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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
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[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 1997
[ ] 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 OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
11300 9TH STREET NORTH
ST. PETERSBURG, FLORIDA 33716-2329
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (813) 579-5000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH
EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ----------------
Common Stock, $.01 Par Value New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether the 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates
of the Registrant, based on the closing price of such stock as of May 21, 1997,
as reported by the New York Stock Exchange, Inc., was $38.00. The number of
common shares, par value $0.01 per share, outstanding as of May 21, 1997, was
18,209,340.
DOCUMENTS INCORPORATED BY REFERENCE
Catalina Marketing Corporation Definitive Proxy Statement for
1997--Part III
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TABLE OF CONTENTS
FORM 10-K
PAGE NO.
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PART I
Item 1 Business .................................................................. 1
Item 2 Properties ................................................................ 4
Item 3 Legal Proceedings ......................................................... 4
Item 4 Submission of Matters to a Vote of Security Holders ....................... 4
PART II
Item 5 Market for Registrant's Common Stock and Related Stockholder Matters ...... 4
Item 6 Selected Financial Data ................................................... 5
Item 7 Management's Discussion and Analysis of Financial Condition and Results of
Operations ................................................................ 5
Item 8 Consolidated Financial Statements and Supplementary Data .................. 9
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure ................................................................ 24
PART III
Item 10 Directors and Executive Officers of the Registrant ........................ 24
Item 11 Executive Compensation .................................................... 24
Item 12 Security Ownership of Certain Beneficial Owners and Management ............ 24
Item 13 Certain Relationships and Related Transactions ............................ 24
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K ........... 24
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PART I
ITEM 1. BUSINESS
General
Catalina Marketing Corporation and subsidiaries (Catalina Marketing, or
the "Company"), through its Catalina Marketing(R) Network, provides
manufacturers of consumer and pharmaceutical products and retailers with a
cost-effective method of delivering advertising messages and promotional
incentives directly to "targeted" consumers based on their purchasing behavior.
The Company helps manufacturers and retailers execute long-term marketing
strategies to build consumer loyalty, promote products, and increase brand
awareness and sales. The Company's principal operating units are Catalina
Marketing Services, Catalina Marketing International, Health Resource Publishing
Company, and Supermarkets Online. Additionally, in October 1996, the Company
purchased a 51% interest in a Japanese outdoor media company as part of the
planned commencement of electronic marketing services on a joint venture basis
in Japan. Catalina Marketing has 767 employees principally in the U.S. as well
as in the United Kingdom, France, Mexico and Japan.
The Catalina Marketing Network
Catalina Marketing, founded in 1983, developed a proprietary Electronic
Marketing Network designed to utilize the Universal Product Code ("UPC")
labeling convention and the widespread use of UPC scanning technology in retail
stores. The Company developed a technological capability to make coupon and
related promotion delivery more responsive to consumer behavior while
maintaining an advantage in terms of cost efficiency relative to alternative
methods. The Catalina Marketing Network provides manufacturers and retailers
with a high level of consumer targeting precision previously unavailable.
The Company's primary business is the delivery of promotions at the
checkout stand through the Catalina Marketing Network, which links the Company's
software, personal computers, central data bases and specially designed thermal
printers to point of scan controllers and scanning equipment. The system prints
promotion incentives based upon information generated at the point of sale, from
the purchased products' UPC. The Company's system evaluates scanner data,
matches it with manufacturer or retailer programmed promotions and directs the
thermal printer, which is located near the cash register, to print the
appropriate promotion or message. Printing occurs throughout the checkout
process and the promotions are handed directly to the shopper at the end of the
shopping transaction.
The Company enters into agreements with retail chains to install the
Catalina Marketing Network in all or selected stores, either regionally or
nationally. Upon installation, the retailer pays a one-time charge for each
installation and generally agrees to use the Catalina Marketing Network in its
stores for a minimum of five years. The Company pays distribution fees to the
retailer based upon the number of manufacturer promotions printed. The equipment
installed in each retail store includes a thermal printer at each checkout lane
linked by a central personal computer to the retailer's point of scan controller
and scanning equipment. One of the Company's two U.S. hub data processing
facilities communicates via modem with the personal computer installed in each
store to send new promotional instructions and to retrieve performance data. The
Company contracts with manufacturers and retailers to print promotions and
receives a fee for each promotion distributed.
All of the equipment and supplies necessary for operation of the
Catalina Marketing Network, including computer hardware, printers and paper, are
purchased by the Company from outside sources. The Company currently obtains
most or all of its requirements from two suppliers for each of these items,
except printers, for which there is one primary supplier. The Company believes
that, as required, alternate sources of supply are available for these items
without material interruptions of the Company's business.
The Catalina Marketing Network's design is flexible and easily
upgradable, and can support new applications developed by the Company. The
Network is driven by proprietary software. The system's flexibility permits the
Network to expand and to evolve as industry or customer requirements change.
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The Company, through its majority owned subsidiaries, provides in-store
electronic marketing services for consumers in the United Kingdom, Mexico,
France and Japan. As of March 31, 1997, the Company's network was in 941 retail
stores throughout the United Kingdom, Mexico and France. A test pilot program in
Japan is expected to commence in fiscal 1998.
Beginning in fiscal 1994 through March 31, 1997, the Company, through a
majority owned subsidiary, Catalina Electronic Clearing Services, Inc. ("CECS"),
operated a coupon clearing business. CECS utilized Catalina Marketing's existing
in-store network linked to scanners manufactured by Spectra-Physics Scanning
Systems, Inc. and others to electronically clear coupons. As of March 31, 1997,
CECS ceased offering electronic coupon clearing services due to operational
challenges and less than anticipated market demand.
In fiscal 1995, the Company formed Health Resource Publishing Company
("HRP") to develop a new application of the Company's patented, in-store
scanner-based technology. This application includes customized newsletters
targeted to pharmacy customers based on their individual prescription purchases.
The laser-printed publication offers medical condition-specific health
information and savings on related products. The Health Resource Publishing
Company newsletter is triggered by the National Drug Code found on all
prescription drugs. When a prescription is processed, a customized newsletter
with therapeutically relevant editorials and product advertising is printed at
the pharmacy counter on a standard laser printer and handed to the customer
along with the customer's filled prescription. As of March 31, 1997, the HRP
system is in 1,195 stores in the United States.
Services
The majority of services executed on the Catalina Marketing Network are
linked to the core Checkout Coupon(R) application. These include manufacturers'
coupons or other incentives delivered directly to targeted shoppers based on
their purchases of competitive products, the same products or complimentary
products. By specifying exactly which UPCs will trigger the printing of
promotions, manufacturers and retailers develop promotions bearing customized
messages and target them directly to shoppers they want to reach. The Company
offers manufacturers and retailers 13 four-week cycles annually for more than
500 product categories. These product categories are generally based on standard
industry classifications of household and consumer products available in
supermarkets, such as coffee, baby food and frozen entrees. The purchaser of a
particular category is given the exclusive right to have Checkout Coupons
printed for that category for each cycle purchased. The Company's policy
generally is to offer its manufacturer clients a right of first acceptance, for
a limited period of time, to purchase a national category cycle for each year
with respect to the identical category cycle which was purchased for the
immediately preceding year. The Company's U.S. Checkout Coupon programs
generated approximately 87 percent of the Company's revenues in fiscal 1997, 91
percent in fiscal 1996, and 95 percent in fiscal 1995.
The Company has developed several additional proprietary electronic
marketing products and program enhancements for the Catalina Marketing Network
that, combined with the Checkout Coupon programs, offer a broad range of
products that can satisfy all of the marketing objectives of a consumer goods
company and enable the Company's clients to impact every phase of the purchase
cycle--before, during and after the purchase. For example, the Checkout
Direct(R) program links the Catalina Marketing Network with a retailer's
check-cashing or other card-based shopper program allowing marketers to monitor
the buying patterns of specific households over time and issue promotions based
on those patterns. In addition, the Company actively assists, implements or
otherwise encourages retailer support to supplement manufacturer Checkout Coupon
programs with "tie-ins," such as newspaper advertising, posters and on-shelf
signs.
The Company's main revenue source is a function of total promotions
distributed based on a per-promotion charge, with a minimum category fee
determined with reference to the shopper reach of the Catalina Marketing
Network, and category unit volume. The minimum category fee is generally payable
to the Company prior to the commencement of the purchased cycle. The redemption
process of Checkout Coupon incentives is similar to that of regular
manufacturer coupons. Retailers provide discounts to consumers who present
coupons, then send redeemed coupons to clearinghouses and receive
reimbursements for the discounts provided, plus handling fees, from the
manufacturers.
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Sales and Marketing
Sales Force. The primary focus of the Company's marketing effort is to
attract national consumer product manufacturers to purchase category cycles. The
Company's sales and client service force focuses its services on current and
prospective customers by working with them to develop and execute customized,
targeted marketing programs that fit each brand's strategy and objectives.
Retailer Marketing. The Company's strategy has been to focus its retail
marketing efforts on installing its Network under contracts with the chain
retailers which have stores in major markets through the Company's retail sales
and service force. The Company encourages retailers to use Network-generated
incentives to promote private label brands or high margin departments, and
incorporate third-party "tie-ins."
At March 31, 1997, the Catalina Marketing Network was installed in
10,745 U.S. Checkout Coupon stores, which reach approximately 144 million
shoppers each week. Outside the United States, the Catalina Marketing Network
was installed in 941 stores, which reach approximately 18 million shoppers each
week.
Research and Development
The Company's expenditures for research and development are generally
for market research, software development, system upgrades and pilot-project
execution in order to create, test, and support new applications for the
Catalina Marketing Network. The Company believes that new service and
application development along with market expansion are vital to maintain the
Company's continued growth.
Competition
The Company competes for manufacturers' advertising and promotional
budgets with a wide range of alternative media, including television, radio,
print and direct mail advertising, as well as several alternative in-store and
point-of-sale programs. Within the coupon industry, the Company competes with
various traditional coupon delivery methods that are more widely accepted and
less expensive per delivered coupon, including free standing inserts (FSIs),
newspapers, direct mail, magazines and in or on-product packaging, as well as
other "in-store" marketing companies using a variety of coupon delivery methods.
The Company competes for promotional dollars based on the efficiency and
efficacy of the Catalina Marketing Network, its ability to accurately and
effectively target potential customers, the shopper "reach" of its network and
its general ability to influence consumer buying behavior, thereby enabling a
manufacturer or retailer to meet its strategic objectives and measure results
based on units moved versus number of coupons delivered.
Employees
The Company employed 767 persons (634 in the U.S.) as of March 31,
1997, substantially all of whom were full-time employees, and none of whom were
covered by a collective bargaining arrangement. Approximately 29 percent of the
Company's employees are located in the St. Petersburg, Florida headquarters.
Patents, Proprietary Information and Trademarks
The Company currently holds several United States and foreign patents
on certain aspects of the Catalina Marketing Network and its services and has
several patent applications pending. The Company believes that its patents
provide it with a competitive advantage and plans to defend its proprietary
rights vigorously in all appropriate circumstances. While the Company believes
that its patent position is important, it also believes that its ability to
market its services to retailers and manufacturers, and to develop new products
will be the major factor affecting its future performance.
The Company believes that product recognition is an important
competitive factor in the electronic marketing and promotion industry.
Accordingly, the Company promotes its service marks and trademarks in connection
with its marketing activities and has registered, and is in the process of
registering several marks. The Company also regards certain computer software
included in the Catalina Marketing Network and each additional service
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application as proprietary and seeks to protect it with copyrights, trade secret
laws and internal non-disclosure agreements and safeguards, as well as by other
means. Such methods may not afford complete protection and there can be no
assurance that others will not independently develop such know-how, concepts or
ideas.
ITEM 2. PROPERTIES
The Company's headquarters facility, which includes its principal
administrative, marketing, management information systems and product
development offices, is located in 65,207 square feet of leased space in St.
Petersburg, Florida. The Company leases an additional 18 sales and support
offices across the United States, consisting of approximately 101,500 square
feet in the aggregate and 4 offices for its foreign operations. The Company
believes that its existing facilities are adequate to meet current requirements
and that suitable additional space will be available as needed to accommodate
growth of its operations and additional sales and support offices for the
foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
Catalina Marketing is involved in routine litigation incidental to the
normal course of business, including litigation initiated by the Company to
protect its intellectual property. In the opinion of management of Catalina
Marketing, the ultimate outcome of this litigation will not have a material
adverse effect on the Company's financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
A. Market Prices of Stock
The Company's Common Stock, par value $0.01 per share ("Common Stock"),
is traded on the New York Stock Exchange ("NYSE") under the symbol POS. The
following table sets forth the high and low closing prices as reported by the
NYSE for the Common Stock of the Company for the quarters ended as follows:
HIGH LOW
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FISCAL 1997
March 31, 1997 ............... $59 3/8 $39
December 31, 1996 ............ $55 1/8 $46
September 30, 1996 ........... $53 7/8 $42 1/8
June 30, 1996 ................ $45 3/4 $36 3/16
FISCAL 1996:
March 31, 1996 ............... $40 3/8 $29 5/16
December 31, 1995 ............ $32 3/16 $24 3/4
September 30, 1995 ........... $31 $26 3/8
June 30, 1995 ................ $26 7/8 $21 1/8
B. Stockholders
As of March 31, 1997, there were approximately 619 registered holders
of Company common stock.
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C. Dividends
The Company has not paid any cash dividends to date, and there are no
current plans to pay a cash dividend.
ITEM 6. SELECTED FINANCIAL DATA
SELECTED CONSOLIDATED FINANCIAL DATA
FISCAL YEAR ENDED MARCH 31,
---------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
INCOME STATEMENT DATA:
Revenues ........................................... $172,143 $134,155 $113,254 $ 91,448 $ 71,947
Costs and expenses:
Direct operating expenses ...................... 62,482 47,661 41,389 35,383 27,100
Selling, general and administrative ............ 48,379 37,358 28,616 26,093 23,266
Depreciation and amortization .................. 17,939 14,328 15,073 11,428 9,266
-------- -------- -------- -------- --------
Total costs and expenses ........................... 128,800 99,347 85,078 72,904 59,632
-------- -------- -------- -------- --------
Income from operations ............................. 43,343 34,808 28,176 18,544 12,315
Net income ......................................... $ 27,241 $ 22,028 $ 17,229 $ 12,670 $ 8,229
Net income per common and common equivalent share .. $ 1.33 $ 1.11 $ 0.86 $ 0.62 $ 0.41
Weighted average common and common equivalent
shares outstanding (in thousands) ................ 20,491 19,922 20,128 20,388 20,264
OTHER DATA:
U.S. Checkout Coupon stores installed at end of
period ........................................... 10,745 9,766 9,004 7,481 5,609
International Checkout Coupon stores installed at
end of period .................................... 941 558 168 137 --
Capital expenditures ............................... $ 34,687 $ 23,561 $ 20,301 $ 25,220 $ 12,183
BALANCE SHEET DATA:
Cash and cash equivalents .......................... $ 13,698 $ 25,778 $ 30,729 $ 26,863 $ 25,613
Property and equipment, net ........................ $ 69,578 $ 46,253 $ 37,440 $ 32,944 $ 20,424
Total assets ....................................... $154,696 $114,187 $ 96,556 $ 82,504 $ 60,961
Long term debt ..................................... $ 869 -- -- -- --
Total stockholders' equity ......................... $ 96,938 $ 71,222 $ 55,494 $ 44,858 $ 29,337
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The statements in the following paragraphs 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, the success and timing of growth of the Company's international and
other ventures outside its core business, actual promotional activities and
programs with the Company's customers, the pace of installation of the Company's
Network, the timing and success of the introduction of new product and program
offerings by the Company, and the Company's ability to maintain favorable client
relationships with packaged goods manufacturers and retailers.
Overview
The Company provides in-store electronic marketing services. Through
its proprietary network, the Company provides manufacturers of consumer and
pharmaceutical products and retailers with cost-effective methods of delivering
promotional incentives and advertising messages directly to consumers based on
their purchasing behavior. These programs offer manufacturers and retailers 13
four-week cycles each year in which to offer highly targeted product promotions
or advertisements directly to consumers. Manufacturers and retailers may utilize
the Catalina Marketing Network to create and deliver ads and promotions on an
exclusive basis within any one of more than 500 product categories. Revenues
from the Checkout Coupon program vary directly with the total number of coupons
printed, subject to minimum category fees which are set based on the reach of
the Catalina Marketing Network and the level of unit sales within each category.
Additionally, in October 1996, the Company purchased a
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51% interest in a Japanese outdoor media company as part of the planned
commencement of electronic marketing services on a joint venture basis in Japan.
Results of Operations
Year Ended March 31, 1997 compared to Year Ended March 31, 1996
Revenues were $172.1 million in fiscal 1997, up 28 percent over
revenues of $134.2 million in fiscal 1996. The increase in revenues is primarily
due to a greater distribution of Checkout Coupon incentives worldwide. In the
U.S., the Catalina Marketing Network printed 2.31 billion promotions during
fiscal 1997, up 18 percent compared to fiscal 1996 (1.95 billion promotions).
Catalina Marketing Services contributed approximately $153.8 million of revenues
in fiscal 1997, up 22.4 percent over revenues of $125.6 million in fiscal 1996.
The greater distribution of Checkout Coupon promotions is attributable to the
broader reach of the Catalina Marketing Network and additional sales of category
cycles. In the U.S., the Catalina Marketing Network was in 10,745 stores at
March 31, 1997, which reach 144 million shoppers each week, as compared to 9,766
stores reaching 127 million shoppers each week at March 31, 1996.
Direct operating expenses consist of retailer fees, paper, sales
commissions and the expenses of operating and maintaining the Catalina Marketing
Network (primarily expenses relating to operations personnel and service
offices), provision for doubtful accounts and the direct expenses associated
with operating the outdoor media business in a majority-owned subsidiary in
Japan (purchased in October 1996). Direct operating expenses increased in
absolute terms to $62.5 million in fiscal 1997 from $47.7 million in fiscal
1996. Direct operating expenses in fiscal 1997 as a percentage of revenues
increased to 36.3 percent from 35.5 percent in fiscal 1996. This increase in
fiscal 1997 is principally attributable to the addition of the direct costs
associated with running the outdoor media business in Japan, expansion of the
HRP operating unit and costs associated with the discontinuance of CECS'
operations.
Selling, general and administrative expenses include personnel-related
costs of selling and administrative staff, overhead and new product development
expenses. Selling, general and administrative expenses in fiscal 1997 were $48.4
million, compared to approximately $37.4 million for fiscal 1996, an increase of
29.5 percent or $11 million. The increase relates primarily to higher costs
associated with a larger sales force, and administrative expenses of new
business ventures and products. As a percentage of revenues, selling, general
and administrative expenses increased 0.3 percent in fiscal 1997, to 28.1
percent from 27.8 percent for the comparable period of fiscal 1996.
Depreciation and amortization increased to $17.9 million for fiscal
1997 from $14.3 million for fiscal 1996. Depreciation increased due to the
increase in capital expenditures associated with new business ventures and was
partially offset by a decrease in depreciation expense on U.S. installed store
equipment. Amortization in fiscal 1997 includes approximately $0.5 million in
amortization of intangible assets arising from the purchase in the first quarter
of fiscal 1997 by the Company of the remaining 46 percent of its U.K. operation
from its minority stockholders.
The provision for income taxes increased to $17.9 million, 40% of
income before income taxes and minority interest, for fiscal 1997 compared to
$14.9 million, 41% of income before income taxes and minority interest, for the
same period in fiscal 1996. The Company's effective tax rate is higher than the
federal statutory tax rate due to state and foreign income taxes and the
inability to currently utilize losses of majority owned foreign subsidiaries for
tax purposes.
Year Ended March 31, 1996 compared to Year Ended March 31, 1995
Revenues were $134.2 million in fiscal 1996, up 18.5 percent over
revenues of $113.3 million in fiscal 1995. The increase in revenues is primarily
due to a greater distribution of Checkout Coupon incentives resulting from a
larger number of shopper transactions scanned by the Catalina Marketing Network
as well as increased
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manufacturer and retailer utilization of the available categories and cycles in
the Catalina Marketing Network. In the U.S., the Catalina Marketing Network
printed 1.95 billion promotions in fiscal 1996, up 11.8 percent compared to 1.75
billion promotions for fiscal 1995. Catalina Marketing Services contributed
approximately $125.6 million of revenues in fiscal 1996, up 15.3 percent over
revenues of $108.9 million in fiscal 1995. In the U.S., the Catalina Marketing
Network was in 9,766 stores at March 31, 1996, which reach 127 million shoppers
each week, as compared to 9,004 stores reaching 120 million shoppers each week
at March 31, 1995.
Direct operating expenses consist of retailer fees, paper and sales
commissions and the expenses of operating and maintaining the Catalina Marketing
Network (primarily expenses relating to operations personnel and service
offices) and provision for doubtful accounts. Direct operating expenses
increased to $47.7 million for fiscal 1996 from $41.4 million for fiscal 1995
but decreased as a percent of revenues to 35.5 percent from 36.5 percent,
respectively. This percent decrease is due primarily to economies in paper
purchasing.
Selling, general and administrative expenses include personnel-related
costs of sales and administrative staff, overhead and new product development
expenses. Selling, general and administrative expenses increased to $37.4
million in fiscal 1996 from $28.6 million for fiscal 1995 and increased as a
percent of revenues to 27.8 percent from 25.3 percent, respectively. This
increase is due primarily to higher costs associated with a larger sales force
and administrative expenses of new business ventures and products.
Depreciation and amortization decreased to $14.3 million for fiscal
1996 from $15.1 million in fiscal 1995. This decrease is due to the increase in
fully depreciated store equipment in fiscal 1996.
The provision for income taxes increased to $14.9 million, 41 percent
of income before income taxes and minority interest, for fiscal 1996 compared to
$11.3 million, 40.3 percent of income before income taxes and minority interest
for fiscal 1995. The Company's effective tax rate is higher than the federal
statutory tax rate due to state and foreign income taxes and the inability to
currently utilize losses of majority owned foreign subsidiaries for tax
purposes.
Quarterly Results
The following table presents certain unaudited quarterly results for
the last eight quarters (dollars in thousands, except per share data):
THREE MONTHS ENDED
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MAR 31, DEC 31, SEPT 30, JUNE 30, MAR 31, DEC 31, SEPT 30, JUNE 30,
1997 1996 1996 1996 1996 1995 1995 1995
-------- -------- -------- -------- -------- -------- -------- --------
Revenues .............................. $ 46,054 $ 46,344 $ 41,618 $ 38,127 $ 36,054 $ 36,546 $ 30,942 $ 30,613
Direct operating expenses ............. 18,428 16,055 14,863 13,136 12,544 13,033 11,142 10,942
Selling, general and administrative ... 13,372 12,195 11,658 11,154 10,922 10,635 8,140 7,661
Depreciation and amortization ......... 5,737 4,448 4,090 3,664 3,355 3,496 3,582 3,895
-------- -------- -------- -------- -------- -------- -------- --------
Income from operations ................ 8,517 13,646 11,007 10,173 9,233 9,382 8,078 8,115
Other income, net ..................... 378 273 341 232 479 286 435 209
Income taxes .......................... (3,631) (5,607) (4,371) (4,271) (4,391) (3,822) (3,277) (3,365)
Minority interest in losses of
subsidiaries ........................ 182 -- 212 160 282 107 98 179
-------- -------- -------- -------- -------- -------- -------- --------
Net income ............................ $ 5,446 $ 8,312 $ 7,189 $ 6,294 $ 5,603 $ 5,953 $ 5,334 $ 5,138
======== ======== ======== ======== ======== ======== ======== ========
Net income per common and common ...... $ .27 $ .40 $ .35 $ .31 $ .28 $ .30 $ .27 $ .26
======== ======== ======== ======== ======== ======== ======== ========
equivalent share
Weighted average common and common
equivalent shares outstanding ....... 20,539 20,635 20,608 20,432 20,238 19,840 19,728 19,870
======== ======== ======== ======== ======== ======== ======== ========
U.S. Checkout Coupon Business:
Stores at quarter end: ................ 10,745 10,741 10,470 10,085 9,766 9,465 9,197 9,049
Net stores installed during quarter: .. 4 271 385 319 301 268 148 45
Promotions printed (in millions): ..... 581 634 574 521 465 549 470 470
Weekly shopper reach at quarter end (in
millions): .......................... 144 141 136 135 127 126 122 122
The Company expects its revenues to fluctuate in accordance with
periods of higher promotional activity by manufacturers. The pattern of coupon
distribution, however, is irregular and may change from period to period
depending on many factors, including the economy, competition, the timing of new
product introductions and the timing of manufacturers' promotion planning and
implementation. These factors, as well as the overall growth in
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the number of retailer and manufacturer contracts with the Company, tend to
influence the Company's revenues and profits.
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 in
the Company's hub data processing facilities. Total store equipment and
third-party store installation costs range from $5,000 to $13,000 per store.
During fiscal 1997 and 1996, the Company made capital expenditures of $34.7
million and $23.6 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 fiscal 1997, the
Company increased expenditures for data processing equipment, spending
approximately $5.7 million, and had a faster pace of store installations
compared to fiscal 1996. Catalina Marketing finances capital expenditures from
internally generated cash flows. Management believes that expenditures for
equipment and research and development will remain between $25 and $35 million
annually for the foreseeable future.
In fiscal 1997, the Company invested approximately $13.7 million for
the purchase of the remaining interest in its United Kingdom subsidiary,
utilizing both available cash and Company common stock. Additionally, on October
10, 1996, the Company purchased 51% of Pacific Media, K.K. (PMK), a Japanese
outdoor media company, for $3.0 million in initial cash consideration. Terms of
the purchase agreement call for the Company to make a series of three annual
payments, which are contingent upon the financial performance of PMK for the
1996, 1997 and 1998 calendar years. The first annual payment, to be made in May
1997, will be approximately $2 million.
During fiscal 1997 and 1996, management purchased $9.5 million and $11
million of Company common stock, respectively. As of March 31, 1997, management
received board approval to purchase an additional $40 million of Company common
stock subject to market conditions. As of April 22, 1997, the Company had
completed the $40 million share repurchase program having purchased 1.4 million
shares of Company common stock at a weighted average price of $28.50 per share.
The Company expects share repurchases to be an ongoing and regular part of its
financial strategy.
As of March 31, 1997, the Company had an unsecured revolving bank
credit facility under which it may borrow up to $30 million, and under which
there were no borrowings outstanding. On April 14, 1997, the Company
renegotiated this credit facility increasing its borrowing limit to $40 million.
This renegotiated facility expires on August 31, 1998 and provides for interest
at variable rates calculated with reference to the London Interbank Offering
Rate (LIBOR) or the bank prime rate for certain advances. In April 1997, the
Company borrowed approximately $19 million against this credit facility in
connection with the completion of the $40 million common stock repurchase
program referenced above.
On May 8, 1997, the Company announced that it has adopted a Stockholder
Protection Plan. To implement this plan, the Company has declared a dividend of
one Preferred Share Purchase Right on each outstanding share of the Company's
common stock. The dividend distribution was payable to stockholders of record on
May 12, 1997. The rights will be exercisable for fractions of a share of the
Company's Series X Junior Participating Preferred Stock only if a person or
group acquires 15% or more of the Company's common stock or announces or
commences a tender offer for 15% or more of the common stock, except for certain
instances defined in the Stockholder Protection Plan.
In accordance with coupon industry practice, the Company generally
pre-bills manufacturers prior to the commencement of the purchased category
cycle. The Company recognizes revenue as promotions are printed, and the amounts
collected prior to printing are reflected as deferred revenue, which is
classified as a current liability. The Company believes working capital
generated by operations is sufficient to repay short term borrowings and for its
capital requirements, although the Company may choose to utilize additional debt
or lease financing, if available, on acceptable terms.
8
11
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO FINANCIAL INFORMATION
PAGE
----
Report of Independent Certified Public Accountants . . . . . . . 10
Consolidated Income Statements, Years ended March 31,
1997, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . 11
Consolidated Balance Sheets at March 31, 1997 and 1996 . . . . . 12
Consolidated Statements of Stockholders' Equity, Years ended
March 31, 1997, 1996 and 1995 . . . . . . . . . . . . . . . . . 13
Consolidated Statements of Cash Flows, Years ended March 31,
1997, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . 14
Notes to the Consolidated Financial Statements . . . . . . . . . 15
9
12
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To Catalina Marketing Corporation:
We have audited the accompanying consolidated balance sheets of Catalina
Marketing Corporation (a Delaware corporation) as of March 31, 1997 and 1996,
and the related consolidated statements of income, stockholders' equity and
cash flows for each of the three years in the period ended March 31, 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Catalina
Marketing Corporation as of March 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
March 31, 1997 in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Tampa, Florida,
April 18, 1997
10
13
CATALINA MARKETING CORPORATION
CONSOLIDATED INCOME STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED MARCH 31,
----------------------
1997 1996 1995
---- ---- ----
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . $172,143 $134,155 $113,254
Costs and Expenses:
Direct operating expenses . . . . . . . . . . . . . . . 62,482 47,661 41,389
Selling, general and administrative . . . . . . . . . . 48,379 37,358 28,616
Depreciation and amortization . . . . . . . . . . . . . 17,939 14,328 15,073
-------- -------- -------
Total costs and expenses . . . . . . . . . . . . . 128,800 99,347 85,078
-------- -------- -------
Income From Operations . . . . . . . . . . . . . . . . . . . 43,343 34,808 28,176
Other Income (Expense), net . . . . . . . . . . . . . . . . . 1,224 1,409 (247)
-------- -------- -------
Income Before Income Taxes and Minority Interest . . . . . . 44,567 36,217 27,929
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . 17,880 14,855 11,259
Minority Interest in Losses of Subsidiaries . . . . . . . . . 554 666 559
-------- -------- -------
Net Income . . . . . . . . . . . . . . . . . . . . . . . $ 27,241 $ 22,028 $17,229
======== ======== =======
Net Income per Common and Common Equivalent Share . . . . . . $ 1.33 $ 1.11 $ 0.86
======== ======== =======
Weighted Average Common and Common Equivalent Shares
Outstanding . . . . . . . . . . . . . . . . . . . . . . . 20,491 19,922 20,128
======== ======== ========
The accompanying Notes are an integral part of these consolidated financial
statements.
11
14
CATALINA MARKETING CORPORATION
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
MARCH 31,
-----------
1997 1996
---- ----
ASSETS
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,698 $ 25,778
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . 28,367 26,725
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 935 502
Deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,467 7,436
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . 11,282 4,850
---------- ----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . 61,749 65,291
---------- ----------
Property and Equipment:
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,913 792
Billboards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,107 --
Furniture and office equipment . . . . . . . . . . . . . . . . . . . . . . . 19,597 10,316
Store equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112,546 99,367
---------- ----------
142,163 110,475
Less: accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . (72,585) (64,222)
---------- ----------
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . 69,578 46,253
Purchased intangible assets, net . . . . . . . . . . . . . . . . . . . . . . 18,805 --
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,564 2,643
---------- ----------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 154,696 $ 114,187
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,674 $ 10,832
Taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 928 620
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,433 17,049
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,611 11,960
Short term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,820 --
---------- ----------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . 53,466 40,461
---------- ----------
Deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,423 2,504
Long term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
869 --
Commitments and contingencies . . . . . . . . . . . . . . . . . . . . . . . .
Stockholders' Equity:
Preferred stock; $.01 par value; 5,000,000 authorized shares; none issued and
outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
Common stock; $.01 par value; 50,000,000 and 30,000,000 authorized shares, and
20,778,557 and 20,459,728 shares issued at March 31, 1997 and 1996, 208 205
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,770 34,079
Cumulative translation adjustment . . . . . . . . . . . . . . . . . . . . . . 749 501
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,214 56,973
Less common stock in treasury, at cost (1,172,408 and 963,800 shares,
respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (30,003) (20,536)
---------- ----------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . 96,938 71,222
---------- ----------
Total Liabilities and Stockholders' Equity . . . . . . . . . . . . . . . $ 154,696 $ 114,187
========== ==========
The accompanying Notes are an integral part of these consolidated financial
statements.
12
15
CATALINA MARKETING CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
COMMON STOCK
-------------- CUMULATIVE TREASURY STOCK TOTAL
ISSUED PAR PAID-IN TRANSLATION RETAINED ----------------- STOCKHOLDERS'
SHARES VALUE CAPITAL ADJUSTMENT EARNINGS SHARES AMOUNT EQUITY
------ ------ -------- ---------- -------- ------ --------- -----------
BALANCE AT MARCH 31, 1994 . . . . 19,708 $ 197 $ 26,942 $ 3 $ 17,716 -- $ -- $ 44,858
Proceeds from issuance of common
stock . . . . . . . . . . . . . 340 3 2,022 -- -- -- -- 2,025
Amortization of option-related
compensation . . . . . . . . . -- -- 142 -- -- -- -- 142
Tax benefit from exercise of
non-qualified stock options and
disqualified dispositions . . . -- -- 575 -- -- -- -- 575
Common stock repurchase . . . . . -- -- -- -- -- (448) (9,477) (9,477)
Translation adjustment . . . . . -- -- -- 142 -- -- -- 142
Net income . . . . . . . . . . . -- -- -- -- 17,229 -- -- 17,229
------ ---- -------- ---- -------- ------ --------- --------
BALANCE AT MARCH 31, 1995 . . . . 20,048 $ 200 $ 29,681 $145 $ 34,945 (448) $ (9,477) $ 55,494
Proceeds from issuance of common
stock . . . . . . . . . . . . . 412 5 2,652 -- -- -- -- 2,657
Amortization of option-related
compensation . . . . . . . . . -- -- 133 -- -- -- -- 133
Tax benefit from exercise of
non-qualified stock options and
disqualified dispositions . . . -- -- 1,613 -- -- -- -- 1,613
Common stock repurchase . . . . . -- -- -- -- -- (516) (11,059) (11,059)
Translation adjustment . . . . . -- -- -- 356 -- -- -- 356
Net income . . . . . . . . . . . -- -- -- -- 22,028 -- -- 22,028
------ ---- -------- ---- -------- ------ --------- --------
BALANCE AT MARCH 31, 1996 . . . . 20,460 $ 205 $ 34,079 $501 $ 56,973 (964) $ (20,536) $ 71,222
Proceeds from issuance of common
stock . . . . . . . . . . . . . 266 3 4,628 -- -- -- -- 4,631
Amortization of option-related
compensation . . . . . . . . . -- -- 202 -- -- -- -- 202
Tax benefit from exercise of
non-qualified stock options and
disqualified dispositions . . . -- -- 884 -- -- -- -- 884
Common stock repurchase . . . . . -- -- -- -- -- (208) (9,467) (9,467)
Deferred compensation plan
common stock units . . . . . . -- -- 189 -- -- -- -- 189
Issuance of common stock to
replace Catalina Marketing
U.K., Ltd. options . . . . . . 11 -- 157 -- -- -- -- 157
Issuance of common stock in
purchase of minority
shareholders of Catalina. . . . 42 -- 1,631 -- -- -- -- 1,631
Marketing U.K., Inc. . . . . .
Translation adjustment . . . . . -- -- -- 248 -- -- -- 248
Net income . . . . . . . . . . . -- -- -- -- 27,241 -- -- 27,241
------ ---- -------- ---- -------- ------ --------- --------
BALANCE AT MARCH 31, 1997 . . . . 20,779 $208 $ 41,770 $749 $ 84,214 (1,172) $ (30,003) $ 96,938
====== ==== ======== ==== ======== ====== ========= ========
The accompanying Notes are an integral part of these consolidated financial
statements.
13
16
CATALINA MARKETING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
FOR THE YEAR ENDED MARCH 31,
------------------------------
1997 1996 1995
-------- ------- -------
Cash Flows from Operating Activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,241 $ 22,028 $17,229
Adjustments to reconcile net income to net cash provided by operating
activities:
Minority interest . . . . . . . . . . . . . . . . . . . . . . . (554) (666) (559)
Loss attributable to joint venture . . . . . . . . . . . . . . . -- -- 950
Depreciation and amortization . . . . . . . . . . . . . . . . . 18,264 14,461 15,215
Provision for doubtful accounts . . . . . . . . . . . . . . . . 1,197 1,307 572
Deferred income tax . . . . . . . . . . . . . . . . . . . . . . 1,677 1,733 2,532
Deferred compensation plan common stock units . . . . . . . . . 189 -- --
Loss (gain) on sales of equipment . . . . . . . . . . . . . . . 4 (20) (407)
Changes in operating assets and liabilities, net of effects from
acquisitions:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . (4,180) (11,460) (8,184)
Inventory, prepaid expenses and other assets . . . . . . . . . . (3,681) (3,698) 390
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . 2,451 7,674 891
Taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . 180 408 (2,320)
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . 4,090 (33) (2,908)
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . (2,611) (6,382) 5,644
-------- ------- -------
Net cash provided by operating activities . . . . . . . . . 44,267 25,352 29,045
-------- ------- -------
Cash Flows From Investing Activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . (34,687) (23,561) (20,301)
Proceeds from sale of equipment . . . . . . . . . . . . . . . . . . . 82 440 1,253
Purchase of investments, net of cash acquired (18,028) (725) (357)
-------- ------- -------
Net cash used in investing activities . . . . . . . . . . . (52,633) (23,846) (19,405)
-------- ------- -------
Cash Flows From Financing Activities:
Proceeds from debt obligations . . . . . . . . . . . . . . . . . . . 1,138 -- --
Principal payments on debt obligations . . . . . . . . . . . . . . . (1,458) -- --
Proceeds from issuance of common and subsidiary stock . . . . . . . . 5,090 2,990 3,063
Tax benefit from exercise of non-qualified stock options and
disqualified dispositions . . . . . . . . . . . . . . . . . . . . 884 1,613 575
Payment for repurchase of company common stock . . . . . . . . . . . (9,467) (11,059) (9,477)
-------- ------- -------
Net cash used in financing activities . . . . . . . . . . . (3,813) (6,456) (5,839)
-------- ------- -------
Net Change in Cash and Cash Equivalents . . . . . . . . . . . . . . . (12,179) (4,950) 3,801
Effect of Exchange Rate Changes on Cash . . . . . . . . . . . . . . . 99 (1) 65
Cash and Cash Equivalents, at beginning of year . . . . . . . . . . . 25,778 30,729 26,863
-------- ------- -------
Cash and Cash Equivalents, at end of year . . . . . . . . . . . . . . $ 13,698 $25,778 $30,729
======== ======= =======
Supplemental Schedule of Other Transactions:
Cash paid during the year for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 70 -- --
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,463 $14,906 $10,331
The accompanying Notes are an integral part of these consolidated financial
statements.
14
17
CATALINA MARKETING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following summarizes the significant accounting and financial policies
of Catalina Marketing Corporation and Subsidiaries (the "Company") which have
been followed in preparing the accompanying consolidated financial statements.
Certain prior balances have been reclassified to conform with the current year
presentation.
Description of the Business. The Company provides in-store electronic
marketing services. Through its proprietary network, the Company provides
consumer products manufacturers and retailers with cost-effective methods of
delivering promotional incentives and advertising messages directly to
consumers based on their purchasing behavior. Additionally, a majority-owned
subsidiary of the Company operates an outdoor media business in Japan. As of
March 31, 1997, the Company's network was installed in 10,745 retail stores and
1,195 pharmacies throughout the United States and 941 retail stores throughout
the United Kingdom, Mexico and France.
Principles of Consolidation and Preparation. The consolidated financial
statements include the accounts of the Company and its wholly-owned and
majority-owned subsidiaries. The preparation of financial statements in
conformity with generally accepted accounting principles requires the use of
management's estimates.
The accounts of the wholly-owned and majority-owned foreign subsidiaries
are included as of December 31, which is their fiscal year end. All material
intercompany profits, transactions and balances have been eliminated. The
Company's investment in non-majority owned companies is accounted for on the
equity method.
Fair Value of Financial Instruments. The book value of all financial
instruments approximates their fair value.
Cash and Cash Equivalents. Cash and cash equivalents consist of cash and
short-term investments. The short-term investments can be immediately converted
to cash and are held at their market value.
Allowance for Doubtful Accounts. The Company records a provision for
estimated doubtful accounts as part of direct operating expenses. As of March
31, 1997 and 1996, the allowance for doubtful accounts was $1,613,000 and
$3,016,000, respectively.
Inventory. Inventory consists of paper used for promotion printing.
Inventory is stated at the lower of cost, as determined by the first-in,
first-out method, or market.
Property and Equipment. Store equipment, billboards, leasehold
improvements and furniture and office equipment are stated at cost.
Depreciation of store equipment, billboards and furniture and office equipment
is computed using the straight-line method based on the estimated useful lives
of the related assets (generally three to eight years). Third party
installation costs, net of amounts reimbursed by the retailer, are capitalized
and amortized using the straight-line method over the shorter of the estimated
useful lives of the assets or the remaining term of the related retailer
contract. Leasehold improvements are amortized using the straight-line method
over the shorter of the estimated useful lives of the assets or the remaining
term of the related lease. Maintenance and repair costs are expensed as
incurred.
Foreign Currency Translation. For foreign subsidiaries whose functional
currency is the local foreign currency, balance sheet accounts are translated
at exchange rates in effect at the end of the subsidiaries' year and income
statement accounts are translated at average exchange rates for the year.
Translation gains and losses are included as a separate component of
stockholders' equity.
15
18
CATALINA MARKETING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Revenue Recognition and Deferred Revenue. In accordance with coupon
industry practice, the Company generally pre-bills manufacturers for purchased
category cycles. The purchase of a category cycle gives a manufacturer the
exclusive right to have promotions printed for a particular product category
during the applicable period. The Company recognizes in-store electronic
marketing service revenues as promotions are printed. Amounts collected prior
to printing are reflected as deferred revenue until printing occurs.
Income Taxes. Provision for income taxes includes federal, state and
foreign income taxes currently payable. Deferred income taxes are provided for
temporary differences between the recognition of income and expenses for
financial reporting purposes and income tax purposes.
Research and Development. Research and development costs relating to the
development and testing of new service applications are expensed as incurred.
If a contractual agreement exists to complete a test program that will result
in a loss, the loss is recognized in the period it becomes known.
Net Income Per Common and Common Equivalent Share. Net income per common
and common equivalent share is based on the weighted average number of shares
of common stock outstanding and dilutive common equivalent shares from stock
options using the treasury stock method, effected for the two-for-one stock
split (see Note 8).
NOTE 2: SUPPLEMENTAL BALANCE SHEET INFORMATION
Prepaid expenses and other current assets include (in thousands):
MARCH 31,
-----------------
1997 1996
------- ------
Prepaid billboard rental . . . . . . . . . . . . . . . . . . . $ 3,972 $ --
Investments in deferred compensation plan . . . . . . . . . . . 4,923 --
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,387 4,850
------- ------
Total prepaid expenses and other current assets . . . . . . $11,282 $4,850
======= ======
Purchased intangible assets, net (see Note 7) include (dollars in thousands):
USEFUL LIFE MARCH 31,
(IN YEARS) 1997
---------- ---------
Patent license and retailer relationships in the United Kingdom . . . 20 $12,691
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 6,661
Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . (547)
-------
Purchased intangible assets, net . . . . . . . . . . . . . . $18,805
=======
In 1997 and 1996, other assets include approximately $0.3 and $0.7 million,
respectively of loans to employees.
Accrued expenses include (in thousands):
MARCH 31,
------------------
1997 1996
------- -------
Payroll related . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,262 $ 4,638
Deferred compensation plan . . . . . . . . . . . . . . . . . . . . . 4,832 3,324
Property, sales and use tax . . . . . . . . . . . . . . . . . . . . 2,349 2,558
Sales commissions . . . . . . . . . . . . . . . . . . . . . . . . . 1,798 1,290
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,192 5,239
------- -------
Total accrued expenses . . . . . . . . . . . . . . . . . . . . $22,433 $17,049
======= =======
16
19
CATALINA MARKETING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 3: INCOME TAXES
Deferred income tax assets or liabilities are computed based on the
temporary differences between the financial statement and income tax bases of
assets and liabilities using the enacted marginal income tax rate in effect for
the year in which the differences are expected to reverse. Deferred income tax
expenses or credits are based on the changes in the deferred income tax assets
or liabilities from period to period.
Temporary differences for financial statement and income tax purposes
result primarily from charges to operations for financial statement reporting
purposes which are not currently tax deductible and revenues deferred for
financial statement reporting purposes which are currently taxable. The
components of the deferred tax asset and liability were as follows (in
thousands):
MARCH 31,
---------------
1997 1996
------ -------
Payroll related . . . . . . . . . . . . . . . . . . . $2,904 $2,287
Deferred revenue . . . . . . . . . . . . . . . . . . . 1,158 1,302
Provision for doubtful accounts . . . . . . . . . . . 670 1,176
Other . . . . . . . . . . . . . . . . . . . . . . . . 2,735 2,671
------ ------
Deferred tax asset . . . . . . . . . . . . . . . $7,467 $7,436
====== ======
Deferred tax liability--depreciation and amortization. $3,423 $2,504
====== ======
The provision for income taxes consisted of the following (in thousands):
MARCH 31,
-----------------------------
1997 1996 1995
------- ------- -------
Current taxes:
Federal . . . . . . . . . . $13,678 $11,516 $ 7,676
State . . . . . . . . . . . 1,877 1,236 1,038
Foreign . . . . . . . . . . 648 370 13
------- ------- -------
16,203 13,122 8,727
------- ------- -------
Deferred taxes:
Federal . . . . . . . . . . 1,629 1,555 2,193
State . . . . . . . . . . . 187 178 339
Foreign . . . . . . . . . . (139) -- --
------- ------- -------
1,677 1,733 2,532
------- ------- -------
Provision for income taxes . $17,880 $14,855 $11,259
======= ======= =======
The reconciliation of the provision for income taxes based on the U.S.
federal statutory income tax rate to the Company's provision for income taxes
is as follows (dollars in thousands):
MARCH 31,
------------------------------
1997 1996 1995
------- ------- -------
Federal statutory rate . . . . . . . . . . . . . . . . 35% 35% 35%
Expected federal statutory tax . . . . . . . . . . . . $15,792 $12,909 $ 9,971
State and foreign income taxes, net of federal benefit 1,829 1,257 576
Effect of foreign subsidiary losses . . . . . . . . . 744 522 250
Tax free municipal bonds . . . . . . . . . . . . . . . (245) (332) (187)
Other . . . . . . . . . . . . . . . . . . . . . . . . (240) 499 649
------- ------- -------
Provision for income taxes . . . . . . . . . . . $17,880 $14,855 $11,259
======= ======= =======
17
20
CATALINA MARKETING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 4: SHORT TERM BORROWINGS AND LONG TERM DEBT
As of March 31, 1997, the Company's short term borrowings and long term
debt (all of which was incurred by the Company's majority-owned Japanese
subsidiary, and is payable in yen) consisted of the following (in thousands):
MARCH 31,
1997
---------
Short term borrowings (including $1,309 current portion of long
term debt) with several Japanese banks and agents,
interest from 2.1% to 3.75%, maturing through December,
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,820
Long term debt with several Japanese banks, interest from 2.1%
to 3.75%, maturing through November, 2000 . . . . . . . . . . $ 869
Short term borrowings and long term debt are personally guaranteed by
minority stockholders of Catalina-Pacific Media, L.L.C. and an employee of
Pacific Media, K.K. The Company indemnifies these minority stockholders and
employee for 51% of this debt.
Maturities of long term debt are as follows as of March 31, 1997 (in
thousands):
AMOUNT
-------
1990 . . . . . . 732
2000 . . . . . . 114
2001 . . . . . . 23
------
$ 869
======
On January 15, 1996, the Company entered into an unsecured revolving bank
credit facility under which it may borrow up to $30 million, at variable rates
calculated with reference to the London Interbank Offering Rate (LIBOR) or the
bank prime rate for certain advances. There were no borrowings under this
credit facility as of March 31, 1997. On April 14, 1997, the Company expanded
this credit facility to $40 million and extended the term to August 31, 1998.
NOTE 5: COMMITMENTS AND CONTINGENCIES
Rental expense under operating leases was $1,622,000, $1,372,000 and
$1,208,000 for the years ended March 31, 1997, 1996 and 1995, respectively.
Future minimum rental commitments under operating leases with non-cancelable
terms of more than one year (the longest of which expires in 2003) as of March
31, 1997, are as follows: $2,225,000 in 1998, $1,929,000 in 1999, $739,000 in
2000, $694,000 in 2001, $654,000 in 2002 and $553,000 thereafter.
One manufacturer accounted for a total of approximately 11 percent of the
Company's revenues during the year ended March 31, 1995. No single
manufacturer accounted for 10 percent or more of the Company's revenues during
the years ended March 31, 1996 or March 31, 1997.
18
21
CATALINA MARKETING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6: STOCK-BASED COMPENSATION PLANS
The Company has a stock option plan, the 1989 Incentive Stock Option Plan
(the "1989 Plan"); a stock grant plan, the Catalina Marketing Corporation 1992
Director Stock Grant Plan ("Grant Plan"); and an employee stock purchase plan,
the Employee Payroll Deduction Stock Purchase Plan (the "Purchase Plan").
1989 Incentive Stock Option Plan. The 1989 Plan was approved by the Board
of Directors in April 1989, and approved by the stockholders in July 1989.
Pursuant to the 1989 Plan, 4,500,000 shares of the Company's common stock are
reserved for issuance upon the exercise of options granted under the 1989 Plan.
Options to purchase an aggregate of 4,288,892 shares have been granted under
the 1989 Plan, of which options to purchase 2,115,420 shares were outstanding
on March 31, 1997.
The 1989 Plan provides for grants of Incentive Stock Options ("ISOs") to
employees (including employee directors). Options granted under the 1989 Plan
generally become exercisable at a rate of 25 percent per year (20 percent per
year for initial grants to new employees), commencing one year after the date
of grant and generally have terms of five to ten years. In 1994, the 1989 Plan
was amended to limit the term to six years. The exercise price of all ISOs
granted under the 1989 Plan must be equal to the fair market value of the
shares on the date of grant.
Aggregate Stock Option Activity. As of March 31, 1997, options to purchase
an aggregate of 1,604,368 shares had been exercised, including options to
purchase 10,000 shares granted outside of the 1989 Plan; options to purchase an
aggregate of 2,135,420 shares were outstanding, including options to purchase
20,000 shares outside of the 1989 Plan; and 790,712 shares remained available
for future grants under the 1989 Plan. Of the options outstanding at March 31,
1997 and at March 31, 1996, options to purchase 887,756 and 617,214 shares
were immediately exercisable, with weighted average exercise prices of $19.89
and $16.79, respectively.
Stock Option activity for the years ended March 31, 1995, 1996 and 1997 is
as follows:
WEIGHTED
NUMBER AVERAGE
OF SHARES OPTION PRICES
---------- --------------
Options outstanding at March 31, 1994 . . 1,491,698 $11.09
Option activity:
Granted . . . . . . . . . . . . . . 751,150 22.41
Exercised . . . . . . . . . . . . . (328,300) 5.52
Canceled or expired . . . . . . . . (84,014) 18.59
---------
Options outstanding at March 31, 1995 . . 1,830,534 16.37
Option activity:
Granted . . . . . . . . . . . . . . 760,632 25.59
Exercised . . . . . . . . . . . . . (404,792) 6.38
Canceled or expired . . . . . . . . (157,286) 21.78
---------
Options outstanding at March 31, 1996 . . 2,029,088 21.48
Option activity:
Granted . . . . . . . . . . . . . . 653,260 44.02
Exercised . . . . . . . . . . . . . (251,668) 15.93
Canceled or expired . . . . . . . . (295,260) 26.29
---------
Options outstanding at March 31, 1997 . . 2,135,420 28.37
19
22
CATALINA MARKETING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Stock Grant Plan. The Grant Plan provides for grants of common stock to
non-employee board members. As of March 31, 1997, 24,454 shares have been
granted and 2,200 have been canceled leaving 77,746 shares available for future
grants under the Grant Plan. Stock granted under the Grant Plan vests ratably
in annual installments over each Director's remaining term.
Employee Stock Purchase Plan. In July 1994, the Purchase Plan was adopted
by the Board of Directors and approved by the stockholders. Pursuant to the
Purchase Plan, 300,000 shares of the Company's common stock were reserved for
issuance. For the fiscal years ended March 31, 1997, 1996 and 1995, 28,375,
22,464, and 10,852 shares were purchased, respectively.
Under the Purchase Plan, employees may purchase Company common stock at 85%
of the market price on the first or last day of an offering period. The maximum
each employee may purchase in an offering period shall not exceed $12,500 in
market value of Company common stock. The Company will typically have two six-
month offering periods each year. The Purchase Plan qualifies under Section 423
of the Internal Revenue Code of 1986.
The Company accounts for the option and stock purchase plans under APB
Opinion No. 25, under which no compensation cost has been recognized. The
Company adopted Statement of Financial Accounting Standards No. 123 (SFAS No.
123) for disclosure purposes in fiscal 1997. For SFAS No. 123 purposes, the
fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions used for grants in fiscal 1996 and 1997: risk-free interest rates
ranging from 5.26 to 6.86 percent depending on the date of grant; expected
dividend yield of zero percent; expected life of five years; and expected
volatility of 33.68 percent. The fair values of options granted in fiscal 1996
and 1997 are $6,859,229 and $10,289,789, respectively, which would be amortized
as compensation over the vesting period of the options.
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ------------------------------------------------------------------------- ----------------------------------
Outstanding Weighted Average Exercisable
Range of as of Remaining Weighted Average as of Weighted Average
Exercise Prices March 31, 1997 Contractual Life Exercise Price March 31, 1997 Exercise Price
- --------------- -------------- ---------------- ---------------- -------------- ----------------
$14.66 - $ 25.50 1,296,940 2.6 $20.63 824,856 $19.25
$25.87 - $ 53.50 838,480 4.6 $40.32 62,900 $28.34
--------- ------- ------
2,135,420 887,756 $19.89
20
23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Had compensation cost for these plans been determined consistent with SFAS
No. 123, the Company's net income and earnings per share would have been
reduced to the following pro forma amounts (in thousands, except per share
data):
MARCH 31,
-----------
1997 1996
-------- --------
Net Income: As Reported $ 27,241 $ 22,028
Pro Forma $ 24,351 $ 20,953
Primary EPS: As Reported $ 1.33 $ 1.11
Pro Forma $ 1.19 $ 1.05
Because the SFAS No. 123 method of accounting has not been applied to
options granted prior to April 1, 1995, the resulting pro forma compensation
cost may not be representative of that to be expected in future years.
Additionally, the pro forma amounts include approximately $257,000, and
$142,000 related to the purchase discount offered under the Purchase Plan for
fiscal 1997 and 1996, respectively.
NOTE 7: ACQUISITIONS
On April 10, 1996, the Company purchased from its minority
stockholders the remaining 46% of Catalina Marketing UK, Inc. not owned by it
for $11.9 million cash consideration and 41,672 newly issued shares of Company
common stock. Catalina Marketing UK, Inc. owns all of the outstanding stock of
Catalina Marketing UK, Ltd., the United Kingdom operating company. The Company
also chose to replace existing options in the Catalina Marketing UK, Ltd. stock
option plan by issuing 12,845 shares of Company common stock to the Catalina
Marketing UK, Ltd. plan participants. The April 10, 1996 purchase has been
accounted for on the purchase method. The intangible assets recorded in
connection with the transaction primarily related to patent license and
retailer relationships (see Note 2).
If Catalina Marketing UK, Inc. had been 100% owned by the Company
during fiscal 1996 and 1995, net income and earnings per common and common
equivalent share would have been approximately $21.7 million or $1.09 per
share, and $16.6 million or $0.83 per share, respectively. The information in
the preceding sentence is unaudited.
On October 10, 1996, the Company purchased 51% of Pacific Media, K.K.
(PMK), a Japanese outdoor media company, for approximately $3.0 million in
initial cash consideration. As part of the transaction, the Company
contributed its PMK shares, and the selling stockholders contributed their
remaining PMK shares, to a newly established Delaware limited liability holding
company, Catalina-Pacific Media, L.L.C., which is now owned 51% by a subsidiary
of the Company. Terms of the purchase agreement call for the Company to make a
series of three annual payments, which are contingent upon the financial
performance of PMK for the 1996, 1997 and 1998 calendar years, respectively.
The subsidiary will introduce Checkout Coupon(R) and other electronic marketing
programs to Japan through a division to be called Catalina Marketing Japan
(CMJ), and is part of the continued international expansion of the Catalina
Marketing(R) Network. The October 10, 1996 purchase has been accounted for on
the purchase method.
21
24
CATALINA MARKETING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8: TWO-FOR-ONE STOCK SPLIT
On June 10, 1996 the Company's Board of Directors declared a
two-for-one common stock split effected in the form of a stock dividend. The
record date for the stock dividend was June 24, 1996, and the payment date was
July 15, 1996. The financial statements and all other stock or option related
information provided herein have been restated to include the effects of the
stock split.
NOTE 9: SAVINGS PLANS
On June 1, 1992, the Company adopted a 401(k) Savings Plan (the "401(k)
Plan"). The Company is required to match employee contributions to the 401(k)
Plan. The match equals 100% of the first 2 percent of compensation the employee
contributes plus 25 percent of employee contributions between 2 percent and 4
percent of the compensation. The Company may also make discretionary
contributions. The Company's contributions during fiscal 1997 and 1996 were
$349,000 and $325,000, respectively.
On January 1, 1992, the Company adopted a non-qualified deferred
compensation plan (the "Deferred Compensation Plan"). The Deferred
Compensation Plan is designed to permit select employees and directors of the
Company to defer a portion of their compensation. Effective July 1, 1996, the
Deferred Compensation Plan was amended and restated allowing participants to
elect deferral of certain types of compensation , including directors fees,
stock grants under the Grant Plan and shares issuable upon the exercise of
stock options, into stock units (units in the Deferred Compensation Plan each
of which represents a share of Company common stock) and creating the Catalina
Marketing Corporation Deferred Compensation Trust (the "Trust"). Amounts
deposited in stock unit accounts are distributed in the form of shares of
Company common stock upon a payment event. Through the Trust, investment
options such as mutual funds and money market funds are available to
participants.
The Company accounts for its investments in the Deferred Compensation Plan
under Statement of Financial Accounting Standards No. 115 (SFAS No. 115). The
investment in the Deferred Compensation Plan and related liability are included
in prepaid expenses and other current assets and accrued expenses of the
consolidated balance sheets, respectively. The Company determined all of its
Deferred Compensation Plan investments currently held in mutual funds and money
market funds are trading securities as defined by SFAS No. 115 and as such are
reported at fair value. Stock units are also reported at fair value. Realized
and unrealized holding gains and losses related to these investments, as well
as the offsetting compensation expense, recognized in net income during fiscal
1997 were not significant.
22
25
CATALINA MARKETING CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 10: DOMESTIC AND FOREIGN INFORMATION
FISCAL YEARS ENDED MARCH 31,
----------------------------------------------------
1997 1996 1995
--------------- ---------------- ---------------
(in thousands)
REVENUES:
United States $158,105 $126,744 $108,962
United Kingdom 7,797 6,022 3,392
Japan 2,909 - -
Other Foreign 5,036 2,519 1,415
Foreign Eliminations (1,704) (1,130) (515)
--------------- ---------------- ---------------
$172,143 $134,155 $113,254
INCOME (LOSS) FROM OPERATIONS:
United States $46,359 $36,449 $29,828
United Kingdom 1,159 847 (219)
Japan (539) - -
Other Foreign (3,636) (2,488) (1,433)
--------------- ---------------- ---------------
$43,343 $34,808 $28,176
IDENTIFIABLE ASSETS AT FISCAL YEAR END:
United States $138,842 $110,024 $92,276
United Kingdom 20,703 6,162 4,514
Japan 16,354 - -
Other Foreign 11,209 6,140 1,884
Foreign Eliminations (32,412) (8,139) (2,118)
--------------- ---------------- ---------------
$154,696 $114,187 $96,556
NOTE 11: EARNINGS PER SHARE UNDER SFAS NO. 128
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 (SFAS No. 128), effective
for financial statements ending after December 15, 1997. SFAS No. 128 replaces
the presentation of primary EPS with a presentation of basic EPS, requires dual
presentation of basic and diluted EPS on the face of the income statement for
all entities with complex capital structures and requires a reconciliation of
the numerator and denominator of the basic EPS computation to the numerator and
denominator of the diluted EPS computation. The effect of the adoption of SFAS
No. 128 on the accompanying financial statements will be as follows (in
thousands, except per share data):
FISCAL YEARS ENDED MARCH 31,
-----------------------------------------
1997 1996 1995
------------ ------------ -------------
Net Income $27,241 $22,028 $17,229
PER SHARE AMOUNTS:
Earnings per share, as reported $1.33 $1.11 $0.86
Effect of SFAS No. 128 $0.06 $0.03 $0.02
------------ ------------ -------------
Basic Earnings per share $1.39 $1.14 $0.88
23
26
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
ITEM 11. EXECUTIVE COMPENSATION.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information called for by Items 10, 11, 12 and 13 will be contained in
Catalina Marketing's definitive Proxy Statement for the Annual Meeting of
Stockholders under the captions "Compensation of Executive Officers and
Non-Employee Directors," "Share Ownership of Certain Beneficial Owners and
Management" and "Nomination and Election of Directors" and is incorporated
herein by this reference. The definitive Proxy Statement will be filed with the
Commission prior to August 30, 1997.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
PAGE
----
(a)1 Financial Statements. The following is a list of all the Consolidated Financial
Statements included in Item 8 of Part II.
Report of Independent Certified Public Accountants . . . . . . . . . . . . . . . 9
Consolidated Income Statements, Years Ended March 31, 1997, 1996 and 1995 . . . . 10
Consolidated Balance Sheets at March 31, 1997 and 1996 . . . . . . . . . . . . . 11
Consolidated Statements of Stockholders' Equity, Years Ended March 31, 1997, 1996
and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Consolidated Statements of Cash Flows, Years Ended March 31, 1997, 1996 and 1995 13
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . 14
(a)2 Financial Statement Schedules.
All other schedules are omitted because they are not applicable or
not required, or because the required information is included in the
Consolidated Financial Statements or notes thereto.
24
27
(a)3 Index to Exhibits
EXHIBIT NO. DESCRIPTION OF DOCUMENT
- ----------- -------------------------
*3.3 Restated Certificate of Incorporation
3.3.1 Certificate of Amendment of Certificate of Incorporation
3.3.2 Certificate of Designation, Preferences and Rights setting forth the terms of the Company's
Series X Junior Participating Preferred Stock, par value $.01 per share
*3.4 Restated Bylaws
**10.4 Amended and Restated 1989 Stock Option Plan, a copy of which is attached as an exhibit to the
Company's Annual Report on Form 10-K for the year ended March 31, 1994
*10.12 Form of Director and Officer Indemnification Agreement
**10.18 Lease Agreement dated as of June 30, 1993 by and between QP One Corporation, a Minnesota
corporation, as landlord, and Registrant, as tenant, a copy of which is attached as an exhibit to
the Company's Annual Report on Form 10-K for the year ended March 31, 1994
**10.18.1 First Amendment dated as of December 20, 1993, to the Lease Agreement dated as of June 30,
1993, by and between QP One Corporation, a Minnesota corporation, as landlord, and Registrant,
as tenant, a copy of which is attached as an exhibit to the Company's Annual Report on Form 10-K
for the year ended March 31, 1994
10.21 1992 Director Stock Grant Plan, as amended on July 23, 1996
**10.22 Employee Payroll Deduction Stock Purchase Plan, a copy of which is attached as an exhibit to the
Company's Annual Report on Form 10-K for the year ended March 31, 1995
**10.23 Credit Agreement dated as of January 15, 1996, by and between the Registrant and SunTrust Bank,
Tampa Bay, a copy of which is attached as an exhibit to the Company's Report on Form 10-Q for
the quarter ended December 31, 1995
10.23.1 First Amendment dated as of April 14, 1997, to the Credit Agreement dated as of January 15, 1996
by and between the Registrant and SunTrust Bank, Tampa Bay
10.24 Lease Agreement dated as of September 5, 1996 by and between Interior Design Services, Inc., a
Florida corporation, as landlord, and Registrant, as tenant
**10.25 Stockholder Protection Agreement, dated May 8, 1997, between the Registrant and ChaseMellon
Shareholder Services, L.L.C., as rights agent, a copy of which is attached as an exhibit to the
Company's Current Report on Form 8-K filed on May 8, 1997
21 List of subsidiaries.
23 Consent of independent certified public accountants
27 Financial Data Schedule (for SEC use only)
- --------
* Incorporated by reference to the Company's Registration Statement on Form
S-1 Registration No. 33-45732, originally filed with the Securities and
Exchange Commission on February 14, 1992, and declared effective (as
amended) on March 26, 1992.
** Previously filed as indicated.
(b) Reports on Form 8-K: None
25
28
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of St.
Petersburg, State of Florida, on May 23, 1997
CATALINA MARKETING CORPORATION
(Registrant)
By: /S/ PHILIP B. LIVINGSTON
-------------------------
Philip B. Livingston,
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons in the capacities and on the
dates indicated.
SIGNATURE CAPACITY DATE
--------- -------- ----
/S/ TOMMY D. GREER Chairman of the Board 5/23/97
- ------------------ -------
TOMMY D. GREER
/S/ GEORGE W. OFF Chief Executive Officer, President, 5/23/97
- ----------------- and Director (Principal Executive -------
GEORGE W. OFF and Operating Officer )
/S/ FRANK H. BARKER Director 5/23/97
- ------------------- -------
FRANK H. BARKER
/S/ FREDERICK W. BEINECKE Director 5/23/97
- ------------------------- -------
FREDERICK W. BEINECKE
/S/ PATRICK W. COLLINS Director
- ---------------------- 5/23/97
PATRICK W. COLLINS -------
/S/ STEPHEN I. D'AGOSTINO Director 5/23/97
- ------------------------- -------
STEPHEN I. D'AGOSTINO
/S/ THOMAS G. MENDELL Director 5/23/97
- --------------------- -------
THOMAS G. MENDELL
/S/ HELENE MONAT Director 5/23/97
- ---------------- -------
HELENE MONAT
/S/ THOMAS W. SMITH Director 5/23/97
- ------------------- -------
THOMAS W. SMITH
/S/ MICHAEL B. WILSON Director 5/23/97
- --------------------- -------
MICHAEL B. WILSON
/S/ PHILIP B. LIVINGSTON Senior Vice President and 5/23/97
- ------------------------ Chief Financial Officer -------
PHILIP B. LIVINGSTON
/S/ TAMARA L. ZEPH Corporate Controller and 5/23/97
- ------------------ Principal Accounting Officer -------
TAMARA L. ZEPH
26