<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 JUNE 30, 1999
( ) 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
----------------------- ----------
(727) 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 August 6, 1999, Registrant had outstanding 18,462,722 shares of
Common Stock.
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CATALINA MARKETING CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Income
for the three month periods ended
June 30, 1999 and 1998 3
Condensed Consolidated Balance Sheets at
June 30, 1999 and March 31, 1999 4
Condensed Consolidated Statements of Cash Flows
for the three month periods ended
June 30, 1999 and 1998 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
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
June 30,
1999 1998
-------- --------
<S> <C> <C>
Revenues $ 72,614 $ 56,834
Costs and Expenses:
Direct operating expenses 30,168 23,550
Selling, general and administrative 19,808 15,305
Depreciation and amortization 8,187 6,404
-------- --------
Total costs and expenses 58,163 45,259
-------- --------
Income From Operations 14,451 11,575
Interest Expense, Net and Other (201) (28)
-------- --------
Income Before Income Taxes and Minority Interest 14,250 11,547
Income Taxes (5,730) (4,809)
Minority Interest in Losses of Subsidiaries 183 --
-------- --------
Net Income $ 8,703 $ 6,738
======== ========
Diluted:
Net Income Per Common Share $ 0.45 $ 0.35
Weighted Average Common Shares Outstanding 19,486 19,033
Basic:
Net Income Per Common Share $ 0.47 $ 0.36
Weighted Average Common Shares Outstanding 18,675 18,530
</TABLE>
The accompanying Notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
CATALINA MARKETING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
(unaudited)
June 30, March 31,
ASSETS 1999 1999
----------- ----------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 22,203 $ 13,942
Accounts receivable, net 40,453 44,045
Deferred tax asset 9,920 8,932
Prepaid expenses and other current assets 31,782 28,562
--------- ---------
Total current assets 104,358 95,481
--------- ---------
Property and Equipment:
Property and equipment 208,272 199,625
Accumulated depreciation and amortization (118,439) (111,939)
--------- ---------
Property and equipment, net 89,833 87,686
--------- ---------
Purchased intangible assets, net 43,190 35,628
Other assets 2,125 2,252
--------- ---------
Total Assets $ 239,506 $ 221,047
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 10,624 $ 14,149
Accrued expenses 35,691 44,697
Deferred revenue 33,131 27,349
Short term borrowings 9,124 7,635
--------- ---------
Total current liabilities 88,570 93,830
--------- ---------
Deferred tax liability 7,574 5,696
Minority interest 1,540 --
Long term debt 1,904 588
--------- ---------
Commitments and Contingencies
Stockholders' Equity:
Preferred stock; $0.01 par value; 5,000,000
authorized shares; none issued and outstanding -- --
Common stock; $0.01 par value; 50,000,000 authorized
shares and 18,583,378 and 18,389,438 shares
issued and outstanding at June 30, 1999 and
March 31, 1999, respectively 186 184
Paid-in capital 11,685 819
Accumulated other comprehensive income 257 843
Retained earnings 127,790 119,087
--------- ---------
Total stockholders' equity 139,918 120,933
--------- ---------
Total Liabilities and Stockholders' Equity $ 239,506 $ 221,047
========= =========
</TABLE>
The accompanying Notes are an integral part of these consolidated financial
statements.
4
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CATALINA MARKETING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30,
---------------------------
1999 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 8,703 $ 6,738
Adjustments to reconcile net income to net cash provided
by operating activities:
Minority interest (183) --
Depreciation and amortization 8,187 6,441
Other 1,819 (573)
Changes in operating assets and liabilities 3,121 2,164
-------- --------
Net cash provided by operating activities 21,647 14,770
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net (11,998) (8,242)
Purchase of investments, net of cash acquired (18,011) (761)
-------- --------
Net cash used in investing activities (30,009) (9,003)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt obligations 7,608 7,838
Principal payments on debt obligations (4,321) (8,322)
Proceeds from issuance of common and subsidiary stock 10,330 1,203
Tax benefit from exercise of non-qualified options and
disqualified dispositions
3,897 376
-------- --------
Net cash provided by financing activities 17,514 1,095
-------- --------
NET INCREASE IN CASH 9,152 6,862
Effect of exchange rate changes on cash (891) (622)
CASH, at end of prior period 13,942 18,434
-------- --------
CASH, at end of current period $ 22,203 $ 24,674
======== ========
</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 June 30, 1999 and March 31, 1999, and the results
of operations and cash flows for the three month periods ended June 30, 1999
and 1998. Certain prior balances have been reclassified to conform with the
current year presentation.
The condensed consolidated financial statements include the accounts of the
Company and its wholly-owned and majority-owned subsidiaries. The first quarter
balances and results of the majority and wholly owned foreign subsidiaries are
included as of March 31, 1999 and December 31, 1998 and for the three month
periods ended March 31, 1999 and 1998, respectively. All material intercompany
profits, transactions and balances have been eliminated.
These financial statements, including the condensed consolidated balance sheet
as of March 31, 1999, 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, 1999.
Note 2. Net Income Per Common Share:
The following is a reconciliation of the denominator of basic EPS to the
denominator of diluted EPS (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
-------------------
1999 1998
------ ------
<S> <C> <C>
Basic weighted average common
shares outstanding 18,675 18,530
Dilutive effect of options outstanding 811 503
------ ------
Diluted weighted average common shares
outstanding 19,486 19,033
</TABLE>
6
<PAGE> 7
Options to purchase 90,000 shares of common stock at a $91.25 exercise price
per share were outstanding at June 30, 1999, but were not included in the
computation of diluted EPS because the options' exercise prices were greater
than the average market price of common stock.
Note 3. Comprehensive Income:
<TABLE>
<CAPTION>
Three months ended
June 30,
-------------------------
1999 1998
------- -------
(in thousands)
<S> <C> <C>
Net income $ 8,703 $ 6,738
Other comprehensive income, net of tax:
Currency translation adjustment (586) (737)
------- -------
Comprehensive Income $ 8,117 $ 6,001
</TABLE>
Note 4. Convertible Long Term Debt:
Effective April 5, 1999, the Tribune Company, an unrelated entity, made an
investment in Supermarkets Online, a majority owned subsidiary of the Company.
In addition to this equity investment, Supermarkets Online borrowed $1.4
million from the Tribune Company in exchange for a subordinated convertible
note bearing interest at a rate of 4.5 percent per annum. This long term debt
obligation is convertible into 500,000 shares of Supermarkets Online common
stock upon certain occurrences.
Note 5. Acquisition:
Effective April 21, 1999, the Company, through one of its wholly owned
subsidiaries, acquired one of its vendors, CompuScan Marketing, Inc.
("Compuscan"), for $9.1 million in initial cash consideration, net of cash
acquired, by means of a merger transaction. Compuscan provides the intellectual
property and backroom processing for the Company's Checkout Prizes product.
Terms of the merger agreement call for the Company to make a series of
additional payments, which are based on specified future revenue growth targets
of the Checkout Prizes product. The purchase has been accounted for using the
purchase method of accounting for acquisition and, accordingly, the results of
operations of Compuscan have been included in the fiscal 2000 condensed
consolidated financial statements of the Company since the date of such
acquisition
Note 6. Segment Information (in thousands):
<TABLE>
<CAPTION>
For the Three Months Ended June 30,
-------------------------------------------------------
1999 1998
------------------------- -------------------------
Targeted Targeted
Marketing Marketing
Services Eliminations Services Eliminations
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Revenue from external
customers $72,614 $ 56,834
Revenue from internal sources 310 (310) 481 (481)
Net income 8,703 6,738
</TABLE>
7
<PAGE> 8
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS:
FISCAL 2000 COMPARED TO FISCAL 1999
The Company's revenues for the first quarter of fiscal 2000 increased 27.8
percent, compared with the same period in fiscal 1999. The increase in revenues
is due to an increase in promotions printed worldwide, increases in direct mail
marketing programs and growth in the Checkout Direct(R) program. Direct mail
marketing programs include, among others, the revenues added by the acquisition
of Market Logic, which was completed on July 13, 1998.
In the U.S., the Catalina Marketing Network was in 12,257 stores at June 30,
1999, which reach 161 million shoppers each week as compared to 11,432 stores
reaching 153 million shoppers each week at June 30, 1998 and 12,092 stores
reaching 152 million shoppers each week at March 31, 1999. The Health Resource
Network was in 4,152 pharmacies at June 30, 1999 as compared to 2,256
pharmacies at June 30, 1998 and 3,861 pharmacies at March 31, 1999. Outside the
U.S., the Catalina Marketing Network was in 2,249 stores at June 30, 1999,
which reach 33 million shoppers each week as compared to 1,456 stores reaching
23 million shoppers each week at June 30, 1998 and 1,935 stores reaching 29
million shoppers each week at March 31, 1999.
In the first quarter of fiscal 2000 the Company installed its Catalina
Marketing Network in 165 stores in the U.S., net of deinstallations, as
compared to 268 stores in the comparable fiscal 1999 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
Resource Network in 291 pharmacies in the first quarter of fiscal 2000, net of
deinstallations, as compared to 336 stores in the comparable fiscal 1999
period. Outside the U.S., the Company installed 314 stores in the first quarter
of fiscal 2000, net of deinstallations, as compared to 84 stores in the
comparable fiscal 1999 period.
Direct operating expenses consist of retailer fees; paper; sales commissions;
loyalty and direct marketing expenses; provision for doubtful accounts; the
expenses of operating and maintaining the Catalina Marketing and Health
Resource Network, primarily expenses relating to operations personnel and
service offices, and the direct expenses associated with operating the outdoor
media business in a majority-owned subsidiary in Asia. Direct operating
expenses increased in absolute terms to $30.2 million for the first quarter of
fiscal 2000 from $23.6 million in the comparable period of fiscal 1999. Direct
operating expenses in the first quarter of fiscal 2000 as a percentage of
revenues increased to 41.5 percent from 41.4 percent in the comparable period
of fiscal 1999. This increase in fiscal 2000 is principally attributable to the
Company's increase in loyalty and direct marketing programs, including the
Market Logic and DCI Cardmarketing businesses, which by their nature have a
higher material cost component of direct costs as a function of revenue than
the Company's other core product line services.
8
<PAGE> 9
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 first quarter of
fiscal 2000 were $19.8 million, compared to $15.3 million for the comparable
period of fiscal 1999, an increase of 29.4 percent or $4.5 million. As a
percentage of revenues, selling, general and administrative expenses increased
0.4 percent in the first quarter of fiscal 2000, to 27.3 percent from 26.9
percent for the comparable period of fiscal 1999. The increase relates
primarily to administrative expenses relating to new operating units and
products.
Depreciation and amortization increased to $8.2 million for the first quarter
of fiscal 2000 from $6.4 million for the comparable period in fiscal 1999.
Depreciation increased due to the investment in capital expenditures, during
the current and prior periods, associated with new operating units and product
lines, data processing equipment and the increase in stores installed.
Amortization expense increased due to the increases in goodwill and other
intangible assets related to the Company's acquisitions.
Interest expense, net and other increased to $201,000 net expense for the first
quarter of fiscal 2000 from $28,000 net expense for the comparable period in
fiscal 1999. This increase in net expense is primarily attributable to lower
average cash balances available for investment and lower interest rates in the
first quarter of fiscal 2000 than in the comparable period in fiscal 1999 and
increased short term borrowing balances in the Company's Asian subsidiary
reported as of June 30, 1999 as compared to June 30, 1998.
The provision for income taxes increased to $5.7 million, or 40.2 percent of
income before income taxes and minority interest, for the first quarter of
fiscal 2000, compared to $4.8 million, or 41.6 percent of income before income
taxes and minority interest, for the same period in fiscal 1999. The rate
decrease is primarily due to the Company's ability to utilize losses of a
majority owned foreign subsidiary for income tax purposes in fiscal 2000. The
Company's effective tax rate is higher than the federal statutory income tax
rate due to state and foreign income taxes and various nondeductible expenses,
primarily the amortization of goodwill related to the Company's acquisitions.
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 $3,000 to $13,000 per store.
During the first quarters of fiscal 2000 and 1999, the Company made capital
expenditures of $12.0 million and $8.2 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 quarter of fiscal 2000, the Company spent $3.6 million more on store
equipment compared to the comparable fiscal 1999 period.
9
<PAGE> 10
Effective April 21, 1999, the Company, through one of its wholly owned
subsidiaries, acquired one of its vendors, CompuScan, for $9.1 million in
initial cash consideration, net of cash acquired, by means of a merger
transaction. Terms of the merger agreement call for the Company to make a series
of additional payments, which are based on specified future revenue growth
targets of the Checkout Prizes product. Additionally, in the first quarter of
fiscal 2000, investments were made totaling $8.9 million which were comprised of
earnout payments attributable to past acquisitions.
The Company believes working capital generated by operations along with
existing credit facilities are sufficient for its overall capital requirements.
Other
Year 2000 Readiness Disclosure
This year 2000 disclosure is the most current information available and
replaces all previous disclosures made by the Company in its filings on Form
10-Q and Form 10-K, and in its Annual Report to Stockholders.
In the next year, many companies will face potentially serious risks associated
with the inability of existing business systems to appropriately recognize
calendar dates beginning in the year 2000. The Company is aware of the year
2000 issue and the effects it may have on its business systems. In response,
the Company has developed a detailed plan to address the issue. This plan
includes a campaign which began in fiscal 1998, was revised to consider
acquired companies' business systems, and has a goal for completion in October
1999. The plan currently includes spending of approximately $1.6 million for
testing and upgrading hardware and software. The Company has spent
approximately $1.1 million on the year 2000 issue through June 30, 1999.
Progress towards completion of the plan is within management's expectations to
meet the October 1999 goal.
The Company has contacted substantially all of its hardware and software
vendors, suppliers and financial institution partners to evaluate their
compliance efforts. Those that have been deemed noncompliant have been
evaluated and corrective action has been or will be taken by October 1999 to
ensure the vendors' year 2000 efforts or lack there of will not adversely
impact the Company's operations.
The Company's manufacturer clients and retailers may also encounter year 2000
issues and are in various states of readiness. If these manufacturers or
retailers encounter serious problems related to the year 2000 issue, those
problems could have a material adverse impact on the operations of the Company.
The Company believes most of its manufacturer clients and retailers are
addressing the year 2000 issue, and the Company is closely monitoring the status
of their readiness.
In the event that the Company's year 2000 compliance efforts are unsuccessful
and/or one or more of the Company's critical internal systems are not year 2000
compliant by December 31, 1999, the following could occur, any of which could
have a material adverse impact on the operations of the Company:
10
<PAGE> 11
(a) Customer service could deteriorate to the point that a substantial number
of the Company's customers move their relationships to other organizations;
(b) The Company may be unable to provide manufacturer and retail clients with
timely and accurate information about program execution; or
(c) The Company may be unable to fulfill various contractual obligations
The Company believes substantially all of its internally developed applications
and purchased applications used internally will be year 2000 compliant by
October 1999. The Company has therefore focused its efforts on contingency
planning for business systems outside of those applications, as warranted.
Forward Looking Statements
The statements in this Form 10-Q may be forward looking, and actual results may
differ materially. Statements not based on historical 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, any acquisitions or
dispositions by the Company, and the Company's ability to maintain favorable
client relationships.
11
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits
10.27 1999 Stock Option Plan
15 Acknowledgment Letter
27 Financial Data Schedule
99 Review Report of Independent Certified Public Accountants
b. Reports of Form 8-K
None
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.
August 13, 1999 CATALINA MARKETING CORPORATION
(Registrant)
/s/ Joseph P. Port
-----------------------------------------------
Joseph P. Port
Senior Vice President and
Chief Financial Officer
(Authorized officer of Registrant and principal
financial officer)
13
<PAGE> 1
EXHIBIT 10.27
CATALINA MARKETING CORPORATION
1999 STOCK OPTION PLAN
1. PURPOSE.
The Plan is intended to provide incentive to key employees and
directors of the Corporation and its Subsidiaries, to encourage proprietary
interest in the Corporation, and to attract new employees and directors with
outstanding qualifications.
2. DEFINITIONS.
Whenever the following terms are used in this Plan, they shall
have the meaning specified below unless the context clearly indicates
otherwise.
(a) "Act" shall mean the Securities Act of 1933, as amended.
(b) "Administrator" shall mean the Board or the Committee,
whichever shall be administering the Plan from time to time in the discretion
of the Board, as described in Section 4 of the Plan.
(c) "Board" shall mean the Board of Directors of the
Corporation.
(d) "Cause" in respect of an Optionee shall mean dishonesty,
fraud, misconduct, unauthorized use or disclosure of confidential information
or trade secrets, conviction or confession of a crime punishable by law (except
misdemeanor violations), or engaging in practices contrary to stock "insider
trading" policies of the Corporation, by such Optionee in each case as
determined by the Administrator, with such determination to be conclusive and
binding on such affected Optionee and all other persons.
(e) "Change of Control" shall mean the occurrence of any of the
following: (i) the acquisition, directly or indirectly, by any individual or
entity or group (as such term is used in Section 13(d)(3) of the Exchange Act)
of beneficial ownership (as defined in Rule 13d-3 under the Exchange Act,
except that such individual or entity shall be deemed to have beneficial
ownership of all shares that any such individual or entity has the right to
acquire without the happening or failure to happen of a material condition or
contingency, other than the passage of time) of more than 50% of the aggregate
outstanding voting power of capital stock of the Corporation in respect of the
general power to elect directors; (ii) during any period of two consecutive
years, individuals who
<PAGE> 2
at the beginning of such period constituted the Board (together with
individuals elected to the Board with the approval of at least 66 2/3% of the
directors of the Corporation then still in office who were either directors at
the beginning of such period, or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board then in office; and (iii) (A) the Corporation consolidates with or merges
into another entity or sells all or substantially all of its assets to any
individual or entity, or (B) any corporation consolidates with or merges into
the Corporation, which in either event (A) or (B) is pursuant to a transaction
in which the holders of the Corporation's voting capital stock in respect of
the general power to elect directors immediately prior to such transaction do
not own, immediately following such transaction, at least a majority of the
voting capital stock in respect of the general power to elect directors of the
surviving corporation or the person or entity which owns the assets so sold.
(f) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(g) "Committee" shall mean the committee appointed by the Board
in accordance with Section 4 of the Plan.
(h) "Common Stock" shall mean the Common Stock, par value $.01
per share, of the Corporation.
(i) "Corporation" shall mean Catalina Marketing Corporation, a
Delaware corporation, or any successor hereunder.
(j) "Disability" shall mean the condition of an Employee who is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than twelve (12) months.
(k) "Employee" shall mean an individual who is employed (within
the meaning of Section 3401 of the Code and the regulations thereunder) by the
Corporation or a Subsidiary.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(m) "Exercise Price" shall mean the price per Share of Common
Stock, determined by the Administrator, at which an Option may be exercised.
2
<PAGE> 3
(n) "Fair Market Value" shall mean the value of one (1) Share of
Common Stock, determined as follows, without regard to any restriction other
than a restriction which, by its terms, will never lapse:
(1) If the Shares are traded on a nationally recognized
exchange or the National Market System (the "NMS") of the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ"), the closing
price as reported for composite transactions on the date of valuation or, if no
sales occurred on that date, then the average of the highest bid and lowest ask
prices on such exchange or the NMS at the end of the day on such date;
(2) If the Shares are not traded on an exchange or the NMS
but are otherwise traded over-the-counter, the average of the highest bid and
lowest asked prices quoted in the NASDAQ system as of the close of business on
the date of valuation, or, if on such day such security is not quoted in the
NASDAQ system, the average of the representative bid and asked prices on such
date in the domestic over-the-counter market as reported by the National
Quotation Bureau, Inc., or any similar successor organization; and
(3) If neither (1) nor (2) applies, the fair market value as
determined by the Administrator in good faith. Such determination shall be
conclusive and binding on all persons.
(o) "Good Reason" in respect of an Optionee shall mean the
occurrence of any of the following events or conditions following a Change of
Control:
(1) A change in the Optionee's status, title, position or
responsibilities (including reporting responsibilities) that represents a
substantial reduction of the status, title, position or responsibilities in
respect of the Corporation's business as in effect immediately prior thereto;
the assignment to the Optionee of substantial duties or responsibilities that
are inconsistent with such status, title, position or responsibilities; or any
removal of the Optionee from or failure to reappoint or reelect the Optionee to
any of such positions, except in connection with the termination of the
Optionee's employment for Cause, for Disability or as a result of his or her
death, or by the Optionee other than for Good Reason;
(2) A reduction in the Optionee's annual base salary;
(3) The Corporation's requiring the Optionee (without the
Optionee's consent) to be based at any place outside a 35-mile radius of his or
her place of employment immediately prior to a Change of Control, except for
reasonably required travel on the Corporation's business that is not materially
greater than such travel requirements prior to such Change of Control;
3
<PAGE> 4
(4) The Corporation's failure to (i) continue in effect any
material compensation or benefit plan (or a reasonable replacement therefor) in
which the Optionee was participating immediately prior to a Change of Control,
including, but not limited to the Plan, or (ii) provide the Optionee with
compensation and benefits at least equal (in terms of benefit levels and/or
reward opportunities) to those provided for under each employee benefit plan,
program and practice as in effect immediately prior to a Change of Control( or
an in effect following the Change of Control, if greater); or
(5) Any material breach by the Corporation of any provision
of the Plan.
(p) "Incentive Stock Option" shall mean an option described in
Section 422(b) of the Code.
(q) "Non-Employee Director" shall have the meaning assigned to
this phrase in Rule 16b-3 of the Securities and Exchange Commission adopted
under the Exchange Act.
(r) "Nonstatutory Stock Option" shall mean an option not described
in Section 422(b) or 423(b) of the Code.
(s) "Option" shall mean any stock option granted pursuant to the
Plan.
(t) "Option Profit" shall mean the amount (not less than zero) by
which the Fair Market Value of a share of Common Stock subject to a
Nonstatutory Stock Option on the date of a Participant's exercise of a
Nonstatutory Stock Option exceeds the exercise price of such Nonstatutory Stock
Option.
(u) "Optionee" shall mean a Participant who has received an
Option.
(v) "Participant" shall have the meaning assigned to it in
Section 5(a) hereof.
(w) "Plan" shall mean this Catalina Marketing Corporation 1999
Stock Option Plan, as it may be amended from time to time.
(x) "Purchase Price" shall mean the Exercise Price times the
number of Shares with respect to which an Option is exercised.
(y) "Retirement" shall mean the voluntary cessation of employment
by an Employee at such time as may be specified in the then current personnel
policies of the Corporation, in the sole discretion of the Administrator or, in
lieu thereof, upon the attainment of age sixty-five (65) and the completion of
not less than twenty (20) years of service with the Corporation or a
Subsidiary.
4
<PAGE> 5
(z) "Share" shall mean one (1) share of Common Stock, adjusted in
accordance with Section 10 of the Plan (if applicable).
(aa) "Subsidiary" shall mean any subsidiary corporation as defined
in Section 424(f) of the Code.
3. EFFECTIVE DATE.
The Plan was adopted by the Board effective April 29, 1999,
subject to the approval of the Corporation's stockholders pursuant to Section
14 of the Plan.
4. ADMINISTRATION.
The Plan shall be administered, in the discretion of the Board
from time to time, by the Board or by the Committee. The Committee shall be
appointed by the Board and shall consist of not less than three (3) members of
the Board. The Board may from time to time remove members from, or add members
to, the Committee. Vacancies on the Committee, however caused, shall be filled
by the Board. The Board shall appoint one of the members of the Committee as
Chairman. The Administrator shall hold meetings at such times and places as it
may determine. Acts of a majority of the Administrator at which a quorum is
present, or acts reduced to or approved in writing by a unanimous consent of
the members of the Administrator, shall be the valid acts of the Administrator.
The Administrator shall from time to time at its discretion select
the Participants who are to be granted Options, determine the number of Shares
to be subject to Options to be granted to each Optionee, designate such Options
as Incentive Stock Options or Nonstatutory Stock Options and determine to what
extent the Options shall be transferrable. The interpretation and construction
by the Administrator of any provisions of the Plan or of any Option granted
thereunder shall be final. No member of the Administrator shall be liable for
any action or determination made in good faith with respect to the Plan or any
Option granted thereunder.
So long as the Common Stock is registered under Section 12 of the
Exchange Act, then notwithstanding the first or second sentences of the
immediately preceding paragraph, selection of officers and directors for
participation and decisions concerning the timing, pricing and amount of an
Option shall be made solely by the Board, or by the Committee, each of the
members of which shall be a Non-Employee Director.
5. PARTICIPATION.
(a) Eligibility.
5
<PAGE> 6
The Optionees shall be such Employees (who may be officers,
whether or not they are directors) and directors of or consultants to the
Corporation (whether or not they are Employees) (collectively, "Participants";
individually a "Participant") as the Administrator may select subject to the
terms and conditions of Section 5(b) below; provided that directors or
consultants who are not also Employees shall not be eligible to receive
Incentive Stock Options.
(b) Ten-Percent Stockholders.
A Participant who owns more than ten percent (10%) of the
total combined voting power of all classes of outstanding stock of the
Corporation, its parent or any of its Subsidiaries shall not be eligible to
receive an Incentive Stock Option unless (i) the Exercise Price of the Shares
subject to such Option is at least one hundred ten percent (110%) of the Fair
Market Value of such Shares on the date of grant and (ii) in the case of an
Incentive Stock Option, such Option by its terms is not exercisable after the
expiration of five (5) years from the date of grant.
(c) Stock Ownership.
For purposes of Section 5(b) above, in determining stock
ownership, a Participant shall be considered as owning the stock owned,
directly or indirectly, by or for his or her brothers and sisters (by whole or
half blood), spouse, ancestors and lineal descendants. Stock owned, directly or
indirectly, by or for a corporation, partnership, estate or trust shall be
considered as being owned proportionately by or for its shareholders, partners
or beneficiaries. Stock with respect to which such Participant holds an Option
or any other option if (as of the time the Option or such other option is
granted) the terms of such Option or other option provide that it will not be
treated as an Incentive Stock Option, shall not be counted.
(d) Outstanding Stock
For purposes of Section 5(b) above, "outstanding stock" shall
include all stock actually issued and outstanding immediately after the grant
of the Option to the Optionee. "Outstanding stock" shall not include shares
authorized for issuance under outstanding Options held by the Optionee or by
any other person.
6
<PAGE> 7
6. STOCK.
The stock subject to Options granted under the Plan shall be
Shares of the Corporation's authorized but unissued or reacquired Common Stock.
The aggregate number of Shares which may be issued upon exercise of Options
under the Plan shall not exceed one million six hundred thousand (1,600,000).
The number of Shares subject to Options outstanding at any time shall not
exceed the number of Shares remaining available for issuance under the Plan. In
the event that any outstanding Option for any reason expires or is terminated,
the Shares allocable to the unexercised portion of such Option or the Shares so
reacquired may again be made subject to an Option. The limitations established
by this Section 6 shall be subject to adjustment in the manner provided in
Section 10 hereof upon the occurrence of an event specified therein.
Notwithstanding anything herein to the contrary, no Person shall receive
Options under the Plan relating to in excess of 600,000 Shares.
7. TERMS AND CONDITIONS OF OPTIONS.
(a) Stock Option Agreements.
Options shall be evidenced by written stock option agreements
in such form as the Administrator shall from time to time determine. Such
agreements need not be identical but shall comply with and be subject to the
terms and conditions set forth below. No Option shall be effective until the
applicable stock option agreement is executed by both parties thereto.
(b) Optionee's Undertaking.
Each Optionee shall agree to remain in the employ or service
of the Corporation or a Subsidiary and to render services for a period as shall
be determined by the Administrator, from the date of the granting of the
Option, but such agreement shall not impose upon the Corporation or its
Subsidiaries any obligation to retain the Optionee in their employ or service
for any period.
(c) Number of Shares.
Each Option shall state the number of Shares to which it
pertains and shall provide for the adjustment thereof in accordance with the
provisions of Section 10 hereof.
(d) Exercise Price.
7
<PAGE> 8
Each Option shall state the Exercise Price. The Exercise
Price shall not be less than the Fair Market Value on the date of grant and, in
the case of an Incentive Stock Option granted to an Optionee described in
Section 5(b) hereof, shall not be less than one hundred ten percent (110%) of
the Fair Market Value on the date of grant.
(e) Medium and Time of Payment.
The Purchase Price shall be payable in full in United States
dollars upon the exercise of the Option; provided, however, that if the
applicable option agreement so provides, or the Administrator, in its sole
discretion otherwise approves thereof, the Purchase Price may be paid by the
surrender of Shares in good form for transfer, owned by the person exercising
the Option and having a Fair Market Value on the date of exercise equal to the
Purchase Price, or in any combination of cash and Shares, as long as the sum of
the cash so paid and the Fair Market Value of the Shares so surrendered equals
the Purchase Price.
In the event the Corporation determines that it is required
to withhold state or Federal income tax as a result of the exercise of an
Option, as a condition to the exercise thereof, an Optionee may be required to
make arrangements satisfactory to the Corporation to enable it to satisfy such
withholding requirements. Payment of such withholding requirements may be made,
in the discretion of the Administrator, (i) in cash, (ii) by delivery of Shares
registered in the name of the Optionee, or by the Corporation not issuing such
number of Shares subject to the Option, having a Fair Market Value at the time
of exercise equal to the amount to be withheld or (iii) any combination of (i)
and (ii) above.
If the Corporation is required to register under Section
207.3 of Regulation G of the Board of Governors of the Federal Reserve System
(Title 12 Code of Federal Regulations Part 207), then so long as such
registration is in effect, the credit extended by the Corporation to an
Optionee for the purpose of paying the Purchase Price shall conform to the
requirements of such Regulation G.
Upon a duly made deferral election by an Optionee eligible to
participate under the Corporation's Deferred Compensation Plan, Shares
otherwise issuable to the Optionee upon the exercise of a Nonstatutory Stock
Option and payment of the Purchase Price by the surrender of Shares in
accordance with the first paragraph of this Section 7(e), will not be delivered
to the Optionee. In lieu of delivery of such Shares, the Common Stock Account
of the Optionee maintained pursuant to the Corporation's Deferred Compensation
Plan shall be credited with a number of stock units having a value, calculated
pursuant to such plan, equal to the Option Profit associated with the exercised
Nonstatutory Stock Option. Such deferral of Option Profit under the
Corporation's Deferred Compensation Plan is available to Optionees only if the
Shares
8
<PAGE> 9
surrendered in payment of the Purchase Price upon the exercise of a
Nonstatutory Stock Option have been held by the Optionee for at least six
months.
(f) Term and Transferability of Options.
Each Option shall state the time or times when all or part
thereof becomes exercisable. No Option shall be exercisable after the
expiration of ten (10) years (or less, in the discretion of the Administrator)
from the date it was granted, and no Incentive Stock Option granted to an
Optionee described in Section 5(b) hereof shall be exercisable after the
expiration of five (5) years (or less, in the discretion of the Administrator)
from the date it was granted. Unless an Option is designated transferrable by
the Administrator upon grant, during the lifetime of the Optionee, the Option
shall be exercisable only by the Optionee and shall not be assignable or
transferable. No Incentive Stock Option may be designated as transferable. In
the event of the Optionee's death, any nontransferable Option shall not be
transferable by the Optionee other than by will or the laws of descent and
distribution.
(g) Cessation of Employment (Except by Death, Disability or
Retirement).
If an Optionee ceases to be an Employee for any reason other
than his or her death, Disability or Retirement, such Optionee shall have the
right, subject to the restrictions referred to in Section 7(f) above, to
exercise the Option at any time within ninety (90) days (or such shorter period
as the Administrator may determine) after cessation of employment, but, except
as otherwise provided in the applicable option agreement, only to the extent
that, at the date of cessation of employment, the Optionee's right to exercise
such Option had accrued pursuant to the terms of the applicable option
agreement and had not previously been exercised. The foregoing notwithstanding,
a stock option agreement may, in the sole discretion of the Administrator, but
need not, provide that the Option shall cease to be exercisable on the date of
such cessation if such cessation arises by reason of termination for Cause or
if the Optionee upon cessation becomes an employee, director or consultant of a
person or entity that the Administrator, in its sole discretion, determines is
in direct competition with the Corporation.
For purposes of this Section 7(g) the employment relationship
shall be treated as continuing intact while the Optionee is on military leave,
sick leave or other bona fide leave of absence (to be determined in the sole
discretion of the Administrator). The foregoing notwithstanding, employment
shall not be deemed to continue beyond the ninetieth (90th) day after the
Optionee ceased active employment, unless the Optionee's reemployment rights
are guaranteed by statute or by contract.
(h) Death of Optionee.
9
<PAGE> 10
If an Optionee dies while a Participant, or after ceasing to
be a Participant but during the period in which he or she could have exercised
the Option under this Section 7, and has not fully exercised the Option, then
the Option may be exercised in full, subject to the restrictions referred to in
Section 7(f) above, at any time within twelve (12) months (or such shorter
period as the Administrator may determine) after the Optionee's death by the
executor or administrator of his or her estate or by any person or persons who
have acquired the Option directly from the Optionee by bequest or inheritance,
but, except as otherwise provided in the applicable option agreement, only to
the extent that, at the date or death, the Optionee's right to exercise such
Option had accrued and had not been forfeited pursuant to the terms of the
applicable option agreement and had not previously been exercised.
(i) Disability of Optionee.
If an Optionee ceases to be an Employee by reason of
Disability, such Optionee shall have the right, subject to the restrictions
referred to in Section 7(f) above, to exercise the Option at any time within
twelve (12) months (or such shorter period as the Administrator may determine)
after such cessation of employment, but, except as provided in the applicable
option agreement, only to the extent that, at the date of such cessation of
employment, the Optionee's right to exercise such Option had accrued pursuant
to the terms of the applicable option agreement and had not previously been
exercised.
(j) Retirement of Optionee.
If an Optionee ceases to be an Employee by reason of
Retirement, such Optionee shall have the right, subject to the restrictions
referred to in Section 7(f) above, to exercise the Option at any time within
ninety (90) days (or such longer or shorter period as the Administrator may
determine) after cessation of employment, but only to the extent that, at the
date of cessation of employment, the Optionee's right to exercise such Option
had accrued pursuant to the terms of the applicable option agreement and had
not previously been exercised.
(k) Rights as a Stockholder.
An Optionee, or a permitted transferee of an Optionee, shall
have no rights as a stockholder with respect to any Shares covered by his or
her Option until the date of the issuance of a stock certificate for such
Shares. After such issuance of a stock certificate for such Shares, the
Optionee shall have all rights as a stockholder including, without limitation,
the right to vote any such Shares. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property),
distributions or other rights for which the record date is prior to the date
such stock certificate is issued, except as provided in Section 10 hereof.
10
<PAGE> 11
(l) Modification, Extension and Renewal of Options.
Within the limitations of the Plan, the Administrator may
modify an Option, accelerate the rate at which an Option may be exercised or
extend or renew outstanding Options. The foregoing notwithstanding, no
modification of an Option shall, without the consent of the Optionee, alter or
impair any rights or obligations under any Option previously granted.
(m) Other Provisions.
The stock option agreements authorized under the Plan may
contain such other provisions not inconsistent with the terms of the Plan
(including, without limitation, restrictions upon the exercise of the Option or
the transfer of Shares of stock following exercise of the Option) as the
Administrator shall deem advisable.
8. LIMITATION ON ANNUAL AWARDS.
The aggregate Fair Market Value (determined as of the date an
Option is granted) of the stock with respect to which Incentive Stock Options
are exercisable for the first time by any Optionee during any calendar year
under this Plan and all other plans maintained by the Corporation, its parent
or its Subsidiaries, shall not exceed $100,000.
9. TERM OF PLAN.
Options may be granted pursuant to the Plan until the expiration
of the Plan on April 29, 2009.
10. RECAPITALIZATIONS; CHANGE OF CONTROL.
(a) Adjustments in Respect of Recapitalizations.
The number of Shares covered by the Plan as provided in
Section 6 hereof, the number of Shares covered by each outstanding Option and
the Exercise Price thereof shall be proportionately adjusted for any increase
or decrease in the number of issued Shares resulting from a subdivision or
consolidation of Shares or a stock split or the payment of a stock dividend
(but only of Common Stock) or any other increase or decrease in the number of
issued Shares effected without receipt of consideration by the Corporation.
If the Corporation shall merge with another corporation and
the Corporation is the surviving corporation in such merger and under the terms
of such merger the shares of Common Stock outstanding immediately prior to the
merger remain outstanding and unchanged, each outstanding Option shall continue
to apply to the Shares subject thereto and shall also pertain and apply to any
additional securities and other
11
<PAGE> 12
property, if any, to which a holder of the number of Shares subject to the
Option would have been entitled as a result of the merger. If the Corporation
sells all, or substantially all, of its assets, or the Corporation merges
(other than a merger of the type described in the immediately preceding
sentence) or consolidates with another corporation, this Plan and each Option
shall terminate; provided that in such event (i) each Optionee to whom no
Option has been tendered by the surviving or acquiring corporation (or the
parent corporation of the surviving or acquiring corporation) in accordance
with all of the terms of clause (ii) or (iii) immediately below, shall have the
right, for a period of at least thirty days, until five days before the
effective date of such sale, merger or consolidation, to exercise, in whole or
in part (in the discretion of the Optionee), any unexpired Option or Options
issued to him or her, without regard to the installment or vesting provisions
of any option agreement, or (ii) in its sole and absolute discretion, the
surviving or acquiring corporation (or the parent corporation of the surviving
or acquiring corporation) may, but shall not be obligated to, (I) tender to all
Optionees with then outstanding Options under the Plan an option or options to
purchase shares of the surviving or acquiring corporation (or of the parent
corporation of the surviving or acquiring corporation), which new option or
options contain such terms and provisions as shall be required substantially to
preserve the rights and benefits of all Options then held by such Optionees or,
(II) grant the choice to all Optionees with then outstanding Options of (A)
exercising the Options in full as described in clause (i) above or (B)
receiving a replacement Option as set forth in clause (ii)(I). A dissolution or
liquidation of the Corporation, other than a dissolution or liquidation
immediately following a sale of all or substantially all of the assets of the
Corporation, which shall be governed by the immediately preceding sentence,
shall cause each Option to terminate. In the event an Optionee exercises any
unexpired Option or Options prior to the effectiveness of a sale of all or
substantially all of the Corporation's assets or a merger or consolidation of
the Corporation with another corporation in accordance with clause (i) of this
Section 10, such exercise of any Option or Options shall be subject to the
consummation of such sale, merger or consolidation. If such sale, merger or
consolidation is not consummated, any otherwise unexpired Option or Options
shall be deemed to have not been exercised, and the Optionee and the
Corporation shall take all steps necessary to achieve this effect including,
without limitation, the Optionee delivering to the Corporation the stock
certificate representing the Shares issued upon the exercise of the Option,
endorsed in favor of the Corporation, and the Corporation returning to the
Optionee the consideration representing the Purchase Price paid by the Optionee
upon the exercise of the Option.
To the extent that the foregoing adjustments relate to
securities of the Corporation, such adjustments shall be made by the
Administrator, whose determination shall be conclusive and binding on all
persons.
Except as expressly provided in this Section 10, the Optionee
shall have no rights by reason of any subdivision of consolidation of shares of
stock of any class, the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class or by reason of any
dissolution, liquidation, merger or
12
<PAGE> 13
consolidation or spin-off of assets or stock of another corporation, and any
issue by the Corporation of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to an Option.
The grant of an Option pursuant to the Plan shall not affect
in any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure, to merge or consolidate or to dissolve, liquidate, sell or transfer
all or any part of its business or assets.
(b) Acceleration under Certain Circumstances Following a Change
of Control.
Notwithstanding any other provision of the Plan to the
contrary and except as otherwise expressly provided in the applicable stock
option agreement, the vesting or similar installment provisions relating to the
exercisability of any Option or replacement option tendered to an Optionee
pursuant to or as a result of, or relating to, a transaction described in the
second paragraph of Section 10(a) hereof shall be accelerated and the Optionee
shall have the right, for a period of at least thirty days, to exercise such
option in the event the Optionee's employment with or services for the
Corporation should terminate within two years following a Change of Control,
unless such employment or services are terminated by the Corporation for Cause
or by the Optionee voluntarily without Good Reason, or such employment or
services are terminated due to the death or Disability of the Optionee.
Notwithstanding the foregoing, no Incentive Stock Option shall become
exercisable pursuant to the foregoing without the Optionee's consent, if the
result would be to cause such option not to be treated as an Incentive Stock
Option.
11. SECURITIES LAW REQUIREMENTS.
(a) Legality of Issuance.
No Shares shall be issued upon the exercise of any Option
unless and until the Corporation has determined that:
(i) it and the Optionee have taken all actions required to
register the offer and sale of the Shares under the Act, or to perfect an
exemption from the registration requirements thereof;
(ii) any applicable listing requirement of any stock exchange
on which the Common Stock is listed has been satisfied; and
(iii) any other applicable provision of state or Federal law
has been satisfied.
13
<PAGE> 14
(b) Restrictions on Transfer; Representations of Optionee;
Legends.
Regardless of whether the offering and sale of Shares under
the Plan has been registered under the Act or has been registered or qualified
under the securities laws of any state, the Corporation may impose restrictions
upon the sale, pledge or other transfer of such Shares (including the placement
of appropriate legends on stock certificates) if, in the judgment of the
Corporation and its counsel, such restrictions are necessary or desirable in
order to achieve compliance with the provisions of the Act, the securities laws
of any state or any other law. In the event that the sale of Shares under the
Plan is not registered under the Act but an exemption is available which
requires an investment representation or other representation, each Optionee
shall be required to represent that such Shares are being acquired for
investment, and not with a view to the sale or distribution thereof, and to
make such other representations as are deemed necessary or appropriate by the
Corporation and its counsel. Stock certificates evidencing Shares acquired
under the Plan pursuant to an unregistered transaction shall bear the following
restrictive legend (or similar legend in the discretion of the Administrator)
and such other restrictive legends as are required or deemed advisable under
the provisions of any applicable law:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO DISTRIBUTION AND MAY NOT BE
OFFERED FOR SALE, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE
SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY IN FORM AND CONTENT TO THE
ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT."
Any determination by the Corporation and its counsel in
connection with any of the matters set forth in this Section 11 shall be
conclusive and binding on all persons.
14
<PAGE> 15
(c) Registration or Qualification of Securities.
The Corporation may, but shall not be obligated to, register
or qualify the sale of Shares under the Act or any other applicable law. The
Corporation shall not be obligated to take any affirmative action in order to
cause the sale of Shares under the Plan to comply with any law.
(d) Exchange of Certificates.
If, in the opinion of the Corporation and its counsel, any
legend placed on a stock certificate representing Shares sold under the Plan is
no longer required, the holder of such certificate shall be entitled to
exchange such certificate for a certificate representing the same number of
Shares but without such legend.
12. AMENDMENT OF THE PLAN.
The Board may from time to time, with respect to any Shares at the
time not subject to Options, suspend or discontinue the Plan or revise or amend
it in any respect whatsoever except that, without the approval of the
Corporation's stockholders, no such revision or amendment shall:
(a) Increase the number of Shares which may be issued under the
Plan;
(b) Change the designation in Section 5 hereof with respect to
the classes of persons eligible to receive Options;
(c) Modify the Plan such that it fails to meet the requirements
of Rule 16b-3 of the Securities and Exchange Commission for the exemption of
the acquisition, cancellation, expiration or surrender of Options from the
operation of Section 16(b) of the Exchange Act; or
(d) Amend this Section 12 to defeat its purpose.
13. APPLICATION OF FUNDS.
The proceeds received by the Corporation from the sale of Common
Stock pursuant to the exercise of an Option will be used for general corporate
purposes.
15
<PAGE> 16
14. APPROVAL OF STOCKHOLDERS.
The adoption of this Plan is subject to approval by the
affirmative vote of the holders of a majority of the outstanding shares present
and entitled to vote at the first annual meeting of stockholders of the
Corporation following the adoption of the Plan, and in no event later than
April 29, 2000. Any additional amendment described in paragraphs (a) through
(d) of Section 12 shall also be subject to approval by the Corporation's
stockholders.
15. EXECUTION.
To record the adoption of the Plan by the Board on April 29, 1999
the Corporation has caused its authorized officers to affix the corporate name
and seal hereto.
CATALINA MARKETING CORPORATION
By
--------------------------------------
George W. Off, Chairman
By
--------------------------------------
Barry A. Brooks, Secretary
[Seal]
16
<PAGE> 1
EXHIBIT 15
August 12, 1999
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 quarter ended June 30, 1999, which
includes our report dated July 13, 1999, 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
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 22,203
<SECURITIES> 0
<RECEIVABLES> 40,453
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 104,358
<PP&E> 208,272
<DEPRECIATION> 118,439
<TOTAL-ASSETS> 239,506
<CURRENT-LIABILITIES> 88,570
<BONDS> 1,904
0
0
<COMMON> 186
<OTHER-SE> 139,732
<TOTAL-LIABILITY-AND-EQUITY> 239,506
<SALES> 72,614
<TOTAL-REVENUES> 72,614
<CGS> 30,168
<TOTAL-COSTS> 58,163
<OTHER-EXPENSES> 201
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 14,433
<INCOME-TAX> 5,730
<INCOME-CONTINUING> 8,703
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,703
<EPS-BASIC> .47
<EPS-DILUTED> .45
</TABLE>
<PAGE> 1
EXHIBIT 99
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) and subsidiaries as of
June 30, 1999, and the related condensed consolidated statements of income and
cash flows for the three-month periods ended June 30, 1999 and 1998. 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 and
subsidiaries as of March 31, 1999, 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 29, 1999, 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, 1999, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
ARTHUR ANDERSEN LLP
Tampa, Florida,
July 13, 1999
