SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1994
_____ Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from __________ to __________
Commission File Number 1-7120
HARTE-HANKS 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, San Antonio, Texas 78216
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code -- 210/829-9000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock: $1 par value, 18,306,100 shares as of September 30, 1994
<PAGE>
<TABLE>
HARTE-HANKS COMMUNICATIONS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
FORM 10-Q REPORT
September 30, 1994
<CAPTION>
Page
<S> <C>
Part I. Financial Information
Item 1. Interim Condensed Consolidated Financial
Statements (Unaudited)
Condensed Consolidated Balance Sheets - 3
September 30, 1994 and December 31, 1993
Consolidated Statements of Operations - 4
Three months ended September 30, 1994 and 1993
Consolidated Statements of Operations - 5
Nine months ended September 30, 1994 and 1993
Consolidated Statements of Cash Flows - 6
Nine months ended September 30, 1994 and 1993
Notes to Interim Condensed Consolidated Financial 7
Statements
Item 2. Management's Discussion and Analysis of Financial 8
Condition and Results of Operations
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 13
(a) Exhibits
(b) Reports on Form 8-K
Signature 13
</TABLE>
<TABLE>
<PAGE>
Harte-Hanks Communications, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (in thousands, except per share and share amounts)
(Unaudited)
<CAPTION>
September 30, December 31,
1994 1993
<S> <C> <C>
Assets
Current assets
Cash.............................................. $ 6,026 $ 4,392
Accounts receivable, net.......................... 63,881 61,130
Inventory......................................... 12,029 8,032
Prepaid expenses.................................. 6,030 5,385
Current deferred income tax....................... 5,696 4,549
Other current assets.............................. 4,563 3,765
Total current assets............................ 98,225 87,253
Property, plant and equipment, net.................. 91,776 90,809
Goodwill, net....................................... 285,645 292,944
Other assets........................................ 8,726 7,932
Total assets.................................... $ 484,372 $ 478,938
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable.................................. $ 28,217 $ 24,422
Accrued payroll and related expenses.............. 15,464 12,607
Accrued interest.................................. 464 950
Prepaid subscriptions............................. 3,742 3,753
Current portion of film contracts................. 2,194 1,233
Income taxes payable.............................. 230 235
Other current liabilities......................... 13,679 10,765
Current portion of long term debt................. 337 977
Total current liabilities....................... 64,327 54,942
Long term debt...................................... 298,405 320,087
Other long term liabilities......................... 21,155 20,045
Total liabilities............................... 383,887 395,074
Stockholders' equity
Common stock, $1 par value, authorized 50,000,000
shares. Issued and outstanding 1994: 18,306,100
shares; 1993: 18,129,400 shares................. 18,306 18,129
Additional paid-in capital........................ 143,653 142,664
Accumulated deficit............................... (61,474) (76,929)
Total stockholders' equity...................... 100,485 83,864
Total liabilities and stockholders' equity...... $ 484,372 $ 478,938
<FN>
See Notes to Interim Condensed Consolidated Financial Statements.
</TABLE>
<TABLE>
<PAGE>
Harte-Hanks Communications, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended September 30,
1994 1993
<S> <C> <C>
Operating revenues.................................... $128,433 $117,512
Operating expenses
Payroll............................................. 48,072 44,430
Production and distribution......................... 45,155 41,684
Advertising, selling, general and administrative.... 12,981 12,795
Depreciation........................................ 3,030 2,775
Goodwill amortization............................... 2,352 2,350
111,590 104,034
Operating income...................................... 16,843 13,478
Other expenses (income)
Interest expense.................................... 4,404 7,770
Interest income..................................... (49) (46)
Other, net.......................................... 410 24
4,765 7,748
Income before income tax expense...................... 12,078 5,730
Income tax expense.................................... 5,829 3,563
Income before extraordinary item...................... 6,249 2,167
Extraordinary item:
Loss due to early extinguishment of debt,
net of income tax benefit of $2,062............... -- (3,850)
Net income (loss)..................................... $ 6,249 $ (1,683)
Primary:
Income (loss) per common share:
Income before extraordinary item.................. $ 0.33 $ 0.17
Extraordinary item................................ -- (0.31)
Net income (loss)................................. $ 0.33 $ (0.14)
Weighted average common and common equivalent
shares outstanding................................ 19,046 12,312
Fully diluted:
Income (loss) per common share:
Income before extraordinary item.................. $ 0.31 $ 0.17
Extraordinary item................................ -- (0.31)
Net income (loss)................................. $ 0.31 $ (0.14)
Weighed average common and common equivalent
share outstanding................................... 20,482 12,312
<FN>
See Notes to Interim Condensed Consolidated Financial Statements.
</TABLE>
<TABLE>
<PAGE>
Harte-Hanks Communications, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
<CAPTION>
Nine Months Ended September 30,
1994 1993
<S> <C> <C>
Operating revenues.................................... $370,414 $334,141
Operating expenses
Payroll............................................. 142,703 128,538
Production and distribution......................... 129,335 118,765
Advertising, selling, general and administrative.... 38,914 36,327
Depreciation........................................ 9,366 8,607
Goodwill amortization............................... 7,054 7,817
Goodwill write-down................................. -- 55,463
327,372 355,517
Operating income (loss)............................... 43,042 (21,376)
Other expenses (income)
Interest expense.................................... 12,514 24,916
Interest income..................................... (140) (97)
Other, net.......................................... 687 551
13,061 25,370
Income (loss) before income tax expense............... 29,981 (46,746)
Income tax expense.................................... 14,526 5,376
Income (loss) before extraordinary item............... 15,455 (52,122)
Extraordinary item:
Loss due to early extinguishment of debt,
net of income tax benefit of $2,062............... -- (3,850)
Net income (loss)..................................... $ 15,455 $(55,972)
Primary:
Income (loss) per common share:
Income (loss) before extraordinary item........... $ 0.81 $ (4.34)
Extraordinary item................................ -- (0.32)
Net income (loss)................................. $ 0.81 $ (4.66)
Weighted average common and common equivalent
shares outstanding................................ 19,043 12,009
Fully diluted:
Income (loss) per common share:
Income (loss) before extraordinary item........... $ 0.78 $ (4.34)
Extraordinary item................................ -- (0.32)
Net income (loss)................................. $ 0.78 $ (4.66)
Weighed average common and common equivalent
share outstanding................................... 20,483 12,009
<FN>
See Notes to Interim Condensed Consolidated Financial Statements.
</TABLE>
<TABLE>
<PAGE>
Harte-Hanks Communications, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (in thousands)
(Unaudited)
<CAPTION>
Nine Months Ended September 30,
1994 1993
<S> <C> <C>
Operating Activities
Net income (loss)................................... $ 15,455 $(55,972)
Add (deduct) non-cash income and expenses:
Depreciation ................................... 9,366 8,607
Goodwill amortization........................... 7,054 7,817
Goodwill write-down............................. -- 55,463
Film amortization............................... 1,881 2,701
Deferred income taxes........................... (1,882) (89)
Other, net...................................... 446 171
Changes in operating assets and liabilities
Increase in accounts receivable, net.............. (2,566) (1,848)
Increase in inventory............................. (4,118) (106)
Increase in prepaid expenses and other
current assets.................................. (622) (3,710)
Increase in accounts payable...................... 1,417 103
Increase (decrease) in other accrued expenses
and other liabilities........................... 5,032 (7,673)
Other, net........................................ 1,172 (39)
Extraordinary loss due to early extinguishment
of debt......................................... -- 5,912
Net cash provided by operating activities....... 32,635 11,337
Investing Activities
Acquisitions........................................ -- (9,783)
Purchases of property, plant and equipment.......... (10,977) (18,621)
Proceeds from the sale of property, plant
and equipment..................................... 74 1,038
Payments on film contracts.......................... (1,468) (2,664)
Net cash used in investing activities............. (12,371) (30,030)
Financing Activities
Long term debt borrowings........................... 348,302 405,629
Payments on long term debt, including current
maturities ....................................... (367,958) (382,234)
Payment of premium on early extinguishment
of debt........................................... -- (3,446)
Stock transactions.................................. 1,026 (15)
Net cash provided by (used in) financing
activities...................................... (18,630) 19,934
Net increase in cash................................ 1,634 1,241
Cash at beginning of year........................... 4,392 3,279
Cash at end of period............................... $ 6,026 $ 4,520
<FN>
See Notes to Interim Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
Harte-Hanks Communications, Inc. and Subsidiaries
Notes to Interim Condensed Consolidated Financial Statements
(Unaudited)
Note A - Financial Statements
The accompanying unaudited Interim Condensed Consolidated Financial
Statements include the accounts of Harte-Hanks Communications, Inc.
and subsidiaries (the "Company").
The statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for
a fair presentation have been included. Operating results for the
nine months ended September 30 are not necessarily indicative of the
results that may be expected for the year ending December 31. For
further information, refer to the consolidated financial statements
and footnotes included in the Company's annual report on Form 10-K for
the year ended December 31, 1993.
Certain prior period amounts have been reclassified for comparative
purposes.
Note B - Income Taxes
The Company's quarterly income tax calculation is based on an
effective income tax rate that is derived by estimating pretax income
and income tax expense for the entire year ended December 31.
Applying the estimated annual effective income tax rate to the pretax
income for the nine months ended September 30, 1994 results in an
income tax expense of $14.5 million. The effective income tax rate
calculated is higher than the federal statutory rate of 35% due to the
addition of state taxes and to certain expenses recorded for financial
reporting purposes (primarily goodwill amortization) which are not
deductible for federal income tax purposes.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Operating results, excluding the effect of the second quarter 1993 goodwill
write-down (discussed under "Goodwill Write-Down," page 12) and third
quarter 1993 extraordinary loss (discussed under "Extraordinary Item," page
12), were as follows:
<TABLE>
Three months ended Nine months ended
In thousands September 30, 1994 September 30, 1993 Change September 30, 1994 September 30, 1993 Change
<S> <C> <C> <C> <C> <C> <C>
Revenues $128,433 $117,512 9.3% $370,414 $334,141 10.9%
Operating expenses 111,590 104,034 7.3% 327,372 300,054 9.1%
Operating income $ 16,843 $ 13,478 25.0% $ 43,042 $ 34,087 26.3%
Net income $ 6,249 $ 2,167 188.4% $ 15,455 $ 3,341 362.6%
</TABLE>
Each business segment contributed to consolidated revenue growth of 9.3% to
$128.4 million and operating income growth of 25.0% to $16.8 million in the
third quarter of 1994 as compared to the third quarter of 1993. The most
dramatic growth occurred in the direct marketing business where revenues
increased 26.5% and operating income increased 67.1%. The Company's overall
growth for both the quarter and year-to-date periods resulted from the
development of new products and services, new customers, shopper circulation
expansion and improving general economic conditions. The same growth
factors also caused operating expenses to rise in both time periods.
Direct Marketing
Direct marketing operating results were as follows:
<TABLE>
Three months ended Nine months ended
In thousands September 30, 1994 September 30, 1993 Change September 30, 1994 September 30, 1993 Change
<S> <C> <C> <C> <C> <C> <C>
Revenues $41,700 $32,961 26.5% $115,728 $87,655 32.0%
Operating expenses 36,716 29,979 22.5% 104,012 79,933 30.1%
Operating income $ 4,984 $ 2,982 67.1% $ 11,716 $ 7,722 51.7%
</TABLE>
Direct marketing revenues increased $8.7 million in the third quarter of
1994 when compared to the third quarter of 1993. The most significant
revenue increases occurred in database, response management and integrated
direct marketing. These service offerings enable customers to identify and
communicate with their marketing targets and to evaluate responses and
measure the effectiveness of their marketing communications. Overall,
revenue growth resulted from increased business with both new and existing
customers, particularly in services provided to the retail, banking, mutual
funds and other financial industries and international customers.
Payroll costs increased $2.7 million for the third quarter of 1994 as
compared to 1993, primarily due to increased hiring to support direct
marketing's revenue growth. Production costs also rose due to increased
volumes.
Direct marketing revenues increased $28.1 million in the first nine months
of 1994 as compared to the first nine months of 1993. Increased revenues
reflected significant growth in all service categories, particularly in
response management, integrated direct marketing and database. The revenue
increase in the first nine months of 1994 was also slightly affected by the
April 1993 acquisition of Direct Market Concepts, Inc.
Year-to-date 1994 operating expenses rose $24.1 million when compared to
1993, reflecting increased activity as well as investments to support future
growth. Year-to-date 1994 operating expenses were also affected slightly by
the April 1993 acquisition.
Shoppers
Shopper operating results, excluding the second quarter 1993 goodwill write-
down, were as follows:
<TABLE>
Three months ended Nine months ended
In thousands September 30, 1994 September 30, 1993 Change September 30, 1994 September 30, 1993 Change
<S> <C> <C> <C> <C> <C> <C>
Revenues $45,043 $45,089 -0.1% $132,485 $130,549 1.5%
Operating expenses 39,281 39,681 -1.0% 118,746 118,517 0.2%
Operating income $ 5,762 $ 5,408 6.5% $ 13,739 $ 12,032 14.2%
</TABLE>
Excluding revenues from the Company's smallest shopper, sold in February
1994, shopper revenues grew $1.4 million, or 3.2%, in the third quarter of
1994 as compared to the same period in 1993. Revenues grew primarily as a
result of circulation expansion. During the 12 months ended September 30,
1994, circulation for the Company's four remaining shoppers grew from 6.7
million to 6.9 million households.
Excluding operating expenses from the divested shopper, third quarter
operating expenses increased $1.2 million. Postage costs increased $0.5
million primarily due to higher circulation. Newsprint costs were flat,
with increased costs resulting from higher volumes due to circulation growth
offset by average price declines. Payroll costs rose $0.7 million, and
general and administrative expenses decreased $0.2 million.
Excluding revenues from the divested shopper, year-to-date revenues
increased $5.5 million, or 4.4%, as compared to 1993. Revenue growth for
the first nine months of 1994 was primarily attributable to circulation
expansion and, to a lesser extent, increased advertising in existing
circulation zones.
Excluding operating expenses from the divested shopper, year-to-date
operating costs increased $4.4 million. Payroll, postage and newsprint
costs increased $2.0 million, $1.5 million and $0.3 million, respectively,
due to increased circulation. General and administrative expenses remained
flat.
<PAGE>
Newspapers
Newspaper operating results, excluding the second quarter 1993 goodwill
write-down, were as follows:
<TABLE>
Three months ended Nine months ended
In thousands September 30, 1994 September 30, 1993 Change September 30, 1994 September 30, 1993 Change
<S> <C> <C> <C> <C> <C> <C>
Revenues $34,682 $32,619 6.3% $101,694 $95,572 6.4%
Operating expenses 28,564 27,525 3.8% 83,917 82,126 2.2%
Operating income $ 6,118 $ 5,094 20.1% $ 17,777 $13,446 32.2%
</TABLE>
Newspaper revenues increased $2.1 million in the third quarter of 1994 when
compared to the third quarter of 1993. Advertising revenues were up 8.0%
overall. Classified advertising revenues grew 11.9% led by strong
automotive volumes. Retail advertising revenues increased 3.6%, while
insert revenues rose 2.5%. In addition, niche and specialty product
revenues were up as a result of investments made to broaden the newspaper
revenue base. Circulation revenues increased 4.4%, reflecting home-delivery
price increases in the fall of 1993.
Payroll costs were $0.5 million higher in the third quarter of 1994 as
compared to 1993 due to increased sales commissions on higher advertising
volumes and normal payroll increases. In addition, general and
administrative costs rose $0.4 million. Newsprint costs decreased $0.2
million as a result of lower average newsprint prices offset slightly by
higher volumes.
Year-to-date 1994 newspaper revenues grew $6.1 million when compared to
1993. Advertising revenues increased 7.4%, driven largely by volume
increases in classified advertising. Circulation revenues increased 5.9%.
Payroll costs for the first nine months of 1994 rose $1.9 million due to
increased advertising volumes in the Company's primary products and normal
payroll increases. In addition, general and administrative costs increased
$0.9 million. Newsprint costs declined $0.6 million due to lower average
newsprint prices offset by higher volumes. Goodwill amortization decreased
$0.8 million due to the second quarter 1993 goodwill write-down that related
to the Company's suburban newspapers in Boston and Dallas.
Television
Television operating results were as follows:
<TABLE>
Three months ended Nine months ended
In thousands September 30, 1994 September 30, 1993 Change September 30, 1994 September 30, 1993 Change
<S> <C> <C> <C> <C> <C> <C>
Revenues $7,008 $6,843 2.4% $20,507 $20,365 0.7%
Operating expenses 4,959 5,004 -0.9% 14,445 14,781 -2.3%
Operating income $2,049 $1,839 11.4% $ 6,062 $ 5,584 8.6%
</TABLE>
<PAGE>
Revenues for the television segment increased $0.2 million in the third
quarter of 1994 when compared to the same period in 1993. Revenues from the
television station operation increased $0.3 million due to higher
advertising revenues, including early political advertising for the November
elections. The revenue increase from the television station operation was
partially offset by decreased revenue from the segment's print graphics
services.
For the first nine months of 1994, television segment revenues increased
$0.1 million as compared to the same period in 1993. The nine months of
1993 was affected by a number of favorable events: the favorable impact from
the closure of one of San Antonio's daily newspapers, a special senatorial
election runoff and the San Antonio Olympic Festival.
Year-to-date revenues from the television station operation increased $0.4
million. A direct mail product and radio station introduced in 1993 also
resulted in additional revenues for 1994. These revenue increases were
offset by a $0.5 million decline in revenues from the segment's print
graphics services.
Expenses for the television segment remained relatively flat during the
third quarter. Year-to-date expenses decreased $0.3 million when compared
to the same period in 1993 primarily because of film programming cost
declines due to the expiration of certain film contracts. These decreases
were slightly offset by increases in payroll costs and other production
costs.
Other Items Affecting Operating Results
Postage expense represents approximately 11% of the Company's total
operating expenses. Shoppers, which accounts for approximately 95% of the
Company's total postage expense, and newspapers both have experienced stable
postal rates in recent years. While postal rates generally increase every
three years, the 10.3% increase proposed for 1995 would be the first postal
rate increase in four years. In addition, the 10.3% proposed increase will
impact direct marketing customers' costs.
Newsprint expense represents approximately 7% of the Company's total
operating expenses. Newspapers and shoppers both have benefited from
favorable newsprint prices in the past several years. Newsprint prices
increased about 11% in June 1994 and about 8% in August 1994, and an
additional price increase of approximately 8% has been announced for
December 1, 1994. These price increases will impact results for the fourth
quarter of 1994 as well as fiscal 1995.
Interest Expense
Interest expense decreased $3.4 million in the third quarter of 1994 and
$12.4 million in the first nine months of 1994 when compared to the same
periods in 1993 as a result of reduced debt levels and the use of less
expensive debt. The Company redeemed $100 million of its 11 7/8%
Subordinated Debentures in August 1993 with borrowings under its credit
facility. The remaining $100 million of Debentures was redeemed in December
1993, funded primarily with proceeds from the Company's initial public
offering.<PAGE>
Although short term interest rates have risen throughout the year, the
impact on the Company has been mitigated somewhat by more favorable pricing
under terms of the Company's credit facility. The more favorable pricing is
a result of increased operating cash flow, as defined in the Company's
credit facility agreement, and reduced debt levels.
Income Taxes
The Company's income tax expense increased $2.3 million in the third quarter
of 1994 and $9.2 million in the first nine months of 1994 when compared to
the same periods in 1993. The expense increase was directly related to the
increased income levels.
Goodwill Write-Down
During the second quarter of 1993, the Company incurred a goodwill write-
down charge of $55.5 million. This write-down was related to the Company's
daily, semi-weekly and weekly newspapers in suburban Boston and Dallas and,
to a lesser extent, its shopper publication in Tucson. The Company sold the
Tucson shopper in February 1994.
Extraordinary Item
As a result of the third quarter 1993 debt redemption discussed under
"Interest Expense," the Company incurred an extraordinary loss of $3.9
million, net of income tax benefits of $2.1 million, from the payment of
redemption premiums and the write-off of related unamortized financing costs
and issuance costs.
Liquidity and Capital Resources
Cash provided from operating activities for the nine months ended September
30, 1994 was $32.6 million, as compared to $11.3 million for the nine months
ended September 30, 1993. Net cash outflows for investing activities were
$12.4 million, as compared to $30.0 million in 1993. Year-to-date investing
activities for 1994 included $11.0 million in capital expenditures for
equipment purchases. In 1993, the net cash outflows for investing
activities of $30.0 million consisted primarily of $18.6 million in capital
expenditures and $9.8 million in cash expenditures on acquisitions.
Capital resources are also available from and provided through the Company's
unsecured credit facility. All borrowings under the revolving credit
facility are to be repaid by December 31, 1999. Management believes that
its credit facility, together with cash provided from operating activities,
will be sufficient to fund operations, anticipated capital and film
expenditures and debt service requirements for the foreseeable future. As
of September 30, 1994, the Company had $103.3 million of unused borrowing
capacity under its credit facility, of which $60.0 million was reserved to
serve as backup for the Company's outstanding commercial paper and other
short-term borrowing facilities.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. See index to Exhibits on Page 14.
(b) No reports on Form 8-K were filed for the three months ended
September 30, 1994.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
<TABLE>
HARTE-HANKS COMMUNICATIONS, INC.
<S> <C>
November 11, 1994 /s/ Richard L. Ritchie
Date Richard L. Ritchie
Senior Vice President,
Finance and Chief Financial
and Accounting Officer
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit Page No.
<S> <C> <C>
*11 Statement Regarding Computation of Net Income (Loss) 15
Common Share
*27 Financial Data Schedules
* Filed herewith.
</TABLE>
<PAGE>
<TABLE>
Exhibit 11
Harte-Hanks Communications, Inc. and Subsidiaries
Earnings Per Share Computations
(in thousands, except per share data)
PRIMARY
<CAPTION>
Three Months Ended September 30,
1994 1993
<S> <C> <C>
Income before extraordinary item.......... $ 6,249 $ 2,167
Extraordinary item........................ -- (3,850)
Net income (loss)......................... $ 6,249 $ (1,683)
Shares used in net earnings per
share computations...................... 19,046 12,312
Per share:
Income before extraordinary item.......... $ .33 $ .17
Extraordinary item........................ -- (.31)
Net income (loss)......................... $ .33 $ (.14)
</TABLE>
<TABLE>
Computation of Shares Used In Net Earnings Per Share Computations
<CAPTION>
Three Months Ended September 30,
1994 1993
<S> <C> <C>
Average outstanding common shares......... 18,245 11,879
Average common equivalent shares --
dilutive effect of option shares........ 801 --
Dilutive effect of options issued in
the preceding twelve months prior
to the initial public offering.......... -- 433
Shares used in net earnings
per share computations.................. 19,046 12,312
</TABLE>
<TABLE>
FULLY DILUTED
<CAPTION>
Three Months Ended September 30,
1994 1993
<S> <C> <C>
Income before extraordinary item.......... $ 6,249 $ 2,167
Extraordinary item........................ -- (3,850)
Net income (loss)......................... $ 6,249 $ (1,683)
Adjusted net income (loss)
for interest on convertible note........ $ 6,437 $ (1,683)
Shares used in net earnings
per share computations.................. 20,482 12,312
Per share:
Income before extraordinary item.......... $ .31 $ .17
Extraordinary item........................ -- (.31)
Net income (loss)......................... $ .31 $ (.14)
</TABLE>
<TABLE>
Computation of Shares Used In Net Earnings Per Share Computations
<CAPTION>
Three Months Ended September 30,
1994 1993
<S> <C> <C>
Average outstanding common shares......... 18,245 11,879
Average common equivalent shares --
dilutive effect of option shares........ 808 --
Dilutive effect of convertible note....... 1,429 --
Dilutive effect of options issued
in the preceding twelve months prior
to the initial public offering.......... -- 433
Shares used in net earnings
per share computations.................. 20,482 12,312
</TABLE>
<TABLE>
Exhibit 11
Harte-Hanks Communications, Inc. and Subsidiaries
Earnings Per Share Computations
(in thousands, except per share data)
PRIMARY
<CAPTION>
Nine Months Ended September 30,
1994 1993
<S> <C> <C>
Income (loss) before extraordinary item... $15,455 $(52,122)
Extraordinary item........................ -- (3,850)
Net income (loss)......................... $15,455 $(55,972)
Shares used in net earnings per
share computations...................... 19,043 12,009
Per share:
Income (loss) before extraordinary item... $ .81 $ (4.34)
Extraordinary item........................ -- (.32)
Net income (loss)......................... $ .81 $ (4.66)
</TABLE>
<TABLE>
Computation of Shares Used In Net Earnings Per Share Computations
<CAPTION>
Nine Months Ended September 30,
1994 1993
<S> <C> <C>
Average outstanding common shares......... 18,190 11,879
Average common equivalent shares --
dilutive effect of option shares........ 853 --
Dilutive effect of options issued in
the preceding twelve months prior
to the initial public offering.......... -- 130
Shares used in net earnings
per share computations.................. 19,043 12,009
</TABLE>
<TABLE>
FULLY DILUTED
<CAPTION>
Nine Months Ended September 30,
1994 1993
<S> <C> <C>
Income (loss) before extraordinary item... $15,455 $(52,122)
Extraordinary item........................ -- (3,850)
Net income (loss)......................... $15,455 $(55,972)
Adjusted net income (loss)
for interest on convertible note........ $16,019 $(55,972)
Shares used in net earnings
per share computations.................. 20,483 12,009
Per share:
Income (loss) before extraordinary item... $ .78 $ (4.34)
Extraordinary item........................ -- (.32)
Net income (loss)......................... $ .78 $ (4.66)
</TABLE>
<TABLE>
Computation of Shares Used In Net Earnings Per Share Computations
<CAPTION>
Nine Months Ended September 30,
1994 1993
<S> <C> <C>
Average outstanding common shares......... 18,190 11,879
Average common equivalent shares --
dilutive effect of option shares........ 864 --
Dilutive effect of convertible note....... 1,429 --
Dilutive effect of options issued
in the preceding twelve months prior
to the initial public offering.......... -- 130
Shares used in net earnings
per share computations.................. 20,483 12,009
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1993
<PERIOD-END> SEP-30-1994
<CASH> 6026
<SECURITIES> 0
<RECEIVABLES> 66165
<ALLOWANCES> (2284)
<INVENTORY> 12029
<CURRENT-ASSETS> 98225
<PP&E> 196287
<DEPRECIATION> (104511)
<TOTAL-ASSETS> 484372
<CURRENT-LIABILITIES> 64327
<BONDS> 0
<COMMON> 18306
0
0
<OTHER-SE> 82179
<TOTAL-LIABILITY-AND-EQUITY> 484372
<SALES> 370414
<TOTAL-REVENUES> 370414
<CGS> 0
<TOTAL-COSTS> 327372
<OTHER-EXPENSES> 547
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12514
<INCOME-PRETAX> 29981
<INCOME-TAX> 14526
<INCOME-CONTINUING> 15455
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15455
<EPS-PRIMARY> .81
<EPS-DILUTED> .78
</TABLE>
