Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Oct. 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 | 30-Sep-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 | ' | 62,068,391 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets | ' | ' |
Cash and cash equivalents | $67,234 | $88,747 |
Accounts receivable (less allowance for doubtful accounts of $1,251 at September 30, 2014 and $1,729 at December 31, 2013) | 107,867 | 120,122 |
Inventory | 1,540 | 1,286 |
Prepaid expenses | 9,192 | 8,528 |
Current deferred income tax asset | 4,942 | 7,696 |
Prepaid income tax | 3,062 | 4,755 |
Other current assets | 7,338 | 8,171 |
Total current assets | 201,175 | 239,305 |
Property, plant and equipment (less accumulated depreciation of $175,684 at September 30, 2014 and $169,854 at December 31, 2013) | 36,008 | 40,711 |
Goodwill | 398,164 | 398,164 |
Other intangible assets (less accumulated amortization of $9,768 at September 30, 2014 and $9,748 at December 31, 2013) | 2,283 | 2,303 |
Other assets | 3,565 | 5,053 |
Total assets | 641,195 | 685,536 |
Current liabilities | ' | ' |
Current maturities of long-term debt | 18,375 | 15,313 |
Accounts payable | 32,965 | 36,756 |
Accrued payroll and related expenses | 12,121 | 16,255 |
Deferred revenue and customer advances | 30,502 | 36,257 |
Income taxes payable | 1,496 | 3,407 |
Customer postage and program deposits | 16,557 | 23,877 |
Other current liabilities | 5,931 | 8,978 |
Total current liabilities | 117,947 | 140,843 |
Long-term debt | 68,906 | 82,687 |
Other long-term liabilities (including deferred income taxes of $69,928 at September 30, 2014 and $65,788 at December 31, 2013) | 109,761 | 112,952 |
Total liabilities | 296,614 | 336,482 |
Stockholders' equity | ' | ' |
Common stock, $1 par value, 250,000,000 shares authorized 119,598,385 shares issued at September 30, 2014 and 119,186,705 shares issued at December 31, 2013 | 119,598 | 119,187 |
Additional paid-in capital | 346,651 | 345,095 |
Retained earnings | 1,160,949 | 1,163,201 |
Less treasury stock, 57,459,160 shares at cost at September 30, 2014 and 56,600,972 shares at cost at December 31, 2013 | -1,255,372 | -1,250,311 |
Accumulated other comprehensive loss | -27,245 | -28,118 |
Total stockholders' equity | 344,581 | 349,054 |
Total liabilities and stockholders' equity | $641,195 | $685,536 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Condensed Consolidated Financial Statements | ' | ' |
Accounts receivable, allowance for doubtful accounts | $1,251 | $1,729 |
Property, plant and equipment, accumulated depreciation | 175,684 | 169,854 |
Other intangible assets, accumulated amortization | 9,768 | 9,748 |
Other long-term liabilities, deferred income taxes | $69,928 | $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) | 119,598,385 | 119,186,705 |
Treasury stock, shares (in shares) | 57,459,160 | 56,600,972 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Condensed Consolidated Statements of Comprehensive Income | ' | ' | ' | ' |
Operating revenues | $134,121 | $134,973 | $407,158 | $407,430 |
Operating expenses | ' | ' | ' | ' |
Labor | 67,026 | 68,341 | 207,943 | 205,601 |
Production and distribution | 40,350 | 39,315 | 122,784 | 118,871 |
Advertising, selling, general and administrative | 12,528 | 12,258 | 39,118 | 38,243 |
Impairment of other intangible assets | ' | 2,750 | ' | 2,750 |
Depreciation, software and intangible asset amortization | 3,677 | 3,949 | 11,207 | 11,788 |
Total operating expenses | 123,581 | 126,613 | 381,052 | 377,253 |
Operating income | 10,540 | 8,360 | 26,106 | 30,177 |
Other (income) expenses | ' | ' | ' | ' |
Interest expense, net | 641 | 729 | 1,949 | 2,260 |
Other, net | -581 | 536 | 1,228 | -600 |
Total other (income) expenses | 60 | 1,265 | 3,177 | 1,660 |
Income from continuing operations before income taxes | 10,480 | 7,095 | 22,929 | 28,517 |
Income tax expense | 4,060 | 2,644 | 9,027 | 10,810 |
Income from continuing operations | 6,420 | 4,451 | 13,902 | 17,707 |
Loss from discontinued operations, net of income taxes | ' | -12,624 | ' | -10,903 |
Net income (loss) | 6,420 | -8,173 | 13,902 | 6,804 |
Basic earnings (loss) per common share | ' | ' | ' | ' |
Continuing operations (in dollars per share) | $0.10 | $0.07 | $0.22 | $0.28 |
Discontinued operations (in dollars per share) | $0 | ($0.20) | $0 | ($0.17) |
Basic earnings (loss) per common share (in dollars per share) | $0.10 | ($0.13) | $0.22 | $0.11 |
Weighted-average common shares outstanding (in shares) | 62,398 | 62,538 | 62,606 | 62,485 |
Diluted earnings (loss) per common share | ' | ' | ' | ' |
Continuing operations (in dollars per share) | $0.10 | $0.07 | $0.22 | $0.28 |
Discontinued operations (in dollars per share) | $0 | ($0.20) | $0 | ($0.17) |
Diluted earnings (loss) per common share (in dollars per share) | $0.10 | ($0.13) | $0.22 | $0.11 |
Weighted-average common and common equivalent shares outstanding (in shares) | 62,585 | 62,994 | 62,818 | 62,808 |
Other comprehensive income (loss), net of tax | ' | ' | ' | ' |
Adjustment to pension liability | 558 | 1,003 | 1,615 | 3,009 |
Foreign currency translation adjustments | -1,348 | 1,056 | -742 | -663 |
Total other comprehensive income (loss), net of tax | -790 | 2,059 | 873 | 2,346 |
Comprehensive income (loss) | $5,630 | ($6,114) | $14,775 | $9,150 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash Flows from Operating Activities | ' | ' |
Net income | $13,902 | $6,804 |
Adjustments to reconcile net income to net cash provided by operating activities | ' | ' |
Impairment of other intangible assets | ' | 2,750 |
(Gain) Loss from discontinued operations | ' | -1,452 |
Loss on the sale of discontinued operations | ' | 12,355 |
Depreciation and software amortization | 11,187 | 11,623 |
Intangible asset amortization | 20 | 165 |
Stock-based compensation | 3,297 | 4,409 |
Excess tax benefits from stock-based compensation | ' | -32 |
Net pension cost (payments) | -4,346 | -564 |
Deferred income taxes | 4,469 | 1,355 |
Other, net | -738 | -851 |
Changes in operating assets and liabilities, net of acquisitions: | ' | ' |
Decrease in accounts receivable, net | 12,255 | 13,789 |
Increase in inventory | -254 | -466 |
Decrease in prepaid expenses and other current assets | 1,862 | 732 |
Decrease in accounts payable | -4,066 | -6,090 |
Decrease in other accrued expenses and liabilities | -23,536 | -7,132 |
Other, net | 3,913 | -2,588 |
Net cash provided by continuing operations | 17,965 | 34,807 |
Net cash provided by (used in) discontinued operations | ' | -60 |
Net cash provided by operating activities | 17,965 | 34,747 |
Cash Flows from Investing Activities | ' | ' |
Purchases of property, plant and equipment | -6,814 | -12,760 |
Proceeds from the sale of property, plant and equipment | 604 | 4,686 |
Net cash flows from investing activities within discontinued operations | ' | 22,500 |
Net cash (used in) provided by investing activities | -6,210 | 14,426 |
Cash Flows from Financing Activities | ' | ' |
Repayment of borrowings | -10,719 | -9,188 |
Debt financing costs | ' | -581 |
Issuance of common stock | -291 | 264 |
Excess tax benefits from stock-based compensations | ' | 32 |
Purchase of treasury stock | -5,362 | -1,049 |
Dividends paid | -16,154 | -10,749 |
Net cash used in financing activities | -32,526 | -21,271 |
Effect of exchange rate changes on cash and cash equivalents | -742 | -525 |
Net increase (decrease) in cash and cash equivalents | -21,513 | 27,377 |
Cash and cash equivalents at beginning of period | 88,747 | 49,384 |
Cash and cash equivalents at end of period | $67,234 | $76,761 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Changes in Equity (USD $) | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total |
In Thousands, unless otherwise specified | ||||||
Balance at Dec. 31, 2012 | $118,737 | $341,586 | $1,165,952 | ($1,248,377) | ($49,734) | $328,164 |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | ' |
Exercise of stock options and release of unvested shares | 450 | 469 | ' | -407 | ' | 512 |
Net tax effect of stock options exercised and release of unvested shares | ' | -2,606 | ' | ' | ' | -2,606 |
Stock-based compensation | ' | 5,744 | ' | ' | ' | 5,744 |
Dividends paid ($0.255 and $0.255 per share for nine months ended September 30, 2014 and twelve months ended December 31, 2013, respectively) | ' | ' | -16,121 | ' | ' | -16,121 |
Treasury stock issued | ' | -98 | ' | 135 | ' | 37 |
Purchase of treasury stock | ' | ' | ' | -1,662 | ' | -1,662 |
Net income (loss) | ' | ' | 13,370 | ' | ' | 13,370 |
Other comprehensive income (loss) | ' | ' | ' | ' | 21,616 | 21,616 |
Balance at Dec. 31, 2013 | 119,187 | 345,095 | 1,163,201 | -1,250,311 | -28,118 | 349,054 |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | ' |
Exercise of stock options and release of unvested shares | 411 | 48 | ' | -750 | ' | -291 |
Net tax effect of stock options exercised and release of unvested shares | ' | -1,277 | ' | ' | ' | -1,277 |
Stock-based compensation | ' | 3,552 | ' | ' | ' | 3,552 |
Dividends paid ($0.255 and $0.255 per share for nine months ended September 30, 2014 and twelve months ended December 31, 2013, respectively) | ' | ' | -16,154 | ' | ' | -16,154 |
Treasury stock issued | ' | -767 | ' | 1,051 | ' | 284 |
Purchase of treasury stock | ' | ' | ' | -5,362 | ' | -5,362 |
Net income (loss) | ' | ' | 13,902 | ' | ' | 13,902 |
Other comprehensive income (loss) | ' | ' | ' | ' | 873 | 873 |
Balance at Sep. 30, 2014 | $119,598 | $346,651 | $1,160,949 | ($1,255,372) | ($27,245) | $344,581 |
Condensed_Consolidated_Stateme3
Condensed Consolidated Statements of Changes in Equity (Parenthetical) (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2013 | |
Condensed Consolidated Statements of Changes in Equity | ' | ' |
Dividends paid (in dollars per share) | $0.26 | $0.26 |
Basis_of_Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 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. and subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. All of its used in this report, the terms “Harte Hanks,” “The Company, “we,” “us” or “our” may refer to Harte Hanks, Inc., 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 and nine months ended September 30, 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 M, Discontinued Operations, we sold the assets of our Shoppers operations on September 27, 2013. The operating results of our 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 | 9 Months Ended | |||
Sep. 30, 2014 | ||||
Recent Accounting Pronouncements | ' | |||
Recent Accounting Pronouncements | ' | |||
Note B — Recent Accounting Pronouncements | ||||
During the second quarter of 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This ASU changes the requirements for reporting discontinued operations. Under the ASU, discontinued operations are defined as either a: | ||||
· | Component of an entity or group of components that | |||
· | has been disposed, meets the criteria to be classified as held-for sale, or has been abandoned/spun-off; and | |||
· | represents a strategic shift that has (or will have a major effect on an entity’s operations and financial results), or a | |||
· | Business or nonprofit activity that, on acquisition, meets the criteria to be classified as held-for sale. | |||
This ASU is effective for interim periods beginning after December 15, 2014, is applied prospectively and early adoption is permitted. This ASU does not have an impact on our year-to-date interim period ending September 30, 2014 and does not impact any of our previously reported and disclosed discontinued operations. The impact of the Company will be dependent on any transaction that is within the scope of the new guidance. | ||||
On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on January 1, 2017. | ||||
Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. | ||||
Fair_Value_of_Financial_Instru
Fair Value of Financial Instruments | 9 Months Ended | |
Sep. 30, 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 | 9 Months Ended |
Sep. 30, 2014 | |
Goodwill | ' |
Goodwill | ' |
Note D — Goodwill | |
As of September 30, 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. | |
During the second quarter of 2014, Harte Hanks initiated a new strategy and began implementing changes to optimize our operational structure for that strategy. As a result, we now report two distinct divisions as segments — Customer Interaction and Trillium Software. This is considered a triggering event that requires additional consideration of potential impairment. Harte Hanks performed a Step 0 analysis and determined that there is no indication of impairment based on this occurrence, and that as of September 30, 2014, no other triggers are present at this time. | |
We continue to monitor potential triggering events, including changes in the business climate in which we operate, attrition of key personnel, the current volatility in the capital markets, the Company’s market capitalization compared to our book value, our recent operating performance, and financial projections. The occurrence of one or more triggering events could require additional impairment testing, which could result in impairment charges in the future. | |
LongTerm_Debt
Long-Term Debt | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Long-Term Debt | ' | |||||||||||||
Long-Term Debt | ' | |||||||||||||
Note E — Long-Term Debt | ||||||||||||||
Our long-term debt obligations were as follows: | ||||||||||||||
The carrying values and estimated fair values of our outstanding debt were as follows: | ||||||||||||||
September 30, | December 31, | |||||||||||||
2014 | 2013 | |||||||||||||
In thousands | Carrying | Fair | Carrying | Fair | ||||||||||
Value | Value | Value | Value | |||||||||||
Total Debt | $ | 87,281 | $ | 87,281 | $ | 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 | 9 Months Ended | ||||||
Sep. 30, 2014 | |||||||
Stock-Based Compensation | ' | ||||||
Stock-Based Compensation | ' | ||||||
Note F — Stock-Based Compensation | |||||||
We recognized $1.0 million and $1.2 million of stock-based compensation during the three months ended September 30, 2014 and 2013, respectively. We recognized $3.3 million and $4.4 million of stock-based compensation during the nine months ended September 30, 2014 and 2013, respectively. | |||||||
We made our annual grant of stock-based awards in the second quarter of 2014 (April 15, 2014). Additional grants were made during the third quarter relating to current and recently hired employees. | |||||||
Equity awards granted during the quarter were as follows: | |||||||
Number of | Weighted- | ||||||
Shares | Average | ||||||
Grant-Date | |||||||
Fair Value | |||||||
Stock options | 116,210 | $ | 2.21 | ||||
Unvested shares | 55,459 | $ | 6.92 | ||||
Performance stock units | 22,666 | $ | 6.04 | ||||
Components_of_Net_Periodic_Pen
Components of Net Periodic Pension Benefit Cost | 9 Months Ended | |||||||
Sep. 30, 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. | ||||||||
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 froze benefits under our unfunded, supplemental pension plan, which was 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 $1.2 million. This curtailment gain offsets 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. | ||||||||
Net pension cost for both plans included the following components: | ||||||||
Three Months Ended September 30, | ||||||||
In thousands | 2014 | 2013 | ||||||
Service cost | $ | — | $ | 86 | ||||
Interest cost | 1,916 | 1,809 | ||||||
Expected return on plan assets | (2,109 | ) | (1,846 | ) | ||||
Amortization of prior service cost | — | — | ||||||
Recognized actuarial loss | 892 | 1,672 | ||||||
Net periodic benefit cost | $ | 699 | $ | 1,721 | ||||
Nine Months Ended September 30, | ||||||||
In thousands | 2014 | 2013 | ||||||
Service cost | $ | 100 | $ | 257 | ||||
Interest cost | 5,771 | 5,428 | ||||||
Expected return on plan assets | (6,327 | ) | (5,537 | ) | ||||
Amortization of prior service cost | — | — | ||||||
Recognized actuarial loss | 2,734 | 5,015 | ||||||
Net periodic benefit cost | $ | 2,278 | $ | 5,163 | ||||
We made contributions of $4.4 million to our funded, frozen pension plan in the nine months ended September 30, 2014. We do not plan to make additional contributions 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. | ||||||||
Income_Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2014 | |
Income Taxes | ' |
Income Taxes | ' |
Note H — Income Taxes | |
Our third quarter 2014 income tax expense of $4.1 million resulted in an effective income tax rate of 38.7%. Our first nine months of 2014 income tax expense of $9.0 million resulted in an effective income tax rate of 39.4%. 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 nine months of 2014 is higher than the federal statutory rate of 35.0%, primarily due to the addition of state income taxes. | |
Our third quarter 2013 income tax expense of $2.6 million resulted in an effective income tax rate of 37.3%. Our first nine months of 2013 income tax expense of $10.8 million resulted in an effective income tax rate of 37.9% which benefited from favorable first quarter discrete items including reductions in tax accruals related to certain foreign subsidiaries, and to additional tax credits made available by the American Taxpayer Relief Act of 2012 enacted in January of 2013. The effective income tax rate calculated for the first nine months of 2013 is higher than the federal statutory rate of 35.0%, primarily due to the addition of state income taxes. | |
Harte Hanks 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 2010. For U.S. federal returns, we are no longer subject to tax examinations for tax years prior to 2011. | |
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 September 30, 2014 or December 31, 2013. | |
Earnings_Per_Share
Earnings Per Share | 9 Months Ended | |||||||
Sep. 30, 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 September 30, | ||||||||
In thousands, except per share amounts | 2014 | 2013 | ||||||
Net Income | ||||||||
Income from continuing operations | $ | 6,420 | $ | 4,451 | ||||
Income from discontinued operations | — | (12,624 | ) | |||||
Net income | $ | 6,420 | $ | (8,173 | ) | |||
Basic EPS | ||||||||
Weighted-average common shares outstanding used in earnings per share computations | 62,398 | 62,538 | ||||||
Basic earnings per share | ||||||||
Continuing operations | $ | 0.1 | $ | 0.07 | ||||
Discontinued operations | 0 | (0.20 | ) | |||||
Net income | $ | 0.1 | $ | (0.13 | ) | |||
Diluted EPS | ||||||||
Shares used in diluted earnings per share computations | 62,585 | 62,994 | ||||||
Diluted earnings per share | ||||||||
Continuing operations | $ | 0.1 | $ | 0.07 | ||||
Discontinued operations | 0 | (0.20 | ) | |||||
Net income | $ | 0.1 | $ | (0.13 | ) | |||
Computation of Shares Used in Earnings Per Share Computations | ||||||||
Weighted-average common shares outstanding | 62,398 | 62,538 | ||||||
Weighted-average common equivalent shares-dilutive effect of stock options and awards | 187 | 456 | ||||||
Shares used in diluted earnings per share computations | 62,585 | 62,994 | ||||||
4.2 million and 4.1 million of anti-dilutive market price options have been excluded from the calculation of shares used in the diluted EPS calculation for the three months ended September 30, 2014 and 2013, respectively. 0.5 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 September 30, 2014. There were no anti-dilutive unvested shares excluded from the calculation of shares used in the diluted EPS calculation for the three months ended September 30, 2013. | ||||||||
Nine Months Ended September 30, | ||||||||
In thousands, except per share amounts | 2014 | 2013 | ||||||
Net Income | ||||||||
Income from continuing operations | $ | 13,902 | $ | 17,707 | ||||
Income from discontinued operations | — | (10,903 | ) | |||||
Net income | $ | 13,902 | $ | 6,804 | ||||
Basic EPS | ||||||||
Weighted-average common shares outstanding used in earnings per share computations | 62,606 | 62,485 | ||||||
Basic earnings per share | ||||||||
Continuing operations | $ | 0.22 | $ | 0.28 | ||||
Discontinued operations | 0 | (0.17 | ) | |||||
Net income | $ | 0.22 | $ | 0.11 | ||||
Diluted EPS | ||||||||
Shares used in diluted earnings per share computations | 62,818 | 62,808 | ||||||
Diluted earnings per share | ||||||||
Continuing operations | $ | 0.22 | $ | 0.28 | ||||
Discontinued operations | 0 | (0.17 | ) | |||||
Net income | $ | 0.22 | $ | 0.11 | ||||
Computation of Shares Used in Earnings Per Share Computations | ||||||||
Weighted-average common shares outstanding | 62,606 | 62,485 | ||||||
Weighted-average common equivalent shares-dilutive effect of stock options and awards | 212 | 323 | ||||||
Shares used in diluted earnings per share computations | 62,818 | 62,808 | ||||||
4.1 million and 4.3 million anti-dilutive market price options have been excluded from the calculation of shares used in the diluted EPS calculation for the nine months ended September 30, 2014 and 2013, respectively. An insignificant number of anti-dilutive non-vested shares have been excluded from the calculation of shares used in the diluted EPS calculation for the nine months ended September 30, 2014 and 2013, respectively. | ||||||||
Comprehensive_Income
Comprehensive Income | 9 Months Ended | ||||||||||
Sep. 30, 2014 | |||||||||||
Comprehensive Income | ' | ||||||||||
Comprehensive Income | ' | ||||||||||
Note J — Comprehensive Income | |||||||||||
Comprehensive income (loss) for a period encompasses net income (loss) and all other changes in equity other than from transactions with our stockholders. Our comprehensive income (loss) was as follows: | |||||||||||
Three Months Ended September 30, | |||||||||||
In thousands | 2014 | 2013 | |||||||||
Net income (loss) | $ | 6,420 | $ | (8,173 | ) | ||||||
Other comprehensive income (loss): | |||||||||||
Adjustment to pension liability | 930 | 1,672 | |||||||||
Tax expense | (372 | ) | (669 | ) | |||||||
Adjustment to pension liability, net of tax | 558 | 1,003 | |||||||||
Foreign currency translation adjustment | (1,348 | ) | 1,056 | ||||||||
Total other comprehensive income (loss) | (790 | ) | 2,059 | ||||||||
Total comprehensive income (loss) | $ | 5,630 | $ | (6,114 | ) | ||||||
Nine Months Ended September 30, | |||||||||||
In thousands | 2014 | 2013 | |||||||||
Net income | $ | 13,902 | $ | 6,804 | |||||||
Other comprehensive income (loss): | |||||||||||
Adjustment to pension liability | 2,691 | 5,015 | |||||||||
Tax expense | (1,076 | ) | (2,006 | ) | |||||||
Adjustment to pension liability, net of tax | 1,615 | 3,009 | |||||||||
Foreign currency translation adjustment | (742 | ) | (663 | ) | |||||||
Total other comprehensive income (loss) | 873 | 2,346 | |||||||||
Total comprehensive income | $ | 14,775 | $ | 9,150 | |||||||
Changes in accumulated other comprehensive income by component are as follows: | |||||||||||
In thousands | Defined Benefit | Foreign | Total | ||||||||
Pension Items | Currency | ||||||||||
Items | |||||||||||
Balance at December 31, 2013 | $ | (32,279 | ) | $ | 4,161 | $ | (28,118 | ) | |||
Other comprehensive income, net of tax, before reclassifications | — | (742 | ) | (742 | ) | ||||||
Amounts reclassified from accumulated other comprehensive income, net of tax | 1,615 | — | 1,615 | ||||||||
Net current period other comprehensive income, net of tax | 1,615 | (742 | ) | 873 | |||||||
Balance at September 30, 2014 | $ | (30,664 | ) | $ | 3,419 | $ | (27,245 | ) | |||
In thousands | Defined Benefit | Foreign | Total | ||||||||
Pension Items | Currency | ||||||||||
Items | |||||||||||
Balance at December 31, 2012 | $ | (54,431 | ) | $ | 4,697 | $ | (49,734 | ) | |||
Other comprehensive (loss), net of tax, before reclassifications | — | (663 | ) | (663 | ) | ||||||
Amounts reclassified from accumulated other comprehensive income, net of tax | 3,009 | — | 3,009 | ||||||||
Net current period other comprehensive income (loss), net of tax | 3,009 | (663 | ) | 2,346 | |||||||
Balance at September 30, 2013 | $ | (51,422 | ) | $ | 4,034 | $ | (47,388 | ) | |||
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 | 9 Months Ended |
Sep. 30, 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. | |
Business_Segments
Business Segments | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Business Segments | ' | |||||||
Business Segments | ' | |||||||
Note L — Business Segments | ||||||||
During the second quarter of 2014, Harte Hanks initiated a new strategy to optimize our operational structure by organizing into two distinct operating divisions: Customer Interaction and Trillium Software. In accordance with ASC 280, Segment Reporting, we determined that under this new organizational structure, we will report the two operating divisions as two reportable segments — Customer Interaction and Trillium Software. Our reportable segments are described below. | ||||||||
Customer Interaction | ||||||||
Our Customer Interaction services offer a wide variety of integrated, multi-channel, data-driven marketing service solutions for our customers. We derive revenues by offering a full complement of capabilities and resources to provide these services in media from direct mail to email, including: | ||||||||
· | agency and digital services; | |||||||
· | database marketing solutions and business-to-business lead generation; | |||||||
· | direct mail; and | |||||||
· | contact centers. | |||||||
Customer Interaction’s largest cost components are labor, outsourced costs and mail supply chain costs. 2013 results reflect an impairment loss of $2.8 million related to other intangible assets associated with our Aberdeen business recorded in the third quarter of 2013. | ||||||||
Trillium Software | ||||||||
Trillium Software is a leading enterprise data quality solutions provider. Our full complement of technologies and services includes global data profiling, data cleansing, enrichment, and data linking for e-business, customer relationship management, data governance, enterprise resource planning, supply chain management, data warehouse, and other enterprise applications. Revenues from the Trillium Software segment are comprised primarily of software, maintenance and professional services. | ||||||||
Trillium Software’s largest cost component is software development, which is comprised primarily of labor. General corporate expense consists primarily of pension and workers compensation expense related to employees from operations we no longer own. | ||||||||
Information about the operations of our two business segments is as follows: | ||||||||
Three Months Ended September 30, | ||||||||
In thousands | 2014 | 2013 | ||||||
Operating revenues | ||||||||
Customer Interaction | $ | 121,078 | $ | 121,338 | ||||
Trillium Software | 13,043 | 13,635 | ||||||
Total operating revenues | $ | 134,121 | $ | 134,973 | ||||
Operating income | ||||||||
Customer Interaction | $ | 7,601 | $ | 5,559 | ||||
Trillium Software | 3,318 | 3,931 | ||||||
Corporate | (379 | ) | (1,130 | ) | ||||
Total operating income | $ | 10,540 | $ | 8,360 | ||||
Income from continuing operations before income taxes | $ | 10,540 | 8,360 | |||||
Interest expense | 716 | $ | 754 | |||||
Interest income | (75 | ) | (25 | ) | ||||
Other, net | (581 | ) | 536 | |||||
Total income from continuing operations before income taxes | $ | 10,480 | $ | 7,095 | ||||
Nine Months Ended September 30, | ||||||||
In thousands | 2014 | 2013 | ||||||
Operating revenues | ||||||||
Customer Interaction | $ | 367,133 | $ | 367,928 | ||||
Trillium Software | 40,025 | 39,502 | ||||||
Total operating revenues | $ | 407,158 | $ | 407,430 | ||||
Operating income | ||||||||
Customer Interaction | $ | 18,743 | $ | 22,600 | ||||
Trillium Software | 9,662 | 10,969 | ||||||
Corporate | (2,299 | ) | (3,392 | ) | ||||
Total operating income | $ | 26,106 | $ | 30,177 | ||||
Income from continuing operations before income taxes | $ | 26,106 | $ | 30,177 | ||||
Interest expense | 2,153 | 2,336 | ||||||
Interest income | (204 | ) | (76 | ) | ||||
Other, net | 1,228 | (600 | ) | |||||
Total income from continuing operations before income taxes | $ | 22,929 | $ | 28,517 | ||||
Discontinued_Operations
Discontinued Operations | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Discontinued Operations | ' | |||||||
Discontinued Operations | ' | |||||||
Note M — Discontinued Operations | ||||||||
We sold the assets of our Shoppers operations to affiliates of OpenGate Capital Management, LLC 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 September 30, | ||||||||
In thousands | 2014 | 2013 | ||||||
Revenues | $ | — | $ | 46,703 | ||||
Income from discontinued operations before impairment charges and income taxes | — | 76 | ||||||
Loss on sale before income taxes | (21,402 | ) | ||||||
Income tax benefit | — | 8,702 | ||||||
Income from discontinued operations | $ | — | $ | (12,624 | ) | |||
Nine Months Ended September 30, | ||||||||
In thousands | 2014 | 2013 | ||||||
Revenues | $ | — | $ | 140,834 | ||||
Income from discontinued operations before impairment charges and income taxes | — | 2,767 | ||||||
Loss on sale before income taxes | (21,402 | ) | ||||||
Income tax benefit | — | 7,732 | ||||||
Income from discontinued operations | $ | — | $ | (10,903 | ) | |||
The major components of cash flows for the Shoppers discontinued operations are as follows: | ||||||||
Nine Months Ended September 30, | ||||||||
In thousands | 2014 | 2013 | ||||||
Loss from discontinued operations | $ | — | $ | (10,903 | ) | |||
Loss on the sale of discontinued operations | — | 12,355 | ||||||
Impairment of Intangible Assets | — | — | ||||||
Deferred Income Taxes | — | (5,094 | ) | |||||
Depreciation and software amortization | — | 2,592 | ||||||
Intangible asset amortization | — | — | ||||||
Other, net | — | 990 | ||||||
Net cash provided by discontinued operations | $ | — | $ | (60 | ) | |||
LongTerm_Debt_Tables
Long-Term Debt (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
Long-Term Debt | ' | |||||||||||||
Schedule of carrying values and estimated fair values of outstanding debt | ' | |||||||||||||
September 30, | December 31, | |||||||||||||
2014 | 2013 | |||||||||||||
In thousands | Carrying | Fair | Carrying | Fair | ||||||||||
Value | Value | Value | Value | |||||||||||
Total Debt | $ | 87,281 | $ | 87,281 | $ | 98,000 | $ | 98,000 | ||||||
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 9 Months Ended | ||||||
Sep. 30, 2014 | |||||||
Stock-Based Compensation | ' | ||||||
Schedule of shares granted and weighted-average grant-date fair value | ' | ||||||
Number of | Weighted- | ||||||
Shares | Average | ||||||
Grant-Date | |||||||
Fair Value | |||||||
Stock options | 116,210 | $ | 2.21 | ||||
Unvested shares | 55,459 | $ | 6.92 | ||||
Performance stock units | 22,666 | $ | 6.04 | ||||
Components_of_Net_Periodic_Pen1
Components of Net Periodic Pension Benefit Cost (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Components of Net Periodic Pension Benefit Cost | ' | |||||||
Schedule of net pension cost of plans | ' | |||||||
Three Months Ended September 30, | ||||||||
In thousands | 2014 | 2013 | ||||||
Service cost | $ | — | $ | 86 | ||||
Interest cost | 1,916 | 1,809 | ||||||
Expected return on plan assets | (2,109 | ) | (1,846 | ) | ||||
Amortization of prior service cost | — | — | ||||||
Recognized actuarial loss | 892 | 1,672 | ||||||
Net periodic benefit cost | $ | 699 | $ | 1,721 | ||||
Nine Months Ended September 30, | ||||||||
In thousands | 2014 | 2013 | ||||||
Service cost | $ | 100 | $ | 257 | ||||
Interest cost | 5,771 | 5,428 | ||||||
Expected return on plan assets | (6,327 | ) | (5,537 | ) | ||||
Amortization of prior service cost | — | — | ||||||
Recognized actuarial loss | 2,734 | 5,015 | ||||||
Net periodic benefit cost | $ | 2,278 | $ | 5,163 | ||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Earnings Per Share | ' | |||||||
Reconciliation of basic and diluted earnings per share | ' | |||||||
Three Months Ended September 30, | ||||||||
In thousands, except per share amounts | 2014 | 2013 | ||||||
Net Income | ||||||||
Income from continuing operations | $ | 6,420 | $ | 4,451 | ||||
Income from discontinued operations | — | (12,624 | ) | |||||
Net income | $ | 6,420 | $ | (8,173 | ) | |||
Basic EPS | ||||||||
Weighted-average common shares outstanding used in earnings per share computations | 62,398 | 62,538 | ||||||
Basic earnings per share | ||||||||
Continuing operations | $ | 0.1 | $ | 0.07 | ||||
Discontinued operations | 0 | (0.20 | ) | |||||
Net income | $ | 0.1 | $ | (0.13 | ) | |||
Diluted EPS | ||||||||
Shares used in diluted earnings per share computations | 62,585 | 62,994 | ||||||
Diluted earnings per share | ||||||||
Continuing operations | $ | 0.1 | $ | 0.07 | ||||
Discontinued operations | 0 | (0.20 | ) | |||||
Net income | $ | 0.1 | $ | (0.13 | ) | |||
Computation of Shares Used in Earnings Per Share Computations | ||||||||
Weighted-average common shares outstanding | 62,398 | 62,538 | ||||||
Weighted-average common equivalent shares-dilutive effect of stock options and awards | 187 | 456 | ||||||
Shares used in diluted earnings per share computations | 62,585 | 62,994 | ||||||
Nine Months Ended September 30, | ||||||||
In thousands, except per share amounts | 2014 | 2013 | ||||||
Net Income | ||||||||
Income from continuing operations | $ | 13,902 | $ | 17,707 | ||||
Income from discontinued operations | — | (10,903 | ) | |||||
Net income | $ | 13,902 | $ | 6,804 | ||||
Basic EPS | ||||||||
Weighted-average common shares outstanding used in earnings per share computations | 62,606 | 62,485 | ||||||
Basic earnings per share | ||||||||
Continuing operations | $ | 0.22 | $ | 0.28 | ||||
Discontinued operations | 0 | (0.17 | ) | |||||
Net income | $ | 0.22 | $ | 0.11 | ||||
Diluted EPS | ||||||||
Shares used in diluted earnings per share computations | 62,818 | 62,808 | ||||||
Diluted earnings per share | ||||||||
Continuing operations | $ | 0.22 | $ | 0.28 | ||||
Discontinued operations | 0 | (0.17 | ) | |||||
Net income | $ | 0.22 | $ | 0.11 | ||||
Computation of Shares Used in Earnings Per Share Computations | ||||||||
Weighted-average common shares outstanding | 62,606 | 62,485 | ||||||
Weighted-average common equivalent shares-dilutive effect of stock options and awards | 212 | 323 | ||||||
Shares used in diluted earnings per share computations | 62,818 | 62,808 | ||||||
Comprehensive_Income_Tables
Comprehensive Income (Tables) | 9 Months Ended | ||||||||||
Sep. 30, 2014 | |||||||||||
Comprehensive Income | ' | ||||||||||
Schedule of comprehensive income | ' | ||||||||||
Three Months Ended September 30, | |||||||||||
In thousands | 2014 | 2013 | |||||||||
Net income (loss) | $ | 6,420 | $ | (8,173 | ) | ||||||
Other comprehensive income (loss): | |||||||||||
Adjustment to pension liability | 930 | 1,672 | |||||||||
Tax expense | (372 | ) | (669 | ) | |||||||
Adjustment to pension liability, net of tax | 558 | 1,003 | |||||||||
Foreign currency translation adjustment | (1,348 | ) | 1,056 | ||||||||
Total other comprehensive income (loss) | (790 | ) | 2,059 | ||||||||
Total comprehensive income (loss) | $ | 5,630 | $ | (6,114 | ) | ||||||
Nine Months Ended September 30, | |||||||||||
In thousands | 2014 | 2013 | |||||||||
Net income | $ | 13,902 | $ | 6,804 | |||||||
Other comprehensive income (loss): | |||||||||||
Adjustment to pension liability | 2,691 | 5,015 | |||||||||
Tax expense | (1,076 | ) | (2,006 | ) | |||||||
Adjustment to pension liability, net of tax | 1,615 | 3,009 | |||||||||
Foreign currency translation adjustment | (742 | ) | (663 | ) | |||||||
Total other comprehensive income (loss) | 873 | 2,346 | |||||||||
Total comprehensive income | $ | 14,775 | $ | 9,150 | |||||||
Schedule of changes in accumulated other comprehensive income | ' | ||||||||||
In thousands | Defined Benefit | Foreign | Total | ||||||||
Pension Items | Currency | ||||||||||
Items | |||||||||||
Balance at December 31, 2013 | $ | (32,279 | ) | $ | 4,161 | $ | (28,118 | ) | |||
Other comprehensive income, net of tax, before reclassifications | — | (742 | ) | (742 | ) | ||||||
Amounts reclassified from accumulated other comprehensive income, net of tax | 1,615 | — | 1,615 | ||||||||
Net current period other comprehensive income, net of tax | 1,615 | (742 | ) | 873 | |||||||
Balance at September 30, 2014 | $ | (30,664 | ) | $ | 3,419 | $ | (27,245 | ) | |||
In thousands | Defined Benefit | Foreign | Total | ||||||||
Pension Items | Currency | ||||||||||
Items | |||||||||||
Balance at December 31, 2012 | $ | (54,431 | ) | $ | 4,697 | $ | (49,734 | ) | |||
Other comprehensive (loss), net of tax, before reclassifications | — | (663 | ) | (663 | ) | ||||||
Amounts reclassified from accumulated other comprehensive income, net of tax | 3,009 | — | 3,009 | ||||||||
Net current period other comprehensive income (loss), net of tax | 3,009 | (663 | ) | 2,346 | |||||||
Balance at September 30, 2013 | $ | (51,422 | ) | $ | 4,034 | $ | (47,388 | ) | |||
Business_Segments_Tables
Business Segments (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Business Segments | ' | |||||||
Business segment reporting information | ' | |||||||
Three Months Ended September 30, | ||||||||
In thousands | 2014 | 2013 | ||||||
Operating revenues | ||||||||
Customer Interaction | $ | 121,078 | $ | 121,338 | ||||
Trillium Software | 13,043 | 13,635 | ||||||
Total operating revenues | $ | 134,121 | $ | 134,973 | ||||
Operating income | ||||||||
Customer Interaction | $ | 7,601 | $ | 5,559 | ||||
Trillium Software | 3,318 | 3,931 | ||||||
Corporate | (379 | ) | (1,130 | ) | ||||
Total operating income | $ | 10,540 | $ | 8,360 | ||||
Income from continuing operations before income taxes | $ | 10,540 | 8,360 | |||||
Interest expense | 716 | $ | 754 | |||||
Interest income | (75 | ) | (25 | ) | ||||
Other, net | (581 | ) | 536 | |||||
Total income from continuing operations before income taxes | $ | 10,480 | $ | 7,095 | ||||
Nine Months Ended September 30, | ||||||||
In thousands | 2014 | 2013 | ||||||
Operating revenues | ||||||||
Customer Interaction | $ | 367,133 | $ | 367,928 | ||||
Trillium Software | 40,025 | 39,502 | ||||||
Total operating revenues | $ | 407,158 | $ | 407,430 | ||||
Operating income | ||||||||
Customer Interaction | $ | 18,743 | $ | 22,600 | ||||
Trillium Software | 9,662 | 10,969 | ||||||
Corporate | (2,299 | ) | (3,392 | ) | ||||
Total operating income | $ | 26,106 | $ | 30,177 | ||||
Income from continuing operations before income taxes | $ | 26,106 | $ | 30,177 | ||||
Interest expense | 2,153 | 2,336 | ||||||
Interest income | (204 | ) | (76 | ) | ||||
Other, net | 1,228 | (600 | ) | |||||
Total income from continuing operations before income taxes | $ | 22,929 | $ | 28,517 | ||||
Discontinued_Operations_Tables
Discontinued Operations (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Discontinued Operations | ' | |||||||
Summary of operating results for the Shoppers discontinued operations | ' | |||||||
Three Months Ended September 30, | ||||||||
In thousands | 2014 | 2013 | ||||||
Revenues | $ | — | $ | 46,703 | ||||
Income from discontinued operations before impairment charges and income taxes | — | 76 | ||||||
Loss on sale before income taxes | (21,402 | ) | ||||||
Income tax benefit | — | 8,702 | ||||||
Income from discontinued operations | $ | — | $ | (12,624 | ) | |||
Nine Months Ended September 30, | ||||||||
In thousands | 2014 | 2013 | ||||||
Revenues | $ | — | $ | 140,834 | ||||
Income from discontinued operations before impairment charges and income taxes | — | 2,767 | ||||||
Loss on sale before income taxes | (21,402 | ) | ||||||
Income tax benefit | — | 7,732 | ||||||
Income from discontinued operations | $ | — | $ | (10,903 | ) | |||
Summary of major components of cash flows for the Shoppers discontinued operations | ' | |||||||
Nine Months Ended September 30, | ||||||||
In thousands | 2014 | 2013 | ||||||
Loss from discontinued operations | $ | — | $ | (10,903 | ) | |||
Loss on the sale of discontinued operations | — | 12,355 | ||||||
Impairment of Intangible Assets | — | — | ||||||
Deferred Income Taxes | — | (5,094 | ) | |||||
Depreciation and software amortization | — | 2,592 | ||||||
Intangible asset amortization | — | — | ||||||
Other, net | — | 990 | ||||||
Net cash provided by discontinued operations | $ | — | $ | (60 | ) | |||
Goodwill_Details
Goodwill (Details) (USD $) | 3 Months Ended | ||
Sep. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | |
segment | segment | ||
Goodwill | ' | ' | ' |
Goodwill | $398,164,000 | ' | $398,164,000 |
Number of operating segments | 2 | 2 | ' |
Impairment charges related to goodwill | $0 | ' | ' |
LongTerm_Debt_Details
Long-Term Debt (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Reported Value Measurement | ' | ' |
Carrying values and estimated fair values of outstanding debt | ' | ' |
Total debt | $87,281 | $98,000 |
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 2 | ' | ' |
Carrying values and estimated fair values of outstanding debt | ' | ' |
Total debt | $87,281 | $98,000 |
StockBased_Compensation_Detail
Stock-Based Compensation (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Stock-Based Compensation | ' | ' | ' | ' |
Stock-based compensation expense | $1 | $1.20 | $3.30 | $4.40 |
Employee Non Employee Stock Option | ' | ' | ' | ' |
Stock-Based Compensation | ' | ' | ' | ' |
Number of Shares Granted | 116,210 | ' | ' | ' |
Weighted-Average Grant-Date Fair Value (in dollars per share) | $2.21 | ' | ' | ' |
Non Vested Shares | ' | ' | ' | ' |
Stock-Based Compensation | ' | ' | ' | ' |
Number of Shares Granted | 55,459 | ' | ' | ' |
Weighted-Average Grant-Date Fair Value (in dollars per share) | $6.92 | ' | ' | ' |
Performance Shares | ' | ' | ' | ' |
Stock-Based Compensation | ' | ' | ' | ' |
Number of Shares Granted | 22,666 | ' | ' | ' |
Weighted-Average Grant-Date Fair Value (in dollars per share) | $6.04 | ' | ' | ' |
Components_of_Net_Periodic_Pen2
Components of Net Periodic Pension Benefit Cost (Details) (USD $) | 9 Months Ended | 0 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2014 | Apr. 01, 2014 | Sep. 30, 2014 |
Funded Frozen Pension Plan | Unfunded Supplemental Pension Plan | Unfunded Supplemental Pension Plan | |
Defined Benefit Plan Disclosure | ' | ' | ' |
Contributions made | $4.40 | ' | ' |
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 | ' | $1.20 | ' |
Components_of_Net_Periodic_Pen3
Components of Net Periodic Pension Benefit Cost (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Net pension cost of plans | ' | ' | ' | ' |
Service cost | ' | $86 | $100 | $257 |
Interest cost | 1,916 | 1,809 | 5,771 | 5,428 |
Expected return on plan assets | -2,109 | -1,846 | -6,327 | -5,537 |
Recognized actuarial loss | 892 | 1,672 | 2,734 | 5,015 |
Net periodic benefit cost | $699 | $1,721 | $2,278 | $5,163 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Income Taxes | ' | ' | ' | ' |
Income tax expense | $4,060 | $2,644 | $9,027 | $10,810 |
Effective income tax rate (as a percent) | 38.70% | 37.30% | 39.40% | 37.90% |
Federal statutory rate (as a percent) | ' | ' | 35.00% | 35.00% |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Net Income | ' | ' | ' | ' | ' |
Income from continuing operations | $6,420 | $4,451 | $13,902 | $17,707 | ' |
Income from discontinued operations | ' | -12,624 | ' | -10,903 | ' |
Net income (loss) | $6,420 | ($8,173) | $13,902 | $6,804 | $13,370 |
Basic EPS | ' | ' | ' | ' | ' |
Weighted-average common shares outstanding used in earnings per share computations | 62,398 | 62,538 | 62,606 | 62,485 | ' |
Continuing operations (in dollars per share) | $0.10 | $0.07 | $0.22 | $0.28 | ' |
Discontinued operations (in dollars per share) | $0 | ($0.20) | $0 | ($0.17) | ' |
Basic earnings (loss) per common share (in dollars per share) | $0.10 | ($0.13) | $0.22 | $0.11 | ' |
Diluted EPS | ' | ' | ' | ' | ' |
Shares used in diluted earnings per share computations | 62,585 | 62,994 | 62,818 | 62,808 | ' |
Continuing operations (in dollars per share) | $0.10 | $0.07 | $0.22 | $0.28 | ' |
Discontinued operations (in dollars per share) | $0 | ($0.20) | $0 | ($0.17) | ' |
Diluted earnings (loss) per common share (in dollars per share) | $0.10 | ($0.13) | $0.22 | $0.11 | ' |
Computation of Shares Used in Earnings Per Share Computations | ' | ' | ' | ' | ' |
Weighted-average common shares outstanding (in shares) | 62,398 | 62,538 | 62,606 | 62,485 | ' |
Weighted-average common equivalent shares - dilutive effect of stock options and awards | 187 | 456 | 212 | 323 | ' |
Shares used in diluted earnings per share computations | 62,585 | 62,994 | 62,818 | 62,808 | ' |
Earnings_Per_Share_Details_2
Earnings Per Share (Details 2) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Employee Non Employee Stock Option | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award | ' | ' | ' | ' |
Anti-dilutive shares excluded from the EPS calculations | 4.2 | 4.1 | 4.1 | 4.3 |
Non Vested Stock | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award | ' | ' | ' | ' |
Anti-dilutive shares excluded from the EPS calculations | 0.5 | 0 | ' | ' |
Comprehensive_Income_Details
Comprehensive Income (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Comprehensive Income | ' | ' | ' | ' | ' |
Net income (loss) | $6,420 | ($8,173) | $13,902 | $6,804 | $13,370 |
Other comprehensive income (loss): | ' | ' | ' | ' | ' |
Adjustment to pension liability | 930 | 1,672 | 2,691 | 5,015 | ' |
Tax expense | -372 | -669 | -1,076 | -2,006 | ' |
Adjustment to pension liability, net of tax | 558 | 1,003 | 1,615 | 3,009 | ' |
Foreign currency translation adjustments | -1,348 | 1,056 | -742 | -663 | ' |
Total other comprehensive income (loss), net of tax | -790 | 2,059 | 873 | 2,346 | ' |
Comprehensive income (loss) | 5,630 | -6,114 | 14,775 | 9,150 | ' |
Accumulated other comprehensive income | ' | ' | ' | ' | ' |
Balance at beginning of period | ' | ' | -28,118 | -49,734 | -49,734 |
Other comprehensive income, net of tax, before reclassifications | ' | ' | -742 | -663 | ' |
Amounts reclassified from accumulated other comprehensive income, net of tax | ' | ' | 1,615 | 3,009 | ' |
Net current period other comprehensive income (loss), net of tax | ' | ' | 873 | 2,346 | 21,616 |
Balance at end of period | -27,245 | -47,388 | -27,245 | -47,388 | -28,118 |
Accumulated Defined Benefit Plans Adjustment | ' | ' | ' | ' | ' |
Accumulated other comprehensive income | ' | ' | ' | ' | ' |
Balance at beginning of period | ' | ' | -32,279 | -54,431 | -54,431 |
Amounts reclassified from accumulated other comprehensive income, net of tax | ' | ' | 1,615 | 3,009 | ' |
Net current period other comprehensive income (loss), net of tax | ' | ' | 1,615 | 3,009 | ' |
Balance at end of period | -30,664 | -51,422 | -30,664 | -51,422 | ' |
Accumulated Translation Adjustment | ' | ' | ' | ' | ' |
Accumulated other comprehensive income | ' | ' | ' | ' | ' |
Balance at beginning of period | ' | ' | 4,161 | 4,697 | 4,697 |
Other comprehensive income, net of tax, before reclassifications | ' | ' | -742 | -663 | ' |
Net current period other comprehensive income (loss), net of tax | ' | ' | -742 | -663 | ' |
Balance at end of period | $3,419 | $4,034 | $3,419 | $4,034 | ' |
Litigation_Contingencies_Detai
Litigation Contingencies (Details) (USD $) | Sep. 30, 2014 |
Litigation Contingencies | ' |
Litigation liability | $0 |
Business_Segments_Details
Business Segments (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
segment | segment | ||||
Business Segments | ' | ' | ' | ' | ' |
Number of operating segments | 2 | 2 | ' | ' | ' |
Number of reportable segments | 2 | ' | ' | ' | ' |
Business segments, information about operations | ' | ' | ' | ' | ' |
Impairment of other intangible assets | ' | ' | $2,750 | ' | $2,750 |
Operating revenues | 134,121 | ' | 134,973 | 407,158 | 407,430 |
Operating income | 10,540 | ' | 8,360 | 26,106 | 30,177 |
Interest expense | 716 | ' | 754 | 2,153 | 2,336 |
Interest income | -75 | ' | -25 | -204 | -76 |
Other, net | -581 | ' | 536 | 1,228 | -600 |
Income from continuing operations before income taxes | 10,480 | ' | 7,095 | 22,929 | 28,517 |
Operating Segments | Customer Interaction | ' | ' | ' | ' | ' |
Business segments, information about operations | ' | ' | ' | ' | ' |
Operating revenues | 121,078 | ' | 121,338 | 367,133 | 367,928 |
Operating income | 7,601 | ' | 5,559 | 18,743 | 22,600 |
Operating Segments | Customer Interaction | Aberdeen Business | ' | ' | ' | ' | ' |
Business segments, information about operations | ' | ' | ' | ' | ' |
Impairment of other intangible assets | ' | ' | 2,800 | ' | 2,800 |
Operating Segments | Trillium Software | ' | ' | ' | ' | ' |
Business segments, information about operations | ' | ' | ' | ' | ' |
Operating revenues | 13,043 | ' | 13,635 | 40,025 | 39,502 |
Operating income | 3,318 | ' | 3,931 | 9,662 | 10,969 |
Corporate, Non-Segment | ' | ' | ' | ' | ' |
Business segments, information about operations | ' | ' | ' | ' | ' |
Operating income | ($379) | ' | ($1,130) | ($2,299) | ($3,392) |
Discontinued_Operations_Detail
Discontinued Operations (Details) (USD $) | 3 Months Ended | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2013 |
Summarized operating results for the Shoppers discontinued operations | ' | ' |
Loss on sale before income taxes | ' | ($12,355) |
Income (loss) from discontinued operations | -12,624 | -10,903 |
Major components of cash flows for the Shoppers discontinued operations | ' | ' |
Loss from discontinued operations, net of income taxes | -12,624 | -10,903 |
Net cash provided by (used in) discontinued operations | ' | -60 |
Shoppers | ' | ' |
Summarized operating results for the Shoppers discontinued operations | ' | ' |
Revenues | 46,703 | 140,834 |
Income from discontinued operations before impairment charges and income taxes | 76 | 2,767 |
Loss on sale before income taxes | -21,402 | -21,402 |
Income tax benefit | 8,702 | 7,732 |
Income (loss) from discontinued operations | -12,624 | -10,903 |
Major components of cash flows for the Shoppers discontinued operations | ' | ' |
Loss from discontinued operations, net of income taxes | -12,624 | -10,903 |
Loss on sale of discontinued operations | ' | 12,355 |
Deferred Income Taxes | ' | -5,094 |
Depreciation and software amortization | ' | 2,592 |
Other, net | ' | 990 |
Net cash provided by (used in) discontinued operations | ' | ($60) |