Harris Revenues Tumble

Harris Interactive has announced a steep decline in revenue for the second quarter of its fiscal 2009, to $50.7m from $62.7m a year previously. An already substantial operating loss for the quarter looked a lot worse after a write-down of $40.3m for goodwill impairment.

Seeking to reassure investors, President and CEO Kimberly Till cited progress on cost reductions and recruitment along with a strong cash position.

The quarterly operating loss of $45.9m, compared with operating income of $3.4m a year previously, included $46.1m in charges. The firm cited 'continued declines in its stock price and the adverse impact of global macroeconomic conditions on our operating results' in its reassessment of goodwill for impairment in accordance with FASB Statement 142, and arrived at a non-cash impairment charge of $40.3m during the quarter. The other large charges were $3.9m for US severance and separation payments, and $1.1m in fees for performance improvement consultants.

Interim CFO Deborah Rieger-Paganis said that as of December 31 the firm was in violation of leverage ratio and interest coverage covenants under the terms of its credit facilities 'and therefore reclassified the remaining $26.0m of outstanding debt to current liabilities until such time as amended credit facilities are in place.' The firm says it obtained a 30-day waiver from lenders yesterday, and expects to have an amended credit facility in place by the end of the waiver period. It remains in a positive net cash position.

Till 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.' Looking ahead, she added: '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.'

Rieger-Paganis said the company would defer issuing full-year guidance, 'given the continued uncertainty about the global macroeconomic environment for the remainder of fiscal 2009.'

Detailed financial information is at www.harrisinteractive.com/ir .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.