POS Catalina Marketing Corp

Catalina Marketing Reports Financial Results for Second Quarter of Fiscal 2005 ST. PETERSBURG, Fla., Nov. 4 /PRNewswire-FirstCall/ -- Catalina Marketing Corporation (NYSE:POS) today reported financial results for its second fiscal quarter and first six months ended September 30, 2004. For the three months ended September 30, 2004, consolidated revenues were $103.7 million, compared with revenues of $107.7 million in the comparable period last year. The company reported consolidated net income of $20.3 million, or $0.39 per diluted share, for the second quarter of fiscal 2005, compared with a net loss of $11.1 million, or a loss of $0.21 per diluted share, for the second quarter of fiscal 2004. On a pro forma non-GAAP basis (which excludes the results of businesses that have either been disposed of or the disposition of which is planned, as well as the removal of the one-time deferral of revenues resulting from the prior years' revenue recognition adjustments to Catalina Health Resource (CHR), as described further below), consolidated revenues were $102.4 million for the three months ended September 30, 2004, compared with $100.3 million of revenues for the same period last year. Pro forma non-GAAP consolidated net income was $18.9 million, or $0.36 per diluted share, for the three months ended September 30, 2004, compared with $14.2 million of net income, or $0.27 per diluted share, for the same period last year. For the six months ended September 30, 2004, consolidated revenues were $200.5 million, compared with revenues of $194.3 million in the comparable period last year. The company reported consolidated net income of $31.2 million, or $0.60 per diluted share, for the first half of fiscal 2005, compared with a net loss of $6.8 million, or a loss of $0.13 per diluted share, for the first half of fiscal 2004. On a pro forma non-GAAP basis, consolidated revenues were $197.8 million for the six months ended September 30, 2004, compared with $182.1 million of revenues for the same period last year. Pro forma non-GAAP consolidated net income was $32.2 million, or $0.62 per diluted share, for the six months ended September 30, 2004, compared with $18.7 million of net income, or $0.36 per diluted share, for the same period last year. Dick Buell, Catalina president and chief executive officer stated, "The results achieved in the second quarter were encouraging, and they reinforce our belief that our strategy to focus on proprietary applications at the point of sale is key to our long-term growth and vitality. Our plans have been formulated and as reflected in the accomplishments achieved to date, we believe these results demonstrate that the company has taken the necessary steps to develop a foundation for the future." Pro Forma Non-GAAP Adjustments This pro forma non-GAAP financial information includes the results of the company's ongoing business operations and, accordingly, excludes (i) the effect of CHR revenues recognized in fiscal 2004 that had been deferred from prior fiscal years, (ii) the financial results of the business units that have been divested, and (iii) the financial results of the remaining business unit targeted for divestiture by the company. In the second quarter of fiscal 2005, Catalina Marketing sold its Japan Billboard business and its Direct Marketing Services unit and has reported their aggregated results as 'Discontinued Operations' on the income statement. The company has also previously announced its intention to divest Catalina Marketing Research Solutions (CMRS). Investors are urged to review the 10-Q for a detailed discussion of the financial results and business descriptions. Summary of Segment Results Three Months Ended Three Months Ended September 30, 2004 September 30, 2003 (In thousands) Revenues Income/Loss Revenues Income/Loss Catalina Marketing Services $66,070 $18,896 $71,427 $18,870 Catalina Health Resource 19,181 2,774 15,153 (146) International 16,891 2,073 13,633 1,083 Corp / Eliminations 230 (4,890) 114 (5,641) Total Pro Forma Non-GAAP $102,372 $18,853 $100,327 $14,166 Discontinued Operations $-- $3,543 $-- $(27,648) CMRS 1,345 (2,117) 3,354 92 Catalina Health Resource Adj. -- -- 3,995 2,279 Total Pro Forma Adjustment $1,345 $1,426 $7,349 $(25,277) Consolidated GAAP $103,717 $20,279 $107,676 $(11,111) Six Months Ended Six Months Ended September 30, 2004 September 30, 2003 (In thousands) Revenues Income/Loss Revenues Income/Loss Catalina Marketing Services $129,468 $35,029 $131,026 $31,706 Catalina Health Resource 37,046 3,848 28,572 (2,810) International 31,138 2,874 22,744 (63) Corp / Eliminations 122 (9,535) (197) (10,093) Total Pro Forma Non-GAAP $197,774 $32,216 $182,145 $18,740 Discontinued Operations $-- $1,543 $-- $(28,131) Cumulative Effect of Accounting Change -- -- -- (770) CMRS 2,727 (2,554) 7,121 367 Catalina Health Resource Adj. -- -- 5,042 2,946 Total Pro Forma Adjustment $2,727 $(1,011) $12,163 $(25,588) Consolidated GAAP $200,501 $31,205 $194,308 $(6,848) Review of Operations The company provided the following review and highlights of the performance of Catalina Marketing's continuing business segments: * Catalina Marketing Services -- CMS revenues were $66.1 million in the quarter ended September 30, 2004, compared with $71.4 million in the same period last year. Net income for the second fiscal quarter was $18.9 million, or $0.36 per diluted share, in both fiscal 2005 and fiscal 2004. For the first six months of fiscal 2005, CMS revenues were $129.5 million and net income was $35.0 million, compared with revenues and net income of $131.0 million and $31.7 million, respectively, in the first six months of fiscal 2004. Earnings were $0.67 and $0.61 per diluted share in the six months ended September 30, 2004 and 2003, respectively. * Catalina Health Resources -- CHR revenues were $19.2 million and net income was $2.8 million, or $0.05 per diluted share, for the quarter ended September 30, 2004, compared with revenues of $19.1 million and net income of $2.1 million, or $0.04 per diluted share, for the same period last year. On a pro forma non-GAAP basis, CHR revenues grew 26.6% to $19.2 million in the second quarter of the current fiscal year, compared with $15.2 million in the same period last year and pro forma non-GAAP net income was $2.8 million, or $0.05 per diluted share, compared with a loss of $0.1 million for the comparable prior year period. For the first six months of fiscal 2005, CHR revenues were $37.0 million resulting in net income of $3.8 million, or $0.07 per diluted share, compared with $33.6 million in revenues and $0.1 million in net income for the first six months of fiscal 2004. On a pro forma non-GAAP basis, fiscal year 2004 year-to-date revenues were $28.6 million with a net loss of $2.8 million, or a net loss of $0.05 per diluted share. * Catalina Marketing International -- CMI revenues increased 23.9% to $16.9 million in the quarter ended September 30, 2004, compared with $13.6 million in the same period last year. Net income for the quarter ended September 30, 2004 was $2.1 million, or $0.04 per diluted share, compared with $1.1 million, or $0.02 per diluted share, for the comparable prior year period. For the first six months of fiscal 2005, CMI revenues were $31.1 million resulting in net income of $2.9 million, or $0.05 per diluted share, compared with revenues of $22.7 million and a net loss of $0.1 million for the six months ended September 30, 2003. * Catalina Marketing Research Solutions -- CMRS second quarter revenues were $1.3 million compared with $3.4 million in the second quarter of fiscal 2004. During the second quarter of fiscal 2005, the company recorded an additional impairment expense related to goodwill and other tangible assets of $3.0 million. CMRS incurred a second quarter net loss of $2.1 million, or $0.04 per diluted share, compared with net income of $0.1 million in the comparable prior year period. For the six months ended September 30, 2004, CMRS revenues were $2.7 million compared with $7.1 million in fiscal 2004. The six-month net loss for CMRS totaled $2.6 million, or $0.05 per diluted share, compared with net income of $0.4 million, or $0.01 per diluted share, in the first six months of fiscal 2004. The company's disposition of its Direct Marketing Services unit and its Japan Billboard business during the second quarter of fiscal 2005 resulted in a net gain of $3.5 million from the operations and disposition of these assets. The aggregated results of these business units are reported in 'Discontinued Operations' on the income statement. During the second quarter of fiscal year 2005, Catalina's board of directors authorized $100 million of funds to be available for the repurchase of the company's common stock. This authorization replaced the $44 million unused portion of the $100 million repurchase program authorized by the board in July 2002. As of September 30, 2004, the company had not yet repurchased any of its stock during the current fiscal year. Mr. Buell said, "We are pleased with the progress made in the second quarter. Several key steps were taken toward our objectives, and we are now focusing on the Catalina businesses in which we hold strategic advantages that will serve to generate long-term growth and profitability." Catalina Marketing said it plans to file its Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, with the Securities and Exchange Commission next week. Investors are urged to review the 10-Q for a detailed discussion of the company's financial results and business descriptions. Webcast Scheduled The company also announced that it will host a webcast on Thursday, November 4, 2004; at 10:00 a.m. EST 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=946944 and will be available for replay from November 4, 2004, through Monday, December 6, 2004. Catalina Marketing Corporation Selected Financial Data (in thousands, except per share amounts) GAAP Periods Ended September 30 Three Months Six Months 2004 2003 2004 2003 Revenues $103,717 $107,676 $200,501 $194,308 Direct Operating Expenses 32,713 35,991 67,600 70,692 Selling, General and Administrative 29,331 31,298 59,086 63,374 Impairment Charge 3,298 -- 3,298 -- Depreciation and Amortization 10,698 11,174 22,337 22,533 Income from Operations 27,677 29,213 48,180 37,709 Other (Income) Expense (126) 211 267 (38) Provision for Income Taxes 11,067 12,465 18,251 15,694 Income from Continuing Operations 16,736 16,537 29,662 22,053 Gain (Loss) from Discontinued Operations 260 (27,648) (1,740) (28,131) Gain (Loss) from Disposition 3,283 -- 3,283 -- Income (Loss) from Discontinued Operations 3,543 (27,648) 1,543 (28,131) Cumulative effect of acctg change -- -- -- (770) Net Income (Loss) $20,279 $(11,111) $31,205 $(6,848) Earnings Per Share, Basic: Earnings Per Share from Continuing Operations $0.32 $0.32 $0.57 $0.43 Income (Loss) from Discontinued Operations $0.07 $(0.53) $0.03 $(0.54) Cumulative Effect of Accounting Change $ -- $-- $-- $(0.02) Net Income (Loss) Per Common Share $0.39 $(0.21) $0.60 $(0.13) Weighted Average Shares Outstanding 52,231 52,217 52,233 52,375 Earnings Per Share, Diluted: Earnings Per Share from Continuing Operations $0.32 $0.32 $0.57 $0.43 Income (Loss) from Discontinued Operations $0.07 $(0.53) $0.03 $(0.54) Cumulative Effect of Accounting Change $ -- $-- $-- $(0.02) Net Income (Loss) Per Common Share $0.39 $(0.21) $0.60 $(0.13) Weighted Average Shares Outstanding 52,311 52,217 52,269 52,375 Catalina Marketing Corporation Selected Financial Data (in thousands, except per share amounts) Pro Forma Non GAAP Periods Ended September 30 Three Months Six Months 2004 2003 2004 2003 Revenues $102,372 $100,327 $197,774 $182,145 Direct Operating Expenses 31,727 34,270 65,515 67,201 Selling, General and Administrative 28,516 29,931 57,339 60,576 Impairment Charge 288 -- 288 -- Depreciation and Amortization 10,606 11,066 22,158 22,321 Income from Operations 31,235 25,060 52,474 32,047 Other (Income) Expense (126) 211 268 (38) Provision for Income Taxes 12,508 10,683 19,990 13,345 Income from Continuing Operations 18,853 14,166 32,216 18,740 Gain (Loss) from Discontinued Operations -- -- -- -- Gain (Loss) from Disposition -- -- -- -- Income (Loss) from Discontinued Operations -- -- -- -- Net Income (Loss) $18,853 $14,166 $32,216 $18,740 Earnings Per Share, Basic: Earnings Per Share from Continuing Operations $0.36 $0.27 $0.62 $0.36 Income (Loss) from Discontinued Operations $-- $-- $-- $-- Net Income (Loss) Per Common Share $0.36 $0.27 $0.62 $0.36 Weighted Average Shares Outstanding 52,231 52,217 52,233 52,375 Earnings Per Share, Diluted: Earnings Per Share from Continuing Operations $0.36 $0.27 $0.62 $0.36 Income (Loss) from Discontinued Operations $-- $-- $-- $-- Net Income (Loss) Per Common Share $0.36 $0.27 $0.62 $0.36 Weighted Average Shares Outstanding 52,311 52,217 52,269 52,375 Catalina Marketing Corporation Selected Other Data (in thousands, except store data) September 30 September 30 2004 2003 GAAP GAAP Balance Sheet and Cash Flow (in thousands): Cash $97,345 $9,165 Stockholders' Equity $200,126 $197,113 Cash Flows from Operating Activities Qtr / YTD $40,603/$42,469 $37,162/$54,441 Catalina Marketing Services: Number of Stores at Quarter End 17,644 17,581 Net Stores Installed During Quarter / YTD 37 / 40 12 / 83 Promotions Printed During Quarter / YTD (in millions) 846 / 1,584 813 / 1,457 Weekly Shopper Reach at Quarter End (in millions) 216 209 Catalina Health Resource: Number of Stores at Quarter End 12,081 15,338 Net Stores Installed During Quarter / YTD 72 / 152 76 / (2,489) Catalina Marketing International: Number of Stores at Quarter End 5,598 4,517 Net Stores Installed During Quarter / YTD 101 / 154 1,066 / 1,514 Promotions Printed During Quarter / YTD (in millions) 220 / 411 212 / 349 Weekly Shopper Reach at Quarter End (in millions) 63 59 Catalina Marketing Corporation Reconciliation of GAAP to Pro Forma Non-GAAP Net Income (1) (in thousands, except per share amounts) Non-GAAP Pro Forma Non-GAAP Three Months Ended September 30, 2004 GAAP Adjustments Pro Forma Revenues $103,717 $(1,345) $102,372 Direct Operating Expenses 32,713 (986) 31,727 Selling, General and Administrative 29,331 (815) 28,516 Impairment Charge 3,298 (3,010) 288 Depreciation and Amortization 10,698 (92) 10,606 Income from Operations 27,677 3,558 31,235 Other (Income) Expense (126) -- (126) Provision for Income Taxes 11,067 1,441 12,508 Income from Continuing Operations 16,736 2,117 18,853 Gain (Loss) from Discontinued Operations 260 (260) -- Gain (Loss) from Disposition 3,283 (3,283) -- Income (Loss) from Discontinued Operations 3,543 (3,543) -- Net Income (Loss) $20,279 $(1,426) $18,853 Earnings Per Share, Basic: Earnings Per Share from Continuing Operations $0.32 $0.04 $0.36 Income (Loss) from Discontinued Operations $0.07 $(0.07) $-- Net Income (Loss) Per Common Share $0.39 $(0.03) $0.36 Weighted Average Shares Outstanding 52,231 52,231 Earnings Per Share, Diluted: Earnings Per Share from Continuing Operations $0.32 $0.04 $0.36 Income (Loss) from Discontinued Operations $0.07 $(0.07) $-- Net Income (Loss) Per Common Share $0.39 $(0.03) $0.36 Weighted Average Shares Outstanding 52,311 52,311 (1) The non-GAAP pro forma net income results are a supplement to the financial data provided that is based on generally accepted accounting principles (GAAP). These non-GAAP pro forma results reflect adjustments primarily to exclude from operating results the financial statement information for business units that have been identified for divestiture or disposal and as such are not viewed by the company as part of the ongoing business. The company believes this presentation provides useful information to investors because it assists investors in better understanding the company's operations for the period. It should be emphasized, however, that these measurements are not a substitution for GAAP-based financial statements. Catalina Marketing Corporation Reconciliation of GAAP to Pro Forma Non-GAAP Net Income (1) (in thousands, except per share amounts) Non-GAAP Pro Forma Non-GAAP Six Months Ended September 30, 2004 GAAP Adjustments Pro Forma Revenues $200,501 $(2,727) $197,774 Direct Operating Expenses 67,600 (2,085) 65,515 Selling, General and Administrative 59,086 (1,747) 57,339 Impairment Charge 3,298 (3,010) 288 Depreciation and Amortization 22,337 (179) 22,158 Income from Operations 48,180 4,294 52,474 Other (Income) Expense 267 1 268 Provision for Income Taxes 18,251 1,739 19,990 Income from Continuing Operations 29,662 2,554 32,216 Gain (Loss) from Discontinued Operations (1,740) 1,740 -- Gain (Loss) from Disposition 3,283 (3,283) -- Income (Loss) from Discontinued Operations 1,543 (1,543) -- Net Income (Loss) $31,205 $1,011 $32,216 Earnings Per Share, Basic: Earnings Per Share from Continuing Operations $0.57 $0.05 $0.62 Income (Loss) from Discontinued Operations $0.03 $(0.03) $-- Net Income (Loss) Per Common Share $0.60 $0.02 $0.62 Weighted Average Shares Outstanding 52,233 52,233 Earnings Per Share, Diluted: Earnings Per Share from Continuing Operations $0.57 $0.05 $0.62 Income (Loss) from Discontinued Operations $0.03 $(0.03) $-- Net Income (Loss) Per Common Share $0.60 $0.02 $0.62 Weighted Average Shares Outstanding 52,269 52,269 (1) The non-GAAP pro forma net income results are a supplement to the financial data provided that is based on generally accepted accounting principles (GAAP). These non-GAAP pro forma results reflect adjustments primarily to exclude from operating results the financial statement information for business units that have been identified for divestiture or disposal and as such are not viewed by the company as part of the ongoing business. The company believes this presentation provides useful information to investors because it assists investors in better understanding the company's operations for the period. It should be emphasized, however, that these measurements are not a substitution for GAAP-based financial statements. Catalina Marketing Corporation Reconciliation of GAAP to Pro Forma Non-GAAP Net Income (1) (in thousands, except per share amounts) Non-GAAP Pro Forma Non-GAAP Three Months Ended September 30, 2003 GAAP Adjustments Pro Forma Revenues $107,676 $(7,349) $100,327 Direct Operating Expenses 35,991 (1,721) 34,270 Selling, General and Administrative 31,298 (1,367) 29,931 Depreciation and Amortization 11,174 (108) 11,066 Income from Operations 29,213 (4,153) 25,060 Other (Income) Expense 211 -- 211 Provision for Income Taxes 12,465 (1,782) 10,683 Income from Continuing Operations 16,537 (2,371) 14,166 Gain (Loss) from Discontinued Operations (27,648) 27,648 -- Gain (Loss) from Disposition -- -- -- Income (Loss) from Discontinued Operations (27,648) 27,648 -- Net Income (Loss) $(11,111) $25,277 $14,166 Earnings Per Share, Basic: Earnings Per Share from Continuing Operations $0.32 $(0.05) $0.27 Income (Loss) from Discontinued Operations $(0.53) $0.53 $-- Net Income (Loss) Per Common Share $(0.21) $0.48 $0.27 Weighted Average Shares Outstanding 52,217 52,217 Earnings Per Share, Diluted: Earnings Per Share from Continuing Operations $0.32 $(0.05) $0.27 Income (Loss) from Discontinued Operations $(0.53) $0.53 $-- Net Income (Loss) Per Common Share $(0.21) $0.48 $0.27 Weighted Average Shares Outstanding 52,217 52,217 (1) The non-GAAP pro forma net income results are a supplement to the financial data provided that is based on generally accepted accounting principles (GAAP). These non-GAAP pro forma results reflect adjustments primarily to exclude from operating results the financial statement information for business units that have been identified for divestiture or disposal and as such are not viewed by the company as part of the ongoing business and the removal of the 2003 one-time deferral of revenues resulting from the prior year's revenue recognition adjustments to Catalina Health Resource. The company believes this presentation provides useful information to investors because it assists investors in better understanding the company's operations for the period. It should be emphasized, however, that these measurements are not a substitution for GAAP-based financial statements. Catalina Marketing Corporation Reconciliation of GAAP to Pro Forma Non-GAAP Net Income (1) (in thousands, except per share amounts) Non-GAAP Pro Forma Non-GAAP Six Months Ended September 30, 2003 GAAP Adjustments Pro Forma Revenues $194,308 $(12,163) $182,145 Direct Operating Expenses 70,692 (3,491) 67,201 Selling, General and Administrative 63,374 (2,798) 60,576 Depreciation and Amortization 22,533 (212) 22,321 Income from Operations 37,709 (5,662) 32,047 Other (Income) Expense (38) -- (38) Provision for Income Taxes 15,694 (2,349) 13,345 Income from Continuing Operations 22,053 (3,314) 18,740 Gain (Loss) from Discontinued Operations (28,131) 28,131 -- Gain (Loss) from Disposition -- -- -- Income (Loss) from Discontinued Operations (28,131) 28,131 -- Cumulative effect of acctg change (770) 770 -- Net Income (Loss) $(6,848) $25,588 $18,740 Earnings Per Share, Basic: Earnings Per Share from Continuing Operations $0.43 $(0.07) $0.36 Income (Loss) from Discontinued Operations $(0.54) $0.54 $-- Cumulative effect of acctg change $(0.02) $0.02 $-- Net Income (Loss) Per Common Share $(0.13) $0.49 $0.36 Weighted Average Shares Outstanding 52,375 52,375 Earnings Per Share, Diluted: Earnings Per Share from Continuing Operations $0.43 $(0.07) $0.36 Income (Loss) from Discontinued Operations $(0.54) $0.54 $-- Cumulative effect of acctg change $(0.02) $0.02 $-- Net Income (Loss) Per Common Share $(0.13) $0.49 $0.36 Weighted Average Shares Outstanding 52,375 52,375 (1) The non-GAAP pro forma net income results are a supplement to the financial data provided that is based on generally accepted accounting principles (GAAP). These non-GAAP pro forma results reflect adjustments primarily to exclude from operating results the financial statement information for business units that have been identified for divestiture or disposal and as such are not viewed by the company as part of the ongoing business and the removal of the 2003 one-time deferral of revenues resulting from the prior year's revenue recognition adjustments to Catalina Health Resource. The company believes this presentation provides useful information to investors because it assists investors in better understanding the company's operations for the period. It should be emphasized, however, that these measurements are not a substitution for GAAP-based financial statements. 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: Investor: Christopher W. Wolf, Chief Financial Officer, +1-727-579-5218, or Joanne Freiberger, Vice President, Finance, +1-727-579-5116, or Media: Rachel Keener, Corporate Communications Manager, +1-727-579-5224, all of Catalina Marketing Corporation Web site: http://www.catalinamarketing.com/

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