distribution system, postal and paper prices, possible governmental
regulation or legislation affecting aspects of the Company's business, the
efficiencies achieved with technology upgrades, the amount of shares the Company
will purchase in the future under its buyback program, fluctuations in interest
rates related to the outstanding debt and other general economic factors.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the 2002 Annual Meeting of Stockholders of ADVO, Inc. (the "Company"), held
on January 17, 2002, the following matters were submitted to a vote of the
stockholders.
1. The election of seven Directors to serve until the Annual Meeting of
Stockholders in 2003.
2. The ratification of the appointment of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending September 28,
2002.
Each of the two proposals was approved by the stockholders in its entirety. For
a list of the directors elected and the votes cast for and against each of the
proposals, reference is made to Exhibit No. 22, Report of Inspectors of Election
for ADVO, Inc.'s Annual Meeting, attached hereto.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Index
Exhibit No. Exhibits
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22 Report of Inspectors of Election for
ADVO, Inc.'s Annual Meeting.
(b) Reports on Form 8-K
A report on Form 8-K dated October 26, 2001 was filed by the Company during the
first quarter ended December 29, 2001. The Form 8-K reported under item 5
thereof the Company's announcement of three internal executive level promotions:
Donald McCombs from Executive Vice President ("EVP") and Chief Financial Officer
to EVP - President, ADVO Operations Group, Julie Abraham from Senior Vice
President ("SVP") of Finance and Controller to SVP and Chief Financial Officer,
and John Dearing from SVP of Fulfillment to SVP of Security Management.
--------------------------------------------------------------------------------
Omitted from this Part II are items which are inapplicable or to which the
answer is negative for the period covered.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ADVO, Inc.
Date: February 11, 2002 By: /s/ JULIE ABRAHAM
----------------- --------------------------------------
Julie Abraham
Senior Vice President
and Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
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