Harris Interactive Inc. (NASDAQ: HPOL), a leading innovative
global market research firm, today announced its financial results
for the second quarter of fiscal 2010. Kimberly Till, President and
Chief Executive Officer of Harris Interactive, said, “The results
for our second quarter demonstrate that we are making progress on
improving the strategic and financial performance of the company,
as evidenced by our return to profitability for the first time in
seven quarters. Although consolidated revenue was down 12% when
compared with last year’s second quarter, it was up by 15% from
this year’s first quarter, influenced in part by the normal
seasonality of our business. Consolidated bookings showed
comparative growth for the first time in five quarters and were up
10% compared with last year’s second quarter. Our U.S. business,
which represents about 60% of our overall revenue, achieved an
operating profit for the third consecutive quarter. As we head into
the second half of the fiscal year, our overall cash position
remains strong.” Till added, “Our numbers are starting to reflect
the many initiatives that we have put in place to grow bookings,
rebuild revenue, and improve profitability.”
Financial Highlights
For the Three
Months
For the Six Months
Ended December 31,
Ended December 31,
$ in millions – unaudited
2009
2008 2009 2008
Revenue $ 44.6 $ 50.7
$ 83.6 $ 100.9 Operating
income (loss) $ 0.6 $ (45.9 ) $
0.2 $ (49.1 ) Net income (loss) $ 1.3
$ (65.6 ) $ 0.7 $ (67.9 ) Fully
diluted net income (loss) per share $ 0.02 $
(1.23 ) $ 0.01 $ (1.27 )
Adjusted EBITDA* $ 2.8 $ (2.7 )
$ 4.8 $ (2.6 ) Adjusted EBITDA* with add-back
of restructuring and other charges $ 3.2 $ 3.2
$ 5.3 $ 3.8
*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 2010 was $44.6 million, as compared with
$50.7 million for the same prior year period.
- Operating income for the second
quarter of fiscal 2010 was $0.6 million, as compared with an
operating loss of $(45.9) million for the same prior year period.
Operating income for the second quarter of fiscal 2010 included
$0.4 million in restructuring and other charges, compared with
$46.1 million in goodwill impairment, restructuring and other
charges for the same prior year period.
- Net income for the second
quarter of fiscal 2010 was $1.3 million, or $0.02 per fully diluted
share, as compared with a net loss of $(65.6) million, or $(1.23)
per fully diluted share for the same prior year period. Net income
for the second quarter of fiscal 2010 included an income tax
benefit of $1.1 million that arose from a tax law change enacted
during the quarter.
- Bookings for the second quarter
of fiscal 2010 were $53.2 million, as compared with $48.6
million for the same prior year period.
- Secured revenue (formerly
referred to as backlog) for the second quarter of fiscal 2010 was
$51.1 million, as compared with $58.0 million for the
same prior year period.
- Non-GAAP Adjusted EBITDA* with
add-back of restructuring and other charges for the second quarter
of fiscal 2010 was $3.2 million, consistent with
$3.2 million for the same prior year period.
Ms. Till outlined the Company’s plans for the future. “Our
roadmap consists of three phases: first, turning around the
financial and strategic performance of the business; second, moving
towards a leadership position in the market research industry; and,
third, expanding into new and related market segments. We believe
that we are well along the way in turning around the performance of
the business, as demonstrated by our improved results this quarter
and our ability to attract top talent. We are beginning to put in
place the plans that will take us into the next phase, moving
towards a leadership position in the industry. We intend to do this
through product innovation and creating economies of scale by
leveraging technology to create a seamless, global research
platform. The innovative products we have planned include products
in the areas of social media, mobile platforms, and linkage among
different data sets and measures, and should lead to higher
margins. Further, the global platform should deliver cost savings,
faster turnaround of client work on a global basis, and higher
quality. In the third phase, we plan to expand into new and related
market information and insight segments, particularly those with
higher profit margins than traditional custom market research, by
leveraging the strength of the Harris brand, our technology
expertise, and our other relevant competencies,” concluded
Till.
Second Quarter Results Conference Call and Webcast
Access
Kimberly Till, President and CEO, will host a conference call to
discuss these results on Tuesday, January 26, 2010, at 5:00 p.m.
EST. Formal remarks will be followed by a question and answer
session.
To access the conference call, please dial toll-free
888.211.4435 in the United States and Canada, or
913.312.0979 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 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, 2009
2009 Assets Cash and cash equivalents $ 14,634 $
16,752 Marketable securities 504 1,010 Accounts receivable, net
24,461 23,163 Unbilled receivables 8,413 6,520 Prepaids and other
current assets 5,459 7,244 Deferred tax assets 852
632 Total current assets 54,323 55,321
Property, plant and equipment, net 6,346 8,015 Other intangibles,
net 18,089 18,540 Deferred tax assets 289 284 Other assets
2,042 2,367 Total assets $ 81,089
$ 84,527
Liabilities and Stockholders'
Equity Accounts payable $ 6,551 $ 6,738 Accrued expenses 15,125
18,349 Current portion of long-term debt 6,925 6,925 Deferred
revenue 14,572 12,531 Total current
liabilities 43,173 44,543 Long-term debt 12,119 15,581
Deferred tax liabilities 2,932 3,163 Other long-term liabilities
2,400 3,117 Total stockholders' equity 20,465
18,123 Total liabilities and stockholders' equity $
81,089 $ 84,527
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, 2009 2008 2009 2008
Revenue from services $ 44,629 $ 50,660 $ 83,564 $ 100,940
Operating expenses: Cost of services 28,085 31,412 52,514
62,563 Selling, general and administrative 13,849 17,117 26,811
36,726 Depreciation and amortization 1,718 1,912 3,474 3,995
Restructuring and other charges 383 5,844 531 6,472 Goodwill
impairment charge - 40,250
- 40,250
Total operating expenses 44,035
96,535 83,330
150,006 Operating income (loss) 594 (45,875 )
234 (49,066 ) Operating margin 1.3 % -90.6 % 0.3 % -48.6 %
Interest and other income (12 ) (135 ) (27 ) (325 ) Interest
expense 499 1,374
1,036 1,830 Income
(loss) from operations before income taxes 107
(47,114 ) (775 )
(50,571 ) Provision (benefit) for income taxes (1,227
) 18,509 (1,476 )
17,315 Net income (loss) $ 1,334
$ (65,623 ) $ 701
$ (67,886 )
Basic net income (loss) per share $ 0.02
$ (1.23 ) $ 0.01 $
(1.27 )
Diluted net income (loss) per share $ 0.02
$ (1.23 ) $ 0.01 $
(1.27 ) Weighted average shares outstanding - Basic
53,939,876 53,391,308
53,919,859 53,365,347
Diluted 54,060,635
53,391,308 54,050,397
53,365,347
Reconciliation of GAAP Income to EBITDA and Adjusted
EBITDA Three months ended Six months ended
December 31, December 31, 2009
2008 2009
2008 GAAP net income (loss) $ 1,334 $ (65,623 ) $ 701 $
(67,886 ) Interest income (12 ) (135 ) (27 ) (325 ) Interest
expense 499 1,374 1,036 1,830 Provision (benefit) for income taxes
(1,227 ) 18,509 (1,476 ) 17,315 Depreciation and amortization
2,077 2,276
4,214 4,738 EBITDA $
2,671 $ (43,599 ) $ 4,448 $ (44,328 ) Goodwill impairment charge -
40,250 - 40,250 Stock-based compensation * 162
661 321
1,454 Adjusted EBITDA $ 2,833
$ (2,688 ) $ 4,769 $
(2,624 ) Adjusted EBITDA $ 2,833 $ (2,688 ) $ 4,769 $ (2,624
) Add-back of restructuring and other charges 383
5,844 531
6,472 Adjusted EBITDA with add-back of
restructuring and other charges $ 3,216 $
3,156 $ 5,300 $ 3,848
*Stock-based compensation expense represents the cost
of stock-based compensation awarded by the Company to its employees
under FASB Statement 123(R), "Share-Based Payments".
©2010 Harris Interactive Inc. All rights reserved.
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