8-K: Harte Hanks Finalizes Pension Plan Termination with Nationwide Annuity Purchase

Harte Hanks has completed the termination of its Qualified Pension Plan I by purchasing an annuity from Nationwide, transferring plan assets and obligations.

Summary

• Harte Hanks has finalized the termination of its Qualified Pension Plan I by purchasing an annuity from Nationwide.
• The agreement was formalized on June 18, 2024, with Nationwide taking over pension benefit payments starting in August 2024.
• Harte Hanks will continue to make payments to plan members through the end of July 2024.
• The transaction involved a $6.1 million cash contribution from Harte Hanks to the pension plan and the transfer of $71.9 million in plan assets to Nationwide.
• This action completes Harte Hanks' prior decision to terminate the pension plan, initially made on June 30, 2023.
• The termination of the pension plan is expected to improve Harte Hanks' cash flow by eliminating ongoing pension payments and related insurance premiums.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to the successful completion of the pension plan termination, which is expected to improve the company's financial position. The use of a reputable insurer like Nationwide also adds to the positive tone.

Positives

• The termination of the pension plan is expected to increase Harte Hanks' cash flow.
• The company will no longer have ongoing pension payment obligations.
• The company will no longer have PBGC insurance premium payments.
• The transaction streamlines Harte Hanks' balance sheet by removing the pension liability.
• Pension plan members will be transitioned to Nationwide, a company with a strong reputation for customer service.

Risks

• The document includes a general cautionary note regarding forward-looking statements, highlighting various economic and business risks that could affect the company's performance.
• These risks include market conditions, competition, and the company's ability to manage costs and adapt to changing client needs.

Future Outlook

The company expects increased cash flow and a streamlined balance sheet due to the termination of the pension plan. The company also notes that forward looking statements are subject to risks and uncertainties.

Management Comments

• Paula Cole, vice president of Nationwide's Pension Risk Transfer business, stated they are offering a seamless transition experience for plan participants.
• David Garrison, Chief Financial Officer of Harte Hanks, commented that the plan termination is a positive step to increasing cash flow and streamlining the balance sheet, while ensuring participants are well taken care of by Nationwide.

Industry Context

Pension risk transfer is a growing trend as companies seek to reduce liabilities and streamline their balance sheets. This move by Harte Hanks is consistent with this trend, and the selection of Nationwide, a large and established insurer, is a common approach.

Comparison to Industry Standards

• Many companies are divesting their pension obligations to insurance companies to reduce risk and improve financial flexibility.
• Companies like Lockheed Martin and Motorola have previously transferred pension liabilities to insurers like Prudential and Athene.
• The size of the Harte Hanks transfer, at $71.9 million, is relatively small compared to some of the larger pension risk transfer deals, which can be in the billions of dollars.
• The use of a well-rated insurer like Nationwide is a common practice to ensure the security of pension benefits.

Stakeholder Impact

• Shareholders will benefit from the improved cash flow and streamlined balance sheet.
• Pension plan members will have their benefits managed by Nationwide, a reputable insurance company.
• Employees are not directly impacted by this transaction.

Next Steps

• Nationwide will begin providing pension benefits to Plan I members in August 2024.
• Harte Hanks will cease making pension payments after July 31, 2024.
• Harte Hanks will no longer be responsible for PBGC insurance premiums related to Plan I.

Key Dates

Keywords

pension plan, annuity, Nationwide, pension risk transfer, plan termination, cash flow, PBGC, Harte Hanks