UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended December 31, 2002
| [ ] | 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 |
(IRS Employer | |
| Incorporation or Organization) |
Identification Number) | |
| 200 Carillon Parkway, St. Petersburg, Florida |
33716-2325 | |
| (Address of Principal Executive Offices) |
(Zip Code) | |
| (727) 579-5000 | ||
| (Registrant’s Telephone Number, Including Area Code) | ||
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 ¨
At January 23, 2003, Registrant had outstanding 53,424,103 shares of Common Stock.
CATALINA MARKETING CORPORATION
INDEX
| Page | ||||
| Part I. |
Financial Information |
|||
| Item 1. Financial Statements |
||||
| 3 | ||||
| Condensed Consolidated Balance Sheets at December 31, 2002 and March 31, 2002 |
4 | |||
| 5 | ||||
| 6 | ||||
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
9 | |||
| Item 3. Quantitative and Qualitative Disclosure About Market Risk |
11 | |||
| 12 | ||||
| Part II. |
Other Information |
|||
| 13 | ||||
| 15 | ||||
| 16 | ||||
2
CATALINA MARKETING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(dollars and shares in thousands, except per share data)
(unaudited)
| Three Months Ended December 31, |
Nine Months Ended December 31, |
|||||||||||||||
| 2002 |
2001 |
2002 |
2001 |
|||||||||||||
| Revenues |
$ |
119,110 |
|
$ |
114,730 |
|
$ |
341,344 |
|
$ |
313,132 |
| ||||
| Costs and Expenses: |
||||||||||||||||
| Direct operating expenses |
|
50,376 |
|
|
49,334 |
|
|
153,760 |
|
|
137,453 |
| ||||
| Selling, general and administrative |
|
30,088 |
|
|
27,384 |
|
|
89,560 |
|
|
80,563 |
| ||||
| Depreciation and amortization |
|
11,155 |
|
|
10,601 |
|
|
32,334 |
|
|
31,496 |
| ||||
| Total costs and expenses |
|
91,619 |
|
|
87,319 |
|
|
275,654 |
|
|
249,512 |
| ||||
| Income From Operations |
|
27,491 |
|
|
27,411 |
|
|
65,690 |
|
|
63,620 |
| ||||
| Interest Expense, Net and Other |
|
(285 |
) |
|
(51 |
) |
|
(2,897 |
) |
|
(1,921 |
) | ||||
| Income Before Income Taxes and Minority Interest |
|
27,206 |
|
|
27,360 |
|
|
62,793 |
|
|
61,699 |
| ||||
| Income Taxes |
|
(10,338 |
) |
|
(9,985 |
) |
|
(24,827 |
) |
|
(22,521 |
) | ||||
| Minority Interest in Losses of Subsidiaries |
|
8 |
|
|
4 |
|
|
28 |
|
|
20 |
| ||||
| Net Income |
$ |
16,876 |
|
$ |
17,379 |
|
$ |
37,994 |
|
$ |
39,198 |
| ||||
| Diluted: |
||||||||||||||||
| Net Income Per Common Share |
$ |
0.31 |
|
$ |
0.31 |
|
$ |
0.69 |
|
$ |
0.69 |
| ||||
| Weighted Average Common Shares Outstanding |
|
54,285 |
|
|
56,370 |
|
|
55,387 |
|
|
57,187 |
| ||||
| Basic: |
||||||||||||||||
| Net Income Per Common Share |
$ |
0.31 |
|
$ |
0.31 |
|
$ |
0.69 |
|
$ |
0.70 |
| ||||
| Weighted Average Common Shares Outstanding |
|
54,212 |
|
|
55,437 |
|
|
54,830 |
|
|
56,078 |
| ||||
See accompanying notes.
3
CATALINA MARKETING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
| ASSETS |
(unaudited) December 31, 2002 |
March 31, 2002 |
||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ |
6,757 |
|
$ |
13,276 |
| ||
| Accounts receivable, net |
|
74,256 |
|
|
79,834 |
| ||
| Inventory |
|
5,613 |
|
|
5,302 |
| ||
| Deferred tax asset |
|
6,129 |
|
|
6,303 |
| ||
| Prepaid expenses and other current assets |
|
18,274 |
|
|
22,563 |
| ||
| Total current assets |
|
111,029 |
|
|
127,278 |
| ||
| Property and Equipment: |
||||||||
| Property and equipment |
|
332,331 |
|
|
311,389 |
| ||
| Accumulated depreciation and amortization |
|
(216,983 |
) |
|
(192,271 |
) | ||
| Property and equipment, net |
|
115,348 |
|
|
119,118 |
| ||
| Purchased intangible assets, net |
|
175,562 |
|
|
153,280 |
| ||
| Other assets |
|
2,158 |
|
|
4,126 |
| ||
| Total Assets |
$ |
404,097 |
|
$ |
403,802 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current Liabilities: |
||||||||
| Accounts payable |
$ |
17,434 |
|
$ |
18,660 |
| ||
| Accrued expenses |
|
44,611 |
|
|
55,755 |
| ||
| Taxes payable |
|
5,025 |
|
|
5,590 |
| ||
| Deferred revenue |
|
24,658 |
|
|
22,492 |
| ||
| Short term borrowings |
|
6,433 |
|
|
14,845 |
| ||
| Total current liabilities |
|
98,161 |
|
|
117,342 |
| ||
| Deferred tax liability |
|
15,797 |
|
|
14,066 |
| ||
| Minority interest |
|
330 |
|
|
1,057 |
| ||
| Long term debt |
|
49,479 |
|
|
16,469 |
| ||
| Commitments and Contingencies |
||||||||
| Stockholders’ Equity: |
||||||||
| Preferred stock; $0.01 par value; 5,000,000 authorized shares; none issued and outstanding |
|
— |
| |||||
| Common stock; $0.01 par value; 150,000,000 authorized shares and 53,342,398 and 55,336,419 shares issued and outstanding at December 31, 2002 and March 31, 2002, respectively |
|
533 |
|
|
553 |
| ||
| Paid-in capital |
|
256 |
|
|
7,164 |
| ||
| Accumulated other comprehensive loss |
|
(1,613 |
) |
|
(994 |
) | ||
| Retained earnings |
|
241,154 |
|
|
248,145 |
| ||
| Total stockholders’ equity |
|
240,330 |
|
|
254,868 |
| ||
| Total Liabilities and Stockholders’ Equity |
$ |
404,097 |
|
$ |
403,802 |
| ||
See accompanying notes.
4
CATALINA MARKETING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
| Nine Months Ended December 31, |
||||||||
| 2002 |
2001 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net income |
$ |
37,994 |
|
$ |
39,198 |
| ||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
|
32,334 |
|
|
31,496 |
| ||
| Loss on impairment of cost method investments |
|
2,540 |
|
|
— |
| ||
| Minority interest |
|
(28 |
) |
|
(20 |
) | ||
| Tax benefit from exercise of non-qualified options and disqualified dispositions |
|
1,222 |
|
|
6,903 |
| ||
| Other |
|
2,843 |
|
|
3,250 |
| ||
| Changes in operating assets and liabilities |
|
(1,840 |
) |
|
9,012 |
| ||