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

For the three months ended September 30, 2005, consolidatedrevenues were $102.8 million, compared with revenues of $102.4 millionin the comparable period of fiscal year 2005. Consolidated net incomefor the second quarter was $19.7 million, or $0.40 per diluted share,compared with net income of $20.3 million, or $0.39 per diluted share,in the second quarter of fiscal year 2005. Second quarter results infiscal year 2005 included $1.4 million of income from discontinuedoperations related to the operation and divesture of non-corebusinesses.

The company reported consolidated income from continuingoperations for the quarter ended September 30, 2005 of $19.7 million,or $0.40 per diluted share, compared with $18.9 million, or $0.36 perdiluted share, for the quarter ended September 30, 2004.

For the six-month period ended September 30, 2005, consolidatedrevenues were $194.6 million, compared with revenues of $197.8 millionin the comparable period of fiscal year 2005. Consolidated net incomefor the first six months of fiscal year 2006 was $33.4 million, or$0.67 per diluted share, compared with net income of $31.2 million, or$0.60 per diluted share, in fiscal year 2005. First half results infiscal year 2005 included a loss from discontinued operations of $1.0million related to the operation and divestiture of non-corebusinesses.

The company reported consolidated income from continuingoperations for the six months ended September 30, 2005 of $33.4million, or $0.67 per diluted share, compared with $32.2 million, or$0.62 per diluted share, for the six months ended September 30, 2004.

"Second quarter earnings improved year-over-year, while revenueswere comparable with the prior year as double digit growth in CatalinaHealth Resource and International were offset by a revenue decline atCatalina Marketing Services," chief executive officer, Dick Buellcommented. "We remain focused on our long-term growth objectives as wecontinue to make steady progress with the introduction of new productsand services and entry into new channels. The results of our effortsshould begin to appear in CMS results during the fourth quarter ofthis fiscal year."

Summary of Segment Results
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Three Months Ended Three Months Ended
September 30, 2005 September 30, 2004
(In millions) Revenues Income/(Loss) Revenues Income/(Loss)

Catalina Marketing
Services $ 60.6 $ 16.0 $ 66.1 $ 18.9
Catalina Health
Resource 22.9 5.0 19.2 2.8
Catalina Marketing
International 19.3 2.4 16.9 2.1
Corp / Eliminations 0.0 (3.7) 0.2 (4.9)
---------------------------------------------
From Continuing
Operations $ 102.8 $ 19.7 $ 102.4 $ 18.9
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Discontinued
Operations $ - $ - $ - $ 1.4
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Consolidated $ 102.8 $ 19.7 $ 102.4 $ 20.3
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Three Months Ended
September 30, 2005
Percent Change
Revenues Income/(Loss)
Catalina Marketing Services (8.3%) (15.1%)
Catalina Health Resource 19.3% 78.8%
Catalina Marketing International 14.0% 15.1%
Corp / Eliminations (99.1%) (25.5%)
----------------------
From Continuing Operations 0.4% 4.7%
----------------------
Discontinued Operations - (100.0%)
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Consolidated 0.4% (2.6%)
======================


Six Months Ended Six Months Ended
September 30, 2005 September 30, 2004
(In millions) Revenues Income/(Loss) Revenues Income/(Loss)

Catalina Marketing
Services $ 118.3 $ 30.8 $ 129.5 $ 35.0
Catalina Health Resource 41.4 7.8 37.1 3.8
Catalina Marketing
International 34.9 3.1 31.1 2.9
Corp / Eliminations 0.0 (8.3) 0.1 (9.5)
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From Continuing
Operations $ 194.6 $ 33.4 $ 197.8 $ 32.2
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Discontinued Operations $ - $ - $ - $ (1.0)
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Consolidated $ 194.6 $ 33.4 $ 197.8 $ 31.2
==========================================

Six Months Ended
September 30, 2005
Percent Change
Revenues Income/(Loss)
Catalina Marketing Services (8.6%) (12.0%)
Catalina Health Resource 11.8% 101.9%
Catalina Marketing International 12.0% 8.4%
Corp / Eliminations (92.4%) (12.8%)
----------------------
From Continuing Operations (1.6%) 3.7%
----------------------
Discontinued Operations - 100.0%
----------------------
Consolidated (1.6%) 7.1%
======================
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Stock Repurchases

During the second quarter, the company repurchased 1,171,900shares of its common stock for a total of $28.3 million, at an averageprice of $24.13 per share. Since the beginning of the fiscal year, thecompany has purchased 2,865,200 shares of its common stock for a totalof $70.1 million, at an average price of $24.47 per share. The companycurrently has authorization to repurchase an additional $85.7 millionof common stock under the August 2005 Board of Directorsauthorization.

Webcast & Investor Conference Scheduled

The company will host a webcast on Thursday, October 27, 2005 at8:00 a.m. EDT to discuss its financial results for its fiscal year2006 second 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, October 27, 2005through Thursday, November 24, 2005.

Rick Frier, chief financial officer, will also present at theFirst Analysis Investment Conference at the New York Palace Hotel inNew York City on November 17, 2005. The presentation will be webcastand will be accessible through the Investor Relations Calendar ofEvents section of the company's web site athttp://www.catalinamarketing.com
Catalina Marketing Corporation
Selected Operating Data
(in thousands, except per share amounts)

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Periods Ended September 30 Three Months Six Months
2005 2004 2005 2004


Revenues $102,756 $102,372 $194,610 $197,774

Direct Operating Expenses 32,318 32,015 63,002 65,803

Selling, General and
Administrative 29,622 28,517 59,423 57,340

Depreciation and Amortization 8,722 10,604 18,227 22,158
-------- -------- -------- --------

Income from Operations 32,094 31,236 53,958 52,473

Other Income (Expense) (242) 125 (69) (267)

Provision for Income Taxes 12,104 12,508 20,478 19,990
-------- -------- -------- --------

Income from Continuing
Operations 19,748 18,853 33,411 32,216

Income (Loss) from Discontinued
Operations - 1,426 - (1,011)

--------- --------- --------- ---------
Net Income $ 19,748 $ 20,279 $ 33,411 $ 31,205
======== ======== ======== ========

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Earnings Per Share, Basic:

Earnings Per Share from
Continuing Operations $ 0.41 $ 0.36 $ 0.67 $ 0.62
Income (Loss) from Discontinued
Operations $ - $ 0.03 $ - $ (0.02)
-------- -------- -------- --------
Net Income Per Common
Share $ 0.41 $ 0.39 $ 0.67 $ 0.60

Weighted Average Shares
Outstanding 48,709 52,231 49,625 52,233

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Earnings Per Share, Diluted:

Earnings Per Share from
Continuing Operations $ 0.40 $ 0.36 $ 0.67 $ 0.62
Income (Loss) from Discontinued
Operations $ - $ 0.03 $ - $ (0.02)
-------- -------- -------- --------
Net Income Per Common
Share $ 0.40 $ 0.39 $ 0.67 $ 0.60

Weighted Average Shares
Outstanding 48,996 52,311 49,927 52,269
------------------------------- --------- --------- --------- --------


Catalina Marketing Corporation
Selected Other Data
(in thousands, except store data)
----------------------------------------------------------------------
September 30 September 30
2005 2004

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

Cash $ 22,731 $ 97,345

Debt 34,779 65,504

Stockholders' Equity 146,442 200,126

Cash Flows from Operating
Activities Quarter / YTD 17,575 / 31,762 40,604 / 42,470

Capital Expenditures Quarter /
YTD 16,110 / 24,594 4,034 / 6,175


Catalina Marketing Services:

Number of Stores at Quarter End 16,693 17,644

Net Stores (Deinstalled) Installed
During Quarter / YTD (888) / (916) 37 / 40

Promotions Printed During Quarter
/ YTD (in millions) 744 / 1,457 846 / 1,584

Weekly Shopper Reach at Quarter
End (in millions) 211 216

Catalina Health Resource:

Number of Stores at Quarter End 12,404 12,081

Net Stores Installed (Deinstalled)
During Quarter / YTD (47) / (19) 72 / 152

Catalina Marketing
International:

Number of Stores at Quarter End 6,699 5,700

Net Stores Installed During
Quarter / YTD 696 / 792 102 / 155

Promotions Printed During Quarter
/ YTD (in millions) 279 / 488 220 / 412

Weekly Shopper Reach at Quarter
End (in millions) 72 63
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Based in St. Petersburg, FL, Catalina Marketing Corporation(www.catalinamarketing.com) was founded 20 years ago based on thepremise 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, the success of new servicesand businesses and the pace of their implementation including theentry into new retail channels, the company's ability to maintainfavorable relationships with its clients and retailers, the outcomeand impact of an ongoing SEC investigation into certain of thecompany's prior fiscal years, and the outcome and impact of thepending shareholder class action and derivative lawsuits.