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.
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