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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 1-7120
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HARTE-HANKS, INC. (formerly HARTE-HANKS
COMMUNICATIONS, 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 78216
SAN ANTONIO, TEXAS (ZIP CODE)
(Address of principal executive officers)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE -- 210-829-9000
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH
TITLE OF EACH CLASS EXCHANGE ON WHICH REGISTERED
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Common Stock New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
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(Title of class)
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.
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Indicate by check mark if disclosure of delinquent filings pursuant to
Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. X
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Aggregate market value of the Company's voting stock held by
non-affiliates on February 1, 2001, based on the $23.19 per share closing price
for the Company's Common Stock on the New York Stock Exchange on such date:
approximately $1,022,000,000.
SHARES OUTSTANDING AT FEBRUARY 1, 2001:
Common Stock - 64,565,472 shares
DOCUMENTS INCORPORATED BY REFERENCE:
The Company's Annual Report to Stockholders for the year ended December
31, 2000 (incorporated in Part II to the extent provided in Items 5, 6, 7 and 8
hereof).
Definitive Proxy Statement for the Company's May 8, 2001 Annual Meeting
of Stockholders to be filed pursuant to Regulation 14A under the Securities
Exchange Act of 1934 (incorporated in Part III to the extent provided in Items
10, 11 and 12 hereof).
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Harte-Hanks, Inc.
Table of Contents
Form 10-K Report
December 31, 2000
Part I Page
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Item 1. Business 3
Item 2. Properties 3
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vote of Security Holders 10
Part II
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Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 10
Item 6. Selected Financial Data 10
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 10
Item 8. Financial Statements and Supplementary Data 10
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 10
Part III
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Item 10. Directors and Executive Officers of the Registrant 10
Item 11. Executive Compensation 11
Item 12. Security Ownership of Certain Beneficial Owners and
Management 12
Item 13. Certain Relationships and Related Transactions 12
Part IV
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Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K. 12
Signatures 16
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ITEM 1. BUSINESS AND ITEM 2. PROPERTIES
INTRODUCTION
Harte-Hanks is a highly focused international direct and interactive
services company that provides a full scope of solutions to a wide range of
industries in the customer relationship management (CRM) arena. The Company also
publishes highly targeted advertising shopper publications which reach nearly
ten million households a week.
The Company's direct and interactive marketing business operates both
nationally and internationally, while its shopper business operates in selected
local and regional markets in California and Florida. The Company believes that
marketing is undergoing a transition from traditional mass media marketing to
targeted marketing and CRM. The transition is being driven by the increasing
sophistication and efficiency of computer technology and a growing need among
marketers to customize the products and services they offer to customers. Direct
and interactive marketing, which represents 69% of the Company's revenue, is
leading the movement toward highly targeted marketing and CRM. The Company's
shopper business applies similar targeting principles. Harte-Hanks' strategy is
based on five key elements: being a market leader in each of its businesses;
increasing revenues through growing its base businesses, introducing new
products, entering new markets and making acquisitions; using technology to
create competitive advantages; employing people who can partner effectively with
its clients; and creating shareholder value. Company revenues totaled $960.8
million in 2000.
Harte-Hanks is the successor to a newspaper business begun in Texas in
the early 1920's by Houston Harte and Bernard Hanks. In 1972, the Company went
public and was listed on the New York Stock Exchange. The Company went private
in a leveraged buyout initiated by management in 1984. In 1993, the Company
again went public and listed its common stock on the NYSE. In October 1997, the
Company sold all of its remaining traditional media operations (consisting of
newspapers, television and radio companies) in order to focus all of its efforts
on its direct and interactive services and shoppers operations.
See Note N of "Notes to Consolidated Financial Statements" for certain
financial information about the Company's two business segments - direct and
interactive marketing and shoppers.
DIRECT MARKETING
GENERAL
Harte-Hanks operates a worldwide direct and interactive services
company offering a broad range of specialized, coordinated and integrated
services. The Company utilizes advanced technologies to enable its clients to
identify, reach, influence and nurture their customers. The Company believes
that developments in computer technology and trends toward more sophisticated
marketing analysis and measurement will continue to result in increased usage of
direct and interactive marketing services. Harte-Hanks' direct and interactive
marketing clients include many of America's largest retailers, high-tech firms,
banks, mutual funds companies, pharmaceutical companies, healthcare
organizations and insurance companies, along with a growing number of clients in
such emerging markets as telecommunications, automotive, utilities and
hospitality. The Company's client base is both domestic and international. In
2000, Harte-Hanks Direct Marketing had revenues of $662.0 million, which
accounted for 69% of the Company's total revenues.
Harte-Hanks Direct Marketing offers a complete range of specialized,
coordinated and integrated direct and interactive marketing services from a
single source. These services are organized into two broad sectors - CRM and
marketing services.
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In 2000, Harte-Hanks made two acquisitions in its direct and
interactive marketing business segment. Both of these acquisitions expanded the
Company's services and client base in its CRM sector. Harte-Hanks expanded its
services to the high-tech, communications and financial services industries
through the acquisition of Hi-Tech Marketing Limited, a London based leading
provider of CRM services in Europe. Harte-Hanks further expanded its
capabilities through the acquisition of Detroit based Information Resources
Group, a leading provider of business-to-business intelligence solutions to the
high-tech, communications and other industries.
CUSTOMER RELATIONSHIP MANAGEMENT
Harte-Hanks Customer Relationship Management (CRM) uses technology as
an enabler to capture, to analyze and to disseminate customer and prospect data
across all points of customer contact. The Company helps clients manage the
inquiries they receive from their marketing efforts, whether from Web sites,
e-mail, toll-free numbers, trade shows, fax programs or other sources. These
inquiries, or leads, are qualified, tracked and distributed both to appropriate
sales channels and to client management for analysis and decision-making. Using
proprietary software and open software solutions, the Company also builds
contact databases for its clients using the information gained from these CRM
activities. These databases help clients measure the return on their marketing
communications and make more informed decisions about future marketing efforts.
The Company also builds customized marketing databases for specific
clients and provides them with easy-to-use tools to perform analysis and to
target their best customers and prospects. Using proprietary name and address
matching software, the Company standardizes large numbers of customer records
from multiple sources, integrates them into a single database for each client
and, if needed, appends demographic and lifestyle information.
In most cases, these databases are delivered for use on clients'
personal computers, networks or workstations, where the Company's P/CIS(R)
software applications and other software solutions help clients predict the
likely results of marketing promotions and track recipients' buying behavior.
Relational databases are built for clients from a range of facilities, each
specializing in specific market segments. These databases are moved to the
client's site or maintained at Harte-Hanks with on-line access to client
locations. In addition to building a client's database and installing the
software, Harte-Hanks CRM performs regular database updates and offers its
software module Trillium(TM) for clients who want to integrate data quality
capabilities into their data warehouse.
In addition, the Company operates as a service bureau, preparing list
selections, maximizing deliverability and reducing clients' mailing costs
through sophisticated postal coding, hygiene and address updates through a
non-exclusive National Change of Address license with the U.S. Postal Service.
As a further extension of the client's marketing arm, Harte-Hanks
provides marketing research and analytics services. Specific capabilities
include tracking and reporting, media analysis, modeling, database profiling,
primary data collection, marketing applications, consulting and program
development.
CRM services are marketed to specific industries or markets with
services and software products tailored to each industry or market. Having
established the basic technological foundation, the Company is able to provide
CRM services to new industries and markets by modifying its existing technology
and information applications. The Company currently provides CRM services to all
of its primary markets in addition to a range of emerging markets.
The Company expanded its CRM services by the June 2000 acquisition of
UK-based Hi-Tech Marketing Limited, a leading pan-European provider of response
management services to the high-tech, communications and financial services
industries. The combination greatly enhances the Company's current European
response management operations that are located in Belgium.
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The Company enhanced its database offering with the November 2000
acquisition of Information Resource Group (IRG), a leading provider of database
products and solutions to the high-tech and communications industries. IRG's
database content and related services complement the database products and
solutions offered by Harte-Hanks Market Intelligence. This combination allows
the Company to provide its clients additional technology-related information
about more than 270,000 business sites in markets worldwide to enhance their
sales, marketing and research initiatives. The Company also expects the
combination of these two database products to provide the advantage of
operational synergies.
The Company strengthened its suite of CRM offerings by forming a number
of strategic alliances during the year. Harte-Hanks formed alliances with
HotData and InfoUSA to deliver Harte-Hanks Market Intelligence CI TechModels to
all customer touch points across the enterprise. HotData will integrate CI
TechModels into popular CRM systems, major enterprise databases and Web sites.
InfoUSA will append CI TechModels to all of its business locations profiles for
sale to customers. Harte-Hanks entered into a strategic relationship and
reseller agreement with CoolSavings, a provider of e-marketing services used by
online and off-line advertisers to build one-to-one customer relationships.
Through this alliance, Harte-Hanks provides its clients a bundled set of
services, including an integrated view of the consumer, targeted promotions via
the Internet, e-mail and direct mail, and tracking and analysis of promotion
effectiveness. CoolSavings provides 12 million active online consumers and more
than 150 companies that want to market offline. Harte-Hanks will tap into the
database to help jump-start its customers' online efforts and to market its
services to CoolSavings clients.
The Company provides CRM services at its facilities in Austin, Texas;
Billerica, Massachusetts; Dallas, Texas, Glen Burnie, Maryland; La Jolla,
California; Lake Katrine, New York; Lake Mary, Florida; Los Angeles, California;
New York, New York; River Edge, New Jersey; Sterling Heights, Michigan;
Sunnyvale, California; and West Bridgewater, Massachusetts. These centers
possess some industry specialization and are linked together to support certain
clients that experience volume spikes or seek high-growth needs.
The Company also provides CRM services internationally through offices
in Dublin, Ireland; Hasselt, Belgium; London, England; Madrid, Spain; Melbourne,
Australia; Sao Paulo, Brazil; Sevres, France; Slough, England; Thatcham,
England; and Toronto, Canada.
MARKETING SERVICES
Harte-Hanks provides a variety of services to help clients develop and
execute targeted marketing communication programs. These include such upfront
services as creative and graphics, along with back-end services such as
printing, personalization of communication pieces using laser and inkjet
printing, target mail and fulfillment, and transportation logistics.
The Company's mail tracking capability and long-standing relationships
with the U.S. Postal Service help ensure that customer mailings reach their
destinations on time. And, by controlling the final stage of the print
distribution process through its logistics operations, the Company facilitates
the delivery of its clients' materials while holding costs to a minimum.
Increasingly clients seek execution programs as part of Harte-Hanks
end-to-end solutions. Harte-Hanks also offers direct marketing agency services
to create the plan to manage direct and interactive marketing communication
efforts. These services combine information-based strategy and brand-building
creative efforts across both traditional direct and interactive media.
Depending upon the needs of clients, Harte-Hanks marketing services
capabilities are provided in a specialized, coordinated and integrated approach
through 17 facilities nationwide.
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SALES AND MARKETING
The national direct and interactive marketing sales forces of
Harte-Hanks are headquartered in Cincinnati, Ohio, with additional offices
maintained throughout the United States and in Dublin, Ireland, Hasselt,
Belgium; London, England; Madrid, Spain, Melbourne, Australia, Sao Paulo,
Brazil, Sevres, France, Slough, England; Thatcham, England and Toronto, Canada.
In addition, the Company has affiliates in Singapore. The sales forces, with
industry-specific knowledge and experience, emphasize the cross-selling a full
range of direct and interactive marketing services and are supported by
employees in each sector. The overall sales focus is to position Harte-Hanks as
a marketing partner and a single-source solution for a client's targeted
marketing needs.
The Company generally charges transaction-related fees each time it
provides direct and interactive marketing services. For certain CRM
applications, it charges a one-time, negotiated fee to build a database, plus an
additional fee each time the database is updated. There are often consulting and
account management fees associated with CRM services and planning fees for many
of the data-based solutions.
FACILITIES
Direct and interactive marketing services are provided at the following
facilities:
CRM MARKETING SERVICES (CONTINUED)
Austin, Texas Kansas City, Kansas
Billerica, Massachusetts Langhorne, Pennsylvania
Dallas, Texas Memphis, Tennessee
Glen Burnie, Maryland New York, New York
La Jolla, California Sacramento, California
Lake Katrine, New York Westville, New Jersey
Lake Mary, Florida Wilkes-Barre, Pennsylvania
Los Angeles, California
New York, New York NATIONAL SALES HEADQUARTERS
River Edge, New Jersey Cincinnati, Ohio
Sterling Heights, Michigan Kansas City, Kansas
Sunnyvale, California La Jolla, California
West Bridgewater, Massachusetts
INTERNATIONAL OFFICES
MARKETING SERVICES Dublin, Ireland
Baltimore, Maryland Hasselt, Belgium
Bellmawr, New Jersey London, England
Bloomfield, Connecticut Madrid, Spain
Cherry Hill, New Jersey Melbourne, Australia
Cincinnati, Ohio Sao Paulo, Brazil
Clearwater, Florida Sevres, France
Dallas/Grand Prairie, Texas Slough, England
Deerfield Beach, Florida Thatcham, England
Fullerton, California Toronto, Canada
Jacksonville, Florida
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COMPETITION
Harte-Hanks' direct and interactive marketing business faces
competition from other direct marketing companies in each sector, as well as
from print and electronic media and other forms of advertising. Harte-Hanks
believes that its state-of-the-art CRM capabilities, combined with its national
production capability, industry focus and ability to offer a full range of
integrated services, enable the Company to compete effectively.
SHOPPERS
GENERAL
Harte-Hanks is the largest publisher of advertising shoppers in North
America based on weekly circulation and revenues, and the only national targeted
media company that focuses on shoppers as a core business. Shoppers are weekly
advertising publications delivered free by third-class mail to all households in
a particular geographic area. Shoppers offer advertisers a targeted,
cost-effective local advertising system, with virtually 100% penetration in
their area of distribution. Shoppers are particularly effective in large markets
with high media fragmentation in which major metropolitan newspapers generally
have low penetration.
As of December 31, 2000, Shoppers delivered nearly 10 million shopper
packages in four major markets each week covering the greater Los Angeles market
(Los Angeles County, Orange County, Riverside County, San Bernardino County,
Ventura County, and Kern County), the greater San Diego market, Northern
California (San Jose, Sacramento and Stockton) and South Florida. (Shopper
publications overlap in approximately 220,000 households in South Orange
County.) The Company's California publications account for 88% of Shopper's
weekly circulation.
Harte-Hanks publishes 809 individual shopper editions each week
distributed to zones of approximately 12,200 households each. This allows
single-location, local advertisers to saturate a single geographic zone, while
enabling multiple-location advertisers to saturate multiple zones. This unique
delivery system gives large and small advertisers alike a cost-effective way to
reach their target markets. The Company believes that its zoning capabilities
and production technologies have enabled it to saturate and target areas in a
number of ways including, geographic, demographic, lifestyles, behavioral and
language. This allows its advertisers to effectively target their customers. The
Company's strategy is to increase its share of local advertising in its existing
circulation areas, and, over time, to increase circulation through internal
expansion into contiguous areas and make selective acquisitions. In 2000,
Harte-Hanks Shoppers had revenues of $298.7 million, accounting for
approximately 31% of the Company's total revenues.
During the period 1996 through 2000, over 1 million households were
added to the Company's shopper circulation through internal expansion. The
Company believes that expansions provide increased revenues and operating income
as the publications in these new areas mature. In addition to internal
expansion, Harte-Hanks Shoppers added approximately 2 million households to its
California circulation with the acquisition of the ABC Shoppers Group from an
indirect subsidiary of The Walt Disney Company in October 1997. The Company now
reaches over 8.7 million households in California, or nearly 73% of the state's
total.
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PUBLICATIONS
The following table sets forth certain information with respect to shopper
publications:
December 31, 2000
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Number of
Market Publication Name Circulation Zones
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Greater Los Angeles PennySaver/South 5,143,000 434
Coast Shopper
Greater San Diego PennySaver/Bargain 1,437,000 117
Bulletin
Northern California PennySaver/Magic Ads 2,150,500 160
South Florida The Flyer 1,171,100 98
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Total: 9,901,600 809
Shopper publications contain classified and display advertising and are
primarily delivered to consumers' homes by third-class saturation mail. The
typical shopper publication contains over 42 pages and is 7 by 9-1/2 inches in
size. Each edition, or zone, is targeted around a natural neighborhood marketing
pattern. Shoppers also serve as a distribution vehicle for multiple ads from
national and regional advertisers; "print and deliver" single-sheet inserts
designed and printed by the Company; coupon books; preprinted inserts from major
retail chains; and a four-color proprietary product, MARQUEE. Harte-Hanks
shopper publications also offer audiotext voice mail in a pay-per-call format.
In addition, Shoppers offer advertising over its internet sites -
www.pennysaverusa.com for its California publications and theflyer.com for its
South Florida publication.
The Company has acquired, developed and applied innovative technology
and customized equipment in the publication of its shoppers, contributing to
efficiency and growth. A proprietary pagination system has made it possible for
the hundreds of weekly zoned editions to be designed, built and output to
plate-ready negatives in a paperless, digital environment. Automating the
production process saves on labor, newsprint and overweight postage. This
software also allows for better ad tracking, immediate checks on individual zone
and ad status, and more on-time press starts with less manpower.
SALES AND MARKETING
The Company maintains local sales offices throughout its geographic
markets and employs more than 647 commissioned sales representatives who develop
both targeted and saturation advertising programs for customers. The sales
organization provides service to both national and local advertisers through its
telemarketing departments and field sales representatives. Shopper customers
vary from individuals with a single item for sale to local neighborhood
advertisers to large multi-location advertisers. The core customers continue to
be local service businesses and small retailers. The Company is increasingly
focusing its marketing efforts on larger national accounts by emphasizing its
ability to deliver saturation advertising in defined zones in combination with
advertising in the shopper publication.
Additional focus is placed on particular industries/categories through
the use of sales specialists. These sales specialists are primarily used to
target automotive, real estate, and employment advertisers.
The Company utilizes a proprietary sales and marketing system (SAMS) to
enter customer orders directly from the field, instantly checking space
availability, ad costs and other pertinent information. A
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paperless order entry system on a Unix platform, SAMS has built-in
error-reducing safeguards, minimizing costly sales adjustments. In addition,
SAMS facilitates placement of advertising in multiple-zoned editions. The
Company has expanded SAMS so that, in addition to allowing advertising
information to be entered for immediate publication, it will build a relational
customer database, enabling sales personnel to access customer history by
designated variables, thereby identifying similar potential customers and
assisting follow-up with existing customers.
FACILITIES
Harte-Hanks shoppers are produced at owned or leased facilities in the
markets they serve. The Company has five production facilities - three in
Southern California, one in Northern California and one in its Florida market -
and 33 sales offices. At the end of 1998 and during 1999, the Company
consolidated two Northern California production facilities into one in the
Sacramento area. The consolidation has facilitated future expansions in the
Northern California marketplace and provided cost savings in the form of
operating synergies.
COMPETITION
Harte-Hanks shoppers compete primarily with metropolitan daily
newspapers, shared mail packages and other local advertising media. Shoppers
also compete in varying degrees for advertisers and readers with magazines,
radio, broadcast and cable television, directories, internet sites, other
shoppers and other communications media that operate in their markets. The
Company believes that its production systems and technology, which enable it to
publish separate editions in narrowly targeted zones, allow it to compete
effectively, particularly in large markets with high media fragmentation.
EMPLOYEES
As of December 31, 2000, Harte-Hanks employed 7,557 full-time employees
and 1,292 part-time employees, as follows: direct marketing - 5,681 full-time
and 916 part-time employees; shoppers - 1,855 full-time and 375 part-time
employees; and corporate office - 21 full-time employees and 1 part-time
employee. None of the work force is represented by labor unions. The Company
considers its relations with its employees to be good.
FACILITIES
Harte-Hanks' executive offices are located in San Antonio, Texas and
occupy approximately 17,000 square feet in leased premises. The Company's
business is conducted in facilities worldwide containing aggregate space of
approximately 3.4 million square feet. Approximately 3.2 million square feet are
held under leases, which expire at dates through 2014. The balance of the
properties, used in the Company's Southern California shopper operations,
Westville, New Jersey marketing services operations and Hasselt, Belgium CRM
operations, are owned by the Company.
ITEM 3. LEGAL PROCEEDINGS
The Company from time to time becomes involved in various claims and
lawsuits incidental to its businesses. In the opinion of management, after
consultation with counsel, any ultimate liability arising out of currently
pending claims and lawsuits will not have a material effect on the financial
condition or operations of the Company.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Incorporated herein by reference from the Company's Annual Report to
Stockholders for the year ended December 31, 2000 at page 32.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated herein by reference from the Company's Annual Report to
Stockholders for the year ended December 31, 2000 at page 31.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Incorporated herein by reference from the Company's Annual Report to
Stockholders for the year ended December 31, 2000 at pages 12 through 17.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
The Company's earnings are affected by changes in short-term interest
rates as a result of its revolving credit agreements, which bear interest at
floating rates. The Company does not believe that it has significant exposure to
market risks associated with changing interest rates as of December 31, 2000.
The Company does not use derivative financial instruments in its operations.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following information is set forth in the Company's Annual Report
to Stockholders for the year ended December 31, 2000, which is incorporated
herein by reference: All Consolidated Financial Statements (pages 18 through
21); all Notes to Consolidated Financial Statements (pages 22 through 30); and
the Independent Auditors' Report (page 32). With the exception of the
information herein expressly incorporated by reference, the Company's Annual
Report to Stockholders for the year ended December 31, 2000 is not deemed filed
as part of this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 10. MANAGEMENT
Incorporated herein by reference from the information in the Company's
definitive proxy statement dated March 27, 2001 for the May 8, 2001 Annual
Meeting of Stockholders under the caption "Management -- Directors and Executive
Officers" on pages 5 and 6.
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ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference from the information in the Company's
definitive proxy statement dated March 27, 2001 for the May 8, 2001 Annual
Meeting of the Stockholders under the caption, "Executive Compensation and Other
Information" on pages 7 through 10.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Incorporated herein by reference from the information in the Company's
definitive proxy statement dated March 27, 2001 for the May 8, 2001. Annual
Meeting of Stockholders under the caption "Security Ownership of Management and
Principal Stockholders" on pages 3 and 4.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K
(a)(1) The following consolidated financial statements are
incorporated by reference from the Company's Annual Report to
Stockholders for the year ended December 31, 2000 attached
hereto:
Consolidated Balance Sheets, December 31, 2000 and 1999
Consolidated Statements of Operations, Years ended
December 31, 2000, 1999 and 1998
Consolidated Statements of Cash Flows, Years ended
December 31, 2000, 1999 and 1998
Consolidated Statements of Stockholders' Equity, Years ended
December 31, 2000, 1999 and 1998
Notes to Consolidated Financial Statements
Independent Auditors' Report
(a)(2) The following accountants' report and financial schedule for
years ended December 31, 2000, 1999 and 1998 are submitted
herewith:
Independent Auditors' Report 10-K Schedule
Schedule II -- Valuation and Qualifying Accounts
All other schedules are omitted as the required information is
inapplicable
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(a)(3) EXHIBITS
Exhibit
No. Description of Exhibit
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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).
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]. (filed as Exhibit 4(c) to the
Company's Form 10-Q for the nine months ended September 30, 2000
and incorporated by reference herein).
4(d) Other long term debt instruments are not being filed pursuant to
Section (b) (4) (ii) of Item 601 of Regulation S-K. Copies of
such instruments will be furnished to the Commission upon
request.
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No. Description of Exhibit
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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, Inc. and Larry
Franklin, dated as of December 15, 2000.
*10(d) Form of Severance Agreement between Harte-Hanks, Inc. and
Richard M. Hochhauser dated as of December 15, 2000.
*10(e) Form 1 of Severance Agreement between Harte-Hanks, Inc. and
certain Executive Officers of the Company dated as of
December 15, 2000.
*10(f) Form 2 of Severance Agreement between Harte-Hanks, Inc. and
certain Executive Officers of the Company dated as of
December 15, 2000.
10(g) 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(h) 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(i) Harte-Hanks, Inc. Amended and Restated 1991 Stock Option Plan
(filed as Exhibit 10(g) 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. 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(k) 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 incorporated by reference herein).
*10(l) Amendment One to Harte-Hanks, Inc. Amended and Restated
Restoration Pension Plan dated December 18, 2000.
15
15
Exhibit
No. Description of Exhibit
------- ----------------------
*11 Statement Regarding Computation of Net Income (Loss) Per Common
Share.
*13 Annual Report to Stockholders (only those portions incorporated
by reference into the Form 10-K are filed herewith).
*21 Subsidiaries of the Company
*23 Consent of KPMG LLP
---------------------
*Filed herewith
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(continued)
14(c) Exhibits -- The response to this portion of item 14 is submitted
as a separate section of this report on pages 18 to 68.
14(d) Financial Statement Schedule -- The response to this portion of
Item 14 is submitted as a separate section of this report on
page 18.
The agreements set forth above describe the contents of certain
exhibits thereunto which are not included. However, such exhibits will be
furnished to the Commission upon request.
16
16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Harte-Hanks, Inc. has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
HARTE-HANKS, INC.
By: /s/ Larry Franklin
-----------------------------------
Larry Franklin
Chairman & Chief Executive Officer
By: /s/ Jacques D. Kerrest
-----------------------------------
Jacques D. Kerrest
Senior Vice President, Finance and
Chief Financial Officer
Date: March 29, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the Registrant
and in the capacities indicated.
/s/ Houston H. Harte /s/ Christopher M. Harte
----------------------------------------------- -----------------------------------
Houston H. Harte, Vice Chairman Christopher M. Harte, Director
/s/ Larry Franklin /s/ James L. Johnson
----------------------------------------------- -------------------------------
Larry Franklin, Chairman James L. Johnson, Director
/s/ Richard M. Hochhauser /s/ David L. Copeland
----------------------------------------------- --------------------------------
Richard M. Hochhauser, Director David L. Copeland, Director
/s/ Dr. Peter T. Flawn
----------------------------------------------
Dr. Peter T. Flawn, Director
17
17
INDEPENDENT AUDITORS' REPORT 10-K SCHEDULE
The Board of Directors and Stockholders
Harte-Hanks, Inc.:
Under date of January 29, 2001, we reported on the consolidated balance sheets
of Harte-Hanks, Inc. and subsidiaries as of December 31, 2000 and 1999 and the
related consolidated statements of operations, cash flows and stockholders'
equity for each of the years in the three-year period ended December 31, 2000,
as contained in the 2000 annual report to stockholders. These consolidated
financial statements and our report thereon are incorporated by reference in the
annual report on Form 10-K for the year 2000. In connection with our audits of
the aforementioned consolidated financial statements, we also audited the
related consolidated financial statement schedule as referred to in Item
14(a)(2). This financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
/s/ KPMG LLP
San Antonio, Texas
January 29, 2001
18
18
Harte-Hanks, Inc. and Subsidiaries
Financial Statement Schedule
Schedule II
Valuation and Qualifying Accounts
(in thousands)
Additions
Balance at Charged to Balance
Beginning Costs and at End
Description of Year Expenses Deductions of Year
----------- ---------- ---------- ---------- -------
Allowance for doubtful accounts:
Year ended December 31, 2000... $ 3,751 $ 4,602 $ 3,709 $4,644
======= ======= ======= ======
Year ended December 31, 1999... $ 3,246 $ 1,825 $ 1,320 $3,751
======= ======= ======= ======
Year ended December 31, 1998... $ 2,835 $ 2,193 $ 1,782 $3,246
======= ======= ======= ======
19
INDEX TO EXHIBITS
Exhibit
No. Description of Exhibit
------- ----------------------
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).
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]. (filed as Exhibit 4(c) to the
Company's Form 10-Q for the nine months ended September 30, 2000
and incorporated by reference herein).
4(d) Other long term debt instruments are not being filed pursuant to
Section (b) (4) (ii) of Item 601 of Regulation S-K. Copies of
such instruments will be furnished to the Commission upon
request.
20
Exhibit
No. Description of Exhibit
------- ----------------------
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, Inc. and Larry
Franklin, dated as of December 15, 2000.
*10(d) Form of Severance Agreement between Harte-Hanks, Inc. and
Richard M. Hochhauser dated as of December 15, 2000.
*10(e) Form 1 of Severance Agreement between Harte-Hanks, Inc. and
certain Executive Officers of the Company dated as of
December 15, 2000.
*10(f) Form 2 of Severance Agreement between Harte-Hanks, Inc. and
certain Executive Officers of the Company dated as of
December 15, 2000.
10(g) 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(h) 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(i) Harte-Hanks, Inc. Amended and Restated 1991 Stock Option Plan
(filed as Exhibit 10(g) 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. 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(k) 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 incorporated by reference herein).
*10(l) Amendment One to Harte-Hanks, Inc. Amended and Restated
Restoration Pension Plan dated December 18, 2000.
21
Exhibit
No. Description of Exhibit
------- ----------------------
*11 Statement Regarding Computation of Net Income (Loss) Per Common
Share.
*13 Annual Report to Stockholders (only those portions incorporated
by reference into the Form 10-K are filed herewith).
*21 Subsidiaries of the Company
*23 Consent of KPMG LLP
---------------------
*Filed herewith