-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BYLSdU1ndFSyFuMfTlxTcXpIgVhMSJ7aH3H/pu4QOE4OXLs6EqtOfw/O61CnlWW4 M+jzP3/2FQ/gtAXIBNml0Q== /in/edgar/work/0000950134-00-009682/0000950134-00-009682.txt : 20001115 0000950134-00-009682.hdr.sgml : 20001115 ACCESSION NUMBER: 0000950134-00-009682 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARTE HANKS INC CENTRAL INDEX KEY: 0000045919 STANDARD INDUSTRIAL CLASSIFICATION: [2741 ] IRS NUMBER: 741677284 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07120 FILM NUMBER: 764248 BUSINESS ADDRESS: STREET 1: 200 CONCORD PLAZA DR STE 800 CITY: SAN ANTONIO STATE: TX ZIP: 78216 BUSINESS PHONE: 2108299000 FORMER COMPANY: FORMER CONFORMED NAME: HARTE HANKS COMMUNICATIONS INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: HARTE HANKS NEWSPAPERS INC DATE OF NAME CHANGE: 19771010 10-Q 1 d81846e10-q.txt FORM 10-Q FOR QUARTER ENDED SEPTEMBER 30, 2000 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2000 ------------------ [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from __________ to __________ Commission File Number 1-7120 ------ HARTE-HANKS, INC. ----------------- (Exact name of registrant as specified in its charter) Delaware 74-1677284 ------------------------------- --------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 200 Concord Plaza Drive, San Antonio, Texas 78216 ------------------------------------------------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code -- 210/829-9000 ------------ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock: $1 par value, 67,160,214 shares as of October 31, 2000. 2 2 HARTE-HANKS, INC. AND SUBSIDIARIES TABLE OF CONTENTS FORM 10-Q REPORT September 30, 2000
Page Part I. Financial Information Item 1. Interim Condensed Consolidated Financial Statements (Unaudited) Condensed Consolidated Balance Sheets - 3 September 30, 2000 and December 31, 1999 Consolidated Statements of Operations - 4 Three months ended September 30, 2000 and 1999 Consolidated Statements of Operations - 5 Nine months ended September 30, 2000 and 1999 Consolidated Statements of Cash Flows - 6 Nine months ended September 30, 2000 and 1999 Consolidated Statements of Stockholders' Equity - 7 Nine months ended September 30, 2000 and 1999 Notes to Interim Condensed Consolidated Financial 8 Statements Item 2. Management's Discussion and Analysis of Financial 11 Condition and Results of Operations Part II. Other Information Item 6. Exhibits and Reports on Form 8-K 16 (a) Exhibits (b) Reports on Form 8-K Signature 17
3 3 Harte-Hanks, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in thousands, except share amounts) - -------------------------------------------------------------------------- (Unaudited)
September 30, December 31, 2000 1999 ------------ ------------ Assets Current assets Cash and cash equivalents ....................... $ 40,585 $ 35,196 Accounts receivable, net ........................ 162,283 154,030 Inventory ....................................... 6,262 7,099 Prepaid expenses ................................ 12,535 12,651 Current deferred income tax asset ............... 7,408 6,848 Other current assets ............................ 4,723 4,309 ------------ ------------ Total current assets .......................... 233,796 220,133 Property, plant and equipment, net .................. 110,553 106,250 Goodwill, net ....................................... 408,320 409,791 Other assets ........................................ 20,707 33,253 ------------ ------------ Total assets .................................. $ 773,376 $ 769,427 ============ ============ Liabilities and Stockholders' Equity Current liabilities Accounts payable ................................ $ 45,105 $ 64,812 Accrued payroll and related expenses ............ 27,515 25,511 Customer deposits and unearned revenue .......... 38,074 35,622 Income taxes payable ............................ 8,803 13,667 Other current liabilities ....................... 20,018 14,405 ------------ ------------ Total current liabilities ..................... 139,515 154,017 Long-term debt ...................................... 3,288 5,000 Other long-term liabilities ......................... 39,025 32,792 ------------ ------------ Total liabilities ............................. 181,828 191,809 ------------ ------------ Stockholders' equity Common stock, $1 par value, 250,000,000 shares authorized. 76,761,490 and 76,392,063 shares issued at September 30, 2000 and December 31, 1999, respectively .............................. 76,761 76,392 Additional paid-in capital ........................ 202,001 197,454 Accumulated other comprehensive income (loss) ..... (500) 12,316 Retained earnings ................................. 548,544 493,362 ------------ ------------ 826,806 779,524 Less treasury stock: 9,616,389 and 8,285,966 shares at cost at September 30, 2000 and December 31, 1999, respectively ................. (235,258) (201,906) ------------ ------------ Total stockholders' equity ...................... 591,548 577,618 ------------ ------------ Total liabilities and stockholders' equity ...... $ 773,376 $ 769,427 ============ ============
See Notes to Interim Condensed Consolidated Financial Statements. 4 4 Harte-Hanks, Inc. and Subsidiaries Consolidated Statements of Operations (in thousands, except per share amounts) - -------------------------------------------------------------------------------- (Unaudited)
Three Months Ended September 30, -------------------------------- 2000 1999 --------- --------- Operating revenues ..................................... $ 243,205 $ 207,632 --------- --------- Operating expenses Payroll ........................................... 86,852 74,677 Production and distribution ....................... 86,047 75,336 Advertising, selling, general and administrative .. 23,676 18,681 Depreciation ...................................... 7,394 6,097 Goodwill and intangible amortization .............. 3,836 2,578 --------- --------- 207,805 177,369 --------- --------- Operating income ....................................... 35,400 30,263 --------- --------- Other expenses (income) Interest expense .................................. 275 67 Interest income ................................... (619) (1,554) Other, net ........................................ 312 280 --------- --------- (32) (1,207) --------- --------- Income before income taxes ............................. 35,432 31,470 Income tax expense ..................................... 14,300 12,867 --------- --------- Net income ............................................. $ 21,132 $ 18,603 ========= ========= Basic: Earnings per common share ......................... $ 0.31 $ 0.27 ========= ========= Weighted-average common shares outstanding ........ 67,519 69,487 ========= ========= Diluted: Earnings per common share ......................... $ 0.30 $ 0.26 ========= ========= Weighted-average common and common equivalent shares outstanding .............................. 69,782 71,715 ========= =========
See Notes to Interim Condensed Consolidated Financial Statements. 5 5 Harte-Hanks, Inc. and Subsidiaries Consolidated Statements of Operations (in thousands, except per share amounts) - ------------------------------------------------------------------------------ (Unaudited)
Nine months ended September 30, ------------------------------- 2000 1999 --------- --------- Operating revenues ..................................... $ 704,955 $ 592,793 --------- --------- Operating expenses Payroll ........................................... 260,151 216,045 Production and distribution ....................... 242,761 217,521 Advertising, selling, general and administrative .. 68,523 49,675 Depreciation ...................................... 21,050 17,362 Goodwill and intangible amortization .............. 11,073 7,385 --------- --------- 603,558 507,988 --------- --------- Operating income ....................................... 101,397 84,805 --------- --------- Other expenses (income) Interest expense .................................. 749 157 Interest income ................................... (1,644) (5,403) Other, net ........................................ 1,125 637 --------- --------- 230 (4,609) --------- --------- Income before income taxes ............................. 101,167 89,414 Income tax expense ..................................... 40,886 36,709 --------- --------- Net income ............................................. $ 60,281 $ 52,705 ========= ========= Basic: Earnings per common share ......................... $ 0.89 $ 0.75 ========= ========= Weighted-average common shares outstanding ........ 68,043 70,400 ========= ========= Diluted: Earnings per common share ......................... $ 0.86 $ 0.73 ========= ========= Weighted-average common and common equivalent shares outstanding .............................. 70,192 72,700 ========= =========
See Notes to Interim Condensed Consolidated Financial Statements. 6 6 Harte-Hanks, Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands) - -------------------------------------------------------------------------------- (Unaudited)
Nine months ended September 30, ------------------------------- 2000 1999 --------- --------- Operating Activities Net income ......................................................... $ 60,281 $ 52,705 Adjustments to reconcile net income to cash provided by operating activities: Depreciation .................................................. 21,050 17,362 Goodwill and intangible amortization .......................... 11,073 7,385 Amortization of option-related compensation ................... 418 494 Deferred income taxes ......................................... 3,878 7,220 Other, net .................................................... 961 224 Changes in operating assets and liabilities, net of acquisitions: Increase in accounts receivable, net .......................... (6,220) (3,274) Decrease in inventory ......................................... 837 739 Increase in prepaid expenses and other current assets ........................................... (246) (5,762) Increase (decrease) in accounts payable ....................... (12,874) 4,237 Increase in other accrued expenses and other liabilities .................................... 2,524 8,266 Other, net .................................................... (5,406) (2,095) --------- --------- Net cash provided by operating activities ................ 76,276 87,501 --------- --------- Investing Activities Acquisitions ....................................................... (9,207) (36,051) Purchases of property, plant and equipment ......................... (26,125) (21,065) Proceeds from sale of property, plant and equipment ................ 144 488 Net sales and maturities of available-for-sale investments ................................ 88 136,479 Other .............................................................. -- (3,000) --------- --------- Net cash provided by (used in) investing activities ............................................. (35,100) 76,851 --------- --------- Financing Activities Long-term borrowings ............................................... 3,288 -- Repayment of long-term borrowings .................................. (5,000) -- Issuance of common stock ........................................... 4,369 5,916 Purchase of treasury stock ......................................... (33,406) (72,473) Issuance of treasury stock ......................................... 61 66 Dividends paid ..................................................... (5,099) (4,210) --------- --------- Net cash used in financing activities ............................................. (35,787) (70,701) --------- --------- Net increase in cash ............................................... 5,389 93,651 Cash and cash equivalents at beginning of year ..................... 35,196 30,367 --------- --------- Cash and cash equivalents at end of period ......................... $ 40,585 $ 124,018 ========= =========
See Notes to Interim Condensed Consolidated Financial Statements. 7 7 Harte-Hanks, Inc. and Subsidiaries Consolidated Statements of Stockholders' Equity (in thousands) - -------------------------------------------------------------------------------- (Unaudited)
Additional Other Total Common Paid-In Retained Treasury Comprehensive Stockholders' In thousands Stock Capital Earnings Stock Income Equity - ------------ ---------- ----------- ---------- ---------- ------------- ------------- Balance at January 1, 1999 ..... $ 75,789 $ 189,698 $ 425,999 $ (114,395) $ -- $ 577,091 Common stock issued- employee benefit plans ...... 148 3,121 -- -- -- 3,269 Exercise of stock options ...... 379 2,268 -- -- -- 2,647 Tax benefit of options exercised ................... -- 1,468 -- -- -- 1,468 Dividends paid ($0.06 per share) ...................... -- -- (4,210) -- -- (4,210) Treasury stock repurchase ...... -- -- -- (72,473) -- (72,473) Treasury stock issued .......... -- 20 -- 46 -- 66 Comprehensive income, net of tax: Net income .................. -- -- 52,705 -- -- 52,705 ---------- Total comprehensive income ..... 52,705 ---------- ---------- ---------- ---------- ---------- ---------- Balance at September 30, 1999 .. $ 76,316 $ 196,575 $ 474,494 $ (186,822) $ -- $ 560,563 ========== ========== ========== ========== ========== ========== Balance at January 1, 2000 ..... $ 76,392 $ 197,454 $ 493,362 $ (201,906) $ 12,316 $ 577,618 Common stock issued- employee benefit plans ...... 142 2,832 -- -- -- 2,974 Exercise of stock options ...... 227 1,168 -- -- -- 1,395 Tax benefit of options exercised ................... -- 540 -- -- -- 540 Dividends paid ($0.075 per share) ...................... -- -- (5,099) -- -- (5,099) Treasury stock repurchase ...... -- -- -- (33,406) -- (33,406) Treasury stock issued .......... -- 7 -- 54 -- 61 Comprehensive income, net of tax: Net income .................. -- -- 60,281 -- -- 60,281 Foreign currency translation adjustment ... -- -- -- -- (1,512) (1,512) Change in net unrealized gain (loss) on long- term investments (net of tax of $6,087) ........ -- -- -- -- (11,304) (11,304) ---------- Total comprehensive income ..... 47,465 ---------- ---------- ---------- ---------- ---------- ---------- Balance at September 30, 2000 .. $ 76,761 $ 202,001 $ 548,544 $ (235,258) $ (500) $ 591,548 ========== ========== ========== ========== ========== ==========
See Notes to Interim Condensed Consolidated Financial Statements. 8 8 Harte-Hanks, Inc. and Subsidiaries Notes to Interim Condensed Consolidated Financial Statements (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited Interim Condensed Consolidated Financial Statements include the accounts of Harte-Hanks, Inc. and subsidiaries (the "Company"). The statements have been prepared in accordance with generally accepted accounting principles 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 generally accepted accounting principles 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, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31. For further information, refer to the consolidated financial statements and footnotes included in the Company's annual report on Form 10-K for the year ended December 31, 1999. Certain prior period amounts have been reclassified for comparative purposes. NOTE B - INCOME TAXES The Company's quarterly and nine month income tax provision of $14.3 million and $40.9 million, respectively, was calculated using an effective income tax rate of approximately 40.4%. The Company's effective income tax rate is derived by estimating pretax income and income tax expense for the year ending December 31, 2000. The effective income tax rate calculated is higher than the federal statutory rate of 35% due to the addition of state taxes and to certain expenses recorded for financial reporting purposes (primarily goodwill amortization) which are not deductible for federal income tax purposes. NOTE C - EARNINGS PER SHARE A reconciliation of basic and diluted earnings per share is as follows:
Three Months Ended September 30, ------------------ In thousands, except per share amount 2000 1999 ------- ------- BASIC EPS Net Income ...................................................... $21,132 $18,603 ======= ======= Weighted-average common shares outstanding used in earnings per share computations ....................... 67,519 69,487 ======= ======= Earnings per common share ....................................... $ 0.31 $ 0.27 ======= ======= DILUTED EPS Net Income ...................................................... $21,132 $18,603 ======= ======= Shares used in earnings per share computations .................. 69,782 71,715 ======= ======= Earnings per common share ....................................... $ 0.30 $ 0.26 ======= ======= Computation of shares used in earnings per share computations: Average outstanding common shares ............................... 67,519 69,487 Average common equivalent shares - dilutive effect of option shares .............................. 2,263 2,228 ------- ------- Shares used in earnings per share computations .................. 69,782 71,715 ======= =======
9 9
Nine Months Ended September 30, ------------------ In thousands, except per share amount 2000 1999 - ------------------------------------- ------- ------- BASIC EPS Net Income ...................................................... $60,281 $52,705 ======= ======= Weighted-average common shares outstanding used in earnings per share computations ....................... 68,043 70,400 ======= ======= Earnings per common share ....................................... $ 0.89 $ 0.75 ======= ======= DILUTED EPS Net Income ...................................................... $60,281 $52,705 ======= ======= Shares used in earnings per share computations .................. 70,192 72,700 ======= ======= Earnings per common share ....................................... $ 0.86 $ 0.73 ======= ======= Computation of shares used in earnings per share computations: Average outstanding common shares ............................... 68,043 70,400 Average common equivalent shares - dilutive effect of option shares .............................. 2,149 2,300 ------- ------- Shares used in earnings per share computations .................. 70,192 72,700 ======= =======
NOTE D - BUSINESS SEGMENTS Harte-Hanks is a highly focused targeted media company with operations in two segments - direct and interactive marketing and shoppers. Information about the Company's operations in different industry segments:
Three Months Ended September 30, ----------------------- In thousands 2000 1999 - ------------ --------- --------- Operating revenues Direct Marketing ....................... $ 165,608 $ 137,639 Shoppers ............................... 77,597 69,993 --------- --------- Total operating revenues ........... $ 243,205 $ 207,632 ========= ========= Operating income Direct Marketing ....................... $ 21,544 $ 18,898 Shoppers ............................... 15,603 13,223 Corporate Activities ................... (1,747) (1,858) --------- --------- Total operating income ............. $ 35,400 $ 30,263 ========= ========= Income before income taxes Operating income ....................... $ 35,400 $ 30,263 Interest expense ....................... (275) (67) Interest income ........................ 619 1,554 Other, net ............................. (312) (280) --------- --------- Total income before income taxes ... $ 35,432 $ 31,470 ========= =========
10 10
Nine months ended September 30, ----------------------- In thousands 2000 1999 - ------------ --------- --------- Operating revenues Direct Marketing ....................... $ 481,150 $ 391,588 Shoppers ............................... 223,805 201,235 --------- --------- Total operating revenues ........... $ 704,955 $ 592,793 ========= ========= Operating income Direct Marketing ....................... $ 65,094 $ 54,706 Shoppers ............................... 42,549 35,766 Corporate Activities ................... (6,246) (5,667) --------- --------- Total operating income ............. $ 101,397 $ 84,805 ========= ========= Income before income taxes Operating income ....................... $ 101,397 $ 84,805 Interest expense ....................... (749) (157) Interest income ........................ 1,644 5,403 Other, net ............................. (1,125) (637) --------- --------- Total income before income taxes ... $ 101,167 $ 89,414 ========= =========
NOTE E - COMPREHENSIVE INCOME The Company's total comprehensive income for the third quarter 2000 was $4.0 million less than net income, whereas comprehensive income for the third quarter 1999 was equal to net income. The majority of the difference in the third quarter of 2000 was attributable to changes in the fair market value of available-for-sale investments. 11 11 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - -------------------------------------------------------------------------------- RESULTS OF OPERATIONS Operating results were as follows:
THREE MONTHS ENDED NINE MONTHS ENDED In thousands SEPT. 30, 2000 SEPT. 30, 1999 CHANGE SEPT. 30, 2000 SEPT. 30, 1999 CHANGE - ------------ -------------- -------------- ------ -------------- -------------- ------ Revenues $ 243,205 $ 207,632 17.1% $ 704,955 $ 592,793 18.9% Operating expenses 207,805 177,369 17.2% 603,558 507,988 18.8% ----------- ---------- ----------- ---------- Operating income $ 35,400 $ 30,263 17.0% $ 101,397 $ 84,805 19.6% =========== ========== =========== ========== Net income $ 21,132 $ 18,603 13.6% $ 60,281 $ 52,705 14.4% =========== ========== =========== ========== Diluted earnings per share $ 0.30 $ 0.26 15.4% $ 0.86 $ 0.73 17.8% =========== ========== =========== ==========
Consolidated revenues grew 17.1% to $243.2 million and operating income grew 17.0% to $35.4 million in the third quarter of 2000 when compared to the third quarter of 1999. The Company's overall growth resulted from acquisitions, increased business with both new and existing customers and from the sale of new products and services. Overall operating expenses compared to 1999 increased 17.2% to $207.8 million. Net income grew 13.6% to $21.1 million, or 30 cents per share, compared to 26 cents per share on a diluted basis. The net income growth resulted from the growth in operating income, partially offset by a decrease of $0.9 million in interest income. DIRECT MARKETING Direct and interactive marketing operating results were as follows:
THREE MONTHS ENDED NINE MONTHS ENDED In thousands SEPT. 30, 2000 SEPT. 30, 1999 CHANGE SEPT. 30, 2000 SEPT. 30, 1999 CHANGE - ------------ -------------- -------------- ------ -------------- -------------- ------ Revenues $ 165,608 $ 137,639 20.3% $ 481,150 $ 391,558 22.9% Operating expenses 144,064 118,741 21.3% 416,056 336,852 23.5% ----------- ---------- ----------- ---------- Operating income $ 21,544 $ 18,898 14.0% $ 65,094 $ 54,706 19.0% =========== ========== =========== ==========
Direct and interactive marketing revenues increased $28.0 million, or 20.3%, in the third quarter of 2000 compared to 1999. Revenue increases were lead by Customer Relationship Management (CRM) which had strong growth for the quarter. CRM revenues increased due to increased business with existing customers and new customer gains. CRM increases were also influenced by the October 1999 acquisition of ZD Market Intelligence, renamed Harte-Hanks Market Intelligence. The traditional growth oriented business-to-business activities of CRM experienced significant growth for the quarter compared to 1999. The high-technology, mutual fund and healthcare industry sectors contributed significantly to overall CRM revenue growth, offsetting continued slowdowns in the insurance industry. Marketing services experienced increased revenues from the banking, automotive and mutual fund industry sectors, offset by a slowdown in the retail industry sector. Fourth quarter results could be affected by continued softness in the retail industry, the largest industry sector served by direct and interactive marketing. Operating expenses increased $25.3 million, or 21.3%, in the third quarter of 2000 compared to 1999. Payroll costs increased $11.2 million due to expanded hiring to support future revenue growth. Also contributing to the increased operating expenses were additional production costs of $7.0 million due to 12 12 increased volumes. General and administrative expense increased $4.2 million due to increased employee expenses and professional and business services fees. Depreciation and amortization expense increased $2.5 million due to goodwill associated with acquisitions and higher levels of capital investment to support growth. Operating expenses were also impacted by the acquisitions noted above. Direct and interactive marketing revenues increased $89.6 million, or 22.9%, in the first nine months of 2000 compared to the first nine months of 1999. Both CRM and marketing services experienced strong revenue growth in the first nine months of 2000. Overall, revenue growth resulted from increased business with both new and existing customers, particularly customers in the high-technology, mutual fund and non-bank finance industries, and the acquisition noted above. Operating expenses rose $79.2 million, or 23.5%, in the first nine months of 2000 compared to the first nine months of 1999. Payroll costs increased $38.5 million due to expanded hiring to support revenue growth. In addition, production costs increased $18.1 million due to increased volumes. General and administrative expense increased $14.6 million primarily due to increased employee expenses and professional and business services fees. Depreciation and amortization expense increased $7.2 million due to goodwill associated with acquisitions and higher levels of capital investment to support growth. The acquisition mentioned above also contributed to the increased operating expenses. SHOPPERS Shopper operating results were as follows:
THREE MONTHS ENDED NINE MONTHS ENDED In thousands SEPT. 30, 2000 SEPT. 30, 1999 CHANGE SEPT. 30, 2000 SEPT. 30, 1999 CHANGE - ------------ -------------- -------------- ------ -------------- -------------- ------ Revenues $ 77,597 $ 69,993 10.9% $ 223,805 $ 201,235 11.2% Operating expenses 61,994 56,770 9.2% 181,256 165,469 9.5% ----------- ---------- ----------- ---------- Operating income $ 15,603 $ 13,223 18.0% $ 42,549 $ 35,766 19.0% =========== ========== =========== ==========
Shopper revenues increased $7.6 million, or 10.9%, in the third quarter of 2000 compared to 1999. Revenue increases were the result of improved sales in established markets as well as new year-over-year geographic expansions into new neighborhoods in both California and Florida. From a product-line perspective, Shoppers had growth in both its in-book products, primarily core sales and employment and automotive related advertising, and its distribution products, primarily preprinted inserts and 4-color glossy heatset flyers. Shoppers also experienced continued success in up-selling ads onto its web-site. In the quarter, Shoppers experienced softness in its real-estate and personals advertising sectors. Operating expenses increased $5.2 million, or 9.2%, in the third quarter of 2000 compared to 1999. The increase in operating expenses was primarily due to increases in payroll costs of $1.4 million, increases in postage of $1.8 million due to increased volumes, and increases in paper costs of $1.0 million due to increased volumes and rate increases in newsprint and job paper. Shopper revenues increased $22.6 million, or 11.2%, in the first nine months of 2000 compared to the first nine months of 1999. Revenue increases were the result of improved sales in established markets as well as new year-over-year geographic expansions into new neighborhoods in both California and Florida. From a product-line perspective, Shoppers had growth in both its in-book products, primarily employment and automotive related advertising and core sales, and its distribution products, primarily 4-color glossy heatset flyers and pre-printed inserts. Shoppers also experienced growth from up-selling ads 13 13 onto its web-site. In the first nine months of 2000, Shoppers experienced slowdowns in its real-estate and personals advertising sectors. Operating expenses increased $15.8 million, or 9.5%, in the first nine months of 2000 compared to the first nine months of 1999. The increase in operating expenses was primarily due to increases in payroll costs of $5.5 million, increases in postage of $3.9 million due to increased volumes, and increases in paper costs of $1.6 due to increased volumes and paper rates. Other Income and Expense The Company realized a loss of approximately $1.0 million in the first nine months of 2000 on the disposal of certain fixed assets. In addition, the Company wrote off approximately $0.4 million of other assets in the first nine months of 2000. These expenses were partially offset by a $0.4 million gain in the third quarter of 2000 on the sale of equity securities that were held in its investment portfolio. Interest Expense/Interest Income Interest income decreased $0.9 million in the third quarter of 2000 and $3.8 million in the first nine months of 2000 when compared to the same periods in 1999. The decrease in the first nine months of 2000 when compared to the same period in 1999 was due to larger cash and investment balances in the first nine months of 1999. The Company sold substantially all of its short-term investments throughout 1999 in order to fund acquisitions and repurchase the Company's stock. Income Taxes The Company's income tax expense increased $1.4 million in the third quarter of 2000 and $4.2 million in the first nine months of 2000 compared to the same periods in 1999. This increase was due primarily to the higher pre-tax income levels. The effective tax rate was 40.4% for the third quarter and the first nine months of 2000 compared to 40.9% for the third quarter of 1999 and 41.1% for the first nine months of 1999. Liquidity and Capital Resources Cash provided by operating activities for the nine months ended September 30, 2000 was $76.3 million. Net cash outflows from investing activities were $35.1 million for the first nine months of 2000 compared to net cash inflows of $76.9 million for the first nine months of 1999. The cash outflows in 2000 primarily relate to purchases of fixed assets. The cash inflows from investing activities in 1999 were primarily attributable to sales and maturities of marketable securities totaling $136.5 million, the proceeds of which were used to fund acquisitions and to repurchase the Company's stock. Net cash outflows from financing activities were $35.8 million in 2000 compared to net cash outflows of $70.7 million in 1999. The cash outflows from financing activities in 2000 and 1999 are attributable primarily to the repurchase of the Company's stock of $33.4 million and $72.5 million in the first nine months of 2000 and 1999, respectively. Capital resources are also available from and provided through the Company's two unsecured credit facilities. These credit facilities, two $100 million variable rate, revolving loan commitments, were put in place on November 4, 1999. All borrowings under the $100 million revolving Three-Year Credit Agreement are to be repaid by November 4, 2002. On November 2, 2000 the Company was granted a 364-day extension to its $100 million revolving 364-Day Credit Agreement. All borrowings under the 364-Day Credit Agreement are to be repaid by November 1, 2001. As of September 30, 2000, the Company had $200 14 14 million of unused borrowing capacity under these two credit facilities. In addition, capital resources are available to the Company through an unsecured credit facility obtained for the purpose of financing the construction of a new building in Belgium. This credit facility, a $3.3 million variable rate, revolving loan commitment was put in place on November 29, 1999 and has no stated maturity. No unused borrowing capacity is available from this credit facility as of September 30, 2000. Management believes that its credit facilities, together with cash provided from operating activities, will be sufficient to fund operations and anticipated acquisitions and capital service needs for the foreseeable future. Recent Developments On November 1, 2000, the Company acquired Detroit-based Information Resources Group, a leading provider of business-to-business intelligence solutions to the technology, communications and other industries. The Company utilized its existing cash and cash equivalents to fund this acquisition. Recent Accounting Pronouncements In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, REVENUE RECOGNITION IN FINANCIAL STATEMENTS ("SAB No. 101"). SAB No. 101 summarizes the SEC's staff's views in applying generally accepted accounting principles to selected revenue recognition issues. To the extent that SAB No. 101 ultimately changes revenue recognition practices, the Company will adopt SAB No. 101 in the fourth quarter of fiscal year 2000 through a cumulative effect adjustment. Any cumulative effect adjustment will be computed as of January 1, 2000. The Company cannot determine the potential impact that SAB No. 101 may have on its consolidated financial position or results of operations at this time. In March 2000, the FASB issued Interpretation No. 44, ACCOUNTING FOR CERTAIN TRANSACTIONS INVOLVING STOCK COMPENSATION: AN INTERPRETATION OF APB OPINION NO. 25. Among other issues, Interpretation No. 44 clarifies the application of Accounting Principles Board Opinion No. 25 (APB No. 25) regarding (a) the definition of employee for purposes of applying APB No. 25, (b) the criteria for determining whether a plan qualifies as a noncompensatory plan, (c) the accounting consequence of various modifications to the terms of a previously fixed stock option or award, and (d) the accounting for an exchange of stock options in a business combination. The provisions of Interpretation No. 44 affecting the Company have been applied on a prospective basis effective July 1, 2000. Through September 30, 2000 the provisions of Interpretation No 44 have had no effect on the Company's results of operations. Factors That May Affect Future Results and Financial Condition From time to time, in both written reports and oral statements by senior management, the Company may express its expectations regarding its future performance. These "forward-looking statements" are inherently uncertain, and investors should realize that events could turn out to be other than what senior management expected. Set forth below are some key factors which could affect the Company's future performance, including its revenues, net income and earnings per share; however, the risks described below are not the only ones the Company faces. Additional risks and uncertainties that are not presently known, or that the Company currently considers immaterial, could also impair the Company's business operations. Legislation -- There could be a material adverse impact on the Company's direct and interactive marketing business due to the enactment of legislation or industry regulations arising from public concern over consumer privacy issues. Restrictions or prohibitions could be placed upon the collection and 15 15 use of information that is currently legally available. Data Suppliers -- The Company could suffer a material adverse effect if owners of the data the Company uses were to withdraw the data. Data providers could withdraw their data if there is a competitive reason to do so or if legislation is passed restricting the use of the data. Acquisitions -- In recent years the Company has made a number of acquisitions in its direct and interactive marketing and shopper businesses, and it expects to pursue additional acquisition opportunities. Acquisition activities, even if not consummated, require substantial amounts of management time and can distract from normal operations. In addition, there can be no assurance that the synergies and other objectives sought in acquisitions will be achieved. Competition -- Direct and interactive marketing is a rapidly evolving business, subject to periodic technological advancements, high turnover of customer personnel who make buying decisions, and changing customer needs and preferences. Consequently, the Company's direct and interactive marketing business faces competition in both of its sectors - CRM and marketing services. The Company's shopper business competes for advertising, as well as for readers, with other print and electronic media. Competition comes from local and regional newspapers, magazines, radio, broadcast and cable television, shoppers and other communications media that operate in the Company's markets. The extent and nature of such competition are, in large part, determined by the location and demographics of the markets targeted by a particular advertiser, and the number of media alternatives in those markets. Failure to continually improve the Company's current processes and to develop new products and services could result in loss of the Company's customers to current or future competitors. In addition, failure to gain market acceptance of new products and services could adversely affect the Company's growth. Qualified Personnel -- The Company believes that its future prospects will depend in large part upon its ability to attract, train and retain highly skilled technical, client services and administrative personnel. Qualified personnel are in great demand and are likely to remain a limited resource for the foreseeable future. Postal Rates -- The Company's shoppers are delivered by standard mail, and postage is the second largest expense, behind payroll, in the Company's shopper business. The present standard postage rates went into effect in January 1999, and a rate increase is expected in 2001. Postal rates also influence the demand for the Company's direct and interactive marketing services even though the cost of mailings is borne by the Company's customers and is not directly reflected in the Company's revenues or expenses. Newsprint Prices -- Newsprint represents a substantial expense in the Company's shopper operations. In recent years newsprint prices have fluctuated widely, and such fluctuations can materially affect the results of the Company's operations. Economic Conditions -- Changes in national economic conditions can affect levels of advertising expenditures generally, and such changes can affect each of the Company's businesses. Revenues from the Company's shopper business are dependent to a large extent on local advertising expenditures in the markets in which they operate. Such expenditures are substantially affected by the strength of the local economies in those markets. Direct and interactive marketing revenues are dependent on national and international economics. 16 16 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. See index to Exhibits on Page 18. (b) No Form 8-K has been filed during the three months ended September 30, 2000. 17 17 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. HARTE-HANKS, INC. November 13, 2000 /s/ Jacques D. Kerrest ----------------- ---------------------------------- Date Jacques D. Kerrest Senior Vice President, Finance and Chief Financial Officer 18 18 EXHIBIT INDEX
Exhibit No. Description of Exhibit - ------- --------------------------------------------------------------------- 2(a) Certificate of Ownership and Merger (filed as Exhibit 2(a) to the Company's Registration Statement No. 33-69202 and incorporated by reference herein). 2(b) Agreement and Plan of Merger dated as of February 4, 1996 among Harte-Hanks Communications, Inc., HHD Acquisition Corp. and DiMark, Inc. (filed as Appendix A to the Company's Registration Statement No. 333-02047 and incorporated by reference herein). 2(c) Agreement and Plan of Merger and Reorganization, dated as of May 16, 1997, by and between The E.W. Scripps Company and Harte-Hanks Communications, Inc. (filed as Exhibit 2.1 to the Company's Form 8-K dated May 22, 1997 and incorporated by reference herein). 2(d) Acquisition Agreement, dated as of May 16, 1997, by and between The E.W. Scripps Company and Harte-Hanks Communications, Inc. (filed as Exhibit 2.2 to the Company's Form 8-K dated May 22, 1997 and incorporated by reference herein). 2(e) Stock Purchase Agreement dated as of July 26, 1997 between ABC, Inc. and Harte-Hanks Communications, Inc. (filed as Exhibit 2(e) to the Company's Form 10-Q for the nine months ended September 30, 1997 and incorporated by reference herein). 3(a) Amended and Restated Certificate of Incorporation (filed as Exhibit 3(a) to the Company's Form 10-K for the year ended December 31, 1993 and incorporated by reference herein). 3(b) Amended and Restated Bylaws (filed as Exhibit 3(b) to the Company's Registration Statement No. 33-69202 and incorporated by reference herein). 3(c) Amendment dated April 30, 1996 to Amended and Restated Certificate of Incorporation (filed as Exhibit 3(c) to the Company's Form 10-Q for the nine months ended September 30, 1996 and incorporated by reference herein). 3(d) Amendment dated May 5, 1998 to Amended and Restated Certificate of Incorporation (filed as Exhibit 3(d) to the Company's Form 10-Q for the six months ended June 30, 1998 and incorporated by reference herein). 3(e) Amended and Restated Certificate of Incorporation as amended through May 5, 1998 (filed as Exhibit 3(e) to the Company's Form 10-Q for the six months ended June 30, 1998 and incorporated by reference herein). 4(a) 364-Day Credit Agreement dated as of November 4, 1999 between Harte-Hanks, Inc. and the Lenders named therein [$100 million]. (filed as Exhibit 4(a) to the Company's form 10-Q for the nine months ended September 30, 1999 and incorporated by reference herein).
19 19
Exhibit No. Description of Exhibit - ------- --------------------------------------------------------------------- 4(b) Three-Year Credit Agreement dated as of November 4, 1999 between Harte-Hanks, Inc. and the Lenders named therein [$100 million]. (filed as Exhibit 4(b) to the Company's form 10-Q for the nine months ended September 30, 1999 and incorporated by reference herein). *4(c) Amendment No. 2 dated October 30, 2000 to 364-Day Credit Agreement [$100 million]. 4(d) Other long term debt instruments are not being filed pursuant to Section (b)(4)(iii) of Item 601 of Regulation S-K. Copies of such instruments will be furnished to the Commission upon request. 10(a) 1984 Stock Option Plan (filed as Exhibit 10(d) to the Company's Form 10-K for the year ended December 31, 1984 and incorporated herein by reference). 10(b) Registration Rights Agreement dated as of September 11, 1984 among HHC Holding Inc. and its stockholders (filed as Exhibit 10(b) to the Company's Form 10-K for the year ended December 31, 1993 and incorporated by reference herein). 10(c) Severance Agreement between Harte-Hanks Communications, Inc. and Larry Franklin, dated as of July 23, 1993 (filed as Exhibit 10(f) to the Company's Registration Statement No. 33-69202 and incorporated by reference herein). 10(d) Form of Severance Agreement between Harte-Hanks Communications, Inc. and certain Executive Officers of the Company, dated as of July 7 or December 28,1997 (filed as Exhibit 10(f) to the Company's Form 10-K for the year ended December 31, 1997 and incorporated by reference herein). 10(e) Form of Severance Agreement between Harte-Hanks, Inc. Richard M. Hochhauser, dated as of January 25, 2000 (filed as Exhibit 10(e) to the Company's Form 10-K for the year ended December 31, 1999 and incorporated by reference herein). 10(f) Harte-Hanks, Inc. Amended and Restated Restoration Pension Plan dated as of January 1, 2000 (filed as Exhibit 10(f) to the Company's Form 10-K for the year ended December 31, 1999 and incorporated by reference herein). 10(g) Harte-Hanks Communications, Inc. 1996 Incentive Compensation Plan (filed as Exhibit 10(p) to the Company's Form 10-Q for the nine months ended September 30, 1996 and incorporated by reference herein). 10(h) Harte-Hanks, Inc. Amended and Restated 1991 Stock Option Plan (filed as Exhibit 10(h) to the Company's Form 10-Q for the six months ended June 30, 2000 and incorporated by reference herein).
20 20
Exhibit No. Description of Exhibit - ------- --------------------------------------------------------------------- 10(i) Harte-Hanks, Inc. 1998 Director Stock Plan (filed as Exhibit 10(h) to the Company's Form 10-Q for the six months ended June 30, 1998 and incorporated by reference herein). 10(j) Harte-Hanks, Inc. Deferred Compensation Plan (filed as Exhibit 10(i) to the Company's Form 10-K for the year ended December 31, 1998 and incorporate by reference herein). *11 Statement Regarding Computation of Net Income (Loss) Per Common Share. *21 Subsidiaries of the Company. *27 Financial Data Schedule.
- ---------- * Filed herewith EX-4.(C) 2 d81846ex4-c.txt AMENDMENT NO. 2 TO 364-DAY CREDIT AGREEMENT 1 1 EXECUTION COUNTERPART AMENDMENT NO. 2 AMENDMENT NO. 2 dated as of October 30, 2000, between HARTE-HANKS, INC. (the "Borrower") and the lenders party hereto (the "Lenders"). WHEREAS, the Borrower, certain of the Lenders, the Retiring Lender referred to below and The Chase Manhattan Bank as Administrative Agent are parties to a 364-Day Credit Agreement dated as of November 4, 1999 (as amended, modified and supplemented and in effect on the date hereof, the "Credit Agreement"); WHEREAS, Bank of Montreal wishes to cease being a "Lender" under the Credit Agreement, and United Missouri Bank wishes to become a "Lender" under the Credit Agreement and assume the Commitment of Bank of Montreal thereunder; and WHEREAS, the Borrower and the certain of the Lenders wish to extend the Commitment Termination Date (as such term is defined in the Credit Agreement) and, in that connection, reallocate certain of the Commitments. NOW THEREFORE, in consideration of the premises and the mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: Section 1. Definitions. Except as otherwise defined in this Amendment No. 2, terms defined in the Credit Agreement are used herein as defined therein. Section 2. Amendments. Subject to the satisfaction of the condition specified in Section 3, but with effect on and after the date hereof, the Credit Agreement is hereby amended as follows: 2.01 Extension of Commitment Termination Date. The definition of "Commitment Termination Date" in Section 1.01 of the Credit Agreement is hereby amended to read in its entirety as follows: "Commitment Termination Date" means the date 364 days from November 2, 2000, subject to extension as provided in Section 2.10 (or, if such date is not a Business Day, the preceding Business Day). 2.02 Adjustment to Commitments. Bank of Montreal shall cease to be a "Lender" party to the Credit Agreement and United Missouri Bank shall assume the Commitment of Bank of Montreal under the Credit Agreement, and become a "Lender" with a Commitment in such amount under the Credit Agreement. In addition, the Commitments of the other Lenders shall be adjusted so that, after giving effect thereto, the Commitments of the Lenders are allocated as provided in Annex I hereto. Section 3. Condition Precedent. The amendments to the Credit Agreement set forth in Section 2 above shall become effective upon (i) the execution and delivery of this Amendment No. 2 by the Borrower and each Lender (including by Bank of Montreal and United Missouri Bank), (ii) delivery to the Administrative Agent of resolutions of the Board of Directors of the Borrower adopted in respect of the transactions contemplated hereby, in form and substance satisfactory to the Administrative Agent and (iii) the payment to each Lender (other than Bank of Montreal) of an extension fee in the amount of .03% of the Commitment of such Lender after giving effect to the amendment set forth in Section 2. In addition, in the event that on the date of such effectiveness there shall be any outstanding 2 2 Loans under the Credit Agreement, then it shall be an additional condition to such effectiveness that, notwithstanding any provision of the Credit Agreement requiring that Loans and prepayments be allocated ratably, the Lenders that are increasing their Commitments (including, United Missouri Bank) shall make Syndicated Loans under the Credit Agreement, the proceeds of which shall be applied to the prepayment of Syndicated Loans held by the Lenders whose Commitments are decreasing (including Bank of Montreal), so that after giving effect thereto the Syndicated Loans are held by the Lenders ratably in accordance with their Commitments as adjusted hereunder, and the Borrower shall have paid any amounts owing under Section 2.16 of the Credit Agreement in connection with such prepayment. It is understood that in any event the entire principal of and interest on all Syndicated Loans held by Bank of Montreal under the Credit Agreement (including, without limitation, all accrued interest and fees and any amounts payable to Bank of Montreal under Section 2.16 of the Credit Agreement) shall be paid in full upon such effectiveness. Section 4. Representations and Warranties. The Borrower represents and warrants to the Lenders that the representations and warranties set forth in Article III of the Credit Agreement (as amended hereby) are true and complete on the date hereof as if made on and as of the date hereof (or, if such representation or warranty is expressly stated to be made as of a specific date, as of such specific date) and as if each reference in said Article III to "this Agreement" included reference to this Amendment No. 2. Section 5. Miscellaneous. Except as herein provided, the Credit Agreement shall remain unchanged and in full force and effect. This Amendment No. 2 may be executed in any number of counterparts, all of which taken together shall constitute one and the same amendatory instrument and any of the parties hereto may execute this Amendment No. 2 by signing any such counterpart. This Amendment No. 2 shall be governed by, and construed in accordance with, the law of the State of New York. [REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK] 3 3 IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to be duly executed and delivered as of the day and year first above written. HARTE-HANKS, INC. By ----------------------------- Name: Title: LENDERS THE CHASE MANHATTAN BANK By ----------------------------- Name: Title: BANK OF AMERICA, N.A. By ----------------------------- Name: Title: THE BANK OF NEW YORK By ----------------------------- Name: Title: BANK ONE, TEXAS, N.A. By ----------------------------- Name: Title: 4 4 MELLON BANK, N.A. By ----------------------------- Name: Title: WELLS FARGO BANK NATIONAL ASSOCIATION By ----------------------------- Name: Title: WESTDEUTSCHE LANDESBANK GIROZENTRALE NEW YORK BRANCH By ----------------------------- Name: Title: BANK OF TOKYO-MITSUBISHI, LTD. By ----------------------------- Name: Title: RETIRING LENDER BANK OF MONTREAL By ----------------------------- Name: Title: 5 5 SCHEDULE I Commitments
Name of Lender Commitment($) - -------------- ------------- The Chase Manhattan Bank 14,500,000.00 Bank of America, N.A. 14,500,000.00 The Bank of New York 10,500,000.00 Bank One, Texas, N.A. 10,500,000.00 Mellon Bank, N.A. 10,500,000.00 Wells Fargo Bank, N.A. 10,500,000.00 Westdeutsche Landesbank Girozentrale New York Branch 10,500,000.00 Bank Of Tokyo-Mitsubishi, Ltd. 9,250,000.00 United Missouri Bank 9,250,000.00 -------------- Total 100,000,000.00
EX-11 3 d81846ex11.txt STATEMENT RE: COMPUTATION OF NET INCOME 1 EXHIBIT 11 HARTE-HANKS, INC. AND SUBSIDIARIES EARNINGS PER SHARE COMPUTATIONS (in thousands, except per share data)
Three Months Ended September 30, ------------------ In thousands, except per share amount 2000 1999 - ------------------------------------- -------- -------- BASIC EPS Net Income $ 21,132 $ 18,603 ======== ======== Weighted-average common shares outstanding used in earnings per share computations 67,519 69,487 ======== ======== Earnings per common share $ 0.31 $ 0.27 ======== ======== DILUTED EPS Net Income $ 21,132 $ 18,603 ======== ======== Shares used in earnings per share computations 69,782 71,715 ======== ======== Earnings per common share $ 0.30 $ 0.26 ======== ======== Computation of shares used in earnings per share computations: Average outstanding common shares 67,519 69,487 Average common equivalent shares - dilutive effect of option shares 2,263 2,228 -------- -------- Shares used in earnings per share computations 69,782 71,715 ======== ========
Nine months ended September 30, ----------------- In thousands, except per share amount 2000 1999 - ------------------------------------- -------- -------- BASIC EPS Net Income $ 60,281 52,705 ======== ======== Weighted-average common shares outstanding used in earnings per share computations 68,043 70,400 ======== ======== Earnings per common share $ 0.89 $ 0.75 ======== ======== DILUTED EPS Net Income $ 60,281 $ 52,705 ======== ======== Shares used in earnings per share computations 70,192 72,700 ======== ======== Earnings per common share $ 0.86 $ 0.73 ======== ======== Computation of shares used in earnings per share computations: Average outstanding common shares 68,043 70,400 Average common equivalent shares - dilutive effect of option shares 2,149 2,300 -------- -------- Shares used in earnings per share computations 70,192 72,700 ======== ========
EX-21 4 d81846ex21.txt SUBSIDIARIES OF THE REGISTRANT 1 EXHIBIT 21 RESTRICTED SUBSIDIARIES OF HARTE-HANKS , INC. As of September, 2000
Jurisdiction of Name of Entity Organization % Owned - -------------- --------------- ------- DiMark, Inc. New Jersey 100% DiMark Marketing, Inc. Pennsylvania 100%(1) Direct Market Concepts, Inc. Florida 100% Direct Marketing Associates Computer Services, Inc. (shell corporation) Maryland 100%(9) DMK, Inc. Delaware 100%(2) DP Blue Book, Inc. Michigan 100% DP Locator, Inc. Michigan 100% The Flyer Publishing Corporation Florida 100% Harte-Hanks Data Services LLC Maryland 100% Harte-Hanks Data Technologies LLC Delaware 100% Harte-Hanks Delaware, Inc. Delaware 100% Harte-Hanks Direct, Inc. Delaware 100% Harte-Hanks Direct Marketing/Baltimore, Inc. Maryland 100% Harte-Hanks Direct Marketing/Cincinnati, Inc. Ohio 100% Harte-Hanks Direct Marketing/Dallas, Inc. Delaware 100% Harte-Hanks Direct Marketing/Fullerton, Inc. California 100% Harte-Hanks Direct Marketing/Kansas City, Inc. Missouri 100% Harte-Hanks do Brazil Consultoria e Servicos Ltda. Brazil 100%(3) Harte-Hanks Limited England 100%(3) Harte-Hanks Market Intelligence, Inc. California 100% Harte-Hanks Market Intelligence Espana LLC Colorado 100% Harte-Hanks Market Intelligence Europe B.V. Netherlands 100% Harte-Hanks Market Intelligence GmbH Germany 100%(4) Harte-Hanks Market Intelligence Limited Ireland 100%(4) Harte-Hanks Market Intelligence Limited England 100%(4) Harte-Hanks Market Intelligence SAS France 100%(4) Harte-Hanks Market Research, Inc. New Jersey 100% Harte-Hanks Partnership, Ltd. Texas 100%(5) Harte-Hanks Pty. Limited Australia 100%(3) Harte-Hanks Response Management/Austin L.P. Delaware 100%(6) Harte-Hanks Response Management/Boston, Inc. Massachusetts 100% Harte-Hanks Response Management Call Centers, Inc. Delaware 100% Harte-Hanks Response Management Europe Belgium 100% Harte-Hanks Shoppers, Inc. California 100% Harte-Hanks Stock Plan, Inc. Delaware 100% Hi-Tech Marketing Limited England 100% H&R Communications, Inc. New Jersey 100%(2) HTS, Inc. Connecticut 100% Information for Marketing Limited (shell corporation) England 100%(7) Mars Graphic Services, Inc. New Jersey 100%(8) Midwest Holding, Inc. Michigan 100% NSO, Inc. Ohio 100% Printing Management Systems, Inc. Delaware 100% PRO Direct Response Corp. New Jersey 100%(2) Southern Comprint Co. California 100% Spectral Resources, Inc. New York 100% Subscription Services, Inc. Michigan 100%
- ---------- (1) Owned by Mars Graphic Services, Inc. (2) Owned by DiMark Marketing, Inc. (3) Owned by Harte-Hanks Data Technologies LLC (4) Owned by Harte-Hanks Market Intelligence Europe B.V. (5) 99.5% Owned by Harte-Hanks Delaware, Inc. .5% Owned by Harte-Hanks , Inc. (6) 99% Owned by Harte-Hanks Stock Plan, Inc. 1% Owned by Harte-Hanks Response Management Call Centers, Inc. (7) Owned by Harte-Hanks Limited (8) Owned by DiMark, Inc. (9) Owned by Harte-Hanks Direct Marketing/Baltimore, Inc. EX-27 5 d81846ex27.txt FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-2000 SEP-30-2000 40,585 0 166,064 3,789 6,262 233,796 237,758 127,205 773,376 139,515 3,288 0 0 76,761 514,787 773,376 704,955 704,955 502,912 603,558 (519) 0 749 101,167 40,886 60,281 0 0 0 60,281 .89 .86
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