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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Form 10-K

Commission File Number: 1-11008

Catalina Marketing Corporation

(727) 579-5000

Securities registered pursuant to Section 12(b) of the Act:

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 o          No þ

      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.     þ

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2 of the Act).     Yes þ          No o

      As of September 30, 2003, the last business day of our most recently completed second fiscal quarter, the aggregate market value of the common stock held by non-affiliates of the registrant (based on the last sales price on that date of $15.19 as reported by the New York Stock Exchange, Inc.) was $740,167,505. The number of shares of registrant’s common stock, par value $0.01 per share, outstanding as of June 30, 2004, was 52,140,866.

Documents Incorporated by Reference

      Certain portions of registrant’s Definitive Proxy Statement for 2004 are incorporated by reference in Parts II and III of this report.

TABLE OF CONTENTS

FORM 10-K

PART I

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PART I

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

      References herein to “Catalina Marketing,” the “Company,” “we,” “us” or “our” refer to Catalina Marketing Corporation and its subsidiaries unless the context specifically states or implies otherwise.

      Certain information included in this Annual Report on Form 10-K, including Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements made in reliance upon the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may be identified by the use of words such as “anticipate,” “estimates,” “should,” “expect,” “guidance,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning, in connection with any discussion of the Company’s future business, results of operations, liquidity and operating or financial performance. Such forward-looking statements involve significant material known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. We cannot assure you that any future results, performance or achievements will be achieved.

      Factors that may cause such differences include, but are not limited to, the changing market for promotional activities, especially as it relates to policies and programs of consumer packaged goods and pharmaceutical products manufacturers, marketers and retailers; general business and economic conditions; acquisitions and divestitures; risks associated with the Company’s growth and finances; government and regulatory policies affecting the Company and its clients; potential adverse federal, state or local legislation or regulation or adverse determinations subjecting the Company to additional taxes; the pricing and availability of alternative forms of advertising; the Company’s ability to execute on its various business plans and to test, expand and install its networks in new markets; risks associated with reliance on the performance and financial condition of manufacturers, marketers and retailers; technological developments; changes in the competitive and regulatory environments in which the Company and its clients operate including, without limitation, shifts in consumer purchase patterns and habits such as the channels through which consumers purchase certain types of products; seasonal variations; actual promotional activities and programs with the Company’s clients; the success of new services and businesses and the pace of their implementation; the Company’s ability to maintain favorable client relationships; the Company’s ability to avoid or mitigate material adverse judgments against, or other adverse results affecting, the Company in the existing United States Securities and Exchange Commission (“SEC”) investigation and shareholder and derivative litigation described in Item 3 — “Legal Proceedings,” or any additional regulatory action, litigation or other proceeding that may be commenced; the Company’s ability to fully address and correct deficiencies and weaknesses in our disclosure controls and procedures and internal control and to thereafter maintain effective disclosure controls and procedures and internal control structure; the Company’s ability to attract, motivate and/or retain key employees. For a further discussion of certain of these risks, uncertainties and other factors, see Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Factors.”

      The Company undertakes no obligation to make public indication of changes in, update or revise any of its forward-looking statements, whether as a result of new information, future events or otherwise.

INTRODUCTORY NOTE

      In this Annual Report on Form 10-K, words such as “today,” “current” or “currently,” or phrases such as “as of the date hereof” or “as of the date of this report,” refer to the date we are filing this Annual Report on Form 10-K with the SEC.

      Catalina Marketing Corporation is filing this Annual Report on Form 10-K for its fiscal year ended March 31, 2004. The Company completed and filed its Annual Report on Form 10-K for the fiscal year ended March 31, 2003 on May 17, 2004. The filing of this Annual Report on Form 10-K for the fiscal year ended March 31, 2004 was delayed because we were required to devote substantial time and resources to the audit of

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Item 1.     Business

General

      Catalina Marketing Corporation, a Delaware corporation, together with its subsidiaries, is a global leader in the development and distribution of behavior-based communications for consumer packaged goods and pharmaceutical products manufacturers, marketers and retailers. Catalina Marketing was founded on the premise that the combination of access to information regarding consumers and insight into their actual purchase behavior enables the delivery of more effective and cost-efficient promotions than traditional marketing approaches. The Company’s primary business initially was developed to provide consumers with in-store coupons delivered based on purchase behavior and distributed primarily in domestic supermarkets. Since the first installation of our network equipment in retail stores in 1984, Catalina Marketing has continued to develop and expand our product offerings.

      Today, the Company offers behavior-based, targeted-marketing services and programs globally through a variety of distribution channels. These marketing solutions, including discount coupons, loyalty marketing programs, informative newsletters, sampling, advertising, in-store instant-win games and other incentives, are delivered directly to shoppers by various means. By specifying how a particular consumer transaction will “trigger” a promotion to print, manufacturers, marketers and retailers can deliver customized incentives and messages only to those consumers they desire to reach. The Company tracks actual purchase behavior and uses Universal Product Code-based scanner technology to target consumers at the checkout counter and National Drug Code information to trigger delivery of a newsletter to consumers in pharmacy prescription checkout transactions. Personally identifiable data that may be collected from the Company’s targeted marketing programs, as well as its research programs, is used in conformity with the Company’s privacy policies and applicable law. The Company does not collect personally identifiable data in connection with pharmacy prescription checkout transactions. The services of our networks are driven by proprietary, internally developed software.

      The Company is organized and managed by segments, which include the following operations: Manufacturer Services, Retail Services, Catalina Health Resource (“CHR”), international operations, which

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      In the United States, as of March 31, 2004, the Catalina Marketing Network®, which supports Manufacturer and Retail Services, was installed in approximately 17,600 retail stores, primarily supermarkets, and reached approximately 209 million shoppers weekly. The Health Resource Network was installed in approximately 11,900 pharmacy outlets and reached more than 20 million prescription medication users weekly. Internationally, our network was installed in over 5,500 retail locations, primarily supermarkets in Europe and Japan, and reached more than 65 million shoppers weekly.

      As of March 31, 2004, the Company employed approximately 1,400 people in offices throughout the United States, Europe and Japan.

Recent Developments

     Previously Filed Financial Statements for Fiscal Years 2003, 2002 and 2001

      We filed our Annual Report on Form 10-K for the fiscal year ended March 31, 2003 on May 17, 2004. In addition to our Consolidated Financial Statements for the fiscal year ended March 31, 2003, this filing included audited restatements of our Consolidated Financial Statements for the fiscal years ended March 31, 2002 and 2001. Please refer to such filing for additional information regarding the background of such restatements and the content and effect of the changes included in the restated financial statements.

     Significant Business Developments and Events For the Fiscal Year Ended March 31, 2004

	•	In May 2003, the Company, through one of its wholly-owned subsidiaries, exercised a call option contained in the Purchase Agreement dated October 10, 1996, among the Company, Pacific Media KK (“PMKK”) and certain minority shareholders of PMKK to purchase the remaining 49% of the voting equity interest in PMKK held by certain minority shareholders for an aggregate purchase price equal to $23.2 million in cash, based on foreign exchange rates on the payment date in July 2003. The Company exercised the call option to preempt the exercise of a put option held by the minority shareholders and reduce the adverse financial impact that would have resulted from the exercise of the put option available to the minority shareholders. PMKK is now wholly owned by the Company.
	•	In September 2003, the Company’s credit agreement with a syndicate of commercial banks (the “Corporate Facility”), expired and we entered into an agreement to extend the Corporate Facility for 60 days. Our aggregate borrowing capacity was reduced from $150.0 million to $30.0 million. In November 2003, we entered into a Second Amended and Restated Credit Agreement with Bank One, N.A., as Administrative Agent and Wachovia Bank, National Association, as Syndication Agent and Documentation Agent. In connection with this agreement, our aggregate borrowing capacity remained at $30.0 million. The Company’s obligations under the Corporate Facility are guaranteed by the Company and certain of its domestic subsidiaries and by assets pledged as collateral. The Corporate Facility expires in August 2004. In November 2003, Catalina Marketing Japan, K.K. (“Catalina Japan”) entered into a credit agreement with Bank One, N.A. (the “Japan Agreement”). The aggregate borrowing capacity under the Japan Agreement is 3.5 billion yen or approximately $33.6 million. Catalina Japan’s obligations under the Japan Agreement are guaranteed by the Company and certain of the Company’s subsidiaries and by assets pledged as collateral. The revolving loan commitment under the Japan Agreement (1.5 billion yen, or approximately $14.4 million) expires in August 2004 and the term loan under the Japan Agreement (2.0 billion yen, or approximately $19.2 million) expires in March 2005. The Japan Agreement replaced the prior credit facility that matured, with extensions, in November 2003 as well as the term loan that would have matured in March 2005.

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	•	In November 2003, the Company announced its intention to divest DMS, CMRS and Japan Billboard, all of which were determined not to be strategically aligned with the Company’s current core competencies. For a more detailed discussion of these planned divestitures see “Business Segment Information — Operations Designated to be Divested by the Company.”
	•	On March 31, 2004, we sold our loyalty card and data-entry services business located in Farmingdale, New Jersey. Catalina Marketing’s loyalty card and data-entry services business provided application and data processing, card production and fulfillment services related to loyalty card programs for retailers. We intend to continue to work with our retail clients to transition our loyalty card and data-entry services.
	•	Throughout fiscal year 2004, there were significant changes to our senior management team and the Company replaced several members of its Board of Directors. In addition, during this same period, our senior management team devoted a significant amount of time conducting internal investigations, restating our financial statements, reviewing corporate governance procedures and responding to government inquiries.

Business Segment Information

     General

      The Company offers behavior-based, targeted-marketing services and programs globally. The Company is organized and managed by segments, which include the following operations: Manufacturer Services, Retail Services, CHR, International, DMS, CMRS and Japan Billboard. See “Business — General.” In November 2003, the Company announced its intention to divest DMS, CMRS and Japan Billboard, all of which were determined not to be strategically aligned with its current core competencies. The Company is currently evaluating options with respect to the sale or other methods of divestiture of these businesses. See “Significant Business Developments and Events For the Fiscal Year Ended March 31, 2004.” For a description of these segments, see “Business Segment Information — Operations Designated to be Divested by the Company.”

      Financial information regarding segment revenues, net income and total assets and geographic information regarding geographic revenues and long-lived assets for fiscal years 2004, 2003 and 2002 is presented in Note 16 to the Consolidated Financial Statements.

     Manufacturer Services

      Manufacturer Services serves the needs of domestic consumer product manufacturers, primarily within the consumer packaged goods industry. Using the Catalina Marketing Network®, this operating segment specializes in behavior-based marketing communications that are delivered at the point-of-sale. The primary service line of the Catalina Marketing Network® is the in-store delivery of incentives at the checkout lane of a retailer, typically a supermarket. Catalina Marketing links its proprietary software, computers, central databases and thermal printers with a retailer’s point-of-sale controller and scanning equipment. The network prints customized promotions at the point-of-sale based on product Universal Product Codes or other scanned information. The printed promotions are handed to consumers by the cashier at the end of the shopping transaction. Our clients contract with us to deliver promotions for them and typically pay us a fee for each promotion delivered.

      The primary focus of Manufacturer Services’ sales efforts is assisting consumer packaged goods manufacturers to design programs that deliver results that achieve their brand objectives. Our sales and client service teams consult with current and prospective clients to develop and implement customized, targeted marketing programs that meet specific brand strategies and objectives.

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      Manufacturer Services generates revenue primarily by providing in-store, electronic marketing delivery services via the Catalina Marketing Network®. The amount of revenue recognized is based on the total incentives delivered multiplied by a per-print fee. Delivered incentives include targeted promotions, messages and sweepstakes. The Company generally bills its clients a minimum category fee in advance of the actual delivery. Contracts for delivery include a minimum number of targeted promotions or messages for a specified category, or categories, within a four-week period referred to as a “cycle.” The delivery of messages or promotions is based upon particular triggering transactions that are registered at the point-of-sale (i.e., the checkout counter of a retail store). In general, Manufacturer Services recognizes revenue at the time a promotion is delivered at the checkout counter of the retail store based on a per promotion charge. The majority of our contracts cover multiple cycles.

      Redemption of these promotions is similar to that of traditional manufacturer coupons. In this regard, retailers provide discounts to consumers who present the coupons. The retailers send redeemed coupons to clearinghouses and receive reimbursements for the discounts provided, including handling fees, from the manufacturers.

      The two primary programs of Manufacturer Services are Checkout Coupon® and Checkout Direct®. Through its Checkout Coupon® service, Catalina Marketing delivers marketing communications to consumers at checkout, based on the products included in their current shopping basket. Through its Checkout Direct® service, Catalina Marketing delivers marketing communications to consumers at the checkout counter using past purchase behavior, which is collected using “frequent shopper” or similar consumer identification methods.

      Manufacturer Services had a single client, Nestlé, that accounted for approximately 17.9%, 17.1% and 13.1% of revenues generated by this segment for the fiscal years ended March 31, 2004, 2003 and 2002, respectively. We believe that the loss of Nestlé could have a material adverse effect on Manufacturer Services as well as the Company taken as a whole.

     Retail Services

      Retail Services provides innovative marketing solutions to approximately 80 retail chains nationwide. The primary objective of this operating group is to support, maintain and expand the Catalina Marketing Network® used by Manufacturer Services. In addition, this operating group provides services to retailers, including promotional prints and analytical services that enable retailers to focus on changing consumer shopping patterns with targeted communications, motivate the consumers to visit a retailer more frequently, increase the size of purchase transactions, purchase specific products and develop brand loyalty. On March 31, 2004, we sold our loyalty card and data-entry services business. This business represented less than 2.5% of our consolidated revenues in fiscal year 2004. See “Significant Business Developments and Events Through March 31, 2004.”

      The Company typically enters into agreements with retail chains to install its network in the retail stores of the chain for an initial specified period. Generally, the retailer pays a one-time fee as a partial reimbursement for the cost of the installation. In general, the Company pays distribution fees to, and exchanges services with, the retailer based on the number of promotions printed. Because of the concentration of ownership in the retail grocery industry, we are dependent on a limited number of retailers that supply the points of distribution for our manufacturer clients’ printed promotional materials. Approximately 55% of the printed in-store promotional incentives we provided for our clients during the fiscal year ended March 31, 2004, were generated from within the stores belonging to five retail chains. If any of these retail chains were to decide to not renew their contract with us to provide our services, or if they materially reduce the number of point-of-sale locations included on our network, a material reduction in our revenues could result if we were unable to replace these point-of-sale locations.

      The Company owns the equipment installed in each retail store, including a thermal printer at each checkout lane linked by a computer on the retailer’s premises to the retailer’s point-of-sale controller and scanning equipment. The Company operates two data processing facilities in the United States that employ various technologies to transmit promotional instructions to computers installed in retail stores and retrieve

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     CHR

      CHR services assist pharmaceutical products and consumer packaged goods manufacturers, as well as retail pharmacies, in providing consumers with condition-specific health information and direct-to-patient communications. CHR’s programs and services enable the Company’s clients to acquire and retain patients by providing educational information about their treatment along with the benefits of compliance, and by encouraging dialogue between patients and their healthcare professionals.

      CHR’s primary product offerings employ an in-store, prescription information-based technology to provide targeted, direct-to-patient communications on behalf of the Company’s clients. These communication services include messages and educational information to healthcare patients at pharmacies throughout the Health Resource Network. The Health Resource Network utilizes a proprietary software system that gives pharmaceutical manufacturers and retailers the opportunity to effectively communicate with patients based on their prescription buying behavior and assists patients in making more informed healthcare decisions while preserving their privacy.

      CHR primarily generates revenues by printing messages for pharmaceutical manufacturers and consumer packaged goods manufacturers in the Health Resource® Newsletter, CHR’s primary client offering. Distribution of the newsletter is generated by the National Drug Code found on all prescription drugs and can be targeted to the consumer based on a variety of factors which could include the National Drug Code, age, gender, third-party payer, category or whether the medicine is prescribed for the first time or a refill, but not by name, address or other personally identifiable information. When a prescription is processed via the Health Resource Network, a customized newsletter with prescription information, therapeutically relevant editorial content and product information, is printed in the pharmacy and given to a consumer by their pharmacist along with that consumer’s medication.

      CHR enters into agreements with pharmacy retail chains to install the Health Resource Network in pharmacies within the chain. Upon installation, the retailer generally agrees to use the Health Resource Network in its pharmacy for a minimum period of time. CHR pays distribution fees to, and exchanges services with, the pharmacy based on the number of Health Resource® Newsletters printed. Approximately 92% of the newsletters printed during the fiscal year ended March 31, 2004, were generated from within the stores belonging to five retail pharmacy chains. If any of these retail pharmacy chains were to decide to not renew their contract with us, or if they materially reduce the number of pharmacy locations included on our network, a material reduction in CHR’s revenues could result if we were unable to either replace these pharmacy locations or the number of transactions processed by the retail pharmacy chain.

      The Health Resource Network uses a printer linked by an on-premises computer to the pharmacy’s point-of-sale controller. Certain versions of the software eliminate the need for a computer in each location, in which case only a printer is located in those pharmacies. CHR operates a data processing facility that communicates via various technologies with the computers installed in the pharmacies to send promotional instructions and retrieve program data. In some cases, CHR installs and owns the equipment. In other cases, the equipment is owned by the pharmacy retailer. All of the equipment owned by us is generic and purchased from third-party vendors. Typically, pharmacies are contractually obligated to provide supplies, including toner and paper. The Company believes that we can secure alternate sources of equipment and supplies without significant interruption to CHR’s business.

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      CHR’s client base varies from year to year and as such a client may be significant in one year and not in another. CHR’s top five clients accounted for 52.9%, 52.1% and 53.7% of CHR’s revenues in fiscal years 2004, 2003 and 2002, respectively.

     International

      The Catalina Marketing Network® operates internationally in a manner similar to that in which the network operates domestically, offering a full range of targeted marketing solutions to many of the top 100 consumer packaged goods manufacturers and enjoys relationships with major supermarket, hypermarket and other retailers based primarily on a syndicated platform. All financial and statistical results of the Company’s wholly and majority-owned foreign subsidiaries are included for the twelve-month period ending December 31 which is their fiscal year end. As of the end of fiscal year 2004, the Company provided in-store electronic targeted marketing services for consumers in France, Italy, the United Kingdom and Japan. In addition, in fiscal year 2004, the Company expanded its behavior-based targeted marketing capabilities in Europe by launching a pilot test program in Germany. At the end of fiscal year 2004, the network was installed in approximately 4,420 retail locations in Europe and approximately 1,130 locations in Japan and reached more than 65 million consumers each week. In France, the Company has been operating since 1994 and, as of the end of fiscal year 2004, the Catalina Marketing Network® was installed in approximately 3,250 retailers across 12 supermarket, hypermarket and other retail chains. In Italy, Catalina began operations in 2000 and was partnered with seven major retail chains and approximately 570 stores at the end of the fiscal year 2004. In the United Kingdom, the Catalina Marketing Network® was installed in approximately 590 stores at the end of the fiscal year 2004. In Japan, the network was launched in 1997 and was installed in 1,125 stores across nine retail chains at the end of the fiscal year 2004, of which three were among the top five general merchandise chains in Japan.

      International had a single client that accounted for approximately 7.7%, 10.1% and 12.1% of revenues generated by this segment for the fiscal years ended March 31, 2004, 2003 and 2002, respectively. We believe that the loss of this client could have a material adverse effect on this business segment, but not on the Company taken as a whole.

      In fiscal year 2004, International revenues accounted for approximately 10.5% of our total revenues. Our international operations are subject to the normal risks of foreign operations, including: changes in local business and economic conditions, political uncertainties, adapting to different regulatory requirements, interest rate movements, uncertainties of litigation, increasing consolidation of retailers and consumer packaged goods manufacturers, competition, pricing pressure, seasonality and changing customer and client preferences. Certain of these risks have affected our business in the past and may also have a material adverse effect on our business, results of operations and financial condition in the future. In addition, sales in our international operations are billed in foreign currencies and are subject to currency exchange fluctuations as are intercompany royalties and financing activities. In prior years, changes in the value of the U.S. dollar compared to foreign currencies have had an impact on our revenues and margins. We cannot predict the direction or magnitude of currency fluctuations. The Company, where practical, purchases goods and services in local currencies. The Company borrows locally to meet its financing requirements in Japan to obtain certain natural and economic hedges.

      In all jurisdictions in which we operate, we are also subject to the laws and regulations that govern foreign investment, foreign trade and currency exchange transactions. These laws and regulations may limit our ability to repatriate cash as dividends or otherwise to the United States and may limit our ability to convert foreign currency cash flows into U.S. dollars.

Operations Designated to be Divested by the Company

      In November 2003, the Company announced its intention to divest DMS, CMRS and Japan Billboard, all of which were determined not to be strategically aligned with the Company’s current core competencies. Aggregate revenues generated by DMS, CMRS and Japan Billboard accounted for 13.6%, 18.5% and 16.9% of the Company’s total revenues for the fiscal years ended March 31, 2004, 2003 and 2002, respectively.

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     DMS

      DMS provides services designed to reach consumers in their homes. DMS analyzes frequent shopper databases and identifies consumer lifestyle changes to develop strategic programs that meet multiple objectives for both brand manufacturers and retailers. These targeted direct mail programs are based on actual purchase behavior or consumer lifestyle changes. DMS provides services which enable manufacturers and retailers to influence the purchase patterns of targeted customers based on their actual purchase behavior and history. Clients use these services to support new product launches and line extensions, build loyalty to a retailer or brand and deliver timely messages to consumers.

      The Company’s specific product offerings include Sample Logic®, Retail Solutions and One-to-One Direct®. Sample Logic® uses consumer purchase data provided by our retailers to deliver targeted product samples and promotions to consumers’ homes. Retail Solutions develops and delivers direct mail customer campaigns, as well as customer reward and loyalty strategies. One-to-One Direct® delivers coupons from multiple consumer packaged goods manufacturers, using data provided by our retailers, to consumers in their home in a single mailing. The Company suspended the One-to-One Direct® service in December 2003.

      DMS had a client that accounted for approximately 3.7%, 16.2% and 0.6% of revenues generated by this segment for fiscal years ended March 31, 2004, 2003 and 2002, respectively. In addition, DMS had another client that accounted for 21.0%, 7.9% and 1.7% of revenues generated by this segment for the fiscal years ended March 31, 2004, 2003 and 2002, respectively. We believe that the loss of this client could have a material adverse effect on DMS, but not on the business of the Company taken as a whole.

     CMRS

      CMRS provides a wide range of traditional marketing research services, including tracking studies and customer satisfaction surveys, as well as proprietary research products that take advantage of the Company’s network of printers and behavioral data gathered throughout the Catalina Marketing Network®. New business development strategies include targeting leaders in a number of service industries such as healthcare, technology and restaurants, as well as consumer packaged goods manufacturers. In addition to new client acquisitions, CMRS is also focused on penetrating additional product segments within the existing manufacturer and retail client base. By combining traditional research services with the other segments’ services, clients are given an integrated solution geared toward their specific needs.

      CMRS had a client that accounted for approximately 16.2%, 18.7% and 15.5% of revenues generated by this segment for the fiscal years ended March 31, 2004, 2003 and 2002, respectively. In addition, CMRS had another client that accounted for approximately 17.5%, 8.4% and 6.5% of revenues generated by this segment for the fiscal years ended March 31, 2004, 2003 and 2002, respectively. We believe that the loss of either of these clients could have a material adverse effect on CMRS, but not on the business of the Company taken as a whole.

     Japan Billboard

      Japan Billboard, also referred to as PMKK, is a wholly-owned subsidiary of the Company that operates a billboard and outdoor media business in Japan. Japan Billboard primarily owns and rents billboards which are displayed on rooftops or faces of buildings in locations suitable for advertising. Advertising is sold either directly to a broad range of leading clients across multiple industries or through advertising agencies. In general, billboards are designed by and produced under the supervision of Japan Billboard. Upon completion and installation, the billboards are financed through third-party financing companies. Japan Billboard is required to make rental payments to building owners for the space on the rooftops and faces of buildings where

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      Japan Billboard had a client that accounted for approximately 70.4%, 74.9% and 71.9% of revenues generated by this segment for the fiscal years ended March 31, 2004, 2003 and 2002, respectively. This client produces tobacco products and is subject to the rules and regulations that govern that industry. As discussed below, this client has substantially reduced its spending with Japan Billboard and this has had a material adverse effect on Japan Billboard, but not the business of the Company taken as a whole.

      The passage and implementation of the Voluntary Global Tobacco Marketing Initiative (the “Initiative”) in fiscal year 2002 has significantly affected the manner in which tobacco companies in Japan are permitted to market, promote and advertise its products. As a result of the implementation of this Initiative, Japan Billboard’s primary client began to reduce their advertising expenditures for billboards significantly, as well as other media and promotional spending. The Initiative, as it relates to outdoor tobacco advertising, mandates that the maximum visual dimension of any billboard advertisement be limited to 35 square meters. As a result, a significant number of Japan Billboard’s sales contracts covering a broad network of large-sized billboards with this client were either terminated or not renewed. In those cases, Japan Billboard has actively sought replacement business to forestall the significant cost of sign removal and cultivate new revenue streams.

      In January 2004, Japan’s Ministry of Health announced its intention to sign and ratify the international Framework Convention on Tobacco Control recently adopted by the World Health Organization. This convention will become effective once it has been adopted by 40 countries. The adoption of this convention will further limit tobacco companies’ ability to advertise tobacco products on billboards in Japan. The effects of this ruling are significant to Japan Billboard, and the Company expects a further reduction in revenues from its single significant client.

     Competition

      Competition in the targeted marketing services business is intense and includes many competitors. We compete for manufacturer advertising and consumer promotion 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. The Company’s segments, Manufacturer Services, Retail Services, DMS and International, compete with various traditional coupon delivery methods including free-standing inserts, newspapers, direct mail, magazines and in- or on-product packaging, as well as other in-store marketing companies that use a variety of coupon, promotion or other advertising delivery methods. In addition, the Company could experience increased competition, both internationally and domestically, from changes and advances in technology including from retailer point-of-sale (“POS”) systems. Furthermore, as sales of certain grocery products, particularly in specialized categories such as paper, baby and pet products, shift from traditional grocery sales retailers to mass merchandisers and value-chains, the Company’s ability to reach shoppers through the existing retail network of traditional grocery stores may be impacted in these specified product categories. CHR competes for pharmaceutical budget dollars with a wide range of media, including television, publications, direct mail and other alternate sources of direct-to-consumer communication. Competition for CMRS comes from a broad array of national, regional and local marketing research firms.

      The Company competes for advertising, promotional and research dollars based on the efficiencies afforded by a unique kind of targeting based on consumer shopping behavior, called behavior-based marketing. Behavior-based marketing requires an efficient network of retail point-of-sale systems and proprietary software and database systems which target individual consumers based on shopping behavior exhibited at the point-of-sale. Our competitive advantages in the practice of behavior-based marketing are achieved through the number of shoppers reached through the Company’s retail network, the number of household IDs and associated purchase histories available in the database and the Company’s ability to deliver consumer insights and influence consumer buying behavior.

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     Research and Development

      The Company’s research and development efforts are generally for pilot-project execution to create, test and support new applications for the Catalina Marketing Network® and Health Resource Network, market research, software development and system upgrades. For the fiscal years ended March 31, 2004, 2003 and 2002, expenditures for research and development were $1.2 million, $1.0 million and $1.3 million, respectively.

     Intellectual Property

      The Company currently holds, and has pending, numerous United States and foreign patents relating to Catalina Marketing products and services. These patents include the initial targeted incentive core patents as well as improvements and additional inventions related to the Company’s current and contemplated business, programs and services. In addition, the Company regards certain computer software in the Catalina Marketing Network® and each additional service application as proprietary and subject to copyright protection. The Company also holds, and has pending, numerous service marks and trademarks related to its entities, businesses, products and services that have associated goodwill in the relevant marketplace. The Company believes that certain intellectual property owned or licensed by the Company gives us a competitive advantage in key geographic regions in which we operate. While we continue to pursue protection for intellectual property rights developed by the Company, certain of our patents, over time, will expire and there is no guarantee that we will be able to secure additional patent rights. The expiration of a core patent or loss of patent protection resulting from a legal challenge may result in significant competition from third parties with respect to the covered product or service in a short period of time. The actual protection afforded by a patent, which can vary from country to country, depends upon the type of patent, the scope of its coverage and the availability of legal remedies in the relevant country. Although we believe that the Company’s intellectual property provides us with a competitive advantage, we believe that we are not dependent upon a single patent, or a specific series of patents, the loss of which would have a material adverse effect on our business. In appropriate situations, we seek to protect our proprietary intellectual property rights vigorously.

     Government Regulation

      Our operations are subject to regulation in the United States and in other countries in which we do business. Generally, we are subject to federal and state laws governing the privacy and the use of consumer information collected by us.

      In the United States, various federal agencies including the Federal Trade Commission, the Department of Treasury’s Alcohol and Tobacco Tax and Trade Bureau, and various state agencies have promulgated regulations that restrict the advertising of tobacco, dairy and alcohol beverage products. These regulations include “below cost,” tied house and trade practice regulations which vary from state to state and can restrict a manufacturer and/or a retailer’s ability to issue coupons for tobacco, dairy and alcohol beverage products. Other state and federal laws also restrict the content and sponsorship of regulated product coupons and messages.

      CHR operates in a highly regulated business environment. The United States Food and Drug Administration of the Department of Health and Human Services (“HHS”) regulates the form and content of prescription drug promotions, such as the messaging in the Health Resource® Newsletter. In addition, federal medical privacy regulations, administered by the Office of Civil Rights of HHS, affect the ability of CHR and its retail pharmacy partners to use patient-specific pharmacy information to provide customized Health Resource® Newsletters. Some states have adopted, or are considering adopting, state medical privacy requirements that could be interpreted more stringently than federal medical privacy requirements. Federal antikickback requirements, administered by the HHS Office of the Inspector General, could be interpreted as restricting drug manufacturer-sponsored programs such as the Health Resource® Newsletter. State antikickback and consumer protection statutes could also be interpreted to impose similar restrictions.

      For a discussion of government regulations on our international operations, see “Business Segment Information — International” and “Japan Billboard.”

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     Available Information

      The Company is subject to the information requirements of the Exchange Act. Therefore, the Company files periodic reports, proxy statements and other information with the SEC. Such reports, proxy statements and other information may be obtained by visiting the Public Reference Room of the SEC at 450 Fifth Street, NW, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically.

      The Company’s website is www.catalinamarketing.com. The Company makes available, free of charge, on or through its website, its annual, quarterly and current reports and any amendments to those reports, as soon as reasonably practicable after electronically filing such reports with the SEC. Information posted on the Company’s website is not part of this report.

Item 2.     Properties

      The Company’s headquarters is located in St. Petersburg, Florida. This 142,857 square foot facility houses the Company’s principal administrative, marketing, information technology and product development offices. The Company leases this facility through a variable interest entity which is partially funded by a third party financial institution. As of March 31, 2004, the Company leased an additional 18 sales and support offices across the United States, consisting of approximately 245,000 square feet in the aggregate, and five offices for its foreign operations. The Company believes that the headquarters facility, along with the existing sales and support offices, are adequate to meet its current requirements and that suitable additional space will be available as needed to accommodate growth of its operations and sales and support office requirements for the foreseeable future.

Item 3.     Legal Proceedings

Government Investigations

      As previously disclosed, on March 4, 2004, the SEC issued a formal order of private investigation that made formal an informal investigation previously initiated by the SEC. The informal investigation was initiated by the SEC after representatives of the Company contacted the SEC on June 30, 2003, to inform the Staff of certain revenue recognition timing issues that management of the Company identified at CHR. The Company believes that the SEC inquiry is focused primarily on the revenue recognition timing issues at CHR during fiscal years 2003, 2002 and 2001, which fiscal years were the subject of the various adjustments and restatements described in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2003. Since the initiation of the informal investigation and through the date of the filing of this Annual Report on Form 10-K, the Company has been cooperating with the SEC in connection with its investigation, including through in-person meetings between Company representatives and the SEC Staff, and the provision to the SEC of information and numerous documents. In addition, the Company has made available as witnesses those individuals under its control in response to the SEC inquiries and requests. Other than the SEC investigation, as of the date hereof, the Company is not aware of any additional inquiry or investigation having been commenced against the Company related to these matters, but it cannot predict whether or not any such regulatory inquiry or investigation will be commenced or, if it is, the outcome of any such inquiry or investigation. If the investigation was to result in a regulatory proceeding or action against the Company, the Company’s business and financial condition could be harmed.

Securities Actions and Derivative Actions

      The Company, and certain present and former officers and directors of the Company and CHR, were named as defendants in numerous complaints purporting to be class actions which were filed in the United States District Court for the Middle District of Florida, Tampa Division, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The actions were originally brought on behalf of those who purchased the Company’s common stock between January 17, 2002 and

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      Certain present and former officers and directors of the Company and CHR, and Catalina Marketing, as a nominal defendant, have been named in two shareholder derivative actions entitled The Booth Family Trust v. Frank H. Barker, et al., Case No. 20510-NC, commenced in the Court of Chancery for the State of Delaware in and for New Castle County, and Craig Deeds v. Frank H. Barker, et al., Case No. 04-000862 commenced in the Circuit Court of the Sixth Judicial Circuit in and for Pinellas County, Florida. These shareholder derivative lawsuits allege that the defendants breached various fiduciary duties based upon the same general set of alleged facts and circumstances as the federal shareholder suits. The plaintiffs seek unspecified compensatory damages, restitution of improper salaries, insider trading profits and payments from the Company, and disgorgement under the Sarbanes-Oxley Act of 2002. In December 2003, these actions were stayed pending a ruling by the district court on the anticipated motion to dismiss the Consolidated Amended Class Action Complaint in the federal securities action. We cannot currently predict the impact or resolution of this litigation or reasonably estimate a range of possible loss, which could be material. The resolution of these lawsuits may harm our business and have a material adverse impact on our financial condition.

Patent Litigation Action

      In May 2002, the Company was sued by Expanse Networks, Inc. (“Expanse”) for patent infringement in the United States District Court for the Eastern District of Pennsylvania. The case is currently scheduled for trial in November 2004. Expanse alleges that the Company infringes two Expanse patents directed to certain specific computer implemented methods for mathematically processing consumer purchase history data to generate and then use a consumer profile. Expanse seeks damages and injunctive relief in the case. The Company has denied Expanse’s claims based on, among other defenses, its assertion that the Company is not infringing the Expanse patents at issue in this action. In addition, the Company believes that, in the event that the Court determines that any of the Company’s various business activities are covered by the Expanse patents, the Expanse patents are invalid for various reasons, including that they are subject to prior use and activities that render the patents invalid. The Company intends to continue to vigorously defend itself in connection with this matter and does not believe that this matter will be resolved in a manner which is materially adverse to the Company.

Item 4.     Submission of Matters to a Vote of Security Holders

      No matters were submitted to a vote of security holders during the fourth quarter of fiscal year 2004 or through the date of the filing of this Annual Report on Form 10-K.

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PART II

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, for each quarter of the last two fiscal years and for the first quarter of fiscal year 2005, the high and low closing prices as reported by the NYSE for the common stock for the quarters ended as follows:

B.     Stockholders

      As of March 31, 2004, there were approximately 800 registered holders of shares of common stock.

C.     Dividends

      The Company has not paid any cash dividends to date. As noted in Note 8 to the Consolidated Financial Statements, the Company is currently party to a credit facility which prohibits the payment of cash dividends to the Company’s stockholders. The Company plans to negotiate a new credit facility, or negotiate a renewal of its current credit facility with substantial revisions to the terms thereof, prior to the scheduled expiration of the credit facility on August 31, 2004. The Company expects that, in connection with such new credit facility, or such renewed credit facility, the prohibition against paying cash dividends will be eliminated. Assuming that, on a going-forward basis, the Company will not be subject to prohibitions on the payment of cash dividends to stockholders, the Company will be free to consider paying a cash dividend, together with a number of other alternatives for the use of its cash resources and expected cash flow which are in excess of the Company’s forecasted needs for operating capital and cash reserves.

D.     Securities Authorized for Issuance Under Equity Compensation Plans

      The information called for by Item 5 will be contained in the Company’s definitive Proxy Statement for the Annual Meeting of Stockholders under the caption Equity Compensation Plan Information and is incorporated herein by reference. The definitive Proxy Statement will be filed with the Commission on or about the time of the filing of this Annual Report on Form 10-K for the fiscal year ended March 31, 2004.

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E.     Issuer Purchases of Equity Securities

      The following table sets forth information relating to the Company’s purchase of its equity securities during fiscal years 2004 and 2003:

(1)

In July 2001, we publicly announced authorization from the Company’s Board of Directors to repurchase up to $75.0 million of the Company’s outstanding common stock. In July 2002, we announced that our Board of Directors had authorized $100.0 million for the repurchase of the Company’s outstanding common stock, which amount included $14.3 million remaining from the Board of Directors’ prior authorization in July 2001 and an additional authorization of $85.7 million. The current repurchase authorization will expire when the total dollar amount authorized by our Board of Directors for the repurchase of shares has been expended. As noted in Note 8 to our Consolidated Financial Statements, the Company is currently party to a credit facility which restricts the repurchase of the Company’s shares.

Item 6.     Selected Financial Data

SELECTED CONSOLIDATED FINANCIAL DATA

      The information set forth below should be read in conjunction with Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and Notes to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K. The following selected consolidated financial data for the fiscal years ended March 31, 2004, 2003, 2002 and 2001 is derived from our audited Consolidated Financial Statements. Amounts for fiscal year 2000 have been

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