Business Segments

12 Months Ended

Dec. 31, 2014

Business Segments

Business Segments

Note N — Business Segments

During the second quarter of 2014, Harte Hanks began executing a new strategy causing us to leverage 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 Group 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.

Corporate

General corporate expense consists primarily of pension and workers compensation expense related to employees from operations we no longer own.

	Year Ended December 31,
In thousands	2014			2013			2012
Operating revenues
Customer Interaction	$	499,444		$	503,760		$	528,042
Trillium Software	54,232			55,849			53,049
Total operating revenues	$	553,676		$	559,609		$	581,091
Operating income
Customer Interaction	$	29,780		$	32,021		$	53,221
Trillium Software	13,347			15,396			14,658
Corporate	(2,365		)	(4,756		)	(5,210		)
Total operating income	$	40,762		$	42,661		$	62,669
Income from continuing operations before income taxes	$	40,762		$	42,661		$	62,669
Interest expense	2,834			3,103			3,573
Interest income	(275		)	(105		)	(89		)
Other, net	897			46			2,993
Total income from continuing operations before income taxes	$	37,306		$	39,617		$	56,192
Depreciation
Customer Interaction	$	12,859		$	13,477		$	13,853
Trillium Software	2,035			2,053			1,823
Corporate	—			—			—
Total depreciation	$	14,894		$	15,530		$	15,676
Other intangible amortization
Customer Interaction	$	26		$	206		$	246
Trillium Software	—			—			—
Corporate	—			—			—
Total intangible amortization	$	26		$	206		$	246
Capital expenditures
Customer Interaction	$	9,341		$	14,092		$	11,108
Trillium Software	1,912			1,781			2,353
Corporate	12			—			—
Total capital expenditures	$	11,265		$	15,873		$	13,461

	Year Ended December 31,
In thousands	2014		2013		2012
Total assets
Customer Interaction	$	533,073	$	575,159	$	570,784
Trillium Software	114,126		110,377		87,890
Corporate	—		—		47,538
Total assets	$	647,199	$	685,536	$	706,212