Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | Apr. 15, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'HARTE HANKS INC | ' |
Entity Central Index Key | '0000045919 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Mar-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 62,780,052 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets | ' | ' |
Cash and cash equivalents | $84,539 | $88,747 |
Accounts receivable (less allowance for doubtful accounts of $1,169 at March 31, 2014 and $1,729 at December 31, 2013) | 110,178 | 120,122 |
Inventory | 1,320 | 1,286 |
Prepaid expenses | 10,321 | 8,528 |
Current deferred income tax asset | 6,030 | 7,696 |
Prepaid income tax | 4,520 | 4,755 |
Other current assets | 7,309 | 8,171 |
Total current assets | 224,217 | 239,305 |
Property, plant and equipment (less accumulated depreciation of $172,963 at March 31, 2014 and $169,854 at December 31, 2013) | 39,429 | 40,711 |
Goodwill | 398,164 | 398,164 |
Other intangible assets (less accumulated amortization of $9,755 at March 31, 2014 and $9,748 at December 31, 2013) | 2,296 | 2,303 |
Other assets | 4,786 | 5,053 |
Total assets | 668,892 | 685,536 |
Current liabilities | ' | ' |
Current maturities of long-term debt | 16,844 | 15,313 |
Accounts payable | 36,877 | 36,756 |
Accrued payroll and related expenses | 12,749 | 16,255 |
Deferred revenue and customer advances | 35,928 | 36,257 |
Income taxes payable | 886 | 3,407 |
Customer postage and program deposits | 21,780 | 23,877 |
Other current liabilities | 6,405 | 8,978 |
Total current liabilities | 131,469 | 140,843 |
Long-term debt | 78,094 | 82,687 |
Other long-term liabilities (including deferred income taxes of $67,947 at March 31, 2014 and $65,788 at December 31, 2013) | 113,177 | 112,952 |
Total liabilities | 322,740 | 336,482 |
Stockholders' equity | ' | ' |
Common stock, $1 par value, 250,000,000 shares authorized 119,478,549 shares issued at March 31, 2014 and 119,186,705 shares issued at December 31, 2013 | 119,479 | 119,187 |
Additional paid-in capital | 345,445 | 345,095 |
Retained earnings | 1,159,669 | 1,163,201 |
Less treasury stock, 56,698,498 shares at cost at March 31, 2014 and 56,600,972 shares at cost at December 31, 2013 | -1,251,062 | -1,250,311 |
Accumulated other comprehensive loss | -27,379 | -28,118 |
Total stockholders' equity | 346,152 | 349,054 |
Total liabilities and stockholders' equity | $668,892 | $685,536 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Condensed Consolidated Financial Statements | ' | ' |
Accounts receivable, allowance for doubtful accounts | $1,169 | $1,729 |
Property, plant and equipment, accumulated depreciation | 172,963 | 169,854 |
Other intangible assets, accumulated amortization | 9,755 | 9,748 |
Other long-term liabilities, deferred income taxes | $67,947 | $65,788 |
Common stock, par value (in dollars per share) | $1 | $1 |
Common stock, shares authorized (in shares) | 250,000,000 | 250,000,000 |
Common stock, shares issued (in shares) | 119,478,549 | 119,186,705 |
Treasury stock, shares (in shares) | 56,698,498 | 56,600,972 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Condensed Consolidated Statements of Comprehensive Income | ' | ' |
Operating revenues | $132,727 | $132,352 |
Operating expenses | ' | ' |
Labor | 71,304 | 67,470 |
Production and distribution | 40,276 | 38,985 |
Advertising, selling, general and administrative | 12,730 | 12,428 |
Depreciation, software and intangible asset amortization | 3,838 | 4,066 |
Total operating expenses | 128,148 | 122,949 |
Operating income | 4,579 | 9,403 |
Other (income) expenses | ' | ' |
Interest expense, net | 679 | 781 |
Other, net | 734 | -1,218 |
Total other (income) expenses | 1,413 | -437 |
Income from continuing operations before income taxes | 3,166 | 9,840 |
Income tax expense | 1,321 | 3,521 |
Income from continuing operations | 1,845 | 6,319 |
Income from discontinued operations, net of income taxes | 0 | 348 |
Net income | 1,845 | 6,667 |
Basic earnings per common share | ' | ' |
Continuing operations (in dollars per share) | $0.03 | $0.10 |
Discontinued operations (in dollars per share) | $0 | $0.01 |
Basic earnings per common share (in dollars per share) | $0.03 | $0.11 |
Weighted-average common shares outstanding (in shares) | 62,686 | 62,471 |
Diluted earnings per common share | ' | ' |
Continuing operations (in dollars per share) | $0.03 | $0.10 |
Discontinued operations (in dollars per share) | $0 | $0.01 |
Diluted earnings per common share (in dollars per share) | $0.03 | $0.11 |
Weighted-average common and common equivalent shares outstanding (in shares) | 62,971 | 62,669 |
Other comprehensive income (loss), net of tax | ' | ' |
Adjustment to pension liability | 553 | 1,003 |
Foreign currency translation adjustments | 186 | -1,130 |
Total other comprehensive income (loss), net of tax | 739 | -127 |
Comprehensive income | $2,584 | $6,540 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Cash Flows from Operating Activities | ' | ' |
Net income | $1,845 | $6,667 |
Adjustments to reconcile net income to net cash provided by operating activities | ' | ' |
Income from discontinued operations | 0 | -348 |
Depreciation and software amortization | 3,832 | 4,011 |
Intangible asset amortization | 6 | 55 |
Stock-based compensation | 1,288 | 1,288 |
Excess tax benefits from stock-based compensation | -425 | -5 |
Net pension cost (payments) | 1,404 | 591 |
Deferred income taxes | 3,825 | 3,121 |
Other, net | -875 | -1,312 |
Changes in operating assets and liabilities, net of acquisitions: | ' | ' |
Decrease (increase) in accounts receivable, net | 9,944 | 15,485 |
Decrease (increase) in inventory | -34 | -340 |
Decrease (Increase) in prepaid expenses and other current assets | -696 | -51 |
(Decrease) increase in accounts payable | 121 | -2,109 |
(Decrease) increase in other accrued expenses and liabilities | -13,810 | -14,565 |
Other, net | 267 | -1,046 |
Net cash provided by continuing operations | 6,692 | 11,442 |
Net cash provided by (used in) discontinued operations | 0 | 656 |
Net cash provided by operating activities | 6,692 | 12,098 |
Cash Flows from Investing Activities | ' | ' |
Purchases of property, plant and equipment | -2,550 | -4,581 |
Proceeds from the sale of property, plant and equipment | 0 | 4,781 |
Net cash flows from investing activities within discontinued operations | 0 | -50 |
Net cash provided by (used in) investing activities | -2,550 | 150 |
Cash Flows from Financing Activities | ' | ' |
Borrowings | 0 | 0 |
Repayment of borrowings | -3,062 | -3,062 |
Debt financing costs | 0 | 0 |
Issuance of common stock | -347 | 82 |
Excess tax benefits from stock-based compensations | 425 | 5 |
Purchase of treasury stock | -175 | -436 |
Dividends paid | -5,377 | 0 |
Net cash used in financing activities | -8,536 | -3,411 |
Effect of exchange rate changes on cash and cash equivalents | 186 | 1,003 |
Net increase (decrease) in cash and cash equivalents | -4,208 | 9,840 |
Cash and cash equivalents at beginning of year | 88,747 | 49,384 |
Cash and cash equivalents at end of year | $84,539 | $59,224 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Changes in Equity (USD $) | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) |
In Thousands, unless otherwise specified | ||||||
Balance at Dec. 31, 2012 | $328,164 | $118,737 | $341,586 | $1,165,952 | ($1,248,377) | ($49,734) |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | ' |
Exercise of stock options and release of unvested shares | 512 | 450 | 469 | 0 | -407 | 0 |
Net tax effect of stock options exercised and release of unvested shares | -2,606 | 0 | -2,606 | 0 | 0 | 0 |
Stock-based compensation | 5,744 | 0 | 5,744 | 0 | 0 | 0 |
Dividends paid ($0.085 and $0.255 per share for three months ended March 31, 2014 and twelve months ended December 31, 2013, respectively) | -16,121 | 0 | 0 | -16,121 | 0 | 0 |
Treasury stock issued | 37 | 0 | -98 | 0 | 135 | 0 |
Purchase of treasury stock | -1,662 | 0 | 0 | 0 | -1,662 | 0 |
Net income | 13,370 | 0 | 0 | 13,370 | 0 | 0 |
Other comprehensive income (loss) | 21,616 | 0 | 0 | 0 | 0 | 21,616 |
Balance at Dec. 31, 2013 | 349,054 | 119,187 | 345,095 | 1,163,201 | -1,250,311 | -28,118 |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | ' |
Exercise of stock options and release of unvested shares | -347 | 292 | -63 | 0 | -576 | 0 |
Net tax effect of stock options exercised and release of unvested shares | -875 | 0 | -875 | 0 | 0 | 0 |
Stock-based compensation | 1,288 | 0 | 1,288 | 0 | 0 | 0 |
Dividends paid ($0.085 and $0.255 per share for three months ended March 31, 2014 and twelve months ended December 31, 2013, respectively) | -5,377 | 0 | 0 | -5,377 | 0 | 0 |
Purchase of treasury stock | -175 | 0 | 0 | 0 | -175 | 0 |
Net income | 1,845 | 0 | 0 | 1,845 | 0 | 0 |
Other comprehensive income (loss) | 739 | 0 | 0 | 0 | 0 | 739 |
Balance at Mar. 31, 2014 | $346,152 | $119,479 | $345,445 | $1,159,669 | ($1,251,062) | ($27,379) |
Condensed_Consolidated_Stateme3
Condensed Consolidated Statements of Changes in Equity (Parenthetical) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Dec. 31, 2013 | |
Condensed Consolidated Statements of Changes in Equity | ' | ' |
Dividends paid (in dollars per share) | $0.09 | $0.26 |
Basis_of_Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2014 | |
Basis of Presentation | ' |
Basis of Presentation | ' |
Note A - Basis of Presentation | |
Consolidation | |
The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Harte-Hanks, Inc. (Harte Hanks) and its subsidiaries (the “Company”). All intercompany accounts and transactions have been eliminated in consolidation. | |
As used in this report, the terms “Harte Hanks,” “we,” “us” or “our” may refer to Harte Hanks, one or more of its consolidated subsidiaries, or all of them taken as a whole. | |
Interim Financial Information | |
The financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2013. | |
Discontinued Operations | |
As discussed in Note L, Discontinued Operations, we sold the assets of our California Shoppers operations on September 27, 2013. The operating results of our California Shoppers (Shoppers) are being reported as discontinued operations in the Condensed Consolidated Financial Statements. Unless otherwise stated, amounts related to the Shoppers operations are excluded from the Notes to Condensed Consolidated Financial Statements for all periods presented. Results of the remaining Harte Hanks business are reported as continuing operations. | |
Use of Estimates | |
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results and outcomes could differ from those estimates and assumptions. On an ongoing basis management reviews its estimates based on currently available information. Changes in facts and circumstances could result in revised estimates and assumptions. | |
Operating Expense Presentation in Consolidated Statements of Comprehensive Income | |
“Labor” in the Consolidated Statements of Comprehensive Income includes all employee payroll and benefits, including stock-based compensation, along with temporary labor costs. “Production and distribution” and “Advertising, selling, general and administrative” do not include labor, depreciation or amortization. |
Recent_Accounting_Pronouncemen
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2014 | |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements | ' |
Note B - Recent Accounting Pronouncements | |
In the first quarter of 2013, we adopted Accounting Standards Update (ASU) 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU 2013-02 addresses the presentation of reclassification adjustments, which was deferred in the initial issuance of ASU 2011-05, Presentation of Comprehensive Income. ASU 2013-02 requires entities to disclose: | |
· For items reclassified out of accumulated other comprehensive income and into net income in their entirety, the effect of the reclassification on each affected net income line item, and | |
· For accumulated other comprehensive income reclassification items that are not reclassified in their entirety into net income, a cross reference to other required U.S. GAAP disclosures. | |
In connection with this adoption we have added the required disclosures in Note J, Comprehensive Income. The adoption of ASU 2013-02 did not affect our operating results, cash flows or financial position. |
Fair_Value_of_Financial_Instru
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2014 | |
Fair Value of Financial Instruments | ' |
Fair Value of Financial Instruments | ' |
Note C - Fair Value of Financial Instruments | |
FASB ASC 820, Fair Value Measurements and Disclosures, (ASC 820) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a fair value hierarchy that prioritizes the inputs used in valuation methodologies into three levels: | |
Level 1 Quoted prices in active markets for identical assets or liabilities. | |
Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |
Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. | |
Because of their maturities and/or variable interest rates, certain financial instruments have fair values approximating their carrying values. These instruments include cash and cash equivalents, accounts receivable and trade payables. The fair value of our outstanding debt is disclosed in Note E, Long-Term Debt. |
Goodwill
Goodwill | 3 Months Ended |
Mar. 31, 2014 | |
Goodwill | ' |
Goodwill | ' |
Note D – Goodwill | |
As of March 31, 2014 and December 31, 2013, we had goodwill of $398.2 million. Under the provisions of FASB ASC 350, Intangibles-Goodwill and Other, goodwill is tested for impairment at least annually, or more frequently if events or circumstances indicate that it is “more likely than not” that goodwill might be impaired. Such events could include a significant change in business conditions, a significant negative regulatory outcome or other events that could negatively affect our business and financial performance. We perform our annual goodwill impairment assessment as of November 30th of each year. | |
The Company continues to monitor potential triggering events, including changes in the business climate in which it operates, attrition of key personnel, the current volatility in the capital markets, the Company’s market capitalization compared to its book value, the Company’s recent operating performance, and the Company’s financial projections. The occurrence of one or more triggering events could require additional impairment testing, which could result in impairment charges in the future. There was no occurrence of a triggering event for fiscal year 2014 as of March 31, 2014. |
LongTerm_Debt
Long-Term Debt | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
Long-Term Debt | ' | |||||||||||||
Long-Term Debt | ' | |||||||||||||
Note E – Long-Term Debt | ||||||||||||||
Our long-term debt obligations were as follows: | ||||||||||||||
March 31, | December 31, | |||||||||||||
In thousands | 2014 | 2013 | ||||||||||||
2010 Revolving Credit Facility, various interest rates based on LIBOR, due August 12, 2013 ($60.5 million capacity at December 31, 2012) | N/A | $ | 0 | |||||||||||
2013 Revolving Credit Facility, various interest rates based on Eurodollar rate, due August 16, 2016 ($72.5 million capacity and effective rate of 2.40% at March 31, 2014) | $ | 0 | N/A | |||||||||||
2011 Term Loan Facility, various interest rates based on LIBOR (effective rate of 2.15% at March 31, 2014), due August 16, 2016 | $ | 94,938 | $ | 98,000 | ||||||||||
Total debt | $ | 94,938 | $ | 98,000 | ||||||||||
Less current maturities | $ | 16,844 | $ | 15,313 | ||||||||||
Total long-term debt | $ | 78,094 | $ | 82,687 | ||||||||||
The carrying values and estimated fair values of our outstanding debt were as follows: | ||||||||||||||
March 31, | December 31, | |||||||||||||
2014 | 2013 | |||||||||||||
In thousands | Carrying | Fair Value | Carrying | Fair Value | ||||||||||
Value | Value | |||||||||||||
Total Debt | $ | 94,938 | $ | 94,938 | $ | 98,000 | $ | 98,000 | ||||||
The estimated fair values were calculated using current rates provided to us by our bankers for debt of the same remaining maturity and characteristics. These current rates are considered Level 2 inputs under the fair value hierarchy established by ASC 820. |
StockBased_Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2014 | |
Stock-Based Compensation | ' |
Stock-Based Compensation | ' |
Note F – Stock-Based Compensation | |
We recognized $1.0 million and $1.1 million of stock-based compensation during the three months ended March 31, 2014 and 2013, respectively. | |
Our annual grant of stock-based awards occurred in the second quarter of 2014 (April 15, 2014). We did not have any significant stock-based compensation activity in the first quarter of 2014. |
Components_of_Net_Periodic_Pen
Components of Net Periodic Pension Benefit Cost | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Components of Net Periodic Pension Benefit Cost | ' | |||||||
Components of Net Periodic Pension Benefit Cost | ' | |||||||
Note G – Components of Net Periodic Pension Benefit Cost | ||||||||
Prior to January 1, 1999, we maintained a defined benefit pension plan for which most of our employees were eligible. We elected to freeze benefits under this defined benefit pension plan as of December 31, 1998. | ||||||||
In 1994, we adopted a non-qualified, unfunded, supplemental pension plan covering certain employees, which provides for incremental pension payments so that total pension payments equal those amounts that would have been payable from our principal pension plan if it were not for limitations imposed by income tax regulations. The benefits under this supplemental pension plan accrued after December 31, 1998 as if the principal pension plan had not been frozen. | ||||||||
Net pension cost for both plans included the following components: | ||||||||
Three months ended March 31, | ||||||||
In thousands | 2014 | 2013 | ||||||
Service cost | $ | 100 | $ | 86 | ||||
Interest cost | 1,939 | 1,809 | ||||||
Expected return on plan assets | -2,109 | -1,846 | ||||||
Amortization of prior service cost | 0 | 0 | ||||||
Recognized actuarial loss | 921 | 1,672 | ||||||
Net periodic benefit cost | $ | 851 | $ | 1,721 | ||||
We made contributions to our funded, frozen pension plan of $1.1 million in the first quarter of 2014. We plan to make additional contributions of $3.7 million to this pension plan during the remainder of 2014. These contributions to our funded, frozen pension plan are being made in order to satisfy the Pension Protection Act of 2006 minimum required contribution. | ||||||||
We are not required to make and do not intend to make any contributions to our unfunded, supplemental pension plan in 2014 other than to the extent needed to cover benefit payments. We expect benefit payments under this supplemental pension plan to total $1.6 million in 2014. | ||||||||
Effective April 1, 2014, we elected to freeze benefits under the unfunded, supplemental pension plan, which will be accounted for as a curtailment of the plan in the second quarter of 2014. The plan freeze results in a reduction of plan expense of $0.4 million over the remainder of 2014 and a reduction in the projected benefit obligation of $1.1 million. This curtailment gain will offset the unrecognized loss held by the plan. The remaining portion of the unrecognized loss will then be amortized over the average life expectancy of all participants. |
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2014 | |
Income Taxes | ' |
Income Taxes | ' |
Note H - Income Taxes | |
Our first quarter 2014 income tax expense of $1.3 million resulted in an effective income tax rate of 41.7%. Our first quarter 2013 income tax provision of $3.5 million resulted in an effective income tax rate of 35.8%. Our effective income tax rate is derived by estimating pretax income and income tax expense for the year ending December 31, 2014. The effective income tax rate calculated for the first quarter of 2014 is higher than the federal statutory rate of 35.0%, primarily due to the addition of state income taxes. | |
Harte Hanks, or one of our subsidiaries, files income tax returns in the U.S. federal, U.S. state and foreign jurisdictions. For U.S. state and foreign returns, we are no longer subject to tax examinations for tax years prior to 2009. For U.S. federal returns, we are no longer subject to tax examinations for tax years prior to 2010. | |
We have elected to classify any interest expense and penalties related to income taxes within income tax expense in our Consolidated Statements of Comprehensive Income. We did not have a significant amount of interest or penalties accrued at March 31, 2014 or December 31, 2013. |
Earnings_Per_Share
Earnings Per Share | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Earnings Per Share | ' | ||||||||
Earnings Per Share | ' | ||||||||
Note I - Earnings Per Share | |||||||||
Basic earnings per share is computed on the basis of the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed on the basis of the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options and non-vested shares. | |||||||||
Reconciliations of basic and diluted earnings per share (EPS) are as follows: | |||||||||
Three Months Ended March 31, | |||||||||
In thousands, except per share amounts | 2014 | 2013 | |||||||
Net Income | |||||||||
Income from continuing operations | $ | 1,845 | $ | 6,319 | |||||
Income from discontinued operations | 0 | 348 | |||||||
Net income | $ | 1,845 | $ | 6,667 | |||||
Basic EPS | |||||||||
Weighted-average common shares outstanding | |||||||||
used in earnings per share computations | 62,686 | 62,471 | |||||||
Basic earnings per share | |||||||||
Continuing operations | $ | 0.03 | $ | 0.1 | |||||
Discontinued operations | 0 | 0.01 | |||||||
Net income | $ | 0.03 | $ | 0.11 | |||||
Diluted EPS | |||||||||
Shares used in diluted earnings per share | |||||||||
computations | 62,971 | 62,669 | |||||||
Basic earnings per share | |||||||||
Continuing operations | $ | 0.03 | $ | 0.1 | |||||
Discontinued operations | 0 | 0.01 | |||||||
Net income | $ | 0.03 | $ | 0.11 | |||||
Computation of Shares Used in Earnings Per | |||||||||
Share Computations | |||||||||
Weighted-average common shares outstanding | 62,686 | 62,471 | |||||||
Weighted-average common equivalent shares- | |||||||||
dilutive effect of stock options and awards | 285 | 198 | |||||||
Shares used in diluted earnings per share | |||||||||
computations | 62,971 | 62,669 | |||||||
3.6 million and 4.4 million anti-dilutive market price options have been excluded from the calculation of shares used in the diluted EPS calculation for the three months ended March 31, 2014 and 2013, respectively. There were no anti-dilutive unvested shares excluded from the calculation of shares used in the diluted EPS calculation for the three months ended March 31, 2014. 0.4 million anti-dilutive non-vested shares have been excluded from the calculation of shares used in the diluted EPS calculation for the three months ended March 31, 2013. |
Comprehensive_Income
Comprehensive Income | 3 Months Ended | ||||||||||||
Mar. 31, 2014 | |||||||||||||
Comprehensive Income | ' | ||||||||||||
Comprehensive Income | ' | ||||||||||||
Note J – Comprehensive Income | |||||||||||||
Comprehensive income for a period encompasses net income and all other changes in equity other than from transactions with our stockholders. Our comprehensive income was as follows: | |||||||||||||
Three Months Ended March 31, | |||||||||||||
In thousands | 2014 | 2013 | |||||||||||
Net income | $ | 1,845 | $ | 6,667 | |||||||||
Other comprehensive income (loss): | |||||||||||||
Adjustment to pension liability | 921 | 1,672 | |||||||||||
Tax expense | (368 | ) | (669 | ) | |||||||||
Adjustment to pension liability, net of tax | 553 | 1,003 | |||||||||||
Foreign currency translation adjustment | 186 | (1,130 | ) | ||||||||||
Total other comprehensive income (loss) | 739 | (127 | ) | ||||||||||
Total comprehensive income | $ | 2,584 | $ | 6,540 | |||||||||
Changes in accumulated other comprehensive income by component are as follows: | |||||||||||||
In thousands | Defined Benefit | Foreign | Total | ||||||||||
Pension | Currency | ||||||||||||
Items | Items | ||||||||||||
Balance at December 31, 2013 | $ | (32,279 | ) | $ | 4,161 | $ | (28,118 | ) | |||||
Other comprehensive (loss), net of tax, | |||||||||||||
before reclassifications | 0 | 186 | 186 | ||||||||||
Amounts reclassified from accumulated other | |||||||||||||
comprehensive income, net of tax | 553 | 0 | 553 | ||||||||||
Net current period other comprehensive income (loss), | |||||||||||||
net of tax | 553 | 186 | 739 | ||||||||||
Balance at March 31, 2014 | $ | (31,726 | ) | $ | 4,347 | $ | (27,379 | ) | |||||
In thousands | Defined Benefit | Foreign | Total | ||||||||||
Pension | Currency | ||||||||||||
Items | Items | ||||||||||||
Balance at December 31, 2012 | $ | (54,431 | ) | $ | 4,697 | $ | (49,734 | ) | |||||
Other comprehensive income (loss), net of tax, | |||||||||||||
before reclassifications | 0 | (1,130 | ) | (1,130 | ) | ||||||||
Amounts reclassified from accumulated other | |||||||||||||
comprehensive income, net of tax | 1,003 | 0 | 1,003 | ||||||||||
Net current period other comprehensive income (loss), | |||||||||||||
net of tax | 1,003 | (1,130 | ) | (127 | ) | ||||||||
Balance at March 31, 2013 | $ | (53,428 | ) | $ | 3,567 | $ | (49,861 | ) | |||||
Reclassification amounts related to the defined pension plans are included in the computation of net period pension benefit cost (see Note G, Components of Net Periodic Pension Benefit Cost). |
Litigation_Contingencies
Litigation Contingencies | 3 Months Ended |
Mar. 31, 2014 | |
Litigation Contingencies | ' |
Litigation Contingencies | ' |
Note K – Litigation Contingencies | |
In the normal course of our business, we are obligated under some agreements to indemnify our clients as a result of claims that we infringe on the proprietary rights of third parties. The terms and duration of these commitments vary and, in some cases, may be indefinite, and certain of these commitments do not limit the maximum amount of future payments we could become obligated to make there under; accordingly, our actual aggregate maximum exposure related to these types of commitments cannot be reasonably estimated. Historically, we have not been obligated to make significant payments for obligations of this nature, and no liabilities have been recorded for these obligations in our financial statements. | |
We are also currently subject to various other legal proceedings in the course of conducting our businesses and, from time to time, we may become involved in additional claims and lawsuits incidental to our businesses. In the opinion of management, after consultation with counsel, none of these matters is currently considered to be reasonably possible of resulting in a material adverse effect on our consolidated financial position or results of operations. Nevertheless, we cannot predict the impact of future developments affecting our pending or future claims and lawsuits and any resolution of a claim or lawsuit within a particular fiscal quarter may adversely impact our results of operations for that quarter. We expense legal costs as incurred, and all recorded legal liabilities are adjusted as required as better information becomes available to us. The factors we consider when recording an accrual for contingencies include, among others: (i) the opinions and views of our legal counsel; (ii) our previous experience; and (iii) the decision of our management as to how we intend to respond to the complaints. |
Discontinued_Operations
Discontinued Operations | 3 Months Ended | ||||||
Mar. 31, 2014 | |||||||
Discontinued Operations | ' | ||||||
Discontinued Operations | ' | ||||||
Note L – Discontinued Operations | |||||||
We sold the assets of our California Shoppers operations to affiliates of OpenGate Capital Management, LLC (“OpenGate”) on September 27, 2013. Because Shoppers represented a distinct business unit with operations and cash flows that can clearly be distinguished, both operationally and for financial purposes, from the rest of Harte Hanks, the results of the Shoppers operations are reported as discontinued operations for all periods presented. | |||||||
Results of the remaining Harte Hanks marketing services business are reported as continuing operations. | |||||||
Summarized operating results for the Shoppers discontinued operations are as follows: | |||||||
Three Months Ended March 31, | |||||||
In thousands | 2014 | 2013 | |||||
Revenues | $ | 0 | $ | 45,980 | |||
Income from discontinued operations before impairment | |||||||
charges and income taxes | 0 | 783 | |||||
Income tax expense | 0 | 435 | |||||
Income from discontinued operations | $ | 0 | $ | 348 | |||
The major components of cash flows for the Shoppers discontinued operations are as follows: | |||||||
Three Months Ended March 31, | |||||||
In thousands | 2014 | 2013 | |||||
Income (Loss) from discontinued operations | $ | - | $ | 348 | |||
Loss on sale | - | - | |||||
Depreciation and software amortization | - | 871 | |||||
Other, net | - | -563 | |||||
Net cash provided by (used in) discontinued operations | $ | - | $ | 656 |
LongTerm_Debt_Tables
Long-Term Debt (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
Long-Term Debt | ' | |||||||||||||
Schedule of long-term debt obligations | ' | |||||||||||||
March 31, | December 31, | |||||||||||||
In thousands | 2014 | 2013 | ||||||||||||
2010 Revolving Credit Facility, various interest rates based on LIBOR, due August 12, 2013 ($60.5 million capacity at December 31, 2012) | N/A | $ | 0 | |||||||||||
2013 Revolving Credit Facility, various interest rates based on Eurodollar rate, due August 16, 2016 ($72.5 million capacity and effective rate of 2.40% at March 31, 2014) | $ | 0 | N/A | |||||||||||
2011 Term Loan Facility, various interest rates based on LIBOR (effective rate of 2.15% at March 31, 2014), due August 16, 2016 | $ | 94,938 | $ | 98,000 | ||||||||||
Total debt | $ | 94,938 | $ | 98,000 | ||||||||||
Less current maturities | $ | 16,844 | $ | 15,313 | ||||||||||
Total long-term debt | $ | 78,094 | $ | 82,687 | ||||||||||
Schedule of carrying values and estimated fair values of outstanding debt | ' | |||||||||||||
March 31, | December 31, | |||||||||||||
2014 | 2013 | |||||||||||||
In thousands | Carrying | Fair Value | Carrying | Fair Value | ||||||||||
Value | Value | |||||||||||||
Total Debt | $ | 94,938 | $ | 94,938 | $ | 98,000 | $ | 98,000 | ||||||
Components_of_Net_Periodic_Pen1
Components of Net Periodic Pension Benefit Cost (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Components of Net Periodic Pension Benefit Cost | ' | |||||||
Net Pension cost of plans | ' | |||||||
Three months ended March 31, | ||||||||
In thousands | 2014 | 2013 | ||||||
Service cost | $ | 100 | $ | 86 | ||||
Interest cost | 1,939 | 1,809 | ||||||
Expected return on plan assets | -2,109 | -1,846 | ||||||
Amortization of prior service cost | 0 | 0 | ||||||
Recognized actuarial loss | 921 | 1,672 | ||||||
Net periodic benefit cost | $ | 851 | $ | 1,721 |
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Earnings Per Share | ' | ||||||||
Reconciliation of basic and diluted earnings per share | ' | ||||||||
Three Months Ended March 31, | |||||||||
In thousands, except per share amounts | 2014 | 2013 | |||||||
Net Income | |||||||||
Income from continuing operations | $ | 1,845 | $ | 6,319 | |||||
Income from discontinued operations | 0 | 348 | |||||||
Net income | $ | 1,845 | $ | 6,667 | |||||
Basic EPS | |||||||||
Weighted-average common shares outstanding | |||||||||
used in earnings per share computations | 62,686 | 62,471 | |||||||
Basic earnings per share | |||||||||
Continuing operations | $ | 0.03 | $ | 0.1 | |||||
Discontinued operations | 0 | 0.01 | |||||||
Net income | $ | 0.03 | $ | 0.11 | |||||
Diluted EPS | |||||||||
Shares used in diluted earnings per share | |||||||||
computations | 62,971 | 62,669 | |||||||
Basic earnings per share | |||||||||
Continuing operations | $ | 0.03 | $ | 0.1 | |||||
Discontinued operations | 0 | 0.01 | |||||||
Net income | $ | 0.03 | $ | 0.11 | |||||
Computation of Shares Used in Earnings Per | |||||||||
Share Computations | |||||||||
Weighted-average common shares outstanding | 62,686 | 62,471 | |||||||
Weighted-average common equivalent shares- | |||||||||
dilutive effect of stock options and awards | 285 | 198 | |||||||
Shares used in diluted earnings per share | |||||||||
computations | 62,971 | 62,669 | |||||||
Comprehensive_Income_Tables
Comprehensive Income (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2014 | |||||||||||||
Comprehensive Income | ' | ||||||||||||
Schedule of comprehensive income | ' | ||||||||||||
Three Months Ended March 31, | |||||||||||||
In thousands | 2014 | 2013 | |||||||||||
Net income | $ | 1,845 | $ | 6,667 | |||||||||
Other comprehensive income (loss): | |||||||||||||
Adjustment to pension liability | 921 | 1,672 | |||||||||||
Tax expense | (368 | ) | (669 | ) | |||||||||
Adjustment to pension liability, net of tax | 553 | 1,003 | |||||||||||
Foreign currency translation adjustment | 186 | (1,130 | ) | ||||||||||
Total other comprehensive income (loss) | 739 | (127 | ) | ||||||||||
Total comprehensive income | $ | 2,584 | $ | 6,540 | |||||||||
Schedule of changes in accumulated other comprehensive income | ' | ||||||||||||
In thousands | Defined Benefit | Foreign | Total | ||||||||||
Pension | Currency | ||||||||||||
Items | Items | ||||||||||||
Balance at December 31, 2013 | $ | (32,279 | ) | $ | 4,161 | $ | (28,118 | ) | |||||
Other comprehensive (loss), net of tax, | |||||||||||||
before reclassifications | 0 | 186 | 186 | ||||||||||
Amounts reclassified from accumulated other | |||||||||||||
comprehensive income, net of tax | 553 | 0 | 553 | ||||||||||
Net current period other comprehensive income (loss), | |||||||||||||
net of tax | 553 | 186 | 739 | ||||||||||
Balance at March 31, 2014 | $ | (31,726 | ) | $ | 4,347 | $ | (27,379 | ) | |||||
In thousands | Defined Benefit | Foreign | Total | ||||||||||
Pension | Currency | ||||||||||||
Items | Items | ||||||||||||
Balance at December 31, 2012 | $ | (54,431 | ) | $ | 4,697 | $ | (49,734 | ) | |||||
Other comprehensive income (loss), net of tax, | |||||||||||||
before reclassifications | 0 | (1,130 | ) | (1,130 | ) | ||||||||
Amounts reclassified from accumulated other | |||||||||||||
comprehensive income, net of tax | 1,003 | 0 | 1,003 | ||||||||||
Net current period other comprehensive income (loss), | |||||||||||||
net of tax | 1,003 | (1,130 | ) | (127 | ) | ||||||||
Balance at March 31, 2013 | $ | (53,428 | ) | $ | 3,567 | $ | (49,861 | ) |
Discontinued_Operations_Tables
Discontinued Operations (Tables) | 3 Months Ended | ||||||
Mar. 31, 2014 | |||||||
Discontinued Operations | ' | ||||||
Summary of operating results for the Shoppers discontinued operations | ' | ||||||
Three Months Ended March 31, | |||||||
In thousands | 2014 | 2013 | |||||
Revenues | $ | 0 | $ | 45,980 | |||
Income from discontinued operations before impairment | |||||||
charges and income taxes | 0 | 783 | |||||
Income tax expense | 0 | 435 | |||||
Income from discontinued operations | $ | 0 | $ | 348 | |||
Summary of major components of cash flows for the Shoppers discontinued operations | ' | ||||||
Three Months Ended March 31, | |||||||
In thousands | 2014 | 2013 | |||||
Income (Loss) from discontinued operations | $ | - | $ | 348 | |||
Loss on sale | - | - | |||||
Depreciation and software amortization | - | 871 | |||||
Other, net | - | -563 | |||||
Net cash provided by (used in) discontinued operations | $ | - | $ | 656 |
Goodwill_Details
Goodwill (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Goodwill | ' | ' |
Goodwill | $398,164 | $398,164 |
LongTerm_Debt_Details
Long-Term Debt (Details) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Long-term debt obligation | ' | ' | ' |
Total debt | $94,938,000 | $98,000,000 | ' |
Less current maturities | 16,844,000 | 15,313,000 | ' |
Total long-term debt | 78,094,000 | 82,687,000 | ' |
2010 Revolving Credit Facility, due August 12, 2013 | ' | ' | ' |
Long-term debt obligation | ' | ' | ' |
Basis of interest rate | 'LIBOR | 'LIBOR | ' |
Total debt | ' | 0 | ' |
Remaining borrowing capacity | ' | ' | 60,500,000 |
2011 Term Loan Facility, due August 16, 2016 | ' | ' | ' |
Long-term debt obligation | ' | ' | ' |
Basis of interest rate | 'LIBOR | 'LIBOR | ' |
Total debt | 94,938,000 | 98,000,000 | ' |
Effective rate of interest (as a percent) | 2.15% | ' | ' |
2013 Revolving Credit Facility, due August 16, 2016 | ' | ' | ' |
Long-term debt obligation | ' | ' | ' |
Basis of interest rate | 'Eurodollar rate | 'Eurodollar rate | ' |
Total debt | 0 | ' | ' |
Remaining borrowing capacity | $72,500,000 | ' | ' |
Effective rate of interest (as a percent) | 2.40% | ' | ' |
LongTerm_Debt_Details_2
Long-Term Debt (Details 2) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Carrying Value | ' | ' |
Carrying values and estimated fair values of outstanding debt | ' | ' |
Total debt | $94,938 | $98,000 |
Fair Value | Level 2 | ' | ' |
Carrying values and estimated fair values of outstanding debt | ' | ' |
Total debt | $94,938 | $98,000 |
StockBased_Compensation_Detail
Stock-Based Compensation (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Stock-Based Compensation | ' | ' |
Stock-based compensation expense | $1 | $1.10 |
Components_of_Net_Periodic_Pen2
Components of Net Periodic Pension Benefit Cost (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Net pension cost of plans | ' | ' |
Service cost | $100 | $86 |
Interest cost | 1,939 | 1,809 |
Expected return on plan assets | -2,109 | -1,846 |
Amortization of prior service cost | 0 | 0 |
Recognized actuarial loss | 921 | 1,672 |
Net periodic benefit cost | $851 | $1,721 |
Components_of_Net_Periodic_Pen3
Components of Net Periodic Pension Benefit Cost (Details 2) (USD $) | 3 Months Ended | 0 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2014 | Apr. 02, 2014 |
Funded, Frozen Pension Plan | Unfunded, Supplemental Pension Plan | Unfunded, Supplemental Pension Plan | |
Subsequent event | |||
Defined Benefit Plan Disclosure | ' | ' | ' |
Contributions made | $1.10 | ' | ' |
Planned contributions in remainder of year | 3.7 | ' | ' |
Expected benefit payments in remainder of year | ' | 1.6 | ' |
Reduction of plan expense over the remainder of 2014 | ' | ' | -0.4 |
Reduction in the projected benefit obligation | ' | ' | $1.10 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Income Taxes | ' | ' |
Income tax expense | $1,321 | $3,521 |
Effective income tax rate (as a percent) | 41.70% | 35.80% |
Federal statutory rate (as a percent) | 35.00% | ' |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | 12 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
Net Income | ' | ' | ' |
Income from continuing operations | $1,845 | $6,319 | ' |
Income from discontinued operations | 0 | 348 | ' |
Net income | $1,845 | $6,667 | $13,370 |
Basic earnings per common share | ' | ' | ' |
Weighted-average common shares outstanding used in earnings per share computations | 62,686 | 62,471 | ' |
Continuing operations (in dollars per share) | $0.03 | $0.10 | ' |
Discontinued operations (in dollars per share) | $0 | $0.01 | ' |
Basic earnings per common share (in dollars per share) | $0.03 | $0.11 | ' |
Diluted earnings per common share | ' | ' | ' |
Shares used in diluted earnings per share computations | 62,971 | 62,669 | ' |
Continuing operations (in dollars per share) | $0.03 | $0.10 | ' |
Discontinued operations (in dollars per share) | $0 | $0.01 | ' |
Diluted earnings per common share (in dollars per share) | $0.03 | $0.11 | ' |
Computation of Shares Used in Earnings Per Share Computations | ' | ' | ' |
Weighted-average common shares outstanding (in shares) | 62,686 | 62,471 | ' |
Weighted-average common equivalent shares - dilutive effect of stock options and awards | 285 | 198 | ' |
Shares used in diluted earnings per share computations | 62,971 | 62,669 | ' |
Earnings_Per_Share_Details_2
Earnings Per Share (Details 2) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Stock Options | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award | ' | ' |
Anti-dilutive shares excluded from the EPS calculations | 3.6 | 4.4 |
Non Vested Stock | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award | ' | ' |
Anti-dilutive shares excluded from the EPS calculations | 0 | 0.4 |
Comprehensive_Income_Details
Comprehensive Income (Details) (USD $) | 3 Months Ended | 12 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
Comprehensive Income | ' | ' | ' |
Net income | $1,845 | $6,667 | $13,370 |
Other comprehensive income (loss): | ' | ' | ' |
Adjustment to pension liability | 921 | 1,672 | ' |
Tax expense | -368 | -669 | ' |
Adjustment to pension liability, net of tax | 553 | 1,003 | ' |
Foreign currency translation adjustments | 186 | -1,130 | ' |
Total other comprehensive income (loss), net of tax | 739 | -127 | ' |
Comprehensive income | 2,584 | 6,540 | ' |
Accumulated other comprehensive income | ' | ' | ' |
Balance at beginning of period | -28,118 | -49,734 | -49,734 |
Other comprehensive income (loss), net of tax, before reclassifications | 186 | -1,130 | ' |
Amounts reclassified from accumulated other comprehensive income, net of tax | 553 | 1,003 | ' |
Net current period other comprehensive income (loss), net of tax | 739 | -127 | 21,616 |
Balance at end of period | -27,379 | -49,861 | -28,118 |
Defined Benefit Pension Items | ' | ' | ' |
Accumulated other comprehensive income | ' | ' | ' |
Balance at beginning of period | -32,279 | -54,431 | -54,431 |
Other comprehensive income (loss), net of tax, before reclassifications | 0 | 0 | ' |
Amounts reclassified from accumulated other comprehensive income, net of tax | 553 | 1,003 | ' |
Net current period other comprehensive income (loss), net of tax | 553 | 1,003 | ' |
Balance at end of period | -31,726 | -53,428 | ' |
Foreign Currency Items | ' | ' | ' |
Accumulated other comprehensive income | ' | ' | ' |
Balance at beginning of period | 4,161 | 4,697 | 4,697 |
Other comprehensive income (loss), net of tax, before reclassifications | 186 | -1,130 | ' |
Amounts reclassified from accumulated other comprehensive income, net of tax | 0 | 0 | ' |
Net current period other comprehensive income (loss), net of tax | 186 | -1,130 | ' |
Balance at end of period | $4,347 | $3,567 | ' |
Litigation_Contingencies_Detai
Litigation Contingencies (Details) (USD $) | Mar. 31, 2014 |
Litigation Contingencies | ' |
Litigation liability | $0 |
Discontinued_Operations_Detail
Discontinued Operations (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Summarized operating results for the Shoppers discontinued operations | ' | ' |
Income (loss) from discontinued operations | $0 | $348 |
Major components of cash flows for the Shoppers discontinued operations | ' | ' |
Income from discontinued operations | 0 | 348 |
Net cash provided by (used in) discontinued operations | 0 | 656 |
Shoppers | ' | ' |
Summarized operating results for the Shoppers discontinued operations | ' | ' |
Revenues | 0 | 45,980 |
Income from discontinued operations before impairment charges and income taxes | 0 | 783 |
Income tax expense | 0 | 435 |
Income (loss) from discontinued operations | 0 | 348 |
Major components of cash flows for the Shoppers discontinued operations | ' | ' |
Income from discontinued operations | 0 | 348 |
Depreciation and software amortization | 0 | 871 |
Other, net | 0 | -563 |
Net cash provided by (used in) discontinued operations | $0 | $656 |