8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

April 26, 2006

Date of Report (Date of earliest event reported)

HARTE-HANKS, INC.

(Exact name of registrant as specified in its charter)

Delaware	1-7120	74-1677284
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

200 Concord Plaza Drive

San Antonio, Texas 78216

(210) 829-9000

(Address of principal executive offices and Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On April 26, 2006, Harte-Hanks issued a press release announcing financial results for its first quarter 2006. The full text of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.

The information contained in this Item 2.02 (including Exhibit 99.1) of this Current Report is furnished pursuant to this Item 2.02 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section.

Item 9.01 Financial Statements and Exhibits

(c) Exhibits. The following exhibit is being furnished herewith.

99.1 Press Release of Harte-Hanks, Inc. dated April 26, 2006 entitled “Harte-Hanks Reports First Quarter Results”

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Harte-Hanks, Inc.
Dated: April 26, 2006
By:	/s/ Sloane Levy
	Vice President, General Counsel

Exhibit No.	Description
99.1	Press Release of Harte-Hanks, Inc. dated April 26, 2006 entitled “Harte-Hanks Reports First Quarter Results”

EX-99.1

Exhibit 99.1

News Release

Corporate Headquarters

P.O. Box 269

San Antonio, TX 78291-0269

Phone: (210) 829-9000

Fax: (210) 829-9403

www.harte-hanks.com

FOR IMMEDIATE RELEASE	Media & Financial Contact: Dean Blythe
April 26, 2006	(210) 829-9138
	dblythe@harte-hanks.com

HARTE-HANKS REPORTS FIRST QUARTER RESULTS

Note: Harte-Hanks will hold a first quarter earnings conference call on April 26, 2006 at 10AM CT. The number is 800-988-9498 domestic or 210-234-0029 international, pass-code 121693. The conference call will also be audio webcast. To access, please go to https://e-meetings.mci.com, conference number 7960108, pass-code 121693. There will be an audio replay available shortly after the call through May 3, 2006. To access, please call 800-739-2817, pass-code 1216.

SAN ANTONIO, TX — Harte-Hanks, Inc. (NYSE: HHS) today reported first quarter 2006 diluted earnings per share of $0.29 on revenues of $278.4 million. These results compare to diluted earnings per share of $0.29 on $268.3 million in revenue for the first quarter of 2005. First quarter 2006 results include stock-based compensation of $1.8 million (1.3 cents per share) as the result of the adoption by the company of SFAS no. 123R for periods beginning after 12/31/2005.

The following table presents financial highlights of the company’s operations for the first quarter of 2006 and 2005. Full financial results are attached.

RESULTS FROM OPERATIONS

	Three Months Ended March 31,
(In thousands, except per share amounts)	2006		2005		% Change
Operating revenues	$	278,395	$	268,293	3.8	%
Operating income		39,570		42,319	-6.5	%
Net income		23,783		25,073	-5.1	%
Diluted earnings per share		0.29		0.29	0.0	%
Diluted shares (weighted average common and common equivalent shares outstanding)		83,028		86,424	-3.9	%

In the discussion below the company intends to provide investors a better understanding of the operating results and underlying trends to measure past and future performance and liquidity. Harte-Hanks evaluates operating performance based on several measures, including the non-GAAP measure of free cash flow, defined as net income, plus depreciation and amortization, plus stock-based compensation (tax-effected), less capital expenditures, as Harte-Hanks believes this is an important measure of the operational strength of its business. Since free cash flow is not a measure calculated in accordance with GAAP, it should not be considered as a substitute for net income as an indicator of operating performance.

Commenting on the first quarter 2006 performance, Chief Executive Officer Richard Hochhauser said, “We were able to achieve the same level of earnings per share this quarter as we delivered in last year’s first quarter, despite the difficult comparisons we faced and the inclusion of stock-based compensation expense in this year’s first quarter. We generated $22.2 million of free cash flow in the quarter.”

Discussing the performance of individual business segments, Hochhauser said, “Direct marketing showed year-over-year declines in both revenue and operating income. We knew and communicated that the first half of the year – and particularly the first quarter - would be difficult on a year-over-year comparable basis. In the first quarter of 2005, direct marketing particularly benefited from a large, complex, world-wide project that we launched in that quarter for one of our significant customers. Additionally, the direct marketing business segment results include stock-based compensation in the first quarter of 2006, which was not included in the first quarter of 2005. Absent the impact of these two factors, direct marketing would have shown revenue growth in the low single digits, and operating income growth above that level. Our pharma/healthcare vertical had strong double-digit growth in the quarter - well over 20% - and our select vertical also had growth in excess of 10% over the prior year. The retail vertical was up in the low-single digits, while financial was down low double digits. Our high tech/telecom vertical, which benefited from the one-time project in the first quarter of 2005, was down over 20%.”

Turning to Shoppers performance, Hochhauser said, “Shoppers posted revenue growth of 16.1%, and operating income growth of 5.1%. Approximately 10 percentage points of the revenue growth is attributable to the Tampa acquisition. With respect to margins, half of the margin decline from the year earlier period is attributable to a combination of the Tampa acquisition and the inclusion of stock-based compensation in the 2006 period.”

Concluding, Hochhauser said, “As we publicly said it would be, the first quarter of 2006 was challenging compared to the first quarter of 2005. This is based on 38% EPS growth in the first quarter of 2005, and the inclusion of stock-based compensation in the first quarter 2006 results. While we always aspire to perform better, we are pleased to have held EPS flat given these factors. At the beginning of this year we stated that our goal for the year - looking at 2005 and 2006 on a comparable stock-based compensation basis - was to deliver good EPS growth for the full year 2006 in the high single digit or better range. After completing the first quarter about where we thought we would be, this continues to be our goal.”

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Statements contained in this press release that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding management’s expectations with respect to the company’s future revenues, earnings per share, operating income and expense related to equity based compensation. These and all other forward-looking statements in this press release are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from those projected or implied in such forward-looking statements. Such factors include, without limitation, overall economic and business conditions, the demand for the company’s services by its clients and prospective clients (including the willingness and ability of the company’s clients to maintain or expand their spending), the financial condition of its clients, economic and other business factors that impact the industries that the company serves, the timing and ability of the company to manage the level of personnel and capacity in the future, competitive factors in the company’s markets, concern over consumer privacy issues, which may lead to enactment of legislation restricting or prohibiting the collection and use of information that is currently legally available, fluctuations in paper prices and postal rates, the number of options and other equity the company may issue to its employees, the number of shares the company repurchases in connection with its repurchase program, and general or regional economic conditions, among other factors. A further list and description of some of the risks and uncertainties potentially impacting the company’s business and future performance can be found in the company’s filings with the Securities and Exchange Commission.

Highlights of the first quarter included:

Shoppers:

• Harte-Hanks Shoppers circulation grew to over 12.6 million by adding approximately 276,000 in new circulation. This included additional circulation of 217,000 added to the Pennysaver in Northern California in the communities of Oakland, Alameda and Emeryville. The newly acquired Tampa Flyer added 59,000 in new circulation to Hillsborough County and western Hernando County.

• PennySaverUSA.com entered into a partnership with Dealer Fusion to add its full suite of listings for all of the car dealerships it represents, among them nearly 500 dealerships in California. This partnership brings nearly 30,000 automobile listings that are searchable on the web site every week.

Direct Marketing:

• Harte-Hanks achieved a number 26 ranking in an inaugural “Global Outsourcing 100” listing, compiled by The International Association of Outsourcing Professionals.

• A large hi-tech company renewed its contract with Harte-Hanks to take inbound telesales.

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• Harte-Hanks was awarded a 5-year contract with a large government agency. The contract includes full-service database marketing, analytics and response management services.

• A worldwide automotive manufacturer selected Harte-Hanks to provide direct marketing for new vehicle launches. This includes customer acquisition and retention programs leveraging direct mail and email as the primary channels of communication.

• During the quarter, Harte-Hanks Trillium Software^®:

• Was recognized as a “market leader” and was ranked highest among evaluated vendors in current offerings and market presence by Forrester Research.

• Released TS Quality Version 10 ESE, which offers a single product platform for completing the data discovery, profiling and quality process on a global scale.

• Announced that it would provide its TS Quality enterprise data quality software solution to global telecommunications provider BT (British Telecommunications plc) on an enterprise-wide license basis.

Corporate:

• On January 26, the company announced a 20% increase in the quarterly dividend to 6.0 cents per share effective with the dividend payable March 15, 2006 to shareholders of record on March 1, which is the eleventh dividend increase since the company went public in 1993 for the second time.

• Harte-Hanks purchased 0.8 million shares of its common stock in the first quarter. There are approximately 5.5 million shares remaining from repurchase authorizations at March 31, 2006. Since January 1997 the company has acquired approximately 44.4 million shares (split adjusted) under its repurchase program.

• The annual meeting of shareholders will be held at 10 A.M. on May 16, 2006 at 200 Concord Plaza Drive, first floor, San Antonio, Texas.

Harte-Hanks, Inc. is a worldwide, direct and targeted marketing company that provides direct marketing services and shopper advertising opportunities to a wide range of local, regional, national and international consumer and business-to-business marketers. Harte-Hanks Direct Marketing improves the return on its clients’ marketing investment with a range of services organized around five solution points: Construct and update the database — Access the data — Analyze the data — Apply the knowledge — Execute the programs. Experts at each element within this process, Harte-Hanks Direct Marketing is highly skilled at tailoring solutions for each of the vertical markets it serves. Harte-Hanks Shoppers is North America’s largest owner, operator and distributor of shopper publications, with shoppers that are zoned into more than 1,000 separate editions with a weekly circulation in excess of 12 million in California and Florida.

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For more information, contact: Chief Financial Officer Dean Blythe (210) 829-9138 or e-mail at dblythe@harte-hanks.com.

This release and other information about Harte-Hanks can be found on the World Wide Web at http://www.harte-hanks.com

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Harte-Hanks, Inc.

Consolidated Statements of Operations (Unaudited)

	Three months ended March 31,
In thousands, except per share data	2006			2005
Operating revenues	$	278,395		$	268,293
Operating expenses:
Labor		107,919			104,302
Production and distribution		101,851			93,588
Advertising, selling, general and administrative		21,238			20,612
Depreciation and amortization		7,817			7,472
		238,825			225,974
Operating income		39,570			42,319
Other expenses (income):
Interest expense		855			203
Interest income		(26	)		(78	)
Other, net		264			489
		1,093			614
Income before income taxes		38,477			41,705
Income tax expense		14,694			16,632
Net income	$	23,783		$	25,073
Basic earnings per common share	$	0.29		$	0.30
Weighted-average common shares outstanding		81,322			84,730
Diluted earnings per common share	$	0.29		$	0.29
Weighted-average common and common equivalent shares outstanding		83,028			86,424

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Harte-Hanks, Inc.

Business Segment Information (Unaudited)

	Three months ended March 31,
In thousands	2006			2005			% Change
OPERATING REVENUES:
Direct Marketing	$	164,318		$	170,019		-3.4	%
Shoppers		114,077			98,274		16.1	%
Total operating revenues	$	278,395		$	268,293		3.8	%
OPERATING INCOME - Note 1:
Direct Marketing	$	20,384		$	24,520		-16.9	%
Shoppers		21,926			20,868		5.1	%
General corporate expense		(2,740	)		(3,069	)	10.7	%
Total operating income	$	39,570		$	42,319		-6.5	%
DEPRECIATION AND AMORTIZATION
Direct Marketing	$	5,817		$	6,021		-3.4	%
Shoppers		1,994			1,446		37.9	%
General corporate expense		6			5		20.0	%
Total depreciation and amortization	$	7,817		$	7,472		4.6	%

Reconciliation of Net Income to Free Cash Flow

	Three months ended March 31,
In thousands	2006		2005
Net Income	$	23,783	$	25,073
Add: After-tax stock-based compensation (pre-tax: $1,764 and $26 in 2006 and 2005, respectively)		1,090		16
Add: depreciation and amortization		7,817		7,472
Less: capital expenditures		10,442		8,677
Free cash flow	$	22,248	$	23,884

Note 1: Operating Income includes stock-based compensation, as follows:

	Three months ended March 31,
	2006		2005
Direct Marketing	$	1,175	$	—
Shoppers		427		—
General corporate		162		26
	$	1,764	$	26

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Harte-Hanks, Inc.

Consolidated Balance Sheets (in thousands, except share amounts)

	(Unaudited) March 31, 2006			December 31, 2005
Assets
Current Assets
Cash and cash equivalents	$	17,354		$	24,561
Accounts receivable, net		168,422			184,537
Inventory		9,166			7,947
Prepaid expenses		18,217			14,783
Current deferred income tax asset		14,332			14,158
Other current assets		10,248			7,718
Total current assets		237,739			253,704
Property, plant and equipment, net		115,929			112,911
Goodwill, net		502,750			502,750
Other intangible assets, net		16,307			16,669
Other assets		3,382			3,629
Total assets	$	876,107		$	889,663
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	57,266		$	62,978
Accrued payroll and related expenses		20,995			35,735
Customer deposits and unearned revenue		56,627			54,143
Income taxes payable		22,843			12,710
Other current liabilities		9,686			9,781
Total current liabilities		167,417			175,347
Long-term debt		50,000			62,000
Other long-term liabilities		92,126			90,970
Total liabilities		309,543			328,317
Stockholders’ equity
Common stock, $1 par value, authorized: 250,000,000 shares Issued at March 31, 2006: 115,910,179 shares;at December 31, 2005: 115,453,416 shares		115,910			115,453
Additional paid-in-capital		280,735			269,865
Accumulated other comprehensive loss		(21,673	)		(21,982	)
Retained Earnings		999,530			980,505
Less treasury stock, March 31, 2006: 34,873,345 shares at cost;
December 31, 2005: 33,965,335 shares at cost		(807,938	)		(782,495	)
Total stockholders’ equity		566,564			561,346
Total liabilities and stockholders’ equity	$	876,107		$	889,663

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