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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, 2001
[ ] 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 _____
COMMISSION FILE NUMBER 1-7120
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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 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
------------------- ----------------------------
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.
--- ---
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
---
Aggregate market value of the Company's voting stock held by
non-affiliates on February 1, 2002, based on the $28.32 per share closing price
for the Company's Common Stock on the New York Stock Exchange on such date:
approximately $1,183,000,000.
SHARES OUTSTANDING AT FEBRUARY 1, 2002:
Common Stock - 62,563,925 shares
DOCUMENTS INCORPORATED BY REFERENCE:
The Company's Annual Report to Stockholders for the year ended December
31, 2001 (incorporated in Part II to the extent provided in Items 5, 6, 7 and 8
hereof).
Definitive Proxy Statement for the Company's May 7, 2002 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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2
Harte-Hanks, Inc.
Table of Contents
Form 10-K Report
December 31, 2001
Page
Part I
Item 1. Business 3
Item 2. Properties 3
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Part II
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
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 11
Item 13. Certain Relationships and Related Transactions 11
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K. 11
Signatures 15
3
ITEM 1. BUSINESS AND ITEM 2. PROPERTIES
INTRODUCTION
Harte-Hanks is an international direct and interactive marketing
services company that provides end-to-end customer relationship management
(CRM), related marketing services solutions and shopper publications to a wide
range of industries serving both consumer and business-to-business markets.
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 technology and a growing need among marketers
to customize the products and services they offer to customers. Direct and
interactive marketing, which represents 66% 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 $917.9 million in 2001.
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 became 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 an international direct and interactive marketing
services company that provides end-to-end CRM and related marketing services
solutions to a wide range of industries serving both consumer and
business-to-business markets. The Company utilizes advanced technologies to
enable its clients to identify, reach, influence and nurture their customers.
The Company believes that developments in technology and trends toward more
sophisticated marketing analysis and measurement will continue to result in
increased usage of direct and interactive marketing services. The Company's
solutions use technology as the enabler to capture, analyze and disseminate
customer and prospect data at all points of contact. The Harte-Hanks
customer-centric models allow it to be the overall solutions provider for
driving traffic to brick-and-mortar locations, Web sites or call/contact
centers. With a full-service approach - CRM professional services to
implementation to ongoing support; strong product and service brands including
Alllink(TM), Trillium(TM) and nTouch; the use of targeted media from mail to
Internet to Web to telephone; end-to-end execution from design and print to
personalized mail and email production - Harte-Hanks provides practical
implementation of technology and understands the needs of clients and their
customers to deliver best-of-breed solutions. The Company's client base is both
domestic and international. In 2001, Harte-Hanks Direct Marketing had revenues
of $601.9 million, which accounted for approximately 66% of the Company's total
revenues.
In 2001, Harte-Hanks made one acquisition in its direct and interactive
marketing business segment. This acquisition expanded the Company's services and
client base in its CRM sector. Harte-Hanks expanded its
4
services to the automotive, energy and other industries through the acquisition
of Sales Support Services, Inc., a leading business-to-business lead generation,
order processing and fulfillment services company with operations in New Jersey,
Texas and California.
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, decision-making and/or
additional interaction in order for clients to more effectively manage their
customer and prospect relationships. 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 its proprietary name and
address matching software, Trillium(TM), 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 software
applications and 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 providing software solutions for analytics and campaign
management, Harte-Hanks CRM performs regular database updates. Harte-Hanks CRM
also offers its software module Trillium(TM) for clients who want to integrate
data quality capabilities into their data warehouse or operational systems.
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 select markets.
The Company expanded its CRM services by the November 2001 acquisition
of Sales Support Services, Inc., a leading business-to-business lead generation,
order processing and fulfillment services company to the automotive, energy and
other industries.
The Company strengthened its suite of CRM offerings by forming a number
of strategic alliances during the year. Harte-Hanks Trillium(TM) Software joined
the Siebel Alliance Program as a Premier Software Partner and has successfully
validated its Trillium Connector for Siebel eBusiness Applications. Trillium
Software has also
5
completed the development of an active interface to the Microsoft SQL Server
2000 Data Transformation Service and has been accepted into Microsoft's Data
Warehouse program. These alliances were developed to align industry leading
software technologies in a tightly integrated solution for developing the most
accurate and reliable customer information for customer data integration,
customer data management, e-business and data warehouse applications.
Additionally, Trillium Software was named a key business partner to the Compaq
Computer Corporation's Zero Latency Enterprise (ZLE) architecture. The Compaq
ZLE solution enables companies to converge key business operations in order to
enhance customer relations, strengthen global supply chain linkages, and improve
decision making through real-time business intelligence and knowledge
management. Trillium Software is the component of Compaq's ZLE architecture used
to clean, standardize and link data in real-time.
Depending on the needs of its clients, Harte-Hanks CRM capabilities are
provided in a specialized, coordinated and integrated approach through 16
facilities nationwide. 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 10 offices located outside of the United States.
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 16 facilities nationwide.
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 Europe, as well as office locations
in Australia, Canada and South America. In addition, the Company has affiliates
in Asia. The sales forces, with industry-specific knowledge and experience,
emphasize the cross-selling of 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.
6
FACILITIES
Direct and interactive marketing services are provided at the following
facilities:
CRM MARKETING SERVICES (CONTINUED)
Austin, Texas Forty Fort, Pennsylvania
Billerica, Massachusetts Fullerton, California
Clearwater, Florida Grand Prairie, Texas
Fort Worth, Texas Jacksonville, Florida
Glen Burnie, Maryland Langhorne, Pennsylvania
La Jolla, California Memphis, Tennessee
Lake Katrine, New York Sacramento, California
Lake Mary, Florida Shawnee, Kansas
Monroe Township, New Jersey Westville, New Jersey
New York, New York
Ontario, California NATIONAL SALES HEADQUARTERS
River Edge, New Jersey Cincinnati, Ohio
San Diego, California
Sterling Heights, Michigan
Valencia, California INTERNATIONAL OFFICES
West Bridgewater, Massachusetts Darmstadt, Germany
Dublin, Ireland
MARKETING SERVICES Hasselt, Belgium
Baltimore, Maryland London, United Kingdom
Bellmawr, New Jersey Madrid, Spain
Bloomfield, Connecticut Melbourne, Australia
Cherry Hill, New Jersey Sao Paulo, Brazil
Cincinnati, Ohio Sevres, France
Clearwater, Florida Toronto, Canada
Deerfield Beach, Florida Uxbridge, United Kingdom
7
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 is 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, 2001, 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
where both an "early" and "late" edition PennySaver is published each week.) The
Company's California publications account for 88% of Shopper's weekly
circulation.
Harte-Hanks publishes 818 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 selective acquisitions. In 2001, Harte-Hanks
Shoppers had revenues of $316.0 million, accounting for approximately 34% of the
Company's total revenues.
During the period 1998 through 2001, over 1.3 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. The Company now reaches over 8.8
million households in California, or nearly 73% of the state's total.
8
PUBLICATIONS
The following table sets forth certain information with respect to shopper
publications:
December 31, 2001
---------------------------------
Number of
Market Publication Name Circulation Zones
---------------------------------------- ---------------- --------------- ---------------
Greater Los Angeles PennySaver 4,944,000 422
Greater San Diego PennySaver 1,693,500 135
Northern California PennySaver 2,165,000 162
South Florida The Flyer 1,186,500 99
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Total: 9,989,000 818
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 40 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. In addition,
Shoppers offer advertising over its internet sites - www.pennysaverusa.com for
its California publications and www.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 630 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 proprietary sales and marketing systems to enter
customer orders directly from the field, instantly checking space availability,
ad costs and other pertinent information. These systems efficiently facilitate
the placement of advertising into multiple-zoned editions and include built-in
error-reducing safeguards which aid in minimizing costly sales adjustments. In
addition to allowing advertising information to be entered for immediate
publication, these systems feed a relational customer database enabling sales
personnel to access
9
customer history by designated variables to facilitate the identification of
similar potential customers and to assist with timely follow-up on 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 29 sales offices.
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, 2001, Harte-Hanks employed 6,894 full-time employees
and 625 part-time employees, as follows: direct marketing - 5,007 full-time and
317 part-time employees; shoppers - 1,867 full-time and 307 part-time employees;
and corporate office - 20 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 3.7 million square feet. Approximately 3.5 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.
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.
10
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, 2001 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, 2001 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, 2001 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, 2001.
The Company does not use derivative financial instruments in its operations.
The Company's earnings are also affected by fluctuations in foreign
exchange rates as a result of its operations in foreign countries. Due to the
level of operations in foreign countries, the impact of fluctuations in foreign
exchange rates is not significant to the Company's overall earnings.
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, 2001, 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, 2001 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 28, 2001 for the May 7, 2002 Annual
Meeting of Stockholders under the caption "Management -- Directors and Executive
Officers."
11
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference from the information in the Company's
definitive proxy statement dated March 28, 2001 for the May 7, 2002 Annual
Meeting of the Stockholders under the caption, "Executive Compensation and Other
Information."
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 28, 2001 for the May 7, 2002. Annual
Meeting of Stockholders under the caption "Security Ownership of Management and
Principal Stockholders."
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, 2001 attached hereto:
Consolidated Balance Sheets, December 31, 2001 and 2000
Consolidated Statements of Operations, Years ended December 31, 2001,
2000 and 1999
Consolidated Statements of Cash Flows, Years ended December 31, 2001,
2000 and 1999
Consolidated Statements of Stockholders' Equity and Comprehensive
Income, Years ended December 31, 2001, 2000 and 1999
Notes to Consolidated Financial Statements
Independent Auditors' Report
(a)(2) The following accountants' report and financial schedule for years
ended December 31, 2001, 2000 and 1999 are submitted herewith:
Independent Auditors' Report on 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 Page No.
------- ---------------------- --------
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) Second Amended and Restated Bylaws (filed as Exhibit 3(b)
to the Company's Form 10-Q for the nine months ended September
30, 2001 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. 3 dated October 26, 2001 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,
2001 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.
13
Exhibit
No. Description of Exhibit Page No.
------- ---------------------- --------
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 (filed as Exhibit
10(c) To the Company's Form 10-K for the year ended December
31, 2000 and incorporated by reference herein).
10(d) Severance Agreement between Harte-Hanks, Inc. and Richard M.
Hochhauser dated as of December 15, 2000 (filed as Exhibit
10(d) to the Company's Form 10-K for the year ended December
31, 2000 and incorporated by reference herein).
10(e) Form 1 of Severance Agreement between Harte-Hanks, Inc. and
certain Executive Officers of the Company, dated as of
December 15, 2000 (filed as Exhibit 10(e) to the Company's
Form 10-K for the year ended December 31, 2000 and
Incorporated by reference herein).
10(f) Form 2 of Severance Agreement between Harte-Hanks, Inc and
certain Executive Officers of the Company, dated as of
December 15, 2000 (files as Exhibit 10(f) to the Company's
Form 10-K for the year ended December 31, 2000 and
Incorporated by reference herein).
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).
14
Exhibit
No. Description of Exhibit Page No.
------- ---------------------- --------
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 (filed as
Exhibit 10(l) to the Company's Form 10-K for the year ended
December 31, 2000 and incorporated by reference herein).
*13 Annual Report to Stockholders (only those portions
incorporated by reference into the Form 10-K are filed
herewith). 18
*21 Subsidiaries of the Company 41
*23 Consent of KPMG LLP 42
----------
*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 42.
14(d) Financial Statement Schedule -- The response to this portion of Item 14
is submitted as a separate section of this report on page 17.
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.
15
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 28, 2002
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 /s/ William K. Gayden
------------------------------------------- ---------------------------------
Dr. Peter T. Flawn, Director William K. Gayden, Director
16
INDEPENDENT AUDITORS' REPORT ON 10-K SCHEDULE
The Board of Directors and Stockholders
Harte-Hanks, Inc.:
Under date of January 29, 2002, we reported on the consolidated balance sheets
of Harte-Hanks, Inc. and subsidiaries as of December 31, 2001 and 2000 and the
related consolidated statements of operations, cash flows and stockholders'
equity and comprehensive income for each of the years in the three-year period
ended December 31, 2001, as contained in the 2001 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 2001. 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, 2002
17
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, 2001 $ 4,644 $ 4,442 $ 3,623 $ 5,463
============ ============ ============ ============
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
============ ============ ============ ============
EXHIBIT INDEX
(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, 2001 attached hereto:
Consolidated Balance Sheets, December 31, 2001 and 2000
Consolidated Statements of Operations, Years ended December 31, 2001,
2000 and 1999
Consolidated Statements of Cash Flows, Years ended December 31, 2001,
2000 and 1999
Consolidated Statements of Stockholders' Equity and Comprehensive
Income, Years ended December 31, 2001, 2000 and 1999
Notes to Consolidated Financial Statements
Independent Auditors' Report
(a)(2) The following accountants' report and financial schedule for years
ended December 31, 2001, 2000 and 1999 are submitted herewith:
Independent Auditors' Report on 10-K Schedule
Schedule II-- Valuation and Qualifying Accounts
All other schedules are omitted as the required information is
inapplicable
(a) (3) EXHIBITS
EXHIBIT
NO. DESCRIPTION OF EXHIBIT PAGE NO.
------- ---------------------- --------
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) Second Amended and Restated Bylaws (filed as Exhibit 3(b)
to the Company's Form 10-Q for the nine months ended September
30, 2001 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. 3 dated October 26, 2001 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,
2001 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.
EXHIBIT
NO. DESCRIPTION OF EXHIBIT PAGE NO.
------- ---------------------- --------
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 (filed as Exhibit
10(c) To the Company's Form 10-K for the year ended December
31, 2000 and incorporated by reference herein).
10(d) Severance Agreement between Harte-Hanks, Inc. and Richard M.
Hochhauser dated as of December 15, 2000 (filed as Exhibit
10(d) to the Company's Form 10-K for the year ended December
31, 2000 and incorporated by reference herein).
10(e) Form 1 of Severance Agreement between Harte-Hanks, Inc. and
certain Executive Officers of the Company, dated as of
December 15, 2000 (filed as Exhibit 10(e) to the Company's
Form 10-K for the year ended December 31, 2000 and
Incorporated by reference herein).
10(f) Form 2 of Severance Agreement between Harte-Hanks, Inc and
certain Executive Officers of the Company, dated as of
December 15, 2000 (files as Exhibit 10(f) to the Company's
Form 10-K for the year ended December 31, 2000 and
Incorporated by reference herein).
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).
EXHIBIT
NO. DESCRIPTION OF EXHIBIT PAGE NO.
------- ---------------------- --------
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 (filed as
Exhibit 10(l) to the Company's Form 10-K for the year ended
December 31, 2000 and incorporated by reference herein).
*13 Annual Report to Stockholders (only those portions
incorporated by reference into the Form 10-K are filed
herewith). 18
*21 Subsidiaries of the Company 41
*23 Consent of KPMG LLP 42
----------
*Filed herewith