Harris Interactive® Reports Second Quarter Results
ROCHESTER, N.Y.--(BUSINESS WIRE)-- Harris Interactive (NASDAQ:HPOL) today announced its financial results for the second quarter of fiscal 2009.
Kimberly Till , President and CEO of Harris Interactive, commented, “We said in October that we needed to act quickly in two areas: to rigorously review our cost structure to align it with our revenues and to recruit top talent to augment our already strong internal teams. The cost reductions we made this quarter were a critical first step to restoring profitability in the business and enabled us to reorganize our business structure to support the strategic initiatives we plan to undertake. We anticipate these actions will result in nearly $10 million in annualized savings. On the recruiting front, we are making significant progress and expect to have several key hires in place by the end of our fiscal year. We are doing what we committed to do and have also maintained a solid cash position. Now we will focus on implementing our strategy to grow revenues and market share by capitalizing on our strong brand and leveraging the deep expertise and insights that our client teams provide to our world class clients.”
Second Quarter Financial Summary
Our results for the second quarter included:
- Revenue of $50.7 million, compared with $62.7 million for the same prior year period,
- Operating loss of $(45.9) million, compared with operating income of $3.4 million for the same prior year period. Our operating loss for the quarter included $46.1 million in charges, specifically:
- $3.9 million for severance related to U.S. headcount reductions and separation payments to former executives,
- $0.9 million related to leased space reductions,
- $1.1 million for performance improvement consultant fees, and
- $40.3 million for goodwill impairment, as described below.
- Net loss of $(65.6) million, or $(1.23) per share, compared with net income of $2.0 million, or $0.04 per share, for the same prior year period,
- Adjusted EBITDA1 of $(2.7) million, compared with $7.1 million reported a year ago, and
- Cash and marketable securities of $26.1 million at December 31, down from $33.3 million reported a year ago.
Excluding the charges noted above, our operating income for the quarter would have been $0.2 million and our adjusted EBITDA1 would have been $3.1 million.
Non-Cash Impairment Charges
Continued declines in our stock price and the adverse impact of global macroeconomic conditions on our operating results caused us to assess our goodwill for impairment in accordance with FASB Statement 142. Based on our assessment, we recorded a non-cash impairment charge of $40.3 million during the quarter.
We also re-assessed the realizability of our deferred tax assets at December 31 in accordance with FASB Statement 109. Based on our assessment, we recorded a non-cash deferred tax valuation allowance of $18.9 million during the quarter. We will continue to assess our ability to utilize these deferred tax assets in future periods.
At December 31, we were in violation of the leverage ratio and interest coverage covenants under the terms of our credit facilities and therefore, reclassified the remaining $26.0 million of outstanding debt to current liabilities until such time as amended credit facilities are in place. In addition, we recorded a $1.0 million charge to interest expense for the portion of our interest rate swap that was deemed ineffective during the quarter as a result of the covenant violation.
On February 5, 2009, we obtained a 30-day waiver from our lenders. “We are in active and cooperative discussions with our lenders and expect to have an amended credit facility in place by the end of the waiver period. Our cash position remained strong at December 31 and when offset against our outstanding debt, we were still in a positive net cash position,” stated
Deborah Rieger-Paganis , Interim Chief Financial Officer.
“Given the continued uncertainty about the global macroeconomic environment for the remainder of fiscal 2009, we will defer issuing full-year guidance. We will continue to proactively monitor our cost structure to ensure that it remains aligned with our revenue,” commented Rieger-Paganis.
Detailed Financial Information
In addition to the financial statements that accompany this earnings release, our key operating metrics can be found at www.harrisinteractive.com/ir.
Second Quarter Results Conference Call and Webcast Access
Kimberly Till , President and CEO, will host a conference call to discuss these results on Friday, February 6, 2009, at 10:00 a.m. EST. Formal remarks will be followed by a question and answer session.
To access the conference call, please dial toll-free 888.713.4215 in the United States and Canada, or 617.213.4867 internationally. The passcode is 67789382.
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=PBFTC99FN. 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 and detailed financial information 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 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 and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934.
1 EBITDA is a non-GAAP measure. Adjusted EBITDA, also a non-GAAP measure, is EBITDA less stock-based compensation. Both measures are reconciled to our GAAP financial statements which are attached to this release.
Harris Interactive Inc.
Michael Burns, 585-214-7328
Vice President, Investor Relations and External Reporting
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