8-K 1 d8k.htm FORM 8-K Form 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) February 14, 2007

Commission File Number: 1-11008

 

CATALINA MARKETING CORPORATION

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware   33-0499007

(State or Other Jurisdiction of

Incorporation or Organization)

  

(I.R.S. Employer

Identification Number)

 

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

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

N/A

(Former name or former address, if changed since last report):

 

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 (see General Instruction A.2. below):

 

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

 

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

 

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

 

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

 

Item 7.01 Regulation FD Disclosure

As previously announced, the Company changed its fiscal year end from March 31st to December 31st effective December 31, 2006. The following tables present proforma consolidated and segment results for the twelve month periods ended December 31, 2006, 2005, and 2004, and include a reconciliation of previously reported fiscal year, year-to-date results through December 31st with the proforma results on a calendar year basis. The company believes that showing previous results on a calendar year basis will provide better comparability with results that will be reported on a calendar year basis beginning with the year ending December 31, 2007.

The amounts presented in the “Calendar Year 2006 – Consolidated Results” and the “Calendar year 2006 – Segment Results” tables are on a GAAP basis and include the expense the Company recognized in accordance with SFAS 123R, Share-Based Payment (“SFAS 123R”), which the Company adopted effective April 1, 2006. The Company has provided reconciliations in the Appendix following the Consolidated and Segment Results tables that present the results for Calendar Year 2006 on a proforma basis that excludes the impact of SFAS 123R. The Company believes this presentation provides useful information to investors because it provides comparable financial results before and after the adoption of SFAS 123R.

The amounts presented in the “Calendar Year 2004 – Consolidated Results” and the “Calendar year 2004 – Segment Results” tables exclude the adjustment to 2004 revenue of Catalina Health Resource. The revenue adjustment is more fully described in Note 2 to the consolidated results table for 2004. The Company believes this non-GAAP, proforma presentation provides useful information to investors because it provides better comparability of the Company’s operations for the periods presented. The Company has provided reconciliations from GAAP basis financial results to proforma results in the Appendix following the Consolidated and Segment Results tables.

The information in this Current Report is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section. The information in this Current Report shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any incorporation by reference language in any such filing.

     Quarter
Ended		     Quarter
Ended		     Quarter
Ended		     Fiscal
YTD		     Quarter
Ended		     Calendar
YTD		  
     06/30/06     09/30/06     12/31/06     12/31/06     03/31/06     12/31/06  
     Unaudited     Unaudited     Unaudited     Unaudited     Unaudited     Unaudited  
     (In thousands, except per share amounts)  

Selected statement of operations data:

             

Revenues

    $ 105,167     $ 112,580     $ 123,127     $ 340,874     $ 125,913     $ 466,787  

Direct expenses (1)

      34,487       37,532       44,373       116,392       38,829       155,221  

Selling, General, & Administrative expenses (1)

      37,945       40,625       44,619       123,189       40,822       164,011  

Depreciation and amortization

      8,806       9,292       11,891       29,989       9,306       39,295  

Operating income

      23,929       25,131       22,244       71,304       36,956       108,260  

Other income (expense), net

      (123 )     275       (1,580 )     (1,428 )     (60 )     (1,488 )

Provision for income taxes (1)

      9,808       10,172       7,097       27,077       12,884       39,961  

Net income (loss)

      13,998       15,234       13,567       42,799       24,012       66,811  

Diluted net income (loss) per common share

    $ 0.30     $ 0.33     $ 0.29     $ 0.92     $ 0.51     $ 1.43  

Diluted weighted average common shares outstanding (2)

      46,617       46,865       46,399       46,633       47,429       46,765  

Selected statement of cash flows data:

             

Cash flow from operating activities

    $ 3,863     $ 30,942     $ 32,493     $ 67,298     $ 39,649     $ 106,947  

Capital Expenditures

      (14,261 )     (50,011 )     (33,219 )     (97,491 )     (20,758 )     (118,249 )

Cash flow from investing activities

      (14,261 )     (49,667 )     (33,284 )     (97,212 )     (20,758 )     (117,970 )

Proceeds from/(payments on) indebtedness

      6,825       41,859       15,855       64,539       15,240       79,779  

Payment for repurchases of common stock

      —         (7,990 )     (7,010 )     (15,000 )     (39,139 )     (54,139 )

Cash dividends paid

      —         (13,901 )     18       (13,883 )     —         (13,883 )

Cash flow from financing activities

      10,322       21,229       10,622       42,173       (23,382 )     18,791  

Effect of exchange rate changes on cash

      439       1,241       (229 )     1,451       52       1,503  

Cash effect of elimination of subsidiary reporting lag

      —         —         21,055       21,055       —         21,055  

Net change in cash and cash equivalents

    $ 363     $ 3,745     $ 30,657       34,765     $ (4,439 )     30,326  

(1)    As of April 1, 2006 the company adopted SFAS 123R, "Share-Based Payment". The following provides the detail of the stock based compensation expense and the related tax benefits that were recognized in direct expenses, selling, general, and administrative expenses, and the provision for income taxes in accordance with SFAS 123R:

        

Direct expenses

    $ 421     $ 577     $ 589     $ 1,587       —       $ 1,587  

Selling, General, & Administrative expenses

      2,462       3,342       3,370       9,174       —         9,174  

Provision for income taxes

      (548 )     (982 )     (1,256 )     (2,786 )     —         (2,786 )

 

(2) The diluted weighted average shares outstanding for the “Calendar YTD” results have never been reported and were calculated for this disclosure based on the twelve months ended December 31, 2006.

Calendar Year 2005 – Consolidated Results:

 

     

Quarter

Ended

06/30/05

    

Quarter

Ended

09/30/05

    

Quarter

Ended

12/31/05

    

Fiscal

YTD

12/31/05

    

Quarter

Ended

03/31/05

    

Calendar

YTD

12/31/05

  
            
            
     Unaudited     Unaudited     Unaudited     Unaudited     Unaudited     Unaudited  
     (In thousands, except per share amounts)  

Selected statement of operations data:

             

Revenues

    $ 91,854     $ 102,756     $ 97,223     $ 291,833     $ 111,969     $ 403,802  

Direct expenses

      30,685       32,318       33,643       96,646       37,446       134,092  

Selling, General, & Administrative expenses

      29,801       29,622       31,853       91,276       40,660       131,936  

Depreciation and amortization

      9,505       8,722       8,453       26,680       10,086       36,766  

Operating income

      21,863       32,094       23,274       77,231       23,777       101,008  

Other income (expense), net

      174       (242 )     (383 )     (451 )     1,462       1,011  

Provision for income taxes

      8,374       12,104       8,698       29,176       9,262       38,438  

Income from continuing operations

      13,663       19,748       14,193       47,604       15,977       63,581  

Income (loss) from discontinued operations

      —         —         —         —         (701 )     (701 )

Net income (loss)

      13,663       19,748       14,193       47,604       15,276       62,880  

Diluted income (loss) per common share:

             

From continuing operations

    $ 0.27     $ 0.40     $ 0.29     $ 0.96     $ 0.30     $ 1.27  

From discontinued operations

      —         —         —         —         (0.01 )     (0.01 )
                                                

Net income (loss)

    $ 0.27     $ 0.40     $ 0.29     $ 0.96     $ 0.29     $ 1.26  
                                                

Diluted weighted average common shares outstanding (1)

      50,865       48,996       48,428       49,419       52,180       50,163  

Selected statement of cash flows data:

             

Cash flow from operating activities

    $ 14,187     $ 17,575     $ 30,263     $ 62,025     $ 46,230     $ 108,255  

Capital Expenditures

      (8,483 )     (16,111 )     (14,902 )     (39,496 )     (9,594 )     (49,090 )

Cash flow from investing activities

      (11,980 )     (16,111 )     (14,902 )     (42,993 )     (9,094 )     (52,087 )

Proceeds from/(payments on) indebteness

      (30,122 )     2,928       13,949       (13,245 )     (160 )     (13,405 )

Payment for repurchases of common stock

      (41,832 )     (28,281 )     (5,065 )     (75,178 )     (44,174 )     (119,352 )

Cash dividends paid

      —         —         (14,451 )     (14,451 )     —         (14,451 )

Cash flow from financing activities

      (71,564 )     (23,853 )     (5,202 )     (100,619 )     (41,968 )     (142,587 )

Effect of exchange rate changes on cash

      (828 )     (886 )     (334 )     (2,048 )     1,586       (462 )

Net change in cash and cash equivalents

    $ (70,185 )   $ (23,275 )   $ 9,825     $ (83,635 )   $ (3,246 )   $ (86,881 )
(1) The diluted weighted average shares outstanding for the "Calendar YTD" results have never been reported and were calculated for this disclosure based on the twelve months ended December 31, 2005.

Calendar Year 2004 – Consolidated Results:

 

    

Quarter

Ended

06/30/04

    

Quarter

Ended

09/30/04

    

Quarter

Ended

12/31/04

    

Fiscal

YTD

12/31/04

    

Quarter

Ended

03/31/04

    

Calendar

YTD

12/31/04

  
            
            
     Unaudited     Unaudited     Unaudited     Unaudited     Proforma(2)     Proforma(2)  
     (In thousands, except per share amounts)  

Selected statement of operations data:

             

Revenues (2)

    $ 95,402     $ 102,372     $ 100,319     $ 298,093     $ 117,423     $ 415,516  

Direct expenses

      33,788       32,015       26,200       92,003       40,676       132,679  

Selling, General, & Administrative expenses

      28,823       28,517       31,365       88,705       32,377       121,082  

Depreciation and amortization

      11,554       10,604       10,202       32,360       11,739       44,099  

Operating income (2)

      21,237       31,236       32,552       85,025       32,631       117,656  

Other income (expense), net

      (392 )     125       255       (12 )     (7 )     (19 )

Provision for income taxes (2)

      7,482       12,508       12,404       32,394       10,213       42,607  

Income from continuing operations (2)

      13,363       18,853       20,403       52,619       22,411       75,030  

Income (loss) from discontinued operations

      (2,437 )     1,426       (1,432 )     (2,443 )     (32,514 )     (34,957 )

Cumulative effect of accounting change, net-of-tax

      —         —         —         —         —         —    

Net income (loss) (2)

      10,926       20,279       18,971       50,176       (10,103 )     40,073  
            

Diluted income (loss) per common share:

             

From continuing operations (2)

    $ 0.26     $ 0.36     $ 0.39     $ 1.01     $ 0.41     $ 1.43  

From discontinued operations

      (0.05 )     0.03       (0.03 )     (0.05 )     (0.61 )     (0.67 )

Cumulative effect of accounting change, net-of-tax

      —         —         —         —         —         —    
                                                

Net income (loss) (2)

    $ 0.21     $ 0.39     $ 0.36     $ 0.96     $ (0.20 )   $ 0.76  
                                                

Diluted weighted average common shares outstanding (1)

      52,245       52,311       52,720       52,334       52,264       52,334  

Selected statement of cash flows data:

             

Cash flow from operating activities

    $ 1,866     $ 40,604     $ 29,291     $ 71,761     $ 51,838     $ 123,599  

Capital Expenditures

      (2,141 )     (4,034 )     (6,758 )     (12,933 )     (4,827 )     (17,760 )

Cash flow from investing activities

      (2,141 )     52       (6,408 )     (8,497 )     (5,242 )     (13,739 )

Proceeds from/(payments on) indebteness

      (698 )     495       (2,413 )     (2,616 )     (30 )     (2,646 )

Payment for repurchases of common stock

      —         —         —         —         —         —    

Cash dividends paid

      —         (15,642 )     (11 )     (15,653 )     —         (15,653 )

Cash flow from financing activities

      (698 )     (14,922 )     (807 )     (16,427 )     (56 )     (16,483 )

Effect of exchange rate changes on cash

      (264 )     144       16       (104 )     782       678  

Net change in cash and cash equivalents

    $ (1,237 )   $ 25,878     $ 22,092     $ 46,733     $ 47,322     $ 94,055  
(1) The diluted weighted average shares outstanding for the "Calendar YTD" results have never been reported and were calculated for this disclosure based on the twelve months ended December 31, 2004.
(2) The quarter ended March 31, 2004, presents certain proforma quarterly results for Catalina Health Resource, adjusted for the one-time deferral of revenues resulting from the prior year’s revenue recognition adjustments. The non-GAAP, proforma results presented are a supplement to the financial data that is based on generally accepted accounting principles. The Company believes this non-GAAP, proforma presentation provides useful information to investors because it provides better comparability of the Company’s operations for the periods presented. It should be emphasized, however, that these non-GAAP, proforma measurements are not a substitution for GAAP-based financial statements. See the "Appendix—GAAP to Proforma Reconciliations" for the reconciliation from GAAP results to the proforma results reported herein for the Quarter Ended March 31, 2004 and Calendar Year Ended December 31, 2004.

Calendar Year 2006 – Segment Results:

 

     Quarter
Ended
06/30/06		     Quarter
Ended
09/30/06		     Quarter
Ended
12/31/06		     Fiscal
YTD
12/31/06		     Quarter
Ended
03/31/06		     Calendar
YTD
12/31/06		  
     Unaudited     Unaudited     Unaudited     Unaudited     Unaudited     Unaudited  
     ($'s in thousands)  

Revenues

             

CMS

    $ 62,227     $ 65,796     $ 72,523     $ 200,546     $ 78,115     $ 278,661  

CHR

      21,926       22,898       26,741       71,565       27,026       98,591  

CMI

      21,014       23,886       23,526       68,426       20,772       89,198  

Corporate

      1,044       1,177       1,495       3,716       1,034       4,750  

Eliminations

      (1,044 )     (1,177 )     (1,158 )     (3,379 )     (1,034 )     (4,413 )
                                                

Total Revenues

    $ 105,167     $ 112,580     $ 123,127     $ 340,874     $ 125,913     $ 466,787  
                                                

Income (loss) from operations (1)

             

CMS

    $ 24,902     $ 25,450     $ 22,713     $ 73,065     $ 38,021     $ 111,086  

CHR

      6,348       7,320       10,054       23,722       9,301       33,023  

CMI

      5,937       6,504       6,176       18,617       3,670       22,287  

Corporate

      (13,258 )     (14,143 )     (16,699 )     (44,100 )     (14,036 )     (58,136 )
                                                

Total Income from Operations

    $ 23,929     $ 25,131     $ 22,244     $ 71,304     $ 36,956     $ 108,260  
                                                

Net Income (loss) (1)

             

CMS

    $ 14,832     $ 15,300     $ 13,521     $ 43,653     $ 22,622     $ 66,275  

CHR

      3,777       4,355       5,982       14,114       5,534       19,648  

CMI

      3,139       3,081       2,584       8,804       1,888       10,692  

Corporate

      (7,750 )     (7,502 )     (8,520 )     (23,772 )     (6,032 )     (29,804 )
                                                

Net income from continuing operations

      13,998       15,234       13,567       42,799       24,012       66,811  

Discontinued Operations

      —         —         —         —         —         —    
                                                

Net income (loss)

    $ 13,998     $ 15,234     $ 13,567     $ 42,799     $ 24,012     $ 66,811  
                                                

(1)    As of April 1, 2006 the company adopted SFAS 123R, "Share-Based Payment". The following provides the detail of the impact of the adoption of SFAS 123R on income (loss) from operations and net income (loss) by segment:

       

Income (loss) from operations

             

CMS

    $ 783     $ 873     $ 862     $ 2,518     $ —       $ 2,518  

CHR

      289       322       319       930       —         930  

CMI

      —         703       786       1,489       —         1,489  

Corporate

      1,811       2,021       1,992       5,824       —         5,824  
                                                

Total Income from Operations

    $ 2,883     $ 3,919     $ 3,959     $ 10,761     $ —       $ 10,761  
                                                

Net Income (loss)

             

CMS

    $ 466     $ 519     $ 513     $ 1,498     $ —       $ 1,498  

CHR

      172       192       189       553       —         553  

CMI

      —         556       613       1,169       —         1,169  

Corporate

      1,698       1,670       1,387       4,755       —         4,755  
                                                

Net income from continuing operations

      2,336       2,937       2,702       7,975       —         7,975  

Discontinued Operations

      —         —         —         —         —         —    
                                                

Net income (loss)

    $ 2,336     $ 2,937     $ 2,702     $ 7,975     $ —       $ 7,975  
                                                

Calendar Year 2005 – Segment Results:

 

      Quarter
Ended
06/30/05		     Quarter
Ended
09/30/05		     Quarter
Ended
12/31/05		     Fiscal
YTD
12/31/05		     Quarter
Ended
03/31/05		     Calendar
YTD
12/31/05		  
     Unaudited     Unaudited     Unaudited     Unaudited     Unaudited     Unaudited  
     ($'s in thousands)  
Revenues             

CMS

    $ 57,689     $ 60,618     $ 57,972     $ 176,279     $ 74,642     $ 250,921  

CHR

      18,530       22,880       21,090       62,500       19,324       81,824  

CMI

      15,628       19,256       18,161       53,045       17,974       71,019  

Corporate

      782       960       891       2,633       936       3,569  

Eliminations

      (775 )     (958 )     (891 )     (2,624 )     (907 )     (3,531 )
                                                

Total Revenues

    $ 91,854     $ 102,756     $ 97,223     $ 291,833     $ 111,969     $ 403,802  
                                                
Income (loss) from operations             

CMS

    $ 24,867     $ 26,969     $ 23,947     $ 75,783     $ 34,723     $ 110,506  

CHR

      4,720       8,335       5,253       18,308       3,026       21,334  

CMI

      2,768       5,682       4,467       12,917       4,754       17,671  

Corporate

      (10,492 )     (8,892 )     (10,393 )     (29,777 )     (18,726 )     (48,503 )
                                                

Total Income from Operations

    $ 21,863     $ 32,094     $ 23,274     $ 77,231     $ 23,777     $ 101,008  
                                                
Net Income (loss)             

CMS

    $ 14,796     $ 16,046     $ 14,248     $ 45,090     $ 20,660     $ 65,750  

CHR

      2,809       4,959       3,126       10,894       1,800       12,694  

CMI

      729       2,387       1,892       5,008       2,911       7,919  

Corporate

      (4,671 )     (3,644 )     (5,073 )     (13,388 )     (9,394 )     (22,782 )
                                                

Net income from continuing operations

      13,663       19,748       14,193       47,604       15,977       63,581  

Discontinued Operations

      —         —         —         —         (701 )     (701 )
                                                

Net income (loss)

    $ 13,663     $ 19,748     $ 14,193     $ 47,604     $ 15,276     $ 62,880  
                                                

Calendar Year 2004 – Segment Results:

 

      Quarter
Ended
06/30/04		     Quarter
Ended
09/30/04		     Quarter
Ended
12/31/04		     Fiscal
YTD
12/31/04		     Quarter
Ended
03/31/04		     Calendar
YTD
12/31/04		  
     Unaudited     Unaudited     Unaudited     Unaudited     Proforma(1)     Proforma(1)  
     ($'s in thousands)  
Revenues             

CMS

    $ 63,402     $ 66,070     $ 65,499     $ 194,971     $ 82,101     $ 277,072  

CHR (1)

      17,866       19,180       19,797       56,843       22,529       79,372  

CMI

      14,246       16,892       15,004       46,142       15,359       61,501  

Corporate

      766       1,059       851       2,676       832       3,508  

Eliminations

      (878 )     (829 )     (832 )     (2,539 )     (1,261 )     (3,800 )
                                                

Total Revenues (1)

    $ 95,402     $ 102,372     $ 100,319     $ 298,093     $ 119,560     $ 417,653  
                                                
Income (loss) from operations             

CMS

    $ 27,191     $ 31,796     $ 30,573     $ 89,560     $ 38,354     $ 127,914  

CHR (1)

      1,808       4,663       6,231       12,702       5,049       17,751  

CMI

      2,754       4,439       3,557       10,750       2,877       13,627  

Corporate

      (10,516 )     (9,662 )     (7,809 )     (27,987 )     (11,512 )     (39,499 )
                                                

Total Income from Operations (1)

    $ 21,237     $ 31,236     $ 32,552     $ 85,025     $ 34,768     $ 119,793  
                                                
Net Income (loss)             

CMS

    $ 16,133     $ 18,896     $ 18,190     $ 53,219     $ 22,821     $ 76,040  

CHR (1)

      1,074       2,774       3,707       7,555       3,004       10,559  

CMI

      801       2,073       1,610       4,484       1,178       5,662  

Corporate

      (4,645 )     (4,890 )     (3,104 )     (12,639 )     (3,265 )     (15,904 )
                                                

Net income from continuing operations (1)

      13,363       18,853       20,403       52,619       23,738       76,357  

Discontinued Operations

      (2,437 )     1,426       (1,432 )     (2,443 )     (32,514 )     (34,957 )
                                                

Net income (loss) (1)

    $ 10,926     $ 20,279     $ 18,971     $ 50,176     $ (8,776 )   $ 41,400  
                                                
(1) The quarter ended March 31, 2004, presents certain proforma quarterly results for Catalina Health Resource, adjusted for the one-time deferral of revenues resulting from the prior year’s revenue recognition adjustments. The non-GAAP, proforma results presented are a supplement to the financial data that is based on generally accepted accounting principles. The Company believes this non-GAAP, proforma presentation provides useful information to investors because it provides better comparability of the Company’s operations for the periods presented. It should be emphasized, however, that these non-GAAP, proforma measurements are not a substitution for GAAP-based financial statements. See the "Appendix—GAAP to Proforma Reconciliations" for the reconciliation from GAAP results to the profroma results reported herein for the Quarter Ended March 31, 2004 and Calendar Year Ended December 31, 2004.

Appendix – GAAP to Proforma Reconciliations

Reconciliation of Consolidated GAAP Results to the Consolidated FAS 123R Proforma Results that exclude SFAS 123R for the Quarters Ended June 30, 2006, September 30, 2006, December 31, 2006; Fiscal Year-to-Date ended December 31, 2006; and the Calendar Year Ended December 31, 2006:

 

      Quarter Ended 06/30/06     Quarter Ended 09/30/06  
     GAAP     FAS 123R     Proforma     GAAP     FAS 123R     Proforma  
     (In thousands, except per share amounts)     (In thousands, except per share amounts)  

Selected statement of operations data:

             

Revenues

    $ 105,167     $ —       $ 105,167     $ 112,580     $ —       $ 112,580  

Direct expenses

      34,487       (421 )     34,066       37,532       (577 )     36,955  

Selling, General, & Administrative expenses

      37,945       (2,462 )     35,483       40,625       (3,342 )     37,283  

Depreciation and amortization

      8,806       —         8,806       9,292       —         9,292  

Operating income

      23,929       2,883       26,812       25,131       3,919       29,050  

Other income (expense), net

      (123 )     —         (123 )     275       —         275  

Provision for income taxes

      9,808       548       10,356       10,172       982       11,154  

Net income (loss)

      13,998       2,335       16,333       15,234       2,937       18,171  

Diluted income (loss) per common share:

    $ 0.30     $ 0.05     $ 0.35     $ 0.33     $ 0.06     $ 0.39  
      Quarter Ended 12/31/06     Fiscal YTD - 12/31/06  
     GAAP     FAS 123R     Proforma     GAAP     FAS 123R     Proforma  
     (In thousands, except per share amounts)     (In thousands, except per share amounts)  

Selected statement of operations data:

             

Revenues

    $ 123,127     $ —       $ 123,127     $ 340,874     $ —       $ 340,874  

Direct expenses

      44,373       (589 )     43,784       116,392       (1,587 )     114,805  

Selling, General, & Administrative expenses

      44,619       (3,370 )     41,249       123,189       (9,174 )     114,015  

Depreciation and amortization

      11,891       —         11,891       29,989       —         29,989  

Operating income

      22,244       3,959       26,203       71,304       10,761       82,065  

Other income (expense), net

      (1,580 )     —         (1,580 )     (1,428 )     —         (1,428 )

Provision for income taxes

      7,097       1,256       8,353       27,077       2,786       29,863  

Net income (loss)

      13,567       2,703       16,270       42,799       7,975       50,774  

Diluted income (loss) per common share:

    $ 0.29     $ 0.06     $ 0.35     $ 0.92     $ 0.17     $ 1.09  
      Calendar Year Ended 12/31/06                    
     GAAP     FAS 123R     Proforma                    
     (In thousands, except per share amounts)                    

Selected statement of operations data:

             

Revenues

    $ 466,787     $ —       $ 466,787        

Direct expenses

      155,221       (1,587 )     153,634        

Selling, General, & Administrative expenses

      164,011       (9,174 )     154,837        

Depreciation and amortization

      39,295       —         39,295        

Operating income

      108,260       10,761       119,021        

Other income (expense), net

      (1,488 )     —         (1,488 )      

Provision for income taxes

      39,961       2,786       42,747        

Net income (loss)

      66,811       7,975       74,786        

Diluted income (loss) per common share:

    $ 1.43     $ 0.17     $ 1.60        

Reconciliation of Segment GAAP Results to the Segment FAS 123R Proforma Results that Excludes SFAS 123R for the Quarters Ended June 30, 2006, September 30, 2006, December 31, 2006; Fiscal Year-to-Date ended December 31, 2006; and the Calendar Year Ended December 31, 2006:

 

      Quarter Ended 06/30/06     Quarter Ended 09/30/06  
     GAAP     FAS 123R    Proforma     GAAP     FAS 123R    Proforma  
     (In thousands, except per share amounts)     (In thousands, except per share amounts)  
Income (loss) from operations               

CMS

    $ 24,902     $ 783    $ 25,685     $ 25,450     $ 873    $ 26,323  

CHR

      6,348       289      6,637       7,320       322      7,642  

CMI

      5,937       —        5,937       6,504       703      7,207  

Corporate

      (13,258 )     1,811      (11,447 )     (14,143 )     2,021      (12,122 )
                                              

Total Income from Operations

    $ 23,929     $ 2,883    $ 26,812     $ 25,131     $ 3,919    $ 29,050  
                                              
Net Income (loss)               

CMS

    $ 14,832     $ 466    $ 15,298     $ 15,300     $ 519    $ 15,819  

CHR

      3,777       172      3,949       4,355       192      4,547  

CMI

      3,139       —        3,139       3,081       556      3,637  

Corporate

      (7,750 )     1,697      (6,053 )     (7,502 )     1,670      (5,832 )
                                              

Net income from continuing operations

      13,998       2,335      16,333       15,234       2,937      18,171  

Discontinued Operations

      —         —        —         —         —        —    
                                              

Net income (loss)

    $ 13,998     $ 2,335    $ 16,333     $ 15,234     $ 2,937    $ 18,171  
                                              
      Quarter Ended 12/31/06     Fiscal YTD - 12/31/06  
     GAAP     FAS 123R    Proforma     GAAP     FAS 123R    Proforma  
     (In thousands, except per share amounts)     (In thousands, except per share amounts)  
Income (loss) from operations               

CMS

    $ 22,713     $ 862    $ 23,575     $ 73,065     $ 2,518    $ 75,583  

CHR

      10,054       319      10,373       23,722       930      24,652  

CMI

      6,176       786      6,962       18,617       1,489      20,106  

Corporate

      (16,699 )     1,992      (14,707 )     (44,100 )     5,824      (38,276 )
                                              

Total Income from Operations

    $ 22,244     $ 3,959    $ 26,203     $ 71,304     $ 10,761    $ 82,065  
                                              
Net Income (loss)               

CMS

    $ 13,521     $ 513    $ 14,034     $ 43,653     $ 1,498    $ 45,151  

CHR

      5,982       189      6,171       14,114       553      14,667  

CMI

      2,584       613      3,197       8,804       1,169      9,973  

Corporate

      (8,520 )     1,388      (7,132 )     (23,772 )     4,755      (19,017 )
                                              

Net income from continuing operations

      13,567       2,703      16,270       42,799       7,975      50,774  

Discontinued Operations

      —         —        —         —         —        —    
                                              

Net income (loss)

    $ 13,567     $ 2,703    $ 16,270     $ 42,799     $ 7,975    $ 50,774  
                                              
      Calendar Year Ended 12/31/06                   
     GAAP     FAS 123R    Proforma                   
     (In thousands, except per share amounts)                   
Income (loss) from operations               

CMS

    $ 111,086     $ 2,518    $ 113,604         

CHR

      33,023       930      33,953         

CMI

      22,287       1,489      23,776         

Corporate

      (58,136 )     5,824      (52,312 )       
                              

Total Income from Operations

    $ 108,260     $ 10,761    $ 119,021         
                              
Net Income (loss)               

CMS

    $ 66,275     $ 1,498    $ 67,773         

CHR

      19,648       553      20,201         

CMI

      10,692       1,169      11,861         

Corporate

      (29,804 )     4,755      (25,049 )       
                              

Net income from continuing operations

      66,811       7,975      74,786         

Discontinued Operations

      —         —        —           
                              

Net income (loss)

    $ 66,811     $ 7,975    $ 74,786         
                              

Reconciliation of GAAP Results to the CHR Proforma Results for the Quarter Ended March 31, 2004, and the Calendar Year Ended December 31, 2004:

 

     Quarter
Ended
03/31/04		     Calendar
YTD
12/31/04		  

Consolidated:

     

Revenues - GAAP

    $ 119,560     $ 417,653  

Revenue Recognition Adjustment

      (2,137 )     (2,137 )
                

Revenues - Proforma

    $ 117,423     $ 415,516  

Operating Income - GAAP

    $ 34,768     $ 119,793  

Revenue Recognition Adjustment

      (2,137 )     (2,137 )
                

Operating Income - Proforma

    $ 32,631     $ 117,656  

Provision for Income Taxes - GAAP

    $ 11,023     $ 43,417  

Revenue Recognition Adjustment

      (810 )     (810 )
                

Provision for Income Taxes - Proforma

    $ 10,213     $ 42,607  

Income from Continuing Operations - GAAP

    $ 23,738     $ 76,357  

Revenue Recognition Adjustment

      (1,327 )     (1,327 )
                

Income from Continuing Operations - Proforma

    $ 22,411     $ 75,030  

Net Income - GAAP

    $ (8,776 )   $ 41,400  

Revenue Recognition Adjustment (after tax)

      (1,327 )     (1,327 )
                

Net Income - Proforma

    $ (10,103 )   $ 40,073  

Diluted EPS from Continuing Operations - GAAP

    $ 0.44     $ 1.46  

Revenue Recognition Adjustment

      (0.03 )     (0.03 )
                

Diluted EPS from Continuing Operations - Proforma

    $ 0.41     $ 1.43  

Diluted EPS - Net Income - GAAP

    $ (0.17 )   $ 0.79  

Revenue Recognition Adjustment

      (0.03 )     (0.03 )
                

Diluted EPS - Net Income - Proforma

    $ (0.20 )   $ 0.76  
     Quarter
Ended
03/31/04		     Calendar
YTD
12/31/04		  

Catalina Health Resource:

     

Revenues - GAAP

    $ 22,529     $ 79,372  

Revenue Recognition Adjustment

      (2,137 )     (2,137 )
                

Revenues - Proforma

    $ 20,392     $ 77,235  

Operating Income - GAAP

    $ 5,049     $ 17,751  

Revenue Recognition Adjustment

      (2,137 )     (2,137 )
                

Operating Income - Proforma

    $ 2,912     $ 15,614  

Net Income - GAAP

    $ 3,004     $ 10,559  

Revenue Recognition Adjustment (after tax)

      (1,327 )     (1,327 )
                

Net Income - Proforma

    $ 1,677     $ 9,232  

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.

 

February 14, 2007   CATALINA MARKETING CORPORATION
  (Registrant)
    /s/ Rick P. Frier
  Name:   Rick P. Frier
  Title:   Executive Vice President and Chief Financial Officer
    (Authorized officer of Registrant and principal financial and accounting officer)