Harris Interactive� (NASDAQ:HPOL) Kimberly Till named CEO On
October 22, 2008, the board of directors appointed Ms. Kimberly
Till as President and CEO of Harris Interactive. She will also
serve on the Company�s board of directors. �The board and I are
pleased to welcome Kimberly to Harris Interactive,� stated George
Bell, Chairman. �We believe that her ability to manage costs,
combined with her deep knowledge of the research industry and
extensive brand-building experience with global, client-focused
organizations will enable her to reinvigorate growth and
profitability at Harris Interactive.� Ms. Till most recently was
the CEO of TNS North America the largest custom market research
firm in the US, where she was responsible for the successful
turnaround of that business. She also has served in executive roles
at Microsoft, AOL, Sony and Disney. �I�m excited about the
opportunities ahead as Harris Interactive is known for its
intellectual strength, its great brand, and its rich heritage of
utilizing technology to gain competitive advantage,� said Ms. Till.
�Although these are very early days, I believe that our key areas
of focus will be on: streamlining our costs and our organizational
structure; leveraging technology to improve efficiency, enhance
quality and deepen the level of insight we can provide to our
clients; diversifying our revenue streams by creating new products
and solutions; and strengthening our ability to service our clients
on a global scale.� Q1FY09 Results Revenue Despite strong revenue
growth in France, Germany and Asia, consolidated Q1FY09 revenue
dropped to $50.3 million, down 9% when compared with the first
quarter of fiscal 2008. �The deepening economic turbulence in the
United States combined with the anticipated decline in Healthcare
revenue, created a 20% decline in domestic revenue and negated the
strong growth we saw in France, Germany and Asia,� said Ronald E.
Salluzzo, CFO. �As we�ve discussed before, we have been taking
steps to turnaround our healthcare business; and while healthcare
revenue was down 29%, it was in line with our expectations.�
Operating and net profit/loss Fiscal first quarter operating loss
was $(3.2) million, compared to an operating profit of $1.6 million
in Q1FY08. Net loss for the quarter was $(2.3) million, or $(0.04)
per share, versus net income of $1.1 million or $0.02 per share a
year ago. �The rapidly deteriorating financial situation in the US
created a revenue-to-cost imbalance which impacted our
profitability in the quarter,� stated Salluzzo. �We have taken a
number of significant actions to improve our profitability
including removing 27 positions in our US operations. As a result
of those actions, plus the CEO transition, we will incur related
charges of $1.7 million in the second quarter.� Adjusted EBITDA
Adjusted EBITDA1, adding back $0.8 million of non-cash stock-based
compensation expense, was $0.1 million compared to $5.0 million of
adjusted EBITDA reported a year ago. Bookings Bookings for the
quarter were $43.5 million, down 14% when compared with $50.8
million of bookings for the same period a year ago. 1 EBITDA, a
non-GAAP measure, is reconciled to our GAAP financial statements in
the accompanying schedules. Balance sheet As of September 30, 2008,
cash, cash equivalents and marketable securities were $25.2
million, up from $24.1 million reported a year ago, and down from
$32.9 million of cash, cash equivalents and marketable securities
reported as of June 30, 2008. �This sequential decline in cash is
typical in the first quarter, due to certain scheduled payments,�
commented Salluzzo. �In addition, order closing activity was down,
reducing payments typically received at project initiation.� As of
September 30, 2008, the Company had $27.7 million of outstanding
debt. FY2009 outlook �Because of continued economic stress in the
US, and mounting evidence that the global financial markets will
weaken further, we continue to defer issuing full-year guidance.
Based on current conditions and our forecasts, we expect that FY09
consolidated revenue will be below last year�s level,� said
Salluzzo. �However, we do believe that the actions we�ve recently
taken, combined with our ongoing expense controls, will help us
achieve higher profit margins, excluding non-recurring charges, in
each year,� Salluzzo concluded. Q1 results conference call and
webcast access The Company has scheduled a conference call to
discuss these results for Friday, October 31, 2008 at 8:30 a.m. ET.
Kimberly Till, President and CEO, will host the teleconference.
Formal remarks will be followed by a question and answer session.
To access the conference call, please dial toll-free 888.680.0890
in the United States and Canada, or 617.213.4857 internationally.
The passcode is 38258180. You may pre-register for this call by
clicking here (or cut and paste the following URL into your browser
window)
https://www.theconferencingservice.com/prereg/key.process?key=
PLDFCVGYH. (Due to its length, this URL may need to be
copied/pasted into your Internet browser's address field. Remove
the extra space if one exists.) Pre-registrants will be issued a
pin number that will permit rapid access to the teleconference. A
live webcast of the conference call will also be accessible via the
investor relations section of the Company's website at
www.harrisinteractive.com/ir, 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, including financial schedules, will be available at
our website www.harrisinteractive.com/ir prior to the call. About
Harris Interactive Harris Interactive is a global leader in custom
market research. With a long and rich history in multimodal
research, powered by our science and technology, we assist clients
in achieving business results. Harris Interactive serves clients
globally through our North American, European and Asian offices and
a network of independent market research firms. For more
information, please visit http://www.harrisinteractive.com/. Safe
Harbor Statement This media release includes statements that may
constitute forward-looking information. We caution you that these
forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ materially from those
discussed. Additional detailed information concerning a number of
factors that could cause actual results to differ is readily
available in the "Risk Factors" section of the most recent Annual
Report on form 10-K filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934. Revenue
and Internet revenue Q1FY09 vs. Q1FY08 In $ US millions except for
% � As Reported Revenue � As Reported Internet Revenue � � Q1FY09 �
Q1FY08 � % Chg � Q1FY09 � Q1FY08 � % Chg US � 30.5 � 37.9 � -20 �
22.9 � 27.1 � -16 Canada � 5.6 � 4.1 � 36 � 1.4 � 0.7 � 124 N.
America � 36.1 � 42.0 � -14 � 24.3 � 27.7 � -12 UK � 9.4 � 9.5 � -1
� 5.6 � 2.5 � 120 France � 2.0 � 1.7 � 16 � 1.8 � 1.5 � 17 Germany
� 1.7 � 1.6 � 7 � 1.6 � 1.5 � 6 Europe � 13.1 � 12.8 � 2 � 8.9 �
5.5 � 61 Asia � 1.1 � 0.3 � 204 � - � 0.03 � -100 Total � 50.3 �
55.2 � -9 � 33.2 � 33.3 � -0 Harris Interactive Key Operating
Metrics � Quarterly Updated 10/31/08 Dollar amounts in millions US$
� Q1 FY2008 � Q2 FY2008 � Q3 FY2008 � Q4 FY2008 � Q1 FY2009
Consolidated Revenue � $55.2 � $62.7 � $57.3 � $63.5 � $50.3
Internet Revenue (% of total revenue) � 62% � 62% � 63% � 66% � 66%
NA Internet Revenue (% of NA revenue) � 66% � 67% � 62% � 67% � 67%
European Internet Revenue (% of European revenue) � 50% � 51% � 67%
� 63% � 68% Cash, Cash Equivalents & Marketable Securities �
$24.1 � $33.3 � $31.2 � $32.9 � $25.2 Bookings � $50.8 � $68.2 �
$61.3 � $53.3 � $43.5 Ending Sales Backlog � $67.4 � $72.8 � $76.9
� $66.8 � $60.1 Average Billable Full Time Equivalents (FTE�s) �
766 � 821 � 818 � 817 � 742 Days Sales Outstanding (DSO) � 49 days
� 43 days � 40 days � 43 days � 49 days Utilization � 62% � 62% �
62% � 66% � 59% Bookings to Revenue Ratio (B/R) � 0.92 � 1.09 �
1.07 � 0.84 � 0.87 Harris Interactive Key Operating Metrics �
Trailing Twelve Months Updated 10/31/08 Dollar amounts in millions
US$ � Sep 07 � Dec 07 � Mar 08 � Jun 08 � Sep 08 Consolidated
Revenue � $219.8 � $226.8 � $232.3 � $238.7 � $233.8 Internet
Revenue (% of total revenue) � 61% � 62% � 62% � 63% � 64% NA
Internet Revenue (% of NA revenue) � 69% � 69% � 67% � 66% � 66%
EUR Internet Revenue (% of European revenue) � 36% � 42% � 50% �
58% � 62% Total Bookings � $225.0 � $227.4 � $231.2 � $233.6 �
$226.4 Average Billable Full Time Equivalents (FTE�s) � 731 � 757 �
779 � 806 � 800 Utilization � 64% � 64% � 63% � 63% � 62% Bookings
to Revenue Ratio (B/R) � 1.02 � 1.00 � 1.00 � 0.98 � 0.97 Key
Operating Metrics Definitions Bookings � The contract value of
revenue-generating projects expected to take place during the next
four fiscal quarters for which a firm client commitment has been
received during the current period, less any adjustments to prior
period bookings due to contract value adjustments or project
cancellations during the current period. Ending Sales Backlog �
Prior period ending sales backlog plus current period bookings less
revenue recognized on outstanding projects as of the end of the
period. Average Billable Full-time Equivalents (FTE�s) � The hours
of available billable capacity in a given period divided by total
standard hours for a full-time employee. This represents an average
for the periods reported. Days Sales Outstanding (DSO) � Accounts
receivable as of the end of the applicable period (including
unbilled receivables less deferred revenue) divided by our daily
revenue (total revenue for the period divided by the number of
calendar days in the period). Utilization � Hours billed by project
personnel in connection with specific revenue-generating projects
divided by total hours of available capacity. Hours billed do not
include marketing, selling, or proposal generation time. Bookings
to Revenue Ratio (B/R) � This ratio is determined by dividing total
bookings for the period by total revenue. Ratios above 1.0 are
indicative of a growing sales backlog. NOTE: The metrics presented
herein should be evaluated in conjunction with all other reports
and documents filed by the Company with the Securities and Exchange
Commission during each of the fiscal periods noted above. HARRIS
INTERACTIVE INC. CONSOLIDATED BALANCE SHEETS (In thousands, except
share and per share amounts) (Unaudited) � � September 30, June 30,
2008 2008 Assets Cash and cash equivalents $ 23,817 $ 32,874
Marketable securities 1,390 - Accounts receivable, net 31,691
34,940 Unbilled receivables 10,979 11,504 Prepaids and other
current assets 7,779 8,753 Deferred tax assets � 2,151 � 3,959
Total current assets 77,807 92,030 � Property, plant and equipment,
net 11,018 11,953 Goodwill 41,416 42,805 Other intangibles, net
21,661 23,302 Deferred tax assets 17,188 14,606 Other assets �
2,445 � 2,353 Total assets $ 171,535 $ 187,049 � � Liabilities and
Stockholders' Equity Accounts payable 8,231 10,779 Accrued expenses
21,186 25,611 Current portion of long-term debt 6,925 6,925
Deferred revenue � 15,468 � 16,226 Total current liabilities 51,810
59,541 � Long-term debt 20,775 22,506 Deferred tax liabilities
3,647 4,035 Other long-term liabilities 2,243 2,331 � Total
stockholders' equity � 93,060 � 98,636 Total liabilities and
stockholders' equity $ 171,535 $ 187,049 HARRIS INTERACTIVE INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share
and per share data) (Unaudited) � � Three months ended September
30, 2008 2007 � Revenue from services $ 50,280 $ 55,186 � Operating
expenses: Cost of services 25,986 27,611 Sales and marketing 5,110
5,687 General and administrative 20,291 18,349 Depreciation and
amortization � 2,083 � � 1,907 � Total operating expenses � 53,470
� � 53,554 � Operating income (loss) (3,190 ) 1,632 Operating
margin -6.3 % 3.0 % � Interest and other income 190 372 Interest
expense � (455 ) � (440 ) Income (loss) from continuing operations
before income taxes � (3,455 ) � 1,564 � Provision (benefit) for
income taxes � (1,194 ) � 546 � Income (loss) from continuing
operations (2,261 ) 1,018 Income from discontinued operations, net
of tax � - � � 124 � Net income (loss) $ (2,261 ) $ 1,142 � � Basic
net income (loss) per share: Continuing operations $ (0.04 ) $ 0.02
Discontinued operations � - � � 0.00 � $ (0.04 ) $ 0.02 � � Diluted
net income (loss) per share: Continuing operations $ (0.04 ) $ 0.02
Discontinued operations � - � � 0.00 � $ (0.04 ) $ 0.02 � �
Weighted average shares outstanding - Basic � 53,339,387 � �
52,642,117 � Diluted � 53,339,387 � � 52,687,728 � Reconciliation
of GAAP Income to EBITDA and Adjusted EBITDA � � � � � � � Three
months ended � � September 30, � � 2008 � 2007 GAAP net income
(loss) � $ (2,261 ) � $ 1,142 � Income from discontinued
operations, net of tax � � - � � � (124 ) Interest income � � (190
) � � (372 ) Interest expense � � 455 � � � 440 � Provision
(benefit) for income taxes � � (1,194 ) � � 546 � Depreciation and
amortization � � 2,462 � � � 2,290 � EBITDA � $ (728 ) � $ 3,922 �
Stock-based compensation* � � 793 � � � 1,074 � Adjusted EBITDA � $
65 � � $ 4,996 � � � � � � Revenue from services � $ 50,280 � � $
55,186 � � � � � � Adjusted EBITDA margin � � 0.1 % � � 9.1 %
*Stock compensation expense represents the cost of stock-based
compensation awarded by the Company to its employees under
Statement of Financial Accounting Standards No. 123(R),
�Share-Based Payments� (�SFAS No. 123(R)�).
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