ST. PETERSBURG, Fla., May 8 /PRNewswire-FirstCall/ -- Catalina Marketing
Corporation (NYSE: POS) today reported results for its fourth quarter and
fiscal year ended March 31, 2003. Revenue for the quarter was $133.0 million,
compared to $133.5 million in the fourth quarter of the prior fiscal year.
Quarterly net income was $5.4 million, or $0.10 per diluted share, after the
effect of the fourth quarter non-cash charge of $10.5 million, or $0.20 per
diluted share, related to an impairment charge against goodwill and other
assets in Catalina Marketing UK. Excluding the effect of the non-cash charge,
net income would have been $15.9 million, or $0.30 per diluted share. Net
income for the comparable prior year period was $22.7 million, or $0.40 cents
per diluted share.
For the twelve month period ended March 31, 2003, total revenue grew 6
percent to $474.4 million, versus $446.7 million for the comparable prior year
period. Net income for the current fiscal year totaled $43.4 million, or
$0.79 cents per diluted share, net of the $10.5 million, or $0.19 per diluted
share, fourth quarter non-cash charge and the $2.5 million, or $0.05 per
diluted share, previously disclosed second quarter non-cash charge to
recognize impairment in the carrying value of certain cost-based investments.
Prior to the impact of the non-cash charges, earnings for the fiscal year
would have been $56.4 million, or $1.03 per diluted share. Net income for the
comparable prior year period was $61.9 million, or $1.08 per diluted share.
Daniel D. Granger, chairman and chief executive officer, commented, "Our
overall results for the quarter were in line with the guidance provided in our
April 15, 2003 press release. As we described in the earlier release,
Catalina Health Resource experienced a disappointing fourth quarter with a
significant shortfall in revenue. The cautious environment that surrounds the
advertising and promotional activities of our pharmaceutical clients and
retail pharmacies continued to reduce promotional spending during the quarter,
causing revenues in that business to decline 34 percent versus the prior year
fourth quarter. In addition, the company chose to incur higher than expected
operating costs during the fourth quarter which also had a negative impact on
earnings."
Granger continued, "While we view our fourth quarter results as
disappointing, most of our business units other than Catalina Health Resource
achieved or exceeded previous estimates for the quarter. The core domestic
business posted revenue growth of 4 percent over the fourth quarter of last
year. European operations posted better than expected results for the quarter
with revenue almost doubling, up 96 percent. The Japanese coupon business
also performed well during the quarter, with revenue increasing by 31 percent
and announcing new contracts with Sotetsu Rosen and Izumi."
Commenting on the upcoming first quarter and full fiscal year, Granger
stated, "Now that we have reviewed the results from the full fiscal year and
translated the impact to fiscal year 2004, the company estimates consolidated
revenues for the fiscal year to increase between 5 percent and 10 percent over
the year ended March 31, 2003. As previously disclosed, the company
anticipates a first quarter non-cash goodwill impairment and other asset
charge estimated at $25 million, or approximately $0.46 per diluted share,
related to the Japanese billboard business. Additionally, the company expects
to adopt the recently issued Statement of Financial Accounting Standards
Interpretation No. 46, "Consolidation of Variable Interest Entities" in the
second quarter of fiscal 2004. The company's corporate headquarters facility
in St. Petersburg, Florida, is financed through a lease with a variable
interest entity. The company expects to begin to report operations related to
the variable interest entity upon adoption of the accounting interpretation.
The resulting cumulative effect of the accounting change related to the
accumulated depreciation on the headquarters facility will be approximately
$3.4 million, or $0.06 per diluted share. Earnings for the year ending March
31, 2004 are estimated to be in the range of $0.56 to $0.61 per diluted share,
after the anticipated effect of the Japan charge, and the cumulative effect of
the accounting change. Excluding the effect of these charges, earnings for
the fiscal year are expected to range from $1.08 to $1.13 per diluted share, a
5 percent to 10 percent increase compared to the prior year."
Granger continued, "For the first quarter ending June 30, 2003,
consolidated revenue is anticipated to range from flat to a decline of 5
percent compared to the first quarter of the prior fiscal year, due primarily
to the results expected at Catalina Health Resource. As a result, we estimate
that consolidated first quarter net loss will be between $0.34 and $0.36 per
diluted share, after the effect of the estimated $25 million, or approximately
$0.46 per diluted share, non-cash charge mentioned above. Excluding the
effect of the non-cash charge, first quarter earnings are expected to be in
the range of $0.10 to $0.12 per diluted share."
Operating and corporate highlights for the quarter included the following:
* Core Domestic Business -- Revenue in the fourth quarter increased
approximately 4 percent over the comparable prior year period. On an annual
basis, the core domestic business revenue grew approximately 9 percent over
the previous fiscal year. The company's U.S. installed store base totaled
17,498 stores at the end of the quarter, compared to 16,488 at the end of the
prior fiscal year. There was a net increase to the company's installed store
base of 165 stores this quarter and 1,010 for the fiscal year.
* Catalina Health Resource -- Revenue for the fourth quarter was
approximately 34 percent lower than the comparable prior year period. For the
fiscal year, Catalina Health Resource revenue decreased approximately 9
percent compared to the prior year. The company added 141 stores on a net
basis during the quarter, for a total of 17,827 pharmacy outlets at the end of
the year. The net loss at Catalina Health Resource approximated $0.06 per
diluted share this quarter. For the fiscal year, Catalina Health Resource
accounted for a net loss of approximately $0.08 per diluted share.
* Catalina Marketing Europe -- Catalina Marketing Europe, which consists
of in-store operations in France, Italy and the United Kingdom, experienced an
increase in revenue from the prior year fourth quarter of approximately 96
percent. The company completed installations in 398 stores on a net basis
during the quarter, for a total installed store base at the end of the fiscal
year of 3,949. For the quarter, Catalina Marketing Europe posted a net loss
of $0.17 per diluted share, after the effect of the $10.5 million, or $0.20
per diluted share, non-cash impairment charge. For the fiscal year ended
March 31, 2003, the loss in Europe was $0.16 per diluted share, after the
effect of the $0.19 per diluted share fourth quarter charge. Excluding the
effect of the non-cash charge, Catalina Marketing Europe contributed $0.03 to
earnings for the fourth quarter and $0.03 for the fiscal year.
* Catalina Marketing Japan -- During the quarter, the company's Japanese
joint venture experienced a quarterly revenue decline of 9 percent compared to
the fourth quarter of the prior year. Coupon revenue increased 31 percent,
but was more than offset by the decline in billboard revenue. The company
completed the installation of 50 stores on a net basis during the quarter, for
a total installed store base at the end of the period of 568 stores. The net
loss in Japan approximated $0.03 and $0.08 per diluted share in the quarter
and fiscal year, respectively.
* Catalina Marketing Research Solutions -- Revenue in the company's
research operations decreased approximately 34 percent compared to the fourth
quarter of the prior year. For the fiscal year ended March 31, 2003, revenue
decreased approximately 2 percent from fiscal year 2002. Catalina Marketing
Research posted a nominal loss for the quarter and contributed approximately
$0.02 per diluted share for the fiscal year ended March 31, 2003.
* Stock Repurchases -- During the quarter, the company repurchased 816,300
shares of its common stock for a total of $15.1 million, at an average price
of $18.50 per share. During the fiscal year, the company purchased 3,132,100
shares of its common stock for a total of $72.0 million, at an average price
of $22.98 per share. The company currently has authorization to repurchase an
additional $57.3 million of common stock under the July 2002 Board of
Directors' authorization.
* Conference Call -- The company will host a conference call today, May 8,
2003 at 5:00 PM EDT to discuss fourth quarter results. The dial-in number is
(800) 863-4938 and the International Dial number is (706) 645-0372.
Rebroadcast of the call will be available from 8:00 PM EDT on Thursday, May 8
until midnight EDT on Thursday, May 15. The replay number is (800) 403-4440
and the International replay number is (706) 645-6523.
Based in St. Petersburg, Fla., Catalina Marketing Corporation
(http://www.catalinamarketing.com) provides a wide range of strategic, targeted
marketing solutions for consumer goods companies and retailers. The targeted
marketing services of the company are provided by interrelated operating
groups that strive to influence the purchasing behavior of consumers wherever
and whenever they make purchase decisions. Through these operating groups,
Catalina Marketing is able to reach consumers internationally and domestically
-- in-store, using incentives, loyalty programs, sampling and advertising
messages; at home, through direct mailings; and online. Personally
identifiable data that may be collected from the company's targeted marketing
programs, as well as its research programs, will not be sold or given to any
outside party without the express permission of the consumer.
Certain statements in the preceding paragraphs are forward looking, and
actual results may differ materially. Statements not based on historic facts
involve risks and uncertainties, including, but not limited to, the changing
market for promotional activities, especially as it relates to policies and
programs of packaged goods and pharmaceutical manufacturers for the issuance
of certain product coupons and other promotions, 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 policies and programs of the company's retail
partners, the success of new services and businesses and the pace of their
implementation, and the company's ability to maintain favorable client
relationships.
- Financial Tables Follow -
Catalina Marketing Corporation
Selected Financial Data
(in thousands, except per share amounts)
Three Months Twelve Months
Periods Ended
March 31 2003 2002 2003 2002
Revenue $133,008 $133,536 $474,352 $446,668
Direct Operating
Expenses 59,468 55,668 213,228 193,121
Selling, General
and Administrative 34,606 30,929 124,166 111,492
Depreciation and
Amortization * 23,528 10,536 55,862 42,032
Income from
Operations 15,406 36,403 81,096 100,023
Interest Expense
and Other ** 335 698 3,232 2,619
Minority Interest 18 8 46 28
Provision for
Income Taxes 9,707 13,031 34,534 35,552
Net Income $5,382 $22,682 $43,376 $61,880
Diluted:
Earnings Per Share $0.10 $0.40 $0.79 $1.08
Weighted Average
Shares Outstanding 53,434 56,984 54,885 57,104
Basic:
Earnings Per Share $0.10 $0.41 $0.80 $1.11
Weighted Average
Shares Outstanding 53,386 55,458 54,474 55,922
Selected Other Data
March 31
2003 2002
Balance Sheet and
Cash Flow (in thousands):
Cash $1,323 $13,276
Stockholders'
Equity 234,866 254,868
Twelve Month EBITDA 136,958 142,055
U.S. Core Domestic
Business:
Number of Stores at
Quarter End 17,498 16,488
Net Stores
Installed During
Quarter/YTD 165/1,010 (15)/1,013
Promotions Printed
During Quarter /
YTD (in millions) 922/3,335 959/3,230
Weekly Shopper
Reach at Quarter
End (in millions) 203 204
International
Business:
Number of Stores at
Quarter End 4,517 3,381
Net Stores
Installed During
Quarter / YTD 448/1,136 43/764
Promotions Printed
During Quarter /
YTD (in millions) 137/502 91/368
Weekly Shopper
Reach at Quarter
End (in millions) 48 36
* Includes the effect of the fourth quarter FY03 non-cash charge
of $10.5 million for asset impairment in Catalina Marketing UK.
** Includes the effect of the second quarter FY03 non-cash charge
of $2.5 million for certain cost-based investments.
Catalina Marketing Corporation
Reconciliation of GAAP to Pro Forma Non-GAAP Net Income (1)
(in thousands, except per share amounts)
Three Months Twelve Months
Periods Ended March 31 2003 2002 2003 2002
Net Income - GAAP $5,382 $22,682 $43,376 $61,880
Adjustments:
Cost based investments -- -- 2,540 --
Asset Impairment Charge 10,483 -- 10,483 --
Total Adjustments 10,483 -- 13,023 --
Net Income (Pro forma Non-GAAP) $15,865 $22,682 $56,399 $61,880
Diluted Earnings per Share:
Earnings Per Share - GAAP $0.10 $0.40 $0.79 $1.08
Adjustments to Earnings per Share 0.20 -- 0.24 --
Earnings Per Share - Pro forma
Non-GAAP $0.30 $0.40 $1.03 $1.08
Diluted Shares Used
in Calculation 53,434 56,984 54,885 57,104
Basic Earnings per Share:
Earnings Per Share - GAAP $0.10 $0.41 $0.80 $1.11
Adjustments to Earnings per Share 0.20 -- 0.24 --
Earnings Per Share - Pro forma
Non-GAAP $0.30 $0.41 $1.04 $1.11
Basic Shares Used in Calculation 53,386 55,458 54,474 55,922
(1) The non-GAAP pro forma net income results are a supplement to the
financial data based on generally accepted accounting principles (GAAP).
These non-GAAP pro forma results include adjustments primarily for non-
cash charges related to the write-off of certain cost-based investments
and the impairment of goodwill and other intangible assets. The company
believes this presentation provides useful information to investors
because it assists investors in better understanding the company's
operations for the quarter and the full fiscal year.
SOURCE Catalina Marketing Corporation
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Related links:
http://www.catalinamarketing.com
CONTACT:
Christopher W. Wolf, Chief Financial Officer,
+1-727-579-5218, or Joanne Freiberger, Vice President, Finance,
+1-727-579-5116, both of Catalina Marketing Corporation
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