<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
October 29, 1997 (October 15, 1997)
Harte-Hanks Communications, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-7120 74-1677284
-------------- ------------ -------------------
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
200 Concord Plaza Drive, San Antonio, Texas 78216
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (210) 829-9000
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<PAGE> 2
ITEM 5. OTHER EVENTS.
On October 15, 1997, the Registrant released the press release attached hereto
as Exhibit 99.1, which press release is incorporated in its entirety herein by
reference. See "Index to Exhibits."
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired Not applicable
(b) Pro Forma Financial Information
The following unaudited pro forma condensed consolidated statements are filed
with this report:
<TABLE>
<S> <C>
Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1997.....Page F-1
Pro Forma Condensed Consolidated Statement of Operations:
Year Ended December 31, 1996.............................Page F-2
Six Months Ended June 30, 1997...........................Page F-3
</TABLE>
On October 15, 1997 Harte-Hanks Communications (the Company) completed the
previously announced sale of its newspaper and television operations to E.W.
Scripps Company for approximately $790 million (the Transaction).
The pro forma condensed consolidated balance sheet as of June 30, 1997 reflects
the financial position of the Company after giving effect to the disposition of
the assets and liabilities of the Company's newspaper (HHN) and television
(HTV) operations and assumes the disposition took place as of June 30, 1997.
The pro forma condensed consolidated statements of operations assume the
disposition occurred on January 1, 1996 and are based upon the operations of
the Company for the year ended December 31, 1996 and the six months ended June
30, 1997.
The unaudited pro forma condensed consolidated statements of operations have
been prepared by the Company based upon assumptions deemed proper by it. The
pro forma adjustments to the statements of operations represented primarily the
use of the Transaction net proceeds to retire the outstanding debt at January
1, 1996, the investment (interest) income earned on the remaining net proceeds
for the periods presented, and the elimination of related interest expense and
banking fees. The unaudited pro forma condensed consolidated financial
statements presented are for illustrative purposes only and are not necessarily
indicative of the future financial position or future results of operations of
the Company had such transactions occurred at the dates indicated for the
periods presented.
The unaudited pro forma condensed consolidated financial statements presented
should be read in conjunction with the historical financial statements and the
related notes of the Company.
2
<PAGE> 3
Page F-1
HARTE-HANKS COMMUNICATIONS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997
(UNAUDITED)
(Dollars in thousands)
===============================================================================
<TABLE>
<CAPTION>
Adjustments
------------------------------
(1) (3)
Historical HHN + HTV Other Pro Forma
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash $ 14,156 $ 2,283 $ 572,351 (4) $ 584,224
Accounts receivable, net 99,394 18,468 80,926
Inventory 12,175 4,224 7,951
Prepaid expense 8,492 866 7,626
Current deferred income tax benefit 6,981 998 5,983
Other current assets 7,075 1,783 5,292
----------- ----------- ------------ -----------
Total current assets 148,273 28,622 572,351 692,002
Property, plant and equipment, net 118,022 40,564 77,458
Goodwill, net 318,783 174,043 144,740
Other assets 5,272 1,959 (1,589)(5) 1,724
----------- ----------- ------------ -----------
Total assets $ 590,350 $ 245,188 $ 570,762 $ 915,924
=========== =========== ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 39,969 $ 2,828 $ 37,141
Accrued payroll and related expenses 17,931 3,932 13,999
Customer deposits and unearned revenue 17,317 3,703 13,614
Income taxes payable 7,147 271,050 (7) 278,197
Other current liabilities 9,702 2,798 6,904
----------- ----------- ------------ -----------
Total current liabilities 92,066 13,261 271,050 349,855
Long term debt 192,400 (192,400)(5) -
Long term deferred tax liabilities (2) 12,480 8,059 2,292 (7) 6,713
Other long term liabilities 13,058 1,071 (6,066)(6) 5,921
----------- ----------- ------------ -----------
Total liabilities 310,004 22,391 74,876 362,489
Total stockholders' equity 280,346 222,797 495,886 553,435
----------- ----------- ------------ -----------
Total liabilities and stockholders' equity $ 590,350 $ 245,188 $ 570,762 $ 915,924
=========== =========== ============ ============
</TABLE>
NOTES TO PRO FORMA BALANCE SHEET:
(1) Net assets of discontinued newspaper and television operations were reported
in total on one line at June 30, 1997. These amounts (detailed below) have
been added back to their respective categories above for presentation
purposes:
<TABLE>
<S> <C>
Property, plant and equipment, net $ 40,564
Goodwill and other intangibles, net 174,043
Other assets 1,959
Long term deferred income tax liabilities 8,059
Other long term liabilities 1,071
------------
Net assets of discontinued operations $ 207,436
============
</TABLE>
(2) "Long term deferred tax liabilities" were previously reported with "Other
long term liabilities" at June 30, 1997.
(3) To eliminate the assets and liabilities of the Company's newspaper (HHN) and
television (HTV) included in the balance sheet as of June 30, 1997.
(4) To reflect the $789.9 million proceeds from the sale of HHN and HTV less the
$25.1 million transaction costs paid arising directly from the sale of HHN
and HTV, less the $192.4 million extinguishment of debt by the Company.
Transaction costs arising from the sale include legal fees, accounting and
auditing fees, stay bonuses, stock option buyouts and other miscellaneous
transaction costs.
(5) To reflect the extinguishment of debt and related write-off of unamortized
financing costs remaining at June 30, 1997.
(6) To reflect the $4.4 million pension curtailment gain and $1.6 million stock
option liability reduction related to the transaction.
(7) To reflect the current income tax and the long term deferred income tax
liabilities related to the sale transaction.
===============================================================================
3
<PAGE> 4
Page F-2
HARTE-HANKS COMMUNICATIONS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(Dollars in thousands except per share amounts)
===============================================================================
<TABLE>
<CAPTION>
Adjustments
---------------------------------
(1)
Historical HHN + HTV Other Pro Forma
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues $ 665,873 $ 150,413 $ -- $ 515,460
--------- --------- --------- ---------
Operating Expenses
Payroll 237,260 49,495 187,765
Production and distribution 240,033 35,304 204,729
Advertising, selling, general and administrative 59,655 16,023 43,632
Depreciation 18,750 4,971 13,779
Goodwill amortization 10,044 6,386 3,658
Merger costs 12,136 -- 12,136
--------- --------- --------- ---------
577,878 112,179 -- 465,699
--------- --------- --------- ---------
Operating income 87,995 38,234 -- 49,761
--------- --------- --------- ---------
Other expenses (income)
Interest expense 13,484 6,138 (7,133)(2) 213
Interest income (1,359) (642) (9,687)(3) (10,404)
Other, net 513 118 (344)(2) 51
--------- --------- --------- ---------
12,638 5,614 (17,164) (10,140)
--------- --------- --------- ---------
Income before income taxes 75,357 32,620 17,164 59,901
Income tax expense 34,736 15,083 2,826 (4) 22,479
--------- --------- --------- ---------
Net income $ 40,621 $ 17,537 $ 14,338 $ 37,422
========= ========= ========= =========
Earnings per common share - primary
Net income $ 1.05 $ 0.45 $ 0.98
--------- --------- ---------
Weighted average common and common
equivalent shares outstanding 38,577 38,577 (336)(5) 38,241
========= ========= =========
Earnings per share - fully diluted
Net income $ 1.05 $ 0.45 $ 0.98
--------- --------- ---------
Weighted average common and common
equivalent shares outstanding 38,654 38,654 (351)(5) 38,303
========= ========= ========
</TABLE>
NOTES TO PRO FORMA STATEMENT OF OPERATIONS:
(1) To eliminate profit and loss of HHN and HTV for the entire period.
(2) To reflect the elimination of interest expense and unamortized financing
costs related to the debt extinguished as a result of the transaction.
(3) To reflect the tax-free investment income for the period considering net
proceeds of the transaction were adjusted by the extinguishment of debt
at January 1, 1996, the cash balance at January 1, 1996 and the net cash
flows from continuing operations for the period.
(4) To reflect the income taxes associated with the elimination of interest
expense and unamortized financing costs as a result of the transaction.
(5) To reflect the purchase of shares resulting from the stock option buy-out
related to the transaction.
===============================================================================
4
<PAGE> 5
Page F-3
HARTE-HANKS COMMUNICATIONS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1997
(UNAUDITED)
(Dollars and shares in thousands except per share amounts)
===============================================================================
<TABLE>
<CAPTION>
Adjustments
----------------------
(1)
Historical HHN + HTV Other Pro Forma
----------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues $ 365,418 $ 76,030 $ -- $ 289,388
--------- --------- --------- ---------
Operating Expenses
Payroll 135,521 25,700 109,821
Production and distribution 125,507 16,097 109,410
Advertising, selling, general and administrative 35,729 8,076 27,653
Depreciation 10,566 2,525 8,041
Goodwill amortization 5,397 3,192 2,205
--------- --------- --------- ---------
312,720 55,590 -- 257,130
--------- --------- --------- ---------
Operating income 52,698 20,440 -- 32,258
--------- --------- --------- ---------
Other expenses (income)
Interest expense 6,491 2,726 (3,698)(2) 67
Interest income (86) (36) (4,785)(3) (4,835)
Other, net (296) 25 (172)(2) (493)
--------- --------- --------- ---------
6,109 2,715 (8,655) (5,261)
--------- --------- --------- ---------
Income before income taxes 46,589 17,725 8,655 37,519
Income tax expense 20,227 7,971 1,463 (4) 13,719
--------- --------- --------- ---------
Net income $ 26,362 $ 9,754 $ 7,192 $ 23,800
========= ========= ========= =========
Earnings per common share - primary
Net income $ 0.68 $ 0.25 $ 0.62
--------- --------- ---------
Weighted average common and common
equivalent shares outstanding 38,782 38,782 (371)(5) 38,411
========= ========= =========
Earnings per share - fully diluted
Net income $ 0.68 $ 0.25 $ 0.62
--------- --------- ---------
Weighted average common and common
equivalent shares outstanding 38,824 38,824 (379)(5) 38,445
========= ========= =========
</TABLE>
NOTES TO PRO FORMA STATEMENT OF OPERATIONS:
(1) To eliminate profit and loss of HHN and HTV for the entire period.
(2) To reflect the elimination of interest expense and unamortized financing
costs related to the debt extinguished as a result of the transaction.
(3) To reflect the tax-free investment income for the period considering net
proceeds of the transaction were adjusted by the extinguishment of debt
at January 1, 1996, the cash balance at January 1, 1996 and the net cash
flows from continuing operations for the period.
(4) To reflect the income taxes associated with the elimination of interest
expense and unamortized financing costs as a result of the transaction.
(5) To reflect the purchase of shares resulting from the stock option buy-out
related to the transaction.
===============================================================================
5
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
Date: October 29, 1997
HARTE-HANKS COMMUNICATIONS, INC.
By: /s/ Jacques D. Kerrest
----------------------------------
Name: Jacques D. Kerrest,
Senior Vice President,
Finance and Chief Financial and
Accounting Officer
6
<PAGE> 7
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Description of Exhibit Numbered Page
<S> <C>
99.1 Press Release dated October 15, 1997 --
</TABLE>
<PAGE> 1
EXHIBIT 99.1
[HARTE HANKS LETTERHEAD]
FOR IMMEDIATE RELEASE
October 15, 1997
HARTE-HANKS COMPLETES SALE OF ITS NEWSPAPERS
AND TV STATION TO E.W. SCRIPPS COMPANY
SAN ANTONIO, TX - Harte-Hanks Communications, Inc. (NYSE: HHS) has completed the
previously announced sale of its newspaper and television operations to the
E.W. Scripps Company (NYSE: SSP) for approximately $790 million.
Commenting on the completion of the transaction, Harte-Hanks President and
Chief Exeucutive Officer Larry Franklin said, "The sale of our newspapers and TV
station is a key step in executing our strategy of becoming a targeted
marketing company. Harte-Hanks will now derive 100% of its revenues from the
direct marketing and shopper businesses. Our recently completed acquisition of
the ABC Shoppers Group demonstrates our commitment to growing these
businesses. Increasingly, we are focusing on building one-on-one relationships
with our clients and their customers. We are convinced this is the right move
for all our stakeholders."
This news release contains forward-looking statements that involve a number of
risks and uncertainties which could cause actual results to differ materially.
These include, but are not limited to, the success of the company's acquisition
strategy, competitive pressures, fluctuations in paper prices, the outcome of
proposed postal rate increases, and general or regional economic conditions.
Based in San Antonio, Texas, Harte-Hanks Communications owns and operates an
international direct marketing company that provides a full range of
specialized, coordinated and integrated direct marketing services including
response management/teleservices, database marketing and marketing services.
The company also owns and operates shoppers that are zoned into more than 750
separate editions reaching over 9 million households in five states each week.
##
FOR MORE INFORMATION, CONTACT: JACQUES KERREST (210) 829-9140
