8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) November 4, 2004

Commission File Number: 1-11008

CATALINA MARKETING CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization) 33-0499007
(I.R.S. Employer
Identification Number)

200 Carillon Parkway, St. Petersburg, Florida
(Address of Principal Executive Offices) 33716-2325
(Zip Code)

Registrant’s Telephone Number, Including Area Code: (727) 579-5000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2 (b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))

TABLE OF CONTENTS

Ex-99.1 November 4, 2004 Press Release

Ex-99.2 November 4, 2004 Webcast Script

     Item 2.02. Results of Operations and Financial Condition

     The following disclosure is being furnished pursuant to Item 2.02 Results of Operations and Financial Condition, of Form 8-K. On November 4, 2004, Catalina Marketing Corporation issued a press release announcing its financial results for its second quarter and six months ended September 30, 2004. The press release is attached hereto as Exhibit 99.1 and is being furnished, and not filed or incorporated by reference into any other statement or report of the Company, under Item 2.02 to this Report on Form 8-K.

     On November 4, 2004, commencing at 10:00 a.m., Catalina Marketing Corporation hosted a webcast. Certain financial information relating to Catalina Marketing Corporation that was not expressly included in the press release referenced above was disclosed during the webcast. A copy of the script used during the webcast containing such financial information is included as Exhibit 99.2 to this Report on Form 8-K and incorporated herein by reference. Exhibit 99.2 is being furnished and not filed or incorporated by reference into any statement or report of Catalina Marketing Corporation, under Item 2.02 to this Report on Form 8-K.

Item 9.01. Financial Statements and Exhibits

(c) Exhibits	99.1 – Press Release dated November 4, 2004
	99.2 – Script for Webcast held November 4, 2004

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly authorized and caused the undersigned to sign this report on the registrant’s behalf.

November 9, 2004	CATALINA MARKETING CORPORATION
	(Registrant)
	/s/ Christopher W. Wolf
	Christopher W. Wolf
	Executive Vice President and Chief Financial Officer
	(Authorized officer of Registrant and principal
	financial officer)

Exhibit Index

Exhibit Number	Description
99.1	Press Release dated November 4, 2004
99.2	Script for Webcast held November 4, 2004

EX-99.1

Exhibit 99.1

NEWS

INVESTOR CONTACT:
Christopher W. Wolf
Chief Financial Officer
(727) 579-5218

Joanne Freiberger
Vice President, Finance
(727) 579-5116

MEDIA CONTACT:
Rachel Keener
Corporate Communications Manager
(727) 579-5224

Catalina Marketing Reports Financial Results
For Second Quarter of Fiscal 2005

ST. PETERSBURG, Fla., November 4, 2004 — Catalina Marketing Corporation (NYSE: POS) today reported financial results for its second fiscal quarter and first six months ended September 30, 2004.

For the three months ended September 30, 2004, consolidated revenues were $103.7 million, compared with revenues of $107.7 million in the comparable period last year. The company reported consolidated net income of $20.3 million, or $0.39 per diluted share, for the second quarter of fiscal 2005, compared with a net loss of $11.1 million, or a loss of $0.21 per diluted share, for the second quarter of fiscal 2004.

On a pro forma non-GAAP basis (which excludes the results of businesses that have either been disposed of or the disposition of which is planned, as well as the removal of the one-time deferral of revenues resulting from the prior years’ revenue recognition adjustments to Catalina Health Resource (CHR), as described further below), consolidated revenues were $102.4 million for the three months ended September 30, 2004, compared with $100.3 million of revenues for the same period last year. Pro forma non-GAAP consolidated net income was $18.9 million, or $0.36 per diluted share, for the three months ended September 30, 2004, compared with $14.2 million of net income, or $0.27 per diluted share, for the same period last year.

For the six months ended September 30, 2004, consolidated revenues were $200.5 million, compared with revenues of $194.3 million in the comparable period last year. The company

reported consolidated net income of $31.2 million, or $0.60 per diluted share, for the first half of fiscal 2005, compared with a net loss of $6.8 million, or a loss of $0.13 per diluted share, for the first half of fiscal 2004.

On a pro forma non-GAAP basis, consolidated revenues were $197.8 million for the six months ended September 30, 2004, compared with $182.1 million of revenues for the same period last year. Pro forma non-GAAP consolidated net income was $32.2 million, or $0.62 per diluted share, for the six months ended September 30, 2004, compared with $18.7 million of net income, or $0.36 per diluted share, for the same period last year.

Dick Buell, Catalina president and chief executive officer stated, “The results achieved in the second quarter were encouraging, and they reinforce our belief that our strategy to focus on proprietary applications at the point of sale is key to our long-term growth and vitality. Our plans have been formulated and as reflected in the accomplishments achieved to date, we believe these results demonstrate that the company has taken the necessary steps to develop a foundation for the future.”

Pro Forma Non-GAAP Adjustments

This pro forma non-GAAP financial information includes the results of the company’s ongoing business operations and, accordingly, excludes (i) the effect of CHR revenues recognized in fiscal 2004 that had been deferred from prior fiscal years, (ii) the financial results of the business units that have been divested, and (iii) the financial results of the remaining business unit targeted for divestiture by the company. In the second quarter of fiscal 2005, Catalina Marketing sold its Japan Billboard business and its Direct Marketing Services unit and has reported their aggregated results as ‘Discontinued Operations’ on the income statement. The company has also previously announced its intention to divest Catalina Marketing Research Solutions (CMRS). Investors are urged to review the Form 10-Q for a detailed discussion of the financial results and business descriptions.

Summary of Segment Results

	Three Months Ended					Three Months Ended
	September 30, 2004					September 30, 2003
(In thousands)	Revenues		Income/Loss			Revenues		Income/Loss
Catalina Marketing Services	$	66,070	$	18,896		$	71,427	$	18,870
Catalina Health Resource		19,181		2,774			15,153		(146	)
International		16,891		2,073			13,633		1,083
Corp / Eliminations		230		(4,890	)		114		(5,641	)
Total Pro Forma Non-GAAP	$	102,372	$	18,853		$	100,327	$	14,166
Discontinued Operations	$	—	$	3,543		$	—	$	(27,648	)
CMRS		1,345		(2,117	)		3,354		92
Catalina Health Resource Adj.		—		—			3,995		2,279
Total Pro Forma Adjustment	$	1,345	$	1,426		$	7,349	$	(25,277	)
Consolidated GAAP	$	103,717	$	20,279		$	107,676	$	(11,111	)

	Six Months Ended					Six Months Ended
	September 30, 2004					September 30, 2003
(In thousands)	Revenues		Income/Loss			Revenues			Income/Loss
Catalina Marketing Services	$	129,468	$	35,029		$	131,026		$	31,706
Catalina Health Resource		37,046		3,848			28,572			(2,810	)
International		31,138		2,874			22,744			(63	)
Corp / Eliminations		122		(9,535	)		(197	)		(10,093	)
Total Pro Forma Non-GAAP	$	197,774	$	32,216		$	182,145		$	18,740
Discontinued Operations	$	—	$	1,543		$	—		$	(28,131	)
Cumulative Effect of Accounting Change										(770	)
CMRS		2,727		(2,554	)		7,121			367
Catalina Health Resource Adj.		—		—			5,042			2,946
Total Pro Forma Adjustment	$	2,727	$	(1,011	)	$	12,163		$	(25,588	)
Consolidated GAAP	$	200,501	$	31,205		$	194,308		$	(6,848	)

Review of Operations

The company provided the following review and highlights of the performance of Catalina Marketing’s continuing business segments:

• Catalina Marketing Services – CMS revenues were $66.1 million in the quarter ended September 30, 2004, compared with $71.4 million in the same period last year. Net income for the second fiscal quarter was $18.9 million, or $0.36 per diluted share, in both fiscal 2005 and fiscal 2004. For the first six months of fiscal 2005, CMS revenues were $129.5 million and net income was $35.0 million, compared with revenues and net income of $131.0 million and $31.7 million, respectively, in the first six months of fiscal 2004. Earnings were $0.67 and $0.61 per diluted share in the six months ended September 30, 2004 and 2003, respectively.

• Catalina Health Resources – CHR revenues were $19.2 million and net income was $2.8 million, or $0.05 per diluted share, for the quarter ended September 30, 2004, compared with revenues of $19.1 million and net income of $2.1 million, or $0.04 per diluted share, for the same period last year. On a pro forma non-GAAP basis, CHR revenues grew 26.6% to $19.2 million in the second quarter of the current fiscal year, compared with $15.2 million in the same period last year and pro forma non-GAAP net income was $2.8 million, or $0.05 per diluted share, compared with a loss of $0.1 million for the comparable prior year period. For the first six months of fiscal 2005, CHR revenues were $37.0 million resulting in net income of $3.8 million, or $0.07 per diluted share, compared with $33.6 million in revenues and $0.1 million in net income for the first six months of fiscal 2004. On a pro forma non-GAAP basis, fiscal year 2004 year-to-date revenues were $28.6 million with a net loss of $2.8 million, or a net loss of $0.05 per diluted share.

• Catalina Marketing International – CMI revenues increased 23.9% to $16.9 million in the quarter ended September 30, 2004, compared with $13.6 million in the same period last year. Net income for the quarter ended September 30, 2004 was $2.1 million, or $0.04 per diluted share, compared with $1.1 million, or $0.02 per diluted share, for the comparable prior year period. For the first six months of fiscal 2005, CMI revenues were $31.1 million resulting in net income of $2.9 million, or $0.05 per diluted share, compared with revenues of $22.7 million and a net loss of $0.1 million for the six months ended September 30, 2003.

• Catalina Marketing Research Solutions – CMRS second quarter revenues were $1.3 million compared with $3.4 million in the second quarter of fiscal 2004. During the second quarter of fiscal 2005, the company recorded an additional impairment expense related to goodwill and other tangible assets of $3.0 million. CMRS incurred a second quarter net loss of $2.1 million, or $0.04 per diluted share, compared with net income of $0.1 million in the comparable prior year period. For the six months ended September 30, 2004, CMRS revenues were $2.7 million compared with $7.1 million in fiscal 2004. The six-month net loss for CMRS totaled $2.6 million, or $0.05 per diluted share, compared with net income of $0.4 million, or $0.01 per diluted share, in the first six months of fiscal 2004.

The company’s disposition of its Direct Marketing Services unit and its Japan Billboard business during the second quarter of fiscal 2005 resulted in a net gain of $3.5 million from the operations and disposition of these assets. The aggregated results of these business units are reported in ‘Discontinued Operations’ on the income statement.

During the second quarter of fiscal year 2005, Catalina’s board of directors authorized $100 million

of funds to be available for the repurchase of the company’s common stock. This authorization replaced the $44 million unused portion of the $100 million repurchase program authorized by the board in July 2002. As of September 30, 2004, the company had not yet repurchased any of its stock during the current fiscal year.

Mr. Buell said, “We are pleased with the progress made in the second quarter. Several key steps were taken toward our objectives, and we are now focusing on the Catalina businesses in which we hold strategic advantages that will serve to generate long-term growth and profitability.”

Catalina Marketing said it plans to file its Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, with the Securities and Exchange Commission next week. Investors are urged to review the Form 10-Q for a detailed discussion of the company’s financial results and business descriptions.

Webcast Scheduled

The company also announced that it will host a webcast on Thursday, November 4, 2004; at 10:00 a.m. EST to discuss its financial results. The webcast may be accessed at www.corporate-ir.net/ireye/ir_site.zhtml?ticker=POS&script=1010&item_id=946944, and will be available for replay from November 4, 2004 through Monday, December 6, 2004.

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

	GAAP
	Three Months						Six Months
Periods Ended September 30	2004			2003			2004			2003
Revenues	$	103,717		$	107,676		$	200,501		$	194,308
Direct Operating Expenses		32,713			35,991			67,600			70,692
Selling, General and Administrative		29,331			31,298			59,086			63,374
Impairment Charge		3,298			—			3,298			—
Depreciation and Amortization		10,698			11,174			22,337			22,533
Income from Operations		27,677			29,213			48,180			37,709
Other (Income) Expense		(126	)		211			267			(38	)
Provision for Income Taxes		11,067			12,465			18,251			15,694
Income from Continuing Operations		16,736			16,537			29,662			22,053
Gain (Loss) from Discontinued Operations		260			(27,648	)		(1,740	)		(28,131	)
Gain (Loss) from Disposition		3,283			—			3,283			—
Income (Loss) from Discontinued Operations		3,543			(27,648	)		1,543			(28,131	)
Cumulative effect of acctg change		—			—			—			(770	)
Net Income (Loss)	$	20,279		$	(11,111	)	$	31,205		$	(6,848	)
Earnings Per Share, Basic:
Earnings Per Share from Continuing Operations	$	0.32		$	0.32		$	0.57		$	0.43
Income (Loss) from Discontinued Operations	$	0.07		$	(0.53	)	$	0.03		$	(0.54	)
Cumulative Effect of Accounting Change	$	—		$	—		$	—		$	(0.02	)
Net Income (Loss) Per Common Share	$	0.39		$	(0.21	)	$	0.60		$	(0.13	)
Weighted Average Shares Outstanding		52,231			52,217			52,233			52,375
Earnings Per Share, Diluted:
Earnings Per Share from Continuing Operations	$	0.32		$	0.32		$	0.57		$	0.43
Income (Loss) from Discontinued Operations	$	0.07		$	(0.53	)	$	0.03		$	(0.54	)
Cumulative Effect of Accounting Change	$	—		$	—		$	—		$	(0.02	)
Net Income (Loss) Per Common Share	$	0.39		$	(0.21	)	$	0.60		$	(0.13	)
Weighted Average Shares Outstanding		52,311			52,217			52,269			52,375

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

	Pro Forma Non-GAAP
	Three Months					Six Months
Periods Ended September 30	2004			2003		2004		2003
Revenues	$	102,372		$	100,327	$	197,774	$	182,145
Direct Operating Expenses		31,727			34,270		65,515		67,201
Selling, General and Administrative		28,516			29,931		57,339		60,576
Impairment Charge		288			—		288		—
Depreciation and Amortization		10,606			11,066		22,158		22,321
Income from Operations		31,235			25,060		52,474		32,047
Other (Income) Expense		(126	)		211		268		(38	)
Provision for Income Taxes		12,508			10,683		19,990		13,345
Income from Continuing Operations		18,853			14,166		32,216		18,740
Gain (Loss) from Discontinued Operations		—			—		—		—
Gain (Loss) from Disposition		—			—		—		—
Income (Loss) from Discontinued Operations		—			—		—		—
Net Income (Loss)	$	18,853		$	14,166	$	32,216	$	18,740
Earnings Per Share, Basic:
Earnings Per Share from Continuing Operations	$	0.36		$	0.27	$	0.62	$	0.36
Income (Loss) from Discontinued Operations	$	—		$	—	$	—	$	—
Net Income (Loss) Per Common Share	$	0.36		$	0.27	$	0.62	$	0.36
Weighted Average Shares Outstanding		52,231			52,217		52,233		52,375
Earnings Per Share, Diluted:
Earnings Per Share from Continuing Operations	$	0.36		$	0.27	$	0.62	$	0.36
Income (Loss) from Discontinued Operations	$	—		$	—	$	—	$	—
Net Income (Loss) Per Common Share	$	0.36		$	0.27	$	0.62	$	0.36
Weighted Average Shares Outstanding		52,311			52,217		52,269		52,375

Catalina Marketing Corporation
Selected Other Data
(in thousands, except store data)

	September 30		September 30
	2004		2003
	GAAP		GAAP
Balance Sheet and Cash Flow (in thousands):
Cash	$	97,345	$	9,165
Stockholders’ Equity	$	200,126	$	197,113
Cash Flows from Operating Activities Qtr / YTD	$	40,603 / $42,469	$	37,162 / $54,441
Catalina Marketing Services:
Number of Stores at Quarter End		17,644		17,581
Net Stores Installed During Quarter / YTD		37 / 40		12 / 83
Promotions Printed During Quarter / YTD (in millions)		846 / 1,584		813 / 1,457
Weekly Shopper Reach at Quarter End (in millions)		216		209
Catalina Health Resource:
Number of Stores at Quarter End		12,081		15,338
Net Stores Installed During Quarter / YTD		72 / 152		76 / (2,489	)
Catalina Marketing International:
Number of Stores at Quarter End		5,598		4,517
Net Stores Installed During Quarter / YTD		101 / 154		1,066 / 1,514
Promotions Printed During Quarter / YTD (in millions)		220 / 411		212 / 349
Weekly Shopper Reach at Quarter End (in millions)		63		59

Catalina Marketing Corporation
Reconciliation of GAAP to Pro Forma Non-GAAP Net Income (1)
(in thousands, except per share amounts)

				Non-GAAP Pro
				Forma			Non-GAAP
Three Months Ended September 30, 2004	GAAP			Adjustments			Pro Forma
Revenues	$	103,717		$	(1,345	)	$	102,372
Direct Operating Expenses		32,713			(986	)		31,727
Selling, General and Administrative		29,331			(815	)		28,516
Impairment Charge		3,298			(3,010	)		288
Depreciation and Amortization		10,698			(92	)		10,606
Income from Operations		27,677			3,558			31,235
Other (Income) Expense		(126	)		—			(126	)
Provision for Income Taxes		11,067			1,441			12,508
Income from Continuing Operations		16,736			2,117			18,853
Gain (Loss) from Discontinued Operations		260			(260	)		—
Gain (Loss) from Disposition		3,283			(3,283	)		—
Income (Loss) from Discontinued Operations		3,543			(3,543	)		—
Net Income (Loss)	$	20,279		$	(1,426	)	$	18,853
Earnings Per Share, Basic:
Earnings Per Share from Continuing Operations	$	0.32		$	0.04		$	0.36
Income (Loss) from Discontinued Operations	$	0.07		$	(0.07	)	$	—
Net Income (Loss) Per Common Share	$	0.39		$	(0.03	)	$	0.36
Weighted Average Shares Outstanding		52,231						52,231
Earnings Per Share, Diluted:
Earnings Per Share from Continuing Operations	$	0.32		$	0.04		$	0.36
Income (Loss) from Discontinued Operations	$	0.07		$	(0.07	)	$	—
Net Income (Loss) Per Common Share	$	0.39		$	(0.03	)	$	0.36
Weighted Average Shares Outstanding		52,311						52,311

(1) The non-GAAP pro forma net income results are a supplement to the financial data provided that is based on generally accepted accounting principles (GAAP). These non-GAAP pro forma results reflect adjustments primarily to exclude from operating results the financial statement information for business units that have been identified for divestiture or disposal and as such are not viewed by the company as part of the ongoing business. The company believes this presentation provides useful information to investors because it assists investors in better understanding the company’s operations for the period. It should be emphasized, however, that these measurements are not a substitution for GAAP-based financial statements.

Catalina Marketing Corporation
Reconciliation of GAAP to Pro Forma Non-GAAP Net Income (1)
(in thousands, except per share amounts)

				Non-GAAP Pro
				Forma			Non-GAAP
Six Months Ended September 30, 2004	GAAP			Adjustments			Pro Forma
Revenues	$	200,501		$	(2,727	)	$	197,774
Direct Operating Expenses		67,600			(2,085	)		65,515
Selling, General and Administrative		59,086			(1,747	)		57,339
Impairment Charge		3,298			(3,010	)		288
Depreciation and Amortization		22,337			(179	)		22,158
Income from Operations		48,180			4,294			52,474
Other (Income) Expense		267			1			268
Provision for Income Taxes		18,251			1,739			19,990
Income from Continuing Operations		29,662			2,554			32,216
Gain (Loss) from Discontinued Operations		(1,740	)		1,740			—
Gain (Loss) from Disposition		3,283			(3,283	)		—
Income (Loss) from Discontinued Operations		1,543			(1,543	)		—
Net Income (Loss)	$	31,205		$	1,011		$	32,216
Earnings Per Share, Basic:
Earnings Per Share from Continuing Operations	$	0.57		$	0.05		$	0.62
Income (Loss) from Discontinued Operations	$	0.03		$	(0.03	)	$	—
Net Income (Loss) Per Common Share	$	0.60		$	0.02		$	0.62
Weighted Average Shares Outstanding		52,233						52,233
Earnings Per Share, Diluted:
Earnings Per Share from Continuing Operations	$	0.57		$	0.05		$	0.62
Income (Loss) from Discontinued Operations	$	0.03		$	(0.03	)	$	—
Net Income (Loss) Per Common Share	$	0.60		$	0.02		$	0.62
Weighted Average Shares Outstanding		52,269						52,269

(1) The non-GAAP pro forma net income results are a supplement to the financial data provided that is based on generally accepted accounting principles (GAAP). These non-GAAP pro forma results reflect adjustments primarily to exclude from operating results the financial statement information for business units that have been identified for divestiture or disposal and as such are not viewed by the company as part of the ongoing business. The company believes this presentation provides useful information to investors because it assists investors in better understanding the company’s operations for the period. It should be emphasized, however, that these measurements are not a substitution for GAAP-based financial statements.

Catalina Marketing Corporation
Reconciliation of GAAP to Pro Forma Non-GAAP Net Income (1)
(in thousands, except per share amounts)

				Non-GAAP Pro
				Forma			Non-GAAP
Three Months Ended September 30, 2003	GAAP			Adjustments			Pro Forma
Revenues	$	107,676		$	(7,349	)	$	100,327
Direct Operating Expenses		35,991			(1,721	)		34,270
Selling, General and Administrative		31,298			(1,367	)		29,931
Depreciation and Amortization		11,174			(108	)		11,066
Income from Operations		29,213			(4,153	)		25,060
Other (Income) Expense		211			—			211
Provision for Income Taxes		12,465			(1,782	)		10,683
Income from Continuing Operations		16,537			(2,371	)		14,166
Gain (Loss) from Discontinued Operations		(27,648	)		27,648			—
Gain (Loss) from Disposition		—			—			—
Income (Loss) from Discontinued Operations		(27,648	)		27,648			—
Net Income (Loss)	$	(11,111	)	$	25,277		$	14,166
Earnings Per Share, Basic:
Earnings Per Share from Continuing Operations	$	0.32		$	(0.05	)	$	0.27
Income (Loss) from Discontinued Operations	$	(0.53	)	$	0.53		$	—
Net Income (Loss) Per Common Share	$	(0.21	)	$	0.48		$	0.27
Weighted Average Shares Outstanding		52,217						52,217
Earnings Per Share, Diluted:
Earnings Per Share from Continuing Operations	$	0.32		$	(0.05	)	$	0.27
Income (Loss) from Discontinued Operations	$	(0.53	)	$	0.53		$	—
Net Income (Loss) Per Common Share	$	(0.21	)	$	0.48		$	0.27
Weighted Average Shares Outstanding		52,217						52,217

(1) The non-GAAP pro forma net income results are a supplement to the financial data provided that is based on generally accepted accounting principles (GAAP). These non-GAAP pro forma results reflect adjustments primarily to exclude from operating results the financial statement information for business units that have been identified for divestiture or disposal and as such are not viewed by the company as part of the ongoing business and the removal of the 2003 one-time deferral of revenues resulting from the prior year’s revenue recognition adjustments to Catalina Health Resource. The company believes this presentation provides useful information to investors because it assists investors in better understanding the company’s operations for the period. It should be emphasized, however, that these measurements are not a substitution for GAAP-based financial statements.

Catalina Marketing Corporation
Reconciliation of GAAP to Pro Forma Non-GAAP Net Income (1)
(in thousands, except per share amounts)

				Non-GAAP Pro
				Forma			Non-GAAP
Six Months Ended September 30, 2003	GAAP			Adjustments			Pro Forma
Revenues	$	194,308		$	(12,163	)	$	182,145
Direct Operating Expenses		70,692			(3,491	)		67,201
Selling, General and Administrative		63,374			(2,798	)		60,576
Depreciation and Amortization		22,533			(212	)		22,321
Income from Operations		37,709			(5,662	)		32,047
Other (Income) Expense		(38	)		—			(38	)
Provision for Income Taxes		15,694			(2,349	)		13,345
Income from Continuing Operations		22,053			(3,314	)		18,740
Gain (Loss) from Discontinued Operations		(28,131	)		28,131			—
Gain (Loss) from Disposition		—			—			—
Income (Loss) from Discontinued Operations		(28,131	)		28,131			—
Cumulative effect of acctg change		(770	)		770			—
Net Income (Loss)	$	(6,848	)	$	25,588		$	18,740
Earnings Per Share, Basic:
Earnings Per Share from Continuing Operations	$	0.43		$	(0.07	)	$	0.36
Income (Loss) from Discontinued Operations	$	(0.54	)	$	0.54		$	—
Cumulative effect of acctg change	$	(0.02	)	$	0.02		$	—
Net Income (Loss) Per Common Share	$	(0.13	)	$	0.49		$	0.36
Weighted Average Shares Outstanding		52,375						52,375
Earnings Per Share, Diluted:
Earnings Per Share from Continuing Operations	$	0.43		$	(0.07	)	$	0.36
Income (Loss) from Discontinued Operations	$	(0.54	)	$	0.54		$	—
Cumulative effect of acctg change	$	(0.02	)	$	0.02		$	—
Net Income (Loss) Per Common Share	$	(0.13	)	$	0.49		$	0.36
Weighted Average Shares Outstanding		52,375						52,375

(1) The non-GAAP pro forma net income results are a supplement to the financial data provided that is based on generally accepted accounting principles (GAAP). These non-GAAP pro forma results reflect adjustments primarily to exclude from operating results the financial statement information for business units that have been identified for divestiture or disposal and as such are not viewed by the company as part of the ongoing business and the removal of the 2003 one-time deferral of revenues resulting from the prior year’s revenue recognition adjustments to Catalina Health Resource. The company believes this presentation provides useful information to investors because it assists investors in better understanding the company’s operations for the period. It should be emphasized, however, that these measurements are not a substitution for GAAP-based financial statements.

Based in St. Petersburg, FL, Catalina Marketing Corporation (www.catalinamarketing.com) was founded 20 years ago based on the premise that targeting communications based on actual purchase behavior would generate more effective consumer response. Today, Catalina Marketing combines unparalleled insight into consumer behavior with dynamic consumer access. This combination of insight and access provides marketers with the ability to execute behavior-based marketing programs, ensuring that the right consumer receives the right message at exactly the right time. Catalina Marketing offers an array of behavior-based promotional messaging, loyalty programs and direct-to-patient information. Personally identifiable data that may be collected from the company’s targeted marketing programs, as well as its research programs, are never sold or given to any outside party without the express permission of the consumer.

Certain statements in the preceding paragraphs are forward looking, and actual results may differ materially. Statements not based on historic facts involve risks and uncertainties, including, but not limited to, the changing market for promotional activities, especially as it relates to policies and programs of packaged goods and pharmaceutical manufacturers and retailers, government and regulatory statutes, rules, regulations and policies, the effect of economic and competitive conditions and seasonal variations, actual promotional activities and programs with the company’s customers, the pace of installation of the company’s store network, the success of new services and businesses and the pace of their implementation, the company’s ability to maintain favorable client relationships, the outcome and impact of an ongoing SEC investigation into certain of the company’s prior fiscal years, and the outcome and impact of the pending shareholder class action and derivative lawsuits.

###

EX-99.2

Exhibit 99.2

CATALINA MARKETING CORPORATION
FISCAL YEAR 2004
FISCAL 05, QUARTER 2 10-Q FILING CONFERENCE CALL– CEO SCRIPT
November 4, 2004

I. Operator

Good morning, ladies and gentlemen and welcome to the Catalina Marketing Corporation conference call to review the results of the second quarter of fiscal 2005. At this time, all lines are on a listen only mode. Later we will conduct our question and answer session and instructions will follow at that time. Should anyone require operator assistance during this conference, please press the star and zero keys on your touch-tone telephone. As a reminder ladies and gentlemen this conference is being recorded. Now I’d like to turn the call over to Mr. Dick Buell, chief executive officer of Catalina Marketing Corporation. Mr. Buell, please go ahead.

II. Dick Buell:

Good morning. Thank you for joining us for today’s discussion on Catalina Marketing’s second quarter of fiscal 2005.

I’m Dick Buell, CEO of Catalina Marketing and today I am joined by Chris Wolf, Catalina’s executive vice president and CFO and Joanne Freiberger, vice president of finance. Prior to beginning our call, I need to share our safe harbor language with you.

Certain statements included on our call today will be forward looking, and actual results may differ materially. Statements not based on historic facts involve risks and uncertainties, including, but not limited to, the changing market for promotional activities, especially as it relates to policies and programs of packaged goods and pharmaceutical manufacturers and retailers, government and regulatory statutes, rules, regulations and policies, the effect of economic and competitive conditions and seasonal variations, actual promotional activities and programs with the company’s customers, the pace of installation of the company’s store network, the success of new services and businesses and the pace of their implementation, the company’s ability to maintain favorable client relationships, the outcome and impact of an ongoing SEC investigation into certain of the company’s prior fiscal years, and the outcome and impact of the pending shareholder class action and derivative lawsuits.

In today’s conference call we will discuss several items including

• the company’s second quarter results;

• the company’s long-term outlook;

• and actions taken towards achieving executional priorities.

We will begin with Chris Wolf reviewing the second quarter numbers and our financial perspective, Chris.

III. Chris Wolf

          Thank you, Dick.

Before I begin my review of the second quarter and year-to-date results, I’d like to remind everyone that, in addition to the press release distributed earlier this morning, the company plans to file the September 30, 2004 Form 10-Q with the Securities and Exchange Commission next week. I encourage all of you to read that document when it is filed. Also, in addition to the results as measured by Accounting Principles Generally Accepted in the United States (or GAAP), I will also provide you with Pro Forma non-GAAP results. The pro forma non-GAAP financial information includes the results of the company’s ongoing business operations and, as such it excludes:

1.	The financial results of the business units actually divested (Direct Marketing Services and Japan Billboard) and the remaining unit targeted for divestiture by the company (Catalina Market Research Solutions or “Research Solutions”) and,
2.	The effect of a one-time deferral of revenues in CHR, resulting from the prior years’ revenue recognition adjustments reflected in fiscal year 2004.

I will begin my review of the quarter and year-to-date results by looking at revenues.

For the second quarter of fiscal year 2005, consolidated revenues were $103.7 million compared to Q2 Fiscal Year 2004 revenues of $107.7 million, a decrease of 3.7%. For the six months ended September 30, 2004, consolidated revenues were $200.5 million, an increase of 3.2%, over revenues of $194.3 million for the six month comparable period last year.

On a pro forma, non-GAAP basis, Q2 consolidated revenues increased by 2.0%, from $100.3 million in fiscal 2004 to $102.4 million in fiscal 2005. The consolidated pro forma non-GAAP revenues for the six months ended September 30, 2004 were $197.8 million, an increase of 8.6% over $182.1 million for the comparable prior year period.

Now for a review of the operating unit revenues.

Catalina Marketing Services (or CMS) reported second quarter revenues of $66.1 million, a 7.5% decline from $71.4 million during the comparable period last year. CMS revenues were affected by the first full quarter impact of the significant pull back of a large manufacturer client, previously disclosed, and the disposition of the loyalty card business at the end of fiscal year 2004. This decrease was partially offset by an increase in print volume which included the roll-out of the new Catalina Category Marketing (CCM) product.

For the first six months of fiscal 2005, CMS revenues were $129.5 million compared to revenues of $131.0 million in the first half of fiscal 2004.

Moving to Health Resource

CHR revenues for Q2 of FISCAL YEAR 2005 were $19.2 million compared to $19.1 million in Q2 of Fiscal Year 2004. On a year-to-date basis, CHR revenues were $37.0 million compared to $33.6 million in revenues reported for the comparable period in fiscal 2004. On a pro forma, non-GAAP basis, CHR second quarter revenues increased $4.0 million, or 26.6% year-over-year, primarily due to a favorable shift in program mix to higher revenue generating types of programs. On a pro forma, non-GAAP basis, for the first six months of fiscal year 2005, revenues at CHR increased to $37.0 million from $28.6 million in fiscal 2004.

Catalina Marketing International (or CMI) revenues increased $3.3 million, or 23.9% year-over-year, mainly from an increase in the volume of promotions delivered and favorable foreign exchange rates. Excluding the impact of foreign exchange, CMI revenues increased 15.0%, with growth in all countries. For the six months ended September 30, 2004, CMI revenues were $31.1 million compared to revenues of $22.7 million in the first half of the prior year.

Now Turning to Cost and Expenses.

For the second quarter of fiscal year 2005, consolidated direct operating expenses were $32.7 million, a decline of 9.1% compared to the second quarter of the fiscal year 2004 total of $36.0 million. As a percentage of revenues, direct operating expenses declined to 31.5% in Q2 of fiscal year 2005 compared to 33.4% in the same period of fiscal year 2004.

The largest dollar decreases in consolidated direct operating expenses related to third-party costs and card operations, primarily attributable to the divestiture of the loyalty card business and a reduction of third party costs at CHR.

These cost reductions were partially offset by an increase in retailer fees in CMS. In addition, printer paper costs decreased in both the U.S. and Europe as a result of a paper cost reduction negotiated earlier in fiscal year 2005.

On a pro-forma, non-GAAP basis, direct operating expenses were $31.7 million, a decrease of 7.4% from the second quarter of fiscal year 2004 total of $34.3 million. As a percentage of revenues, pro forma non-GAAP direct operating expenses were 31.0% in the second quarter of fiscal year 2005 versus 34.2% in the corresponding prior year quarter.

Fiscal year 2005 second quarter consolidated selling, general and administrative (“SG&A”) expenses were $29.3 million, a decrease of 6.3%, or $2.0 million, compared to the second quarter of fiscal year 2004 SG&A expenses of $31.3 million. As a percentage of revenues, SG&A expenses in Q2 of fiscal year 2005 decreased to 28.3% of revenues from 29.1% of revenues in the quarter ended September 30, 2003.

          The largest dollar decreases were driven by lower sales force expenses and marketing costs. These decreases were partially offset by increased personnel and incentive compensation costs.

On a pro forma, non-GAAP basis, SG&A expenses were $28.5 million, a decrease of 4.7% from the second quarter of the fiscal year 2004 total of $29.9 million. As a percentage of revenues, pro forma non-GAAP SG&A expenses were 27.9% in the quarter ended September 30, 2004 versus 29.8% in the same period of last year.

Second quarter consolidated depreciation and amortization expense was $10.7 million, a 4.3% decrease from the second quarter of fiscal year 2004 expense of $11.2 million.

As we have disclosed earlier, the Company announced its intent to divest Direct Marketing Services (DMS), Japan Billboard and Research Solutions because they were deemed not to be strategically aligned with the Company’s current core competencies. During the second quarter of fiscal year 2005, the company completed the disposition of DMS and its Japan Billboard business, reporting a net gain of $3.5 million from the sale of

these assets.

As discussed on the first quarter conference call, until all of these businesses are divested, the company indicated it would continue to test the remaining goodwill related to these operations for possible impairment in accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.” In addition, August is the company’s annual testing date for goodwill and other intangibles.

As such, the company tested the goodwill for all entities during the second quarter, including that of Research Solutions. Based on this testing, we recorded an additional goodwill impairment charge of $2.6 million, primarily due to a further decline in Research Solutions’ forecasted cash flows, reducing the remaining goodwill balance at Research Solutions to zero.

The company also recorded impairment charges of approximately $700 thousand at Research Solutions and Corporate because the estimated fair value of certain depreciable assets exceeded their carrying value.

Turning to Interest Expense and Taxes

Consolidated interest expense decreased to $151 thousand in the second quarter of fiscal year 2005 from $609 thousand in the same period last year primarily due to lower interest rates and lower average outstanding debt balances.

The consolidated provision for income taxes of $11.1 million recognized in the second quarter of fiscal 2005 decreased to 39.8% of pre-tax income from continuing operations compared to $12.5 million, or 43.0% of income recognized in the same period last year. The rate decrease was primarily due to the affect of lower foreign and state income tax rates.

Moving to the Net Income and Loss results.

For the three months ended September 30, 2004, consolidated net income was $20.3 million, or 39 cents per diluted share, compared to a net loss of $11.1 million, or 21 cents per diluted share for the comparable prior year period. As a percentage of revenues, consolidated net income was 19.6% in Q2 of fiscal 2005. On a year-to-date basis, net income was $31.2 million, or 15.6% of revenues, compared to a $6.8 million loss in the six months ended September 30, 2003.

Pro forma, non-GAAP net income for the second fiscal quarter of 2005 was $18.9 million, or 18.4% of revenues, compared to Q2 fiscal 2004 net income of $14.2 million, or 14.1% of revenues. Second quarter pro-forma, non-GAAP earnings were 36 cents and 27 cents per diluted share in fiscal 2005 and 2004, respectively. On a year-to-date basis, pro forma, non-GAAP net income was $32.2 million compared to $18.7 million last year. Six month pro-forma, non-GAAP earnings were 62 cents and 36 cents per diluted share in fiscal 2005 and 2004, respectively.

Turning to Cash Flow and Liquidity.

The cash balance at September 30, 2004 was $97.3 million compared to $71.5 million at June 30, 2004.

During the three months ended September 30, 2004, the Company generated cash flow from operating activities of $40.6 million, compared to cash generated from operating activities in fiscal 2004 of $37.2 million. For the six months, operating cash flow was $42.5 million versus $54.4 million last year.

Capital expenditures during the quarter were $4.0 million compared to $6.5 million for the second quarter of the prior year. The primary variance is attributable to fewer store installations in the current fiscal year. On a year-to-date basis, capital spending was $6.2 million as compared to $16.1 million for the first six months of fiscal 2004.

With regard to debt and capital requirements.

During the second fiscal quarter, the company purchased its corporate headquarters located here in St. Petersburg, and terminated the related lease financing agreement that it had entered into in 1999. The

purchase price of the building was $30.5 million and, in effect, was paid with a $30.0 million draw down from the Company’s new credit facility. During the quarter, the Company also drew $32 million on its new multi-currency credit facility to retire the amount outstanding under the former Japanese facility.

As of September 30, 2004, $62.7 million was outstanding under the $125 million credit facility. The company remains in compliance with all financial covenants related to all of its credit facilities.

On September 1, 2004, the company announced that the Board of Directors declared an annual cash dividend to common stockholders of $0.30 per share. The dividend was funded on September 30, 2004 for payment to stockholders on October 1, 2004, resulting in a use of cash of $15.6 million.

And finally,

Catalina’s board of directors authorized $100 million of funds to be available for the repurchase of the company’s common stock. This authorization replaced the $44 million unused portion of the $100 million repurchase program authorized by the board in July 2002. As of September 30, 2004, the company had not yet repurchased any of its stock during the fiscal year.

I know that this is a lot of information to absorb in this format, and, again, I encourage all of you to read the 10-Q, which is scheduled to be filed early next week. With that, I would like to turn the call back over to Dick Buell.

IV. DICK BUELL:

Thank you, Chris. I would now like to share our comments regarding the second quarter business and financial results.

Catalina Marketing’s strategic direction, executional priorities and growth strategy have been identified and established. Not only have these business drivers been well-defined, but specific and certain actions have been taken to support the company’s commitment to long-term sales growth and profitability. We are already seeing positive progress and results.

Over the last few months, Catalina’s management has been realigning divisions to the company’s strategic direction and the key assets that create our differentiated marketing solutions and programs. Progress has been made to eliminate the businesses that did not support that strategic direction. Divestments included the Card Services business, the Japanese billboard business, Direct Mail Marketing Services and Research Solutions. Three out of four of the planned divestitures are now complete and we are close to resolution on Research Solutions.

In addition, the creation of a new business development group is underway. This new department is responsible for the exploration of fresh, innovative opportunities for the organization that leverage the company’s current strategic assets (1) our network of manufacturer sponsors, (2) retail channel partners, and (3) proprietary solutions powered by intellectual property. Much of the anticipated long-term growth will emerge from the work created within this group.

Finally, Catalina Marketing is in a financial position of strength.

• Retail and manufacturer contract negotiation results are favorable;

• the company’s cash flow is strong;

• and, as Chris mentioned, on a pro-forma basis, all business units are exceeding the prior year’s second quarter profit performance.

The company’s executional priorities developing new, innovative marketing solutions controlling costs and developing people, are at the forefront of everyone’s mind.

In the way of new, innovative solutions, Catalina Health Resource has secured ten new pilots to test its latest analytical enhancement developed to improve patient-level prescription compliance and persistence. Further details will be forthcoming in the months to come. Catalina Category Marketing is continuing to gain momentum

with 42 signed contracts. And now, Catalina Marketing Services has also secured nine new advertising tests on the Catalina printer system.

Controlling cost is becoming a core characteristic of Catalina’s culture. Several million dollars in costs have been eliminated across the corporation as a result of numerous ideas submitted by employees. These cost-saving solutions encompass areas such as store system file communications, efficient use of supplies, inventory management improvements and savings-conscious employee communication and expense measures.

Developing people is a top priority for Catalina Marketing. Recently, an employee survey was conducted to better understand the issues and opportunities of our employees. Those results are being evaluated and steps are being taken to address topics raised. It is important that Catalina Marketing be a competitive and attractive employer. Therefore, management is conducting a comprehensive compensation study to ensure compensation, benefits and employee support programs are reflective of the company’s goals.

Each of these initiatives support the company’s winning strategy, which is “to be the dominant provider of behavior-based marketing solutions wherever and whenever packaged goods and healthcare products are sold.”

Now, I’d like to discuss a series of specific successes the corporation and divisions have produced as a result of the organization’s clear focus and dedication to build a successful Catalina Marketing.

o From a financial perspective, Catalina Marketing has had several successes.

o The company is now up to date on all its financial filings;

o It recently increased its share repurchase authorization;

o And, a dividend was declared and paid for the first time.

o Strategically, all 3 core businesses are solid.

o We have a well-defined business strategy;

o And, a long-term growth plan is in place.

o Through the end of the second quarter, business and market results are exceeding our plan and prior year.

Now, let’s take a look at each business unit.

As mentioned, Catalina Marketing Services, comprised of the manufacturer and retail sales, continues to deliver above-expectation results by leveraging new products like Catalina Category Marketing, CCM. Forty-two pilot programs have been or are preparing to be executed in the marketplace, and the retail team has secured more than 25 endorsement letters from retailers encouraging manufacturers to use the innovative solution. This is an exciting program for all of our constituents. Manufacturers are enjoying increased volume movement. CCM is driving multiple trips back to participating retailers and consumers are putting dollars back into their pockets.

The concept of using the network as an advertising vehicle is currently being tested and has already delivered great results with 9 new pilots underway. The advertising application is yet another example of an innovative solution our sales team can offer to clients.

Finally, several major successes for this team were created with the signing of several key consumer packaged goods contracts. Retail contract negotiations are also producing positive results. Catalina Marketing Services continues to work to deliver high-value programs to its clients. The financial results for this division reflect its progress. Even with significant pullback by a large manufacturer client and the disposition of the loyalty card business, CMS’ profit level remained even with the prior year quarter at $18.9 million.

Catalina Health Resource is making headway of its own with positive contract negotiations concluding. Currently, more than 80 percent of the CHR retail network is contracted for the next two years. In addition, a new government initiative is underway designed to support future growth and increase the divisions overall revenue and profit. Furthermore, Catalina Health Resource is exploring ways to acquire DTC media budget dollars. To date, a conceptual media model has been developed and road tests are emerging. CHR is energized about the future potential growth each of these initiatives can deliver.

We are pleased with the financial performance of this division to date. On a pro-forma non-GAAP basis, CHR’s revenues increased to $19.2 million in the current second quarter, compared to $15.2 million in the same period

last year. CHR’s net income, from a pro-forma, non-GAAP perspective, was $2.8 million compared to a $100,000 loss in fiscal 04’s second quarter.

Catalina Marketing International is in its third year of double-digit revenue growth.

• France continues to develop existing and new, large retailers. Also, the addition of the checkout direct product capability is expected to drive future revenue.

• Italy has experienced a nearly 50 percent increase in network volume during fiscal 2005 with over 600 participating stores.

• The UK successfully rolled-out to a major chain and a number of new pilots are being pursued.

• Germany, CMI’s most recent global expansion, now has 3 retail pilots in the works and 30 categories have been sold.

• Finally, Japan currently has nearly 1,100 participating retail stores and checkout direct is in a pilot format.

Collectively, the international division is producing solid results.

CMI’s financial results mirror this positive progress. Revenues for the current second quarter increased to $16.9 million, compared with $13.6 million in the same period last year. Net income was $2.1 million this quarter in comparison to the $1.1 million reported for the second quarter of fiscal 2004.

Across the core businesses, Marketing Services, Health Resource, and International, we are pleased and encouraged with the overall strategic progress and financial performance.

Now, let’s open the lines to questions.

     V. Dick Buell Opens Q&A

Select summary of Q&A:

[Alexia Quadrani, a Bear Stearns analyst, asked a question with regard to the revenue impact of the large manufacturer client that had pulled back its business.

Chris Wolf answered that the company does not disclose the exact amount, but recognized that the amount is substantial, multiple millions of dollars, some of which was made up with other business.

Alexia Quadrani asked a question with regard to the increase in retail fees in the quarter.

Chris Wolf answered that the increase was just north of a half million dollars and was primarily a result of changes with some retailers that the company used to compensate with the Catalina Marketing Fund and is now using a fee payment.

Alexia Quadrani asked why the company did not buy any stock back during the quarter.

Chris Wolf answered that the company looks at a multitude of items when making these decisions and must wait for a safe trading window prior to purchasing shares.

Troy Mastin, a William Blair analyst, asked whether there was any reason that the company would not return to its normal seasonal EPS patterns.

Chris Wolf answered that the seasonal patterns are relatively the same, with the distinction of the impact from the pull back by the large manufacturer client that will continue to impact the second half of the fiscal year.

Troy Mastin also asked whether the company would be providing an update to its EPS guidance.

Dick Buell reiterated that the company would not be providing guidance. In addition, Mr. Buell indicated that as we look at the gap created by the pull back of the significant client there are still meaningful hurdles and challenges that the company will face in the second half of the fiscal year.

Mark Bacurin of Robert W. Baird, asked how much of the 7.5% decline in the CMS segment was due to the sale of the loyalty card business.

Mr. Wolf answered that approximately $2 million of the decline in the revenues in the second quarter was a result of the sale of the loyalty card business.

Fred Searby, of JP Morgan, asked whether the impact of the large manufacturer client will be as pronounced in Q3 & Q4 as it was in the first half.

Mr. Buell answered that the overall gap is fairly well spread between the first and second half of the year, with the decline slightly higher in the second half. He reiterated that there were still hurdles and challenges that need to be overcome to get back to the overall comparable performance in the prior year.

Todd Van Fleet, of First Analysis, asked what the overall tax rate and capex levels are expected to be for the fiscal year.

Mr. Wolf answered that the overall tax rate will likely be around 38.5% and that due to some timing on projects in the second half capex could come in around the mid $20 million’s as compared to the $30 million originally projected. ]

Phone questions end.

VI. Operator

          Mr. Buell, we have concluded the allotted time for this call. I’d like to turn the conference back over to you.

VII. Dick Buell Close

During the last seven months, our management team has assessed the situation, created a roadmap and realigned resources to build sales growth and profitability. These actions are already generating success. All of this reflects the new direction where Catalina Marketing is headed.

Chris Wolf and Joanne Freiberger will be available throughout the day to help answer any additional questions you might have. Thank you for joining us today, and I look forward to speaking with you again soon.

VIII. Operator

          That concludes today’s conference call. Thank you everyone for your participation.

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