Delaware | 74-1677284 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
Title of each class | Name of each exchange on which registered | |||
Common Stock | New York Stock Exchange |
Page | ||
• | Agency & Digital Services. Our agency services are full-service, customer engagement agencies specializing in direct and digital communications for both consumer and business-to-business markets. With strategy, creative, and implementation services, we help marketers within targeted industries understand, identify, and engage prospects and customers in their channel of choice. Our digital solutions integrate online services within the marketing mix and include: search engine management, display, digital analytics, website development and design, digital strategy, social media, email, e-commerce, and interactive relationship management and a host of other services that support our core businesses. |
• | Database Marketing Solutions and Business-to-Business Lead Generation. We have successfully delivered marketing database solutions across various industries. Our solutions are built around centralized marketing databases with three core offerings: insight and analytics; customer data integration; and marketing communications tools. Our solutions enable organizations to build and manage customer communication strategies that drive new customer acquisition and retention and maximize the value of existing customer relationships. Through insight, we help clients identify models of their most profitable customer relationships and then apply these models to increase the value of existing customers while also winning profitable new customers. Through customer data integration, data from multiple sources comes together to provide a single customer view of client prospects and customers. Then we help clients apply their data and insights to the entire customer life cycle, to help clients sustain and grow their business, gain deeper customer insights, and continuously refine their customer resource management strategies and tactics. |
• | Direct Mail. As a full-service direct marketing provider and one of the largest mailing partners of the U.S. Postal Service (USPS), our operational mandate is to ensure creativity and quality, provide an understanding of the options available in technologies and segmentation strategies and capitalize on economies of scale with our variety of execution options. Our services include: digital printing, print on demand, advanced mail optimization, logistics and transportation optimization, tracking (including our proprietary prEtrak solution), commingling, shrink wrapping, and specialized mailings. We also maintain fulfillment centers where we provide custom kitting services, print on demand, product recalls, and freight optimization allowing our customers to distribute literature and other marketing materials. |
• | Contact Centers. We operate teleservice workstations around the globe providing advanced contact center solutions such as: speech, voice and video chat, integrated voice response, analytics, social cloud monitoring, and web self-service. We provide both inbound and outbound contact center services and support many languages with our strategically placed global locations for both consumer and business-to-business markets. |
Domestic Offices | |
Austin, Texas | Maitland, Florida |
Baltimore, Maryland | New York, New York |
Burlington, Massachusetts | Oakland, California |
Burlington, Vermont | San Antonio, Texas |
Chicago, Illinois | San Diego, California |
Deerfield Beach, Florida | San Francisco, California |
East Bridgewater, Massachusetts | San Mateo, California |
Fullerton, California | Shawnee, Kansas |
Grand Prairie, Texas | Trevose, Pennsylvania |
Jacksonville, Florida | Texarkana, Texas |
Langhorne, Pennsylvania | Wilkes-Barre, Pennsylvania |
International Offices | |
Böblingen, Germany | Manila, Philippines |
Bristol, United Kingdom | Reading, United Kingdom |
Hasselt, Belgium | Uxbridge, United Kingdom |
• | Federal and state laws governing the use of the internet and regulating telemarketing, including the U.S. Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM), which regulates commercial email and requires that commercial emails give recipients an opt-out method. Canada’s Anti-Spam Legislation (CASL) applies in a comparable manner for our activities in Canada. Telemarketing activities are regulated by, among other requirements, the Federal Trade Commission’s Telemarketing Sales Rule (TSR), the Federal Communications Commission’s Telephone Consumer Protection Act (TCPA), and various state do-not-call laws. |
• | Federal and state laws governing the collection and use of personal data online and via mobile devices, including but not limited to the Federal Trade Commission Act and the Children's Online Privacy Protection Act, which seek to address consumer privacy and protection. |
• | The U.S. Department of Commerce’s proposed Privacy Shield Framework, the Federal Trade Commission’s Protecting Consumer Privacy in an Era of Rapid Change policy, and the European Commission’s newly announced European General Data Protection Regulation (GDPR), each of which seeks to address consumer privacy, data protection, and technological advancements in relation to the collection or use of personal information. |
• | A significant number of states in the U.S. have passed versions of data security or breach notification laws, which include required standards for data security and generally require timely notifications to affected persons in the event of data security breaches or other unauthorized access to certain types of protected personal data. With the increased attention security breaches have received, federal legislation may also be adopted and impose additional obligations. |
• | The Fair Credit Reporting Act (FCRA), which governs, among other things, the sharing of consumer report information, access to credit scores, and requirements for users of consumer report information. |
• | The Financial Services Modernization Act of 1999, or Gramm-Leach-Bliley Act (GLB), which, among other things, regulates the use for marketing purposes of non-public personal financial information of consumers that is held by financial institutions. Although Harte Hanks is not considered a financial institution, many of our clients are subject to the GLB. The GLB also includes rules relating to the physical, administrative, and technological protection of non-public personal financial information. |
• | The Health Insurance Portability and Accountability Act of 1996 (HIPAA), which regulates the use of protected health information for marketing purposes and requires reasonable safeguards designed to prevent intentional or unintentional use or disclosure of protected health information. |
• | The Fair and Accurate Credit Transactions Act of 2003 (FACT Act), which amended the FCRA and requires, among other things, consumer credit report notice requirements for creditors that use consumer credit report information in connection with risk-based credit pricing actions and also prohibits a business that receives consumer information from an affiliate from using that information for marketing purposes unless the consumer is first provided a notice and an opportunity to direct the business not to use the information for such marketing purposes, subject to certain exceptions. |
• | The European Union (EU) data protection laws, including the comprehensive EU Directive on Data Protection (1995) (EU Directive), and the GDPR (which will replace the EU Directive once implemented), which imposes a number of obligations with respect to use of personal data, and includes a prohibition on the transfer of personal information from the EU to other countries that do not provide consumers with an “adequate” level of privacy or security. The EU standard for adequacy is generally stricter and more comprehensive than that of the U.S. and most other countries. |
• | limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate, including limiting our ability to invest in our strategic initiatives, and, consequently, place us at a competitive disadvantage; |
• | reduce the availability of our cash flows that would otherwise be available to fund working capital, capital expenditures, acquisitions, and other general corporate purposes; and |
• | result in higher interest expense in the event of increases in interest rates, as discussed below under “Interest rate increases could affect our results of operations, cash flows, and financial position.” |
• | social, economic, and political instability; |
• | changes in local, national, and international legal requirements or policies resulting in burdensome government controls, tariffs, restrictions, embargoes, or export license requirements; |
• | higher rates of inflation; |
• | the potential for nationalization of enterprises; |
• | less favorable labor laws that may increase employment costs and decrease workforce flexibility; |
• | potentially adverse tax treatment; |
• | less favorable foreign intellectual property laws that would make it more difficult to protect our intellectual property from misappropriation; |
• | more onerous or differing data privacy and security requirements or other marketing regulations; |
• | longer payment cycles; and |
• | the differing costs and difficulties of managing international operations. |
• | the impact of the uneven and lackluster economic recovery from the last recession, the overall strength of the economies of the markets we serve and general market volatility; |
• | variations in our operating results from period to period and variations between our actual operating results and the expectations of securities analysts, investors, and the financial community; |
• | unanticipated developments with client engagements or client demand, such as variations in the size, budget, or progress toward the completion of engagements, variability in the market demand for our services, client consolidations, and the unanticipated termination of several major client engagements; |
• | announcements of developments affecting our businesses; |
• | competition and the operating results of our competitors; and |
• | other factors discussed elsewhere in this Item 1A, “Risk Factors.” |
2015 | 2014 | |||||||||||||||
High | Low | High | Low | |||||||||||||
First Quarter | $ | 8.10 | $ | 7.27 | $ | 8.84 | $ | 6.71 | ||||||||
Second Quarter | 7.79 | 5.96 | 8.89 | 6.66 | ||||||||||||
Third Quarter | 6.00 | 3.40 | 7.27 | 6.37 | ||||||||||||
Fourth Quarter | 4.31 | 3.23 | 7.74 | 5.68 |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of a Publicly Announced Plan (2) | Maximum Dollar Amount that May Yet Be Spent Under the Plan | ||||||||||
October 1 - 31, 2015 | 21,600 | $ | 3.56 | 21,600 | $ | 11,437,538 | ||||||||
November 1 - 30, 2015 | — | $ | — | — | $ | 11,437,538 | ||||||||
December 1 - 31, 2015 | — | $ | — | — | $ | 11,437,538 | ||||||||
Total | 21,600 | $ | 3.56 | 21,600 |
ANNUAL RETURN PERCENTAGE Years Ending | |||||||||||||||
Company Name / Index | Dec 2011 | Dec 2012 | Dec 2013 | Dec 2014 | Dec 2015 | ||||||||||
Harte Hanks, Inc. | -26.35 | -30.94 | 36.62 | 3.88 | -55.17 | ||||||||||
S&P 500 Index | 2.11 | 16.00 | 32.39 | 13.69 | 1.38 | ||||||||||
Peer Group | -14.68 | 9.55 | 51.30 | 1.36 | 5.12 |
In thousands, except per share amounts | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
Statement of Comprehensive Income Data | ||||||||||||||||||||
Revenues | $ | 495,301 | $ | 553,676 | $ | 559,609 | $ | 581,091 | $ | 614,270 | ||||||||||
Operating expenses | ||||||||||||||||||||
Labor, production and distribution | 404,163 | 446,094 | 443,524 | 450,771 | 476,086 | |||||||||||||||
Advertising, selling, general and administrative | 54,530 | 51,900 | 54,937 | 51,729 | 50,483 | |||||||||||||||
Impairment of other intangible assets | 209,938 | — | 2,750 | — | — | |||||||||||||||
Depreciation and amortization | 14,245 | 14,920 | 15,737 | 15,922 | 15,442 | |||||||||||||||
Total operating expenses | 682,876 | 512,914 | 516,948 | 518,422 | 542,011 | |||||||||||||||
Operating income (loss) | (187,575 | ) | 40,762 | 42,661 | 62,669 | 72,259 | ||||||||||||||
Interest expense, net | 4,759 | 2,559 | 2,998 | 3,484 | 2,941 | |||||||||||||||
Loss on sale | 9,501 | — | — | — | — | |||||||||||||||
Other, net | 1,007 | 897 | 46 | 2,993 | 781 | |||||||||||||||
Income tax expense (benefit) | (31,914 | ) | 13,315 | 15,176 | 20,796 | 26,477 | ||||||||||||||
Income (loss) from continuing operations | $ | (170,928 | ) | $ | 23,991 | $ | 24,441 | $ | 35,396 | $ | 42,060 | |||||||||
Earnings (loss) from continuing operations per common share—diluted | $ | (2.77 | ) | $ | 0.38 | $ | 0.39 | $ | 0.56 | $ | 0.67 | |||||||||
Weighted-average common and common equivalent shares outstanding—diluted | 61,643 | 62,658 | 62,812 | 63,148 | 63,552 | |||||||||||||||
Other Data | ||||||||||||||||||||
Cash dividends per share | $ | 0.34 | $ | 0.34 | $ | 0.26 | $ | 0.43 | $ | 0.32 | ||||||||||
Capital expenditures | $ | 11,574 | $ | 11,265 | $ | 15,873 | $ | 13,461 | $ | 22,336 | ||||||||||
Balance sheet data (at end of period) | ||||||||||||||||||||
Current assets | $ | 151,706 | $ | 201,417 | $ | 239,305 | $ | 205,014 | $ | 248,968 | ||||||||||
Property, plant and equipment, net | $ | 33,913 | $ | 36,913 | $ | 40,711 | $ | 44,091 | $ | 46,842 | ||||||||||
Goodwill and other intangibles, net | $ | 223,095 | $ | 400,441 | $ | 400,467 | $ | 403,423 | $ | 403,668 | ||||||||||
Total assets | $ | 414,621 | $ | 644,177 | $ | 685,536 | $ | 706,212 | $ | 703,997 | ||||||||||
Total debt | $ | 77,313 | $ | 82,687 | $ | 98,000 | $ | 110,250 | $ | 179,438 | ||||||||||
Total stockholders’ equity | $ | 140,316 | $ | 326,676 | $ | 349,054 | $ | 328,164 | $ | 446,355 |
• | agency and digital services; |
• | database marketing solutions and business-to-business lead generation; |
• | direct mail; and |
• | contact centers. |
Year Ended December 31, | ||||||||||||||||||
In thousands, except per share amounts | 2015 | % Change | 2014 | % Change | 2013 | |||||||||||||
Revenues | $ | 495,301 | -10.5 | % | $ | 553,676 | -1.1 | % | $ | 559,609 | ||||||||
Operating expenses | 682,876 | 33.1 | % | 512,914 | -0.8 | % | 516,948 | |||||||||||
Operating income (loss) | $ | (187,575 | ) | -560.2 | % | $ | 40,762 | -4.5 | % | $ | 42,661 | |||||||
Operating Margin | N/M | 7.4 | % | 7.6 | % | |||||||||||||
Income (loss) from continuing operations | $ | (170,928 | ) | -812.5 | % | $ | 23,991 | -1.8 | % | $ | 24,441 | |||||||
Diluted EPS from continuing operations | $ | (2.77 | ) | -828.9 | % | $ | 0.38 | -2.6 | % | $ | 0.39 |
Year Ended December 31, | ||||||||||||||||||
In thousands | 2015 | % Change | 2014 | % Change | 2013 | |||||||||||||
Revenues | $ | 444,166 | -11.1 | % | $ | 499,444 | -0.9 | % | $ | 503,760 | ||||||||
Operating expenses | 641,186 | 36.5 | % | 469,664 | -0.4 | % | 471,739 | |||||||||||
Operating income (loss) | $ | (197,020 | ) | N/M | $ | 29,780 | -7.0 | % | $ | 32,021 | ||||||||
Operating margin | N/M | 6.0 | % | 6.4 | % |
Year Ended December 31, | ||||||||||||||||||
In thousands | 2015 | % Change | 2014 | % Change | 2013 | |||||||||||||
Revenues | $ | 51,135 | -5.7 | % | $ | 54,232 | -2.9 | % | $ | 55,849 | ||||||||
Operating expenses | 37,096 | -9.3 | % | 40,885 | 1.1 | % | 40,453 | |||||||||||
Operating income | $ | 14,039 | 5.2 | % | $ | 13,347 | -13.3 | % | $ | 15,396 | ||||||||
Operating Margin | 27.5 | % | 24.6 | % | 27.6 | % |
• | A decrease in accrued payroll attributable to the timing of normal payroll as well as a decrease in bonus and commission accruals; |
• | A decrease in customer postage and program discounts attributable to customers utilizing lower postage cost alternatives; |
• | An decrease in accounts receivable, net attributable to year to date revenue decline; |
• | A decrease in deferred revenue and customer advances attributable to lower postage volume and deferred income related to database and software maintenance; |
• | authorize distributions, dividends, stock redemptions, and repurchases if a payment event of default has occurred and is continuing; |
• | enter into certain merger or liquidation transactions; |
• | grant liens; |
• | enter into certain sale and leaseback transactions; |
• | have foreign subsidiaries account for more than 20% of the consolidated revenue, consolidated EBITDA, or assets of Harte Hanks and its subsidiaries, in the aggregate; |
• | enter into certain transactions with affiliates; and |
• | allow the total indebtedness of Harte Hanks’ subsidiaries to exceed $20.0 million. |
In thousands | Total | 2016 | 2017 | 2018 | 2019 | 2020 | Thereafter | |||||||||||||||||||||
Debt | $ | 77,313 | $ | 77,313 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Interest on term debt (1) | 934 | 934 | — | — | — | — | — | |||||||||||||||||||||
Interest on revolver debt (2) | 393 | 393 | — | — | — | — | — | |||||||||||||||||||||
Operating leases | 43,021 | 11,565 | 10,676 | 7,686 | 5,343 | 3,121 | 4,630 | |||||||||||||||||||||
Capital leases | 336 | 132 | 100 | 58 | 32 | 14 | — | |||||||||||||||||||||
Unfunded pension plan benefit payments | 16,958 | 1,542 | 1,611 | 1,603 | 1,593 | 1,685 | 8,924 | |||||||||||||||||||||
Other long-term obligations | 1,456 | 803 | 537 | 116 | — | — | — | |||||||||||||||||||||
Total contractual cash obligations | $ | 140,411 | $ | 92,682 | $ | 12,924 | $ | 9,463 | $ | 6,968 | $ | 4,820 | $ | 13,554 |
In thousands | 2015 | 2014 | 2013 | |||||||||
Operations | ||||||||||||
Customer Interaction | $ | 69,699 | $ | 248,891 | $ | 377,854 | ||||||
Trillium Software | 149,273 | 149,273 | 20,310 | |||||||||
Total Goodwill | $ | 218,972 | $ | 398,164 | $ | 398,164 |
• | Macroeconomic conditions - no significant changes have occurred in the general economic conditions |
• | Industry and market considerations - no significant changes have occurred in the environment in which Customer Interaction or Trillium Software operates |
• | Cost Factors - no significant increases in labor, or other costs for Customer Interaction or Trillium Software that have had a negative effect on earnings and cash flows |
• | Other events - the change in key leadership of Harte Hanks is not considered to have a negative impact on Customer Interaction or Trillium Software, and there have been no significant litigation or regulatory issues |
• | Decrease in share price - there has been no significant decrease in the share price of Harte Hanks since the third quarter 2015 valuation |
• | Balance sheet/book value - there have been no significant changes to Customer Interaction or Trillium Software balance sheet or book value since the third quarter 2015 valuation |
ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES | |
15(a)(1) | Financial Statements | |
The financial statements filed as part of this report and referenced in Item 8 are presented in the Consolidated Financial Statements and the notes thereto beginning at page 43 of this Form 10-K (Financial Statements). | ||
15(a)(2) | Financial Statement Schedules | |
All schedules for which provision is made in the applicable rules and regulations of the SEC have been omitted as the schedules are not required under the related instructions, are not applicable, or the information required thereby is set forth in the Consolidated Financial Statements or notes thereto. | ||
15(a)(3) | Exhibits | |
The Exhibit Index following the Notes to Consolidated Financial Statements in this Form 10-K lists the exhibits that are filed or furnished, as applicable, as part of this Form 10-K. |
HARTE HANKS, INC. | |||
By: | /s/ Karen A. Puckett | ||
Karen A. Puckett | |||
President and Chief Executive Officer | |||
Date: | March 14, 2016 |
/s/ Karen A. Puckett | /s/ Douglas C. Shepard | |
Karen A. Puckett | Douglas C. Shepard | |
Director; President and | Executive Vice President and | |
Chief Executive Officer | Chief Financial Officer | |
Date: March 14, 2016 | Date: March 14, 2016 | |
/s/ Carlos M. Alvarado | /s/ Christopher M. Harte | |
Carlos M. Alvarado | Christopher M. Harte, Chairman | |
Vice President, Finance and | Date: March 14, 2016 | |
Corporate Controller | ||
Date: March 14, 2016 | ||
/s/ Stephen E. Carley | /s/ Scott C. Key | |
Stephen E. Carley, Director | Scott C. Key, Director | |
Date: March 14, 2016 | Date: March 14, 2016 | |
/s/ David L. Copeland | /s/ Judy C. Odom | |
David L. Copeland, Director | Judy C. Odom, Director | |
Date: March 14, 2016 | Date: March 14, 2016 | |
/s/ William F. Farley | ||
William F. Farley, Director | ||
Date: March 14, 2016 |
/s/ KPMG LLP |
San Antonio, Texas |
March 14, 2016 |
March 14, 2016 | |
/s/ Karen A. Puckett | |
Karen A. Puckett | |
President and Chief Executive Officer | |
/s/ Douglas C. Shepard | |
Douglas C. Shepard | |
Executive Vice President and | |
Chief Financial Officer | |
/s/ Carlos M. Alvarado | |
Carlos M. Alvarado | |
Vice President, Finance and | |
Corporate Controller |
December 31, | ||||||||
In thousands, except per share and share amounts | 2015 | 2014 | ||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 17,613 | $ | 56,749 | ||||
Accounts receivable (less allowance for doubtful accounts of $1,249 at December 31, 2015 and $1,224 at December 31, 2014) | 115,155 | 125,295 | ||||||
Inventory | 963 | 1,235 | ||||||
Prepaid expenses | 9,548 | 9,000 | ||||||
Prepaid income tax | 1,760 | 1,185 | ||||||
Other current assets | 6,667 | 7,953 | ||||||
Total current assets | $ | 151,706 | $ | 201,417 | ||||
Property, plant and equipment | ||||||||
Buildings and improvements | 17,207 | 17,112 | ||||||
Software | 84,780 | 88,422 | ||||||
Equipment and furniture | 101,083 | 102,688 | ||||||
Software development and equipment installations in progress | 2,258 | 2,390 | ||||||
Gross property, plant and equipment | 205,328 | 210,612 | ||||||
Less accumulated depreciation and amortization | (171,415 | ) | (173,699 | ) | ||||
Net property, plant and equipment | 33,913 | 36,913 | ||||||
Goodwill | 218,972 | 398,164 | ||||||
Other intangible assets (less accumulated amortization of $650 at December 31, 2015 and $9,774 at December 31, 2014) | 4,123 | 2,277 | ||||||
Other assets (including deferred income taxes of $3,000 at December 31, 2015 and $2,055 at December 31, 2014) | 5,907 | 5,406 | ||||||
Total assets | $ | 414,621 | $ | 644,177 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Current maturities of long-term debt | $ | 3,000 | $ | 18,375 | ||||
Accounts payable | 38,287 | 36,478 | ||||||
Accrued payroll and related expenses | 8,340 | 9,773 | ||||||
Deferred revenue and customer advances | 27,426 | 33,631 | ||||||
Income taxes payable | 1,246 | 2,462 | ||||||
Customer postage and program deposits | 12,513 | 17,120 | ||||||
Other current liabilities | 6,628 | 6,430 | ||||||
Total current liabilities | 97,440 | 124,269 | ||||||
Long-term debt | 74,313 | 64,312 | ||||||
Pensions | 55,491 | 65,156 | ||||||
Contingent consideration | 20,277 | — | ||||||
Other long-term liabilities (including deferred income taxes of $20,672 at December 31, 2015 and $56,510 at December 31, 2014) | 26,784 | 63,764 | ||||||
Total liabilities | $ | 274,305 | $ | 317,501 | ||||
Stockholders’ equity | ||||||||
Common stock, $1 par value, 250,000,000 shares authorized 120,146,720 shares issued at December 31, 2015 and 119,606,551 shares issued at December 31, 2014 | 120,147 | 119,607 | ||||||
Additional paid-in capital | 353,050 | 346,239 | ||||||
Retained earnings | 973,538 | 1,165,707 | ||||||
Less treasury stock, 58,879,742 shares at cost at December 31, 2015 and 57,832,362 shares at cost at December 31, 2014 | (1,262,859 | ) | (1,257,648 | ) | ||||
Accumulated other comprehensive loss | (43,560 | ) | (47,229 | ) | ||||
Total stockholders’ equity | 140,316 | 326,676 | ||||||
Total liabilities and stockholders’ equity | $ | 414,621 | $ | 644,177 |
Years Ended December 31, | ||||||||||||
In thousands, except per share amounts | 2015 | 2014 | 2013 | |||||||||
Operating revenues | $ | 495,301 | $ | 553,676 | $ | 559,609 | ||||||
Operating expenses | ||||||||||||
Labor | 260,839 | 279,135 | 281,924 | |||||||||
Production and distribution | 143,324 | 166,959 | 161,600 | |||||||||
Advertising, selling, general and administrative | 54,530 | 51,900 | 54,937 | |||||||||
Goodwill and intangible assets impairment | 209,938 | — | 2,750 | |||||||||
Depreciation, software and intangible asset amortization | 14,245 | 14,920 | 15,737 | |||||||||
Total operating expenses | 682,876 | 512,914 | 516,948 | |||||||||
Operating income (loss) | (187,575 | ) | 40,762 | 42,661 | ||||||||
Other expenses | ||||||||||||
Interest expense, net | 4,759 | 2,559 | 2,998 | |||||||||
Loss on sale | 9,501 | — | — | |||||||||
Other, net | 1,007 | 897 | 46 | |||||||||
15,267 | 3,456 | 3,044 | ||||||||||
Income (loss) from continuing operations before income taxes | (202,842 | ) | 37,306 | 39,617 | ||||||||
Income tax expense (benefit) | (31,914 | ) | 13,315 | 15,176 | ||||||||
Income (loss) from continuing operations | (170,928 | ) | 23,991 | 24,441 | ||||||||
Income from discontinued operations, net of income taxes | — | — | 1,284 | |||||||||
Loss on sales of discontinued operations, net of income taxes | — | — | (12,355 | ) | ||||||||
Loss from discontinued operations | — | — | (11,071 | ) | ||||||||
Net income (loss) | $ | (170,928 | ) | $ | 23,991 | $ | 13,370 | |||||
Basic earnings (loss) per common share | ||||||||||||
Continuing operations | $ | (2.77 | ) | $ | 0.38 | $ | 0.39 | |||||
Discontinued operations | — | — | (0.18 | ) | ||||||||
Basic earnings (loss) per common share | $ | (2.77 | ) | $ | 0.38 | $ | 0.21 | |||||
Weighted-average common shares outstanding | 61,643 | 62,444 | 62,503 | |||||||||
Diluted earnings (loss) per common share | ||||||||||||
Continuing operations | $ | (2.77 | ) | $ | 0.38 | $ | 0.39 | |||||
Discontinued operations | — | — | (0.18 | ) | ||||||||
Diluted earnings (loss) per common share | $ | (2.77 | ) | $ | 0.38 | $ | 0.21 | |||||
Weighted-average common and common equivalent shares outstanding | 61,643 | 62,658 | 62,812 | |||||||||
Other comprehensive income (loss), net of tax | ||||||||||||
Adjustment to pension liability | $ | 5,645 | $ | (17,281 | ) | $ | 22,152 | |||||
Foreign currency translation adjustments | (1,976 | ) | (1,830 | ) | (536 | ) | ||||||
Total other comprehensive income (loss), net of tax | 3,669 | (19,111 | ) | 21,616 | ||||||||
Comprehensive income (loss) | $ | (167,259 | ) | $ | 4,880 | $ | 34,986 |
Years Ended December 31, | ||||||||||||
In thousands | 2015 | 2014 | 2013 | |||||||||
Cash Flows from Operating Activities | ||||||||||||
Net income (loss) | $ | (170,928 | ) | $ | 23,991 | $ | 13,370 | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities | ||||||||||||
Loss on sale | 9,501 | — | — | |||||||||
Income from discontinued operations | — | — | (1,284 | ) | ||||||||
Loss on sale of discontinued operations | — | — | 12,355 | |||||||||
Impairment of goodwill and intangible assets | 209,938 | — | 2,750 | |||||||||
Depreciation and software amortization | 13,586 | 14,894 | 15,530 | |||||||||
Intangible asset amortization | 659 | 26 | 206 | |||||||||
Stock-based compensation | 5,733 | 4,055 | 5,744 | |||||||||
Excess tax benefits from stock-based compensation | (14 | ) | — | (42 | ) | |||||||
Net pension cost (payments) | (257 | ) | (2,860 | ) | 784 | |||||||
Interest accretion on contingent consideration | 2,337 | — | — | |||||||||
Deferred income taxes | (41,235 | ) | 5,798 | 1,744 | ||||||||
Other, net | 333 | — | (2,606 | ) | ||||||||
Changes in operating assets and liabilities, net of acquisitions: | 0 | -5173 | 7630 | |||||||||
Decrease (increase) in accounts receivable, net | 10,187 | (5,173 | ) | 7,630 | ||||||||
Decrease (increase) in inventory | 272 | 51 | (507 | ) | ||||||||
Decrease (increase) in prepaid expenses and other current assets | 802 | 3,316 | (2,536 | ) | ||||||||
Increase (decrease) in accounts payable | 2,141 | (278 | ) | (1,336 | ) | |||||||
(Decrease) increase in other accrued expenses and liabilities | (12,550 | ) | (20,055 | ) | 9,398 | |||||||
Other, net | 438 | 1,796 | (17,089 | ) | ||||||||
Net cash provided by continuing operations | 30,943 | 25,561 | 44,111 | |||||||||
Net cash provided by discontinued operations | — | — | 15,461 | |||||||||
Net cash provided by operating activities | 30,943 | 25,561 | 59,572 | |||||||||
Cash Flows from Investing Activities | ||||||||||||
Acquisitions, net of cash acquired | (29,862 | ) | — | — | ||||||||
Dispositions, net of cash transferred | 4,974 | — | — | |||||||||
Purchases of property, plant and equipment | (11,574 | ) | (11,265 | ) | (15,873 | ) | ||||||
Proceeds from the sale of property, plant and equipment | 297 | 169 | 3,723 | |||||||||
Net cash flows from investing activities within discontinued operations | — | — | 22,500 | |||||||||
Net cash provided by (used in) investing activities | (36,165 | ) | (11,096 | ) | 10,350 | |||||||
Cash Flows from Financing Activities | ||||||||||||
Borrowings | 13,000 | — | — | |||||||||
Repayment of borrowings | (18,375 | ) | (15,313 | ) | (12,250 | ) | ||||||
Debt financing costs | — | — | (581 | ) | ||||||||
Issuance of common stock | (910 | ) | (481 | ) | 512 | |||||||
Excess tax benefits from stock-based compensation | 14 | — | 42 | |||||||||
Purchase of treasury stock | (4,619 | ) | (8,661 | ) | (1,760 | ) | ||||||
Issuance of treasury stock | 193 | 1,307 | 135 | |||||||||
Dividends paid | (21,241 | ) | (21,485 | ) | (16,121 | ) | ||||||
Net cash used in financing activities | (31,938 | ) | (44,633 | ) | (30,023 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | (1,976 | ) | (1,830 | ) | (536 | ) | ||||||
Net increase (decrease) in cash and cash equivalents | (39,136 | ) | (31,998 | ) | 39,363 | |||||||
Cash and cash equivalents at beginning of year | 56,749 | 88,747 | 49,384 | |||||||||
Cash and cash equivalents at end of year | $ | 17,613 | $ | 56,749 | $ | 88,747 |
In thousands, except per share amounts | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income(loss) | Total Stockholders’ Equity | ||||||||||||||||||
Balance at December 31, 2012 | $ | 118,737 | $ | 341,586 | $ | 1,165,952 | $ | (1,248,377 | ) | $ | (49,734 | ) | $ | 328,164 | ||||||||||
Exercise of stock options and release of unvested shares | 450 | 469 | — | (407 | ) | — | 512 | |||||||||||||||||
Net tax effect of stock options exercised and release of unvested shares | — | (2,606 | ) | — | — | — | (2,606 | ) | ||||||||||||||||
Stock-based compensation | — | 5,744 | — | — | — | 5,744 | ||||||||||||||||||
Dividends paid ($0.225 per share) | — | — | (16,121 | ) | — | — | (16,121 | ) | ||||||||||||||||
Treasury stock issued | — | (98 | ) | — | 135 | — | 37 | |||||||||||||||||
Purchase of treasury stock | — | — | — | (1,662 | ) | — | (1,662 | ) | ||||||||||||||||
Net income | — | — | 13,370 | — | — | 13,370 | ||||||||||||||||||
Other comprehensive income | — | — | — | — | 21,616 | 21,616 | ||||||||||||||||||
Balance at December 31, 2013 | $ | 119,187 | $ | 345,095 | $ | 1,163,201 | $ | (1,250,311 | ) | $ | (28,118 | ) | $ | 349,054 | ||||||||||
Exercise of stock options and release of unvested shares | 420 | (151 | ) | — | (750 | ) | — | (481 | ) | |||||||||||||||
Net tax effect of stock options exercised and release of unvested shares | — | (1,993 | ) | — | — | — | (1,993 | ) | ||||||||||||||||
Stock-based compensation | — | 4,055 | — | — | — | 4,055 | ||||||||||||||||||
Dividends paid ($0.34 per share) | — | — | (21,485 | ) | — | — | (21,485 | ) | ||||||||||||||||
Treasury stock issued | — | (767 | ) | — | 1,307 | — | 540 | |||||||||||||||||
Purchase of treasury stock | — | — | — | (7,894 | ) | — | (7,894 | ) | ||||||||||||||||
Net income | — | — | 23,991 | — | — | 23,991 | ||||||||||||||||||
Other comprehensive loss | — | — | — | — | (19,111 | ) | (19,111 | ) | ||||||||||||||||
Balance at December 31, 2014 | $ | 119,607 | $ | 346,239 | $ | 1,165,707 | $ | (1,257,648 | ) | $ | (47,229 | ) | $ | 326,676 | ||||||||||
Exercise of stock options and release of unvested shares | 540 | (329 | ) | — | (1,120 | ) | — | (909 | ) | |||||||||||||||
Net tax effect of stock options exercised and release of unvested shares | — | 1,742 | — | — | — | 1,742 | ||||||||||||||||||
Stock-based compensation | — | 5,733 | — | — | — | 5,733 | ||||||||||||||||||
Dividends paid ($0.34 per share) | — | — | (21,241 | ) | — | — | (21,241 | ) | ||||||||||||||||
Treasury stock issued | — | (335 | ) | — | 528 | — | 193 | |||||||||||||||||
Purchase of treasury stock | — | — | — | (4,619 | ) | — | (4,619 | ) | ||||||||||||||||
Net loss | — | — | (170,928 | ) | — | — | (170,928 | ) | ||||||||||||||||
Other comprehensive income | — | — | — | — | 3,669 | 3,669 | ||||||||||||||||||
Balance at December 31, 2015 | $ | 120,147 | $ | 353,050 | $ | 973,538 | $ | (1,262,859 | ) | $ | (43,560 | ) | $ | 140,316 |
Year Ended December 31, | ||||||||||||
In thousands | 2015 | 2014 | 2013 | |||||||||
Balance at beginning of year | $ | 1,224 | $ | 1,729 | $ | 2,574 | ||||||
Increase in allowance charged to expense | 630 | (68 | ) | 47 | ||||||||
Account charges against the expense | (605 | ) | (437 | ) | (892 | ) | ||||||
Balance at end of year | $ | 1,249 | $ | 1,224 | $ | 1,729 |
Buildings and improvements | 10 | to | 40 years |
Software | 3 | to | 10 years |
Equipment and furniture | 3 | to | 20 years |
December 31, | ||||||||
In thousands | 2015 | 2014 | ||||||
Equipment and furniture | $ | 1,088 | $ | 1,351 | ||||
Less accumulated amortization | (767 | ) | (980 | ) | ||||
Net book value | $ | 321 | $ | 371 |
Year Ended December 31, | ||||||||||||
In thousands | 2015 | 2014 | 2013 | |||||||||
Revenue (1) | ||||||||||||
United States | $ | 411,775 | $ | 463,752 | $ | 469,596 | ||||||
Other countries | 83,526 | 89,924 | 90,013 | |||||||||
Total revenue | $ | 495,301 | $ | 553,676 | $ | 559,609 |
December 31, | ||||||||
In thousands | 2015 | 2014 | ||||||
Property, plant and equipment (2) | ||||||||
United States | $ | 29,437 | $ | 33,134 | ||||
Other countries | 4,476 | 3,779 | ||||||
Total property, plant and equipment | $ | 33,913 | $ | 36,913 |
(1) | Geographic revenues are based on the location of the service being performed. |
(2) | Property, plant and equipment are based on physical location. |
December 31, | ||||||||
In thousands | 2015 | 2014 | ||||||
2013 Revolving Credit Facility ($60.6 million capacity), due August 16, 2016 | ||||||||
Various interest rates based on Eurodollar rate (effective rate of 2.67% at December 31, 2015) | — | — | ||||||
Various interest rates based on the highest of (a) the Agent's prime rate, (b) the Federal Funds Rate plus 0.50% per annum, (c) Eurodollar rate plus 1.00% per annum, plus a spread with is determined based on our total debt-to-EBITDA ratio then in effect (effective rate of 4.75% at December 31, 2015) | 13,000 | — | ||||||
2011 Term Loan Facility, various interest rates based on LIBOR (effective rate of 2.42% at December 31, 2015), due August 16, 2016 | 64,313 | 82,687 | ||||||
Total debt | $ | 77,313 | $ | 82,687 | ||||
Less current maturities | 3,000 | 18,375 | ||||||
Total long-term debt | $ | 74,313 | $ | 64,312 |
December 31, | ||||||||||||||||
2015 | 2014 | |||||||||||||||
In thousands | Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
Total debt | $ | 77,313 | $ | 77,313 | $ | 82,687 | $ | 82,687 |
• | authorize distributions, dividends, stock redemptions and repurchases if a payment event of default has occurred and is continuing; |
• | enter into certain merger or liquidation transactions; |
• | grant liens; |
• | enter into certain sale and leaseback transactions; |
• | have foreign subsidiaries account for more than 20% of the assets, revenue, and earnings of Harte Hanks and its subsidiaries, in the aggregate; |
• | enter into certain transactions with affiliates; and |
• | allow the total indebtedness of Harte Hanks’ subsidiaries to exceed $20.0 million. |
In thousands | ||||
2016 | $ | 77,313 | ||
2017 | — | |||
2018 | — | |||
2019 | — | |||
2020 | — | |||
Thereafter | — | |||
$ | 77,313 |
Year Ended December 31, | ||||||||||||
In thousands | 2015 | 2014 | 2013 | |||||||||
Current | ||||||||||||
Federal | $ | 6,998 | $ | 5,836 | $ | 8,689 | ||||||
State and Local | 1,177 | 619 | 3,554 | |||||||||
Foreign | 1,146 | 1,062 | 1,189 | |||||||||
Total Current | $ | 9,321 | $ | 7,517 | $ | 13,432 | ||||||
Deferred | ||||||||||||
Federal | $ | (38,278 | ) | $ | 2,862 | $ | 3,532 | |||||
State and local | (2,912 | ) | 2,177 | (2,142 | ) | |||||||
Foreign | (45 | ) | 759 | 354 | ||||||||
Total Deferred | $ | (41,235 | ) | $ | 5,798 | $ | 1,744 | |||||
Total income tax expense | $ | (31,914 | ) | $ | 13,315 | $ | 15,176 |
Year Ended December 31, | ||||||||||||
In thousands | 2015 | 2014 | 2013 | |||||||||
United States | $ | (205,435 | ) | $ | 29,962 | $ | 33,143 | |||||
Foreign | 2,593 | 7,344 | 6,474 | |||||||||
Total income (loss) from continuing operations before income taxes | $ | (202,842 | ) | $ | 37,306 | $ | 39,617 |
Year Ended December 31, | |||||||||||||||||||||
In thousands | 2015 | Rate | 2014 | Rate | 2013 | Rate | |||||||||||||||
Computed expected income tax expense (benefit) | $ | (70,995 | ) | 35.0 | % | $ | 13,057 | 35.0 | % | $ | 13,866 | 35.0 | % | ||||||||
Goodwill impairment basis difference | 36,664 | -18.1 | % | — | — | % | — | — | % | ||||||||||||
Sold operations basis difference | 686 | -0.3 | % | — | — | % | — | — | % | ||||||||||||
Net effect of state income taxes | 857 | -0.4 | % | 1,817 | 4.9 | % | 918 | 2.3 | % | ||||||||||||
Foreign subsidiary dividend inclusions | 557 | -0.3 | % | 135 | 0.4 | % | 1,125 | 2.8 | % | ||||||||||||
Foreign tax rate benefit | (90 | ) | — | % | (749 | ) | -2.0 | % | (570 | ) | -1.4 | % | |||||||||
Change in beginning of year valuation allowance | (153 | ) | 0.1 | % | (537 | ) | -1.4 | % | (87 | ) | -0.2 | % | |||||||||
Non deductible interest | 715 | -0.4 | % | — | — | % | — | — | % | ||||||||||||
Other, net | (155 | ) | 0.1 | % | (408 | ) | -1.2 | % | (76 | ) | -0.2 | % | |||||||||
Income tax expense (benefit) for the period | $ | (31,914 | ) | 15.7 | % | $ | 13,315 | 35.7 | % | $ | 15,176 | 38.3 | % |
Year Ended December 31, | ||||||||||||
In thousands | 2015 | 2014 | 2013 | |||||||||
Continuing operations | $ | (31,914 | ) | $ | 13,315 | $ | 15,176 | |||||
Discontinued operations | — | — | (7,822 | ) | ||||||||
Stockholders’ equity | 2,021 | (9,527 | ) | 17,373 | ||||||||
Total | $ | (29,893 | ) | $ | 3,788 | $ | 24,727 |
Year Ended December 31, | ||||||||
In thousands | 2015 | 2014 | ||||||
Deferred tax assets | ||||||||
Deferred compensation and retirement plan | $ | 22,884 | $ | 25,432 | ||||
Accrued expenses not deductible until paid | 3,612 | 3,925 | ||||||
Employee stock-based compensation | 3,709 | 1,182 | ||||||
Accrued payroll not deductible until paid | 707 | 948 | ||||||
Accounts receivable, net | 1,208 | 1,175 | ||||||
Other, net | 417 | 280 | ||||||
Federal net operating loss carryforwards | — | 130 | ||||||
Foreign net operating loss carryforwards | 2,657 | 2,805 | ||||||
State net operating loss carryforwards | 1,956 | 2,010 | ||||||
Foreign tax credit carryforwards | 785 | 739 | ||||||
Capital loss carryforwards | 6,278 | 7,182 | ||||||
Total gross deferred tax assets | 44,213 | 45,808 | ||||||
Less valuation allowances | (9,958 | ) | (10,933 | ) | ||||
Net deferred tax assets | $ | 34,255 | $ | 34,875 | ||||
Deferred tax liabilities | ||||||||
Property, plant and equipment | $ | (6,154 | ) | $ | (6,484 | ) | ||
Goodwill and other intangibles | (45,212 | ) | (82,702 | ) | ||||
Other, net | (561 | ) | (144 | ) | ||||
Total gross deferred tax liabilities | (51,927 | ) | (89,330 | ) | ||||
Net deferred tax liabilities | $ | (17,672 | ) | $ | (54,455 | ) |
In thousands | ||||
Balance at January 1, 2014 | $ | 27 | ||
Additions for current year tax positions | — | |||
Additions for prior year tax positions | — | |||
Reductions for prior year tax positions | — | |||
Lapse of statute | (27 | ) | ||
Settlements | — | |||
Balance at December 31, 2014 | $ | — | ||
Additions for current year tax positions | $ | — | ||
Additions for prior year tax positions | 761 | |||
Reductions for prior year tax positions | — | |||
Lapse of statute | — | |||
Settlements | — | |||
Balance at December 31, 2015 | $ | 761 |
In thousands | Customer Interaction | Trillium | Total | |||||||||
Balance at December 31, 2013 | $ | 377,854 | $ | 20,310 | $ | 398,164 | ||||||
Segment reallocation | $ | (128,963 | ) | $ | 128,963 | $ | — | |||||
Balance at December 31, 2014 | $ | 248,891 | $ | 149,273 | $ | 398,164 | ||||||
Purchase consideration | 41,845 | — | 41,845 | |||||||||
Disposition | (11,099 | ) | — | (11,099 | ) | |||||||
Impairment | (209,938 | ) | — | (209,938 | ) | |||||||
Balance at December 31, 2015 | $ | 69,699 | $ | 149,273 | $ | 218,972 |
In thousands | ||||
Balance at December 31, 2013 | $ | 2,250 | ||
Acquisition | — | |||
Impairment | — | |||
Balance at December 31, 2014 | $ | 2,250 | ||
Acquisition | — | |||
Disposition | (2,250 | ) | ||
Balance at December 31, 2015 | $ | — |
In thousands | ||||
Balance at December 31, 2013 | $ | 53 | ||
Acquisition | — | |||
Amortization | (26 | ) | ||
Impairment | — | |||
Balance at December 31, 2014 | $ | 27 | ||
Disposition | (18 | ) | ||
Acquisition | 4,773 | |||
Amortization | (659 | ) | ||
Impairment | — | |||
Balance at December 31, 2015 | $ | 4,123 |
In thousands | ||||
2016 | $ | 821 | ||
2017 | 707 | |||
2018 | 627 | |||
2019 | 613 | |||
2020 | 613 | |||
Thereafter | 742 | |||
$ | 4,123 |
Year Ended December 31, | ||||||||
In thousands | 2015 | 2014 | ||||||
Change in benefit obligation | ||||||||
Benefit obligation at beginning of year | $ | 191,065 | $ | 161,370 | ||||
Service cost | — | 100 | ||||||
Interest cost | 7,724 | 7,698 | ||||||
Actuarial (gain) loss | (10,861 | ) | 32,018 | |||||
Benefits paid | (9,213 | ) | (9,051 | ) | ||||
Curtailments | — | (1,070 | ) | |||||
Benefit obligation at end of year | $ | 178,715 | $ | 191,065 | ||||
Change in plan assets | ||||||||
Fair value of plan assets at beginning of year | 124,372 | 120,604 | ||||||
Actual return on plan assets | 982 | 6,887 | ||||||
Contributions | 5,541 | 5,932 | ||||||
Benefits paid | (9,213 | ) | (9,051 | ) | ||||
Fair value of plan assets at end of year | $ | 121,682 | $ | 124,372 | ||||
Funded status at end of year | $ | (57,033 | ) | $ | (66,693 | ) |
In thousands | 2015 | 2014 | ||||||
Other current liabilities | $ | 1,542 | $ | 1,537 | ||||
Pensions | 55,491 | 65,156 | ||||||
$ | 57,033 | $ | 66,693 |
In thousands | 2015 | 2014 | ||||||
Net loss | $ | 43,915 | $ | 49,560 | ||||
Prior service cost | — | — | ||||||
$ | 43,915 | $ | 49,560 |
In thousands | 2015 | 2014 | ||||||
Projected benefit obligation | $ | 178,715 | $ | 191,065 | ||||
Accumulated benefit obligation | $ | 178,715 | $ | 191,065 | ||||
Fair value of plan assets | $ | 121,682 | $ | 124,372 |
Year Ended December 31, | ||||||||||||
In thousands | 2015 | 2014 | 2013 | |||||||||
Net Periodic Benefit Cost (Pre-Tax) | ||||||||||||
Service cost | $ | — | $ | 100 | $ | 343 | ||||||
Interest cost | 7,724 | 7,698 | 7,237 | |||||||||
Expected return on plan assets | (8,637 | ) | (8,418 | ) | (7,383 | ) | ||||||
Amortization of prior service cost | — | — | — | |||||||||
Recognized actuarial loss | 6,228 | 3,654 | 6,687 | |||||||||
Net periodic benefit cost | $ | 5,315 | $ | 3,034 | $ | 6,884 | ||||||
Amounts Recognized in Other Comprehensive Income (Loss) (Pre-Tax) | ||||||||||||
Net (gain) loss | $ | (9,408 | ) | $ | 28,802 | $ | (36,920 | ) | ||||
Prior service cost | — | — | — | |||||||||
Total (benefit) cost recognized in other comprehensive loss | $ | (9,408 | ) | $ | 28,802 | $ | (36,920 | ) | ||||
Net (benefit) cost recognized in net periodic benefit cost and other comprehensive (income) loss | $ | (4,093 | ) | $ | 31,836 | $ | (30,036 | ) |
Year Ended December 31, | |||||||||
2015 | 2014 | 2013 | |||||||
Weighted-average assumptions used to determine net periodic benefit cost | |||||||||
Discount rate | 4.13 | % | 4.94 | % | 4.15 | % | |||
Expected return on plan assets | 7.00 | % | 7.00 | % | 7.25 | % | |||
Rate of compensation increase | N/A | N/A | 3.00 | % |
December 31, | ||||||
2015 | 2014 | |||||
Weighted-average assumptions used to determine benefit obligations | ||||||
Discount rate | 4.49 | % | 4.13 | % | ||
Rate of compensation increase | N/A | N/A |
In thousands | 2015 | % | 2014 | % | ||||||||||
Equity securities | $ | 83,185 | 68 | % | $ | 82,010 | 66 | % | ||||||
Debt securities | 32,726 | 27 | % | 32,381 | 26 | % | ||||||||
Other | 5,771 | 5 | % | 9,981 | 8 | % | ||||||||
Total plan assets | $ | 121,682 | 100 | % | $ | 124,372 | 100 | % |
In thousands | December 31, 2015 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Equity securities | $ | 83,185 | $ | 83,301 | $ | — | $ | — | ||||||||
Debt securities | 32,726 | 32,726 | — | — | ||||||||||||
Other | 5,771 | — | 5,771 | — | ||||||||||||
Total | $ | 121,682 | $ | 116,027 | $ | 5,771 | $ | — |
In thousands | December 31, 2014 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Equity securities | $ | 82,010 | $ | 82,010 | $ | — | $ | — | ||||||||
Debt securities | 32,381 | 32,381 | — | — | ||||||||||||
Other | 9,981 | — | 9,981 | — | ||||||||||||
Total | $ | 124,372 | $ | 114,391 | $ | 9,981 | $ | — |
Target | Acceptable Range | Benchmark Index | ||||||||
Domestic Equities | 50.0 | % | 35 | % | - | 75% | S&P 500 | |||
Large Cap Growth | 22.5 | % | 15 | % | - | 30% | Russell 1000 Growth | |||
Large Cap Value | 22.5 | % | 15 | % | - | 30% | Russell 1000 Value | |||
Mid Cap Value | 5.0 | % | 5 | % | - | 15% | Russell Mid Cap Value | |||
Mid Cap Growth | 0.0 | % | 0 | % | - | 10% | Russell Mid Cap Growth | |||
Domestic Fixed Income | 35.0 | % | 15 | % | - | 50% | LB Aggregate | |||
International Equities | 15.0 | % | 10 | % | - | 25% | MSC1 EAFE |
In thousands | ||||
2016 | $ | 9,418 | ||
2017 | 9,623 | |||
2018 | 9,801 | |||
2019 | 9,930 | |||
2020 | 10,296 | |||
2021-2025 | 56,274 | |||
$ | 105,342 |
In thousands | Number of Shares | Weighted- Average Option Price | Weighted- Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (Thousands) | |||||||||
Options outstanding at December 31, 2012 | 5,106,629 | $ | 14.32 | ||||||||||
Granted in 2013 | 1,138,600 | 8.30 | |||||||||||
Exercised in 2013 | (151,875 | ) | 6.04 | $ | 268 | ||||||||
Unvested options forfeited in 2013 | (762,062 | ) | 11.97 | ||||||||||
Vested options expired in 2013 | (1,085,580 | ) | 13.47 | ||||||||||
Options outstanding at December 31, 2013 | 4,245,712 | $ | 13.65 | ||||||||||
Granted in 2014 | 1,002,955 | 8.01 | |||||||||||
Exercised in 2014 | (78,125 | ) | 6.19 | $ | 61 | ||||||||
Unvested options forfeited in 2014 | (437,984 | ) | 8.72 | ||||||||||
Vested options expired in 2014 | (268,537 | ) | 17.83 | ||||||||||
Options outstanding at December 31, 2014 | 4,464,021 | $ | 11.50 | ||||||||||
Granted in 2015 | 1,973,606 | 5.73 | |||||||||||
Exercised in 2015 | (35,000 | ) | 6.04 | $ | 67 | ||||||||
Unvested options forfeited in 2015 | (660,733 | ) | 7.96 | ||||||||||
Vested options expired in 2015 | (1,139,148 | ) | 14.89 | ||||||||||
Options outstanding at December 31, 2015 | 4,602,746 | $ | 8.74 | 6.13 | $ | — | |||||||
Exercisable at December 31, 2015 | 1,779,288 | $ | 12.73 | 3.99 | $ | — |
Range of Exercise Prices | Number Outstanding | Weighted- Average Exercise Price | Weighted- Average Remaining Life (Years) | Number Exercisable | Weighted- Average Exercise Price | |||||||||||||||
$ | 0.00 | - | 6.99 | 1,605,866 | $ | 4.72 | 3.54 | 221,520 | $ | 6.10 | ||||||||||
$ | 7.00 | - | 10.99 | 1,984,405 | $ | 8.02 | 6.58 | 545,293 | $ | 8.41 | ||||||||||
$ | 11.00 | - | 11.99 | 397,000 | $ | 11.90 | 3.95 | 397,000 | $ | 11.90 | ||||||||||
$ | 12.00 | - | 15.99 | 306,350 | $ | 14.40 | 3.14 | 306,350 | $ | 14.40 | ||||||||||
$ | 16.00 | - | 24.49 | 50,000 | $ | 17.30 | 2.00 | 50,000 | $ | 17.30 | ||||||||||
$ | 24.50 | - | 28.85 | 259,125 | $ | 25.90 | 0.39 | 259,125 | $ | 25.90 | ||||||||||
4,602,746 | $ | 8.74 | 6.13 | 1,779,288 | $ | 12.73 |
Year Ended December 31, | |||||||||
2015 | 2014 | 2013 | |||||||
Expected term (in years) | 6.24 | 6.25 | 6.25 | ||||||
Expected stock price volatility | 40.60 | % | 47.10 | % | 46.59 | % | |||
Risk-free interest rate | 1.58 | % | 1.88 | % | 1.43 | % | |||
Expected dividend yield | 5.69 | % | 3.82 | % | 4.74 | % |
Number of Shares | Weighted- Average Grant Date Fair Value | ||||||
Unvested shares outstanding at December 31, 2012 | 500,453 | $ | 10.95 | ||||
Granted in 2013 | 591,931 | 8.02 | |||||
Vested in 2013 | (297,375 | ) | 11.01 | ||||
Forfeited in 2013 | (108,964 | ) | 8.94 | ||||
Unvested shares outstanding at December 31, 2013 | 686,045 | $ | 8.72 | ||||
Granted in 2014 | 529,426 | 7.90 | |||||
Vested in 2014 | (342,613 | ) | 8.98 | ||||
Forfeited in 2014 | (82,720 | ) | 8.37 | ||||
Unvested shares outstanding at December 31, 2014 | 790,138 | $ | 8.10 | ||||
Granted in 2015 | 836,775 | 6.38 | |||||
Vested in 2015 | (504,686 | ) | 8.23 | ||||
Forfeited in 2015 | (159,781 | ) | 7.90 | ||||
Unvested shares outstanding at December 31, 2015 | 962,446 | $ | 6.57 |
Number of Shares | Weighted- Average Grant-Date Fair Value | ||||||
Performance stock units outstanding at December 31, 2012 | 239,700 | $ | 10.25 | ||||
Granted in 2013 | 333,000 | 7.76 | |||||
Settled in 2013 | — | — | |||||
Forfeited in 2013 | (102,000 | ) | 9.84 | ||||
Performance stock units outstanding at December 31, 2013 | 470,700 | $ | 8.58 | ||||
Granted in 2014 | 308,507 | 7.09 | |||||
Settled in 2014 | — | — | |||||
Forfeited in 2014 | (175,533 | ) | 9.30 | ||||
Performance stock units outstanding at December 31, 2014 | 603,674 | $ | 7.61 | ||||
Granted in 2015 | 669,839 | 4.30 | |||||
Settled in 2015 | — | — | |||||
Forfeited in 2015 | (572,129 | ) | 7.54 | ||||
Performance stock units outstanding at December 31, 2015 | 701,384 | $ | 4.51 |
In thousands | ||||
2016 | $ | 11,565 | ||
2017 | 10,676 | |||
2018 | 7,686 | |||
2019 | 5,343 | |||
2020 | 3,121 | |||
Thereafter | 4,630 | |||
$ | 43,021 |
In thousands | 2015 | 2014 | ||||||
Current portion of capital leases | $ | 132 | $ | 134 | ||||
Long-term portion of capital leases | 204 | 185 | ||||||
Total capital lease obligation | $ | 336 | $ | 319 |
In thousands | ||||
2016 | $ | 132 | ||
2017 | 100 | |||
2018 | 58 | |||
2019 | 32 | |||
2020 | 14 | |||
Thereafter | — | |||
$ | 336 |
In thousands, except per share amounts | 2015 | 2014 | 2013 | |||||||||
Net Income (Loss) | ||||||||||||
Income (loss) from continuing operations | $ | (170,928 | ) | $ | 23,991 | $ | 24,441 | |||||
Income (loss) from discontinued operations | — | — | (11,071 | ) | ||||||||
Net income (loss) | $ | (170,928 | ) | $ | 23,991 | $ | 13,370 | |||||
Basic EPS | ||||||||||||
Weighted-average common shares outstanding used in earnings per share computations | 61,643 | 62,444 | 62,503 | |||||||||
Basic earnings (loss) per share | ||||||||||||
Continuing operations | $ | (2.77 | ) | $ | 0.38 | $ | 0.39 | |||||
Discontinued operations | — | — | (0.18 | ) | ||||||||
Basic earnings (loss) per share | $ | (2.77 | ) | $ | 0.38 | $ | 0.21 | |||||
Diluted EPS | ||||||||||||
Shares used in diluted earnings per share computations | 61,643 | 62,658 | 62,812 | |||||||||
Basic earnings (loss) per share | ||||||||||||
Continuing operations | $ | (2.77 | ) | $ | 0.38 | $ | 0.39 | |||||
Discontinued operations | — | — | (0.18 | ) | ||||||||
Basic earnings (loss) per share | $ | (2.77 | ) | $ | 0.38 | $ | 0.21 | |||||
Computation of Shares Used in Earnings Per Share Computations | ||||||||||||
Weighted-average common shares outstanding | 61,643 | 62,444 | 62,503 | |||||||||
Weighted-average common equivalent shares- dilutive effect of stock options and awards | — | 214 | 309 | |||||||||
Shares used in diluted earnings per share computations | 61,643 | 62,658 | 62,812 |
Year Ended December 31, | ||||||||||||
In thousands | 2015 | 2014 | 2013 | |||||||||
Net income (loss) | $ | (170,928 | ) | $ | 23,991 | $ | 13,370 | |||||
Other comprehensive income (loss): | ||||||||||||
Adjustment to pension liability | 9,408 | (28,802 | ) | 36,920 | ||||||||
Tax (expense) benefit | (3,763 | ) | 11,521 | (14,768 | ) | |||||||
Adjustment to pension liability, net of tax | 5,645 | (17,281 | ) | 22,152 | ||||||||
Foreign currency translation adjustment | (1,976 | ) | (1,830 | ) | (536 | ) | ||||||
Total other comprehensive income (loss) | $ | 3,669 | $ | (19,111 | ) | $ | 21,616 | |||||
Total comprehensive income (loss) | $ | (167,259 | ) | $ | 4,880 | $ | 34,986 |
In thousands | Defined Benefit Pension Items | Foreign Currency Items | Total | |||||||||
Balance at December 31, 2013 | $ | (32,279 | ) | $ | 4,161 | $ | (28,118 | ) | ||||
Other comprehensive loss, net of tax, before reclassifications | — | (1,830 | ) | (1,830 | ) | |||||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | (17,281 | ) | — | (17,281 | ) | |||||||
Net current period other comprehensive income (loss), net of tax | (17,281 | ) | (1,830 | ) | (19,111 | ) | ||||||
Balance at December 31, 2014 | $ | (49,560 | ) | $ | 2,331 | $ | (47,229 | ) | ||||
Other comprehensive loss, net of tax, before reclassifications | — | (1,976 | ) | (1,976 | ) | |||||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax | 5,645 | — | 5,645 | |||||||||
Net current period other comprehensive income (loss), net of tax | 5,645 | (1,976 | ) | 3,669 | ||||||||
Balance at December 31, 2015 | $ | (43,915 | ) | $ | 355 | $ | (43,560 | ) |
• | agency and digital services; |
• | database marketing solutions and business-to-business lead generation; |
• | direct mail; and |
• | contact centers. |
Year Ended December 31, | ||||||||||||
In thousands | 2015 | 2014 | 2013 | |||||||||
Operating revenues | ||||||||||||
Customer Interaction | $ | 444,166 | $ | 499,444 | $ | 503,760 | ||||||
Trillium Software | 51,135 | 54,232 | 55,849 | |||||||||
Total operating revenues | $ | 495,301 | $ | 553,676 | $ | 559,609 | ||||||
Operating income | ||||||||||||
Customer Interaction | $ | (197,020 | ) | $ | 29,780 | $ | 32,021 | |||||
Trillium Software | 14,039 | 13,347 | 15,396 | |||||||||
Corporate | (4,594 | ) | (2,365 | ) | (4,756 | ) | ||||||
Total operating income | $ | (187,575 | ) | $ | 40,762 | $ | 42,661 | |||||
Income from continuing operations before income taxes | $ | (187,575 | ) | $ | 40,762 | $ | 42,661 | |||||
Interest expense, net | 4,759 | 2,559 | 2,998 | |||||||||
Loss on sale | 9,501 | — | — | |||||||||
Other, net | 1,007 | 897 | 46 | |||||||||
Total income from continuing operations before income taxes | $ | (202,842 | ) | $ | 37,306 | $ | 39,617 | |||||
Depreciation | ||||||||||||
Customer Interaction | $ | 11,717 | $ | 12,859 | $ | 13,477 | ||||||
Trillium Software | 1,869 | 2,035 | 2,053 | |||||||||
Corporate | — | — | — | |||||||||
Total depreciation | $ | 13,586 | $ | 14,894 | $ | 15,530 | ||||||
Other intangible amortization | ||||||||||||
Customer Interaction | $ | 656 | $ | 26 | $ | 206 | ||||||
Trillium Software | 3 | — | — | |||||||||
Corporate | — | — | — | |||||||||
Total intangible amortization | $ | 659 | $ | 26 | $ | 206 | ||||||
Capital expenditures | ||||||||||||
Customer Interaction | $ | 7,777 | $ | 9,341 | $ | 14,092 | ||||||
Trillium Software | 3,644 | 1,912 | 1,781 | |||||||||
Corporate | 153 | 12 | — | |||||||||
Total capital expenditures | $ | 11,574 | $ | 11,265 | $ | 15,873 |
Year Ended December 31, | ||||||||
In thousands | 2015 | 2014 | ||||||
Total assets | ||||||||
Customer Interaction | $ | 231,635 | $ | 436,561 | ||||
Trillium Software | 182,986 | 207,616 | ||||||
Corporate | — | — | ||||||
Total assets | $ | 414,621 | $ | 644,177 |
In thousands | |||
Cash consideration per purchase agreement | $ | 30,245 | |
Estimated fair value of contingent consideration | 17,940 | ||
Fair value of total consideration | $ | 48,185 |
In thousands | |||
Recognized amounts of tangible assets and liabilities: | |||
Current assets | $ | 4,135 | |
Property and equipment | 164 | ||
Other assets | 389 | ||
Current liabilities | (822 | ) | |
Other liabilities | — | ||
Total tangible assets and liabilities | $ | 3,866 | |
Identifiable intangible assets | 4,773 | ||
Goodwill (including deferred tax adjustment of $2,299) | 41,845 | ||
Total | $ | 50,484 |
In thousands | |||
Contingent consideration at acquisition date | $ | 17,940 | |
Accretion of interest | 2,337 | ||
Accrued earnout liability as of December 31, 2015 | $ | 20,277 |
Year Ended December 31, | ||||||||||||
In thousands | 2015 | 2014 | 2013 | |||||||||
Revenues | $ | — | $ | — | $ | 140,834 | ||||||
Income from discontinued operations before impairment charges and income taxes | — | — | 2,509 | |||||||||
Loss on sale before income taxes | — | — | (21,402 | ) | ||||||||
Income tax benefit | — | — | 7,822 | |||||||||
Loss from discontinued operations | $ | — | $ | — | $ | (11,071 | ) |
Year Ended December 31, | ||||||||||||
In thousands | 2015 | 2014 | 2013 | |||||||||
Loss from discontinued operations | $ | — | $ | — | $ | (11,071 | ) | |||||
Loss on sale | — | — | 12,355 | |||||||||
Deferred income taxes | — | — | 10,594 | |||||||||
Depreciation and software amortization | — | — | 2,592 | |||||||||
Other, net | — | — | 2,619 | |||||||||
Net cash provided by discontinued operations | $ | — | $ | — | $ | 17,089 |
2015 Quarter Ended | 2014 Quarter Ended | |||||||||||||||||||||||||||||||
In thousands, except per share amounts | December 31 | September 30 | June 30 | March 31 | December 31 | September 30 | June 30 | March 31 | ||||||||||||||||||||||||
Revenues | $ | 129,815 | $ | 121,968 | $ | 122,345 | $ | 121,173 | $ | 146,518 | $ | 134,121 | $ | 140,310 | $ | 132,727 | ||||||||||||||||
Operating income (loss) | 6,792 | (205,438 | ) | 8,057 | 3,015 | 14,656 | 10,540 | 10,987 | 4,579 | |||||||||||||||||||||||
Net income (loss) | 2,543 | (170,914 | ) | (4,172 | ) | 1,615 | 10,089 | 6,420 | 5,637 | 1,845 | ||||||||||||||||||||||
Basic earnings (loss) per share | $ | 0.04 | $ | (2.77 | ) | $ | (0.07 | ) | $ | 0.03 | $ | 0.16 | $ | 0.10 | $ | 0.09 | $ | 0.03 | ||||||||||||||
Diluted earnings (loss) per share | $ | 0.04 | $ | (2.77 | ) | $ | (0.07 | ) | $ | 0.03 | $ | 0.16 | $ | 0.10 | $ | 0.09 | $ | 0.03 |
Exhibit | ||
No. | Description of Exhibit |
2.1 | Asset Purchase Agreement, dated September 18, 2013, by and among Harte Hanks Shoppers, Inc., Southern Comprint Co. and Harte Hanks, Inc., on the one hand, and Pennysaver USA Publishing, LLC, Pennysaver USA Printing, LLC, Orbiter Properties, LLC and OpenGate Capital Management, LLC, on the other hand (filed as Exhibit 2.1 to the company’s Form 8-K dated September 19, 2013). | |
2.2 | Agreement and Plan of Merger, dated March 16, 2015, among Harte Hanks, Inc., Harte Hanks Smart, Inc., 3Q Digital, Inc. and Maury Domengeaux, as representative to the stockholders of 3Q Digital, Inc. (filed as Exhibit 2.1 to the company's Form 10-Q dated May 7, 2015). | |
2.3 | Membership Interest Purchase Agreement, dated April 14, 2015, between AMI Intermediate, LLC and Harte Hanks, Inc. relating to the sale of Aberdeen Group and Harte Hanks Market Intelligence (filed as Exhibit 2.2 to the company's Form 10-Q dated May 7, 2015). |
3(a) | 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). | |
3(b) | Fifth Amended and Restated Bylaws (filed as Exhibit 3.1 to the company’s Form 8-K dated December 4, 2015). | |
3(c) | Certificate of Amendment of Incorporation dated January 30, 2015 (filed as Exhibit 3.1 to the company’s Form 8-K dated January 30, 2015). |
10.1(a) | Term Loan Agreement by and between Harte Hanks, Inc. and Wells Fargo Bank, N.A, as administrative agent, dated March 7, 2008 (filed as Exhibit 10.1 to the company’s Form 8-K dated March 7, 2008). | |
10.1(b) | Amended and Restated Credit Agreement, dated as of August 8, 2013, between Harte Hanks, Inc., each lender from time to time party thereto, and Bank of America, N. A., as administrative agent (filed as Exhibit 10.1 to the company’s Form 8-K, dated August 12, 2013). | |
10.1(c) | First Amendment to Term Loan Agreement dated as of August 12, 2010 between Harte Hanks, Inc., and Wells Fargo Bank, N. A., as Administrative Agent (filed as Exhibit 10.2 to the company’s Form 8-K, dated August 12, 2010). | |
10.1(d) | Term Loan Agreement dated as of August 16, 2011 between Harte Hanks, Inc., each lender from time to time party thereto, and Bank of America, N. A., as administrative agent (filed as Exhibit 10.1 to the company’s Form 8-K, dated August 16, 2011). | |
10.1(e) | First Amendment to Revolving Credit Agreement dated as of August 16, 2011 Between Harte Hanks, Inc., each lender from time to time party thereto, and Bank of America, N. A., as administrative agent (filed as Exhibit 10.2 to the company’s Form 8-K, dated August 16, 2011). | |
10.1(f) | Second Amendment to Term Loan Agreement dated as of August 16, 2011 Between Harte Hanks, Inc., each lender from time to time party thereto and Wells Fargo Bank, N.A., as administrative agent (filed as Exhibit 10.3 to the company’s Form 8-K, dated August 16, 2011). | |
10.1(g) | First Amendment to Term Loan Agreement, dated as of August 8, 2013, between Harte Hanks, Inc., each Subsidiary Guarantor (as defined in the Existing Term Loan Agreement), each lender from time to time party thereto, and Bank of America, N.A., as administrative agent (filed as Exhibit 10.2 to the company’s Form 8-K, dated August 12, 2013). | |
10.1(f) | Term Loan Agreement by and between Harte Hanks, Inc. and Wells Fargo Bank, as administrative agent, date March 10, 2016 (filed as Exhibit 10.1 to the company's Form 8-K dated March 11, 2016). |
10.2(a) | Harte Hanks, Inc. Restoration Pension Plan (As Amended and Restated Effective January 1, 2008) (filed as Exhibit 10.1 to the company’s Form 8-K dated June 27, 2008). | |
10.2(b) | Harte Hanks, Inc. Deferred Compensation Plan (As Amended and Restated Effective January 1, 2008) (filed as Exhibit 10.3 to the company’s Form 10-K dated June 27, 2008). | |
10.2(c) | Harte Hanks, Inc. 2005 Omnibus Incentive Plan (As Amended and Restated Effective February 13, 2009) (filed as Exhibit 10.1 to the company’s Form 8-K dated February 13, 2009). | |
10.2(d) | Amendment to Harte Hanks, Inc. 2005 Omnibus Incentive Plan, dated as of May 12, 2009 (incorporated by reference to Exhibit 4.4 to Harte Hanks Registration Statement on Form S-8, filed on May 12, 2009). | |
10.2(e) | Form of 2005 Omnibus Incentive Plan Non-Qualified Stock Option Agreement (filed as Exhibit 10.2(i) to the company’s Form 10-K dated March 7, 2012). | |
10.2(f) | Form of 2005 Omnibus Incentive Plan Bonus Stock Agreement (filed as Exhibit 10.2(j) to the company’s Form 10-K dated March 7, 2012). | |
10.2(g) | Form of 2005 Omnibus Incentive Plan Restricted Stock Award Agreement (filed as Exhibit 10.2(k) to the company’s Form 10-K dated March 7, 2012). | |
10.2(h) | Form of 2005 Omnibus Incentive Plan Performance Unit Award Agreement (filed as Exhibit 10.2(l) to the company’s Form 10-K dated March 7, 2012). | |
10.2(i) | Summary of Non-Employee Directors’ Compensation (included within the company’s Schedule of 14A proxy statement filed April 15, 2013). | |
10.2(j) | Harte Hanks, Inc. 2013 Omnibus Incentive Plan (filed as Annex A to the company’s Schedule 14A proxy statement filed April 15, 2013). | |
10.2(k) | Form of 2013 Omnibus Incentive Plan Non-Qualified Stock Option Agreement (filed as Exhibit 10.4 to the company’s Registration Statement on Form S-8 dated June 7, 2013). | |
10.2(l) | Form of 2013 Omnibus Incentive Plan Restricted Stock Award Agreement (General) (filed as Exhibit 10.1 to the company’s Registration Statement on Form S-8 dated June 7, 2013). | |
10.2(m) | Form of 2013 Omnibus Incentive Plan Restricted Stock Award Agreement (Director) (filed as Exhibit 10.2 to the company’s Registration Statement on Form S-8 dated June 7, 2013). | |
10.2(n) | Form of 2013 Omnibus Incentive Plan Performance Unit Award Agreement (filed as Exhibit 10.3 to the company’s Registration Statement on Form S-8 dated June 7, 2013). | |
10.2(o) | Form of Non-Qualified Stock Option Agreement between the company and Robert A. Philpott (filed as Exhibit 10.2 to the company’s 8-K dated June 11, 2013). | |
10.2(p) | Form of Restricted Stock Award Agreement between the company and Robert A. Philpott (filed as Exhibit 10.3 to the company’s 8-K dated June 11, 2013). | |
10.2(q) | Form of Performance Unit Award Agreement between the company and Robert A. Philpott (filed as Exhibit 10.4 to the company’s 8-K dated June 11, 2013). | |
10.2(r) | Form of Non-Qualified Stock Option Agreement between the company and Karen A. Puckett (filed as Exhibit 10.2 to the company's 8-K dated September 14, 2015). | |
10.2(s) | Form of Restricted Stock Award Agreement between the company and Karen A. Puckett (filed as Exhibit 10.3 to the company's 8-K dated September 14, 2015). | |
10.2(t) | Form of Performance Unit Award Agreement between the company and Karen A. Puckett (filed as Exhibit 10.4 to the company's 8-K dated September 14, 2015). |
10.3(a) | Form of Change of Control Severance Agreement between the company and its Corporate Officers (filed as Exhibit 10.1 to the company’s Form 8-K, dated March 19, 2015). | |
10.3(b) | Form of Employment Restrictions Agreement signed by the Corporate Officers of the company (filed as Exhibit 10.3 to the company’s Form 8-K dated March 15, 2011). | |
10.3 (c) | Transition and Consulting Agreement, dated as of July 25, 2011, Between the company and Peter E. Gorman (filed as Exhibit 10.1 to the Company’s Form 8-K dated July 26, 2011). | |
10.3 (d) | Transition Agreement dated July 30, 2012 between the company and Gary J. Skidmore (filed as Exhibit 10.2 to the company’s 8-K dated August 2, 2012) | |
10.3 (e) | Form of Indemnification Agreement for Directors and Officers (filed as Exhibit 10.1 to the company’s 8-K dated August 2, 2012) | |
10.3 (f) | Retirement & Consulting Agreement between the company and Larry D. Franklin dated June 7, 2013 (filed as Exhibit 10.5 to the company’s 8-K dated June 11, 2013). | |
10.3 (g) | Employment Agreement between the company and Robert A. Philpott dated June 8, 2013 (filed as Exhibit 10.1 to the company’s 8-K dated June 11, 2013). | |
10.3 (h) | Form of Severance Agreement between the company and certain of its officers (filed as Exhibit 10.6 to the company’s 8-K dated June 11, 2013). | |
10.3(i) | Executive Severance Policy applicable to the company’s executive officers and certain others (filed as Exhibit 10.1 to the company’s Form 8-K, dated January 30, 2015). | |
10.3(j) | Retention Bonus Agreement applicable to the company's executive officers (filed as Exhibit 10.1 to the company's Form 8-K, dated July 9, 2015). | |
10.3(k) | Employment Agreement between the company and Karen A. Puckett dated September 13, 2015 (filed as Exhibit 10.1 to the company's Form 8-K, dated September 14, 2015). |
*21 | Subsidiaries of Harte Hanks, Inc. | |
*23 | Consent of KPMG LLP, Independent Registered Public Accounting Firm. | |
*31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
*31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
*32.1 | Furnished Certification of Chief Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
*32.2 | Furnished Certification of Chief Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
*101 | XBRL Interactive Data Files. |
Name of Entity | Jurisdiction of Organization | % Owned | ||
3Q Digital, Inc. | Delaware | 100% | ||
Harte-Hanks Belgium N.V. | Belgium | 100%(1) | ||
Harte-Hanks Data Services LLC | Maryland | 100% | ||
Harte-Hanks Direct, Inc. | New York | 100%(9) | ||
Harte-Hanks Direct Marketing/Baltimore, Inc. | Maryland | 100% | ||
Harte-Hanks Direct Marketing/Cincinnati, Inc. | Ohio | 100% | ||
Harte-Hanks Direct Marketing/Dallas, Inc. | Delaware | 100% | ||
Harte-Hanks Direct Marketing/Fullerton, Inc. | California | 100% | ||
Harte-Hanks Direct Marketing/Jacksonville, LLC | Delaware | 100%(7) | ||
Harte-Hanks Direct Marketing/Kansas City, LLC | Delaware | 100%(6) | ||
Harte-Hanks do Brazil Consultoria e Servicos Ltda. | Brazil | 100%(4) | ||
Harte Hanks Europe B.V. | Netherlands | 100% | ||
Harte-Hanks Florida, Inc. | Delaware | 100% | ||
Harte-Hanks GmbH | Germany | 100%(3) | ||
Harte Hanks Logistics, LLC | Florida | 100%(7) | ||
Harte-Hanks Market Intelligence Espana LLC | Colorado | 100% | ||
Harte-Hanks Philippines, Inc. | Philippines | 100% | ||
Harte-Hanks Print, Inc. | New Jersey | 100% | ||
Harte-Hanks Pty. Limited | Australia | 100%(2) | ||
Harte-Hanks Response Management/Austin, Inc. | Delaware | 100% | ||
Harte-Hanks Response Management/Boston, Inc. | Massachusetts | 100% | ||
Harte-Hanks Shoppers, Inc. | California | 100% | ||
Harte-Hanks SRL | Romania | 100%(8) | ||
Harte-Hanks Strategic Marketing, Inc. | Delaware | 100%(2) | ||
Harte-Hanks STS, Inc. | Delaware | 100% | ||
Harte-Hanks Teleservices, LLC | Delaware | 100%(5) | ||
Harte-Hanks Trillium Software Germany GmbH | Germany | 100%(10) | ||
Harte Hanks Trillium UK Limited | United Kingdom | 100%(8) | ||
Harte Hanks UK Limited | United Kingdom | 100%(2) | ||
HHMIX SAS | France | 100%(3) | ||
NSO, Inc. | Ohio | 100% | ||
Sales Support Services, Inc. | New Jersey | 100% | ||
Southern Comprint Co. | California | 100% | ||
Trillium Software, Inc. | Delaware | 100% |
(1) | 99.84% Owned by Harte Hanks, Inc. |
0.16% Owned by Harte-Hanks Direct, Inc. | |
(2) | Owned by Trillium Software, Inc. |
(3) | Owned by Harte Hanks Europe B.V. |
(4) | 99.999% Owned by Trillium Software, Inc. |
.001% Owned by Harte Hanks, Inc. | |
(5) | Owned by Harte-Hanks Direct, Inc. |
(6) | Owned by Sales Support Services, Inc. |
(7) | Owned by Harte-Hanks Florida, Inc. |
(8) | Owned by Harte Hanks UK Limited |
(9) | Owned by Harte-Hanks Print, Inc. |
(10) | Owned by Harte-Hanks GmbH |
I, Karen A. Puckett, President and Chief Executive Officer of Harte Hanks, Inc. (the “Company”), certify that: | ||
1. | I have reviewed this annual report on Form 10-K of the Company; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: | |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonable likely to materially affect, the registrant’s internal control over financial reporting; and | |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
March 14, 2016 | /s/ Karen A. Puckett | |
Date | Karen A. Puckett | |
President and Chief Executive Officer |
I, Douglas C. Shepard, Executive Vice President and Chief Financial Officer of Harte Hanks, Inc. (the “Company”), certify that: | ||
1. | I have reviewed this annual report on Form 10-K of the Company; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: | |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonable likely to materially affect, the registrant’s internal control over financial reporting; and | |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
March 14, 2016 | /s/ Douglas C. Shepard | |
Date | Douglas C. Shepard | |
Executive Vice President and Chief Financial Officer |
March 14, 2016 | /s/ Karen A. Puckett | |
Date | Karen A. Puckett | |
President and Chief Executive Officer |
March 14, 2016 | /s/ Douglas C. Shepard | |
Date | Douglas C. Shepard | |
Executive Vice President and Chief Financial Officer |
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Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Jan. 31, 2016 |
Jun. 30, 2015 |
|
Document and Entity Information | |||
Entity Registrant Name | HARTE HANKS INC | ||
Entity Central Index Key | 0000045919 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 288,131,575 | ||
Entity Common Stock, Shares Outstanding | 61,266,978 | ||
Document Fiscal Year Focus | 2015 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 1,249 | $ 1,224 |
Accumulated amortization | 650 | 9,774 |
Deferred Income Tax Assets, Net | 3,000 | 2,055 |
Deferred income taxes | $ 20,672 | $ 56,510 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized (in shares) | 250,000,000 | 250,000,000 |
Common stock, shares issued (in shares) | 120,146,720 | 119,606,551 |
Treasury stock, shares (in shares) | 58,879,742 | 57,832,362 |
Consolidated Statements of Changes in Equity (Parenthetical) - $ / shares |
3 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Statement of Stockholders' Equity [Abstract] | |||||||
Dividends paid (in dollars per share) | $ 0.085 | $ 0.085 | $ 0.085 | $ 0.085 | $ 0.34 | $ 0.34 | $ 0.255 |
Significant Accounting Policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies | Significant Accounting Policies Consolidation The accompanying consolidated financial statements present the financial position and the results of operations and cash flows of Harte Hanks, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. As used in this report, the terms “Harte Hanks,” “we,” “us,” or “our” may refer to Harte Hanks, Inc., one or more of our consolidated subsidiaries, or all of them taken as a whole. Discontinued Operations As discussed in Note O, Discontinued Operations, we sold the assets of our California Shoppers operations on September 27, 2013. The operating results and related balances of Shoppers, including the loss on the sale, are being reported as discontinued operations in the Consolidated Financial Statements. Unless otherwise stated, amounts related to the Shoppers operations are excluded from the Notes to Consolidated Financial Statements for all years presented. Reclassification of Prior Year Amounts Certain prior year amounts have been reclassified for comparative purposes. All 2013 amounts related to discontinued operations have been reclassified for comparative purposes. The retrospective early adoption of ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, resulted in the reclassification of current deferred tax assets to non-current on the company's consolidated balance sheet as of December 31, 2014. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results and outcomes could differ from those estimates and assumptions. Such estimates include, but are not limited to, estimates related to pension accounting; estimates related to fair value for purposes of assessing goodwill, long-lived assets and intangible assets for impairment; estimates related to income taxes; and estimates related to contingencies. On an ongoing basis, management reviews its estimates based on currently available information. Changes in facts and circumstances could result in revised estimates and assumptions. Operating Expense Presentation in Consolidated Statements of Comprehensive Income (Loss) The “Labor” line in the Consolidated Statements of Comprehensive Income (Loss) includes all employee payroll and benefits, including stock-based compensation, along with temporary labor costs. The “Production and distribution” and “Advertising, selling, general and administrative” lines do not include labor, depreciation or amortization. Revenue Recognition We recognize revenue when all of the following criteria are satisfied: (i) persuasive evidence of an arrangement exists; (ii) the price is fixed or determinable; (iii) collectability is reasonably assured; and (iv) the service has been performed or the product has been delivered. Payments received in advance of the performance of services or delivery of the product are recorded as deferred revenue until such time as the services are performed or the product is delivered. Our accounting policy for revenue recognition has an impact on our reported results and relies on certain estimates that require judgments on the part of management. Revenue is derived from a variety of services and products, and may be billed at hourly rates, monthly rates, or a fixed price. For all sales, we require either a purchase order, a statement of work signed by the client, a written contract, or some other form of written authorization from the client. Revenue from agency and creative services, analytical services, and market research is typically billed based on time and materials. Revenue from email marketing, social media marketing, digital marketing techniques such as search engine maximization ("SEM"), and other digital solutions is recognized as the work is performed. Revenue from these services is typically based on a fixed price or rate given to the client. Revenue associated with new marketing database builds is deferred until complete or until client acceptance. Upon completion or acceptance, revenue and direct build costs are then recognized over the term of the related arrangement as the services are provided. Revenue from database and website hosting services is recognized ratably over the contractual hosting period. Pricing for database builds are typically based on a fixed price and hosting fees are typically based on a fixed price per month or per contract. Revenue from technology database subscriptions is based on a fixed price and is recognized ratably over the term of the subscription. Revenue from stand-alone technology data sales is recognized at the time of delivery. Revenue from services such as data processing, printing, personalization of communication pieces using laser and inkjet printing, targeted mail, and transportation logistics is recognized as the work is performed. Revenue from these services is typically based on a fixed price or rate given to the client. Postage costs of mailings in our direct mail business are borne by our clients and are not directly reflected in our revenues or expenses. Revenue related to fulfillment and contact centers, including inbound and outbound calling and email management, is also typically based on a fixed price per transaction or service provided. Revenue from these services is recognized as the service or activity is performed. Revenue from software arrangements involving multiple elements is allocated to each element based on the vendor-specific objective evidence of fair values of the respective elements. For software sales with multiple elements (for example, software licenses with undelivered post-contract customer support or “PCS”), we allocate revenue to each component of the arrangement using the residual value method based on the fair value of the undelivered elements. This means we defer revenue from the software sale equal to the fair value of the undelivered elements. The fair value of PCS is based upon separate sales of renewals to other clients. The fair value of services, such as training and consulting, is based upon separate sales of these services to other clients. The revenue allocated to PCS is recognized ratably over the term of the support period. Revenue allocated to professional services is recognized as the services are performed. The revenue allocated to software products, including time-based software licenses, is recognized, if collection is probable, upon execution of a licensing agreement and shipment of the software or ratably over the term of the license, depending on the structure and terms of the arrangement. If the licensing agreement is for a term of a year or less and includes PCS, we recognize the software and the PCS revenue ratably over the term of the license. For certain non-software arrangements, we enter into contracts that include delivery of a combination of our service offerings. Such arrangements are divided into separate units of accounting, provided that the delivered element(s) has stand-alone value and objective and reliable evidence of the fair value of the undelivered element(s) exist(s). When we are able to un-bundle the arrangement into separate units of accounting, revenue from each service is recognized separately, and in accordance with our revenue recognition policy for each element. If we are unable to un-bundle the arrangement into separate units of accounting, we apply one of the revenue recognition policies to the entire arrangement. This might impact the timing of revenue recognition, but would not change the total revenue recognized from the arrangement. Taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from our revenues and expenses. Cash Equivalents All highly liquid investments with an original maturity of 90 days or less at the time of purchase are considered to be cash equivalents. Cash equivalents are carried at cost, which approximates fair value. Allowance for Doubtful Accounts We maintain our allowance for doubtful accounts at a balance adequate to reduce accounts receivable to the amount of cash expected to be realized upon collection. The methodology used to determine the minimum allowance balance is based on our prior collection experience and is generally related to the accounts receivable balance in various aging categories. The balance is also influenced by specific clients’ financial strength and circumstances and current market conditions. Accounts that are determined to be uncollectible are written off in the period in which they are determined to be uncollectible. Periodic changes to the allowance balance are recorded as increases or decreases to bad debt expense, which is included in the “Advertising, selling, general and administrative” line of our Consolidated Statements of Comprehensive Income (Loss). The changes in the allowance for doubtful accounts consisted of the following:
Inventory Inventory, consisting primarily of print materials and operating supplies, is stated at the lower of cost (first-in, first-out method) or market. Property, Plant and Equipment Property, plant and equipment are stated on the basis of cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The general ranges of estimated useful lives are:
Long-lived assets such as property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset group. We did not record an impairment of long-lived assets in 2015, 2014, or 2013. Property, plant and equipment includes capital lease assets. Capital lease assets at December 31, 2015 and 2014 consisted of:
Amortization expense related to capital lease assets was $0.1 million, $0.2 million, and $0.3 million for the years ended December 31, 2015, 2014, and 2013, respectively. Depreciation and amortization on property, plant and equipment was $13.6 million, $14.7 million and $15.4 million for the years ended December 31, 2015, 2014, and 2013, respectively. Goodwill and Other Intangible Assets Goodwill is not subject to amortization but is tested for impairment on an annual basis (or more frequently if impairment indicators arise). We have established November 30 as the date for our annual test for impairment of goodwill. Reporting units with goodwill are tested for impairment by first assessing qualitative factors to determine whether the existence of events or circumstances leads to a determination that is more likely than not that the fair value of the reporting unit is less than its carrying amount. If after assessing the totality of events or circumstances, or based on management's judgment, we determine it is more likely that not that the fair value of a reporting unit is less than its carrying amount, a two-step impairment test is performed. The first step compares the fair value of the reporting unit (measured as the present value of expected future cash flows) to its carrying amount. If the fair value of the reporting units is less than its carrying amount, a second step is performed. In this step, the fair value of the reporting unit is less than its carrying amount, a second step is performed. In this step, the fair value of the reporting unit is allocated to its assets and liabilities to determine the implied fair value of goodwill, which is used to measure the impairment loss. Our indefinite life intangibles are evaluated for impairment using a qualitative assessment. If it is more likely than not that the asset is impaired, the amount by which the carrying value exceeds the fair value is recorded as impairment expense. Our acquired intangible assets are amortized on a straight-line basis over their estimated useful lives, which generally range from 7 to 40 years. Our acquired intangible assets do not have indefinite lives. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the intangible asset may not be recoverable. The carrying amount of an intangible asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If it is determined that an impairment loss has occurred, the loss is measured as the amount by which the carrying amount of the intangible asset exceeds its fair value. Goodwill is recorded to the extent that the purchase price of an acquisition exceeds the fair value of the identifiable net assets acquired. Other intangibles with definite and indefinite useful lives are recorded at fair value at the date of the acquisition. The company tests its goodwill and other intangible assets with indefinite useful lives for impairment as of November 30 of each year and as of an interim date should factors or indicators become apparent that would require an interim test. We have two reportable segments, which also represent our reporting units — Customer Interaction and Trillium Software. The company performs a qualitative assessment to determine whether fair value may be less than carrying value and, if necessary, assesses the impairment of its goodwill by determining the fair value of each of its reporting units and comparing the fair value to the carrying value for each reporting unit. Fair values of our reporting units and other intangibles with indefinite useful lives have been determined using discounted cash flow and cash flow multiple methodologies. Our overall market capitalization also was considered when evaluating the fair values of our reporting units. Intangible assets with definite useful lives are amortized over their respective estimated useful lives and reviewed for impairment if we believe that changes or triggering events have occurred that could have caused the carrying value of the intangible assets to exceed its fair value. Under the provisions of FASB ASC 350, Intangibles-Goodwill and Other (ASC 350), goodwill is tested for impairment at least annually, or more frequently if events or circumstances indicate that it is “more likely than not” that goodwill might be impaired. Such events could include a significant change in business conditions, a significant negative regulatory outcome or other events that could negatively affect our business and financial performance. We perform our annual goodwill impairment assessment as of November 30th of each year for each of our reportable segments. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances have been established where we have assessed that it is more likely than not that certain deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The company recognized the effect of income tax positions only if those positions are more likely than not of being sustained. Earnings Per Share Basic earnings per common share are based upon the weighted-average number of common shares outstanding during the period. Diluted earnings per common share are based upon the weighted-average number of common shares and dilutive common stock equivalents outstanding during the period. Dilutive common stock equivalents are calculated based on the assumed exercise of stock options and vesting of unvested shares using the treasury stock method. Stock-Based Compensation All share-based awards are recognized as operating expense in the “Labor” line of the Consolidated Statements of Comprehensive Income (Loss). Calculated expense is based on the fair values of the awards on the date of grant and is recognized over the requisite service period. Reserve for Healthcare, Workers’ Compensation, Automobile and General Liability We are self-insured for our workers’ compensation, automobile, general liability and the majority of our healthcare insurance. We make various subjective judgments about a number of factors in determining our reserve for healthcare, workers’ compensation, automobile and general liability insurance, and the related expense. Our deductible for individual healthcare claims is $0.3 million. Our deductible for workers’ compensation is $0.5 million. We have a $0.3 million deductible for automobile and general liability claims. Our insurance administrator provides us with estimated loss reserves, based upon its experience dealing with similar types of claims, as well as amounts paid to date against these claims. We apply actuarial factors to both insurance estimated loss reserves and to paid claims and then determine reserve levels, taking into account these calculations. At December 31, 2015 and 2014, our reserve for healthcare, workers’ compensation, net, automobile and general liability was $6.1 million and $7.8 million, respectively. Periodic changes to the reserve for workers’ compensation, automobile and general liability are recorded as increases or decreases to insurance expense, which is included in the “Advertising, selling, general and administrative” line of our Consolidated Statements of Comprehensive Income (Loss). Periodic changes to the reserve for healthcare are recorded as increases or decreases to employee benefits expense, which is included in the “Labor” line of our Consolidated Statements of Comprehensive Income (Loss). Foreign Currencies In most instances the functional currencies of our foreign operations are the local currencies. Assets and liabilities recorded in foreign currencies are translated in U.S. dollars at the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during a given month. Adjustments resulting from this translation are charged or credited to other comprehensive loss. Geographic Concentrations Depending on the needs of our clients, our services are provided in an integrated approach through more than 30 facilities worldwide, of which 6 are located outside of the U.S. Information about the operations in different geographic areas:
Recent Accounting Pronouncements In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which requires entities with a classified balance sheet to present all deferred tax assets and liabilities as non-current. The ASU is effective for public business entities for interim and annual periods in fiscal years beginning after December 15, 2016. Early adoption is permitted. On December 31, 2015, we elected to early adopt retrospectively, thus reclassifying $3.7 million and $5.1 million of current deferred tax assets to non-current at December 31, 2015 and 2014, respectively. In September 2015, the FASB issued ASU 2015-16, Business Combinations: Simplifying the Accounting for Measurement-Period Adjustments. The ASU requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period after an acquisition within the reporting period they are determined. This is a change from the previous requirement that the adjustments be recorded retrospectively. The ASU also requires disclosure of the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the adjustment to the provisional amounts, calculated as if the accounting had been completed at the acquisition dates. The ASU is effective for interim and annual periods beginning after December 15, 2015. Early adoption is permitted. The company has early adopted the ASU as of September 30, 2015. The adoption did not have a material impact on our consolidated financial statements. In August 2015, the FASB issued ASU 2015-12, Plan Accounting: Defined Benefit Pension Plans, Defined Contribution Pension Plans, Health and Welfare Benefit Plans. (Part II), Plan Investment Disclosures, reduces complexities for employee benefit plan financial reporting and disclosure requirements. The ASU is effective for annual periods beginning after December 15, 2015. The company has early adopted the ASU as of December 31, 2015. The adoption did not have a material impact on our consolidated financial statements. In April 2015, the FASB issued ASU 2015-05, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, which provides explicit guidance to help companies evaluate the accounting for fees paid by a customer in a cloud computing arrangement. This ASU is effective for interim and annual periods beginning after December 15, 2015. An entity can elect to adopt the amendments either prospectively for all arrangements entered into or materially modified after the effective date, or retrospectively. Early adoption is permitted. The company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting; however, we do not expect the adoption to have a material impact on our consolidated financial statements. In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The ASU is effective for annual periods beginning after December 15, 2015, and interim periods within those annual periods. The impact on the company will be a reclassification of debt issuance costs; however, we do not expect the adoption to have a significant impact on our consolidated financial statements. In January 2015, the FASB issued ASU 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, which eliminates the concept of extraordinary items from U.S. GAAP as part of its simplification initiative. The ASU does not affect disclosure guidance for events or transactions that are unusual in nature or infrequent in their occurrence. The ASU is effective for interim and annual periods in fiscal years beginning after December 15, 2015. The ASU allows prospective or retrospective application. Early adoption is permitted if applied from the beginning of the fiscal year of adoption. The effective date is the same for both public entities and all other entities. The impact on the company will be dependent on any transaction or event that is within the scope of the new guidance. On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The standard permits the use of either the retrospective or cumulative effect transition method. On July 9, 2015, the FASB decided to delay the effective date of the new revenue standard by one year. The new effective date is for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted beginning January 1, 2017 (original effective date of the ASU). The company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. |
Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments FASB ASC 820, Fair Value Measurements and Disclosures, (ASC 820) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a fair value hierarchy that prioritizes the inputs used in valuation methodologies into three levels: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Because of their maturities and/or variable interest rates, certain financial instruments have fair values approximating their carrying values. These instruments include cash and cash equivalents, accounts receivable, and trade payables. The fair value of our outstanding debt is disclosed in Note C, Long-Term Debt. The fair value of the assets in our funded pension plan is disclosed in Note F, Employee Benefit Plans. The assumptions used to determine the fair value of our reporting units in Step One of our goodwill impairment test, the identified theoretical intangibles assets of our Customer Interaction reporting unit in Step Two of our goodwill impairment test, and the discounted cash flow model used to calculate the fair value of our Aberdeen Group trade name are disclosed in Note E, Goodwill and Other Intangible Assets. The summary of our acquisition related contingent consideration accounted for at fair value on a recurring basis is disclosed in Note N, Acquisition and Disposition. |
Long-Term Debt |
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Long-Term Debt | Note C — Long-Term Debt Our long-term debt obligations at year-end were as follows:
The carrying values and estimated fair values of our outstanding debt at year-end were as follows:
The estimated fair values were calculated using market quotes for debt of the same remaining maturity and characteristics. These current rates are considered Level 2 inputs under the fair value hierarchy established by ASC 820, Fair Value Measurement. Credit Facilities On August 16, 2011, we entered into a five-year $122.5 million term loan facility (2011 Term Loan Facility) with Bank of America, N.A., as Administrative Agent. For each borrowing under the 2011 Term Loan Facility, we can generally choose to have the interest rate for that borrowing calculated based on either (i) the LIBOR rate (as defined in the 2011 Term Loan Facility) for the applicable interest period, plus a spread (ranging from 2.00% to 2.75% per annum) based on our total net funded debt-to-EBITDA ratio (as defined in the 2011 Term Loan Facility) then in effect; or (ii) the highest of (a) the Agent’s prime rate, (b) the BBA daily floating rate LIBOR, as determined by Agent for such date, plus 1.00%, and (c) the Federal Funds Rate plus 0.50%, plus a spread (ranging from 1.00% to 1.75% per annum) based on our total net funded debt-to-EBITDA ratio then in effect. We may elect to prepay the 2011 Term Loan Facility at any time without incurring any prepayment penalties. On August 8, 2013, we entered into a three-year $80 million revolving credit facility, which includes a $25 million letter of credit sub-facility and a $5 million swing line loan sub-facility (2013 Revolving Credit Facility) with Bank of America, N.A. (as Administrative Agent, Swing Line Lender and L/C Issuer) and the other lenders party thereto. The 2013 Revolving Credit Facility permits us to request up to a $15 million increase in the total amount of the facility. The 2013 Revolving Credit Facility matures on August 16, 2016. We may elect to prepay the 2013 Revolving Credit Facility at any time without incurring any prepayment penalties. For each borrowing under the 2013 Revolving Credit Facility, we can generally choose to have the interest rate for that borrowing calculated on either (i) the Eurodollar rate for the applicable interest period plus a spread which is determined based on our total net debt-to-EBITDA ratio then in effect, which ranges from 2.25% to 3.00% per annum; or (ii) the highest of (a) the Agent’s prime rate, (b) the Federal Funds Rate plus 0.50% per annum or (c) Eurodollar rate plus 1.00% per annum, plus a spread which is determined based on our total debt-to-EBITDA ratio then in effect, which spread ranges from 1.25% to 2.00% per annum. We also pay a quarterly commitment fee under the 2013 Revolving Credit Facility, which is based on a rate applied to the difference between total commitment amount under the 2013 Revolving Credit Facility and the aggregate amount of outstanding obligations under such facility. The commitment fee rate ranges from 0.50% to 0.55% per annum, depending on our total net debt-to-EBITDA ratio then in effect. In addition, we pay a letter of credit fee with respect to outstanding letters of credit. That fee is calculated by applying a rate equal to the spread applicable to Eurodollar based loans plus a fronting fee of 0.125% per annum to the average daily undrawn amount of the outstanding letters of credit. At December 31, 2015 we had letters of credit totaling $6.4 million issued under the 2013 Revolving Credit Facility, decreasing the amount available for borrowing to $60.6 million. At December 31, 2014 we had letters of credit totaling $6.2 million issued under the 2013 Revolving Credit Facility, decreasing the amount available for borrowing to $73.8 million. Under both of our credit facilities, we are required to maintain an interest coverage ratio of not less than 2.75 to 1, and we must maintain a total debt-to-EBITDA ratio of not more than 2.25 to 1 under the 2013 Revolving Credit Facility and 3.00 to 1 under the 2011 Term Loan Facility. The credit facilities also contain customary covenants restricting our and our subsidiaries’ ability to:
The credit facilities each also include customary covenants regarding reporting obligations, delivery of notices regarding certain events, maintaining our corporate existence, payment of obligations, maintenance of our properties and insurance thereon at customary levels with financially sound and reputable insurance companies, maintaining books and records and compliance with applicable laws. The credit facilities each also provide for customary events of default including nonpayment of principal or interest, breach of representations and warranties, violations of covenants, failure to pay certain other indebtedness, bankruptcy and material judgments and liabilities, certain violations of environmental laws or ERISA or the occurrence of a change of control. Our material domestic subsidiaries have guaranteed the performance of Harte Hanks under our credit facilities. As of December 31, 2015, we were in compliance with all of the covenants of our credit facilities. The future minimum principal payments related to our debt at December 31, 2015 are as follows:
See below for discussion of current maturities of long-term debt reflected on the consolidated balance sheet for the period ending December 31, 2015. Cash payments for interest were $1.7 million, $2.5 million, and $2.8 million for the years ended December 31, 2015, 2014, and 2013, respectively. On March 10, 2016, we entered into a secured credit facility with Wells Fargo Bank, N.A. as Administrative Agent, consisting of a maximum $65.0 million revolving credit facility (the 2016 Revolving Credit Facility), and a $45.0 million term loan facility (the 2016 Term Loan, and collectively with the 2016 Revolving Credit Facility, the Secured Credit Facilities). The 2016 Secured Credit Facilities are secured by substantially all of the company's assets and its material domestic subsidiaries. The Secured Credit Facilities will be used for general corporate purposes, and was used to replace, and repay remaining outstanding balances on, the company's (i) 2013 Revolving Credit Facility, and (ii) 2011 Term Loan Facility. The credit and guarantee agreements related to the 2013 Revolving Credit Facility and 2011 Term Loan Facility will likewise be terminated. The 2016 Revolving Credit Facility allows for loans up to the lesser of (a) $65.0 million or (b) 85.0% of eligible domestic accounts receivable plus, subject to certain sublimits, 85.0% of eligible foreign accounts receivable plus the lower of (i) $15.0 million or (ii) 85.0% of eligible unbilled accounts receivable, all of which are subject to customary reserves and eligibility criteria. The outstanding amount of the 2016 Term Loan will be repayable, on a monthly basis, in an amount equal to 1/120th of the original principal amount of the 2016 Term Loan. Any amount remaining unpaid will be due and payable in full on the Maturity Date March 10, 2021. So long as an established amount of availability under the 2016 Revolving Credit Facility is maintained (described below), the 2016 Term Loan may be prepaid in whole or in part at any time, subject to prior written notice and payment of a prepayment premium (3.0% in the first year, 2.0% in the second year, and 1.0% in the third year) of the outstanding principal balance of the amount of the 2016 Term Loan prepaid during such year. The Term Loan is subject to mandatory prepayments from the net proceeds of certain asset dispositions (subject to customary reinvestment exceptions), and the incurrence of certain indebtedness, which prepayments are subject to the prepayment premium. Additionally, if the leverage ratio is greater than 2.0 to 1 in 2016 or 1.75 to 1 in any subsequent year, the Term Loan is subject to mandatory prepayments in an amount equal to 50.0% of the excess cash flow of Harte Hanks and its subsidiaries. Prepayments made with respect to excess cash flow are not subject to the prepayment premium. Voluntary prepayments of the 2016 Term Loan and mandatory prepayments of the 2016 Term Loan from excess cash flow are not permitted if availability under the 2016 Revolving Credit Facility is less than established amounts the greater of (1) 13.5% of the maximum amount of the 2016 Revolving Credit Facility and (2) $14.9 million with respect to voluntary prepayments, and the greater of 10.0% of the maximum amount of the 2016 Revolving Credit Facility and $11.0 million with respect to excess cash flow payments. The loans under the Secured Credit Facilities will accrue interest at a rate equal to, at the company's option, (a) the base rate plus the applicable margin, or (b) the LIBOR rate (as defined and limited in the Secured Credit Facilities) plus the applicable margin. The base rate is the greatest of (a) the prime lending rate as publicly announced from time to time by Wells Fargo, (b) the federal funds rate plus 0.5%, and (c) the LIBOR rate for one month interest plus 1.0% per annum. The applicable margin for the 2016 Revolving Credit Facility is determined based upon the amount available to be borrowed under the 2016 Revolving Credit Facility in excess of trade payables aged in excess of historical levels and book overdrafts and ranges between 1.0 to 1.5% for loans accruing interest at the base rate and 2.0 to 2.5% for loans accruing interest at the LIBOR rate. The applicable margin for the 2016 Term Loan is 7.22% for loans accruing interest at the LIBOR rate and 6.22% for loans accruing interest at the base rate. We also pay an unused line of credit fee in an amount between 0.25 and 0.375% on the unused capacity on the 2016 Revolving Credit Facility outstanding amount. Under the Secured Credit Facilities, we are required to maintain certain financial covenants: a fixed charge coverage ratio of at least 1.0 to 1 for the 12 month period at each month through June 30, 2016 and 1.1 to 1 for the 12 month period at each month end thereafter; a leverage ratio of 2.25 to 1.0 at each month end from March 31, 2016 to December 31, 2016 and 2.0 to 1 at each month end thereafter; a minimum rolling four quarter period ending recurring revenue amount of $35.0 million at each quarter end from March 31, 2016 to September 30, 2016, and increasing quarterly from $35.2 million to $42.8 million each quarter thereafter; and capital expenditures not to exceed $14.0 million for the period from March 10, 2016 to December 31, 2016, and each fiscal year thereafter. The Secured Credit Facilities also contain customary covenants restricting the company and its subsidiaries’ ability to create, incur, assume or become liable to indebtedness; create, incur or assume liens; consummate acquisitions; liquidate, dissolve, suspend, or cease subsidiaries or a substantial portion of the business; convey, sell, lease, license, assign, transfer or dispose of assets; change the nature of business; make prepayments and amendments to other obligations and indebtedness; pay dividends and distributions and repurchase capital stock; modify accounting methods (other than as required by GAAP); make or acquire investments; enter into certain transactions with affiliates; use proceeds; issue equity interests; and amend, increase, fail to pay amounts due to, or terminate certain employee benefits, including a pension plan or multi-employer plan. The Secured Credit Facilities include certain customary representations and warranties, affirmative covenants and events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross-defaults to certain indebtedness, certain events of bankruptcy, certain events under ERISA, material judgments and a change of control. If an event of default occurs, the administrative agent, at the direction of the lenders under the Secured Credit Facilities, will be entitled to take various actions, including the acceleration of all amounts due under the Secured Credit Facilities and all actions permitted to be taken by a secured creditor. Due to the financial covenants and other terms of the Secured Credit Facilities, Harte Hanks anticipates that it will no longer declare dividends or repurchase stock for the foreseeable future. In accordance with ASC 470-10-45, Debt, Other Presentation Matters, because the Consolidated Balance Sheet is issued subsequent to March 10, 2016, and because a portion of the Secured Credit Facilities proceeds were used to pay off the 2011 Term Loan Facility and 2013 Revolving Credit Facility, total debt is reclassified to long-term debt as of December 31, 2015, except for the $3.0 million in current-maturities of long-term debt (which represents payments due in the next 12 months under the 2016 Secured Credit Facilities). |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The components of income tax expense (benefit) are as follows:
The U.S. and foreign components of income from continuing operations before income taxes were as follows:
The differences between total income tax expense (benefit) and the amount computed by applying the statutory federal income tax rate to income before income taxes were as follows:
Total income tax expense (benefit) was allocated as follows:
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:
In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based on the expectation of future taxable income and that the deductible temporary differences will offset existing taxable temporary differences, we believe it is more likely than not that we will realize the benefits of these deductible differences, net of the existing valuation allowances, at December 31, 2015 and 2014. As discussed in Note A, Significant Accounting Policies, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, which requires that deferred tax assets and liabilities be classified as non-current on the balance sheet rather than being separately presented as current and non-current portions. On December 31, 2015, we elected to early adopt ASU No. 2015-17 retrospectively, thus reclassifying $3.7 million and $5.1 million of deferred tax assets to non-current at December 31, 2015 and 2014, respectively. We or one of our subsidiaries files income tax returns in the U.S. federal, U.S. state, and foreign jurisdictions. For U.S. federal, U.S. state, and foreign returns, we are no longer subject to tax examinations for years prior to 2011. A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:
Included in the balance as of December 31, 2015 are $0.8 million of unrecognized tax benefits that, if recognized, would impact the effective tax rate. We anticipate that it is reasonably possible that we will have a reduction in the liability of up to $0.8 million during 2016 as a result of settlements. We have elected to classify any interest and penalties related to income taxes within income tax expense in our Consolidated Statements of Comprehensive Income (Loss). We did not recognize any tax benefits for the reduction of accrued interest and penalties associated with the reduction of the liability for unrecognized tax benefits during the years ended December 31, 2015 and 2014. We did not have any interest and penalties accrued at December 31, 2015 or 2014. As of December 31, 2015, we had net operating loss carryforwards that are available to reduce future taxable income and that will begin to expire in 2030. Our capital loss carryforwards that are available to reduce future capital gains will expire in 2018. The valuation allowance for deferred tax assets was $10.0 million and $10.9 million at December 31, 2015 and 2014. The net change in valuation allowance was a decrease of $0.9 million in 2015 and an increase $0.2 million in 2014. The valuation allowance at December 31, 2015 and 2014 relates to net operating loss, capital loss, and foreign tax credit carryforwards, which are not expected to be realized. Deferred income taxes have not been provided on the undistributed earnings of our foreign subsidiaries as these earnings have been, and under current plans will continue to be, permanently reinvested in these subsidiaries. As of December 31, 2015, the net cumulative undistributed earnings of these subsidiaries were approximately $3.7 million. If those earnings were not considered permanently reinvested, U.S. federal deferred income taxes would have been recorded, after consideration of U.S. foreign tax credits. However, it is not practicable to estimate the amount of additional taxes which may be payable upon the distribution of their cumulative earnings. As of December 31, 2015 approximately $4.5 million of cash is located within certain foreign subsidiaries that if repatriated would require that we accrue and pay approximately $2.1 million in additional tax. Cash payments for income taxes were $10.1 million, $4.9 million, and $11.3 million in 2015, 2014, and 2013, respectively. |
Goodwill and Other Intangible Assets |
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Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill is recorded to the extent that the purchase price of an acquisition exceeds the fair value of the identifiable net assets acquired. Other intangibles with definite and indefinite useful lives are recorded at fair value at the date of the acquisition. Under the provisions of FASB ASC 350, Intangibles-Goodwill and Other (ASC 350), goodwill is tested for impairment at least annually, or more frequently if events or circumstances indicate that it is "more likely than not" that goodwill might be impaired. We assess the impairment of our goodwill and other intangible assets by determining the fair value of each of our reporting units and comparing the fair value to the carrying value for each reporting unit. Determining fair value requires the exercise of significant judgments, including judgments about appropriate discount rates, the amount and timing of expected future cash flows, and perpetual growth rates. We monitor potential triggering events, including changes in the business climate in which we operate, attrition of key personnel, the current volatility in the capital markets, the company’s market capitalization compared to our book value, our recent operating performance, and financial projections. During the third quarter of 2015 as a result of a sustained decline in our market capitalization below our book value of equity and recent operating performance, the company determined that a triggering event had occurred. In accordance with ASC 350, we determined that an interim Step One impairment test of Customer Interaction and Trillium Software goodwill was warranted. The fair value of each reporting unit was estimated using both the income approach and market approach models. The fair value of our Customer Interaction reporting unit was estimated to be less than the carrying value, including goodwill. The fair value of our Trillium Software reporting unit was estimated to be more than the carrying value, including goodwill. The company determined that the goodwill balance with respect to the Customer Interaction was impaired and Step Two testing on that reporting unit balance was deemed necessary. Step Two of the goodwill test consists of performing a hypothetical purchase price allocation, under which the estimated fair value of the reporting unit is allocated to its tangible and intangible assets based on their estimated fair values, with any residual amount being assigned to goodwill. During the Step Two analysis, book value was estimated to approximate fair value for all working capital items, as well as a number of insignificant assets and liabilities. Intangible assets related to trade names, customer relationships and non-compete agreements were identified and the fair value of these intangible assets was estimated. The models used to value the Customer Interaction reporting unit in Step One and the identified intangible assets in Step Two relied on management’s assumptions. These assumptions, which are significant to the calculated fair values, are considered Level 3 inputs under the fair value hierarchy established by ASC 350, as they are unobservable. The assumptions in the Step One test include discount rate, revenue growth rates, tax rates, and operating margins. In addition to these assumptions, the Step Two assumptions include customer attrition rates and royalty rates. The impairment analysis indicated an impairment of Customer Interaction goodwill that is recorded in the Consolidated Statements of Comprehensive Income (Loss) in the third quarter of 2015 of $209.9 million and a corresponding $36.8 million tax benefit resulting in a net income impact of $173.1 million. The changes in the carrying amount of goodwill are as follows:
On April 14, 2015 the company sold its B2B research businesses, Aberdeen Group and Harte Hanks Market Intelligence (the "B2B research business”). The B2B research business asset group was a part of our Customer Interaction segment (see Note M, Business Segments). The allocated fair value to the B2B research business within the net book value of Customer Interaction goodwill was $11.1 million. In addition, $2.3 million of intangible assets with indefinite useful lives related to the Aberdeen Group trade name was written off in conjunction with the sale of the B2B research business. These amounts were written off and are reflected in the Loss on sale in the Other expenses section of the Condensed Consolidated Statements of Income (Loss). See Note N, Acquisition and Disposition, below for further discussion. On March 16, 2015 the company acquired the stock of a privately-owned digital marketing agency. The company paid some consideration upon closing, with additional consideration payable upon the achievement of revenue performance goals over the three-year period following the closing. The company performed a valuation to determine the estimate of the total purchase consideration and to estimate values for the tangible and identifiable intangible assets. As a result of the calculation, we recorded $41.8 million in goodwill and $4.8 million of identified intangible assets with definite lives for for customer relationships, trade names and non-compete agreements. During second quarter of 2014, we determined our reporting units as Customer Interaction and Trillium Software. In this analysis, our goodwill was allocated to each reporting unit based on the estimated fair value of the reporting unit. We performed an impairment test immediately before and after the change in reporting units, utilizing this same methodology as our November 30 annual impairment test and no indication of impairment was identified. On September 30, 2013, as a result of a significant decrease in forecasted revenues and an overall strategic assessment of the related operations, management completed an evaluation of the Aberdeen Group trade name. A discounted cash flow model was used to calculate the fair value of the Aberdeen trade name. The significant assumptions used in this method included the (i) revenue growth rates for Aberdeen, (ii) discount rate, (iii) tax rate, and (iv) royalty rate. These assumptions are considered Level 3 inputs under the fair value hierarchy established by FASB ASC 820, Fair Value Measurements and Disclosures. Harte Hanks recorded a non-cash trade name intangible asset impairment charge of $2.8 million. The impairment charge is included in Impairment of other intangible assets in the Consolidated Statements of Comprehensive Income (Loss) in the third quarter of 2013. We performed our annual goodwill impairment testing as of November 30, 2015. We performed a step zero analysis, and overall fair value was compared to overall market capitalization. Based on the results of our November 30, 2015 impairment tests, we did not record any additional impairment losses in 2015 related to goodwill and other intangible assets. We did not record an impairment loss related to goodwill in 2014. The company continues to monitor potential triggering events, including changes in the business climate in which it operates, attrition of key personnel, the current volatility in the capital markets, the company’s market capitalization compared to its book value, the company’s recent operating performance, and the company’s financial projections. The occurrence of one or more triggering events could require additional impairment testing, which could result in additional impairment charges in the future. Other intangibles with indefinite useful lives relate to trade names associated with the Aberdeen Group acquisition in September 2006. These intangibles were written-off in conjunction with the sale of the B2B Research Business. The changes in the carrying amount of other intangibles with indefinite lives are as follows:
Other intangibles with definite useful lives all relate to contact databases, client relationships, and non-compete agreements. Other intangible assets with definite useful lives are amortized on a straight-line basis over their respective estimated useful lives, typically a period of 2 to 10 years, and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The changes in the carrying amount of other intangibles with definite lives are as follows:
Amortization expense related to other intangibles with definite useful lives was $0.7 million, $0.0 million, and $0.2 million for the years ended December 31, 2015, 2014, and 2013, respectively. Expected amortization expense for the next five years is as follows:
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Employee Benefit Plans |
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Employee Benefit Plans | Employee Benefit Plans Prior to January 1, 1999, we maintained a defined benefit pension plan for which most of our employees were eligible (the Qualified Pension Plan). In conjunction with significant enhancements to our 401(k) plan, we elected to freeze benefits under the Qualified Pension Plan as of December 31, 1998. In 1994, we adopted a non-qualified, unfunded, supplemental pension plan (Restoration Pension Plan) covering certain employees, which provides for incremental pension payments so that total pension payments equal those amounts that would have been payable from the principal pension plan were it not for limitations imposed by income tax regulation. The benefits under the Restoration Pension Plan were intended to provide benefits equivalent to our Qualified Pension Plan as if such plan had not been frozen. Effective April 1, 2014, we froze benefits under our Restoration Pension Plan, which was accounted for as a curtailment of the plan in the second quarter of 2014. The curtailment resulted in a reduction of plan expense of $0.4 million during 2014 and a reduction in the projected benefit obligation of $1.1 million. This curtailment gain offsets the unrecognized loss held by the Restoration Pension Plan. The remaining portion of the unrecognized loss will then be amortized over the average life expectancy of all participants. The overfunded or underfunded status of our defined benefit post-retirement plans is recorded as an asset or liability on our balance sheet. The funded status is measured as the difference between the fair value of plan assets and the projected benefit obligation. Periodic changes in the funded status are recognized through other comprehensive income. We currently measure the funded status of our defined benefit plans as of December 31, the date of our year-end consolidated balance sheets. The status of the defined benefit pension plans at year-end was as follows:
The following amounts have been recognized in the Consolidated Balance Sheets at December 31:
The following amounts have been recognized in accumulated other comprehensive loss, net of tax, at December 31:
We are not required to make and do not intend to make any contributions to our Qualified Pension Plan in 2016. Based on current estimates we will not be required to make any contributions to our Qualified Pension Plan until 2018. We are not required to make and do not intend to make any contributions to our Restoration Pension Plan in 2016 other than to the extent needed to cover benefit payments. We expect benefit payments under this supplemental pension plan to total approximately $1.5 million in 2016. In the event of a change of control, as defined in the plan document, the Restoration Pension Plan is required to be fully funded. The following information is presented for pension plans with an accumulated benefit obligation in excess of plan assets:
The Restoration Pension Plan had an accumulated benefit obligation of $26.4 million and $28.2 million at December 31, 2015 and 2014, respectively. The following table presents the components of net periodic benefit cost and other amounts recognized in other comprehensive income (loss) for both plans:
The estimated net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost in 2016 is $2.3 million. The period over which the net loss from the Qualified Pension Plan is amortized into net periodic benefit cost has been changed effective in 2016 from the average future service of active participants (approximately 9 years) to the average future lifetime of all participants (approximately 24 years). This change reflects that the Qualified Pension Plan is frozen and that almost all of the plan's participants are not active employees. The weighted-average assumptions used for measurement of the defined pension plans were as follows:
The discount rate assumptions are based on current yields of investment-grade corporate long-term bonds. The expected long-term return on plan assets is based on the expected future average annual return for each major asset class within the plan’s portfolio (which is principally comprised of equity investments) over a long-term horizon. In determining the expected long-term rate of return on plan assets, we evaluated input from our investment consultants, actuaries, and investment management firms, including their review of asset class return expectations, as well as long-term historical asset class returns. Projected returns by such consultants and economists are based on broad equity and bond indices. Additionally, we considered our historical 15-year compounded returns, which have been in excess of the forward-looking return expectations. The funded pension plan assets as of December 31, 2015 and 2014, by asset category, are as follows:
The current economic environment presents employee benefit plans with unprecedented circumstances and challenges, which, in some cases over the last several years, have resulted in large declines in the fair value of investments. The fair values presented have been prepared using values and information available as of December 31, 2015 and 2014. The following tables present the fair value measurements of the assets in our funded pension plan:
The investment policy for the Qualified Pension Plan focuses on the preservation and enhancement of the corpus of the plan’s assets through prudent asset allocation, quarterly monitoring and evaluation of investment results, and periodic meetings with investment managers. The investment policy’s goals and objectives are to meet or exceed the representative indices over a full market cycle (3-5 years). The policy establishes the following investment mix, which is intended to subject the principal to an acceptable level of volatility while still meeting the desired return objectives:
The funded pension plan provides for investment in various investment types. Investments, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility risk. Due to the level of risk associated with investments, it is reasonably possible that changes in the value of investments will occur in the near term and may impact the funded status of the plan. To address the issue of risk, the investment policy places high priority on the preservation of the value of capital (in real terms) over a market cycle. Investments are made in companies with a minimum five-year operating history and sufficient trading volume to facilitate, under most market conditions, prompt sale without severe market effect. Investments are diversified; reasonable concentration in any one issue, issuer, industry, or geographic area is allowed if the potential reward is worth the risk. Investment managers are evaluated by the performance of the representative indices over a full market cycle for each class of assets. The Pension Plan Committee reviews, on a quarterly basis, the investment portfolio of each manager, which includes rates of return, performance comparisons with the most appropriate indices, and comparisons of each manager’s performance with a universe of other portfolio managers that employ the same investment style. The expected future pension benefit payments for the next ten years as of December 31, 2015 are as follows:
We also sponsor a 401(k) retirement plan in which we match a portion of employees’ voluntary before-tax contributions. Under this plan, both employee and matching contributions vest immediately. Total 401(k) expense recognized in 2015, 2014, and 2013 was $3.6 million, $3.8 million, and $3.9 million, respectively. |
Stockholders' Equity |
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Stockholders' Equity Attributable to Parent [Abstract] | |
Stockholders' Equity | Stockholders’ Equity We paid a quarterly dividend of $0.085 per share in each quarter of 2015. During 2015, we repurchased 0.9 million shares of our common stock for $4.6 million under our stock repurchase programs that were publicly announced in August of 2014 and 2012. Under the program announced in August 2014 our Board of Directors has authorized us to spend up to $20.0 million to repurchase shares of our outstanding common stock. As of December 31, 2015, we had authorization to spend $11.4 million to repurchase additional shares under this program. From 1997 through December 2015, we have paid more than $1.2 billion to repurchase 67.9 million shares under this program and previously announced programs. During 2015, we received 170,567 shares of our common stock, with an estimated market value of $1.1 million, in connection with vesting of shares as shares are returned to treasury to pay for an awardee’s tax obligation. |
Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation Compensation expense for stock-based awards is based on the fair values of the awards on the date of grant and is recognized on a straight-line basis over the vesting period of the entire award in the “Labor” line of the Consolidated Statements of Comprehensive Income (Loss). For the years ended December 31, 2015, 2014, and 2013, we recorded total stock-based compensation expense of $5.7 million, $4.1 million, and $5.7 million, respectively. In September 2015 we granted equity awards to Karen Puckett as a material inducement for her to accept appointment as our Chief Executive Officer. In addition, in October 2015, we granted equity awards to our Chief Marketing Officer as a material inducement to his acceptance of such position. These option, restricted stock, and performance units awards were not submitted for stockholder approval, and were separately listed with the NYSE. In July 2013 we granted equity awards to Robert Philpott as a material inducement for him to accept appointment as our Chief Executive Officer. These option, restricted stock, and performance unit awards were not submitted for stockholder approval, and were separately registered with the SEC and listed with the NYSE. In May 2013 our stockholders approved the 2013 Omnibus Incentive Plan (2013 Plan), pursuant to which we may issue up to 5.0 million shares of stock-based awards to directors, employees and consultants. The 2013 Plan replaced the stockholder-approved 2005 Omnibus Incentive Plan (2005 Plan), pursuant to which we issued equity securities to directors, officers, and key employees. No additional stock-based awards will be granted under the 2005 Plan, but awards previously granted under the 2005 Plan will remain outstanding in accordance with their respective terms. As of December 31, 2015, there were 3.2 million shares available for grant under the 2013 Plan. Stock Options Options granted as inducement awards have an exercise price equal to the market value of the common stock on the grant date. These options become exercisable in 25% increments on the first through fourth anniversaries of their date of grant, and expire on the tenth anniversary of their date of grant. Options to purchase 1.0 million shares were outstanding under the inducement awards at December 31, 2015, with exercise prices of either $3.79 or $4.26 per share. Following the third quarter 2015 resignation of Mr. Philpott, vesting was accelerated on his unvested stock options (pursuant to the terms of his employment agreement and inducement award), for which we recognized $0.5 million of accelerated expense in July 2015. Under the 2013 Plan, all options have been and will be granted at exercise prices equal to the market value of the common stock on the grant date. All such options are exercisable in 25% increments on the first through fourth anniversaries of their date of grant, and expire on the tenth anniversary of their date of grant. As of December 31, 2015, 2013 Plan options to purchase 1.4 million shares were outstanding with exercise prices ranging from $4.67 to $8.85 per share. All options under the 2005 Plan were granted at exercise prices equal to the market value of the common stock on the grant date. All 2005 Plan options granted prior to 2011 become exercisable in 25% increments on the second through fifth anniversaries of their date of grant and expire on the tenth anniversary of their date of grant. All options granted after 2011 become exercisable in 25% increments on the first through fourth anniversaries of their date of grant, and expire on the tenth anniversary of their date of grant. As of December 31, 2015, 2005 Plan options to purchase 2.3 million shares were outstanding with exercise prices ranging from $6.04 to $27.00 per share. Options issued from January 2013 through March 2015 vest in full (to the extent not previously vested) upon a change in control, as defined in the applicable equity plan. Options granted to officers since April 2015 or before January 2013 vest in full (to the extent not previously vested) upon a change in control if such options are not assumed or replaced by a publicly-traded successor with an equivalent award (as such terms are defined in such officers’ change-in-control severance agreements). Additionally, 25% of the inducement options granted to Ms. Puckett will vest (if all are not previously vested) in the event her employment is terminated without cause, or if she terminates her employment for good reason (as such terms are defined in her employment agreement). The following summarizes all stock option activity during the years ended December 31, 2015, 2014, and 2013:
The aggregate intrinsic value at year end in the table above represents the total pre-tax intrinsic value that would have been received by the option holders if all of the in-the-money options were exercised on December 31, 2015. The pre-tax intrinsic value is the difference between the closing price of our common stock on December 31, 2015 and the exercise price for each in-the-money option. This value fluctuates with the changes in the price of our common stock. The following table summarizes information about stock options outstanding at December 31, 2015:
The fair value of each option grant is estimated on the date of grant using the Black-Scholes Option-Pricing Model based on the following weighted-average assumptions used for grants during 2015, 2014, and 2013:
Expected term is estimated using the simplified method, which takes into account vesting and contractual term. The simplified method is being used to calculate expected term instead of historical experience due to a lack of relevant historical data resulting from changes in option vesting schedules and changes in the pool of employees receiving option grants. Expected stock price volatility is based on the historical volatility from traded shares of our stock over the expected term. The risk-free interest rate is based on the rate of a zero-coupon U.S. Treasury instrument with a remaining term approximately equal to the expected term. Expected dividend yield is based on historical stock price movement and anticipated future annual dividends over the expected term. Future annual dividends over the expected term are estimated to be $0.34 per share. The weighted-average fair value of options granted during 2015, 2014, and 2013 was $1.36, $2.59, and $2.35, respectively. As of December 31, 2015, there was $3.0 million of total unrecognized compensation cost related to unvested stock options. This cost is expected to be recognized over a weighted average period of approximately 2.87 years. Unvested Shares Unvested shares granted as inducement awards or under the 2013 Plan vest in three equal increments on the first three anniversaries of their date of grant. Unvested shares granted from January 2013 through March 2015 vest in full (to the extent not previously vested) upon a change in control, as defined in the applicable equity plan. Unvested shares granted to officers since April 2015 as inducement awards or under the 2013 Plan vest in full (to the extent not previously vested) upon a change in control if such unvested shares are not assumed or replaced by a publically-traded successor with an equivalent award (as such terms are defined in such officers’ change-in-control severance agreements). Following the third quarter 2015 resignation of Mr. Philpott, vesting was accelerated on his unvested shares (pursuant to the terms of his employment agreement and inducement award), for which we recognized $1.2 million of accelerated expense in July 2015. The following summarizes all unvested share activity during 2015, 2014, and 2013:
The fair value of each unvested share is estimated on the date of grant as the closing market price of our common stock on the date of grant. As of December 31, 2015, there was $4.8 million of total unrecognized compensation cost related to unvested shares. This cost is expected to be recognized over a weighted average period of approximately 2.03 years. Performance Stock Units Under the inducement awards, the 2013 Plan, and the 2005 Plan performance stock units are a form of share-based award similar to unvested shares, except that the number of shares ultimately issued is based on our performance against specific performance goals over a three-year period. At the end of the performance period, the number of shares of stock issued will be determined by adjusting upward or downward from the maximum in a range between 0% and 100%. Unvested performance stock units granted from January 2013 through March 2015 vest in full at the 100% performance level upon a change in control, as defined in the applicable equity plan. Unvested performance stock units granted to officers since April 2015 as inducement awards or under the 2013 Plan vest in full upon a change in control if such unvested performance stock units are not assumed or replaced by a publicly-traded successor with an equivalent award (as such terms are defined in such officers’ change-in-control severance agreements). The following summarizes all performance stock unit activity during 2015, 2014, and 2013:
The fair value of each performance stock unit is estimated on the date of grant as the closing market price of our common stock on the date of grant, minus the present value of anticipated dividend payments. Periodic compensation expense is based on the current estimate of future performance against specific performance goals over a three-year period and is adjusted up or down based on those estimates. As of December 31, 2015, there was $1.1 million of total unrecognized compensation cost related to performance stock units. This cost is expected to be recognized over a weighted average period of approximately 2.83 years. |
Commitments and Contingencies |
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Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies At December 31, 2015, we had letters of credit in the amount of $6.4 million issued under the 2013 Revolving Credit Facility. No amounts were drawn against these letters of credit at December 31, 2015. These letters of credit exist to support insurance programs relating to workers’ compensation, automobile, and general liability, and to offset liability relating to leasehold obligations. In the normal course of our business, we are obligated under some agreements to indemnify our clients as a result of claims that we infringe on the proprietary rights of third parties. The terms and duration of these commitments vary and, in some cases, may be indefinite, and certain of these commitments do not limit the maximum amount of future payments we could become obligated to make there under; accordingly, our actual aggregate maximum exposure related to these types of commitments cannot be reasonably estimated. Historically, we have not been obligated to make significant payments for obligations of this nature, and no liabilities have been recorded for these obligations in our financial statements. We are also currently subject to various other legal proceedings in the course of conducting our businesses and, from time to time, we may become involved in additional claims and lawsuits incidental to our businesses. In the opinion of management, after consultation with counsel, none of these matters is currently considered to be reasonably possible of resulting in a material adverse effect on our consolidated financial position or results of operations. Nevertheless, we cannot predict the impact of future developments affecting our pending or future claims and lawsuits and any resolution of a claim or lawsuit within a particular fiscal quarter may adversely impact our results of operations for that quarter. We expense legal costs as incurred, and all recorded legal liabilities are adjusted as required as better information becomes available to us. The factors we consider when recording an accrual for contingencies include, among others: (i) the opinions and views of our legal counsel, (ii) our previous experience, and (iii) the decision of our management as to how we intend to respond to the complaints. |
Leases |
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Leases | Leases We lease real estate and certain equipment under numerous lease agreements, most of which contain some renewal options. The total rent expense applicable to operating leases was $14.5 million, $15.4 million, and $14.5 million for the years ended December 31, 2015, 2014, and 2013, respectively. Step rent provisions and escalation clauses, normal tenant improvements, rent holidays, and other lease concessions are taken into account in computing minimum lease payments. We recognize the minimum lease payments on a straight-line basis over the minimum lease term. The future minimum rental commitments for all non-cancelable operating leases with terms in excess of one year as of December 31, 2015 are as follows:
We also lease certain equipment and software under capital leases. Our capital lease obligations at year-end were as follows:
The future minimum lease payments for all capital leases operating as of December 31, 2015 are as follows:
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share In periods in which the company has net income, the company is required to calculate earnings per share using the two-class method. The two-class method is required because the company's unvested shares are considered participating securities. Participating securities have the right to receive dividends should the company declare dividends on its common stock. Under the two-class method, undistributed and distributed earnings are allocated on a pro-rata basis to the common and restricted stockholders. The weighted-average number of common and restricted shares outstanding during the period is then used to calculate EPS for each class of shares. In periods in which the company has a net loss, basic loss per share is calculated using the treasury stock method. The treasury stock method is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period. The two-class is method is not used, because the two-class calculation is anti-dilutive. Reconciliations of basic and diluted earnings per share (EPS) are as follows:
For the purpose of calculating the shares used in the diluted EPS calculations, 4.2 million, 4.1 million, and 4.2 million anti-dilutive options have been excluded from the EPS calculations for the years ended December 31, 2015, 2014, and 2013, respectively. There were no anti-dilutive unvested shares for the years ended December 31, 2015 and 2013, respectively, and 0.0 million anti-dilutive unvested for the year ended December 31, 2014. |
Comprehensive Income (Loss) |
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Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) for a period encompasses net income (loss) and all other changes in equity other than from transactions with our stockholders. Our comprehensive income (loss) was as follows:
Changes in accumulated other comprehensive income (loss) by component are as follows:
Reclassification amounts related to the defined pension plans are included in the computation of net period pension benefit cost (see Note F, Employee Benefit Plans). |
Acquisition and Disposition |
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Acquisition and Disposition | Acquisition and Disposition On March 16, 2015, we completed the acquisition of 3Q Digital, Inc. The results of 3Q Digital, Inc.’s operations have been included in our consolidated financial statements since that date and are reported in the Customer Interaction segment. The initial purchase price was $30.2 million in cash. In addition, the purchase agreement includes a contingent consideration arrangement that requires us to pay the former owners of 3Q Digital, Inc. an additional cash payment depending on achievement of certain revenue growth goals. The potential undiscounted amount of all future payments that could be required to be paid under the contingent consideration arrangement is between $0 and $35.0 million in cash in 2018. The intangible assets include customer relationships, trade names, and non-compete agreements. The following tables summarize the consideration paid and the amounts of estimated fair value of the assets acquired and liabilities assumed at the acquisition date.
The fair value of the tangible net assets, identifiable intangible assets and goodwill recognized on acquisition is $48.2 million. The acquired intangible assets, which are being amortized, are as follows: customer relationships of $4.3 million (amortized over seven years), trade names and trademarks of $0.3 million (amortized over two years), and non-compete agreements of $0.2 million (amortized over three years). A reconciliation of the beginning and ending accrued balances of the contingent consideration using significant unobservable inputs (Level 3) for the twelve months ended December 31, 2015 is as follows:
The purchase price has been allocated based on the estimated fair values of assets described above and are subject to achievement of revenue goals. All future changes to the contingent consideration will be included in operations. On April 14, 2015, Harte Hanks sold its B2B research business. The B2B research business represented less than 5% of our total 2014 and 2013 revenues. As a result of the sale, the company recognized a pre-tax loss of $9.5 million in the second quarter of 2015. The related asset group does not meet the criteria to be classified as a component of an entity. As such, the related loss on sale is included in income before income taxes in the income statement in other expenses. The assets included both goodwill and intangible assets (see Note E, Goodwill and Other Intangible Assets). Future expenses are possible in future periods based upon certain working capital settlement provisions. |
Business Segments |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segments | Business Segments During the second quarter of 2014, Harte Hanks began executing a new strategy causing us to leverage 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 marketing service solutions for our customers. We derive revenues by offering a full complement of capabilities and resources to provide these services in media from direct mail to email, including:
Customer Interaction’s largest cost components are labor, outsourced costs, and mail supply chain costs. 2015 results reflect an impairment loss of $209.9 million related to goodwill associated with our Customer Interaction segment in the third quarter of 2015. 2013 results reflect an impairment loss of $2.8 million related to other intangible assets associated with our Aberdeen Group business recorded in the third quarter of 2013. Trillium Software Trillium Software 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. Trillium Software’s largest cost component is software development, which is comprised primarily of labor. Corporate General corporate expense consists primarily of pension and workers compensation expense related to employees from operations we no longer own.
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Discontinued Operations | Discontinued Operations We sold the assets of our California Shoppers operations to affiliates of OpenGate Capital Management, LLC (OpenGate) on September 27, 2013 for gross proceeds of approximately $22.5 million in cash. In addition, OpenGate agreed to assume certain liabilities associated with the Shoppers division. This transaction resulted in a loss on the sale of $12.4 million, net of $9.0 million of income tax benefit. This loss on sale includes transaction costs of approximately $2.6 million. Because the Shoppers operations represented distinct business units with operations and cash flows that can clearly be distinguished, both operationally and for financial purposes, from the rest of Harte Hanks, the results of the Shoppers operations are reported as discontinued operations for all periods presented. Results of the remaining Harte Hanks marketing services business are reported as continuing operations. Summarized operating results for the Shoppers discontinued operations, through the dates of disposal, are as follows:
The major components of cash flows for the Shoppers discontinued operations are as follows:
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Selected Quarterly Data (Unaudited) | Selected Quarterly Data (Unaudited)
Earnings per common share amounts are computed independently for each of the quarters presented. Therefore, the sum of the quarterly earnings per share amounts may not equal the quarterly earnings per share amounts or the annual earnings per share amounts. |
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Subsequent Events [Abstract] | |
Subsequent Event | Note Q — Subsequent Event On March 10, 2016, we entered into a secured credit facility with Wells Fargo Bank, N.A. as Administrative Agent. This facility consists of a maximum $65.0 million revolving credit facility (the 2016 Revolving Credit Facility) and a $45.0 million term loan facility (the 2016 Term Loan, and collectively with the 2016 Revolving Credit Facility, the Secured Credit Facilities). See Note C for further discussion. On March 4, 2016, Harte Hanks completed the purchase of substantially all of the assets of Denver-based Aleutian Consulting, Inc. (Aleutian) for $3.5 million. Aleutian, which will operate as Harte Hanks Consulting, provides go-to-market strategy consulting services combined with a proprietary fact-based, data-driven analytics approach. The historical results of Aleutian are not material to the company. |
Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||
Consolidation | The accompanying consolidated financial statements present the financial position and the results of operations and cash flows of Harte Hanks, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. As used in this report, the terms “Harte Hanks,” “we,” “us,” or “our” may refer to Harte Hanks, Inc., one or more of our consolidated subsidiaries, or all of them taken as a whole. |
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Discontinued Operations | As discussed in Note O, Discontinued Operations, we sold the assets of our California Shoppers operations on September 27, 2013. The operating results and related balances of Shoppers, including the loss on the sale, are being reported as discontinued operations in the Consolidated Financial Statements. Unless otherwise stated, amounts related to the Shoppers operations are excluded from the Notes to Consolidated Financial Statements for all years presented. |
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Reclassification of Prior Year Amounts | Certain prior year amounts have been reclassified for comparative purposes. All 2013 amounts related to discontinued operations have been reclassified for comparative purposes. The retrospective early adoption of ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, resulted in the reclassification of current deferred tax assets to non-current on the company's consolidated balance sheet as of December 31, 2014. |
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Use of Estimates | The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results and outcomes could differ from those estimates and assumptions. Such estimates include, but are not limited to, estimates related to pension accounting; estimates related to fair value for purposes of assessing goodwill, long-lived assets and intangible assets for impairment; estimates related to income taxes; and estimates related to contingencies. On an ongoing basis, management reviews its estimates based on currently available information. Changes in facts and circumstances could result in revised estimates and assumptions. |
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Operating Expense Presentation in Consolidated Statements of Comprehensive Income (Loss) | The “Labor” line in the Consolidated Statements of Comprehensive Income (Loss) includes all employee payroll and benefits, including stock-based compensation, along with temporary labor costs. The “Production and distribution” and “Advertising, selling, general and administrative” lines do not include labor, depreciation or amortization. |
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Revenue Recognition | We recognize revenue when all of the following criteria are satisfied: (i) persuasive evidence of an arrangement exists; (ii) the price is fixed or determinable; (iii) collectability is reasonably assured; and (iv) the service has been performed or the product has been delivered. Payments received in advance of the performance of services or delivery of the product are recorded as deferred revenue until such time as the services are performed or the product is delivered. Our accounting policy for revenue recognition has an impact on our reported results and relies on certain estimates that require judgments on the part of management. Revenue is derived from a variety of services and products, and may be billed at hourly rates, monthly rates, or a fixed price. For all sales, we require either a purchase order, a statement of work signed by the client, a written contract, or some other form of written authorization from the client. Revenue from agency and creative services, analytical services, and market research is typically billed based on time and materials. Revenue from email marketing, social media marketing, digital marketing techniques such as search engine maximization ("SEM"), and other digital solutions is recognized as the work is performed. Revenue from these services is typically based on a fixed price or rate given to the client. Revenue associated with new marketing database builds is deferred until complete or until client acceptance. Upon completion or acceptance, revenue and direct build costs are then recognized over the term of the related arrangement as the services are provided. Revenue from database and website hosting services is recognized ratably over the contractual hosting period. Pricing for database builds are typically based on a fixed price and hosting fees are typically based on a fixed price per month or per contract. Revenue from technology database subscriptions is based on a fixed price and is recognized ratably over the term of the subscription. Revenue from stand-alone technology data sales is recognized at the time of delivery. Revenue from services such as data processing, printing, personalization of communication pieces using laser and inkjet printing, targeted mail, and transportation logistics is recognized as the work is performed. Revenue from these services is typically based on a fixed price or rate given to the client. Postage costs of mailings in our direct mail business are borne by our clients and are not directly reflected in our revenues or expenses. Revenue related to fulfillment and contact centers, including inbound and outbound calling and email management, is also typically based on a fixed price per transaction or service provided. Revenue from these services is recognized as the service or activity is performed. Revenue from software arrangements involving multiple elements is allocated to each element based on the vendor-specific objective evidence of fair values of the respective elements. For software sales with multiple elements (for example, software licenses with undelivered post-contract customer support or “PCS”), we allocate revenue to each component of the arrangement using the residual value method based on the fair value of the undelivered elements. This means we defer revenue from the software sale equal to the fair value of the undelivered elements. The fair value of PCS is based upon separate sales of renewals to other clients. The fair value of services, such as training and consulting, is based upon separate sales of these services to other clients. The revenue allocated to PCS is recognized ratably over the term of the support period. Revenue allocated to professional services is recognized as the services are performed. The revenue allocated to software products, including time-based software licenses, is recognized, if collection is probable, upon execution of a licensing agreement and shipment of the software or ratably over the term of the license, depending on the structure and terms of the arrangement. If the licensing agreement is for a term of a year or less and includes PCS, we recognize the software and the PCS revenue ratably over the term of the license. For certain non-software arrangements, we enter into contracts that include delivery of a combination of our service offerings. Such arrangements are divided into separate units of accounting, provided that the delivered element(s) has stand-alone value and objective and reliable evidence of the fair value of the undelivered element(s) exist(s). When we are able to un-bundle the arrangement into separate units of accounting, revenue from each service is recognized separately, and in accordance with our revenue recognition policy for each element. If we are unable to un-bundle the arrangement into separate units of accounting, we apply one of the revenue recognition policies to the entire arrangement. This might impact the timing of revenue recognition, but would not change the total revenue recognized from the arrangement. Taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from our revenues and expenses. |
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Cash Equivalents | All highly liquid investments with an original maturity of 90 days or less at the time of purchase are considered to be cash equivalents. Cash equivalents are carried at cost, which approximates fair value. |
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Allowance for Doubtful Accounts | We maintain our allowance for doubtful accounts at a balance adequate to reduce accounts receivable to the amount of cash expected to be realized upon collection. The methodology used to determine the minimum allowance balance is based on our prior collection experience and is generally related to the accounts receivable balance in various aging categories. The balance is also influenced by specific clients’ financial strength and circumstances and current market conditions. Accounts that are determined to be uncollectible are written off in the period in which they are determined to be uncollectible. Periodic changes to the allowance balance are recorded as increases or decreases to bad debt expense, which is included in the “Advertising, selling, general and administrative” line of our Consolidated Statements of Comprehensive Income (Loss). |
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Inventory | Inventory, consisting primarily of print materials and operating supplies, is stated at the lower of cost (first-in, first-out method) or market. |
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Property, Plant and Equipment | Property, plant and equipment are stated on the basis of cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The general ranges of estimated useful lives are:
Long-lived assets such as property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset group. We did not record an impairment of long-lived assets in 2015, 2014, or 2013 |
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Goodwill and Other Intangibles | Goodwill is not subject to amortization but is tested for impairment on an annual basis (or more frequently if impairment indicators arise). We have established November 30 as the date for our annual test for impairment of goodwill. Reporting units with goodwill are tested for impairment by first assessing qualitative factors to determine whether the existence of events or circumstances leads to a determination that is more likely than not that the fair value of the reporting unit is less than its carrying amount. If after assessing the totality of events or circumstances, or based on management's judgment, we determine it is more likely that not that the fair value of a reporting unit is less than its carrying amount, a two-step impairment test is performed. The first step compares the fair value of the reporting unit (measured as the present value of expected future cash flows) to its carrying amount. If the fair value of the reporting units is less than its carrying amount, a second step is performed. In this step, the fair value of the reporting unit is less than its carrying amount, a second step is performed. In this step, the fair value of the reporting unit is allocated to its assets and liabilities to determine the implied fair value of goodwill, which is used to measure the impairment loss. Our indefinite life intangibles are evaluated for impairment using a qualitative assessment. If it is more likely than not that the asset is impaired, the amount by which the carrying value exceeds the fair value is recorded as impairment expense. Our acquired intangible assets are amortized on a straight-line basis over their estimated useful lives, which generally range from 7 to 40 years. Our acquired intangible assets do not have indefinite lives. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the intangible asset may not be recoverable. The carrying amount of an intangible asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If it is determined that an impairment loss has occurred, the loss is measured as the amount by which the carrying amount of the intangible asset exceeds its fair value. Goodwill is recorded to the extent that the purchase price of an acquisition exceeds the fair value of the identifiable net assets acquired. Other intangibles with definite and indefinite useful lives are recorded at fair value at the date of the acquisition. The company tests its goodwill and other intangible assets with indefinite useful lives for impairment as of November 30 of each year and as of an interim date should factors or indicators become apparent that would require an interim test. We have two reportable segments, which also represent our reporting units — Customer Interaction and Trillium Software. The company performs a qualitative assessment to determine whether fair value may be less than carrying value and, if necessary, assesses the impairment of its goodwill by determining the fair value of each of its reporting units and comparing the fair value to the carrying value for each reporting unit. Fair values of our reporting units and other intangibles with indefinite useful lives have been determined using discounted cash flow and cash flow multiple methodologies. Our overall market capitalization also was considered when evaluating the fair values of our reporting units. Intangible assets with definite useful lives are amortized over their respective estimated useful lives and reviewed for impairment if we believe that changes or triggering events have occurred that could have caused the carrying value of the intangible assets to exceed its fair value. Under the provisions of FASB ASC 350, Intangibles-Goodwill and Other (ASC 350), goodwill is tested for impairment at least annually, or more frequently if events or circumstances indicate that it is “more likely than not” that goodwill might be impaired. Such events could include a significant change in business conditions, a significant negative regulatory outcome or other events that could negatively affect our business and financial performance. We perform our annual goodwill impairment assessment as of November 30th of each year for each of our reportable segments. |
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Income Taxes | Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances have been established where we have assessed that it is more likely than not that certain deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The company recognized the effect of income tax positions only if those positions are more likely than not of being sustained. |
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Earnings Per Share | Basic earnings per common share are based upon the weighted-average number of common shares outstanding during the period. Diluted earnings per common share are based upon the weighted-average number of common shares and dilutive common stock equivalents outstanding during the period. Dilutive common stock equivalents are calculated based on the assumed exercise of stock options and vesting of unvested shares using the treasury stock method. |
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Stock-Based Compensation | All share-based awards are recognized as operating expense in the “Labor” line of the Consolidated Statements of Comprehensive Income (Loss). Calculated expense is based on the fair values of the awards on the date of grant and is recognized over the requisite service period. |
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Reserve for Healthcare, Workers' Compensation, Automobile and General Liability | We are self-insured for our workers’ compensation, automobile, general liability and the majority of our healthcare insurance. We make various subjective judgments about a number of factors in determining our reserve for healthcare, workers’ compensation, automobile and general liability insurance, and the related expense. Our deductible for individual healthcare claims is $0.3 million. Our deductible for workers’ compensation is $0.5 million. We have a $0.3 million deductible for automobile and general liability claims. Our insurance administrator provides us with estimated loss reserves, based upon its experience dealing with similar types of claims, as well as amounts paid to date against these claims. We apply actuarial factors to both insurance estimated loss reserves and to paid claims and then determine reserve levels, taking into account these calculations. At December 31, 2015 and 2014, our reserve for healthcare, workers’ compensation, net, automobile and general liability was $6.1 million and $7.8 million, respectively. Periodic changes to the reserve for workers’ compensation, automobile and general liability are recorded as increases or decreases to insurance expense, which is included in the “Advertising, selling, general and administrative” line of our Consolidated Statements of Comprehensive Income (Loss). Periodic changes to the reserve for healthcare are recorded as increases or decreases to employee benefits expense, which is included in the “Labor” line of our Consolidated Statements of Comprehensive Income (Loss). |
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Foreign Currencies | In most instances the functional currencies of our foreign operations are the local currencies. Assets and liabilities recorded in foreign currencies are translated in U.S. dollars at the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during a given month. Adjustments resulting from this translation are charged or credited to other comprehensive loss. |
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Recent Accounting Pronouncements | In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which requires entities with a classified balance sheet to present all deferred tax assets and liabilities as non-current. The ASU is effective for public business entities for interim and annual periods in fiscal years beginning after December 15, 2016. Early adoption is permitted. On December 31, 2015, we elected to early adopt retrospectively, thus reclassifying $3.7 million and $5.1 million of current deferred tax assets to non-current at December 31, 2015 and 2014, respectively. In September 2015, the FASB issued ASU 2015-16, Business Combinations: Simplifying the Accounting for Measurement-Period Adjustments. The ASU requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period after an acquisition within the reporting period they are determined. This is a change from the previous requirement that the adjustments be recorded retrospectively. The ASU also requires disclosure of the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the adjustment to the provisional amounts, calculated as if the accounting had been completed at the acquisition dates. The ASU is effective for interim and annual periods beginning after December 15, 2015. Early adoption is permitted. The company has early adopted the ASU as of September 30, 2015. The adoption did not have a material impact on our consolidated financial statements. In August 2015, the FASB issued ASU 2015-12, Plan Accounting: Defined Benefit Pension Plans, Defined Contribution Pension Plans, Health and Welfare Benefit Plans. (Part II), Plan Investment Disclosures, reduces complexities for employee benefit plan financial reporting and disclosure requirements. The ASU is effective for annual periods beginning after December 15, 2015. The company has early adopted the ASU as of December 31, 2015. The adoption did not have a material impact on our consolidated financial statements. In April 2015, the FASB issued ASU 2015-05, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, which provides explicit guidance to help companies evaluate the accounting for fees paid by a customer in a cloud computing arrangement. This ASU is effective for interim and annual periods beginning after December 15, 2015. An entity can elect to adopt the amendments either prospectively for all arrangements entered into or materially modified after the effective date, or retrospectively. Early adoption is permitted. The company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting; however, we do not expect the adoption to have a material impact on our consolidated financial statements. In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The ASU is effective for annual periods beginning after December 15, 2015, and interim periods within those annual periods. The impact on the company will be a reclassification of debt issuance costs; however, we do not expect the adoption to have a significant impact on our consolidated financial statements. In January 2015, the FASB issued ASU 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items, which eliminates the concept of extraordinary items from U.S. GAAP as part of its simplification initiative. The ASU does not affect disclosure guidance for events or transactions that are unusual in nature or infrequent in their occurrence. The ASU is effective for interim and annual periods in fiscal years beginning after December 15, 2015. The ASU allows prospective or retrospective application. Early adoption is permitted if applied from the beginning of the fiscal year of adoption. The effective date is the same for both public entities and all other entities. The impact on the company will be dependent on any transaction or event that is within the scope of the new guidance. On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The standard permits the use of either the retrospective or cumulative effect transition method. On July 9, 2015, the FASB decided to delay the effective date of the new revenue standard by one year. The new effective date is for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted beginning January 1, 2017 (original effective date of the ASU). The company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. |
Significant Accounting Policies (Tables) |
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in allowance for doubtful accounts | We maintain our allowance for doubtful accounts at a balance adequate to reduce accounts receivable to the amount of cash expected to be realized upon collection. The methodology used to determine the minimum allowance balance is based on our prior collection experience and is generally related to the accounts receivable balance in various aging categories. The balance is also influenced by specific clients’ financial strength and circumstances and current market conditions. Accounts that are determined to be uncollectible are written off in the period in which they are determined to be uncollectible. Periodic changes to the allowance balance are recorded as increases or decreases to bad debt expense, which is included in the “Advertising, selling, general and administrative” line of our Consolidated Statements of Comprehensive Income (Loss). The changes in the allowance for doubtful accounts consisted of the following:
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Schedule of estimated useful lives of property, plant and equipment | Property, plant and equipment are stated on the basis of cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The general ranges of estimated useful lives are:
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Schedule of capital lease assets | Property, plant and equipment includes capital lease assets. Capital lease assets at December 31, 2015 and 2014 consisted of:
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Schedule of information about the operations in different geographical areas | Information about the operations in different geographic areas:
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Long-Term Debt (Tables) |
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt obligations | Our long-term debt obligations at year-end were as follows:
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Schedule of carrying values and estimated fair values of outstanding debt | The carrying values and estimated fair values of our outstanding debt at year-end were as follows:
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Schedule of future minimum principal payments related to debt | The future minimum principal payments related to our debt at December 31, 2015 are as follows:
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Income Taxes (Tables) |
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of income tax expense (benefit) | The components of income tax expense (benefit) are as follows:
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Schedule of components of income from continuing operations before income taxes | The U.S. and foreign components of income from continuing operations before income taxes were as follows:
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Schedule of difference between total income tax expense (benefit) and the amount computed by applying the statutory federal income tax rate | The differences between total income tax expense (benefit) and the amount computed by applying the statutory federal income tax rate to income before income taxes were as follows:
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Schedule of allocation of income tax expense (benefit) | Total income tax expense (benefit) was allocated as follows:
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Schedule of tax effects of temporary differences | The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:
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Schedule of reconciliation of the beginning and ending amount of unrecognized tax benefit | A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:
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Goodwill and Other Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in goodwill | The changes in the carrying amount of goodwill are as follows:
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Schedule of changes in the carrying amount of other intangibles with indefinite lives | The changes in the carrying amount of other intangibles with indefinite lives are as follows:
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Schedule of changes in the carrying amount of other intangibles with definite lives | The changes in the carrying amount of other intangibles with definite lives are as follows:
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Schedule of expected amortization expense | Expected amortization expense for the next five years is as follows:
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Employee Benefit Plans (Tables) |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of status of defined benefit pension plans | The status of the defined benefit pension plans at year-end was as follows:
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Schedule of amounts recognized in the Consolidated Balance Sheets | The following amounts have been recognized in the Consolidated Balance Sheets at December 31:
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Schedule of amounts recognized in accumulated other comprehensive loss | The following amounts have been recognized in accumulated other comprehensive loss, net of tax, at December 31:
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Schedule of accumulated benefit obligation in excess of plan assets | The following information is presented for pension plans with an accumulated benefit obligation in excess of plan assets:
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Schedule of net periodic benefit cost and other amounts recognized in other comprehensive income (loss) | The following table presents the components of net periodic benefit cost and other amounts recognized in other comprehensive income (loss) for both plans:
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Schedule of weighted-average assumptions used for measurement of the defined pension plans | The weighted-average assumptions used for measurement of the defined pension plans were as follows:
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Schedule of funded pension plan assets by asset category | The funded pension plan assets as of December 31, 2015 and 2014, by asset category, are as follows:
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Schedule of fair value of plan assets | The following tables present the fair value measurements of the assets in our funded pension plan:
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Schedule of investment mix, which is intended to subject the principal to an acceptable level of volatility while still meeting the desired return objectives | The policy establishes the following investment mix, which is intended to subject the principal to an acceptable level of volatility while still meeting the desired return objectives:
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Schedule of expected future pension benefit payments | The expected future pension benefit payments for the next ten years as of December 31, 2015 are as follows:
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Stock-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of stock option activity | The following summarizes all stock option activity during the years ended December 31, 2015, 2014, and 2013:
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Summary of information of stock options outstanding | The following table summarizes information about stock options outstanding at December 31, 2015:
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Schedule of weighted-average assumptions used to estimate fair value | The fair value of each option grant is estimated on the date of grant using the Black-Scholes Option-Pricing Model based on the following weighted-average assumptions used for grants during 2015, 2014, and 2013:
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of unvested share activity | The following summarizes all unvested share activity during 2015, 2014, and 2013:
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Summary of performance stock unit activity | The following summarizes all performance stock unit activity during 2015, 2014, and 2013:
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Leases (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of future minimum rental commitments for all non-cancellable operating leases | The future minimum rental commitments for all non-cancelable operating leases with terms in excess of one year as of December 31, 2015 are as follows:
|
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Schedule of capital lease obligations | We also lease certain equipment and software under capital leases. Our capital lease obligations at year-end were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of future minimum rental commitments for all capital leases | The future minimum lease payments for all capital leases operating as of December 31, 2015 are as follows:
|
Earnings Per Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of basic and diluted earnings per share | Reconciliations of basic and diluted earnings per share (EPS) are as follows:
|
Comprehensive Income (Loss) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Comprehensive Income (Loss) | Our comprehensive income (loss) was as follows:
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Schedule of changes in accumulated other comprehensive income | Changes in accumulated other comprehensive income (loss) by component are as follows:
|
Acquisition and Disposition (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of estimated fair value of the assets acquired | The following tables summarize the consideration paid and the amounts of estimated fair value of the assets acquired and liabilities assumed at the acquisition date.
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Schedule of reconciliation of beginning and ending balances of contingent earnout consideration | A reconciliation of the beginning and ending accrued balances of the contingent consideration using significant unobservable inputs (Level 3) for the twelve months ended December 31, 2015 is as follows:
|
Business Segments (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business segment reporting information |
|
Discontinued Operations (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of operating results for the Shoppers discontinued operations | Summarized operating results for the Shoppers discontinued operations, through the dates of disposal, are as follows:
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Summary of major components of cash flows for the Shoppers discontinued operations | The major components of cash flows for the Shoppers discontinued operations are as follows:
|
Selected Quarterly Data (Unaudited) (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Data [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of selected quarterly data (unaudited) |
|
Significant Accounting Policies (Details) - segments |
3 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2014 |
Dec. 31, 2015 |
|
Accounting Policies [Abstract] | ||
Number of reportable segments | 2 | 2 |
Number of operating segments | 2 |
Significant Accounting Policies (Details 2) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Allowance for Doubtful Accounts Receivable [Roll Forward] | |||
Allowance for doubtful account, beginning of year | $ 1,224 | $ 1,729 | $ 2,574 |
Increase in allowance charged to expense | 630 | (68) | 47 |
Account charges against the expense | (605) | (437) | (892) |
Allowance for doubtful account, end of year | $ 1,249 | $ 1,224 | $ 1,729 |
Significant Accounting Policies - (Details 4) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Accounting Policies [Abstract] | ||
Deductible for individual healthcare claims | $ 275,000 | |
Deductible for workers' compensation | 500,000 | |
Deductible for automobile and general liability claims | 250,000 | |
Self insurance reserve | $ 6,100,000 | $ 7,800,000 |
Significant Accounting Policies - (Details 5) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015
USD ($)
|
Sep. 30, 2015
USD ($)
|
Jun. 30, 2015
USD ($)
|
Mar. 31, 2015
USD ($)
|
Dec. 31, 2014
USD ($)
|
Sep. 30, 2014
USD ($)
|
Jun. 30, 2014
USD ($)
|
Mar. 31, 2014
USD ($)
|
Dec. 31, 2015
USD ($)
facility
|
Dec. 31, 2014
USD ($)
|
Dec. 31, 2013
USD ($)
|
|
Property, Plant and Equipment [Line Items] | |||||||||||
Number of facilities which provide services (more than 30) | facility | 30 | ||||||||||
Revenues | $ 129,815 | $ 121,968 | $ 122,345 | $ 121,173 | $ 146,518 | $ 134,121 | $ 140,310 | $ 132,727 | $ 495,301 | $ 553,676 | $ 559,609 |
Property, plant and equipment | 33,913 | 36,913 | 33,913 | 36,913 | |||||||
UNITED STATES | |||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||
Revenues | 411,775 | 463,752 | 469,596 | ||||||||
Property, plant and equipment | 29,437 | 33,134 | $ 29,437 | 33,134 | |||||||
Foreign Countries | |||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||
Number of facilities which provide services (more than 30) | facility | 6 | ||||||||||
Revenues | $ 83,526 | 89,924 | $ 90,013 | ||||||||
Property, plant and equipment | 4,476 | 3,779 | 4,476 | 3,779 | |||||||
Other Current Assets | New Accounting Pronouncement, Early Adoption, Effect | |||||||||||
Property, Plant and Equipment [Line Items] | |||||||||||
Deferred tax asset | $ (3,700) | $ (5,100) | $ (3,700) | $ (5,100) |
Long-Term Debt (Details 2) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Carrying Value | ||
Carrying values and estimated fair values of outstanding debt | ||
Total debt | $ 77,313 | $ 82,687 |
Fair Value | Significant Other Observable Inputs (Level 2) | ||
Carrying values and estimated fair values of outstanding debt | ||
Total debt | $ 77,313 | $ 82,687 |
Long-Term Debt (Details 4) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Future minimum principal payments | |||
2016 | $ 77,313,000 | ||
2017 | 0 | ||
2018 | 0 | ||
2019 | 0 | ||
2020 | 0 | ||
Thereafter | 0 | ||
Total debt | 77,313,000 | $ 82,687,000 | |
Cash payments for interest | $ 1,700,000 | 2,500,000 | $ 2,800,000 |
Minimum | |||
Long-term debt obligation | |||
Interest coverage ratio (as a percent) | 2.75 | ||
Maximum | |||
Long-term debt obligation | |||
Aggregate percentage limit of assets accounted for by foreign subsidiaries | 20.00% | ||
Limit of allowed indebtedness of subsidiaries | $ 20,000,000.0 | ||
2013 Revolving Credit Facility, due August 16, 2016 | Maximum | |||
Long-term debt obligation | |||
Debt-to-EBITDA ratio (as a percent) | 2.25 | ||
2011 Term Loan Facility, due August 16, 2016 | |||
Future minimum principal payments | |||
Total debt | $ 64,313,000 | $ 82,687,000 | |
2011 Term Loan Facility, due August 16, 2016 | Maximum | |||
Long-term debt obligation | |||
Debt-to-EBITDA ratio (as a percent) | 3.00 |
Income Taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Current | |||
Federal | $ 6,998 | $ 5,836 | $ 8,689 |
State and Local | 1,177 | 619 | 3,554 |
Foreign | 1,146 | 1,062 | 1,189 |
Total Current | 9,321 | 7,517 | 13,432 |
Deferred | |||
Federal | (38,278) | 2,862 | 3,532 |
State and local | (2,912) | 2,177 | (2,142) |
Foreign | (45) | 759 | 354 |
Total Deferred | (41,235) | 5,798 | 1,744 |
Total income tax expense | $ (31,914) | $ 13,315 | $ 15,176 |
Income Taxes (Details 2) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Income Tax Disclosure [Abstract] | |||
United States | $ (205,435) | $ 29,962 | $ 33,143 |
Foreign | 2,593 | 7,344 | 6,474 |
Total income (loss) from continuing operations before income taxes | $ (202,842) | $ 37,306 | $ 39,617 |
Income Taxes (Details 4) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Income Tax Disclosure [Abstract] | |||
Income tax expense (benefit) | $ (31,914) | $ 13,315 | $ 15,176 |
Income tax expense, discontinued operations | 0 | 0 | (7,822) |
Income tax expense (benefit), stockholders' equity | 2,021 | (9,527) | 17,373 |
Income tax expense, allocation | $ (29,893) | $ 3,788 | $ 24,727 |
Income Taxes (Details 6) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Income Tax Disclosure [Abstract] | |||
Income tax expense (benefit) | $ (31,914) | $ 13,315 | $ 15,176 |
Income tax expense (benefit) rate for the period | 15.70% | 35.70% | 38.30% |
Computed expected income tax expense (benefit) | 35.00% | 35.00% | 35.00% |
Income Taxes (Details 7) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Unrecognized tax benefits | $ 0 | $ 27 |
Additions for current year tax positions | 0 | 0 |
Additions for prior year tax positions | 761 | 0 |
Reductions for prior year tax positions | 0 | 0 |
Lapse of statute | 0 | (27) |
Settlements | 0 | 0 |
Unrecognized tax benefits | $ 761 | $ 0 |
Income Taxes (Details 8) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Tax Credit Carryforward [Line Items] | |||
Unrecognized tax benefits | $ 761,000 | $ 0 | $ 27,000 |
Unrecognized tax benefits, interest and penalties | 0 | 0 | |
Unrecognized tax benefits, interest and penalties accrued | 0 | 0 | |
Deferred tax assets, valuation allowance | 9,958,000 | 10,933,000 | |
Deferred tax assets, valuation allowance, increase (decrease) | (900,000) | 200,000 | |
Undistributed earnings in foreign subsidiaries | 3,700,000 | ||
Cash held in foreign subsidiaries for permanent reinvestment | 4,500,000 | ||
Income tax due if cash held in foreign subsidiaries was repatriated | 2,100,000 | ||
Income taxes paid | $ 10,100,000 | $ 4,900,000 | $ 11,300,000 |
Goodwill and Other Intangible Assets (Details 2) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Changes in the carrying amount of other intangibles with indefinite lives | ||
Balance at beginning of the period | $ 2,250 | $ 2,250 |
Acquisition | 0 | 0 |
Disposition | (2,250) | |
Balance at end of the period | $ 0 | $ 2,250 |
Goodwill and Other Intangible Assets (Details 3) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Intangible assets with useful lives | |||
Goodwill | $ 218,972 | $ 398,164 | $ 398,164 |
Changes in the carrying amount of other intangibles with definite lives | |||
Balance at the beginning of the period | 27 | 53 | |
Purchase Price Consideration | 4,773 | 0 | |
Amortization | (659) | (26) | (206) |
Impairment | 0 | 0 | |
Disposition | (18) | ||
Balance at the end of the period | $ 4,123 | $ 27 | $ 53 |
Minimum | |||
Intangible assets with useful lives | |||
Useful lives | 2 years | ||
Maximum | |||
Intangible assets with useful lives | |||
Useful lives | 10 years |
Goodwill and Other Intangible Assets (Details 4) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
---|---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |||
2016 | $ 821 | ||
2017 | 707 | ||
2018 | 627 | ||
2019 | 613 | ||
2020 | 613 | ||
Thereafter | 742 | ||
Total | $ 4,123 | $ 27 | $ 53 |
Commitments and Contingencies (Details) - Letter of Credit |
12 Months Ended |
---|---|
Dec. 31, 2015
USD ($)
| |
Contingencies | |
Amount drawn against letters of credit | $ 0 |
2013 Revolving Credit Facility, due August 16, 2016 | |
Contingencies | |
Letters of credit amount issued | $ 6,400,000 |
Leases (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Leases [Abstract] | |||
Rent expense | $ 14,500 | $ 15,400 | $ 14,500 |
Future minimum rental commitments for all non-cancellable operating leases | |||
2016 | 11,565 | ||
2017 | 10,676 | ||
2018 | 7,686 | ||
2019 | 5,343 | ||
2020 | 3,121 | ||
Thereafter | 4,630 | ||
Total | 43,021 | ||
Capital lease obligations | |||
Current portion of capital leases | 132 | 134 | |
Long-term portion of capital leases | 204 | 185 | |
Total capital lease obligation | 336 | $ 319 | |
Future minimum lease payments for all capital leases | |||
2016 | 132 | ||
2017 | 100 | ||
2018 | 58 | ||
2019 | 32 | ||
2020 | 14 | ||
Thereafter | 0 | ||
Total | $ 336 |
Earnings Per Share (Details 2) - shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Weighted-average anti-dilutive shares have been excluded from the EPS calculations | 4,200,000 | 4,100,000 | 4,200,000 |
Unvested stock | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Weighted-average anti-dilutive shares have been excluded from the EPS calculations | 0 | 0 | 0 |
Comprehensive Income (Loss) - Reconciliation (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Net income (loss) | $ 2,543 | $ (170,914) | $ (4,172) | $ 1,615 | $ 10,089 | $ 6,420 | $ 5,637 | $ 1,845 | $ (170,928) | $ 23,991 | $ 13,370 |
Adjustment to pension liability | 9,408 | (28,802) | 36,920 | ||||||||
Tax (expense) benefit | (3,763) | 11,521 | (14,768) | ||||||||
Adjustment to pension liability | 5,645 | (17,281) | 22,152 | ||||||||
Foreign currency translation adjustment | (1,976) | (1,830) | (536) | ||||||||
Total other comprehensive income (loss), net of tax | 3,669 | (19,111) | 21,616 | ||||||||
Comprehensive income (loss) | (167,259) | 4,880 | $ 34,986 | ||||||||
Accumulated Defined Benefit Plans Adjustment | |||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Adjustment to pension liability | 5,645 | (17,281) | |||||||||
Accumulated Translation Adjustment | |||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||||||
Foreign currency translation adjustment | $ (1,976) | $ (1,830) |
Discontinued Operations Cash From Discontinued Operations (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Discontinued operations | |||
Loss from discontinued operations | $ 0 | $ 0 | $ (11,071) |
Loss on sales of discontinued operations, net of income taxes | 0 | 0 | 12,355 |
Net cash provided by discontinued operations | 0 | 0 | 15,461 |
Shoppers | |||
Discontinued operations | |||
Loss from discontinued operations | 0 | 0 | (11,071) |
Loss on sales of discontinued operations, net of income taxes | 0 | 0 | 12,355 |
Deferred income taxes | 0 | 0 | 10,594 |
Depreciation and software amortization | 0 | 0 | 2,592 |
Other, net | 0 | 0 | 2,619 |
Net cash provided by discontinued operations | $ 0 | $ 0 | $ 17,089 |
Selected Quarterly Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Selected Quarterly Data (Unaudited) | |||||||||||
Revenues | $ 129,815 | $ 121,968 | $ 122,345 | $ 121,173 | $ 146,518 | $ 134,121 | $ 140,310 | $ 132,727 | $ 495,301 | $ 553,676 | $ 559,609 |
Operating income (loss) | 6,792 | (205,438) | 8,057 | 3,015 | 14,656 | 10,540 | 10,987 | 4,579 | (187,575) | 40,762 | 42,661 |
Net income (loss) | $ 2,543 | $ (170,914) | $ (4,172) | $ 1,615 | $ 10,089 | $ 6,420 | $ 5,637 | $ 1,845 | $ (170,928) | $ 23,991 | $ 13,370 |
Basic earnings (loss) per common share (in dollars per share) | $ 0.04 | $ (2.77) | $ (0.07) | $ 0.03 | $ 0.16 | $ 0.10 | $ 0.09 | $ 0.03 | $ (2.77) | $ 0.38 | $ 0.21 |
Diluted earnings (loss) per common share (in dollars per share) | $ 0.04 | $ (2.77) | $ (0.07) | $ 0.03 | $ 0.16 | $ 0.10 | $ 0.09 | $ 0.03 | $ (2.77) | $ 0.38 | $ 0.21 |
Subsequent Event (Details) - USD ($) |
Mar. 04, 2016 |
Mar. 10, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|---|---|
Line of Credit Facility [Line Items] | ||||
Term loan | $ 77,313,000 | $ 82,687,000 | ||
Subsequent Event | 2016 Revolving Credit Facility | ||||
Line of Credit Facility [Line Items] | ||||
Long-term line of credit | $ 65,000,000.0 | |||
Subsequent Event | 2016 First-out Term Loan | ||||
Line of Credit Facility [Line Items] | ||||
Term loan | $ 45,000,000 | |||
Aluetian | Subsequent Event | ||||
Line of Credit Facility [Line Items] | ||||
Consideration transferred | $ 3,500,000 |
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