Business Segments

6 Months Ended

Jun. 30, 2014

Business Segments

Business Segments

Note L – Business Segments

During the second quarter of 2014, Harte Hanks initiated a new strategy to optimize our operational structure by organizing into two distinct operating divisions: Customer Interaction and Trillium Software. In accordance with ASC 280, Segment Reporting, we determined that under this new organizational structure, we will report the two operating divisions as two reportable segments – Customer Interaction and Trillium Software. Our reportable segments are described below.

Customer Interaction

Our Customer Interaction services offer a wide variety of integrated, multi-channel, data-driven solutions for our customers. We derive revenues by offering a full complement of capabilities and resources to provide a broad range of marketing services and data management software, in media from direct mail to email, including: 

· agency and digital services;

· database marketing solutions and business-to-business lead generation;

· direct mail; and

· contact centers.

Trillium Software

Trillium Software, A Harte Hanks Company, is a leading enterprise data quality solutions provider. Our full complement of technologies and services includes global data profiling, data cleansing, enrichment, and data linking for e-business, customer relationship management, data governance, enterprise resource planning, supply chain management, data warehouse, and other enterprise applications. Revenues from the Trillium Software segment are comprised primarily of software, maintenance and professional services.

Customer Interaction’s largest cost components are labor, outsourced costs and mail supply chain costs.  Trillium Software’s largest cost component is development, which is comprised primarily of labor.

General corporate expense consists primarily of pension and workers compensation expense related to employees from former operations.

Information about the operations of our two business segments is as follows:

	Three months ended June 30,
In thousands	2014			2013
Operating revenues
Customer Interaction	$	127,321		$	126,952
Trillium Software	12,989			13,153
Total operating revenues	$	140,310		$	140,105
Operating income (loss)
Customer Interaction	$	9,192		$	10,135
Trillium Software	2,749			3,410
Corporate	(954		)	(1,132		)
Total operating income	$	10,987		$	12,413
Income from continuing operations before income taxes	$	10,987		12,413
Interest expense	710			$	779
Interest income	(81		)	(29		)
Other, net	1,075			82
Total income from continuing operations before income taxes	$	9,283		$	11,581
	Six months ended June 30,
In thousands	2014			2013
Operating revenues
Customer Interaction	$	246,055		$	246,590
Trillium Software		26,982			25,867
Total operating revenues	$	273,037		$	272,457
Operating income
Customer Interaction	$	11,142		$	17,041
Trillium Software		6,344			7,038
Corporate		(1,920	)		(2,262	)
Total operating income	$	15,566		$	21,817
Income (loss) from continuing operations before income taxes	$	15,566		$	21,817
Interest expense		1,437			1,582
Interest income		(129	)		(51	)
Other, net		1,809			(1,136	)
Total income (loss) from continuing operations before income taxes	$	12,449		$	21,422