Harris Interactive® Reports Second Quarter Fiscal 2013 Results and Provides Full Fiscal Year Guidance

USD in millions – unaudited

For the Three Months
Ended December 31,

For the Six Months
Ended December 31,

2012

2011

2012

2011

Revenue (2)

$     37.1

$     39.1

$   70.1

$    76.9

Operating income (loss) (3)

$       3.0

$       2.3

$     4.8

$    (2.0)

Net income (loss)

$       2.9

$       1.6

$     4.6

$    (4.3)

Fully diluted net income (loss) per share

$     0.05

$     0.03

$   0.08

$  (0.08)

Adjusted EBITDA (4)

$       4.8

$      4.0

$     8.3

$      1.6

Adjusted EBITDA with add-back of restructuring and other charges (4)

$       4.8

$      4.0

$     8.3

$      6.9

Cash provided by operations

$       1.6

$      3.3

$     1.9

$      3.5

Bookings (5)

$     47.8

$    45.2

$   81.7

$    77.3

At December 31:

2012

2011

Cash and cash equivalents

$      11.1

$    14.1

Outstanding debt

$        3.6

$      8.4

Secured revenue (6)

$      54.1

$    45.1

(1)

All amounts shown reflect our Asian operations as discontinued operations.

(2)

Amounts include the impact of foreign currency exchange rate differences. Excluding the impact of foreign currency exchange rate differences, revenue for the three and six months ended December 31, 2012 decreased by 5% and 8%, respectively, over the same prior year periods.

(3)

Operating income for the three and six months ended December 31, 2012 did not include any restructuring or other charges, compared with $(0.1) million and $5.4 million, respectively,  for the same prior year periods.

(4)

EBITDA is a non-GAAP measure. Adjusted EBITDA, also a non-GAAP measure, is EBITDA with stock-based compensation added back.

(5)

Amounts include the impact of foreign currency exchange rate differences. Excluding the impact of foreign currency exchange rate differences, bookings for the three and six months ended December 31, 2012 increased by 5% for both current periods, over the same prior year periods.

(6)

Amounts include the impact of foreign currency exchange rate differences. Excluding the impact of foreign currency exchange rate differences, secured revenue at December 31, 2012 increased by 19% over the same prior year period.

HARRIS INTERACTIVE INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

December 31,

June 30,

2012

2012

Assets

   Cash and cash equivalents

$         11,085

$    11,456

   Accounts receivable, net

27,234

19,940

   Unbilled receivables

6,512

7,513

   Prepaids and other current assets

3,663

3,859

   Deferred tax assets

156

243

Total current assets

48,650

43,011

   Property, plant and equipment, net

2,335

2,500

   Other intangibles, net

9,551

10,795

   Other assets

1,131

1,080

Total assets

$         61,667

$    57,386

Liabilities and Stockholders' Equity

   Accounts payable

$          9,122

$      7,628

   Accrued expenses

17,343

21,643

   Current portion of long-term debt

3,596

4,794

   Deferred revenue

14,264

10,088

   Liabilities from discontinued operations

-

181

Total current liabilities

44,325

44,334

   Long-term debt

-

1,199

   Deferred tax liabilities

1,497

1,696

   Other long-term liabilities

3,165

4,072

Total stockholders' equity

12,680

6,085

Total liabilities and stockholders' equity

$         61,667

$    57,386

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,

2012

2011

2012

2011

Revenue from services

$       37,087

$       39,115

$       70,097

$       76,884

Operating expenses:

   Cost of services

21,898

24,380

41,353

48,010

Selling, general and administrative 

11,207

11,308

21,985

22,973

Depreciation and amortization

963

1,197

1,911

2,490

Restructuring and other charges

-

(72)

-

5,368

Total operating expenses

34,068

36,813

65,249

78,841

Operating income (loss)

3,019

2,302

4,848

(1,957)

Operating margin

8.1%

5.9%

6.9%

-2.5%

Interest expense, net

69

204

170

361

    Income (loss) from continuing operations before
income taxes

2,950

2,098

4,678

(2,318)

Provision for income taxes

58

283

43

3

   Income (loss) from continuing operations

2,892

1,815

4,635

(2,321)

   Loss from discontinued operations

-

(190)

-

(2,011)

   Net income (loss)

$         2,892

$         1,625

$         4,635

$        (4,332)

Basic net income (loss) per share:

   Continuing operations

$           0.05

$           0.03

$           0.08

$          (0.04)

   Discontinued operations

-

(0.00)

-

(0.04)

Basic net income (loss) per share

$           0.05

$           0.03

$           0.08

$          (0.08)

Diluted net income (loss) per share:

   Continuing operations

$           0.05

$           0.03

$           0.08

$          (0.04)

   Discontinued operations

-

(0.00)

-

(0.04)

Diluted net income (loss) per share

$           0.05

$           0.03

$           0.08

$          (0.08)

Weighted average shares outstanding:

     Basic

56,152,326

55,272,335

56,171,401

55,149,610

     Diluted

57,412,623

55,294,426

57,395,320

55,149,610

Harris Interactive Inc.

Three and Six Months Ended December 31, 2012

Reconciliation of GAAP Net Income (Loss) to EBITDA and Adjusted EBITDA

Amounts in thousands of USD

Three Months Ended

Six Months Ended

December 31,

December 31,

2012

2011

2012

2011

GAAP net income (loss)

$      2,892

$     1,625

$   4,635

$  (4,332)

 Loss from discontinued operations

-

190

-

2,011

Interest expense, net

69

204

170

361

Provision for income taxes

58

283

43

3

Depreciation and amortization

1,127

1,462

2,243

2,980

EBITDA

$      4,146

$     3,764

$   7,091

$   1,023

Stock-based compensation (7)

679

271

1,248

550

Adjusted EBITDA

$      4,825

$     4,035

$   8,339

$   1,573

Adjusted EBITDA

$      4,825

$     4,035

$   8,339

$   1,573

Add-back of restructuring and other charges

-

(72)

-

5,368

Adjusted EBITDA with add-back of restructuring and other charges

$      4,825

$     3,963

$   8,339

$   6,941

(7) Stock-based compensation expense represents the cost of stock-based compensation
accounted for under the FASB guidance for stock-based compensation.

Full Year Fiscal 2013 Guidance

Reconciliation of GAAP Net Income (Loss) to EBITDA and Adjusted EBITDA

Amounts in millions of USD

For the Fiscal Year Ending June 30, 2013 (1)(2)

For the Fiscal Year Ended June 30, 2012

GAAP net income (loss)

$                    7.0

$              (5.6)

Loss from discontinued operations, net of tax

-

1.9

Interest expense, net

0.2

0.7

Provision for income taxes

0.1

0.2

Depreciation and amortization

4.4

5.6

EBITDA

$                  11.7

$               2.8

Stock-based compensation (3)

2.3

1.8

Adjusted EBITDA

$                  14.0

$               4.6

Adjusted EBITDA

$                  14.0

$               4.6

Add-back of restructuring and other charges

-

7.5

Adjusted EBITDA with add-back of restructuring and other charges

$                  14.0

$             12.1

(1) This reconciliation is based on the midpoint of the Adjusted EBITDA guidance range provided in this press release.

(2) The amounts expressed in this column are based on current estimates as of the date of this press release.

(3) Stock-based compensation expense represents the cost of stock-based compensation accounted for under the
FASB guidance for stock-based compensation.