Catalina Marketing Reports Financial Results for First Quarter Fiscal 2005

Catalina Marketing Reports Financial Results for First Quarter
Fiscal 2005
Quarterly Report on Form 10-Q Filed Today with SEC 


ST. PETERSBURG, Fla., Aug. 16  /PRNewswire-FirstCall/ -- Catalina Marketing
Corporation (NYSE:POS) today reported that the company has filed its Quarterly
Report on Form 10-Q for the quarter ended June 30, 2004 with the Securities and
Exchange Commission (SEC).  Investors are urged to review the 10-Q for a
detailed discussion of the financial results and business descriptions.

For the three-month period ended June 30, 2004, consolidated revenues grew 3.4%
to $105.6 million, compared with revenues of $102.2 million reported for the
comparable prior year period.  The company had consolidated net income of $10.9
million, or $0.21 per diluted share, for the first quarter of fiscal 2005
compared with net income of $4.3 million, or $0.08 per diluted share, for the
first quarter of fiscal 2004.  On a pro forma non-GAAP basis (to exclude the
results of businesses being planned for disposition, as described further
below), consolidated revenues increased 15.1% to $95.4 million during the
quarter ended June 30, 2004 from $82.9 million during the quarter ended June
30, 2003.  Pro forma non-GAAP consolidated net income was $13.4 million for the
three months ended June 30, 2004, as compared with $5.6 million of net income
for the comparable prior year period.

Pro Forma Non-GAAP Adjustments

The pro forma non-GAAP financial information herein includes the results of the
company's ongoing business operations and accordingly, excludes the financial
results of the business units targeted for divestiture by the company including
Direct Marketing Services (DMS), Japan Billboard and Catalina Marketing
Research Solutions (CMRS).  Investors are urged to review the 10-Q for a
detailed discussion of the financial results and business descriptions.

                           Three Months Ended  Three Months Ended
                              June 30, 2004      June 30, 2003

                                        Net                Net
   (In thousands)            Revenues  Income   Revenues  Income

   Catalina Marketing
   Services                  $63,402  $16,133   $59,599  $12,836
   Catalina Health Resource   17,866    1,074    14,466   (1,997)
   International              14,246      801     9,111   (1,146)
   Corp / Elim                  (112)  (4,645)     (311)  (4,083)
     Total Strategic         $95,402  $13,363   $82,865   $5,610

   DMS                        $5,938  $(1,819)  $11,812    $(483)
   Japan Billboard             2,921     (181)    3,768   (1,138)
   CMRS                        1,382     (437)    3,767      274
     Total Non-Strategic     $10,241  $(2,437)  $19,347  $(1,347)

   Consolidated             $105,643  $10,926  $102,212   $4,263




Dick Buell, chief executive officer stated, "The results achieved in the first
quarter were encouraging, with all business segments outperforming the prior
year, except for those non-strategic units that we have targeted for
divestiture.  We believe these results demonstrate that the company has taken
the necessary steps to develop a foundation for future growth."

Mr. Buell continued, "Looking forward to the balance of fiscal year 2005, it is
important to emphasize that Catalina's management is committed to developing
and implementing initiatives that will grow revenues and profitability in the
long term.  Therefore, in the future, the company does not presently intend to
provide guidance as to revenues or earnings expectations.  However, having been
unable to publicly report results on a regular basis during the past year,
Catalina recognizes the importance of providing directional guidance regarding
the current fiscal year.  To establish a baseline for future comparison, we
will refer to numbers that have been adjusted to reflect the planned
divestitures of Japan Billboard, DMS and CMRS, as well as the removal of the
one-time deferral of revenues resulting from the prior years' revenue
recognition adjustments to Catalina Health Resource.  With those adjustments,
fiscal year 2004 diluted earnings per share was $1.06 and fiscal year 2003
diluted earnings per share was $0.98. Operating income for adjusted fiscal year
2004 reached $89 million and fiscal year 2003 netted out at $90 million.  In
fiscal year 2004, adjusted revenues rose to $397 million from revenues of $386
million in fiscal year 2003."

Mr. Buell concluded, "Using the adjusted baseline as a point of comparison,
fiscal year 2005 is projected to be a solid-performing year with flat revenues
and comparable profitability."

Webcast Scheduled

The company also announced that it will host a webcast on Monday, August 16,
2004; at 10:00 a.m. EDT to discuss its financial results as filed in its first
quarter 2005 report on Form 10-Q.  The webcast may be accessed at
http://www.corporate-/
ir.net/ireye/ir_site.zhtml?ticker=POS&script=1010&item_id=926086, and will be
available for replay from Monday, August 16, 2004 through Thursday, September
16, 2004.

                        Catalina Marketing Corporation
                           Selected Financial Data
                   (in thousands, except per share amounts)

                                       Three Months Ended Three Months Ended
                                            June 30            June 30
                                        2004      2004      2003      2003
                                        GAAP   Pro Forma    GAAP   Pro Forma

  Revenues                           $105,643   $95,402  $102,212   $82,865

  Direct Operating Expenses            41,678    33,788    46,805    32,812

  Selling, General and Administrative  31,771    28,824    35,619    30,241

  Impairment Charge                     1,609         -         -         -

  Depreciation and Amortization        12,198    11,552    11,804    11,159

  Income from Operations               18,387    21,238     7,984     8,653

  Other (Income) Expense                  420       393      (198)     (250)

  Provision for Income Taxes            7,041     7,482     3,149     3,293

  Net Income before accounting change  10,926    13,363     5,033     5,610
  Cumulative effect of acctg change         -         -      (770)        -
  Net Income after acctg change       $10,926   $13,363    $4,263    $5,610


  Basic:

  Earnings Per Share                    $0.21     $0.26     $0.08     $0.11

  Weighted Average Shares Outstanding  52,227    52,227    52,536    52,536

  Diluted:

  Earnings Per Share                    $0.21     $0.26     $0.08     $0.11

  Weighted Average Shares Outstanding  52,245    52,245    52,569    52,569



                       Catalina Marketing Corporation
                             Selected Other Data
                  (in thousands, except per share amounts)

                                                           June 30
                                                   2004              2003
    Balance Sheet and Cash Flow (in thousands):

  Cash                                           $71,467            $8,886

  Stockholders' Equity                          $194,668          $207,240

  Cash Flows from Operating Activities            $1,866           $17,279


    U.S. Core Domestic Business:

  Number of Stores at Quarter End                 17,607            17,569

  Net Stores Installed During Quarter                  3                71

  Promotions Printed During Quarter (in
   millions)                                         738               644

  Weekly Shopper Reach at Quarter End
   (in millions)                                     220               215

    International Business:

  Number of Stores at Quarter End                  5,598             4,517

  Net Stores Installed During Quarter                 53               448

  Promotions Printed During Quarter (in
   millions)                                         187               137

  Weekly Shopper Reach at Quarter End
   (in millions)                                      61                48


                        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 June 30, 2004         GAAP    Adjustments   Pro Forma

  Revenues                                 $105,643     $10,241     $95,402

  Direct Operating Expenses                  41,678       7,890      33,788

  Selling, General and Administrative        31,771       2,947      28,824

  Impairment Charge                           1,609       1,609           -

  Depreciation and Amortization              12,198         646      11,552

  Income from Operations                     18,387      (2,851)     21,238

  Other (Income) Expense                        420          27         393

  Provision for Income Taxes                  7,041        (441)      7,482

  Net Income (Loss)                         $10,926     $(2,437)    $13,363

  Earnings per Share, Basic
   (52,227 shares)                            $0.21      $(0.05)      $0.26

  Earnings per Share, Diluted
   (52,245 shares)                            $0.21      $(0.05)      $0.26

   (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 quarter.  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 June 30, 2003         GAAP     Adjustments  Pro Forma

  Revenues                                 $102,212     $19,347     $82,865

  Direct Operating Expenses                  46,805      13,993      32,812

  Selling, General and Administrative        35,619       5,378      30,241

  Depreciation and Amortization              11,804         645      11,159

  Income from Operations                      7,984        (669)      8,653

  Other (Income) Expense                       (198)         52        (250)

  Provision for Income Taxes                  3,149        (144)      3,293

  Net Income (Loss) before accounting
   change                                     5,033        (577)      5,610

  Cumulative effect of acctg change            (770)       (770)          -

  Net Income (Loss) after acctg change       $4,263     $(1,347)     $5,610

  Earnings per Share, Basic
   (52,536 shares)                            $0.08      $(0.03)      $0.11
  Earnings per Share, Diluted
   (52,569 shares)                            $0.08      $(0.03)      $0.11

   (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 quarter.  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 Adjusted Basis (1)
                  (in thousands, except per share amounts)


                                                Fiscal Year Ended March 31
  Consolidated Revenues:                           2004              2003

  GAAP                                          $472,950          $470,709

  Adj. to reconcile GAAP to
   non-GAAP Pro Forma                            (64,318)          (86,861)
  CHR revenue adjustment                         (11,558)            1,668

  Non-GAAP Pro Forma                            $397,074          $385,516


  Consolidated Operating Income:                   2004              2003

  GAAP                                           $12,726           $92,386

  Adj. to reconcile GAAP to
   non-GAAP Pro Forma                             88,091            (4,255)
  CHR revenue adjustment                         (11,558)            1,668

  Non-GAAP Pro Forma                             $89,259           $89,799


  Consolidated Diluted EPS:                         2004              2003

  GAAP                                            $(0.37)            $1.00

  Adj. to reconcile GAAP to
   non-GAAP Pro Forma                               1.56             (0.04)
  CHR revenue adjustment                           (0.13)             0.02

  Non-GAAP Pro Forma                               $1.06             $0.98

  (1) The non-GAAP pro forma net income results are a supplement to the
   financial data 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, as
   well as the one-time deferral of CHR revenues resulting from prior years'
   revenue recognition adjustments.  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.



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 timing of the completion of the company's future SEC
filings, 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. 

http://www.corporate-/

DATASOURCE: Catalina Marketing Corporation



CONTACT:  Investors, Christopher W. Wolf, Chief Financial Officer,

[phone], or Joanne Freiberger, Vice President, Finance,

[phone], or Media, Susan Gear, Executive Director, Marketing,

[phone], all of Catalina Marketing Corporation



Web site:  http://www.catalinamarketing.com/ 

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