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8-K - FORM 8-K - HARRIS INTERACTIVE INCl41703e8vk.htm
Exhibit 99.1
     
Press Contact:
Michael T. Burns
Investor Relations
Harris Interactive Inc.
800-866-7655 x7328
mburns@harrisinteractive.com
  (HARRIS LOGO)
Harris Interactive® Reports Second Quarter Fiscal 2011 Results
New York, N.Y. — January 27, 2011 — 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.
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   For the Six Months
    Ended December 31,   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.
     
©2011 Harris Interactive Inc.   All rights reserved.

 


 

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.”
     
  (HARRIS LOGO)

 


 

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 http://ir.harrisinteractive.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 http://ir.harrisinteractive.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 http://ir.harrisinteractive.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 LOGO)

 


 

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 LOGO)

 


 

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 LOGO)

 


 

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  
           
     
  (HARRIS LOGO)

 


 

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.
     
    (HARRIS LOGO)