SAN ANTONIO, TX--(Marketwire - February 1, 2011) - Harte-Hanks, Inc. (NYSE: HHS) today reported fourth quarter 2010 diluted earnings per share of $0.24 on revenues of $236.0 million. These results compare to diluted earnings per share of $0.21 on $217.5 million in revenues for the fourth quarter of 2009.

The following table presents financial highlights of the company's operations for the fourth quarter of 2010 and 2009, respectively. Full financial results are attached.

                     RESULTS FROM OPERATIONS (unaudited)

(In thousands, except per share amounts)   Three Months Ended December 31,
                                             2010       2009     % Change
                                           ---------- ---------- ---------
Operating revenues                         $  235,993 $  217,489       8.5%
Operating income                               25,109     19,827      26.6%
Net income                                     15,604     13,492      15.7%
Diluted earnings per share                       0.24       0.21      14.3%
Diluted shares (weighted average common
 and common equivalent shares outstanding)     64,198     64,100       0.2%
                                           ---------- ---------- ---------

For the three months ended December 31, 2010, the company generated free cash flow (defined below) of $17.3 million, down from $19.1 million in the prior year's fourth quarter.

For the year, the company's revenues increased slightly to $860.5 million and operating income increased 10.5% to $91.1 million. Diluted earnings per share for the year were $0.84 compared to $0.75 for 2009.

                   RESULTS FROM OPERATIONS (unaudited)

(In thousands, except per share amounts)       Year Ended December 31,
                                             2010       2009     % Change
                                           ---------- ---------- ---------
Operating revenues                         $  860,526 $  860,143       0.0%
Operating income                               91,053     82,430      10.5%
Net income                                     53,604     47,715      12.3%
Diluted earnings per share                       0.84       0.75      12.0%
Diluted shares (weighted average common
 and common equivalent shares outstanding)     64,139     63,885       0.4%
                                           ---------- ---------- ---------

Commenting on the 2010 performance, Chairman, President and Chief Executive Officer Larry Franklin said, "We are very pleased with our fourth quarter revenue performance particularly in Direct Marketing. The one-time project we discussed in the third quarter accounted for approximately 50% of the revenue growth. We had very strong revenue performance in our Software and Data business and The Agency Inside Harte-Hanks. The 5.0% revenue decline in Shoppers was slightly higher than the 4.2% decline in the third quarter. There were several factors influencing the HDM profit performance. A majority of the margin percentage decline was from incentive compensation that resulted from the strong fourth quarter revenue performance. As previously mentioned we are (and will continue) investing in the people and product development necessary to execute multichannel and digital strategies in both businesses. We are very pleased with our Shopper profit performance in 2010 and the progress in their digital strategy."

Discussing the performance of individual business segments, Executive Vice President and Chief Financial Officer, Doug Shepard, said, "Direct Marketing fourth quarter revenues increased 14.2% and operating income declined 3.7%. Revenue for each Direct Marketing vertical increased approximately 10% in the fourth quarter compared to the fourth quarter of 2009 except for the pharma/healthcare vertical. Our pharma/healthcare vertical increased approximately 55% due to the one-time project related to a voluntary product recall for a long-standing customer that was carried over from the third quarter. Operating income margins were 15.4% versus 18.3% in the fourth quarter of 2009.

Shoppers experienced a fourth quarter revenue decrease of 5.0% compared to the fourth quarter of 2009 and an operating profit of $0.9 million. For the year, Shoppers revenue decreased 5.4% and operating income excluding the fourth quarter 2009 legal settlement of $6.95 million increased $10.0 million."

Concluding, Franklin said, "We are pleased with the fourth quarter revenue growth in Direct Marketing, but we do not expect to have that level of growth over the next few quarters. We do however expect to see some margin improvement during 2011. For Shoppers, California and Florida remain very difficult markets with unemployment still over 12%. Additionally we face significant paper price increases and a postage increase. We continue to invest in our digital strategy and are very excited about the progress we are making. In both of our businesses, I am confident we have the leadership team that will leverage these investments for long term success while delivering excellent short term results for our customers, our people and our shareholders. We are excited about the future because of our financial strength and our people."

Selected Highlights:

-- Harte-Hanks Direct Marketing renewed and expanded its relationship with
   one of the world's largest technology solution providers. In addition
   to providing global data management strategy and related support
   services for this client (as Harte-Hanks has done in the past),
   Harte-Hanks' Mason Zimbler B2B agency will monitor and manage the
   social marketing presence of the client's sales force for a major new
   product initiative.

-- Harte-Hanks Direct Marketing's Trillium Software® provided a Basel II
   compliance solution to one of its largest existing customers, a global
   financial institution, centered on its Trillium Software System® and
   related services. The bank will use the Trillium Software System to
   evaluate risk, and for capital reserve calculation and reporting.
   This solution represents a new way to leverage Trillium's ability to
   capture and cleanse data to generate reliable, comprehensive and
   actionable reports.

-- Trillium Software® introduced its TrilliumApps™ a Web-based
   collection of pre-developed information quality rules, processes and
   full data quality workflows that can be easily downloaded at no cost
   and inserted into existing Trillium Software System® environments.
   TrilliumApps has been built leveraging the broad and deep experience
   of Trillium Software consultants and engineers working across a wide
   variety of industries, geographies and projects. TrilliumApps organizes
   the content for easy access to rules and applications (apps), enabling
   customers to explore, select and download their chosen apps directly
   to their desktops.

-- Harte-Hanks Direct Marketing won a competitive process to deliver a
   large relationship marketing program for a nation-wide financial service
   provider. The Agency Inside Harte-Hanks will coordinate marketing
   strategy development and execution, drawing from Harte-Hanks' marketing
   database, data services, email and targeted mail capabilities to provide
   an integrated multichannel solution to the client.

-- In the fourth quarter, Mazda Europe selected Harte-Hanks' Trillium
   Software System® to analyze and consolidate customer data for its
   company-wide customer relationship management (CRM) initiative. Mazda
   will utilize the Trillium Software System to fulfill the necessary
   consolidation and cleansing of data in real time, while continually
   assuring that its mission-critical customer data is of the highest
   possible quality.

-- Harte-Hanks leveraged its relationship with a long-standing department
   store client to secure significant new business for Harte-Hanks
   Shoppers,® and Harte-Hanks Direct Marketing's
   Trillium Software®. The Trillium Software System will be used for
   data quality control and improvement to increase the effectiveness of
   the client's multichannel marketing initiatives. This client is
   currently one of Harte-Hanks Direct Marketing's largest mail and data
   services clients.

-- Harte-Hanks' Trillium Software® licensed the Trillium Software
   System® to another of the world's largest financial institutions for
   automating their data quality processes, as well as to support Basel II
   reporting requirements. Trillium software also secured new clients, and
   significant renewals or expansions for existing clients, in the consumer
   electronics, financial services, consumer packaged goods, hotel,
   consumer retail, healthcare services and telecommunications industries.

-- Harte-Hanks Direct Marketing renewed and expanded its relationship with
   Texas Instruments, a large semiconductor company. In addition to
   providing technical support and fulfillment for Texas Instruments
   (as Harte-Hanks has done in the past), Harte-Hanks social media support
   specialists will monitor online forums for customer feedback so that the
   client can address questions and make product design changes in response
   to marketplace commentary.

-- The Agency Inside Harte-Hanks was selected by a large regional bank to
   develop a relationship marketing program to deepen the banks
   relationship with its customers. This multichannel program will also
   integrate Harte-Hanks Direct Marketing's data and direct mail services
   to deliver improved client results.

-- Harte-Hanks Direct Marketing expanded its relationship with a large
   nationwide retailer in support of its sophisticated direct mail
   programs. This client will now leverage Harte-Hanks' database and
   analytics services to drive marketing strategies for multichannel
   programs, most of which will be fulfilled by Harte-Hanks.

-- Harte-Hanks Aberdeen Group announced the launch of, a website providing technology marketers with
   access to marketing program tools allowing them to utilize Aberdeen
   Group's fact-based technology marketing research as campaign content,
   and to direct lead generation activities to Aberdeen's more than 2.5
   million technology decision makers in over 40 countries, 90% of the
   Fortune 1,000, and 93% of the Technology 500.

-- The Agency Inside Harte-Hanks and its client Comcast won a 2010 "Silver"
   MARK Award from the Cable & Telecommunications Association for Marketing
   (CTAM) for a multichannel marketing program. The honor recognized an
   advertising effort targeted to Comcast customers who received a Nintendo
   Wii console for signing up for new "Triple Play" services (TV,
   high-speed internet and voice). A direct mail effort compelled these new
   Nintendo Wii users to hook their consoles up to Comcast High-Speed

-- Harte-Hanks increased its regular quarterly cash dividend, bringing the
   cash dividend for the first quarter of 2011 to 8.0 cents per share.
   This represents a 6.7% increase in the regular quarterly dividend and
   is the company's fourteenth dividend increase since its 1993 public
   offering. With the payment of this dividend, Harte-Hanks will have
   paid consecutive quarterly dividends since the first quarter of 1995.

About Harte-Hanks:

Harte-Hanks® is a worldwide, direct and targeted marketing company that provides direct marketing services and shopper advertising opportunities to local, regional, national and international consumer and business-to-business marketers. Harte-Hanks Direct Marketing improves return on its clients' marketing investment by increasing their prospect and customer value through solutions and services organized around five groupings of integrated activities: Information (data collection/management) - Opportunity (data access/utilization) - Insight (data analysis/interpretation) - Engagement (program and campaign creation and development) - Interaction (program execution). Harte-Hanks Shoppers is North America's largest owner, operator and distributor of shopper publications, with shoppers that are zoned into more than 950 separate editions with approximately 11.5 million circulation each week in California and Florida. Harte-Hanks Shoppers brings buyers and sellers together at a local level, helping businesses and individuals get results from targeted, local advertisements, both through Shoppers' printed publications and online through the™ and™ websites. Visit the Harte-Hanks Web site at

For more information, contact: Executive Vice President and Chief Financial Officer Doug Shepard at (210) 829-9120 or e-mail at

Cautionary Note Regarding Forward-Looking Statements:

This press release and our related earnings conference call contain "forward-looking statements" within the meaning of the federal securities laws. All such statements are qualified by this cautionary note, which is provided pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements other than historical facts are forward-looking and may be identified by words such as "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "seeks," "could," "intends," or words of similar meaning. Examples include statements regarding (1) our strategies and initiatives, (2) adjustments to our cost structure and other actions designed to respond to market conditions and improve our performance, and the anticipated effectiveness and expenses associated with these actions, (3) our financial outlook for revenues, earnings per share, operating income, expense related to equity-based compensation, capital resources and other financial items, (4) our expectations for our businesses and for the industries in which we operate, including with regard to the negative performance trends in our Shoppers business and the adverse impact of continuing economic uncertainty in the United States and other economies on the marketing expenditures and activities of our Direct Marketing clients and prospects, (5) competitive factors, (6) acquisition and development plans, (7) our stock repurchase program and (8) other statements regarding future events, conditions or outcomes. These forward-looking statements involve risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to vary materially from what is expressed in or indicated by the forward-looking statements. In that event, our business, financial condition, results of operations or liquidity could be materially adversely affected and investors in our securities could lose part or all of their investments. These risks, uncertainties, assumptions and other factors include, without limitation, (a) domestic, international and local economic and business conditions, including (i) market conditions in California and Florida that may continue to adversely impact local advertising expenditures in our Shoppers publications and (ii) the adverse impact of continuing economic uncertainty in the United States and elsewhere on the marketing expenditures and activities of our clients and prospects, (b) the demand for our services by clients and prospective clients, including (i) the willingness of existing clients to maintain or increase their spending on products and services that are or remain profitable for us, and (ii) our ability to predict changes in client preferences, (c) the financial condition and marketing budgets of our clients, including client bankruptcies or other developments that may result in increased bad debt expense, (d) economic and other business factors that impact the industry verticals that we serve, including any consolidation of clients and prospective clients in these verticals, (e) our ability to manage and timely adjust our capacity and headcount, and to otherwise effectively service our clients, (f) the impact of competition and our ability to continually improve our processes and to develop and introduce new products and services in a timely and cost-effective manner, (g) our ability to protect our data centers against security breaches and other interruptions, and to protect sensitive personal information of our clients and their customers, (h) increasing concern over consumer privacy issues, or enactment of legislation restricting the collection and use of information that is currently legally available, (i) the impact of other regulations, including restrictions on unsolicited marketing communications and other consumer protection laws, (j) fluctuations in fuel prices, paper prices, postal rates and postal delivery schedules, (k) the number of equity securities that we may issue to employees, (l) the number of shares, if any, that we may repurchase in connection with our repurchase program, (m) unanticipated developments regarding litigation including the actual outcome of our preliminary settlement to resolve a previously disclosed class action lawsuit filed in 2001, or other contingent liabilities, and (n) other factors discussed under "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2009. The forward-looking statements in this press release and our related earnings conference call are made only as of the date hereof and we undertake no obligation to update publicly any forward-looking statement, even if new information becomes available or other events occur in the future.

Supplemental Non-GAAP Financial Measures:

In this press release and our related earnings conference call, the company intends to provide investors with a better understanding of operating results and underlying trends to assess the company's performance and liquidity. Harte-Hanks evaluates its operating performance based on several measures, including the non-GAAP financial measures of (1) free cash flow, defined as net income, plus depreciation and amortization, plus stock-based compensation (tax-effected), less capital expenditures, and (2) EBITDA, defined as net income before interest, taxes, depreciation, and amortization. Harte-Hanks believes that free cash flow and EBITDA are useful supplemental financial measures for investors because they facilitate investors' ability to evaluate the operational strength of the company's business. Free cash flow and EBITDA, however, are not calculated in accordance with GAAP and they should not be considered substitutes for net income as an indicator of operating performance. A quantitative reconciliation of free cash flow and EBITDA to net income is found in the tables attached to this release.

This document may contain trademarks that are owned or licensed by Harte-Hanks, Inc. and its subsidiaries, including, without limitation, Harte-Hanks® and other names and marks. All other brand names, product names, or trademarks belong to their respective holders.

Harte-Hanks, Inc.
Consolidated Statements of Operations (Unaudited)

                                 Three months ended    Twelve months ended
                                    December 31,         December 31,
                                --------------------  --------------------
In thousands, except per share
 data                             2010       2009       2010       2009
                                ---------  ---------  ---------  ---------

Operating revenues              $ 235,993  $ 217,489  $ 860,526  $ 860,143
Operating expenses:
  Labor                            97,464     89,500    356,037    366,077
  Production and distribution      90,698     78,528    323,217    312,230
  Advertising, selling, general
   and administrative              16,851     16,005     66,792     62,479
  Shopper legal settlement              -      6,950          -      6,950
  Depreciation and amortization     5,871      6,679     23,427     29,977
                                ---------  ---------  ---------  ---------
                                  210,884    197,662    769,473    777,713
                                ---------  ---------  ---------  ---------
Operating income                   25,109     19,827     91,053     82,430
                                ---------  ---------  ---------  ---------
Other expenses (income):
  Interest expense                    722        703      2,824      8,150
  Interest income                     (64)       (37)      (200)      (182)
  Other, net                          596        361      2,102      2,520
                                ---------  ---------  ---------  ---------
                                    1,254      1,027      4,726     10,488
                                ---------  ---------  ---------  ---------
Income before income taxes         23,855     18,800     86,327     71,942
Income tax expense                  8,251      5,308     32,723     24,227
                                ---------  ---------  ---------  ---------
Net income                      $  15,604  $  13,492  $  53,604  $  47,715
                                =========  =========  =========  =========

Basic earnings per common share $    0.25  $    0.21  $    0.84  $    0.75
                                =========  =========  =========  =========

  Weighted-average common
   shares outstanding              63,626     63,574     63,616     63,556
                                =========  =========  =========  =========

Diluted earnings per common
 share                          $    0.24  $    0.21  $    0.84  $    0.75
                                =========  =========  =========  =========

  Weighted-average common and
   common equivalent shares
   outstanding                     64,198     64,100     64,139     63,885
                                =========  =========  =========  =========

Harte-Hanks, Inc.
Balance Sheet Data (Unaudited)

                                 December 31,   December 31,
In thousands                         2010           2009
                                -------------  -------------

    Cash and cash equivalents   $      85,996  $      86,598

    Total debt                  $     193,000  $     239,688

Harte-Hanks, Inc.
Business Segment Information (Unaudited)

                      Three months ended          Twelve months ended
                         December 31,                  December 31,
                   --------------------------  ---------------------------
                                       %                             %
In thousands         2010      2009    Change    2010      2009     Change
                   --------  --------  ------  --------  --------  -------

   Marketing       $174,758  $153,010   14.2%  $601,283  $585,988      2.6%
  Shoppers           61,235    64,479   -5.0%   259,243   274,155     -5.4%
                   --------  --------          --------  --------
     revenues      $235,993  $217,489    8.5%  $860,526  $860,143      0.0%
                   --------  --------          --------  --------

   Marketing       $ 26,903  $ 27,932   -3.7%  $ 86,748  $ 95,812     -9.5%
  Shoppers              887    (5,370) 116.5%    15,602    (1,354) -1252.3%
   expense           (2,681)   (2,735)   2.0%   (11,297)  (12,028)     6.1%
                   --------  --------          --------  --------
     income        $ 25,109  $ 19,827   26.6%  $ 91,053  $ 82,430     10.5%
                   --------  --------          --------  --------

   Marketing       $  4,403  $  4,881   -9.8%  $ 17,081  $ 21,205    -19.4%
  Shoppers            1,464     1,793  -18.3%     6,333     8,747    -27.6%
   expense                4         5  -20.0%        13        25    -48.0%
                   --------  --------          --------  --------         
     amortization  $  5,871  $  6,679  -12.1%  $ 23,427  $ 29,977    -21.9%
                   --------  --------          --------  --------

Reconciliation of Net Income to Free Cash Flow

                   Three months ended          Twelve months ended
                       December 31,                  December 31,
                   ------------------          -------------------
In thousands         2010      2009              2010      2009
                   --------  --------          --------  --------
Net Income         $ 15,604  $ 13,492          $ 53,604  $ 47,715
  Add: After-tax
   (Note 1)             623       587             2,418     2,578
  Add: depreciation
   and amortization   5,871     6,679            23,427    29,977
  Less: capital
   expenditures       4,818     1,609            17,449     9,011
                   --------  --------          --------  --------
Free cash flow     $ 17,280  $ 19,149          $ 62,000  $ 71,259
                   --------  --------          --------  --------

Note 1:  Pre-tax compensation expense was $953 and $817 for the three
          months ended December 31, 2010 and 2009, respectively.
         Pre-tax compensation expense was $3,907 and $3,890 for the twelve
          months ended December 31, 2010 and 2009, respectively.

Reconciliation of Net Income to EBITDA

                   Three months ended          Twelve months ended
                       December 31,                  December 31,
                   ------------------          -------------------
In thousands         2010      2009              2010      2009
                   --------  --------          --------  --------
Net Income         $ 15,604  $ 13,492          $ 53,604  $ 47,715
Add: Depreciation
      amortization    5,871     6,679            23,427    29,977
      expense, net
      and non-
      operating, net  1,254     1,027             4,726    10,488
     Income tax
      expense         8,251     5,308            32,723    24,227
                   --------  --------          --------  --------
EBITDA             $ 30,980  $ 26,506          $114,480  $112,407
                   --------  --------          --------  --------

EBITDA by Segment:
     Marketing     $ 31,306  $ 32,813          $103,829  $117,017
    Shoppers          2,351    (3,577)           21,935     7,393
    Corporate        (2,677)   (2,730)          (11,284)  (12,003)
                   --------  --------          --------  --------
                   $ 30,980  $ 26,506          $114,480  $112,407
                   --------  --------          --------  --------

Harte-Hanks, Inc.
Direct Marketing Revenue Mix (Unaudited)

Vertical Markets - Percent of Direct Marketing Revenue

                                 Three months ended    Twelve months ended
                                    December 31,         December 31,
                                --------------------  --------------------
                                  2010       2009       2010       2009
                                ---------  ---------  ---------  ---------

Retail                                 27%        28%        26%        26%
Financial and Insurance Services       12%        13%        13%        13%
Technology                             26%        28%        27%        29%
Healthcare and Pharmaceuticals         15%        11%        13%        11%
Other Select Markets                   20%        20%        21%        21%
                                ---------  ---------  ---------  ---------
                                      100%       100%       100%       100%
                                =========  =========  =========  =========