POS Catalina Marketing Corp

Catalina Marketing Corporation (NYSE:POS) today reported financial results for its third quarter and first nine months ended December 31, 2005. For the three months ended December 31, 2005, consolidated revenues were $97.2 million, compared with revenues of $100.3 million in the same period of fiscal 2005. Consolidated net income for the third quarter was $14.2 million, or $0.29 per diluted share, compared with net income of $19.0 million, or $0.36 per diluted share, in the third quarter of fiscal 2005. Third quarter results in fiscal 2005 included $1.4 million in losses from discontinued operations due principally to losses from the disposal of non-core businesses. The company reported consolidated income from continuing operations for the quarter ended December 31, 2005 of $14.2 million, or $0.29 per diluted share, compared with $20.4 million, or $0.39 per diluted share, for the quarter ended December 31, 2004. During the 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 the third quarter of fiscal 2005. Nine-Month Consolidated Results For the nine-month period ended December 31, 2005, consolidated revenues were $291.8 million, compared with revenues of $298.1 million in the comparable period of fiscal 2005. Consolidated net income for the first nine months of fiscal 2006 was $47.6 million, or $0.96 per diluted share, compared with net income of $50.2 million, or $0.96 per diluted share, in fiscal 2005. Results in the first nine months of fiscal 2005 included a loss from discontinued operations of $2.4 million related to the operation and divestiture of non-core businesses plus the positive impact on income from the reversal of $4.4 million of sales tax reserves. The company reported consolidated income from continuing operations for the nine months ended December 31, 2005 of $47.6 million, or $0.96 per diluted share, compared with $52.6 million, or $1.01 per diluted share, for the nine months ended December 31, 2004. "Third quarter revenues were affected by market conditions as Catalina Marketing Services experienced specific challenges due to reduced spending by certain manufacturer clients at the end of their calendar year," chief executive officer, Dick Buell, commented. "The third quarter decrease in CMS' revenues was partially offset by another quarter of solid revenue growth in both Catalina Marketing International and Catalina Health Resource. Based on our recent strong manufacturer contract renewals, coupled with new, exceptional retailer network renewals, we expect CMS to experience improvement in the fourth quarter of this fiscal year." Buell continued, "As we begin preparing for fiscal year 2007, capital and resource investments will increase to strengthen the foundation for Catalina's important long-term business growth. The organization is focused on the additional investments which will affect our income statement and balance sheet as we roll out our recently announced full color and full graphics printing capabilities. While the overall expected return on this project is financially attractive, we believe that the timing of these strategic investments will precede the related anticipated revenue growth and will impact operating income next fiscal year. We remain both committed to and focused on our long-term revenue and profit growth objectives through the introduction of new products and services, entry into new channels as evidenced by the ongoing installation of Walgreens and Kmart stores, and expansion into new geographies." -0- *T Summary of Segment Results Three Months Ended Three Months Ended December 31, 2005 December 31, 2004 (In millions) Revenues Income/(Loss) Revenues Income/(Loss) Catalina Marketing Services $58.0 $14.3 $65.5 $18.2 Catalina Health Resource 21.1 3.1 19.8 3.7 Catalina Marketing International 18.1 1.9 15.0 1.6 Corp / Eliminations 0.0 (5.1) 0.0 (3.1) -------- ------------- -------- ------------- From Continuing Operations $97.2 $14.2 $100.3 $20.4 -------- ------------- -------- ------------- Discontinued Operations $ - $ - $ - $(1.4) -------- ------------- -------- ------------- Consolidated $97.2 $14.2 $100.3 $19.0 ======== ============= ======== ============= Nine Months Ended Nine Months Ended December 31, 2005 December 31, 2004 (In millions) Revenues Income/(Loss) Revenues Income/(Loss) Catalina Marketing Services $176.3 $45.1 $195.0 $53.2 Catalina Health Resource 62.5 10.9 56.9 7.5 Catalina Marketing International 53.0 5.0 46.1 4.5 Corp / Eliminations 0.0 (13.4) 0.1 (12.6) -------- ------------- -------- ------------- From Continuing Operations $291.8 $47.6 $298.1 $52.6 -------- ------------- -------- ------------- Discontinued Operations $ - $ - $ - $(2.4) -------- ------------- -------- ------------- Consolidated $291.8 $47.6 $298.1 $50.2 ======== ============= ======== ============= Three Months Ended December 31, 2005 (In millions) Percent Change Revenues Income/(Loss) Catalina Marketing Services (11.5%) (21.7%) Catalina Health Resource 6.5% (15.7%) Catalina Marketing International 21.0% 17.6% Corp / Eliminations (100.0%) (63.4%) -------- ------------- From Continuing Operations (3.1%) (30.4%) -------- ------------- Discontinued Operations - 100.0% -------- ------------- Consolidated (3.1%) (25.2%) ======== ============= Nine Months Ended December 31, 2005 (In millions) Percent Change Revenues Income/(Loss) Catalina Marketing Services (9.6%) (15.3%) Catalina Health Resource 10.0% 44.2% Catalina Marketing International 15.0% 11.7% Corp / Eliminations (93.6%) (5.9%) -------- ------------- From Continuing Operations (2.1%) (9.5%) -------- ------------- Discontinued Operations - 100.0% -------- ------------- Consolidated (2.1%) (5.1%) ======== ============= *T Stock Repurchases During the third quarter, the company repurchased 192,400 shares of its common stock for a total of $5.1 million, at an average price of $26.33 per share. Since the beginning of the fiscal year, the company has purchased 3,057,600 shares of its common stock for a total of $75.2 million, at an average price of $24.59 per share. The company currently has authority to repurchase an additional $80.6 million of common stock under the August 2005 Board of Directors authorization. Webcast and Investor Conferences Scheduled The company will host a webcast on Thursday, January 26, 2006 at 10:00 a.m. EST to discuss its financial results for its fiscal year 2006 third quarter. The webcast may be accessed at http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=POS&script=1000 and will be available for replay from Thursday, January 26, 2006 through Monday, February 27, 2006. Dick Buell, chief executive officer, will present at the Bear Stearns Investment Conference in Palm Beach, Florida on Monday, February 27, 2006. Mr. Buell will also present at Baird's 2006 Business Solutions Conference in Boston on Wednesday, March 1, 2006. The presentations will be webcast and will be accessible through the Investor Relations Calendar of Events section of the company's web site (http://www.catalinamarketing.com). -0- *T Catalina Marketing Corporation Selected Operating Data (in thousands, except per share amounts) Periods Ended December 31 Three Months Nine Months 2005 2004 2005 2004 Revenues $97,223 $100,319 $291,833 $298,093 Direct Operating Expenses 33,643 26,200 96,646 92,003 Selling, General and Administrative 31,853 31,365 91,276 88,705 Depreciation and Amortization 8,453 10,202 26,680 32,360 -------- --------- --------- --------- Income from Operations 23,274 32,552 77,231 85,025 Other Income (Expense) (383) 255 (451) (12) Provision for Income Taxes 8,698 12,404 29,176 32,394 -------- --------- --------- --------- Income from Continuing Operations 14,193 20,403 47,604 52,619 Gain (Loss) from Discontinued Operations - 292 - (4,002) Gain (Loss) from Disposition - (1,724) - 1,559 -------- --------- --------- --------- Income (Loss) from Discontinued Operations - (1,432) - (2,443) -------- --------- --------- --------- Net Income $14,193 $18,971 $47,604 $50,176 ======== ========= ========= ========= Earnings Per Share, Basic: Earnings Per Share from Continuing Operations $0.30 $0.39 $0.97 $1.01 Income (Loss) from Discontinued Operations $ - $(0.03) $ - $(0.05) -------- --------- --------- --------- Net Income Per Common Share $0.30 $0.36 $0.97 $0.96 Weighted Average Shares Outstanding 48,021 52,300 49,088 52,266 Earnings Per Share, Diluted: Earnings Per Share from Continuing Operations $0.29 $0.39 $0.96 $1.01 Income (Loss) from Discontinued Operations $ - $(0.03) $ - $(0.05) -------- --------- --------- --------- Net Income Per Common Share $0.29 $0.36 $0.96 $0.96 Weighted Average Shares Outstanding 48,428 52,720 49,419 52,334 *T -0- *T Catalina Marketing Corporation Selected Other Data (in thousands, except store data) December 31, December 31, 2005 2004 Selected Balance Sheet and Cash Flow Data (in thousands): Cash $32,556 $119,437 Debt 48,001 62,197 Stockholders' Equity 156,551 222,114 Cash Flows from Operating Activities Quarter / YTD 30,263 / 62,025 29,291 / 71,761 Capital Expenditures Quarter / YTD 14,902 / 39,496 6,758 / 12,933 Catalina Marketing Services: Number of Stores at Quarter End 17,788 17,712 Net Stores (Deinstalled) Installed During Quarter / YTD 1,095 / 179 68 / 108 Promotions Printed During Quarter / YTD (in millions) 712 / 2,169 813 / 2,403 Weekly Shopper Reach at Quarter End (in millions) 226 221 Catalina Health Resource: Number of Stores at Quarter End 12,621 12,380 Net Stores Installed (Deinstalled) During Quarter / YTD 217 / 198 299 / 451 Catalina Marketing International: Number of Stores at Quarter End 6,962 5,741 Net Stores Installed During Quarter / YTD 263 / 1,055 41 / 196 Promotions Printed During Quarter / YTD (in millions) 286 / 774 204 / 616 Weekly Shopper Reach at Quarter End (in millions) 84 62 *T About Catalina Marketing Corporation Based in St. Petersburg, Fla., Catalina Marketing Corporation (http://www.catalinamarketing.com) was founded over 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 provided 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 consumer packaged goods and pharmaceutical manufacturers and retailers and competition to provide marketing services to these customers, mergers and consolidations in the consumer packaged goods and retailer industries, federal, state and international government and regulatory statutes, rules, regulations and policies including privacy and labeling, the effect of economic conditions and seasonal variations, actual promotional activities and programs with the company's customers, the pace, cost and challenges associated with the installation of the company's store network and changes in the status of contractual relations with retailers including as it relates to the company's installation of color printers and related new technologies, the success of new services and businesses and the pace of their implementation including the entry into new retail channels, the company's ability to maintain favorable relationships with its clients and retailers, 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.