Catalina Marketing Reports Financial Results for the Third Quarter of Fiscal 2006

For the three months ended December 31, 2005, consolidatedrevenues were $97.2 million, compared with revenues of $100.3 millionin the same period of fiscal 2005. Consolidated net income for thethird quarter was $14.2 million, or $0.29 per diluted share, comparedwith net income of $19.0 million, or $0.36 per diluted share, in thethird quarter of fiscal 2005. Third quarter results in fiscal 2005included $1.4 million in losses from discontinued operations dueprincipally to losses from the disposal of non-core businesses.

The company reported consolidated income from continuingoperations for the quarter ended December 31, 2005 of $14.2 million,or $0.29 per diluted share, compared with $20.4 million, or $0.39 per diluted share, for the quarter ended December 31, 2004.

During the quarter ended December 31, 2004, the company received afavorable ruling related to a state sales tax assessment, and as aresult, reversed into income a $4.4 million accrued liability, whichhad been recognized as expense in prior periods. The reversal of thisliability resulted in a favorable impact, net of related income taxes,of approximately $0.05 per diluted share in the third quarter offiscal 2005.

Nine-Month Consolidated Results

For the nine-month period ended December 31, 2005, consolidatedrevenues were $291.8 million, compared with revenues of $298.1 millionin the comparable period of fiscal 2005. Consolidated net income forthe first nine months of fiscal 2006 was $47.6 million, or $0.96 per diluted share, compared with net income of $50.2 million, or $0.96 per diluted share, in fiscal 2005. Results in the first nine months of fiscal 2005 included a loss from discontinued operations of $2.4 million related to the operation and divestiture of non-core businesses plus the positive impact on income from the reversal of $4.4 million of sales tax reserves.

The company reported consolidated income from continuingoperations for the nine months ended December 31, 2005 of $47.6 million, or $0.96 per diluted share, compared with $52.6 million, or $1.01 per diluted share, for the nine months ended December 31, 2004.

"Third quarter revenues were affected by market conditions asCatalina Marketing Services experienced specific challenges due toreduced spending by certain manufacturer clients at the end of theircalendar year," chief executive officer, Dick Buell, commented. "Thethird quarter decrease in CMS' revenues was partially offset byanother quarter of solid revenue growth in both Catalina MarketingInternational and Catalina Health Resource. Based on our recent strongmanufacturer contract renewals, coupled with new, exceptional retailernetwork renewals, we expect CMS to experience improvement in thefourth quarter of this fiscal year."

Buell continued, "As we begin preparing for fiscal year 2007,capital and resource investments will increase to strengthen thefoundation for Catalina's important long-term business growth. Theorganization is focused on the additional investments which willaffect our income statement and balance sheet as we roll out ourrecently announced full color and full graphics printing capabilities.While the overall expected return on this project is financiallyattractive, we believe that the timing of these strategic investmentswill precede the related anticipated revenue growth and will impactoperating income next fiscal year. We remain both committed to andfocused on our long-term revenue and profit growth objectives throughthe introduction of new products and services, entry into new channelsas evidenced by the ongoing installation of Walgreens and Kmartstores, and expansion into new geographies."
Summary of Segment Results

Three Months Ended Three Months Ended
December 31, 2005 December 31, 2004
(In millions) Revenues Income/(Loss) Revenues Income/(Loss)

Catalina Marketing
Services $58.0 $14.3 $65.5 $18.2
Catalina Health Resource 21.1 3.1 19.8 3.7
Catalina Marketing
International 18.1 1.9 15.0 1.6
Corp / Eliminations 0.0 (5.1) 0.0 (3.1)
-------- ------------- -------- -------------
From Continuing
Operations $97.2 $14.2 $100.3 $20.4
-------- ------------- -------- -------------
Discontinued Operations $ - $ - $ - $(1.4)
-------- ------------- -------- -------------
Consolidated $97.2 $14.2 $100.3 $19.0
======== ============= ======== =============


Nine Months Ended Nine Months Ended
December 31, 2005 December 31, 2004
(In millions) Revenues Income/(Loss) Revenues Income/(Loss)

Catalina Marketing
Services $176.3 $45.1 $195.0 $53.2
Catalina Health Resource 62.5 10.9 56.9 7.5
Catalina Marketing
International 53.0 5.0 46.1 4.5
Corp / Eliminations 0.0 (13.4) 0.1 (12.6)
-------- ------------- -------- -------------
From Continuing
Operations $291.8 $47.6 $298.1 $52.6
-------- ------------- -------- -------------
Discontinued Operations $ - $ - $ - $(2.4)
-------- ------------- -------- -------------
Consolidated $291.8 $47.6 $298.1 $50.2
======== ============= ======== =============


Three Months Ended
December 31, 2005
(In millions) Percent Change
Revenues Income/(Loss)
Catalina Marketing Services (11.5%) (21.7%)
Catalina Health Resource 6.5% (15.7%)
Catalina Marketing International 21.0% 17.6%
Corp / Eliminations (100.0%) (63.4%)
-------- -------------
From Continuing Operations (3.1%) (30.4%)
-------- -------------
Discontinued Operations - 100.0%
-------- -------------
Consolidated (3.1%) (25.2%)
======== =============

Nine Months Ended
December 31, 2005
(In millions) Percent Change
Revenues Income/(Loss)
Catalina Marketing Services (9.6%) (15.3%)
Catalina Health Resource 10.0% 44.2%
Catalina Marketing International 15.0% 11.7%
Corp / Eliminations (93.6%) (5.9%)
-------- -------------
From Continuing Operations (2.1%) (9.5%)
-------- -------------
Discontinued Operations - 100.0%
-------- -------------
Consolidated (2.1%) (5.1%)
======== =============

Stock Repurchases

During the third quarter, the company repurchased 192,400 sharesof its common stock for a total of $5.1 million, at an average priceof $26.33 per share. Since the beginning of the fiscal year, thecompany has purchased 3,057,600 shares of its common stock for a totalof $75.2 million, at an average price of $24.59 per share. The companycurrently has authority to repurchase an additional $80.6 million ofcommon stock under the August 2005 Board of Directors authorization.

Webcast and Investor Conferences Scheduled

The company will host a webcast on Thursday, January 26, 2006 at10:00 a.m. EST to discuss its financial results for its fiscal year2006 third quarter. The webcast may be accessed athttp://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=POS&script=1000and will be available for replay from Thursday, January 26, 2006through Monday, February 27, 2006.

Dick Buell, chief executive officer, will present at the BearStearns Investment Conference in Palm Beach, Florida on Monday,February 27, 2006. Mr. Buell will also present at Baird's 2006Business Solutions Conference in Boston on Wednesday, March 1, 2006.The presentations will be webcast and will be accessible through theInvestor Relations Calendar of Events section of the company's website (http://www.catalinamarketing.com).
Catalina Marketing Corporation
Selected Operating Data
(in thousands, except per share amounts)

Periods Ended December 31 Three Months Nine Months
2005 2004 2005 2004

Revenues $97,223 $100,319 $291,833 $298,093

Direct Operating Expenses 33,643 26,200 96,646 92,003

Selling, General and
Administrative 31,853 31,365 91,276 88,705

Depreciation and Amortization 8,453 10,202 26,680 32,360
-------- --------- --------- ---------

Income from Operations 23,274 32,552 77,231 85,025

Other Income (Expense) (383) 255 (451) (12)

Provision for Income Taxes 8,698 12,404 29,176 32,394
-------- --------- --------- ---------

Income from Continuing
Operations 14,193 20,403 47,604 52,619

Gain (Loss) from Discontinued
Operations - 292 - (4,002)
Gain (Loss) from Disposition - (1,724) - 1,559
-------- --------- --------- ---------
Income (Loss) from Discontinued
Operations - (1,432) - (2,443)

-------- --------- --------- ---------
Net Income $14,193 $18,971 $47,604 $50,176
======== ========= ========= =========

Earnings Per Share, Basic:

Earnings Per Share from
Continuing Operations $0.30 $0.39 $0.97 $1.01
Income (Loss) from Discontinued
Operations $ - $(0.03) $ - $(0.05)
-------- --------- --------- ---------
Net Income Per Common Share $0.30 $0.36 $0.97 $0.96

Weighted Average Shares
Outstanding 48,021 52,300 49,088 52,266


Earnings Per Share, Diluted:

Earnings Per Share from
Continuing Operations $0.29 $0.39 $0.96 $1.01
Income (Loss) from Discontinued
Operations $ - $(0.03) $ - $(0.05)
-------- --------- --------- ---------
Net Income Per Common Share $0.29 $0.36 $0.96 $0.96

Weighted Average Shares
Outstanding 48,428 52,720 49,419 52,334
Catalina Marketing Corporation
Selected Other Data
(in thousands, except store data)

December 31, December 31,
2005 2004

Selected Balance Sheet and Cash
Flow Data (in thousands):

Cash $32,556 $119,437

Debt 48,001 62,197

Stockholders' Equity 156,551 222,114

Cash Flows from Operating Activities
Quarter / YTD 30,263 / 62,025 29,291 / 71,761

Capital Expenditures Quarter / YTD 14,902 / 39,496 6,758 / 12,933


Catalina Marketing Services:

Number of Stores at Quarter End 17,788 17,712

Net Stores (Deinstalled) Installed
During Quarter / YTD 1,095 / 179 68 / 108

Promotions Printed During Quarter /
YTD (in millions) 712 / 2,169 813 / 2,403

Weekly Shopper Reach at Quarter End
(in millions) 226 221

Catalina Health Resource:

Number of Stores at Quarter End 12,621 12,380

Net Stores Installed (Deinstalled)
During Quarter / YTD 217 / 198 299 / 451

Catalina Marketing International:

Number of Stores at Quarter End 6,962 5,741

Net Stores Installed During Quarter
/ YTD 263 / 1,055 41 / 196

Promotions Printed During Quarter /
YTD (in millions) 286 / 774 204 / 616

Weekly Shopper Reach at Quarter End
(in millions) 84 62

About Catalina Marketing Corporation

Based in St. Petersburg, Fla., Catalina Marketing Corporation(http://www.catalinamarketing.com) was founded over 20 years ago basedon the premise that targeting communications based on actual purchasebehavior would generate more effective consumer response. Today,Catalina Marketing combines unparalleled insight into consumerbehavior with dynamic consumer access. This combination of insight andaccess provides marketers with the ability to execute behavior-basedmarketing programs, ensuring that the right consumer receives theright message at exactly the right time. Catalina Marketing offers anarray of behavior-based promotional messaging, loyalty programs anddirect-to-patient information. Personally identifiable data that maybe collected from the company's targeted marketing programs, as wellas its research programs, are never sold or provided to any outsideparty without the express permission of the consumer.

Certain statements in the preceding paragraphs areforward-looking, and actual results may differ materially. Statementsnot based on historic facts involve risks and uncertainties,including, but not limited to, the changing market for promotionalactivities, especially as it relates to policies and programs ofconsumer packaged goods and pharmaceutical manufacturers and retailersand competition to provide marketing services to these customers,mergers and consolidations in the consumer packaged goods and retailerindustries, federal, state and international government and regulatorystatutes, rules, regulations and policies including privacy andlabeling, the effect of economic conditions and seasonal variations,actual promotional activities and programs with the company'scustomers, the pace, cost and challenges associated with theinstallation of the company's store network and changes in the statusof contractual relations with retailers including as it relates to thecompany's installation of color printers and related new technologies,the success of new services and businesses and the pace of theirimplementation including the entry into new retail channels, thecompany's ability to maintain favorable relationships with its clientsand retailers, the outcome and impact of an ongoing SEC investigationinto certain of the company's prior fiscal years, and the outcome andimpact of the pending shareholder class action and derivativelawsuits.