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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 15, 1998
Catalina Marketing Corporation
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
1-11008 33-0499007
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Commission File Number (IRS Employer Identification No.)
11300 9th Street North
St. Petersburg, Florida 33716
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(Address of principal executive offices) (Zip Code)
(813) 579-5000
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Registrant's Telephone Number
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Item 5. Other Events.
On October 15, 1998 Catalina Marketing Corporation (the Company)
issued a press release communicating its second quarter fiscal 1999
earnings, included in this report as Exhibit 99.7.
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Item 7. Exhibits.
99.7 Form of press release dated October 15, 1998.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
CATALINA MARKETING CORPORATION
By: /s/ Philip B. Livingston
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Philip B. Livingston,
Senior Vice President and
Chief Financial Officer
Dated: October 16, 1998
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EXHIBIT 99.7
(Catalina Marketing Corporation Letterhead)
NEWS
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FOR IMMEDIATE RELEASE CONTACT: Daniel D. Granger
President and
Chief Executive Officer
(727) 579-5007
Philip B. Livingston
Senior Vice President and
Chief Financial Officer
(727) 579-5006
Christopher W. Wolf
Treasurer
(727) 579-5218
CATALINA MARKETING CORPORATION
REPORTS SECOND QUARTER RESULTS
ST. PETERSBURG, Florida, October 15, 1998 - Catalina Marketing Corporation
(NYSE: POS) today announced results for the quarter ended September 30, 1998.
For the quarter, the company's revenue increased 22 percent to $64.4 million, up
from $52.7 million for the same period a year ago. Earnings per share, before
the effect of a one-time charge discussed below, increased 16 percent to 50
cents per share, versus 43 cents per share in the year-ago quarter. Net income
for the quarter, before the effect of the one-time charge, was $9.4 million
compared to $8.2 million in the September 1997 quarter.
As of the end of the quarter, the company posted a one-time charge to write off
its investment in Intelledge Corporation. This resulted in a charge to other
expense of $3.0 million, or 16 cents per share. The company posted the charge
because it has become clear that Intelledge will require substantial additional
financing to continue as a going concern and it is not clear at this time that
additional financing will be available. Reported net income for the quarter,
taking into account the write off, was $6.4 million, or 34 cents per share.
For the six month period ended September 30, 1998, total revenue increased 22
percent to $121.3 million versus $99.4 million posted in the first half of
fiscal 1998. Earnings per share were 85 cents, before the effect of the
Intelledge charge (69 cents after the charge), versus 73 cents reported a year
ago.
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Dan Granger, president and chief executive officer, commented, "We achieved our
quarterly target on an operating income basis and are pleased with the quarter's
results. The $64.4 million in consolidated revenue for the quarter included
solid top-line growth in our core domestic business. The core domestic business
continues to be the primary source of our growth. In addition, our new ventures
and international operations continue to be growing contributors to the top
line."
Other highlights for the quarter included the following:
o Total revenue in the company's core domestic business, which includes
primarily business generated by manufacturers and retailers through the
company's U.S. supermarket network, and certain retailer programs, increased
20 percent for the second quarter over the year-ago quarter. On a trailing
twelve month basis, core domestic business revenue grew 19 percent over the
prior twelve month period. These amounts were bolstered by the addition of
Market Logic whose results are included in the company's results commencing
July 1998.
o Earnings before interest, taxes, depreciation and amortization ("EBITDA")
reached $84.7 million, up 22 percent (on a pro forma basis), for the
trailing twelve month period ended September 30, 1998.
o The company's U.S. installed store base increased to 11,621 as of September
30, 1998, with 189 additional stores installed during the quarter on a net
basis. Additionally, the company announced during the quarter new contracts
for future installation of more than 300 supermarkets in a number of chains
including Furr's Supermarket, Inc.; Gerland's Food Fair; Fiesta Mart, Inc;
Farm Fresh; Lowes Foods; and Fleming's Milwaukee, Wisc. Division.
o During the second quarter, the company repurchased approximately 270,000
shares of common stock for a total of $11.8 million, or a weighted average
price of $43.58 per share. This share repurchase activity was executed under
the $30 million share authorization announced in November 1997. Since the
start of fiscal 1995 and including shares repurchased in the second quarter,
the company has repurchased 3.1 million shares of common stock for a total
of $92.6 million, or a weighted price of $30.15.
o Health Resource Publishing Company added 930 stores on a net basis,
finishing the quarter with an installed base of 3,186 pharmacy outlets
versus 1,477 at the same time last year. The total includes over 700 stores
installed in Rite-Aid. Revenue during the first half of fiscal 1999 has
doubled over the same period last year. Health Resource Publishing's net
loss for the quarter was equal to six cents per company common share.
o SuperMarkets Online, Inc. continued to build upon its position as a leader
in Internet consumer packaged goods promotions with 1.7 million visitors to
the web site per month. Over 40 packaged goods manufacturers are now
participating in ValuPage(TM) programs involving 116 product categories.
ValuPage(TM) offers can now be accepted in over 8,000 supermarkets within
the Catalina Marketing Network(R). Consisting of customized shopping lists
of offers that consumers can access through www.valupage.com, ValuPage(TM)
provides packaged goods manufacturers and retailers with a secure Internet
coupon and other promotion solution that leverages the in-store,
scanner-based Catalina Marketing Network(R). SuperMarkets Online's net loss
for the quarter was equal to one cent per company common share.
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o The company's European business, which includes the United Kingdom and
France, increased its store base in the quarter by 60 stores to a total of
1,495 stores, and continues to provide positive earnings. The European
business contributed one cent per company common share this quarter.
o The company announced that its Japanese joint venture had signed a roll out
agreement with Jusco, Japan's third largest retail chain, to install the
balance of its 190 stores. It had previously announced a ten store pilot
with Jusco. Including the ten store pilot with Seiyu, the network is now
installed in 65 stores in Japan versus 13 as of September 30, 1997. The
company's portion of the net loss in its Japan joint venture was equal to
two cents per company common share this quarter.
Commenting on the upcoming quarters, Granger stated, "The prospects for our
core business are good. Over the remaining six months of the current fiscal
year, revenue growth in the core business is expected to be in line with our 15
percent projection for the year. However, because revenue for the third quarter
of fiscal 1998 was unusually large as a percentage of full fiscal year revenue,
year-over-year revenue growth for the third quarter of fiscal 1999 will be less
than the previous two quarters. Specifically, we are forecasting relatively low
growth for the core business in the third quarter of this fiscal year when
compared to the third quarter of last year. Revenue for the third quarter of
fiscal 1998 was the highest for any quarter in the company's history and
reflected a one time shift in manufacturers' spending from the fourth quarter to
the third quarter. However, we still expect to achieve earnings growth for the
company for fiscal 1999 in line with our previous estimates, before the effects
of the one-time charge."
Granger continued, "the prospects for the continued expansion of our Health
Resource Publishing, International, and SuperMarkets Online businesses are
excellent. We will continue to invest in these businesses in anticipation of
increased revenue and future earnings."
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 manufacturers for the issuance of certain product coupons, 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, and the company's ability to
maintain favorable client relationships.
Based in St. Petersburg, Florida, Catalina Marketing Corporation provides
in-store electronic marketing programs for more than 150 consumer goods
companies. The Catalina Marketing Network(R) reaches more than 151 million
shoppers each week in over 11,600 supermarkets across the United States. The
company consists of four distinct business units: Catalina Marketing Services,
which markets the company's core electronic marketing programs; Catalina
Marketing International, which markets Network programs abroad; Health Resource
Publishing Company, which delivers incentives through customized newsletters in
the pharmacy; and SuperMarkets Online, Inc., which distributes targeted consumer
goods promotions on the World Wide Web.
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CATALINA MARKETING CORPORATION
Selected Financial Data
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
PERIODS ENDED SEPTEMBER 30 1998 1997 1998 1997
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<S> <C> <C> <C> <C>
Revenue $ 64,448 $ 52,727 $ 121,282 $ 99,386
Direct Operating Expenses 28,198 20,407 51,748 38,440
Selling, General and Administrative 14,022 12,421 29,327 25,317
Depreciation and Amortization 6,638 5,923 13,042 11,614
Income from Operations 15,590 13,976 27,165 24,015
Interest Income/(Expense) and Other (2,893) (390) (2,921) (783)
Provision for Income Taxes 6,308 5,342 11,117 9,351
Net Income 6,389 8,244 13,127 13,881
DILUTED:
Earnings Per Share $ 0.34 $ 0.43 $ 0.69 $ 0.73
Weighted Average Shares Outstanding 18,963 19,146 18,998 19,135
BASIC:
Earnings Per Share $ 0.35 $ 0.45 $ 0.71 $ 0.76
Weighted Average Shares Outstanding 18,512 18,368 18,521 18,349
</TABLE>
Selected Other Data
<TABLE>
<CAPTION>
SEPTEMBER 30
1998 1997
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BALANCE SHEET AND CASH FLOW (IN THOUSANDS):
<S> <C> <C>
Cash $ 10,900 $ 2,769
Stockholders' Equity 95,146 75,914
Twelve Month EBITDA 81,173 67,977
Twelve Month EBITDA (Pro forma)* 84,668 69,407
U.S. CHECKOUT COUPON BUSINESS:
Number of Stores at Quarter End 11,621 10,801
Net Stores Installed During Quarter/YTD 189/457 (31)/56
Promotions Printed During Quarter/YTD (in millions) 654/1,261 660/1,257
Weekly Shopper Reach at Quarter End (in millions) 151 142
INTERNATIONAL CHECKOUT COUPON BUSINESS:
Number of Stores at Quarter End 1,560 913
Net Stores Installed During Quarter/YTD 104/188 (144)/(28)
Promotions Printed During Quarter/YTD (in millions) 95/186 78/184
Weekly Shopper Reach at Quarter End (in millions) 24 15
</TABLE>
* Pro forma EBITDA for twelve months ended September 30, 1998 excludes $3.5
million in expense associated with the shutdown of Mexican operations during
the quarter ended December 31, 1997. Comparably, pro forma EBITDA for the
twelve months ended September 30, 1997 excludes the effect of $1.4 million in
expense ($2.0 million less $0.6 million in depreciation expense) incurred in
shutting down the company's electronic coupon clearing operation during the
fourth quarter of fiscal year 1997.
