January 27, 2011

Harris Interactive® Reports Second Quarter Fiscal 2011 Results

NEW YORK, Jan. 27, 2011 /PRNewswire/ -- Harris Interactive Inc. (Nasdaq: HPOL), a leading innovative global market research firm, today announced its second quarter fiscal 2011 financial results, which show growth in revenue, bookings, and operating income compared with the same prior year period. Excluding foreign exchange rate differences, revenue was up 2%, driven by growth in the U.K., Canada, France, Germany, and Asia, and bookings grew 4% as a result of strong sales performance in Canada, France, and Germany. Operating income improved by nearly 47%, making the second quarter the company's most profitable quarter in three years.

(Logo:  http://photos.prnewswire.com/prnh/20100518/NY06801LOGO )

Kimberly Till, President and Chief Executive Officer of Harris Interactive, said, "As these results indicate, we have made progress in stabilizing our overall business. Further, consistent with one of our key strategic initiatives, we are developing new products and solutions that leverage technology and will provide us with new revenue streams. Our new, social intelligence platform, Research Lifestreaming, and its associated products and solutions, are generating both direct and indirect sales. In addition, we are very focused on the mobile space and are beginning to implement our strategy of exploiting mobile devices for real-time data feeds, polling, and insights for our clients."

Financial Highlights



For the Three Months

Ended December 31,


For the Six Months

Ended December 31,

$ in millions — unaudited

2010

2009

2010

2009






Revenue

$    44.9

$    44.6

$  82.0

$  83.6

Operating income (loss)

$     0.9

$     0.6

$  (0.4)

$   0.2

Net income (loss)

$     0.3

$     1.3

$  (1.0)

$   0.7

Fully diluted net income (loss) per share

$    0.01

$    0.02

$  (0.02)

$  0.01






Adjusted EBITDA*

$     3.0

$     2.8

$   3.8

$   4.8

Adjusted EBITDA* with add-back of restructuring and other charges

$     3.7

$     3.2

$   4.5

$   5.3

*EBITDA is a non-GAAP measure. Adjusted EBITDA, also a non-GAAP measure, is EBITDA less stock-based compensation and non-cash goodwill impairment charges.



Key Financial Statistics

  • Total revenue for the second quarter of fiscal 2011 was $44.9 million, as compared with $44.6 million for the same prior year period. Excluding foreign currency exchange rate differences, revenue for the second quarter was up 2% compared with the same prior year period.
  • Operating income for the second quarter of fiscal 2011 was $0.9 million, as compared with operating income of $0.6 million for the same prior year period.
  • Net income for the second quarter of fiscal 2011 was $0.3 million, or $0.01 per fully diluted share, as compared with net income of $1.3 million, or $0.02 per fully diluted share for the same prior year period. Net income for the second quarter of fiscal 2010 included the favorable impact of a tax law change that resulted in a $1.1 million tax benefit.
  • As of December 31, 2010, we had $13.5 million in cash and $13.2 million in outstanding debt.  During the first six months of fiscal 2011, we have made $2.4 million in debt principal payments.  
  • Cash provided by operations for the second quarter of fiscal 2011 was $3.3 million, as compared with $2.6 million provided by operations for the same prior year period.
  • Bookings for the second quarter of fiscal 2011 were $55.3 million, as compared with $53.2 million for the same prior year period. Excluding foreign currency exchange rate differences, bookings for the second quarter were up 4% compared with the same prior year period.
  • Secured revenue (formerly referred to as backlog) for the second quarter of fiscal 2011 was $55.4 million, as compared with $51.1 million for the same prior year period. Excluding foreign currency exchange rate differences, secured revenue for the second quarter was up 9% compared with the same prior year period.
  • Non-GAAP adjusted EBITDA* with add-back of restructuring and other charges for the second quarter of fiscal 2011 was $3.7 million, as compared with $3.2 million for the same prior year period.

Ms. Till continued, "On a country by country basis, we are making progress in fixing the U.S. business, having rebuilt several industry verticals and applying a proven approach to improve performance in the others. Regarding Canada, I am pleased that our recent restructuring of the business has had a positive impact on performance, as we achieved meaningful year over year bookings, revenue, and operating income growth in the quarter for the first time since we acquired the business in August 2007. Germany, France and Asia also performed well in the quarter. Although we have more work to do in the U.K., having lost a large tracking study during the quarter, we are beginning to execute on our plan to reposition the business and get it back on track over the next few quarters."

Ms. Till concluded, "Over the past two years, we have made substantial improvements in our product offerings, pricing, work processes, global panel and survey platforms, financial stability, and talent at all levels of the company. While these improvements take time to impact the numbers, I believe that our business is in the strongest position since we began the turnaround."

Second Quarter Fiscal 2011 Results Conference Call and Webcast Access

Kimberly Till, President and Chief Executive Officer, will host a conference call to discuss these results on Thursday, January 27, 2011, at 5:00 p.m. ET. Formal remarks will be followed by a question and answer session.

To access the conference call, please dial toll-free 877.303.9858 in the United States and Canada, or 408.337.0139 internationally.

A live webcast of the conference call also will be accessible via the Investor Relations section of our website at https://harrisinteractives.com/, where an archived replay of the webcast will be available for 30 days following the call. No telephone replay of the conference call will be provided. This media release will be available under the Investor Relations section of our website at https://harrisinteractives.com/ prior to the call.

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this press release and oral statements made by the Company on its conference call in relation to this release constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. These statements include, among others, statements as to future economic performance, projections as to financial items, estimates, and plans and objectives for future operations, products and services. In some cases, you can identify forward-looking statements by terminology such as, "may", "should", "expects", "plans", "anticipates", "feel", "believes", "estimates", "predicts", "potential", "continue", "consider", "possibility", or the negative of these terms or other comparable terminology. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, without limitation, risks detailed in the "Risk Factors" section of the Company's most recent Annual Report on Form 10-K, as updated quarterly in our Quarterly Reports on Form 10-Q to reflect additional material risks. The Company has filed its reports on Forms 10-K and 10-Q with the Securities and Exchange Commission, and they are available under the Investor Relations section of our website at https://harrisinteractives.com/. Risks and uncertainties also include the continued volatility of the global macroeconomic environment and its impact on the Company and its clients, the Company's ability to sustain and grow its revenue base, the Company's ability to maintain and improve cost efficient operations, the impact of reorganization and restructuring and related charges, quarterly variations in financial results, actions of competitors, the Company's ability to develop and maintain products and services attractive to the market, and uncertainties surrounding compliance with certain NASDAQ listing requirements.

You are urged to consider these factors carefully in evaluating such forward-looking statements and are cautioned not to place undue reliance on them. The forward-looking statements are qualified in their entirety by this cautionary statement.

About Harris Interactive

Harris Interactive is one of the world's leading custom market research firms, leveraging research, technology, and business acumen to transform relevant insight into actionable foresight. Known widely for the Harris Poll and for pioneering innovative research methodologies, Harris offers expertise in a wide range of industries including healthcare, technology, public affairs, energy, telecommunications, financial services, insurance, media, retail, restaurant, and consumer package goods. Serving clients in over 215 countries and territories through our North American, European, and Asian offices and a network of independent market research firms, Harris specializes in delivering research solutions that help us — and our clients — stay ahead of what's next. For more information, please visit www.harrisinteractive.com.

HPOL — E

HARRIS INTERACTIVE INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)







December 31,

June 30,



2010

2010

Assets

  Cash and cash equivalents

$         13,499

$    14,158

  Accounts receivable, net

28,463

23,735

  Unbilled receivables

7,400

7,566

  Prepaids and other current assets

4,235

3,722

  Deferred tax assets

430

375


Total current assets

54,027

49,556





  Property, plant and equipment, net

4,392

5,626

  Other intangibles, net

15,644

16,382

  Other assets

1,435

1,566


Total assets

$         75,498

$    73,130









Liabilities and Stockholders' Equity

  Accounts payable

$          7,616

$      8,952

  Accrued expenses

16,841

16,768

  Current portion of long-term debt

4,794

4,794

  Deferred revenue

16,474

11,612


Total current liabilities

45,725

42,126





  Long-term debt

8,390

10,787

  Deferred tax liabilities

2,238

2,391

  Other long-term liabilities

1,687

1,792






Total stockholders' equity

17,458

16,034


Total liabilities and stockholders' equity

$         75,498

$    73,130















HARRIS INTERACTIVE INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)









Three months ended

Six months ended



December 31,

December 31,



2010

2009

2010

2009







Revenue from services

$       44,940

$       44,629

$     81,954

$     83,564







Operating expenses:





  Cost of services


29,560

28,085

53,753

52,514

Selling, general and administrative

12,312

13,849

24,876

26,811

Depreciation and amortization

1,515

1,718

3,043

3,474

Restructuring and other charges

679

383

679

531

Total operating expenses

44,066

44,035

82,351

83,330

Operating income (loss)

874

594

(397)

234

Operating margin

1.9%

1.3%

-0.5%

0.3%







Interest and other income

(8)

(12)

(23)

(27)

Interest expense


316

499

785

1,036

   Income (loss) from operations before income taxes

566

107

(1,159)

(775)

Provision (benefit) for income taxes

223

(1,227)

(165)

(1,476)

  Net income (loss)


$           343

$        1,334

$         (994)

$          701







Basic net income (loss) per share

$          0.01

$          0.02

$        (0.02)

$         0.01







Diluted net income (loss) per share

$          0.01

$          0.02

$        (0.02)

$         0.01







Weighted average shares outstanding -






Basic

54,472,556

53,939,876

54,447,673

53,919,859


Diluted

54,542,596

54,060,635

54,447,673

54,050,397















Reconciliation of GAAP Income to EBITDA and Adjusted EBITDA










Three months ended

Six months ended


December 31,

December 31,


2010

2009

2010

2009

GAAP net income (loss)

$         343

$       1,334

$    (994)

$     701

Interest income

(8)

(12)

(23)

(27)

Interest expense

316

499

785

1,036

Provision (benefit) for income taxes

223

(1,227)

(165)

(1,476)

Depreciation and amortization

1,937

2,077

3,895

4,214

EBITDA

$      2,811

$       2,671

$   3,498

$   4,448

Stock-based compensation (1)

171

162

350

321

Adjusted EBITDA

$      2,982

$       2,833

$   3,848

$   4,769






Adjusted EBITDA

$      2,982

$       2,833

$   3,848

$   4,769

Add-back of restructuring and other charges

679

383

679

531

Adjusted EBITDA with add-back of restructuring and other charges

$      3,661

$       3,216

$   4,527

$   5,300






(1) Stock-based compensation expense represents the cost of stock-based compensation awarded
by the Company to its employees under the FASB guidance for stock-based compensation













Press Contact:

Michael T. Burns

Investor Relations

Harris Interactive Inc.

800-866-7655 x7328

mburns@harrisinteractive.com




SOURCE Harris Interactive

News Provided by Acquire Media


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