<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1997
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ______ to _______
Commission File Number 1-11008
CATALINA MARKETING CORPORATION
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 33-0499007
- ----------------------------------- ------------------------------
(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
11300 9th Street North
St. Petersburg, Florida 33716-2329
- ----------------------------------- ------------------------------
(813) 579-5000
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
At February 9, 1998, Registrant had outstanding 18,481,675 shares of
Common Stock.
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CATALINA MARKETING CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Income
for the three month and nine month periods ended
December 31, 1997 and 1996 3
Condensed Consolidated Balance Sheets at
December 31, 1997 and March 31, 1997 4
Condensed Consolidated Statements of Cash Flows
for the nine month periods ended
December 31, 1997 and 1996 5
Notes to Condensed Consolidated
Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
</TABLE>
2
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CATALINA MARKETING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
------------------------- -------------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues $ 63,703 $ 46,344 $ 163,089 $ 126,089
Costs and Expenses:
Direct operating expenses 23,752 16,055 62,192 44,054
Selling, general and administrative 18,561 12,195 43,878 35,007
Depreciation and amortization 5,613 4,448 17,227 12,202
--------- --------- --------- ---------
Total costs and expenses 47,926 32,698 123,297 91,263
--------- --------- --------- ---------
Income From Operations 15,777 13,646 39,792 34,826
Interest Income (Expense) and Other (208) 273 (991) 846
--------- --------- --------- ---------
Income Before Income Taxes and
Minority Interest 15,569 13,919 38,801 35,672
Income Taxes (4,706) (5,607) (14,057) (14,249)
Minority Interest in losses of subsidiaries
-- -- -- 372
--------- --------- --------- ---------
Net Income $ 10,863 $ 8,312 $ 24,744 $ 21,795
========= ========= ========= =========
Diluted:
Net Income Per Common Share $ 0.57 $ 0.40 $ 1.30 $ 1.06
========= ========= ========= =========
Weighted Average Common Shares Outstanding
19,118 20,635 18,970 20,615
========= ========= ========= =========
Basic:
Net Income Per Common Share $ 0.59 $ 0.42 $ 1.35 $ 1.11
========= ========= ========= =========
Weighted Average Common Shares Outstanding
18,445 19,703 18,381 19,627
========= ========= ========= =========
</TABLE>
The accompanying Notes are an integral part of these consolidated financial
statements.
3
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CATALINA MARKETING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
December 31, March 31,
ASSETS 1997 1997
--------- ---------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 16,357 $ 13,698
Accounts receivable, net 29,379 28,367
Deferred tax asset 11,761 7,467
Prepaid expenses and other current assets 12,895 12,217
--------- ---------
Total current assets 70,392 61,749
--------- ---------
Property and Equipment:
Property and equipment 150,691 142,163
Accumulated depreciation and amortization (85,191) (72,585)
--------- ---------
Property and equipment, net 65,500 69,578
--------- ---------
Purchased intangible assets, net 18,604 18,805
Other assets 4,223 4,564
--------- ---------
Total Assets $ 158,719 $ 154,696
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 9,494 $ 12,674
Accrued expenses 30,595 23,361
Deferred revenue 19,737 11,611
Short term borrowings 5,092 5,820
--------- ---------
Total current liabilities 64,918 53,466
--------- ---------
Deferred tax liability 4,744 3,423
Long term debt 616 869
--------- ---------
Commitments and Contingencies
Stockholders' Equity:
Preferred stock; $.01 par value; 5,000,000
authorized shares; none issued and outstanding -- --
Common stock; $0.01 par value; 50,000,000 authorized
shares, and 21,027,397 and 20,778,557 shares issued
at December 31, 1997 and March 31, 1997, respectively 210 208
Paid-in capital 49,595 41,770
Cumulative translation adjustment (319) 749
Retained earnings 108,958 84,214
Less common stock in treasury, at cost (2,575,885 and
1,172,408 shares at
December 31, 1997 and March 31,
1997, respectively) (70,003) (30,003)
--------- ---------
Total stockholders' equity 88,441 96,938
--------- ---------
Total Liabilities and Stockholders' Equity $ 158,719 $ 154,696
========= =========
</TABLE>
The accompanying Notes are an integral part of these consolidated financial
statements.
4
<PAGE> 5
CATALINA MARKETING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended December 31,
----------------------------------
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 24,744 $ 21,795
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 17,372 12,473
Minority interest -- (372)
Other 119 2,138
Changes in operating assets and liabilities 9,606 4,034
-------- --------
Net cash provided by operating activities 51,841 40,068
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net (14,144) (26,431)
Purchase of investments, net of cash acquired (2,087) (18,028)
-------- --------
Net cash used in investing activities (16,231) (44,459)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt obligations 31,486 --
Principal payments on debt obligations (32,231) --
Proceeds from issuance of common and subsidiary stock 5,535 3,694
Tax benefit from exercise of non-qualified options
and disqualifying dispositions 2,131 276
Payment for repurchase of company common stock (40,000) (3,647)
-------- --------
Net cash (used in) provided by financing activities (33,079) 323
-------- --------
NET INCREASE (DECREASE) IN CASH 2,531 (4,068)
Effect of exchange rate changes on cash 128 (63)
CASH, at end of prior period 13,698 25,778
-------- --------
CASH, at end of current period $ 16,357 $ 21,647
======== ========
</TABLE>
The accompanying Notes are an integral part of these consolidated financial
statements.
5
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CATALINA MARKETING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Condensed Consolidated Financial Statements:
In the opinion of the Company, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the financial position of the
Company as of December 31, 1997 and March 31, 1997, and the results of
operations for the three month and nine month periods ended December 31, 1997
and 1996 and cash flows for the nine month periods ended December 31, 1997 and
1996.
The condensed consolidated financial statements include the accounts of the
Company and its wholly-owned and majority-owned subsidiaries. The third quarter
balances and results of the majority owned foreign subsidiaries are included as
of and for the three and nine month periods ended September 30, 1997 and 1996.
All material intercompany profits, transactions and balances have been
eliminated. The Company's investment in a non-majority owned company is
accounted for on the equity method.
These financial statements, including the condensed consolidated balance sheet
as of March 31, 1997, which has been derived from audited financial statements,
are presented in accordance with the requirements of Form 10-Q and consequently
may not include all disclosures normally required by generally accepted
accounting principles or those normally made in the Company's Annual Report on
Form 10-K. The accompanying condensed consolidated financial statements and
related notes should be read in conjunction with the Company's Annual Report on
Form 10-K for the fiscal year ended March 31, 1997.
Note 2. Net Income Per Common Share:
In the quarter ended December 31, 1997, the Company adopted Statement of
Financial Accounting Standards No. 128, "Earnings per Share" (SFAS No. 128).
Accordingly, diluted and basic earnings per share (EPS) are shown on the face of
the accompanying condensed consolidated statements of income. The following is a
reconciliation of the denominator of basic EPS to the denominator of diluted
EPS:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
------------------------------------------
1997 1996 1997 1996
------ ------ ------ ------
(in thousands)
<S> <C> <C> <C> <C>
Basic weighted average common
shares outstanding 18,445 19,703 18,381 19,627
Dilutive effect of options outstanding 673 932 589 988
------ ------ ------ ------
Diluted weighted average common shares
outstanding 19,118 20,635 18,970 20,615
====== ====== ====== ======
</TABLE>
6
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Options to purchase 220,500 shares of common stock at prices ranging from $53.50
to $43.50 per share were outstanding during the nine months ended December 31,
1997 but were not included in the computation of diluted EPS because the
options' exercise prices were greater than the average market price of common
shares.
Note 3: Stockholder Protection Agreement:
On May 8, 1997, the Company announced that it had adopted a Stockholder
Protection Plan. To implement this plan, the Company declared a dividend of one
Preferred Share Purchase Right on each outstanding share of the Company's common
stock. The dividend distribution was payable to stockholders of record on May
12, 1997. The rights will be exercisable for fractions of a share of the
Company's Series X Junior Participating Preferred Stock only if a person or
group acquires 15 percent or more of the Company's common stock or announces or
commences a tender offer for 15 percent or more of the common stock, except for
certain instances defined in the Stockholder Protection Plan.
Note 4: Effect of SFAS No. 130 and No. 131:
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS
No. 130) and No. 131, "Disclosures about Segments of an Enterprise and Related
Information" (SFAS No. 131).
SFAS No. 130 requires that an enterprise classify items of other comprehensive
income by their nature on the face of its financial statements and display the
accumulated balance of other comprehensive income separately from retained
earnings and additional paid-in capital in the equity section of the balance
sheet. SFAS No. 130 is effective for financial statements relating to fiscal
years beginning after December 15, 1997.
SFAS No. 131 requires that a public business enterprise report financial and
descriptive information about its reportable operating segments. SFAS No. 131 is
effective for financial statements relating to fiscal years beginning after
December 15, 1997.
The effects of SFAS No. 130 and SFAS No. 131 on the Company have not been
considered at this time.
Note 5: Credit Agreement:
On September 30, 1997, the Company terminated its existing $40 million credit
facility and entered into a new $150 million credit agreement (the Credit
Agreement) with a syndicate of commercial banks led by NationsBank, National
Association with Fleet National Bank as co-agent. The Credit Agreement makes
available (i) a $100 million revolving credit facility expiring September 30,
2000, (ii) a $10 million swing line facility expiring September 30, 2000, and
(iii) a $50 million 364 day line of credit facility expiring September 29, 1998
under which, the Company, at its option, may convert outstanding borrowings upon
expiration into a term loan with a maturity of September 30, 2000. The Company
may alternatively request, and the lenders have the option to provide, a renewal
of the line of credit on a revolving basis
7
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for additional periods of up to 364 days each. At no time may the aggregate
principal balance exceed $150 million under the Credit Agreement. As of December
31, 1997, there were no borrowings outstanding thereunder.
The Credit Agreement provides that borrowings accrue interest on a variable
basis at (i) the London Interbank Offering Rate (LIBOR) (adjusted for any
reserve requirements in force) plus an applicable margin ranging from 50 to
162.5 basis points, or (ii) the base rate, defined in the Credit Agreement as
the greater of (a) the prime rate or (b) 50 basis points plus the federal funds
rate as defined in the Credit Agreement. In addition, the Credit Agreement
provides for unused facilities fees to accrue at a range of 12.5 to 37.5 basis
points per annum multiplied by the unused portions of the revolving credit and
line of credit facilities. The Credit Agreement is secured by the common stock
or equivalent of several Company subsidiaries, is guaranteed by several Company
subsidiaries, and contains certain financial covenants and other terms and
conditions.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS:
FISCAL 1998 COMPARED TO FISCAL 1997
The Company's revenues for the third quarter and first nine months of fiscal
1998 increased 37.5 percent and 29.3 percent, respectively, compared with the
same periods in fiscal 1997. The increase in revenues is primarily due to a
greater distribution of Checkout Coupon(R) incentives worldwide, growth in new
programs such as Checkout Direct(R) and, to a lesser extent, revenues added by
the acquisition by the Company on October 10, 1996 of a 51 percent interest in a
Japanese based outdoor media business. The Company believes that a portion of
incremental revenue for the third quarter of fiscal 1998 compared with the third
quarter of fiscal 1997 was attributable to a shift in the promotion plans of
some clients whose spending the Company had originally anticipated would occur
in the fourth quarter of fiscal 1998.In the U.S., the Catalina Marketing Network
printed 764 million and 2,021 million promotions during the third quarter and
first nine months of fiscal 1998, respectively, up 20.5 percent and 16.9 percent
compared to the same fiscal 1997 periods (634 million and 1,729 million
promotions). The greater distribution of promotions is attributable to the
broader reach of the Catalina Marketing Network as well as additional sales of
category cycles and the sale of new products and programs. Catalina Marketing
Services, constituting the Company's base business in the U.S., contributed
approximately $55.0 million and $138.4 million of revenues in the third quarter
and first nine months of fiscal 1998, respectively, up 30.0 percent and 20.0
percent over revenues of $42.3 million and $115.3 million in the comparable
fiscal 1997 periods.
In the U.S., the Catalina Marketing Network was in 10,979 stores at December 31,
1997, which reach 145 million shoppers each week as compared to 10,741 stores
reaching 141 million shoppers each week at December 31, 1996 and 10,745 stores
reaching 144 million shoppers each week at March 31, 1997. The Health Resources
Network was in 1,566 pharmacies at December 31, 1997 as compared to 977
pharmacies at December 31, 1996 and 1,195 pharmacies at March 31, 1997. Outside
the U.S., the Catalina Marketing Network was in 1,290 stores at December 31,
1997, which reach 19 million shoppers each week as
8
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compared to 837 stores reaching 18 million shoppers each week at December 31,
1996 and 941 stores reaching 18 million shoppers each week at March 31, 1997. In
the first nine months of fiscal 1998, the Company installed its Catalina
Marketing Network in 234 stores (net of deinstallations) in the U.S. as compared
to 975 stores in the comparable fiscal 1997 period. Deinstallation activity can
and does occur primarily due to the consolidation and business combination of
supermarket chains as well as store closures made by retailers in the ordinary
course of business. The Company also installed its Health Resources Network in
371 pharmacies in the first nine months of fiscal 1998 as compared to 740
pharmacies in the comparable fiscal 1997 period. Outside the U.S., the Company
installed 349 stores in the first nine months of fiscal 1998 as compared to 279
stores in the comparable fiscal 1997 period. During the first six months of
fiscal 1998, the Company ceased operations in 300 stores in and around Mexico
City.
Direct operating expenses consist of retailer fees, paper, sales commissions and
the expenses of operating and maintaining the Catalina Marketing Network
(primarily expenses relating to operations personnel and service offices),
provision for doubtful accounts and the direct expenses associated with
operating the outdoor media business in a majority-owned subsidiary in Japan
(purchased in October 1996). Direct operating expenses increased in absolute
terms to $23.8 million and $62.2 million for the third quarter and first nine
months of fiscal 1998, respectively, from $16.1 million and $44.1 million in the
comparable periods of fiscal 1997. Direct operating expenses in the first nine
months of fiscal 1998 as a percentage of revenues increased to 38.1 percent from
34.9 percent in the comparable period of fiscal 1997. This increase in fiscal
1998 is principally attributable to the addition of the direct costs associated
with running the outdoor media business in Japan.
Selling, general and administrative expenses include personnel-related costs of
selling and administrative staff, overhead and new product development expenses.
Selling, general and administrative expenses for the third quarter and first
nine months of fiscal 1998 were $18.6 million and $43.9 million, respectively,
compared to $12.2 million and $35.0 million for the same periods of fiscal 1997,
increases of 52.2 percent and 25.3 percent. The increases relate primarily to
higher costs associated with a larger sales force, and administrative expenses
of new business ventures and products. As a percentage of revenues, selling,
general and administrative expenses increased 2.8 percent in the third quarter
of fiscal 1998, to 29.1 percent from 26.3 percent for the comparable period of
fiscal 1997. This increase is principally due to a $3.5 million one time expense
incurred in the third quarter of fiscal 1998 associated with the shutdown of
Mexican operations. As a percentage of revenues for the first nine months of
fiscal 1998, selling, general and administrative expenses decreased 0.9 percent
to 26.9 percent from 27.8 percent for the comparable period of fiscal 1997. This
decrease is principally due to the outdoor media business in Japan, which
typically has a higher percentage of direct costs (as indicated above) and a
smaller percentage of selling, general and administrative expenses than the
Company's other businesses, as well as the fiscal 1997 period including the
electronic clearing business which ceased operations on March 31, 1997, and was
partially offset by the $3.5 million one time expense incurred related to the
shutdown of the Mexican operations in the third quarter of fiscal 1998.
Depreciation and amortization increased to $5.6 million and $17.2 million for
the third quarter and first nine months of fiscal 1998 from $4.4 million and
$12.2 million for the comparable
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periods of fiscal 1997. Depreciation increased due to the increase in fiscal
1997 capital expenditures associated with new business ventures and data
processing equipment.
Interest income (expense) and other decreased to $.2 million and $1.0 million
expense for the third quarter and first nine months of fiscal 1998 from $.3
million and $.9 million income for the comparable periods of fiscal 1997. The
decrease is primarily due to the Company incurring interest expense on
borrowings from its credit facility during the third quarter and first nine
months of fiscal 1998.
The provision for income taxes decreased to $4.7 million and $14.1 million (30.2
percent and 36.2 percent of income before income taxes and minority interest)
for the third quarter and first nine months of fiscal 1998, respectively,
compared to $5.6 million and $14.2 million (40.2 percent and 39.9 percent of
income before income taxes and minority interest) for the same periods of fiscal
1997. The decrease in the provision for income taxes for fiscal 1998 is due to
the $3.1 million tax benefit arising due to the shutdown of the Mexican
operations. Excluding the effect of the Mexican operations shutdown, the
Company's effective tax rate is higher than the expected federal statutory tax
rate due to state and foreign income taxes and the inability to utilize
currently losses of other majority owned foreign subsidiaries for tax purposes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital expenditures are store equipment and third-party
store installation costs, as well as data processing equipment for the Company's
central data processing facilities. Total store equipment and third-party store
installation costs range from $5,000 to $13,000 per store. During the first nine
months of fiscal 1998 and 1997, the Company made capital expenditures of $14.1
million and $26.5 million, respectively. The pace of installations varies
depending on the timing of contracts entered into with retailers and the
scheduling of store installations by mutual agreement. During the first nine
months of fiscal 1998, the Company had a slower pace of U.S. store installations
and spent $4.4 million less in data processing equipment and furniture and
fixtures compared to the comparable fiscal 1997 period. Management believes that
expenditures for capital equipment will remain between $20 million and $35
million annually for the foreseeable future.
During the first quarter of fiscal 1998, the Company purchased 1,403,477 shares
of its common stock for $40 million, initiating and completing a $40 million
share repurchase program approved by the Company's board as of March 31, 1997.
Management has since been authorized to purchase up to $30 million of Company
common stock subject to market conditions. During the fourth quarter of fiscal
1998 management has purchased to date 55,000 shares of its common stock for $2.7
million. The Company may consider additional share repurchases from time to
time.
10
<PAGE> 11
During the first nine months of fiscal 1998, the Company borrowed approximately
$27 million against its $40 million credit facility, $22 million of which was in
connection with the completion of the $40 million common stock repurchase
program referenced above, and $5 million of which was used to fund operations.
On September 30, 1997 the Company terminated its existing $40 million credit
facility and entered into a new credit agreement (the Credit Agreement) with a
syndicate of banks under which it may borrow up to $150 million, at variable
rates calculated with reference to the London Interbank Offering Rate (LIBOR) or
the higher of the bank prime rate or the Federal Funds rate plus 50 basis points
for certain advances. The Credit Agreement expires on September 30, 2000. The
Company repaid $27 million during the first nine months of fiscal 1998, leaving
no outstanding balance on this facility at December 31, 1998.
The Company believes working capital generated by operations along with existing
credit facilities are sufficient for its overall capital requirements.
11
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits
15 Acknowledgment Letter
27 Financial Data Schedule (for SEC use only)
99 Review Report of Independent Certified Public Accountants
b. Reports on Form 8-K
Report dated October 15, 1997 regarding the Company's press
release communicating its fiscal 1998 second quarter earnings
Report dated November 11, 1997 regarding the Company's press
release announcing $30 million share repurchase authorization
Report dated November 20, 1997 regarding the Company's press
release regarding the French high court's ruling against its
majority-owned affiliate, Catalina Marketing of France
12
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CATALINA MARKETING CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, Registrant's principal financial officer, thereunto duly
authorized.
February 12, 1998 CATALINA MARKETING CORPORATION
------------------------------
(Registrant)
/s/ Philip B. Livingston
------------------------------
Philip B. Livingston
Senior Vice President and
Chief Financial Officer
(Authorized officer of Registrant and
principal financial officer)
13
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EXHIBIT 15
[ARTHUR ANDERSEN LETTERHEAD]
January 12, 1998
Catalina Marketing Corporation
11300 9th Street North
St. Petersburg, Florida 33716
Catalina Marketing Corporation:
We are aware that Catalina Marketing Corporation has incorporated, by reference
in its Registration Statement File Nos. 33-46793, 33-77100, 33-82456, 333-07525
and 333-13335, its Form 10-Q for the three-month and nine-month periods ended
December 31, 1997, which includes our report dated January 12, 1998, covering
the unaudited interim financial information contained therein. Pursuant to
Regulation C of the Securities Act of 1933 (the Act), that report is not
considered a part of the registration statement prepared or certified by our
firm or a report prepared or certified by our firm within the meaning of
Sections 7 and 11 of the Act.
Very truly yours,
ARTHUR ANDERSEN LLP
By /s/ WILLIAM J. MEURER
---------------------
William J. Meurer
NNK
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 16,357
<SECURITIES> 0
<RECEIVABLES> 29,379
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 70,392
<PP&E> 150,691
<DEPRECIATION> 85,191
<TOTAL-ASSETS> 158,719
<CURRENT-LIABILITIES> 64,918
<BONDS> 616
0
0
<COMMON> 210
<OTHER-SE> 88,231
<TOTAL-LIABILITY-AND-EQUITY> 158,719
<SALES> 163,089
<TOTAL-REVENUES> 163,089
<CGS> 62,192
<TOTAL-COSTS> 123,297
<OTHER-EXPENSES> 991
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 38,801
<INCOME-TAX> 14,057
<INCOME-CONTINUING> 24,744
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,744
<EPS-PRIMARY> 1.35
<EPS-DILUTED> 1.30
</TABLE>
<PAGE> 1
EXHIBIT 99
[ARTHUR ANDERSEN LLP LETTERHEAD]
REVIEW REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To Catalina Marketing Corporation:
We have reviewed the accompanying condensed consolidated balance sheet of
Catalina Marketing Corporation (a Delaware corporation) as of December 31, 1997,
and the related condensed consolidated statements of income for the three-month
and nine-month periods ended December 31, 1997 and 1996, and the condensed
consolidated statements of cash flows for the nine-month periods ended December
31, 1997 and 1996. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above, for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Catalina Marketing Corporation as
of March 31, 1997, and the related consolidated statements of income,
stockholders' equity and cash flows for the year then ended (not presented
separately herein), and, in our report dated April 18, 1997, we expressed an
unqualified opinion on those financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of March 31, 1997, is fairly stated, in all material respects, in relation to
the consolidated balance sheet from which it has been derived.
/s/ ARTHUR ANDERSEN LLP
Tampa, Florida,
January 12, 1998
