Harris Interactive® Reports First Quarter Fiscal 2010 Results

http://www.businesswire.com/news/home/20091029006403/en

Achieves Operating Income in U.S. Business for Second Consecutive Quarter
NEW YORK--(Business Wire)--
Harris Interactive (NASDAQ:HPOL), a leading global custom market research firm,
today announced its financial results for the first quarter of fiscal 2010.

"In what is historically the market research industry`s slowest quarter of the
year from a revenue standpoint, we achieved operating income in our U.S.
business for the second consecutive quarter and showed a significant improvement
in Adjusted EBITDA compared with last year`s first quarter. This performance
clearly demonstrates the benefit of the cost reductions we implemented last
year," commented Kimberly Till, President and Chief Executive Officer of Harris
Interactive. "We are heavily focused on rebuilding revenues and controlling
costs. Our cash position remains strong, and I believe that we are on track to
deliver on our key strategic initiatives," Till continued.

For the first quarter of fiscal 2010, the Company`s U.S. business generated $0.8
million in operating income and the Company achieved $2.1 million in Adjusted
EBITDA, including the add-back of $0.1 million in restructuring and other
charges. At September 30, 2009, the Company held $14.4 million in cash and
marketable securities.

Financial Highlights
For the Three Months Ended
September 30,
$ in millions - unaudited 2009 2008

Revenue $ 38.9 $ 50.3
Operating loss $ (0.4 ) $ (3.2 )
Net loss $ (0.6 ) $ (2.3 )
Fully diluted net loss per share $ (0.01 ) $ (0.04 )

Adjusted EBITDA* $ 1.9 $ 0.1
Adjusted EBITDA* with add-back of restructuring and other charges $ 2.1 $ 0.7

*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 first quarter of fiscal 2010 was $38.9 million, as
compared with $50.3 million for the same period in the prior year, representing
a decline of $11.3 million or 23%. Included in the decline was an unfavorable
foreign exchange rate impact of $1.4 million or 13% of our overall revenue
decline.
* Operating loss for the first quarter of fiscal 2010 was $(0.4) million, as
compared with an operating loss of $(3.2) million for the same period in the
prior year. The operating loss for the first quarter of fiscal 2010 included
$0.1 million in restructuring and other charges, compared with $0.6 million for
the same period in the prior year.
* Net loss for the first quarter of fiscal 2010 was $(0.6) million, or $(0.01)
per fully diluted share, as compared with a net loss of $(2.3) million, or
$(0.04) per fully diluted share for the same period in the prior year.
* Non-GAAP Adjusted EBITDA* for the first quarter of fiscal 2010 was $1.9
million, as compared with $0.1 million for the same period in the prior year.
* Non-GAAP Adjusted EBITDA* with add-back of restructuring and other charges for
the first quarter of fiscal 2010 was $2.1 million, as compared with $0.7 million
for the same period in the prior year.
* Bookings for the first quarter of fiscal 2010 were $32.7 million, as compared
with $43.5 million for the same period in the prior year.
* Secured revenue for the first quarter of fiscal 2010 was $42.5 million, as
compared with $60.1 million for the same period in the prior year.

"I joined Harris about a year ago and am pleased with the progress we have made
thus far. We`ve recruited strong talent, realigned our cost structure, and
increased our financial stability by successfully amending our credit agreement.
We are now implementing a comprehensive set of initiatives that should drive
revenue and cost efficiency in the months ahead. These include developing a
robust pipeline of innovative products, significantly improving the efficiency
of our workflow processes and systems, and developing larger more strategic
account relationships. Taken together, these efforts should position us well in
the coming months," concluded Till.

First Quarter Results Conference Call and Webcast Access

Kimberly Till, President and CEO, will host a conference call to discuss these
results on Thursday, October 29, 2009, at 5:00 p.m. EDT. Formal remarks will be
followed by a question and answer session.

To access the conference call, please dial toll-free 877.879.6209 in the United
States and Canada, or 719.325.4771 internationally.

A live webcast of the conference call will also be accessible via the Investor
Relations section of our website at www.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
www.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 www.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 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.

HARRIS INTERACTIVE INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)

September 30, June 30,
2009 2009
Assets
Cash and cash equivalents $ 13,886 $ 16,752
Marketable securities 507 1,010
Accounts receivable, net 22,737 23,163
Unbilled receivables 7,807 6,520
Prepaids and other current assets 6,322 7,244
Deferred tax assets 685 632
Total current assets 51,944 55,321

Property, plant and equipment, net 7,156 8,015
Other intangibles, net 18,646 18,540
Deferred tax assets 296 284
Other assets 2,097 2,367
Total assets $ 80,139 $ 84,527

Liabilities and Stockholders' Equity
Accounts payable $ 5,907 $ 6,738
Accrued expenses 15,561 18,349
Current portion of long-term debt 6,925 6,925
Deferred revenue 13,362 12,531
Total current liabilities 41,755 44,543

Long-term debt 13,850 15,581
Deferred tax liabilities 3,055 3,163
Other long-term liabilities 2,809 3,117

Total stockholders' equity 18,670 18,123
Total liabilities and stockholders' equity $ 80,139 $ 84,527

HARRIS INTERACTIVE INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)

Three months ended
September 30,
2009 2008

Revenue from services $ 38,935 $ 50,280

Operating expenses:
Cost of services 24,431 31,151
Selling, general and administrative 12,962 19,608
Depreciation and amortization 1,754 2,083
Restructuring and other charges 148 628
Total operating expenses 39,295 53,470
Operating loss (360 ) (3,190 )
Operating margin -0.9 % -6.3 %

Interest and other income 15 190
Interest expense (537 ) (455 )

Loss from operations before income taxes (882 ) (3,455 )
Provision (benefit) for income taxes (249 ) (1,194 )
Net loss $ (633 ) $ (2,261 )

Basic and diluted net loss per share: (0.01 ) (0.04 )

Weighted average shares outstanding -
Basic and diluted 53,899,842 53,339,387

Reconciliation of GAAP Income to EBITDA and Adjusted EBITDA

Three months ended
September 30,
2009 2008
GAAP loss $ (633 ) $ (2,261 )
Interest income (15 ) (190 )
Interest expense 537 455
Provision (benefit) for income taxes (249 ) (1,194 )
Depreciation and amortization 2,136 2,462
EBITDA $ 1,776 $ (728 )
Stock-based compensation (1) 158 793
Adjusted EBITDA $ 1,934 $ 65

Adjusted EBITDA $ 1,934 $ 65
Add-back of restructuring and other charges 148 628
Adjusted EBITDA with add-back of restructuring and other charges $ 2,082 $ 693

(1) Stock-based compensation expense represents the cost of stock-based compensation awarded by the Company to its employees.

HPOL - E

Harris Interactive Inc.
Press Contact:
Michael T. Burns, Investor Relations
800-866-7655 x7328
mburns@harrisinteractive.com

Copyright Business Wire 2009