-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QOz4HvC6g+DHiA6SqYWZsZqGmF+mK8iZq+ONltnSxUSf5oV5uLCw0j10MQCOSNge XhCepXvJShZkwc8ftblDkw== 0001016843-00-000136.txt : 20000215 0001016843-00-000136.hdr.sgml : 20000215 ACCESSION NUMBER: 0001016843-00-000136 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CATALINA MARKETING CORP/DE CENTRAL INDEX KEY: 0000883977 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING AGENCIES [7311] IRS NUMBER: 330499007 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11008 FILM NUMBER: 542307 BUSINESS ADDRESS: STREET 1: 11300 9TH ST NORTH CITY: ST PETERSBURG STATE: FL ZIP: 33716 BUSINESS PHONE: 8135795000 MAIL ADDRESS: STREET 1: 11300 9TH STREET NORTH CITY: ST PETERSBURG STATE: FL ZIP: 33716-2329 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 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 February 10, 2000 Registrant had outstanding 18,285,624 shares of Common Stock. CATALINA MARKETING CORPORATION INDEX PAGE ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Statements of Income for the three and nine month periods ended December 31, 1999 and 1998 3 Condensed Consolidated Balance Sheets at December 31, 1999 and March 31, 1999 4 Condensed Consolidated Statements of Cash Flows for the nine month periods ended December 31, 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 9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 12 SIGNATURES 13 2 CATALINA MARKETING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except per share data) (unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED DECEMBER 31, DECEMBER 31, ----------------------- ----------------------- 1999 1998 1999 1998 --------- --------- --------- --------- Revenues $ 97,790 $ 67,604 $ 257,232 $ 188,886 --------- --------- --------- --------- Costs and Expenses: Direct operating expenses 39,226 27,279 104,931 79,027 Selling, general and administrative 22,200 13,665 65,488 42,992 Depreciation and amortization 8,862 6,931 25,626 19,973 --------- --------- --------- --------- Total costs and expenses 70,288 47,875 196,045 141,992 --------- --------- --------- --------- Income From Operations 27,502 19,729 61,187 46,894 Interest Expense, Net and Other (31) 199 (241) (2,722) --------- --------- --------- --------- Income Before Income Taxes and Minority Interest 27,471 19,928 60,946 44,172 Income Taxes (11,043) (7,913) (24,501) (19,030) Minority Interest in Losses of Subsidiaries 132 -- 490 -- --------- --------- --------- --------- Net Income $ 16,560 $ 12,015 $ 36,935 $ 25,142 DILUTED: Earnings Per Common Share $ 0.86 $ 0.64 $ 1.91 $ 1.33 Weighted Average Common Shares Outstanding 19,230 18,891 19,360 18,964 BASIC: Earnings Per Common Share $ 0.90 $ 0.65 $ 1.99 $ 1.36 Weighted Average Common Shares Outstanding 18,415 18,398 18,571 18,483
The accompanying Notes are an integral part of these consolidated financial statements. 3 CATALINA MARKETING CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands)
(UNAUDITED) DECEMBER 31, MARCH 31, ASSETS 1999 1999 ----------- ---------- Current Assets: Cash and cash equivalents $ 7,535 $ 13,942 Accounts receivable, net 56,065 44,045 Deferred tax asset 10,723 8,932 Prepaid expenses and other current assets 31,011 28,562 --------- --------- Total current assets 105,334 95,481 --------- --------- Property and Equipment: Property and equipment 236,122 199,625 Accumulated depreciation and amortization (132,460) (111,939) --------- --------- Property and equipment, net 103,662 87,686 --------- --------- Purchased intangible assets, net 58,749 35,628 Other assets 2,624 2,252 --------- --------- Total Assets $ 270,369 $ 221,047 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 14,889 $ 14,149 Accrued expenses 59,275 44,697 Deferred revenue 24,479 27,349 Short term borrowings 23,878 7,635 --------- --------- Total current liabilities 122,521 93,830 --------- --------- Deferred tax liability 7,393 5,696 Minority interest 1,391 -- Long term debt 1,853 588 --------- --------- 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 18,244,230 and 18,389,438 shares issued and outstanding at December 31, 1999 and March 31, 1999, respectively 182 184 Paid-in capital 1,341 819 Accumulated other comprehensive income 1,101 843 Retained earnings 134,587 119,087 --------- --------- Total stockholders' equity 137,211 120,933 --------- --------- Total Liabilities and Stockholders' Equity $ 270,369 $ 221,047 ========= =========
The accompanying Notes are an integral part of these consolidated financial statements. 4 CATALINA MARKETING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (unaudited)
NINE MONTHS ENDED DECEMBER 31, ------------------------------ 1999 1998 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 36,935 $ 25,142 Adjustments to reconcile net income to net cash provided by operating activities: Minority interest (490) -- Depreciation and amortization 25,626 20,035 Other 2,396 2,611 Changes in operating assets and liabilities (3,031) (19,340) -------- -------- Net cash provided by operating activities 61,436 28,448 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures, net (35,720) (29,034) Purchase of investments, net of cash acquired (30,982) (3,970) -------- -------- Net cash used in investing activities (66,702) (33,004) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings on credit facility 5,000 -- Proceeds from debt obligations 23,152 17,869 Principal payments on debt obligations (12,006) (17,848) Proceeds from issuance of common and subsidiary stock 12,199 5,087 Tax benefit from exercise of non-qualified options and disqualified dispositions 4,780 1,715 Payment for repurchase of company common stock (34,531) (11,771) -------- -------- Net cash used in financing activities (1,406) (4,948) -------- -------- NET DECREASE IN CASH (6,672) (9,504) Effect of exchange rate changes on cash 265 (171) CASH, at end of prior period 13,942 18,434 -------- -------- CASH, at end of current period $ 7,535 $ 8,759 ======== ========
The accompanying Notes are an integral part of these consolidated financial statements. 5 CATALINA MARKETING CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1. Condensed Consolidated Financial Statements: In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position of the Company as of December 31, 1999 and March 31, 1999, the results of operations for the three and nine months ended December 31, 1999 and 1998, and cash flows for the nine month periods ended December 31, 1999 and 1998. Certain prior period balances have been reclassified to conform with the current period presentation. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. The third quarter balances and results of the majority and wholly owned foreign subsidiaries are included as of September 30, 1999 and December 31, 1998 and for the three and nine month periods ended September 30, 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. Earnings Per Common Share: The following is a reconciliation of the denominator of basic EPS to the denominator of diluted EPS (in thousands): THREE MONTHS ENDED NINE MONTHS ENDED DECEMBER 31, DECEMBER 31, ------------------------------------- 1999 1998 1999 1998 ------------------------------------ Basic weighted average common shares outstanding 18,415 18,398 18,571 18,483 Dilutive effect of options outstanding 815 493 789 481 ------------------------------------- Diluted weighted average common shares outstanding 19,230 18,891 19,360 18,964 6 Options to purchase 30,300 shares of common stock at $106 7/8 exercise price per share were outstanding at December 31, 1999, but were not included in the computation of diluted EPS because such options' exercise prices were greater than the average market price of common stock. Note 3. Comprehensive Income:
THREE MONTHS ENDED NINE MONTHS ENDED DECEMBER 31, DECEMBER 31, ---------------------------------------- 1999 1998 1999 1998 ---------------------------------------- (in thousands) Net income $16,560 $12,015 $36,935 $25,142 Other comprehensive income, net of tax: Currency translation adjustment 1,539 672 258 132 ---------------------------------------- Comprehensive Income $18,099 $12,687 $37,193 $25,274
Note 4. Credit Facility: In September 1999, the Company, as a part of its $150 million credit agreement, extended the term of the $50 million 364 day line of credit facility to September 26, 2000. At December 31, 1999, there was $5 million outstanding thereunder. Note 5. 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 6. Acquisitions: 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 criteria, including future revenue growth targets of the Checkout Prizes product. Effective July 1, 1999, the Company acquired certain assets and assumed certain liabilities of Alliance Research, Inc., an attitudinal research company, for $6.7 million in initial consideration, net of cash and cash equivalents acquired. Terms of the purchase agreement call for the Company to make a series of payments, which are contingent upon future operating performance of the business purchased from Alliance Research, Inc. 7 The above referenced acquisitions have been accounted for using the purchase method of accounting for acquisitions and, accordingly, the results of operations of each acquisition have been included in the fiscal 2000 financial statements since the date of such acquisition. Additionally, in the first nine months of fiscal 2000, investments were made totaling $15.1 million which were comprised of earnout payments attributable to past acquisitions. Note 7. Segment Information (in thousands):
FOR THE THREE MONTHS ENDED DECEMBER 31, --------------------------------------------------------------- 1999 1998 -------------------------------- ---------------------------- TARGETED TARGETED MARKETING MARKETING SERVICES ELIMINATIONS SERVICES ELIMINATIONS --------------- --------------- ------------ -------------- Revenue from external customers $ 97,790 $ 67,604 Revenue from internal sources 420 (420) 979 (979) Net income 16,560 12,015
FOR THE NINE MONTHS ENDED DECEMBER 31, --------------------------------------------------------------- 1999 1998 -------------------------------- ---------------------------- TARGETED TARGETED MARKETING MARKETING SERVICES ELIMINATIONS SERVICES ELIMINATIONS --------------- --------------- ------------ -------------- Revenue from external customers $257,232 $188,886 Revenue from internal sources 1,074 (1,074) 2,068 (2,068) Net income 36,935 25,142
Note 8. Commitments and Contingencies As of October 21, 1999, the Company entered into a lease financing agreement for a new corporate headquarters building in St. Petersburg, Florida. The lease term runs through September 2005. The Company has the option to extend the lease term for up to three, five year renewal periods, subject to certain conditions. The agreement includes a purchase option for the Company that approximates the original cost of the building. The Company anticipates that it will occupy the new corporate headquarters building and begin making lease payments in the second quarter of fiscal 2001. 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 third quarter and first nine months of fiscal 2000 increased 44.6 percent and 36.2 percent, respectively, compared with the same periods in fiscal 1999. The increase in revenues is due to an increase in promotions printed worldwide, growth in the Checkout Direct(R) program and increases in direct mail marketing programs. Additionally, the third quarter and first nine months of fiscal 2000 include revenues from Market Logic and DCI Cardmarketing, acquired in July 1998 and January 1999, respectively. The second and third quarters of fiscal 2000 also include revenues from Alliance Research, Inc. acquired in July 1999. In the U.S., the Catalina Marketing Network was in 13,020 stores at December 31, 1999, which reach 173 million shoppers each week as compared to 11,814 stores reaching 156 million shoppers each week at December 31, 1998 and 12,092 stores reaching 152 million shoppers each week at March 31, 1999. The Health Resource Network was in 5,912 pharmacies at December 31, 1999 as compared to 3,733 pharmacies at December 31, 1998 and 3,861 pharmacies at March 31, 1999. Outside the U.S., the Catalina Marketing Network was in 2,476 stores at December 31, 1999, which reach 35 million shoppers each week as compared to 1,811 stores reaching 31 million shoppers each week at December 31, 1998 and 1,935 stores reaching 29 million shoppers each week at March 31, 1999. In the first nine months of fiscal 2000 the Company installed its Catalina Marketing Network in 928 stores in the U.S., net of deinstallations, as compared to 650 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 2,051 pharmacies in the first nine months of fiscal 2000, net of deinstallations, as compared to 1,813 stores in the comparable fiscal 1999 period. Outside the U.S., the Company installed 541 stores in the first nine months of fiscal 2000, net of deinstallations, as compared to 439 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 $39.2 million and $104.9 million for the third quarter and first nine months of fiscal 2000, respectively, from $27.3 million and $79.0 million in the comparable periods of fiscal 1999. Direct operating expenses in the third quarter and first nine months of fiscal 2000 as a percentage of revenues decreased to 40.1 percent and 40.8 percent, respectively, from 40.3 percent and 41.8 percent in the comparable periods of fiscal 1999. This decrease in fiscal 2000 is principally attributable to a favorable shift in product mix towards higher margin 9 domestic sales, partially offset by the higher material costs component of direct costs as a function of revenue associated with the increase in direct marketing and research programs, including Market Logic, Alliance Research, and the DCI Cardmarketing business. Selling, general and administrative expenses include personnel-related costs of selling and administrative staff, overhead, marketing expenses and new product development expenses. Selling, general and administrative expenses for the third quarter and first nine months of fiscal 2000 were $22.2 million and $65.5 million, respectively, compared to $13.7 million and $43.0 million for the comparable period of fiscal 1999, increases of 62.5 percent and 52.3 percent, respectively. As a percentage of revenues, selling, general and administrative expenses increased 2.5 percent and 2.7 percent in the third quarter and first nine months of fiscal 2000, to 22.7 percent and 25.5 percent, respectively, from 20.2 percent and 22.8 percent for the comparable periods of fiscal 1999. These increases relate primarily to administrative, advertising and marketing expenses relating to new operating units and products. Depreciation and amortization increased to $8.9 million and $25.6 million for the third quarter and first nine months of fiscal 2000 from $6.9 million and $20.0 million for the comparable periods in fiscal 1999. Depreciation increased due to additional 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 additions in goodwill and other intangible assets related to the Company's acquisitions. Interest expense, net and other changed to $31,000 and $241,000 net expense for the third quarter and first nine months of fiscal 2000 from $199,000 net income and $2.7 million net expense for each of the comparable periods in fiscal 1999. The unfavorable comparison for the third quarter of fiscal 2000 is primarily due to increased interest expense due to borrowings on the Company's credit facility during the second and third quarters of fiscal 2000. The decrease in net expense for the comparable nine month periods is primarily due to the Company writing off its $3.0 million investment in Intelledge Corporation in the second quarter of fiscal 1999. The provision for income taxes increased to $24.5 million, or 40.2 percent of income before income taxes and minority interest, for the first nine months of fiscal 2000, compared to $19.0 million, or 43.1 percent of income before income taxes and minority interest, for the same period in fiscal 1999. The rate decrease is primarily due to the valuation allowance recorded against the $3.0 million deferred tax benefit for the Intelledge investment write off in the second quarter of fiscal 1999 and to a lesser extent 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, various nondeductible expenses, primarily the amortization of goodwill related to the Company's acquisitions and, in the case of fiscal 1999, the valuation allowance referred to in the previous sentence. 10 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 nine months of fiscal 2000 and 1999, the Company made capital expenditures of $35.7 million and $29.0 million, respectively. The pace of installations varies depending on the timing of contracts entered into with retailers and the scheduling of store installations by mutual agreement. During the first nine months of fiscal 2000, the Company had a faster pace of store installations spending $4.5 million more on store equipment compared to the comparable fiscal 1999 period. 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. Effective July 1, 1999, the Company acquired certain assets and assumed certain liabilities of Alliance Research, Inc., an attitudinal research company, for $6.7 million in initial consideration, net of cash and cash equivalents acquired. Terms of the purchase agreement call for the Company to make a series of payments, which are contingent upon future operating performance of the business purchased from Alliance Research, Inc. Additionally, in the first nine months of fiscal 2000, investments were made totaling $15.1 million which were comprised of earnout payments attributable to past acquisitions. During the second quarter of fiscal 2000, the Company purchased 396,500 shares of its common stock for $34.5 million. On October 25, 1999 the Company announced approval by its Board of Directors of an additional $50.0 million to buy back Company common stock. As of October 25, 1999, this authorization increases the total funds available for share repurchases to $59.0 million. During the second quarter of fiscal 2000, the Company borrowed approximately $10.0 million against its $150 million credit facility and repaid $5.0 million of that borrowing in the third quarter of fiscal 2000. As of December 31, 1999 $5.0 million was outstanding thereunder. The Company believes working capital generated by operations along with existing credit facilities is sufficient for its overall capital requirements. 11 OTHER Year 2000 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. The year 2000 issue involves the potentially serious risks associated with the inability of existing business systems to appropriately recognize calendar dates beginning in the year 2000. In December 1999, the Company completed its detailed plan to address the issue of transition to the year 2000 and noted no apparent internal business system problems. Additionally, there have been no apparent issues with the Company's retail and manufacturer clients or suppliers in relation to the year 2000 transition. The Company spent approximately $1.4 million on the year 2000 issue through December 31, 1999. 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, and the Company's ability to maintain favorable client relationships. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. a. Exhibits 15 Acknowledgement Letter 19 Review Report of Independent Certified Public Accountants 27 Financial Data Schedule b. Reports of Form 8-K None 12 CATALINA MARKETING CORPORATION SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, Registrant's principal financial officer, thereunto duly authorized. February 14, 2000 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 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION - ---------- ----------- 15 Acknowledgement Letter 19 Review Report of Independent Certified Public Accountants 27 Financial Data Schedule EX-15 2 EXHIBIT 15 February 14, 2000 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 Nos. 33-46793, 33-77100, 33-82456, 333-07525, 333-13335 and 333-86905, its Form 10-Q for the quarter ended December 31, 1999, which includes our report dated January 11, 2000, 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, /s/ ARTHUR ANDERSEN LLP - ------------------------- EX-19 3 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 December 31, 1999, and the related condensed consolidated statements of income for the three-month and nine-month periods ended December 31, 1999 and 1998, and the condensed consolidated statements of cash flow for the nine-month periods ended December 31, 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 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. /s/ ARTHUR ANDERSEN LLP ---------------------------- Tampa, Florida, January 11, 2000 EX-27 4
5 1,000 9-MOS MAR-31-1999 APR-01-1999 DEC-31-1999 7,535 0 56,065 0 0 105,334 236,122 132,460 270,369 122,521 1,853 0 0 182 137,029 270,369 257,232 257,232 104,931 196,045 241 0 0 60,946 24,501 36,935 0 0 0 36,935 1.99 1.91
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