POS Catalina Marketing Corp

Catalina Marketing Reports Financial Results For the Fourth Quarter of Fiscal Year 2005 ST. PETERSBURG, Fla., May 18 /PRNewswire-FirstCall/ -- Catalina Marketing Corporation (NYSE:POS) today reported financial results for its fourth quarter and fiscal year ended March 31, 2005. For the three months ended March 31, 2005, consolidated revenues were $112.0 million, compared with revenues of $119.6 million in the comparable period last year. Consolidated net income for the fourth quarter was $15.3 million, or $0.29 per diluted share, compared with a net loss of $8.8 million, or $0.17 per diluted share, in the fourth quarter of fiscal year 2004. Fourth quarter results in fiscal year 2005 included $0.7 million in losses from discontinued operations due principally to losses from the disposal of non-core businesses, compared with $32.5 million of losses from discontinued operations, due principally from goodwill impairment charges, recognized in the fourth quarter of fiscal year 2004. The company reported consolidated income from continuing operations for the quarter ended March 31, 2005 of $16.0 million, or $0.30 per diluted share, compared with $23.7 million, or $0.44 per diluted share, for the quarter ended March 31, 2004. "The results in the fourth quarter were consistent with our expectations," said Dick Buell, chief executive officer of Catalina Marketing. "The company incurred costs in the fourth quarter of fiscal 2005 that were not experienced in fiscal 2004 including costs related to growth initiatives, incentive compensation and compliance with Sarbanes-Oxley. As discussed on our last earnings call, the company's investment in growth initiatives reflects a commitment to drive future earnings growth." Revenue in the fourth quarter of fiscal year 2005 was negatively influenced by the sale of the loyalty card business, which occurred in March 2004, and the pull back of a large manufacturer client. The combined revenue impact of these two issues exceeded $8 million in the quarter which, in turn, negatively impacted gross profit. Full Year Consolidated Results For the twelve months ended March 31, 2005, consolidated revenues were $410.1 million, compared with revenues of $408.6 million last year. Consolidated net income for the fiscal year was $65.5 million, or $1.25 per diluted share, compared with a net loss of $19.3 million, or $0.37 per diluted share, in fiscal year 2004. Results in fiscal year 2005 included $3.1 million in losses from discontinued operations due principally to losses from the operations of non-core businesses, compared with $78.9 million of losses from discontinued operations, due principally from goodwill impairment charges, recognized in fiscal year 2004. The company reported consolidated income from continuing operations for the year ended March 31, 2005 of $68.6 million, or $1.31 per diluted share, compared with $60.4 million, or $1.15 per diluted share, for the year ended March 31, 2004. "We are pleased with our financial, strategic and organizational results for fiscal 2005. In addition to the financial outcome, our focus for 2005 was to establish a solid foundation for the future," stated Dick Buell, Catalina's chief executive officer. "We repurchased a record $44 million of Catalina stock during the fourth quarter. In the second quarter, for the first time in the history of the company, we declared an annual dividend to shareholders. The company renewed the focus on its core businesses, achieved its goal of divesting the four non-strategic businesses, and strengthened the management team with the hiring and promotion of key individuals. Catalina Marketing's financial, strategic and organizational achievements in fiscal 2005 have created a solid foundation for future innovation and growth." During the third fiscal quarter ended December 31, 2004, the company received a favorable ruling related to a state sales tax assessment, and as a result, reversed into income a $4.4 million accrued liability, which had been recognized as expense in prior periods. The reversal of this liability resulted in a favorable impact, net of related income taxes, of approximately $0.05 per diluted share, in both the third quarter and the full fiscal year 2005. Pro Forma Non-GAAP Adjustments The pro forma non-GAAP basis results presented in this news release and attached tables exclude the effect of Catalina Health Resource revenues recognized in fiscal year 2004 that had been deferred from prior fiscal years due to revenue recognition adjustments. Fourth quarter fiscal 2005 consolidated revenues of $112.0 million reflect a decrease of 4.6% compared with non-GAAP pro forma revenues of $117.4 million for the same period last year. For the three months ended March 31, 2005, consolidated income from continuing operations was $16.0 million, or $0.30 per diluted share, compared with pro forma non-GAAP income from continuing operations of $22.4 million, or $0.43 per diluted share, for the same period last year. Consolidated revenues of $410.1 million for the twelve months ended March 31, 2005 reflect an increase of 3.3% compared with pro forma non-GAAP revenues of $397.1 million for the same period last year. Consolidated income from continuing operations was $68.6 million, or $1.31 per diluted share, for the twelve months ended March 31, 2005, compared with pro forma non-GAAP income from continuing operations of $53.5 million, or $1.02 per diluted share, for the same period last year. Summary of Segment Results Three Months Ended Three Months Ended March 31, 2005 March 31, 2004 (In thousands) Revenues Income/ Revenues Income/ (Loss) (Loss) Catalina Marketing Services $74,641 $20,660 $82,101 $22,820 Catalina Health Resource (1) 19,324 1,801 20,392 1,677 International 17,974 2,911 15,360 1,177 Corp / Eliminations 30 (9,395) (430) (3,263) Total Pro Forma (1) $111,969 $15,977 $117,423 $22,411 Catalina Health Resource Adj.(1) -- -- 2,137 1,327 From Continuing Operations - GAAP $111,969 $15,977 $119,560 $23,738 Discontinued Operations $-- $(701) $-- $(32,514) Consolidated GAAP $111,969 $15,276 $119,560 $(8,776) Twelve Months Ended Twelve Months Ended March 31, 2005 March 31, 2004 (In thousands) Revenues Income/ Revenues Income/ (Loss) (Loss) Catalina Marketing Services $269,612 $73,879 $282,128 $72,724 Catalina Health Resource (1) 76,167 9,356 66,207 396 International 64,116 7,395 49,580 462 Corp / Eliminations 167 (22,034) (841) (20,062) Total Pro Forma (1) $410,062 $68,596 $397,074 $53,520 Catalina Health Resource Adj.(1) -- -- 11,558 6,877 From Continuing Operations - GAAP $410,062 $68,596 $408,632 $60,397 Discontinued Operations $-- $(3,144) $-- $(78,900) Cumulative Effect of Acctg Change $-- $-- $-- $(770) Consolidated GAAP $410,062 $65,452 $408,632 $(19,273) (1) The non-GAAP pro forma revenue and net income results are a supplement to the financial data that is based on generally accepted accounting principles (GAAP). The non-GAAP pro forma results reflect adjustments to exclude non-recurring revenue resulting from the one-time deferral of CHR revenues in prior periods (and the related tax effect) resulting from revenue recognition adjustments in such prior years. The company believes this presentation provides useful information to investors because it assists investors in better understanding the company's operations for comparability with recurring results for the future. It should be emphasized, however, that these measurements are not a substitution for GAAP-based financial statements. Discontinued Operations During the fiscal year ended March 31, 2005, the company completed the divestiture of its remaining non-strategic business units. Research Solutions was divested during the third quarter and Direct Marketing Services and Japan Billboard were both sold in the second quarter of fiscal year 2005. The aggregated results of these dispositions are reported in the income statement as "Discontinued Operations." Stock Repurchases During the fourth quarter, the company repurchased 1,652,100 shares of its common stock for a total of $44.2 million, at an average price of $26.74 per share. The company currently has authorization to repurchase an additional $55.8 million of common stock under the September 2004 Board of Directors' authorization. Catalina Marketing expects to file its Annual Report on Form 10-K for the fiscal year ended March 31, 2005, with the Securities and Exchange Commission on or before June 14, 2005. Investors are urged to review the Form 10-K for a detailed discussion of the company's financial results and business descriptions. Webcast and Investor Conferences Scheduled The company will host a webcast on Wednesday, May 18, 2005, at 10:00 a.m. EDT to discuss its financial results. The webcast may be accessed at http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=POS&script=1010&item_id =1056457 , and will be available for replay from Wednesday, May 18, 2005 through Thursday, June 16, 2005. The Catalina 2005 investor conference will be held in Tampa, Florida on May 25 and May 26, 2005 and will address key accomplishments for fiscal year 2005 as well as the company's future growth initiatives. The audio portion of the investor conference, and the graphics presented, will be webcast live over the Internet. The webcast will be accessible at http://www.wsw.com/webcast/catalina . Dick Buell, chief executive officer, will also present at Deutsche Bank's Media/Telecom Conference at The Pierre Hotel in New York City on June 6, 2005. The presentation will be webcast and will be accessible through the Investor Relations Calendar of Events section of the company's web site at http://www.catalinamarketing.com/ . Catalina Marketing Corporation Selected Financial Data (in thousands, except per share amounts) Periods Ended March 31 Three Months Twelve Months 2005 2004 2005 2004 Revenues $111,969 $119,560 $410,062 $408,632 Direct Operating Expenses 37,446 40,676 129,449 140,401 Selling, General and Administrative 40,660 32,377 129,365 124,856 Depreciation and Amortization 10,086 11,739 42,446 45,243 Income from Operations 23,777 34,768 108,802 98,132 Other Income (Expense) 1,462 (8) 1,450 (536) Provision for Income Taxes 9,262 11,022 41,656 37,199 Income from Continuing Operations 15,977 23,738 68,596 60,397 Gain (Loss) from Discontinued Operations (270) (32,514) (4,272) (78,900) Gain (Loss) from Disposition (431) -- 1,128 -- Income (Loss) from Discontinued Operations (701) (32,514) (3,144) (78,900) Cumulative Effect of Change in Accounting -- -- -- (770) Net Income (Loss) $15,276 $(8,776) $65,452 $(19,273) Earnings Per Share, Basic: Earnings Per Share from Continuing Operations $0.30 $0.44 $1.31 $1.15 Income (Loss) from Discontinued Operations $(0.01) $(0.61) $(0.06) $(1.50) Cumulative Effect of Change in Accounting $-- $-- $-- $(0.02) Net Income (Loss) Per Common Share $0.29 $(0.17) $1.25 $(0.37) Weighted Average Shares Outstanding 51,740 52,229 52,167 52,304 Earnings Per Share, Diluted: Earnings Per Share from Continuing Operations $0.30 $0.44 $1.31 $1.15 Income (Loss) from Discontinued Operations $(0.01) $(0.61) $(0.06) $(1.50) Cumulative Effect of Change in Accounting $-- $-- $-- $(0.02) Net Income (Loss) Per Common Share $0.29 $(0.17) $1.25 $(0.37) Weighted Average Shares Outstanding 52,180 52,264 52,356 52,324 Catalina Marketing Corporation Selected Other Data (in thousands, except store data) March 31 March 31 2005 2004 Balance Sheet and Cash Flow (in thousands): Cash $116,191 $72,704 Debt $64,623 $66,924 Stockholders' Equity $196,374 $184,662 Cash Flows from Operating Activities Quarter / YTD $46,230 / $117,991 $51,838 / $138,133 Capital Expenditures Quarter / YTD $9,594 / $22,527 $4,827 / $26,427 Catalina Marketing Services: Number of Stores at Quarter End 17,609 17,604 Net Stores (Deinstalled) Installed During Quarter / YTD (103) / 5 22 / 106 Promotions Printed During Quarter / YTD (in millions) 881 / 3,279 878 / 3,118 Weekly Shopper Reach at Quarter End (in millions) 218 209 Catalina Health Resource: Number of Stores at Quarter End 12,423 11,929 Net Stores Installed (Deinstalled) During Quarter / YTD 43 / 494 (3,884) / (5,898) Catalina Marketing International: Number of Stores at Quarter End 5,907 5,545 Net Stores Installed During Quarter / YTD 166 / 362 287 / 1028 Promotions Printed During Quarter / YTD (in millions) 248 / 851 230 / 757 Weekly Shopper Reach at Quarter End (in millions) 66 65 Based in St. Petersburg, FL, Catalina Marketing Corporation ( http://www.catalinamarketing.com/ ) was founded 20 years ago based on the premise that targeting communications based on actual purchase behavior would generate more effective consumer response. Today, Catalina Marketing combines unparalleled insight into consumer behavior with dynamic consumer access. This combination of insight and access provides marketers with the ability to execute behavior-based marketing programs, ensuring that the right consumer receives the right message at exactly the right time. Catalina Marketing offers an array of behavior-based promotional messaging, loyalty programs and direct-to-patient information. Personally identifiable data that may be collected from the company's targeted marketing programs, as well as its research programs, are never sold or given to any outside party without the express permission of the consumer. Certain statements in the preceding paragraphs are forward looking, and actual results may differ materially. Statements not based on historic facts involve risks and uncertainties, including, but not limited to, the changing market for promotional activities, especially as it relates to policies and programs of packaged goods and pharmaceutical manufacturers and retailers, government and regulatory statutes, rules, regulations and policies, the effect of economic and competitive conditions and seasonal variations, actual promotional activities and programs with the company's customers, the pace of installation of the company's store network, the success of new services and businesses and the pace of their implementation, the company's ability to maintain favorable client relationships, the outcome and impact of an ongoing SEC investigation into certain of the company's prior fiscal years, and the outcome and impact of the pending shareholder class action and derivative lawsuits. DATASOURCE: Catalina Marketing Corporation CONTACT: Investors, Rick Frier, Executive Vice President, Finance, +1-727-579-5147, or Joanne Freiberger, Vice President, Finance, +1-727-579-5116; or Media, Michelle Bauer, Executive Director, Marketing Communications, +1-727-579-5129, all of Catalina Marketing Corporation Web site: http://www.catalinamarketing.com/

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