883977--5/26/2006--CATALINA_MARKETING

related topics

{product, market, service}

{system, service, information}

{property, intellectual, protect}

{regulation, change, law}

{condition, economic, financial}

{financial, litigation, operation}

{regulation, government, change}

{control, financial, internal}

{loss, insurance, financial}

Risk Factors Relating to Our Business Increased competition could reduce the demand for our services, which could have a material adverse effect on our business, financial condition, results of operations and business prospects. A shift in consumer purchasing trends for certain categories of products from traditional retail supermarkets may cause a decrease in the utilization of our services. Our business is dependent on the promotional spending of our manufacturer and retail partners, which may be effected by seasonal, economic and other factors over which we have no control. Our success depends on our relationships with retailers and pharmacies that provide access to consumers in their retail locations and we rely on data provided from retailers and pharmacies to trigger and report on the delivery of our services. We may not succeed in our effort to develop new services or enter new retail channels and achieve future growth. Our proposed enhanced and expanded service offerings, including the deployment of color printers, will require significant capital expenditures. Significant anticipated new initiatives, including the deployment of color printers, will impact our resources and management. Loss of data center capacity or interruption of telecommunication links could adversely affect our business. A breach of our network security could result in liability to us and deter customers from using our services. Failure to defend our intellectual property rights may harm our competitive position, and litigation to protect our intellectual property rights could be costly. Intellectual property litigation against us could be costly and could result in the loss of significant rights. Legislation relating to consumer privacy and changes in government regulations could affect our ability to deliver targeted communications and collect data that we use in providing our marketing services, which could negatively affect our ability to satisfy our clients needs. Compliance with changes in the securities laws and regulations, including the Sarbanes-Oxley Act of 2002, is likely to increase our costs. Due to inherent limitations, there can be no assurance that our system of disclosure and internal controls and procedures will be successful in preventing all errors or fraud, or in informing management of all material information in timely manner. There are inherent uncertainties involved in estimates, judgments and assumptions used in the preparation of financial statements in accordance with U. S. GAAP. Any changes in estimates, judgments and assumptions could have a material adverse effect on our business, financial position and results of operations. Changes to financial accounting standards may affect our reported results of operations. Risks Related to Shareholder Lawsuits We, and certain of our current and former directors and former officers, are defendants in several stockholder class action lawsuits.

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883977--5/26/2006--CATALINA_MARKETING_CORP/DE