10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

ANNUAL REPORT PURSUANT TO SECTIONS 13 OR

15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended June 30, 2007
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from          to

COMMISSION FILE NUMBER: 000-27577

HARRIS INTERACTIVE INC.

(Exact Name of Registrant as Specified in its Charter)

DELAWARE	16-1538028
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
60 Corporate Woods, Rochester, New York	14623 (zip code)
(Address of principal executive offices)

Registrant’s telephone number, including area code:

(585) 272-8400

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $0.001 par value per share	The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:

NONE

INDICATE BY CHECK MARK IF THE REGISTRANT IS A WELL-KNOWN SEASONED ISSUER, as defined in Rule 405 of the Securities Act.  Yes o     No þ

INDICATE BY CHECK MARK IF THE REGISTRANT IS NOT REQUIRED TO FILE REPORTS pursuant to Section 13 or Section 15(d) of the Exchange Act.  Yes o     No þ

INDICATE BY CHECK MARK WHETHER THE REGISTRANT:  (1) HAS FILED ALL REPORTS required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o

INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS A LARGE ACCELERATED FILER, AN ACCELERATED FILER OR A NON- ACCELERATED FILER. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Act. (Check one):

Large accelerated filer o     Accelerated filer þ     Non-accelerated filer o

INDICATE BY CHECK MARK WHETHER REGISTRANT IS A SHELL COMPANY (as defined in Rule 12b-2 of the Act).  Yes o     No þ

As of December 31, 2006, the aggregate market value of voting and non-voting common equity securities held by non-affiliates of the registrant was $275,731,707.

On September 7, 2007, 53,108,611 shares of the Registrant’s Common Stock, $.001 par value, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The information required by Part III of this Report, to the extent not set forth herein, is incorporated by reference from the Registrant’s definitive proxy statement relating to the annual meeting of stockholders to be held on October 30, 2007, which definitive proxy statement will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Report relates.

HARRIS INTERACTIVE INC.

FORM 10-K

FOR THE FISCAL YEAR ENDED JUNE 30, 2007

INDEX

			Page
Part I:
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995				3
	Item 1:	Business		3
	Item 1A:	Risk Factors		15
	Item 1B:	Unresolved Staff Comments		23
	Item 2:	Properties		23
	Item 3:	Legal Proceedings		23
	Item 4:	Submission of Matters to a Vote of Security Holders		23
Part II:
	Item 5:	Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		24
	Item 6:	Selected Financial Data		27
	Item 7:	Management’s Discussion and Analysis of Financial Condition and Results of Operations		28
	Item 7A:	Quantitative and Qualitative Disclosures About Market Risk		48
	Item 8:	Financial Statements and Supplementary Data		50
	Item 9:	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		90
	Item 9A:	Controls and Procedures		90
	Item 9B:	Other Information		91
Part III:
	Item 10:	Directors, Executive Officers and Corporate Governance		91
	Item 11:	Executive Compensation		92
	Item 12:	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		92
	Item 13:	Certain Relationships and Related Transactions, and Director Independence		92
	Item 14:	Principal Accountant Fees and Services		92
Part IV:
	Item 15:	Exhibits and Financial Statement Schedules		93
Signatures				95
EX-10.1.11
EX-10.4.2
EX-10.4.34
EX-10.4.43
EX-10.4.48
EX-10.4.53
EX-10.7.9
EX-21
EX-23
EX-31.1
EX-31.2
EX-32.1
EX-32.2

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PART I

“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995

The discussion in this Form 10-K contains forward-looking statements that involve risks and uncertainties. The statements contained in this Form 10-K that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”), as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements regarding expectations, beliefs, intentions or strategies regarding the future. All forward-looking statements included in this document are based on the information available to Harris Interactive on the date hereof, and Harris Interactive assumes no obligation to update any such forward-looking statement. Actual results could differ materially from the results discussed herein. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the Risk Factors section of this Form 10-K. The Risk Factors set forth in other reports or documents Harris Interactive files from time to time with the Securities and Exchange Commission (the “SEC”) should also be reviewed.

Item 1.   Business

References herein to “we,” “our”, “us”, “its”, the “Company” or “Harris Interactive” refer to Harris Interactive Inc. and its subsidiaries, unless the context specifically requires otherwise. Harris Interactive^® and The Harris Poll^® are U.S. registered trademarks of Harris Interactive Inc. This Form 10-K may also include other trademarks, trade names and service marks of Harris Interactive and of other parties.

Corporate Overview

Harris Interactive was founded in 1975 in upstate New York as the Gordon S. Black Corporation, however, its roots date back to the founding of Louis Harris & Associates in New York City in 1956. Today, Harris Interactive is an international, full-service, consultative market research firm widely known for The Harris Poll (one of the world’s longest-running, independent opinion polls) and for pioneering online market research methods. Harris Interactive serves clients worldwide through its offices in the United States, Europe and Asia and through a global network of independent market research firms.

In June 2007, the market research industry analysts at Inside Research named Harris Interactive the 12th largest U.S. market research organization for the second consecutive year, and in July 2007, we were named the world’s 13th largest market research firm (down from 12th in 2006). In September 2007, Inside Research named us the world’s second fastest-growing market research, down from 1st in 2006.

Our corporate headquarters are located in Rochester, New York, and our fiscal year ends June 30th.

Mergers, Acquisitions and Sale of Business

The Gordon S. Black Corporation was founded in 1975 as a New York corporation. Since that time, our acquisitions have included:

•  February 2001 — the custom research division of Yankelovich Partners, Inc., headquartered in Norwalk, Connecticut,

•  August 2001 — all of the capital stock of Market Research Solutions Limited, a privately-owned U.K. company headquartered in Oxford, England,

•  September 2001 — all of the capital stock of M&A Create Limited, a privately-owned company headquartered in Tokyo, Japan,

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•  November 2001 — all of the capital stock of Total Research Corporation, a Delaware corporation headquartered in Princeton, New Jersey,

•  March 2004 — all of the capital stock of Novatris, S.A. (“Novatris”), a share corporation organized and existing under the laws of France,

•  September 2004 — all of the capital stock of Wirthlin Worldwide, Inc. (“Wirthlin”), a privately-held California corporation headquartered in Reston, Virginia, and

•  April 2007 — all of the capital stock of MediaTransfer AG Netresearch & Consulting (“MediaTransfer”), a privately-held German stock corporation headquartered in Hamburg, Germany.

After the close of fiscal 2007, we completed the following acquisitions, which are more fully described in Note 23, “Subsequent Events,” to our consolidated financial statements contained in this Form 10-K:

•  August 2007 — all of the capital stock of Marketshare Limited, a company incorporated under the laws of Hong Kong, and Marketshare Pte Ltd, a company incorporated under the laws of Singapore (collectively, “Marketshare”), and

•  August 2007 — all of the capital stock of Decima Research Inc. (“Decima”), a corporation incorporated in Ontario, Canada.

In May 2005, we completed the sale of our Japanese subsidiaries: M&A Create Limited, Adams Communications Limited and Harris Interactive Japan, K.K., in a management buy-out. In June 2007, we committed to a plan to sell our “Rent and Recruit” business, which was engaged primarily in providing facilities for and conducting focus group interviews. On August 23, 2007, the sale of our Rent and Recruit business was completed.

Business Overview

Harris Interactive is a professional services firm that serves its clients in many industries and many countries. We provide Internet-based and traditional market research and polling services which include ad-hoc or customized qualitative and quantitative research, service bureau research (conducted for other market research firms) and long-term tracking studies.

We serve clients in numerous vertical markets including:

•  Automotive and Transportation,

•  Consumer Packaged Goods,

•  Emerging and General Markets,

•  Financial Services,

•  Public Affairs and Policy,

•  Healthcare and Pharmaceutical, and

•  Technology and Telecom.

In addition, we maintain a number of horizontally-focused strategic research groups that collaborate with our sales and vertical practice teams to deliver solutions in the following areas:

•  Brand & Strategy Research,

•  Loyalty Research, and

•  Marketing Communications (Advertising) Research.

We also conduct computer-assisted telephone interviewing in telephone data collection centers in Orem, Utah, as well as Brentford, Maidenhead and Hazel Grove, United Kingdom. In addition to these

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dedicated facilities, we outsource telephone data collection and survey programming to contracted sources to a number of countries including Canada, India and Costa Rica.

We deliver custom research using both traditional and Internet-based data collection methods. The majority of our tracking and service bureau research is conducted via the Internet. We continue to work aggressively to transition traditional custom research to Internet-based research.

During fiscal 2007, 60.5% of our total revenue was derived from Internet-based research, up from 59.1% and 56.5% in fiscal 2006 and 2005, respectively. We treat all of the revenue from a project as Internet-based whenever more than 50% of the data collection for that project was completed online.

Our Internet panel currently consists of over six million individuals — all of whom have double opted-in to participate by affirmatively reconfirming their intent to join the panel after initial registration. Based upon publicly reported competitor panel sizes, the number of online surveys we have completed and the amount of revenue we derive from online research, we believe that Harris Interactive leads the worldwide Internet-based market research industry.

The Worldwide Market for Online Research

The online research market is already significant and is growing. Industry analysts at Inside Research estimate that the current potential worldwide opportunity for online survey research is between $9 and $10 billion. In its March 2007 edition, Inside Research estimated that about $3.0 billion will be spent to conduct online research in calendar 2007, up from $2.5 billion in calendar 2006, but still leaving a $6 to $7 billion market opportunity.

We believe that the transition from traditional data collection methods to online methods is inevitable because Internet-based market research has a number of inherent advantages that make it a true replacement technology:

•  Speed — Internet surveys can be completed in as little as five days, as opposed to three weeks for an average mail survey and approximately two weeks for an average random-digit-dial telephone survey.

•  Value — Internet-based market research can provide larger and more robust sample sizes than telephone-based research for the same cost, or the same sample size can be gathered online at a lower cost.

•  Versatility — Motion and still pictures, graphics, advertising copy, and websites can be securely viewed right on the desktop. Images and sound can be combined to maintain interest and enhance the respondent experience. Internet-based methodology allows surveys to be created on demand, with content and sequencing modified as panelists respond.

•  Innovation — Online research techniques, such as virtual shopping, bulletin board style focus groups and virtual 3D package testing, that were never possible before are now performed regularly. As our (and our clients’) knowledge of online research grows, our repertoire of more powerful research tools will continue to expand.

•  Accuracy — Our propensity score weighting techniques have repeatedly produced results that are as accurate as or more accurate than telephone-based research.

•  Honesty — Our experience indicates that respondents’ online answers to questions of a more personal nature such as income, health condition, sexual behavior and political affiliation/opinion tend to be answered more openly, honestly and in greater detail than those collected via telephone-based research.

•  Convenience — Online research is conducted on the respondent’s schedule, not the telephone researcher’s schedule. Web-based questionnaires may be completed at home, at work, or anywhere a respondent has Internet access, 24/7/365.

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•  Productivity — As online panelists can read faster than they can listen, more questions can be asked and answered in the same amount of time. Participants in online qualitative sessions type their own transcripts, which can be immediately reviewed and analyzed.

Our Products and Services

Custom Research

We conduct many types of custom research including customer satisfaction surveys, market share studies, new product introduction studies, brand recognition studies, reputation studies, ad concept testing and more. A custom research project has three distinct phases:

•  Survey Design — Initial meetings are conducted with the client to clearly define the objectives and reasons for the study, which ensures that the final data collected will meet the client’s needs. Based on the requirements, we then determine the proper data collection process (such as a mail, telephone or Internet survey, focus group meetings or personal interviews), sampling scheme (the demographics and number of people to be surveyed) and design the survey questionnaire or focus group protocol.

•  Data Collection — Field data collection is conducted through computer-aided Internet or telephone interviewing, by mail or in person, by holding focus group meetings, or any combination of the above. Various quality procedures are employed to ensure that surveys are returned and the correct number of interviews is completed.

•  Weighting, Analysis and Reporting — We review the collected data for sufficiency and completeness, weight the data accordingly, and then analyze by desired demographic, business or industry characteristics. A comprehensive report that typically includes recommendations is then prepared and delivered to the client.

Our proprietary sample design and questionnaire development techniques are intended to ensure that complete and accurate information is collected, and that this data will satisfy the specific inquiries of our clients. We have developed in-depth data collection techniques that enhance the integrity and reliability of our sample database. Our survey methodology is intended to ensure that responses are derived from the appropriate decision-makers in each category. As a result, we have a solid foundation for delivering the data that meets our clients’ needs.

Tracking Study Research

We apply extensive expertise to the design, execution and maintenance of custom, online tracking studies for clients in a broad range of industries and across the globe. Considered by many to be a vital part of any comprehensive research program, tracking studies regularly ask identical questions to similar demographic groups within a constant interval (once a month; once a quarter, etc.) to feed business decision-makers with dynamic data and intelligence that enables them to:

•  Drive and sustain customer loyalty,

•  Gather market and customer intelligence relative to the brand and category,

•  Detect emerging market trends and/or potential threats,

•  Assess the impact of marketing on customer behaviors and attitudes, and

•  Identify opportunities for growth.

Service Bureau Research

The Harris Interactive Service Bureau (HISB) conducts Internet-based data collection for other market research firms that either do not have the necessary resources to develop Internet-based

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market research capabilities or that have otherwise chosen not to develop such capabilities themselves.

Research and Development

We have not incurred expenditures for the three fiscal years ended June 30, 2007 that would be classified as research and development as defined by accounting principles generally accepted in the United States of America under Statement of Financial Accounting Standards No. 2, Accounting for Research and Development Costs.

Our Intellectual Property and Other Proprietary Rights

We believe that the Harris brand and its associated intellectual property provide us with many competitive advantages. The awareness and attributes of the Harris brand — trusted, accurate, non-biased, innovative, collaborative, thoughtful and results-focused — are essential to maintain for our continued success. To protect our brand and our intellectual property, we rely on a combination of patent, copyright, trademark and trade-secret laws, as well as confidentiality, non-disclosure, non-compete and license agreements.

We currently have two patents pending for:

•  A system to conduct research via “build your own” product/pricing configurations over a network, and

•  Shelf Impact^SM — a system for evaluating the impact of package design and shelf placement for store shelf products using extremely short duration image exposure.

As other means of protecting our property, we have registered trademarks for many of our products and services in the U.S., U.K., France, Germany and other countries within the European Union, and will continue to protect our intellectual property through those means.

We have licensed in the past, and expect to license in the future, certain proprietary rights, such as trademarks or copyrighted material, to third parties. While we attempt to ensure that the quality of our brand is maintained by these licenses, licensees may take actions that might harm the value of our proprietary rights or reputation.

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Seasonality

Being project-based, our business has historically exhibited moderate seasonality. Revenue generally tends to ramp upward during the fiscal year, with Q1 (ending September 30) generating the lowest revenue. Fiscal Q2 (ending December 31) generally yields a sequential increase in revenue. Fiscal Q3 (ending March 31) is approximately flat with or slightly less than Q2. Fiscal Q4 (ending June 30) revenue typically yields the highest revenue of the year. As a result of the seasonality noted, we manage our business based on our annual business cycle. Total consolidated revenue from continuing operations, by quarter, for the fiscal years ended June 30, 2005 through 2007, is as follows:

The moderate historical seasonality described above is not necessarily indicative of quarterly revenue trends which may occur in the future.

Our Clients

At June 30, 2007, we had approximately 1,800 clients, compared with approximately 1,900 at June 30, 2006. By way of illustration, we served clients in the United States during fiscal 2007 and 2006 in the following lines of business, which lines of business comprised the following percentages of our consolidated revenue:

	% FY2007			% FY2006
	Revenue			Revenue
Healthcare and Pharmaceutical		26.9	%		30.5	%
Emerging and General Markets		11.5	%		9.5	%
Technology and Telecom		10.9	%		12.6	%
Public Affairs and Policy		9.3	%		6.5	%
Financial Services		5.8	%		6.5	%
Automotive and Transportation		4.3	%		4.8	%
Consumer Packaged Goods		3.8	%		4.5	%
Service Bureau		3.3	%		3.7	%

In addition to the revenue derived from the lines of business shown above, our European operations, primarily in the U.K. and France during those periods, accounted for 24.2% and 21.4% of our consolidated revenue for fiscal 2007 and 2006, respectively.

In fiscal 2007 and 2006, no single client accounted for more than 10% of our consolidated revenue.

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Our Competition

We compete with numerous market research firms, as well as corporations and individuals that perform market research studies on an isolated basis, many of whom have market shares or financing and marketing resources larger than our own. Our competitors include, but are not limited to, Arbitron Inc., GfK AG, Greenfield Online Inc., IMS Health, Inc., Intage Inc., Ipsos, National Research Corp., Taylor Nelson Sofres plc and YouGov plc.

In June 2007, Inside Research ranked Harris Interactive as the 12^th largest U.S. market research firm for the second consecutive year. In July 2007, Inside Research ranked Harris Interactive as the world’s 13^th largest market research firm, down from 12^th in 2006.

Although we believe that barriers to creating a large proprietary online panel and acquiring the technology and the knowledge necessary to conduct accurate Internet-based market research remain high, we have seen intensified competition from existing market research firms as they continue to build their online research capabilities. We also believe that the number of dedicated online data collection and sample-only firms which enable traditional market research firms to execute online research has added to the competitive environment.

In fiscal 2007, Harris Interactive introduced GlobalSynch^SM, our global synchronized research platform that integrates data collected via multiple modes into one database. This web-based system provides increased speed, greater accuracy and easy real-time client access to research data collected anywhere in the world regardless of collection mode. We believe that no other market research firm currently has a similar system in place. This ability to more fully synchronize our survey design, data collection, analysis and reporting functions gives us an advantage over some of our competitors who do not offer the same broad range of services.

We believe we also have other competitive advantages, including:

•  Our Highly Skilled Employees — many of whom are recognized by their peers as leaders in the field of market research, or in the particular vertical markets in which they specialize.

•  Our Strong Brand — synonymous with accuracy and truthfulness, we believe that Harris Interactive and The Harris Poll are two of the best known and most trusted names for U.S. market research and public opinion polling today. We have now expanded The Harris Poll into the United Kingdom and the rest of Europe, and expect to continue our relationships with The Financial Times (London) and LeMonde (Paris), in order to raise awareness of the Harris Interactive brand on a global scale.

•  Our Internet Panel — believed by us to be the world’s largest for conducting online market research. Currently, our panel consists of over six million individuals from around the world who have voluntarily agreed to participate in our various online research studies. This large and diverse Internet panel enables us to:

•  accurately project results to large segments of the population, such as “all U.S. voters” or “all British adults”,

•  conduct a broad range of studies across a wide set of industries,

•  rapidly survey very large numbers of the general population, and

•  accurately survey certain low-incidence, hard-to-find subjects.

•  Our Specialty Sub-Panels — Through the ongoing screening of our larger panel and recruitment targeted specifically to certain audiences, we have developed numerous specialty sub-panels of hard-to-find respondents, including: Affluent, Chronic Illness, Mothers and Expectant Mothers, Physicians, Pet Companion and Technology Decision-Makers. Our clients value our ability to rapidly survey these hard to find subjects. Many of our clients have asked us to

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develop specialty panels exclusively for their use. Specialty sub-panel research has become a key driver of profitable revenue growth for us.

•  Our Science and Methodology — To really understand the intricacies and nuances of Internet research, we have conducted nearly 1,500 “research on research” experiments. We also have executed approximately 75 million online surveys since we began conducting online research in 1997. That depth and breadth of experience allows us to continually provide our clients with the most up-to-date and accurate knowledge they need to make meaningful business decisions and improve their performance.

•  Our Global Enterprise Solutions Portfolio — A comprehensive tool-box of research techniques, methodologies and models that can be applied by marketing experts to help develop strategy, implement tactics and assess their impact in the marketplace. These tools can also be used to analyze markets, develop new products and services, create and/or measure brand positioning and awareness and measure and/or improve customer loyalty.

•  Our Technology — A significant amount of computer software and hardware is required to conduct Internet-based market research and polling. The key elements of our technology infrastructure include:

•  A high-speed customized email system, which enables us to rapidly format, target and send over one million customized email invitations per hour,

•  A sophisticated survey engine, which can support 180,000 custom five-minute surveys per hour with a peak capacity of 15,000 surveys processed simultaneously,

•  Multi-lingual software systems, which have the ability to collect data in any language supported by Microsoft, including double-byte character sets (such as the Asian languages) and right to left reading languages,

•  An advanced survey dispatcher system, which acts like an air traffic control system to monitor, control and balance all respondent activity across all of our servers, and to ensure that no respondent will get a “sorry — the system is busy” notice. In addition, our proprietary dispatcher system gathers real-time statistics on survey starts, suspensions and completions, shutting off the surveys when the contracted completion levels have been achieved, thereby reducing cost overruns,

•  A fully scalable infrastructure that can easily and inexpensively grow with the expansion of our business, and

•  A global synchronized research platform that integrates data collected via multiple modes into one database.

•  Our Professional Sales Force — which is relatively unique in the market research industry, an industry in which researchers are traditionally the primary salepersons. Our salesforce generates leads, expands existing client relationships and gains new business. At the end of fiscal 2007, we had over 50 full-time dedicated sales professionals, who work with our market research professionals who also sell our services, supported by a team of inside business developers.

•  Our Dedication to Customer Satisfaction — which has helped us to retain our clients and continually improve the quality of services that we deliver. We evaluate all of our researchers and managers on customer satisfaction scores, and their bonus compensation is also tied to those customer satisfaction levels. At June 30, 2007, our worldwide overall satisfaction rating stood at 8.8 and our willingness to recommend rated 8.9, both on a ten point scale, consistent with ratings of 8.7 and 8.9, respectively, at June 30, 2006. Maintaining high levels of customer satisfaction helps us to:

•  identify and rapidly respond to changing client needs,

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•  increase the loyalty of our clients and generate greater lifetime value from them, and

•  improve our margins by dampening price sensitivity.

Financial Information about Geographic Areas

We are comprised principally of operations in the United States. Non-U.S. market research operations are located in the United Kingdom, France and Germany, and to a more limited extent, Hong Kong and China. We operate these non-U.S. businesses on a basis consistent with our U.S. operations. We perform custom and service-bureau Internet-based market research in the United Kingdom, France and Germany using our global database.

Our business model for offering custom market research is consistent across the geographic regions in which we operate. Geographic management facilitates local execution of our global strategies. However, we maintain global leaders for the majority of our critical business processes, and the most significant performance evaluations and resources allocations made by our chief operating decision-maker are made on a global basis. Accordingly, we have concluded that we have one reportable segment.

We have prepared the financial results for geographic information on a basis that is consistent with the manner in which management internally disaggregates information to assist in making internal operating decisions. We have allocated common expenses among these geographic regions differently than we would for stand-alone information prepared in accordance with accounting principles generally accepted in the United States of America. All intercompany sales and transactions have been eliminated upon consolidation. Geographic operating income (loss) may not be consistent with measures used by other companies.

Geographic information from continuing operations for the fiscal years ended June 30 was as follows (amounts in thousands):

	U.S.		Europe			Asia
	Market		Market			Market
	Research		Research			Research			Total
2007:
Revenue from services	$	159,843	$	51,960		$	—		$	211,803
Operating income (loss)		9,802		2,734			(219	)		12,317
Long-lived assets		7,298		2,604			—			9,902
Deferred tax assets		16,815		(541	)		249			16,523
2006:
Revenue from services	$	166,228	$	45,956		$	—		$	212,184
Operating income (loss)		13,837		293			(239	)		13,891
Long-lived assets		7,691		2,005			1			9,697
Deferred tax assets		19,682		(105	)		162			19,739
2005:
Revenue from services	$	146,589	$	46,523		$	523		$	193,635
Operating income (loss)		9,530		(636	)		(164	)		8,730
Long-lived assets		9,302		2,399			4			11,705
Deferred tax assets		25,758		(877	)		66			24,947

During fiscal 2007, 2006 and 2005, approximately 75.5%, 78.3% and 75.7%, respectively, of our total consolidated revenue was derived from our U.S. operations. Approximately 24.5%, 21.7% and 24.3%, respectively, of our total consolidated revenue was derived from our non-U.S. operations, primarily in the U.K. and France during those periods.

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Backlog

At June 30, 2007, we had a revenue backlog from continuing operations of approximately $64.9 million, as compared to a backlog of approximately $58.9 million from continuing operations at June 30, 2006. We estimate that substantially all of the backlog at June 30, 2007 will be recognized as revenue from services during the fiscal year ending June 30, 2008, based on our experience from prior years.

Employees

At June 30, 2007, we employed a total of 1,015 full-time individuals on a worldwide basis, 730 of which were employed in the United States. In addition, we employed 278 part-time and hourly individuals on a worldwide basis for data gathering and processing activities, 239 of which were employed in the United States. Casual employees of our operations outside of the United States are not included in the headcount numbers provided herein.

None of our employees are represented by a collective bargaining agreement. We have not experienced any work stoppages. We consider our relationship with our employees to be good.

Executive Officers of Harris Interactive

The following table sets forth the name, age and position of each of the persons who were serving as our executive officers as of September 12, 2007. These individuals have been appointed by and are serving at the pleasure of our board of directors.

Name	Age		Position
Gregory T. Novak		45	President and Chief Executive Officer
Dee T. Allsop		49	President, U.S. Solutions Research Groups
Bruce A. Anderson		50	President, Harris/Decima
Leonard R. Bayer		57	Executive Vice President, Chief Scientist and Chief Technology Officer
Dennis K. Bhame		59	Executive Vice President, Human Resources
Katherine A. Binns		46	President, U.S. Industry Research Groups
Richard W. Millard		49	President, U.S. Industry Research Groups
Eric W. Narowski		38	Principal Accounting Officer and Vice President, Corporate Controller
Michelle F. O’Neill		44	President, U.S. Industry Research Groups
Ronald E. Salluzzo		56	Executive Vice President, Chief Financial Officer, Treasurer and Secretary
George H. Terhanian		43	President, Harris Interactive Europe and Global Internet Research
David B. Vaden		36	President, North America and Global Operations

Gregory T. Novak is currently our President and Chief Executive Officer, positions he has held since April 2004 and September 2005, respectively. He has been a director of the Company since September 2005. From May 2005 to September 2005, Mr. Novak served as the Company’s acting Chief Executive Officer and from April 2004 to September 2005, he served as the Company’s Chief Operating Officer. From July 2003 to March 2004, Mr. Novak served as the Company’s President, U.S. Operations and from July 2001 to June 2003, served as its Group President, Strategic Marketing Solutions and Business and Consulting. From July 2000 to July 2001, Mr. Novak served as the Company’s Group President, Strategic Marketing Solutions and from June 1999 through June 2000, served as the President of its Internet division. Prior to joining the Company, from August 1996 to June 1999, Mr. Novak worked for Lightnin, a chemical process engineering and manufacturing

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company, most recently as Vice President, General Manager of Lightnin Americas. Mr. Novak received an M.S. in Management from Purdue University’s Krannert Business School and a B.S. in Mechanical Engineering from the University of Pittsburgh. Mr. Novak is also a graduate of General Electric’s Nuclear Power Engineering Program and FMC Corporation’s Corporate Analyst Training and Development Program.

Dee T. Allsop, PhD is currently our President, U.S. Solutions Research Groups, a position he has held since May 2005. From September 2004 to May 2005, Dr. Allsop served as Group President, Harris/Wirthlin Brand and Strategy Consulting Group. From January 2003 to September 2004, Dr. Allsop served as Chairman and Chief Executive Officer of Wirthlin and from 1996 to 2002, Dr. Allsop served as Wirthlin’s Senior Vice President for Western States. From 1986 to 1996, Dr. Allsop served in a variety of progressively senior positions with Wirthlin. Dr. Allsop received a PhD. and M.A. in Political Science from The Ohio State University and a B.A. in Political Science from Brigham Young University.

Bruce A. Anderson is currently President, Harris/Decima, a position he has held since our acquisition of Decima Research in August 2006. From October 2004 to August 2006, Mr. Anderson served as Chairman and Chief Executive Officer of Decima. Prior to joining Decima, Mr. Anderson was a Partner with the Earnscliffe Strategy Group, a consulting firm he co-founded in 1990. Mr. Anderson studied Journalism and Political Science at Carleton University.

Leonard R. Bayer is currently our Executive Vice President, Chief Scientist and Chief Technology Officer, and is a director of the Company, positions he has held since July 1978. Prior to joining the Company, Mr. Bayer worked for Practice Development Corporation from August 1976 to July 1978, where he served as Vice President of Research and Development. From September 1975 to August 1976, Mr. Bayer was a member of the faculty of the University of Rochester School of Medicine, where he taught mathematical statistics. Mr. Bayer received an M.A. in Statistics, a B.S. in Astrophysics and a B.A. in Mathematics from the University of Rochester.

Dennis K. Bhame is currently our Executive Vice President, Human Resources, a position he has held since April 2000. Prior to joining us, Mr. Bhame spent 16 years at Bausch & Lomb Inc. working in progressively senior positions, most recently as Vice President, Global Human Resources, Eyeware Division. Prior to joining Bausch & Lomb in 1984, Mr. Bhame worked as a human resources professional at Burroughs Corporation, a manufacturer of adding machines and computer equipment, and Moore Business Forms, a producer of business forms. Mr. Bhame received a B.S. in Business Management from New Hampshire College.

Katherine A. Binns is currently our President, U.S. Industry Research Groups, a position she has held since July 2005. In this role, she oversees the Company’s Healthcare research practice. From February 1996 to June 2005. Ms. Binns served as a Senior Vice President within our Healthcare research practice. Ms. Binns joined the Company in February 1996 through the Company’s acquisition of Louis Harris and Associates, where she had served in positions of increasing responsibility since April 1983. Ms. Binns received an M.B.A. from the Leonard N. Stern School of Business, New York University, and a B.F.A. from the San Francisco Art Institute.

Richard W. Millard, Ph.D is currently our President, U.S. Industry Research Groups, a position he has held since April 2007. In this role, he oversees the Company’s Public Affairs and Policy, Consumer Goods and Financial Services research practices. From May 2006 to April 2007, Dr. Millard served as Senior Vice President in our Public Affairs and Policy research practice, and from June 2003 to May 2006, he served in this role in our Healthcare research practice From June 2001 to June 2003, he served as a Vice President and from January 2000 to June 2001, he served as a Senior Research Director, both in the Healthcare research practice. Prior to joining the Company in January 2000, Dr. Millard spent two years at Patient Infosystems, Inc. as Vice President of Clinical Affairs. Dr. Millard received his Ph.D. and M.A. in Psychology, both from the University of Hawaii, and his M.B.A. in Accounting and Finance from the University of Rochester. Dr. Millard is currently a member of both the American Psychological Association and American Marketing Association.

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Eric W. Narowski is currently our Principal Accounting Officer, a position he has held since February 2006. He continues to serve as our Vice President, Corporate Controller, a position he has held since January 2000. Mr. Narowski served as Controller of the Company from July 1997 to January 2000. Mr. Narowski received a B.S. in Accounting from the State University of New York at Geneseo and is a Certified Public Accountant.

Michelle F. O’Neill is currently our U.S. President, Industry Research Groups, a position she has held since July 2006. In this role, she oversees the Company’s Emerging & General Markets research practice, including Technology and Automotive & Transportation industry solutions groups. From July 2006 to April 2007, Ms. O’Neill served as President of our Emerging & General Markets industry solutions group and our Technology industry solutions group. From July 2005 to June 2006, Ms. O’Neill served as Group President of our Emerging & General Markets research practice and from July 2004 to June 2005, she served as Group President of our General Markets research practice. From July 2001 to June 2004, Ms. O’Neill served as Senior Vice President and Business Leader of our Strategic Consulting research practice. Ms. O’Neill joined the Company in February 2001 through the Company’s acquisition of Yankelovich Partners, where she had served as a Partner since August 1994. Ms. O’Neill received a B.S. in Business Finance from University of Connecticut.

Ronald E. Salluzzo is currently our Executive Vice President, Chief Financial Officer, Treasurer and Secretary, positions he has held since March 2006. Prior to joining us, Mr. Salluzzo served as the Chief Risk Officer for BearingPoint Inc., a provider of strategic consulting, application services, technology solutions and managed services to companies and government organizations, from February 2005 to December 2005. From January 1999 to February 2005, Mr. Salluzzo was the Executive Vice President in charge of BearingPoint’s State and Local Government and Education practice. Prior to 1999, Mr. Salluzzo spent 27 years at KPMG LLP working in progressively senior positions, most recently as an Audit Partner and National Industry Leader for Higher Education. Mr. Salluzzo received a Bachelor of Business Administration from St. Bonaventure University and is a Certified Public Accountant.

George H. Terhanian, Ph.D is currently our President, Harris Interactive Europe, a position he has held since July 2003. He continues to serve as President, Global Internet Research, a position he has held since June 2002, and has also directed our online research activities since they began in 1997. Prior to joining us in 1996, Dr. Terhanian taught in elementary and secondary schools in the United States and was an analyst for the Inspector General’s Office of the United States Department of Education. He has also served an appointment as an American Educational Research Association Fellow at the National Center for Educational Statistics. Dr. Terhanian received his Ph.D. in Education (Policy Research, Evaluation and Measurement) from the University of Pennsylvania, his Ed.M. in Administration, Planning and Social Policy from Harvard University and his B.A. in Political Science from Haverford College.

David B. Vaden is currently our President, North America and Global Operations, a position he has held since April 2007. From February 2006 to April 2007, Mr. Vaden served as our Executive Vice President, Chief Operations Officer. From January 2005 to February 2006, Mr. Vaden served as our Executive Vice President, Operations and Chief Strategy Officer. From January 2002 to January 2005, Mr. Vaden served as our Senior Vice President, Business Development and Internet Services. From January 2000 to January 2002, Mr. Vaden served as Vice President, Finance. Prior to joining us, Mr. Vaden served as a Manager in the Audit and Business Advisory Services division at PricewaterhouseCoopers LLP (PwC). While at PwC, Mr. Vaden was selected as one of 50 employees among 37,000 personnel in the United States to participate in the PwC Scholars Program. Mr. Vaden received an M.B.A. with distinction from Columbia University Business School and a B.S. in Accounting with honors from St. John Fisher College, and is a Certified Public Accountant.

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Available Information

Information about our products and services, shareholder information, press releases and SEC filings can be found on our website at www.harrisinteractive.com. Through our website, we make available free of charge the documents and reports we file with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Information on our website (or the websites of our subsidiaries) does not constitute part of this Report on Form 10-K.

The public may also read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site at www.sec.gov, which contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

Item 1A.   Risk Factors

Risks Related to Our Business

Failure to maintain our brand reputation and recognition could impair our ability to remain competitive.

We believe that maintaining our good brand reputation and recognition is critical to attracting and expanding our current client base as well as attracting and retaining qualified employees. If our reputation and name are damaged through our participation in surveys involving controversial topics or if the results of our surveys are inaccurate or are misused or used out of context by one of our clients, we may become less competitive or lose market share.

We have registered a number of our trademarks, including Harris Interactive and The Harris Poll. If we were prevented from using the Harris name, our brand recognition and business would likely suffer. We would have to make substantial financial expenditures to promote and rebuild our brand identity.

If we are unable to maintain adequate capacity and demographic composition of our existing Internet panel, or if we are required to spend substantial funds to do so, our business, financial condition and results of operations will suffer.

Our success is highly dependent on our ability to maintain sufficient capacity of our Internet panel and its specialty sub-panels. Our ability to do this may be harmed if we lose panel capacity or are unable to attract and maintain an adequate number of replacement panelists and specialty sub-panel members.

There are no industry or other benchmarks for determining the optimal size and composition of an Internet panel. Among other factors, panelist response rates vary with differing survey content, and the frequency with which panelists are willing to respond to survey invitations is variable. Although we believe that our current panel is adequate for the foreseeable future to accommodate our clients’ broad-based survey requests in the markets we serve, circumstances could change due to the factors described above. Additionally, we are not always able to accommodate client requests to survey low-incidence, limited populations with specific demographic characteristics. We constantly reassess our panel size and demographics as survey requests are made and, based upon availability of existing panelists to fulfill project requests, determine our need to recruit additional panelists. If our need to recruit panelists or specialty sub-panel members increases significantly, our operating costs will rise.

In general, if the number of our active survey respondents significantly decreases, or the demographic composition of our Internet panel narrows, our ability to provide our clients with accurate and statistically projectable information would likely suffer. This risk is likely to increase as our

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business expands. Our business will be unable to grow and will suffer if we have an insufficient number of panelists to respond to our surveys, if our panel becomes unreliable due to reduced size or if it is no longer representative of the general population.

Our online panelists are not obligated to participate in our surveys and polls and there can be no assurance that they will continue to do so.

We use our HIpoints^TM, HIstakes^TM and instant results programs to provide incentives to encourage participation in our surveys and to maintain the capacity of our Internet panel. If these programs lose their effectiveness in the future, a reduction in capacity or responsiveness of the panel could result.

A breach of our Internet security measures, security concerns, or liability arising from the use of the personal information of our Internet panel, could adversely affect our business.

A failure in our security measures could result in the misappropriation of private data. As a result, we may be required to expend capital and other resources to protect against the threat of such security breaches or to alleviate problems caused by such breaches, which could have a material adverse effect on our business, financial condition and results of operations.

Internet security concerns could cause some online panelists to reduce their participation levels, provide inaccurate responses or end their membership in our Internet panel. This could harm our credibility with our current clients. If our clients become dissatisfied, they may stop using our products and services. In addition, dissatisfied and lost clients could damage our reputation. A loss of online panelists or a loss of clients would hurt our efforts to generate increased revenues and impair our ability to attract potential clients.

We could be subject to liability claims by our online panelists for any misuse of the demographic personal information. These claims could result in costly litigation. We could also incur additional costs and expenses if new regulations regarding the use of personal information are introduced or if our privacy practices are investigated by a governmental body.

We may be subject to liability for publishing or distributing content over the Internet.

We may be subject to claims relating to content that is published on or downloaded from our websites. We also could be subject to liability for content that is accessible from our website through links to other websites. For example, as part of our surveys panelists sometimes access, through our websites or linkages to client websites, content provided by our clients, such as advertising copy, that may be incomplete or contain inaccuracies. We also recruit panelists to participate in research sponsored and hosted by our clients on the client’s website, and we cannot completely control breaches of privacy policies, warranties, or other claims that may be made by those third parties. We may be accused of sending bulk unsolicited email and have our email blocked by one or more Internet service providers (“ISP’s”) and, therefore, be unable to conduct online data collection.

Although we carry general and professional liability insurance, our insurance may not cover potential liability claims for publishing or distributing content over the Internet, or may not be adequate to cover all costs incurred in defense of potential claims or to indemnify us for all liability that may be imposed. In addition, any claims of this type, with or without merit, would result in the diversion of our financial resources and management personnel.

Any failure in the performance of our Internet-based technology infrastructure could harm our business.

Because a greater proportion of our business than those of many of our competitors involves Internet-based data collection, our business may suffer a greater impact due to any Internet-related system failure. Any Internet-related system delays or failures, including network, software or hardware

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failures, that cause an interruption in our ability to communicate with our Internet panel, collect research data, or protect visual materials included in our surveys, could result in reduced revenue, could impair our reputation, and have a material adverse effect on our business, financial condition and results of operations.

Our systems and operations are vulnerable to damage or interruption from fire, earthquake, flooding, power loss, telecommunications failure, break-ins and similar events. The redundancy of our systems may not be adequate, as we depend upon third-party suppliers to protect our systems and operations from the events described above. We have experienced technical difficulties and downtime of individual components of our systems in the past, and we believe that technical difficulties and downtime may occur from time to time in the future. The impact of technical difficulties and downtime may be severe. We have developed, however have not fully implemented, a formal disaster recovery plan, and our business interruption insurance may not adequately compensate us for any losses that may occur due to failures in our systems.

Our servers and software must be able to accommodate a high volume of traffic. Any increase in demands on our servers beyond that which we currently anticipate will require us to fund the expansion and modification of our network infrastructure. If we were unable to add additional software and hardware to accommodate increased demand, unanticipated system disruptions and slower data collection would likely result.

Our Internet panel members communicate with us using various ISP’s. These providers have experienced significant outages in the past, from time to time may block certain communications, and in the future could experience outages, delays and other difficulties unrelated to our systems.

Major components of the Internet backbone itself could fail due to terrorist attack, war or natural disaster. Our business is particularly vulnerable to such failure because not only would we suffer the effects experienced by businesses in general, we would be unable to perform Internet surveys, which are the core of much of our business. Thus, we would have to find alternative means to conduct surveys or would be unable to effectively service the needs of many of our clients.

Failure or inability to protect our intellectual property could adversely affect our business.

Our success and ability to compete depends substantially on our internally-developed methodologies, technologies and trademarks, which we protect through a combination of patent, copyright, trade-secret and trademark laws. Currently, we have pending trademark applications for a number of our products and services. We also have patent applications currently pending for our method for conducting product configuration research over a computer-based network and our shelf impact process. In addition, we may apply for additional trademarks or patents in the future. Our patent or trademark applications may not be approved, or if approved, our patents or trademarks may be successfully challenged by others or invalidated. We cannot guarantee that infringement or other claims will not be asserted or prosecuted against us in the future, whether resulting from our internally-developed intellectual property or licenses or content from third parties. Any future assertions or prosecutions could be time-consuming, result in costly litigation and diversion of technical and management personnel or require us to pay money damages, introduce new trademarks, develop non-infringing technology, or enter into royalty or licensing agreements. Any of those events could substantially increase our operating expenses and potentially reduce our expected revenues. Moreover, there can be no assurance that third parties will not independently develop functionally equivalent or superior methodologies and technologies.

We generally enter into confidentiality or license agreements with parties with whom we do business, and generally control access to, and distribution of, our technologies, documentation and other proprietary information. Despite our efforts to protect our proprietary rights from unauthorized use or disclosure, parties may attempt to disclose, obtain or use our technologies. The steps we have taken may not prevent misappropriation of our technologies, particularly in foreign countries where

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laws or law enforcement practices may not protect our proprietary rights as fully as in the United States.

We may seek to license technology to enhance our current technology infrastructure. We cannot be certain that any such licenses will be available on commercially reasonable terms or at all. The loss or lack of availability of any of these technology licenses could result in delays in providing our products and services until equivalent technology, if available, is identified, licensed and integrated.

Our international growth is dependent upon expansion of both our international Internet panel in key regions and our global footprint.

Key components of our strategy are the extension of our Internet-based market research products and services to clients internationally, expansion of our Internet panel to include global online panelists and acquisitive expansion of our global footprint to provide us with a physical presence in markets where we currently do not have one. If worldwide Internet usage does not continue to grow, we may be unable to attract international online panelists to our Internet panel or international clients for our Internet-based market research and polling products and services. Our inability to attract panel members in key regions, such as Western Europe and Asia, would necessitate the use of more costly traditional market research methodologies to serve the needs of our clients who do business internationally. Our ability to grow internationally will be adversely affected to the extent that our international panel does not grow commensurately with demand of our international clients. The optimal size of our panel in specific countries is subject to the same uncertainty as is applicable to our existing panel in the United States. Additionally, our ability to grow internationally will also be adversely affected if we are unable to successfully complete acquisitions of market research companies in high-potential geographic markets where we currently do not have a physical presence.

Our international growth will be adversely affected if the marketplace does not continue to convert to Internet-based market research and polling.

Although Internet-based research has achieved general acceptance in the United States, the success of our international business will depend in large part on our ability to continually develop and market Internet-based products and services that achieve broad market acceptance internationally. Our clients in the international markets we serve must continue to accept the Internet as an attractive replacement for traditional market research methodologies, such as direct mail, telephone-based surveys, mall intercepts, focus groups and in-person interviews. If our current and potential clients do not continue to accept our Internet-based methodologies as reliable and unbiased, our revenues may not meet expectations or may decline, and our business, financial condition and results of operations would likely suffer.

We rely on services provided by off-shore providers, the disruption of which could adversely impact our business.

We rely on off-shore providers in countries such as Canada, India and Costa Rica, to provide certain of our programming services, as well as telephone and Internet data collection. Political or economic instability in countries from which such support services are provided, or a significant increase in the costs of such services, could adversely affect our business. From time to time, laws and regulations are proposed in the United States that would restrict or limit the benefits of off-shore operations, and enactment of any such legal restrictions could harm our results of operations.

If we are unable to overcome other risks associated with global operations, we will be unable to conduct business on a global level.

Because many of our larger competitors have global operations, our expansion must, in part, be global. Our international operations have either lost money or not added significantly to our net income in recent years. Our operational, technical, and financial systems and controls will have to

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continue to adapt to a more diversified geographic base of operations. Managing and sustaining our international growth, and ensuring its profitability, will place significant demands on management. If we are unable to manage our growth effectively, we may not be able to successfully implement our business plan at projected levels.

The following additional risks are inherent in doing business on a global level:

•  inability to comply with or enactment of more restrictive privacy laws,

•  changes in regulatory requirements,

•  currency exchange fluctuations,

•  problems in collecting accounts receivable and longer collection periods,

•  potentially adverse tax consequences,

•  political instability,

•  Internet access restrictions, and

•  anti-American sentiment or terrorist activity against American interests abroad.

We have little or no control over these risks. For example, we have encountered more restrictive privacy laws in connection with our business operations in Europe, which have inhibited our ability to develop our European Internet panel. As we increase our global operations in the future, we may experience some or all of these risks, which may have a material adverse effect on our business, financial condition and results of operations.

We must continue to attract and retain highly skilled employees.

Our future success will depend, in part, on our ability to continue to attract, retain and motivate highly skilled technical, managerial, marketing, sales and client support personnel. Project managers with industry expertise are important to our ability to retain and expand our business. Intense competition for these personnel exists, and we may be unable to attract, integrate or retain the proper numbers of sufficiently qualified personnel that our business plan assumes. In the past, we have from time to time experienced difficulty hiring and retaining qualified employees. There are few, if any, educational institutions that provide specialized training related to market research. Therefore, employees must be recruited in competition with other industries and few of those who are recruited have direct or substantial experience with Internet-based research. In the past, competition for highly skilled employees has resulted in additional costs for recruitment, training, compensation and relocation or the provision of remote access to our facilities. We may continue in the future to experience difficulty in hiring and retaining employees with appropriate qualifications. To the extent that we are unable to hire and retain skilled employees in the future, our business, financial condition and results of operations would likely suffer.

Variations in our operating results may cause our stock price to fluctuate.

Our quarterly operating results have in the past, and may in the future, fluctuate significantly and we may incur losses in any given quarter. Our future results of operations may fall below the expectations of public market analysts and investors. If this happens, the price of our common stock would likely decline.

Factors that are outside of our control, and that have caused our results to fluctuate in the past or that may affect us in the future, include:

•  declines in general economic conditions or the budgets of our clients,

•  a general decline in the demand for market research and polling products and services,

•  seasonal decreases in the demand for market research and polling services,

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•  development of equal or superior products and services by our competitors,

•  technical difficulties that cause general and long-term failure of the Internet, and

•  currency exchange fluctuations.

Factors that are partially within our control, and that have caused our results to fluctuate in the past or that may affect us in the future, include:

•  effective management of the professional services aspects of our business, including utilization and realization rates,

•  our relative mix of revenues from Internet-based and traditional market research,

•  our ability to maintain the proper size and scope of our Internet panel necessary to develop and sell new products and services and generate expected revenues,

•  development of our own new, marketable products and services, and

•  our globalization efforts.

The factors listed above may affect both our quarter-to-quarter operating results as well as our long-term success. You should not rely on quarter-to-quarter comparisons of our results of operations or any other trend in our performance as an indication of our future results.

Anti-takeover provisions in our charter and applicable law could delay or prevent an acquisition of our company.

Our restated certificate of incorporation provides for the division of our board of directors into three classes, eliminates the right of stockholders to act by written consent without a meeting, and provides our board of directors with the power to issue shares of preferred stock without stockholder approval. The preferred stock could have voting, dividend, liquidation, and other rights established by the board of directors that are superior to those of our common stock.

Our board of directors also adopted a stockholder rights plan, pursuant to which we declared and paid a dividend of one right for each share of common stock outstanding as of March 29, 2005, and one right attaches to each share issued thereafter until a specified date. Unless redeemed by us prior to the time the rights are exercised, upon the occurrence of certain events, the rights will entitle the holders to receive upon exercise of each right shares of our preferred stock, or shares of an acquiring entity, having a value equal to the exercise price of the right divided by 50% of the then market price of our common stock. The issuance of the rights could have the effect of delaying or preventing a change in control of our company.

In addition, Section 203 of the Delaware General Corporation Law contains provisions that impose restrictions on stockholder action to acquire our company. The effect of these provisions of our certificate of incorporation and Delaware law could discourage or prevent third parties from seeking to obtain control of us, including transactions in which the holders of common stock might receive a premium for their shares over prevailing market prices.

Potential acquisitions of, or investments in, other companies may not be available and/or have a negative impact on our business.

We have in the past and may in the future acquire or make investments in complementary businesses, services, products or technologies. If we choose not to pursue acquisitions, are unable to identify suitable acquisition candidates or are unable to acquire them at reasonable prices and/or on reasonable terms, our rate of growth may slow.

If we choose to pursue acquisitions, some material risks we may face include:

•  difficulties in the harmonization and assimilation of the operations, technologies, products and personnel of the acquired business,

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•  the diversion of management’s attention from other business concerns,

•  the availability of favorable acquisition financing, and

•  the potential loss of key employees and/or clients of any acquired business.

Acquisitions may require the use of significant amounts of cash, resulting in the inability to use those funds for other business purposes. Acquisitions using our capital stock could have a dilutive effect, and could adversely affect the market price of our common stock. Amortization of intangible assets would reduce our earnings, which in turn could negatively influence the price of our common stock. These difficulties could disrupt our ongoing business, distract our management and employees and increase our expenses.

Risks Related to Our Industry

The market research industry is vulnerable to fluctuations in general economic conditions.

The market research industry tends to be adversely affected by slow or depressed business conditions in the market as a whole. Many of our clients treat all or a portion of their market research expenditures as discretionary. As general economic conditions decline and our clients seek to control variable costs, projects to be performed by us may be delayed or cancelled, and new bookings may slow. As a result, our growth and earnings may be adversely impacted.

We face competitive pressures within the market research and polling industry and from others who have the ability to collect data over the Internet.

The market research and polling industry includes many competitors, some of whom are much larger than we are or have specialized products and services we do not offer.

Consolidation within the industry has resulted and may continue to result in some of our competitors acquiring Internet data collection capabilities through mergers and acquisitions. Many other companies have, or are developing, large databases of individuals with whom they can communicate via the Internet. Such companies may themselves, or in arrangements with other market research firms, choose to provide competitive data collection services. As others increase their ability to offer Internet-based data collection services, and as our competitors develop alternative products, we may come under increasing pressures in selling and pricing our products and services.

No one client accounts for more than 10% of our revenues and most of our revenues are derived on a project by project basis. We must continuously replace completed work with new projects, and these competitive pressures may make it more difficult for us to do so and to sustain and grow our revenues.

Changes in government regulation could limit our Internet activities or result in additional costs of doing business on the Internet.

Any future legislation or regulations or the application of existing laws and regulations to the Internet could limit our effectiveness in conducting Internet-based market research and polling, and increase our operating expenses. For example:

•  A significant majority of U.S. state legislatures have enacted laws regulating the distribution of unsolicited email. Such laws could force changes in the manner in which we are able to recruit and communicate with panelists.

•  Our business may be restricted by the development of various U.S. federal and state “do not call” lists and other privacy regulations that permit consumers to protect themselves from unsolicited telemarketing telephone calls. In 2003, the Federal Trade Commission (“FTC”) amended its rules to establish a national “do not call” registry. Although “do not call” list regulations do not currently apply to market research phone calls, new legislation or regulation could eliminate the current market research exemption. If “do not call” list regulations become applicable to market research phone calls, our results of operations may be adversely affected by the loss of revenues from telephone-based market research.

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•  The Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM”) imposes a number of restrictions and requirements related to commercial communications over the Internet. CAN-SPAM also gives more legal ammunition for ISP’s to take spammers to court, allows the FTC to impose fines and gives state attorneys general the power to bring lawsuits. Any inability on our part to comply with CAN-SPAM and similar laws could add to our costs and force changes in the way in which we conduct business.

•  The U.S. Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) imposes a number of restrictions and requirements designed to safeguard personal health information. As Healthcare is the largest industry group that we serve, from time to time, HIPAA could have the effect of increasing our costs and restricting our ability to gather and disseminate information, which could ultimately have a negative effect on our revenues.

•  Certain foreign countries in which we do business, such as China, censor or control our communication with our online panelists. Such limitations may hinder our ability to effectively conduct market research in a way that meets the needs of our clients.

•  A number of U.S. states have enacted or have pending legislation governing gifts from, and marketing by, pharmaceutical companies. Some of these laws require pharmaceutical companies to report physician payments, including cash incentives to physicians and other health care professionals for participating in market research surveys. Such laws may impact response rates for surveys conducted for pharmaceutical/health care companies who are seeking physician opinions.

In addition, the application of existing laws to the Internet could expose us to substantial liability for which we might not be indemnified by content providers or other third parties. Existing laws and regulations currently address, and new laws and regulations and industry self- regulatory initiatives are likely to address, a variety of issues, including, among others, the following:

•  email distribution,

•  user privacy and expression,

•  the rights and safety of children,

•  intellectual property,

•  information security,

•  anti-competitive practices,

•  the convergence of traditional channels with Internet commerce,

•  taxation and pricing, and

•  the characteristics and quality of products and services.

Those laws that do reference the Internet have limited interpretation by the courts and their applicability and scope are not well defined, particularly on an international basis. Any new laws or regulations relating to the Internet could adversely affect our business.

Changes in industry practices could limit our Internet activities.

Industry standards related to the Internet are still evolving. Moreover, some private entities have proposed their own standards for communications with, and use of information related to, individuals who use the Internet. ISP’s also have the ability to disrupt our communications with our panel. Although we believe that we maintain high standards for the recruitment of members into our database, communications with our panelists and use of information provided by our respondents, some ISP’s and/or self-appointed industry regulators may not agree. As a result, our communications with our panelists may be disrupted from time to time. In such instances, our ability to collect data using traditional market research methodologies may be adversely impacted by the continued decline in response rates to surveys conducted over the telephone.

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If we do not continue to keep pace with rapid technological change within the market research and polling industry, we will not be able to successfully implement our business plan.

The markets for our products and services are highly competitive. Our competitors continue to improve their technology and methodologies as they gain more experience with the Internet. Our business may suffer over time if we fail to have, create or acquire equal or superior technologies and methodologies. Our ongoing success will depend on our continued ability to improve the performance features and reliability of our products and services. We may experience difficulties that could delay or prevent the successful development, introduction or marketing of new products and services. We could also incur substantial costs if we need to modify our services or infrastructure to adapt to these changes.

Item 1B.   Unresolved Staff Comments

None.

Item 2.   Properties

Our corporate headquarters and principal United States operating facility is located at 60 Corporate Woods, Rochester, New York, 14623, under an operating lease that expires in July 2015. In addition, we lease data collection centers to house our telephone interviewing centers in Orem, Utah, and Brentford, Maidenhead and Hazel Grove, United Kingdom. We also lease service offices to house our project staff, administrative staff and processing staff, in New York, New York, Princeton, New Jersey, Reston, Virginia, Norwalk, Connecticut, Cincinnati, Ohio, Minneapolis, Minnesota, Claremont, California, Brentford, Hazel Grove and Maidenhead, United Kingdom, Paris, France, Hamburg, Germany, and Hong Kong and Shanghai, China.

We lease all of our facilities and believe our current facilities are adequate to meet our needs for the foreseeable future. We believe additional or alternative facilities can be leased to meet our future needs on commercially reasonable terms.

Information concerning each of our material properties is as follows (amounts in thousands):

			Remaining
			Lease Obligation
Address	Location	Termination Date	June 30, 2007
101 Merritt 7	Norwalk, Connecticut	May 2008	$	306
4665 Cornell Road	Cincinnati, Ohio	June 2008		491
40-52 Watermans Park	Brentford, United Kingdom	June 2008		1,570
70 Carlson Road	Rochester, New York	June 2008		327
1920 Association Drive	Reston, Virginia	April 2010		1,196
135 Corporate Woods	Rochester, New York	June 2010		986
Pepper Road	Hazel Grove, United Kingdom	July 2010		666
Vanwall Road	Maidenhead, United Kingdom	July 2010		619
5 Independence Way	Princeton, New Jersey	July 2011		2,813
161 Avenue of the Americas	New York, New York	April 2012		3,213
60 Corporate Woods	Rochester, New York	July 2015		10,579

Item 3.   Legal Proceedings

In the normal course of business, we are at times subject to pending and threatened legal actions and proceedings. After reviewing pending and threatened actions and proceedings with counsel, management believes that the outcome of such actions or proceedings is not expected to have a material adverse effect on our business, financial condition or results of operations.

Item 4.   Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders during the fourth quarter of fiscal 2007.

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PART II

Item 5.   Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is traded on the Global Select Market (previously named the National Market System) of Nasdaq under the symbol “HPOL”. The following table shows, beginning on August 1, 2006, the high and low sales prices per share of our common stock on the Nasdaq exchange. For periods prior to August 1, 2006, the prices per share of our common stock reflect the high and low bid prices on the National Market System.

	Fiscal 2007				Fiscal 2006
	High		Low		High		Low
Quarter Ended:
June 30	$	6.50	$	4.93	$	5.79	$	4.62
March 31		6.11		4.67		5.98		4.25
December 31		6.85		4.63		4.55		3.51
September 30		6.26		4.95		5.05		3.77

Holders

At September 4, 2007, our common stock was held by approximately 5,700 stockholders, reflecting stockholders of record or persons holding stock through nominee or street name accounts with brokers.

Dividends

We have never declared nor paid any cash dividends on our common stock. We currently anticipate that we will retain any future earnings for the maintenance and expansion of our operations, acquisitions and for repurchases of our common stock. Accordingly, we do not anticipate paying any cash dividends on our common stock in the foreseeable future.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

Issuer Purchases of Equity Securities

The following table shows the monthly activity for our Repurchase Program for the three months ended June 30, 2007 (in thousands, except share amounts):

ISSUER PURCHASES OF EQUITY SECURITIES

					Total
					Number of		Approximate
					Shares		Dollar Value of
					Purchased		Shares That
					as Part of		May Yet Be
	Total Number		Average Price		Publicly		Purchased
	of Shares		Paid		Announced		Under the
Period	Purchased		per Share		Program		Program
April 1, 2007 through April 30, 2007		1,426,635	$	5.46		1,426,635	$	—
May 1, 2007 through May 31, 2007		364,127		5.49		364,127		23,000
June 1, 2007 through June 30, 2007		—		—		—		23,000
Total		1,790,762	$	5.47		1,790,762	$	23,000

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In May 2006, our Board of Directors (the “Board”) authorized a Share Repurchase Program (the “Repurchase Program”). Under the Repurchase Program, up to $25.0 million could be used by us, in the discretion of our Board of Directors from time to time, to acquire our common stock during the twelve months following the date the program was authorized. On January 31, 2007, our Board approved expanding the capacity of the Repurchase Program by $30.0 million and extending its duration through December 31, 2007. On May 2, 2007, our Board further expanded the capacity of the Repurchase Program by $25.0 million. The expiration date of the Repurchase Program remains December 31, 2007. Purchases may be made in the open market or in any private transaction, in accordance with applicable laws, rules, and regulations.

Decisions under the Repurchase Program on amounts of repurchases and their timing have been and will continue to be based on factors such as the stock price and availability, as well as general Company, economic and market conditions. We have made and may make broker, open market and privately negotiated block purchases from time to time.

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Performance Graph

The following graph compares the cumulative 5-year total return provided shareholders on Harris Interactive Inc.’s common stock relative to the cumulative total returns of the NASDAQ Composite index, the S&P Smallcap 600 index and a peer group of those companies with which we complete both globally and within the U.S. The peer group represented includes the market research corporations Arbitron Inc., GfK AG, Greenfield Online Inc., IMS Health, Inc., Intage Inc., Ipsos, National Research Corp., Taylor Nelson Sofres plc and YouGov plc. Net Ratings, Inc. and Opinion Research Corp., reported in prior years as part of the peer group, no longer are publicly traded so have been removed from the graph.

An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock, in each index and in the peer group on June 30, 2002 and its relative performance is tracked through June 30, 2007. The stock price performance shown on the graph below is not necessarily indicative of future price performance and only reflects Harris Interactive Inc.’s relative stock price for the aforementioned period.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

Among Harris Interactive Inc., The NASDAQ Composite Index

And The S&P Smallcap 600 Index

	6/02		6/03		6/04		6/05		6/06		6/07
Harris Interactive Inc.	$	100.00	$	191.69	$	199.41	$	144.51	$	169.14	$	158.75
NASDAQ Composite		100.00		109.91		139.04		141.74		155.82		191.32
S&P Smallcap 600		100.00		96.42		130.41		147.95		168.55		195.58
Peer Group		100.00		100.91		133.93		147.80		160.02		191.89

*  $100 invested on 6/30/02 in stock or index-including reinvestment of dividends. Fiscal year ending June 30.

Copyright^© 2007, Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. All rights reserved. www.researchdatagroup.com/S&P.htm

The cumulative total shareholder return graph and accompanying information shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C promulgated by the SEC or the liabilities of Section 18 of the Exchange Act, except to the extent that the Company specifically requests that the information be treated as soliciting material or specifically incorporates it by reference into a document filed under the Securities Act or the Exchange Act. The cumulative total shareholder return graph and accompanying information shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent Harris Interactive specifically incorporates it by reference.

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Item 6.   Selected Financial Data

The following selected consolidated financial data of Harris Interactive should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the notes to those statements and other financial information appearing elsewhere in this Form 10-K. The selected consolidated financial data reported below includes the financial results of the following entities which we acquired as of the dates indicated: MediaTransfer (April 2007), Wirthlin (September 2004), Novatris (March 2004). In addition, information reported for fiscal years 2003 through 2007 has been reclassified to reflect our Japanese and Rent and Recruit operations as discontinued operations for all periods presented.

	For the Years Ended June 30,
	2007			2006			2005			2004			2003
	(In thousands, except share and per share amounts)
Statement of Operations Data:
Revenue from services	$	211,803		$	212,184		$	193,635		$	138,482		$	124,094
Cost of services		103,273			102,133			90,451			64,543			61,816
Gross profit		108,530			110,051			103,184			73,939			62,278
Operating expenses:
Sales and marketing		21,151			20,540			20,366			11,915			9,438
General and administrative(1)		68,730			68,158			65,608			43,964			40,952
Depreciation and amortization		6,783			7,212			7,348			4,796			5,620
Gain on sale of assets		(788	)		—			—			—			—
Restructuring (credits) charges and asset write-downs		337			250			1,132			—			(997	)
Total operating expenses		96,213			96,160			94,454			60,675			55,013
Operating income		12,317			13,891			8,730			13,264			7,265
Interest and other income		2,246			1,534			742			637			587
Interest expense		(290	)		(20	)		(150	)		(107	)		(17	)
Income from continuing operations before income taxes		14,273			15,405			9,322			13,794			7,835
Provision (benefit) for income taxes(2)		5,319			6,205			4,978			(16,009	)		(2,998	)
Income from continuing operations		8,954			9,200			4,344			29,803			10,833
Income (loss) from discontinued operations, net of tax (including loss on disposal of $2,684 in 2005)		122			260			(2,761	)		115			274
Net income available to holders of common stock	$	9,076		$	9,460		$	1,583		$	29,918		$	11,107
Basic net income (loss) per share(*):
Continuing operations	$	0.16		$	0.15		$	0.07		$	0.53		$	0.20
Discontinued operations		0.00			0.00			(0.05	)		0.00			0.01
Basic net income per share	$	0.16		$	0.15		$	0.03		$	0.53		$	0.21
Diluted net income (loss) per share(*):
Continuing operations	$	0.16		$	0.15		$	0.07		$	0.52		$	0.20
Discontinued operations		0.00			0.00			(0.05	)		0.00			0.01
Diluted net income per share	$	0.16		$	0.15		$	0.03		$	0.52		$	0.20
Weighted-average shares outstanding — basic		56,133,355			61,511,031			60,264,152			56,099,330			52,983,689
Weighted-average shares outstanding — diluted		56,397,600			61,685,777			61,238,064			57,444,785			54,638,596

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	For the Years Ended June 30,
	2007		2006		2005		2004		2003
	(In thousands, except share and per share amounts)
Balance Sheet Data:
Cash and cash equivalents	$	28,911	$	11,465	$	13,118	$	12,511	$	15,728
Marketable securities	$	4,418	$	45,145	$	23,392	$	42,603	$	22,963
Working capital	$	22,046	$	62,026	$	46,426	$	70,416	$	44,920
Total assets	$	238,126	$	254,557	$	240,158	$	198,071	$	145,242
Short-term borrowings	$	19,625	$	—	$	—	$	—	$	—
Total stockholders’ equity	$	168,444	$	201,278	$	192,493	$	165,489	$	118,489

(*)	Figures may not add due to rounding
(1)	Amounts for fiscal years 2003 through 2005 are not directly comparable to subsequent fiscal years, as a result of our adoption of SFAS No. 123(R)using the modified prospective method.
(2)	Fiscal years 2003 and 2004 include the effects of the reversal of prior year valuation allowances that had been recorded against certain deferred tax assets.

Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Fiscal 2007 was marked by some significant challenges:

•  Total revenue was essentially flat in fiscal 2007, compared with fiscal 2006.

•  Gross profit for fiscal 2007 decreased to 51.2%, compared with 51.9% for fiscal 2006.

•  Operating margin was 5.8% for fiscal 2007, a decline from 6.5% for fiscal 2006.

•  Net income decreased approximately 4% for fiscal 2007, compared with fiscal 2006.

•  Total U.S. revenue decreased 3.8% for fiscal 2007, compared with fiscal 2006. However, total European revenue increased 13.1% for fiscal 2007, compared with fiscal 2006.

•  Total Internet-based revenue increased 2.2% for fiscal 2007, compared with fiscal 2006.

•  U.S. Internet-based revenue decreased 1.4% for fiscal 2007, compared with fiscal 2006. However, European Internet-based revenue increased 33.6% for fiscal 2007, compared with fiscal 2006.

Despite these challenges, we continue to support our business strategy into fiscal 2008. We believe that investing in our sales force is the best method to grow our revenue, and we will continue those investments. Specifically, our U.S. sales force was up approximately 10% from fiscal 2006, and we hired and trained a dedicated European sales force during the fiscal year.

Our European operations continue to grow sales, revenue and profits. In addition, we believe that our acquisition of MediaTransfer in early April was an important step in expanding our global footprint within Europe, in order to enhance our clients’ needs for worldwide service.

In August 2007, we took two significant steps toward expanding our global research capabilities by acquiring Decima Research, a leading Canadian research firm, and Marketshare, a private Asian research firm with co-located headquarters in Hong Kong and Singapore. Adding the strengths of these firms will improve our global service offering and provide increased access into two fast-growing regions that represent about a $4 billion market opportunity. By adding these firms, we now have a presence in six of the top ten global research markets, and access to two-thirds of the global research market, up from approximately one-half just six months ago. In line with our global expansion goals, we will continue to look for attractive partners in other sizable and high-growth regions around the world.

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Business Combinations

Effective on April 1, 2007, pursuant to a Share Sale and Purchase Agreement dated March 30, 2007 by and among the Company, its wholly-owned subsidiary, Harris Interactive International Inc. (“HII”), and the stockholders of MediaTransfer, HII purchased 100% of the outstanding shares of MediaTransfer. We believe that this acquisition will allow us to expand our access into the European research market and enable us to better serve our multinational clients. MediaTransfer has extensive experience and deep expertise in the Consumer Packaged Goods (“CPG”) industry, including the application of proprietary technology that creates virtual retail shopping simulations to test package design, shelf placement configurations, pricing etc. In addition to its CPG practice, MediaTransfer has expertise in telecom, financial services and pharmaceutical research.

This acquisition was accounted for under the purchase method in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141, Business Combinations, and was included in our financial statements commencing on April 1, 2007. Further financial information about business combinations is included in Note 3, “Business Combinations,” to our consolidated financial statements contained in this Form 10-K.

Restructuring

Fiscal 2007

During the fourth quarter of fiscal 2007, we recorded $0.3 million in restructuring charges directly related to a facilities consolidation and headcount reduction, both designed to ensure the alignment of our cost structure with the operational needs of the business. We negotiated an amendment to the lease agreement for our Reston, Virginia office, which resulted in a reduction of the square footage of rented space at that office by 5,192 square feet, located on the first floor, in exchange for a payment of $0.2 million to the landlord, and contingent upon the landlord entering into a lease for the aforementioned first floor space, which subsequently occurred in June 2007. As a result of the amendment, our lease obligation over the remaining term of the lease will be reduced by approximately $0.5 million from the initial lease, which when offset against the payment to the landlord for the space reduction noted above, will result in anticipated net savings of approximately $0.3 million over the remaining lease term.

We also reduced the staff of our U.S. operations by 6 full-time equivalents and incurred $0.1 million in severance charges, all of which will involve cash payments. The reduction in staff was communicated to the affected employees during the fourth quarter of fiscal 2007.

The following table summarizes activity with respect to the restructuring charges for the fiscal 2007 plan during the fiscal year ended June 30, 2007 (amounts in thousands):

				Lease
	Severance			Commitments			Total
Net charge during fiscal 2007	$	107		$	230		$	337
Cash payments during fiscal 2007		(45	)		(230	)		(275	)
Remaining reserve at June 30, 2007	$	62		$	—		$	62

All actions in the plan were completed by June 30, 2007. Cash payments in connection with the plan will be completed by December 2007.

Fiscal 2006

During the fourth quarter of fiscal 2006, we recorded $0.3 million in restructuring charges directly related to certain actions designed to align the cost structure of our U.K. operations with the operational needs of that business. Management developed a formal plan that included closing two facilities in Macclesfield and Stockport and consolidating those operations into our Hazel Grove location. This consolidation was completed by June 30, 2006 at a cost of less than $0.1 million, the

29

majority of which represented future cash payments on the remaining lease commitment for the Macclesfield facility. Additionally, we classified the Stockport facility and the related property, plant and equipment as assets held for sale in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. On December 29, 2006, we completed the sale of the Stockport facility and the related property, plant and equipment for total cash consideration of $1.3 million, which resulted in a gain of $0.4 million. The gain is recorded under “Gain on sale of assets” in our consolidated statement of operations for the fiscal year ended June 30, 2007.

In connection with the facilities consolidation discussed above, we also reduced the staff of the affected operations by 15 full-time equivalents and incurred $0.2 million in severance charges, all of which will involve cash payments. The reduction in staff was communicated to the affected employees during the fourth quarter of fiscal 2006.

The following table summarizes activity with respect to the restructuring charges for the fiscal 2006 plan during the fiscal years ended June 30, 2007 and 2006 (amounts in thousands):

				Lease
	Severance			Commitments			Total
Net charge during fiscal 2006	$	191		$	59		$	250
Cash payments during fiscal 2006		(101	)		—			(101	)
Remaining reserve at June 30, 2006	$	90		$	59		$	149
Cash payments during fiscal 2007		(90	)		(34	)		(124	)
Remaining reserve at June 30, 2007	$	—		$	25		$	25

All actions in the plan were completed by June 30, 2006. Cash payments in connection with the plan will be completed by August 2007. As a result of the actions described above, we realized cash savings of approximately $0.4 million in fiscal 2007.

Further financial information about our restructuring plans is included in Note 4, “Restructuring Charges,” to our consolidated financial statements contained in this Form 10-K.

Discontinued Operations

During the fourth quarter of fiscal 2007, we committed to a plan to sell our Rent and Recruit business. Based upon our review and assessment of Rent and Recruit’s net assets, the book values of its remaining net assets approximated their estimated fair value.

We classified Rent and Recruit as a discontinued operation, consistent with the provisions of SFAS No. 144. At June 30, 2007, we were in the process of identifying potential buyers or other interested parties and discussing a possible transaction with them. On August 23, 2007, the sale of Rent and Recruit was completed.

The results of operations, net of taxes, and the carrying value of the assets and liabilities of Rent and Recruit are reflected in the accompanying consolidated financial statements as discontinued operations, assets held for sale and liabilities held for sale, respectively. All prior periods presented were reclassified to conform to this presentation. These reclassifications of the prior period consolidated financial statements did not impact total assets, liabilities, stockholders’ equity, net income or cash flows.

Further financial information regarding discontinued operations is included in Note 5, “Discontinued Operations,” to our consolidated financial statements contained in this Form 10-K.

Critical Accounting Policies and Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect amounts reported therein. The most significant of these areas involving difficult or

30

complex judgments made by management with respect to the preparation of our financial statements in fiscal 2007 include:

•  Revenue recognition,

•  Allowance for doubtful accounts,

•  Goodwill, intangible assets and other long-lived assets,

•  Income taxes and tax contingencies,

•  HIpoints loyalty program,

•  Restructuring charges,

•  Stock-based compensation,

•  Post-employment obligations, and

•  Discontinued operations.

In each situation, management is required to make estimates about the effects of matters or future events that are inherently uncertain.

Revenue Recognition

We recognize revenue from services on a proportional performance basis. In assessing contract performance, both input and output criteria are reviewed. Costs incurred are used as an objective input measure of performance. The primary input of all work performed under these arrangements is labor. As a result of the relationship between labor and cost, there is normally a direct relationship between the costs incurred and the proportion of the contract performed to date. Costs incurred as an initial proportion of expected total costs is used as an initial proportional performance measure. This indicative proportional performance measure is always subsequently validated against more subjective criteria (i.e. relevant output measures) such as the percentage of interviews completed, percentage of reports delivered to a client and the achievement of any project milestones stipulated in the contract. In the event of divergence between the objective and more subjective measures, the more subjective measures take precedence since these are output measures.

Clients are obligated to pay based upon services performed, and in the event that a client cancels the contract, the client is responsible for payment for services performed through the date of cancellation. Losses expected to be incurred, if any, on jobs in progress are charged to income as soon as it becomes probable that such losses will occur. Invoices to clients in the ordinary course are generated based upon the achievement of specific events, as defined by each contract, including deliverables, timetables, and incurrence of certain costs. Such events may not be directly related to the performance of services. Revenues earned on contracts in progress in excess of billings are classified as unbilled receivables. Amounts billed in excess of revenues earned are classified as deferred revenue.

Revisions to estimated costs and differences between actual contract losses and estimated contract losses would affect both the timing of revenue allocated and the results of our operations.

Allowance for Doubtful Accounts

We maintain an allowance for estimated losses resulting from the failure of clients to make required payments. We continually assess the collectibility of outstanding client invoices. In estimating the allowance, we consider factors such as historical collections, historical write-offs, a client’s current creditworthiness, age of the receivable balance both individually and in the aggregate, and general economic conditions that may affect a client’s ability to pay. Actual collections could differ from our estimates, requiring additional adjustments to the allowance for doubtful accounts.

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Goodwill, Intangible Assets and Other Long-Lived Assets

Acquisitions are accounted for under the purchase method of accounting pursuant to SFAS No. 141. Accordingly, the preliminary purchase price is allocated to the tangible assets and liabilities and intangible assets acquired, based on their estimated fair values. The excess purchase price over the fair value is recorded as goodwill. Identifiable intangible assets are valued separately based on estimates of future cash flows and are amortized over their expected useful life. Amortizable intangible assets and other long-lived assets are subject to an impairment test under SFAS No. 144 if there is an indicator of impairment. The carrying value and ultimate realization of these assets is dependent upon estimates of future earnings and benefits that we expect to generate from their use. If our expectations of future results and cash flows change and are significantly diminished, intangible assets may be impaired and the resulting charge to operations may be material. When we determine that the carrying value of intangibles or other long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment, we measure impairment, if any, based on the projected undiscounted cash flow method to determine whether an impairment exists, and then measure the impairment using discounted cash flows. The estimation of useful lives and expected cash flows requires us to make significant judgments regarding future periods that are subject to some factors outside our control. Changes in these estimates can result in significant revisions to the carrying value of these assets and may result in material charges to the results of operations.

Effective January 1, 2002, we adopted SFAS No. 142, Goodwill and Other Intangible Assets, and ceased amortizing goodwill as of that date. SFAS No. 142 requires us to test goodwill for impairment on an annual basis, and between annual tests in certain circumstances, and to write down goodwill and non-amortizable intangible assets when impaired. These events or circumstances generally would include the occurrence of operating losses or a significant decline in earnings associated with the asset. As we have one reportable segment, we utilize the entity-wide approach for assessing goodwill. Goodwill is evaluated for impairment using the two-step process as prescribed in SFAS No. 142. The first step is to compare the fair value of the reporting unit to the carrying amount of the reporting unit. If the carrying amount exceeds the fair value, a second step must be followed to calculate impairment. Otherwise, if the fair value of the reporting unit exceeds the carrying amount, the goodwill is not considered to be impaired as of the measurement date. We performed the initial step by comparing our fair market value as determined by our publicly traded stock to the carrying amount of the reporting unit. Based upon its annual evaluations, we determined that the fair value of the reporting unit exceeded the carrying amount at June 30, 2007, 2006 and 2005, resulting in no impairment. If impairment had occurred, any excess of carrying value over fair value would have been recorded as a loss.

Prior to performing our annual impairment analysis for the year ended June 30, 2005, we recorded a $3.0 million impairment charge during the third quarter of fiscal 2005 for the full amount of the goodwill attributable to HI Japan, the operations of which have been classified as discontinued operations (see Note 5, “Discontinued Operations,” to our consolidated financial statements contained in this Form 10-K).

Income Taxes and Tax Contingencies

We account for income taxes using the asset and liability method in accordance with SFAS No. 109, Accounting for Income Taxes. Under SFAS No. 109, deferred tax assets and liabilities are recognized for future tax consequences attributable to operating loss carryforwards and differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases for operating profit and tax liability carryforward. Our consolidated financial statements contain certain deferred tax assets and liabilities that result from temporary differences between book and tax accounting, as well as net operating loss carryforwards of approximately $35.4 million at June 30, 2007.

32

SFAS No. 109 requires the establishment of a valuation allowance to reflect the likelihood of the realization of deferred tax assets. Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. We evaluate the weight of the available evidence to determine whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The decision to record a valuation allowance requires varying degrees of judgment based upon the nature of the item giving rise to the deferred tax asset. The amount of the deferred tax asset considered realizable is based on significant estimates, and it is at least reasonably possible that changes in these estimates in the near term could materially affect our financial condition and results of operations.

We continually evaluate our tax contingencies and recognize a liability when we believe that it is probable that a liability exists. Actual outcomes that differ from our estimate of potential exposure could have a material impact on our financial condition and results of operations.

HIpoints Loyalty Program

In July 2001, we initiated HIpoints, a loyalty program designed to reward respondents who register for our online panel, complete online surveys and refer others to join our online panel. The earned points are non-transferable and may be redeemed for gifts from a specific product folio at any time prior to expiration, which occurs after one year of account inactivity. We maintain a reserve for our obligations with respect to future redemption of outstanding points based on the expected redemption rate of the points. This expected redemption rate is based on our actual redemption rates since the inception of the program. An actual redemption rate that differs from the expected redemption rate could have a material impact on our results of operations.

Restructuring Charges

Restructuring charges represent costs incurred to better align our cost structure with the needs of our business. Restructuring charges can include termination benefits for reductions in staff, as well as costs for the consolidation of facilities. Costs for the consolidation of facilities are comprised of future obligations under the terms of the leases for identified excess space and asset impairment charges for fixed assets related to these spaces, less anticipated income from subleasing activities, if any. Estimates and assumptions are evaluated on a quarterly basis to reflect new developments and prevailing economic conditions. If actual conditions are more or less favorable than those we project, we may be required to record additional restructuring charges or reverse previously recorded charges accordingly. For further discussion regarding the impact of restructuring charges on the results of our operations, see “Restructuring” above.

Stock-Based Compensation

On July 1, 2005, we adopted SFAS No. 123(R), Share-Based Payment, which requires the recognition of compensation expense for all share-based payments made to employees based on the fair value of the share-based payment on the date of grant. We elected to use the modified prospective approach for adoption, which requires that compensation expense be recorded for the unvested portion of previously issued awards that remain outstanding at July 1, 2005 using the same estimate of the grant date fair value and the same attribution method used to determine the pro forma disclosure under SFAS No. 123, Accounting for Stock-Based Compensation. The adoption resulted in the recognition of $3.1 million of compensation expense for stock options and restricted stock granted to employees and non-employee directors for the fiscal year ended June 30, 2006, with an additional $3.7 million of compensation expense for the fiscal year ended June 30, 2007. As of June 30, 2007, we had $7.4 million of total unrecognized stock-based compensation expense related to non-vested stock-based compensation arrangements granted under our long-term incentive plans. That expense is expected to be recognized over a weighted-average period of 3.1 years.

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For share-based payments granted subsequent to July 1, 2005, compensation expense based on the grant date fair value is recognized in the Consolidated Statements of Operations over the requisite service period. In determining the fair value of stock options, we use the Black-Scholes option pricing model, which employs the following assumptions:

•  Expected volatility — based on historical volatilities from daily share price observations for our stock covering a period commensurate with the expected term of the options granted.

•  Expected life of the option — based on the vesting terms of the respective option and a contractual life of ten years, calculated using the “simplified method” as allowed by Staff Accounting Bulletin No. 107.

•  Risk-free rate — based on the implied yield available at the time the options were granted on U.S. Treasury zero coupon issues with a remaining term equal to the expected life of the option when granted.

•  Dividend yield — based on our historical practice of electing not to pay dividends to our shareholders.

Expected volatility and the expected life of the options granted, both of which impact the fair value of the option calculated under the Black-Scholes option pricing model, involve management’s best estimates at that time. The weighted-average assumptions used to value options during the fiscal years ended June 30, 2005, 2006 and 2007, respectively, are set forth in Note 13, “Stock-Based Compensation,” to our consolidated financial statements contained in Item 8 of this Report on Form 10-K. The fair value of our restricted stock awards is based on the price per share of our common stock on the date of grant. We grant options to purchase our stock at fair value as of the date of grant.

SFAS No. 123(R) also requires that we recognize compensation expense for only the portion of options or restricted shares that are expected to vest. Therefore, we apply estimated forfeiture rates that are derived from historical employee termination behavior and the vesting period of the respective stock options or restricted shares. If the actual number of forfeitures differs from those estimated by management, additional adjustments to compensation expense may be required in future periods.

Post-Employment Obligations

We have entered into employment agreements with certain of our executives which obligate us to make payments for varying periods of time and under terms and circumstances set forth in the agreements. In part, the payments are in consideration for obligations of the executives not to compete with us after termination of their employment and, in part, the payments relate to other relationships between the parties. We account for our obligations under these agreements in accordance with SFAS No. 112, Employers’ Accounting for Post-employment Benefits, an Amendment of FASB Statements No. 5 and 43. To the extent that we become obligated in the future to make payments to one or more of our executives under their employment agreements, such obligations could have a material impact on the results of our operations. The impact on our results of operations of post-employment obligations that arose during the fiscal years ended June 30, 2005, 2006 and 2007 is discussed below within “Results of Operations.”

Discontinued Operations

Discontinued operations are defined in SFAS No. 144 as a component of an entity that has either been disposed of or is classified as held for sale if both the operations and cash flows of the component have been or will be eliminated from ongoing operations of the entity as a result of the disposal transaction and the entity will not have any significant continuing involvement in the operations of the component after the disposal transaction. SFAS No. 144 further provides that the assets and liabilities of the component of the entity that has been classified as discontinued operations

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be presented separately in the entity’s balance sheet. For further discussion regarding the discontinued operations of our Rent and Recruit business, see “Discontinued Operations” above.

Explanation of Key Financial Statement Captions

Revenue from Services

We recognize revenue from services on a proportional performance basis. In assessing contract performance, both input and output criteria are reviewed. Costs incurred are used as an objective input measure of performance. The primary input of all work performed under these arrangements is labor. As a result of the relationship between labor and cost, there is normally a direct relationship between the costs incurred and the proportion of the contract performed to date. Costs incurred as an initial proportion of expected total costs is used as an initial proportional performance measure. This indicative proportional performance measure is always subsequently validated against more subjective criteria (i.e. relevant output measures) such as the percentage of interviews completed, percentage of reports delivered to a client and the achievement of any project milestones stipulated in the contract. In the event of divergence between the objective and more subjective measures, the more subjective measures take precedence since these are output measures.

Our revenue from services is derived principally from the following:

•  Custom Research — including, but not limited to, customer satisfaction surveys, market share studies, new product introduction studies, brand recognition studies, reputation studies and ad concept testing.

•  Tracking Studies — studies that regularly ask identical questions to similar demographic groups within a constant interval (once a month; once a quarter, etc.) to feed business decision-makers with dynamic data and intelligence.

•  Service-Bureau Research — HISB provides Internet-based data collection services for other market research firms.

Cost of Services

Our direct costs associated with generating revenues principally consist of the following items:

•  Project Personnel — Project personnel have four distinct roles: project management, survey design, data collection and analysis. We maintain project personnel in the United States, Europe, and Asia. Labor costs are specifically allocated to the projects they relate to. We utilize an automated timekeeping system, which tracks the time of project personnel as incurred for each specific revenue-generating project.

•  Panelist Incentives — Our panelists receive both cash and non-cash incentives (through programs such as our HIpoints loyalty program) for participating in our surveys. We award cash incentives to our panelists for participating in surveys, which are earned when we receive a timely survey response. Non-cash incentives in the form of points are awarded to market survey respondents who register for our online panel, complete online surveys and refer others to join our online panel. The earned points are non-transferable and may be redeemed for gifts from a specific product folio at any time prior to expiration, which occurs after one year of account inactivity.

•  Data Processing — We manage the processing of survey data using our own employees. We also engage third-party suppliers to perform data processing on an as-needed basis.

•  Other Direct Costs — Other direct costs include direct purchases, principally labor and materials, related to data collection and analysis.

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Sales and Marketing

We employ sales and marketing professionals to support the sales and marketing of our traditional and Internet-based market research services. Our sales professionals are compensated based upon the delivery of projects and recognition of revenue on those projects. Commissions are accrued based upon the delivery of completed projects to our clients. Additionally, our sales professionals are supported by a staff of marketing professionals who design product pricing and promotional strategies. Furthermore, labor costs for project personnel during periods when they are not working on specific revenue-generating projects but instead, are participating in our selling efforts, are also included in sales and marketing expenses.

General and Administrative

We employ staff in the areas of finance, human resources, information technology and executive management. Additionally, general and administrative expenses include the labor costs for project personnel when they are not working on specific revenue-generating projects or are not participating in our selling efforts.

Provision for Income Taxes

The provision for income taxes includes current and deferred income taxes. Furthermore, deferred tax assets are recognized for the expected realization of available net operating loss carryforwards. A valuation allowance is recorded when it is necessary to reduce a deferred tax asset to an amount that we expect to realize in the future. We continually review the adequacy of our valuation allowance and adjust it based on whether or not our assessment indicates that it is more likely than not that these benefits will be realized.

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Results of Operations

The following table sets forth the results of our continuing operations, expressed both as a dollar amount and as a percentage of revenue from services, for the fiscal years ended June 30:

	2007			%			2006			%			2005			%
Revenue from services	$	211,803			100.0	%	$	212,184			100.0	%	$	193,635			100.0	%
Cost of services		103,273			48.8			102,133			48.1			90,451			46.7
Gross profit		108,530			51.2			110,051			51.9			103,184			53.3
Operating expenses:
Sales and marketing		21,151			10.0			20,540			9.7			20,366			10.5
General and administrative		68,730			32.4			68,158			32.1			65,608			33.9
Depreciation and amortization		6,783			3.2			7,212			3.4			7,348			3.8
Gain on sale of assets		(788	)		(0.4	)		—			—			—			—
Restructuring charges		337			0.2			250			0.1			1,132			0.6
Operating income		12,317			5.8			13,891			6.5			8,730			4.5
Interest and other income		2,246			1.1			1,534			0.7			742			0.4
Interest expense		(290	)		(0.1	)		(20	)		(0.0	)		(150	)		(0.1	)
Income from continuing operations before taxes		14,273			6.7			15,405			7.3			9,322			4.8
Provision for income taxes		5,319			2.5			6,205			2.9			4,978			2.6
Income from continuing operations		8,954			4.2			9,200			4.3			4,344			2.2
Income (loss) from discontinued operations (including loss on disposal of $2,684 in 2005), net of tax		122			0.1			260			0.1			(2,761	)		(1.4	)
Net income	$	9,076			4.3		$	9,460			4.5		$	1,583			0.8

The results of continuing operations as presented and discussed herein do not include the results of our discontinued Rent and Recruit business and Japanese operations.

Year Ended June 30, 2007 Versus Year Ended June 30, 2006

Revenue from services.  Total revenue decreased by $0.4 million to $211.8 million for fiscal 2007, a decrease of 0.2% over fiscal 2006. This decrease in total revenue was due to the factors described below.

U.S. revenue decreased by $6.4 million to $159.8 million for fiscal 2007, a decrease of 3.8% over fiscal 2006. This decrease in U.S. revenue was principally driven by revenue declines in the following research groups:

•  Healthcare, as a result of internal restructuring at certain of this group’s clients, as well as certain industry challenges, including continued consolidation and realignment within the Healthcare industry,

•  Technology and Telecom, as a result of sales force turnover within this group, which has necessitated the rebuilding of the group’s sales team throughout the fiscal year, and

•  Loyalty, as a result of our decision at the end of fiscal 2006 not to bid on a significant, recurring client tracking study because of its low profit margins, offset in part by winning a new tracking study at an existing client and reformulating the group’s service offerings to better meet customer requirements.

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Offsetting the decrease in U.S. revenue as noted above were revenue increases in the following research groups:

•  Marketing and Communications Research, as a result of winning new tracking studies with new and existing clients,

•  Public Affairs and Policy, as a result of realigning this group’s sales resources with the objectives of its business, and

•  Emerging and General Markets, as a result of consistent efforts on the part of this group’s sales resources to grow its client base.

European revenue increased by $6.0 million to $52.0 million for fiscal 2007, an increase of 13.1% over fiscal 2006. European revenue increased primarily due to:

•  a favorable impact of $4.1 million as a result of foreign exchange rate differences and the depreciation of the U.S. Dollar against the British Pound and the Euro,

•  our acquisition of MediaTransfer in April 2007, which contributed $1.4 million in revenue during the fourth fiscal quarter, and

•  our concerted efforts toward stabilizing and growing our European operations.

Revenue from Internet-based services was $128.2 million or 60.5% of total revenue for fiscal 2007, compared with $125.4 million or 59.1% of total revenue for fiscal 2006. On a geographic basis:

•  U.S. Internet-based revenue decreased to $110.6 million or 69.2% of total U.S. revenue for fiscal 2007, compared with $112.2 million or 67.5% of total U.S. revenue for fiscal 2006.

•  European Internet-based revenue increased to $17.6 million or 33.9% of total European revenue for fiscal 2007, compared with $13.2 million or 28.7% of total European revenue for fiscal 2006.

While U.S. Internet-based revenue increased as a percentage of total U.S. revenue for fiscal 2007, it declined in total, consistent with the decline in total U.S. revenue noted above. The growth in European Internet-based revenue for fiscal 2007 is the result of our focus on training our European sales force on promoting the benefits of Internet-based data collection to their clients, and our April 2007 acquisition of MediaTransfer, which contributed $1.3 million in Internet-based revenue during the fourth quarter of fiscal 2007.

Gross profit.  Gross profit decreased to $108.5 million or 51.2% of total revenue for fiscal 2007, compared with $110.1 million or 51.9% of total revenue for fiscal 2006. Gross profit was principally impacted by increased utilization rates for professional staff during fiscal 2007 when compared with fiscal 2006.

Sales and marketing.  Sales and marketing expense increased to $21.2 million or 10.0% of total revenue for fiscal 2007, compared with $20.5 million or 9.7% of total revenue for fiscal 2006. The increase in sales and marketing expense was principally the result of our investments to expand our U.S. sales force and to hire and train a dedicated European sales force during fiscal 2007.

General and administrative.  General and administrative expense increased to $68.7 million or 32.4% of total revenue for fiscal 2007, compared with $68.2 million or 32.1% of total revenue for fiscal 2006. General and administrative expense was principally impacted by several factors, including the following:

•  a $2.0 million decrease in bonus expense, as a result of the Company’s performance falling short of bonus plan targets,

•  $0.7 million in general and administrative expenses as a result of our April 2007 acquisition of MediaTransfer,

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•  a $0.7 million increase in stock-based compensation expense for options and restricted stock granted during fiscal 2007,

•  $0.6 million in costs associated with an unsuccessful acquisition during the third fiscal quarter, and

•  $0.3 million in administration fees for the Repurchase Program, compared with less than $0.1 million in such fees during fiscal 2006.

Depreciation and amortization.  Depreciation and amortization was $6.8 million or 3.2% of total revenue for fiscal 2007, compared with $7.2 million or 3.4% of total revenue for fiscal 2006. The decrease in depreciation and amortization expense was the result of fixed and intangible assets that became fully depreciated or amortized during fiscal 2007.

Restructuring charges.  See above under “Restructuring” for further discussion regarding our fiscal 2007 and 2006 restructuring plans.

Gain on sale of assets.  Gain on sale of assets during fiscal 2007 consists of a $0.4 million gain realized on the December 2006 sale of our Stockport facility, along with $0.4 million in net proceeds from the June 2007 sale of two internally developed patents. No similar gains were realized during fiscal 2006.

Interest and other income.  Interest and other income was $2.2 million or 1.1% of total revenue for fiscal 2007, compared with $1.5 million or 0.7% of total revenue for fiscal 2006. The increase in interest and other income was primarily due to favorable rates of return compared with those for fiscal 2006.

Interest expense.  Interest expense was $0.3 million or 0.1% of total revenue for fiscal 2007, compared with $0.0 million for fiscal 2006. The increase in interest expense was the result of $19.6 million in short-term borrowings during the fourth quarter of fiscal 2007 to fund the acquisition of MediaTransfer and repurchases of our common stock through the Repurchase Program.

Income taxes.  We recorded an income tax provision of $5.3 million for fiscal 2007, compared with $6.2 million for fiscal 2006. Our effective tax rate for fiscal 2007 was 37.3%, compared with 40.3% for fiscal 2006. The decrease in our effective tax rate was principally due to valuation allowance reversals, as more fully described in Note 15, “Income Taxes,” to our consolidated financial statements contained in this Form 10-K.

Year Ended June 30, 2006 Versus Year Ended June 30, 2005

Revenue from services.  Total revenue increased by $18.5 million to $212.2 million for fiscal 2006, an increase of 9.6% over fiscal 2005. This increase in total revenue was due in part to our September 2004 acquisition of Wirthlin along with additional factors more fully described below.

U.S. revenue increased by $19.6 million to $166.2 million for fiscal 2006, an increase of 13.4% over fiscal 2005. This increase in U.S. revenue was principally driven by revenue growth in the following research groups:

•  Healthcare, as a result of our focus on improving the productivity of selling efforts in these markets through deep account penetration, as well as from the continued maturation of existing client relationships,

•  Technology and Telecom, as a result of a strategic increase in our focus in these markets throughout fiscal 2006,

•  Automotive, as a result of expanding our revenue base with several key clients in this market through deep account penetration, and

•  Product Solutions, as a result of greater collaboration between this group and our researchers that work with clients across the various industries that we serve.

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Also, we believe that U.S. revenue has increased as a result of our continued focus on building long-term relationships with our clients in order to obtain projects that are recurring in nature.

Offsetting the growth in U.S. revenue as noted above were declines in revenue in the following research groups:

•  Government, as a result of reconstituting the internal organizational structure of the group and redefinition of its approach within this market during fiscal 2006,

•  HISB, as a result of continued pricing pressures, and

•  Consumer Packaged Goods, as a result of turnover within its project and dedicated sales resource staffs.

European revenue decreased by $0.6 million to $46.0 million for fiscal 2006, a decrease of 1.2% from fiscal 2005. The decline in European revenue, partially offset by the growth in European Internet-based revenue discussed below, was principally impacted by the following:

•  unfavorable impact of $1.8 million as a result of foreign exchange rate differences and the appreciation of the U.S. Dollar against the British Pound and the Euro,

•  challenges of post-Wirthlin acquisition integration, and

•  difficulty recruiting sales personnel.

Revenue from Internet-based services was $125.4 million or 59.1% of total revenue for fiscal 2006, compared with $109.3 million or 56.5% of total revenue for fiscal 2005. On a geographic basis:

•  U.S. Internet-based revenue increased to $112.2 million or 67.5% of total U.S. revenue for fiscal 2006, compared with $97.7 million or 66.7% of total U.S. revenue for fiscal 2005.

•  European Internet-based revenue increased to $13.2 million or 28.7% of total European revenue for fiscal 2006, compared with $11.6 million or 24.9% of total European revenue for fiscal 2005.

The percentage increase in revenue from Internet-based services as a percentage of total revenue is principally the result of the continued acceptance of Internet-based methods of collecting data in both the U.S. and Europe.

Gross profit.  Gross profit was $110.1 million or 51.9% of total revenue for fiscal 2006, compared with $103.2 million or 53.3% of total revenue for fiscal 2005. Increases in gross profit were more than offset by the impact of an approximately two point increase in the direct purchases component of cost of services as a percentage of total revenue as a result of the mix of projects for fiscal 2006 compared with fiscal 2005.

Gross profit is directly affected by overall revenue as well as changes in the pricing and mix of work performed and the cost components on each project (e.g. project personnel time, data processing and data collection) from one period to another. Additionally, gross profit reflects our treatment of all project personnel time which is not allocated to specific revenue-generating projects as either sales and marketing or general and administrative expense based upon the unbillable tasks on which the time is spent.

Sales and marketing.  Sales and marketing expense was essentially flat at $20.5 million or 9.7% of total revenue for fiscal 2006, compared with $20.4 million or 10.5% of total revenue for fiscal 2005. The decrease in sales and marketing expense as a percentage of total revenue was principally due to our strategic focus on improving the productivity of our selling efforts, offset in part by a slight increase in the unbillable project personnel time in support of sales and marketing efforts from approximately $7.6 million for fiscal 2005 to $8.0 million for fiscal 2006.

General and administrative.  General and administrative expense increased to $68.2 million or 32.1% of total revenue for fiscal 2006, compared with $65.6 million or 33.9% of total revenue for fiscal

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2005. The dollar increase and the decrease in general and administrative expense as a percentage of total revenue were principally impacted by the following:

•  $2.8 million in stock-based compensation expense for fiscal 2006 as a result of our adoption of SFAS No. 123(R) on July 1, 2005, while no such expense was recorded in fiscal 2005,

•  a $1.0 million increase in employee benefit costs, principally as a result of year-over-year rate increases,

•  a $1.0 million increase in unbillable project personnel time included in general and administrative expense from $10.4 million for fiscal 2005 to $11.4 million for fiscal 2006,

•  a $0.9 million increase in bonus expense, principally as a result of our improved financial performance, which is directly linked to our bonus plans,

•  a $1.5 million decrease in post-employment obligations to former executives from $1.8 million for such obligations to Dr. Gordon S. Black, former Executive Chairman, Robert E. Knapp, former Chairman and Chief Executive Officer, and Theresa A. Flanagan, former Group President, Customer Loyalty Management, during fiscal 2005 to $0.3 million for such obligations to our former Chief Financial Officer, Frank J. Connolly, Jr., during fiscal 2006, and

•  a $0.8 million decrease in salary expense, due to ongoing efforts to ensure that headcount levels are appropriately aligned with business needs.

Depreciation and amortization.  Depreciation and amortization was essentially flat at $7.2 million or 3.4% of total revenue for fiscal 2006, compared with $7.3 million or 3.8% of total revenue for fiscal 2005.

Restructuring charges.  See above under “Restructuring” for further discussion regarding our fiscal 2006 and 2005 restructuring plans.

Interest and other income.  Interest and other income was $1.5 million or 0.7% of total revenue for fiscal 2006, compared with $0.7 million or 0.4% of total revenue for fiscal 2005. The increase in interest and other income was principally impacted by the following:

•  an increase in cash, cash equivalents and marketable securities from $36.5 million at June 30, 2005 to $56.6 million at June 30, 2006, and

•  improved rates of return compared with those of fiscal 2005.

Income taxes.  We recorded a provision for income taxes of $6.2 million on continuing operations for fiscal 2006, compared with a provision for income taxes of $5.0 million on continuing operations for fiscal 2005. Our effective tax rate for fiscal 2006 was 40.3%, compared with 53.4% for fiscal 2005. Our effective tax rate for fiscal 2006 includes $1.0 million in tax benefits realized as a result of the reversal of valuation allowances recorded against tax losses for which it became more likely than not that a portion of the underlying benefit will be realized in the future. Income tax expense was principally a non-cash item for fiscal 2006 and fiscal 2005.

Significant Factors Affecting Company Performance

Our Revenue Mix and Gross Profitability

We treat all of the revenue from a project as Internet-based whenever more than 50% of the data collection for that project was completed online. Regardless of data collection mode, most full-service market research projects contain three specific phases as outlined in the chart below. Generally, the costs of a project are spread evenly across those three phases.

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Internet-based data collection has certain fixed costs relating to data collection, panel incentives and database development and maintenance. When the volume of Internet-based work reaches the point where fixed costs are absorbed, increases in Internet-based revenue tend to increase profitability, assuming that project professional service components and pricing are comparable and operating expenses are properly controlled.

Projects designated as Internet-based may have traditional data collection components, particularly in multi-country studies where Internet databases are not fully developed. That traditional data collection component tends to decrease the profitability of the project. Profitability is also decreased by direct costs of outsourcing (programming and telephone data collection) and incentive pass-through costs.

For further information regarding Internet-based revenue, by quarter, for the fiscal years ended June 30, 2006 and 2007, please see the table in “Our Ability to Measure Our Performance” below.

Our Ability to Measure Our Performance

We closely track certain key operating metrics, specifically bookings, ending sales backlog, average billable full-time equivalents, days of sales outstanding, utilization and bookings to revenue ratio. Each of these key operating metrics enables us to measure the current and forecasted performance of our business relative to historical trends and promote a management culture that focuses on accountability. We believe that this ultimately leads to increased productivity and more effective and efficient use of our human and capital resources.

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Key operating metrics for continuing operations, by quarter, for the fiscal years ended June 30, 2006 and 2007, were as follows (U.S. Dollar amounts in millions):

	Q1			Q2			Q3			Q4			Q1			Q2			Q3			Q4
	FY2006			FY2006			FY2006			FY2006			FY2007			FY2007			FY2007			FY2007
Internet Revenue (% of total revenue)		58	%		60	%		61	%		58	%		61	%		58	%		60	%		63	%
US Internet Revenue (% of US revenue)		68	%		69	%		67	%		66	%		68	%		67	%		68	%		73	%
European Internet Revenue (% of European revenue)		27	%		28	%		32	%		28	%		39	%		30	%		30	%		36	%
Cash & Marketable Securities	$	37.4		$	48.0		$	57.9		$	56.6		$	46.8		$	54.0		$	29.1		$	33.3
Bookings	$	43.9		$	58.6		$	65.3		$	46.7		$	42.9		$	65.7		$	57.6		$	50.9
Ending Sales Backlog	$	52.2		$	57.0		$	70.9		$	58.9		$	54.6		$	64.6		$	70.4		$	64.9
Average Billable Full Time Equivalents (FTEs)		735			721			708			714			720			719			728			712
Days Sales Outstanding (DSO)		53 days			44 days			32 days			42 days			47 days			43 days			35 days			43 days
Utilization		57	%		64	%		64	%		64	%		61	%		61	%		64	%		68	%
Bookings to Revenue Ratio		0.91			1.09			1.27			0.80			0.91			1.18			1.11			0.89

Since our business has moderate seasonality, we encourage our investors to measure our progress over longer time frames. To help that process, we provide trailing twelve-month key operating metrics. Trailing twelve-month data for certain of our key operating metrics for continuing operations at June 30, 2007, and at the last eight fiscal quarter end dates, were as follows (U.S. Dollar amounts in millions):

	Sep 05			Dec 05			Mar 06			Jun 06			Sep 06			Dec 06			Mar 07			Jun 07
Consolidated Revenue (continuing operations only)	$	205.8		$	207.0		$	207.6		$	212.2		$	211.2		$	213.1		$	213.5		$	211.8
Internet Revenue (% of total revenue)		55	%		58	%		59	%		59	%		60	%		59	%		59	%		61	%
US Internet Revenue (% of US revenue)		64	%		67	%		67	%		68	%		68	%		67	%		67	%		69	%
European Internet Revenue (% of European revenue)		26	%		28	%		29	%		29	%		32	%		32	%		32	%		34	%
Total Bookings	$	195.9		$	210.2		$	215.6		$	214.5		$	213.6		$	220.7		$	213.0		$	217.1
Average Billable Full Time Equivalents (FTEs)		746			735			723			720			716			715			720			720
Utilization		60	%		60	%		61	%		62	%		63	%		63	%		63	%		63	%
Bookings to Revenue Ratio		0.95			1.02			1.04			1.01			1.01			1.04			1.00			1.03

Additional information regarding each of the key operating metrics noted above is as follows:

Bookings are defined as the contract value of revenue-generating projects that are anticipated to take place during the next four fiscal quarters for which a firm client commitment was received during the current period, less any adjustments to prior period bookings due to contract value adjustments or project cancellations during the current period.

Bookings for the three months ended June 30, 2007 were $50.9 million, compared with $46.7 million for the same prior year period. $1.9 million of the increase was principally attributable to our

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acquisition of MediaTransfer in April 2007, while the remainder was principally the result of the tracking studies discussed below under “Ending Sales Backlog.”

Monitoring bookings enhances our ability to forecast long-term revenue and to measure the effectiveness of our marketing and sales initiatives. However, we also are mindful that bookings often vary significantly from quarter to quarter. Information concerning our new bookings is not comparable to, nor should it be substituted for, an analysis of our revenue over time. There are no third-party standards or requirements governing the calculation of bookings. New bookings involve estimates and judgments regarding new contracts as well as renewals, extensions and additions to existing contracts. Subsequent cancellations, extensions and other matters may affect the amount of bookings previously reported.

Ending Sales Backlog is defined as prior period ending sales backlog plus current period bookings, less revenue recognized on outstanding projects as of the end of the period.

Ending sales backlog helps us to manage our future staffing levels more accurately and is also an indicator of the effectiveness of our marketing and sales initiatives. Generally, projects included in ending sales backlog at the end of a fiscal period convert to revenue from services during the following twelve months, based on our experience from prior years.

Ending sales backlog of $64.9 million for the three months ended June 30, 2007 represented a 10.2% increase compared with the ending sales backlog for the same prior year period. $1.2 million of the increase was attributable to our acquisition of MediaTransfer, while the remainder was principally the result of $5.8 million in tracking studies which we won during the fourth fiscal quarter.

Average Billable Full-Time Equivalents (FTE’s) are defined as the hours of available billable capacity in a given period divided by total standard hours for a full-time employee and represent an average for the periods reported.

Measuring FTE’s enables us to determine proper staffing levels, minimize unbillable time and improve utilization and profitability.

Billable FTE’s of 712 for the three months ended June 30, 2007 were essentially flat with the 714 billable FTE’s reported for the same prior year period.

Days of Sales Outstanding (DSO) is calculated as accounts receivable as of the end of the applicable period (including unbilled receivables less deferred revenue) divided by our daily revenue (total revenue for the period divided by the number of calendar days in the period).

Measuring DSO allows us to minimize our investment in working capital, measure the effectiveness of our collection efforts and helps forecast cash flow. Generally, a lower DSO measure equates to more efficient use of working capital.

DSO of 43 days for the three months ended June 30, 2007 was consistent with DSO for the same prior year period.

Utilization is defined as hours billed by project personnel in connection with specific revenue-generating projects divided by total hours of available capacity. Hours billed do not include marketing, selling or proposal generation time.

Tracking utilization enables efficient management of overall staffing levels and promotes greater accountability for the management of resources on individual projects. Utilization for the three months ended June 30, 2007 was 68% compared with 64% for the same prior year period. This increase is the result of our concerted efforts to maximize the utilization of our professional staff.

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Liquidity and Capital Resources

Cash and Cash Equivalents

The following table sets forth net cash provided by operating activities, net cash provided by (used in) investing activities and net cash (used in) financing activities, for the fiscal years ended June 30:

	2007			2006			2005
Net cash provided by operating activities	$	16,639		$	27,885		$	17,528
Net cash provided by (used in) investing activities		28,800			(24,346	)		(13,982	)
Net cash (used in) financing activities		(28,251	)		(5,372	)		(3,794	)

Net cash provided by operating activities.  Net cash provided by operating activities decreased to $16.6 million for fiscal 2007, compared with $27.9 million for fiscal 2006. The decrease in net cash provided by operating activities was principally attributable to timing differences compared with the prior fiscal year in payment of outstanding accounts payable, accrued expenses and other liabilities, which were offset by an improvement in the timeliness of collecting amounts due on outstanding invoices, as noted by a $1.1 million decrease in accounts receivable and a $0.6 million increase in cash collected on amounts billed in excess of costs (deferred revenue).

Net cash provided by operating activities increased to $27.9 million for fiscal 2006, compared with $17.5 million for fiscal 2005. The increase in net cash provided by operating activities was principally attributable to the following:

•  an increase in income from continuing operations, net of non-cash items such as depreciation and amortization, stock-based compensation and restructuring charges (net of cash payments), and

•  an improvement in the timeliness of collecting amounts due on outstanding invoices, as noted by a $6.3 million increase in cash collected on accounts receivable and a $2.1 million increase in cash collected on amounts billed in excess of costs (deferred revenue).

Net cash provided by (used in) investing activities.  Net cash provided by investing activities was $28.8 million for fiscal 2007, compared with $24.3 million used in investing activities for fiscal 2006. The change from fiscal 2006 was principally due to our liquidation of marketable securities to fund repurchases of our common stock under our Repurchase Program, described in further detail below, offset by our ongoing investing activities, including our acquisition of MediaTransfer in April 2007 for $9.8 million (net of cash acquired).

Net cash used in investing activities increased to $24.3 million for fiscal 2006, compared with $14.0 million for fiscal 2005. The increase in net cash used in investing activities was principally attributable to the following:

•  $20.8 million decrease in net cash paid in connection with acquisitions, as there were no acquisitions in fiscal 2006,

•  $21.9 million increase in cash used for the purchase of marketable securities to $49.2 million for fiscal 2006 from $27.3 million for fiscal 2005,

•  $19.1 million decrease in proceeds from maturities and sales of marketable securities to $27.5 million for fiscal 2006 from $46.6 million for fiscal 2005,

•  $7.3 million decrease in cash used for capital expenditures to $2.1 million for fiscal 2006 from $9.4 million for fiscal 2005, principally impacted by $4.6 million in leasehold improvements to our New York City office during fiscal 2005, and

•  $0.5 million used for the acquisition of intangible assets during fiscal 2006, down from $4.0 million for fiscal 2005.

45

Net cash (used in) financing activities.  Net cash used in financing activities was $28.3 million for fiscal 2007, compared with $5.4 million for fiscal 2006. The increase in net cash used in financing activities was principally due to our use of $50.5 million in cash to repurchase shares of our common stock under our Repurchase Program, offset by $19.6 million in cash proceeds from short-term borrowings used to fund our acquisition of MediaTransfer and share repurchases under our Repurchase Program during the fourth quarter of fiscal 2007.

Net cash used in financing activities increased to $5.4 million for fiscal 2006, compared with $3.8 million for fiscal 2005. The increase from fiscal 2005 to fiscal 2006 was principally attributable to the following:

•  a $1.2 million decrease in cash provided by the issuance of common stock and stock option exercises to $1.1 million for fiscal 2006 from $2.3 million for fiscal 2005,

•  $6.5 million in cash used to repurchase shares of our common stock under the Repurchase Program, which commenced in May 2006, and

•  a $6.1 million decrease in cash used to repay outstanding notes, as all such notes were paid in full during fiscal 2005.

Working Capital

At June 30, 2007, we had cash, cash equivalents and marketable securities of $33.3 million, a decrease of 41.2% from $56.6 million at June 30, 2006, as a result of the reasons described above. Based on current plans and business conditions, we believe that our existing cash, cash equivalents, marketable securities and cash flows from operations will be sufficient to satisfy the cash requirements that we anticipate will be necessary to support our planned operations for the foreseeable future. However, we cannot be certain that our underlying assumed levels of revenue and expenses will be accurate. In addition, if we acquire additional businesses, we likely will be required to seek additional funding through public or private financing or other arrangements. Based upon our current relationships with financial institutions and financial condition, we believe that adequate funds will be available to support our acquisition activities on reasonable terms, but if such funds are not available when needed or on favorable terms, it could have a material adverse effect on our business and results of operations.

Our capital requirements depend on numerous factors, including but not limited to, market acceptance of our services, the resources we allocate to the continuing development of our Internet infrastructure and Internet panel, the marketing and selling of our services and our acquisition activities. For the fiscal year ending June 30, 2008, our capital expenditures are expected to range between $4.5 and $5.0 million. We believe that cash generated from our operations and the cash and marketable securities we held at June 30, 2007 will be sufficient to provide adequate funding for any foreseeable capital requirements that may arise.

In order to continue to generate revenue, we must continually develop new business, both for growth and to replace non-renewed projects. Although work for no one client constitutes more than 10% of our revenue, we have had to find significant amounts of replacement and additional revenue as client relationships and work for continuing clients change and will likely have to continue to do so in the future. Our ability to generate revenue is dependent not only on execution of our business plan, but also on general market factors outside of our control. Many of our clients treat all or a portion of their market research expenditures as discretionary. As a result, as economic conditions decline in any of our markets, our ability to generate revenue is adversely impacted.

Share Repurchase Program

Under the Repurchase Program authorized by our Board on May 3, 2006, as amended on January 31 and May 2, 2007, we repurchased 9.0 million shares of our common stock at an average price per share of $5.59 for an aggregate purchase price of $50.5 million during the fiscal year ended

46

June 30, 2007. Since the Repurchase Program’s inception, we have repurchased 10.3 million shares of our common stock at an average price per share of $5.52 for an aggregate purchase price of $57.0 million. All repurchased shares were subsequently retired.

At June 30, 2007, the Repurchase Program had $23.0 million in remaining capacity. Purchases may be made in the open market or in any private transaction, and in accordance with applicable laws, rules, and regulations. The Board, in its discretion, may continue to make purchases prior to the Program’s expiration on December 31, 2007, subject to the conditions described above. The Repurchase Program and related activity are more fully described above in Item 5 — “Issuer Purchases of Equity Securities.”

Line and Letters of Credit

On August 15, 2006, we entered into a Credit Agreement (the “Agreement”) with JPMorgan Chase Bank N.A. (the “Bank”) for a line of credit which enabled us to borrow up to a maximum of $15.0 million at any one time outstanding through May 31, 2007 (the “Credit Facility”). Borrowings under the Credit Facility were repayable as set forth in a Line of Credit Note (the “Note”) executed concurrently with the Agreement. Under the Agreement, the Bank agreed to issue letters of credit under the line of credit at our request in an aggregate amount not to exceed the amount of the Credit Facility. Availability under the line of credit is reduced by the face amount of outstanding letters of credit. Upon termination of the line of credit, we must cash collateralize outstanding letters of credit. We entered into amendments to the Agreement and Note on April 3, 2007 that increased the Credit Facility from $15.0 million to $25.0 million and extended the maturity date of the Note from May 31, 2007 to April 1, 2008. The Credit Agreement and Note were further amended on July 23, 2007 to increase their capacity to $37.0 million.

The Note, as amended, bears interest at either the Prime Rate, LIBOR plus 75 basis points or the Federal Funds rate plus 75 basis points, based upon instructions provided by us as to whether advances are Prime Rate, LIBOR or Federal Funds Rate advances. Accrued interest is payable monthly, or in the case of LIBOR rate loans, at the end of LIBOR rate periods but at least every three months, and all accrued interest and outstanding principal is payable in full on April 1, 2008.

The Credit Facility contains affirmative covenants that require us to maintain insurance, maintain our existence, provide financial information to the Bank, and provide the Bank with notice of material claims against us and defaults under the Credit Facility. It also contains covenants that, among other things, limit our ability to change the nature of our business, cease operations, merge, acquire or consolidate with any other entity (unless we are the surviving entity in such a merger, acquisition or consolidation), change our name, or sell a material part of our assets outside of the ordinary course of business, which sale would have a material adverse effect on us. We also agree not to grant security interests in our accounts, our payment intangibles and our general intangibles relating to the payment of money.

There were $19.6 million in short-term borrowings outstanding under our arrangement with the Bank at June 30, 2007, and letters of credit outstanding of approximately $0.1 million, which correspondingly reduce our available borrowing capacity under the Credit Facility.

At June 30, 2007, we had no long-term borrowings and at June 30, 2006 we had no short-term or long-term borrowings.

Off-Balance Sheet Risk Disclosure

At June 30, 2007 and 2006, we did not have any transactions, agreements or other contractual arrangements constituting an “off-balance sheet arrangement” as defined in Item 303(a)(4) of Regulation S-K.

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Contractual Cash Obligations

Our consolidated contractual cash obligations and other commercial commitments at June 30, 2007 are as follows (amounts in 000s):

	Payments Due by Period
			Less than		1-3		3-5		More than
	Total		1 Year		Years		Years		5 Years
Short-term debt	$	19,625	$	19,625	$	—	$	—	$	—
Long-term debt		—		—		—		—		—
Capital lease obligations		—		—		—		—		—
Operating leases		23,687		5,558		9,296		4,539		4,294
Purchase obligations		—		—		—		—		—
Other long-term obligations		—		—		—		—		—
Total contractual cash obligations	$	43,312	$	25,183	$	9,296	$	4,539	$	4,294

Recent Accounting Pronouncements

See “Recent Accounting Pronouncements” in Note 2, “Summary of Significant Accounting Policies,” to our consolidated financial statements contained in this Form 10-K for a discussion of the impact of recently issued accounting pronouncements on our consolidated financial statements at June 30, 2007, for the fiscal year then ended, as well as the expected impact on our consolidated financial statements for future periods.

Item 7A.   Quantitative and Qualitative Disclosures About Market Risk

We have two kinds of market risk exposures, interest rate exposure and foreign currency exposure. We have no market risk sensitive instruments entered into for trading purposes.

As we continue to increase our debt and expand globally, the risk of interest rate and foreign currency exchange rate fluctuation may increase. We will continue to assess the need to, and will as appropriate, utilize interest rate swaps and financial instruments to hedge foreign currency exposures on an ongoing basis to mitigate such risks.

Interest Rate Exposure

Until fiscal 2007, we have not had interest rate exposure because we have not had material outstanding debt. At June 30, 2007, we had outstanding short-term debt under our Credit Facility of $19.6 million. The debt matures April 1, 2008 and bears interest at our election at either the Prime Rate, LIBOR plus 75 basis points, or the Federal Funds rate plus 75 basis points. We have elected the LIBOR-based rate for all of our borrowings to date. Assuming the outstanding borrowings remain at the same level, each one percentage point increase or decrease in LIBOR would cost or save us $0.2 million per year, approximately 2% of our net income in fiscal 2007. Cash flows would correspondingly decrease or increase.

Foreign Currency Exposure

As a result of operating in foreign markets, our financial results could be affected by factors such as changes in foreign currency exchange rates. We have international sales and operations in Europe, and to a more limited extent, Asia. Therefore, we are subject to foreign currency rate exposure. Non-U.S. transactions are denominated in the functional currencies of the respective countries in which our foreign subsidiaries reside. Our consolidated assets and liabilities are translated into U.S. Dollars at the exchange rates in effect as of the balance sheet date. Consolidated income and expense items are translated into U.S. Dollars at the average exchange rates for each period presented. Accumulated net translation adjustments are recorded in the accumulated other

48

comprehensive income component of stockholders’ equity. We measure our risk related to foreign currency rate exposure on two levels, the first being the impact of operating results on the consolidation of foreign subsidiaries that are denominated in the functional currency of their home country, and the second being the extent to which we have instruments denominated in a foreign currency.

Foreign exchange translation gains and losses are included in our results of operations as a result of consolidating the results of our international operations, which are denominated in each country’s functional currency, with our U.S. results. The impact of translation gains or losses on net income from consolidating foreign subsidiaries was not material for the periods presented. We have historically had low exposure to changes in foreign currency exchange rates upon consolidating the results of our foreign subsidiaries with our U.S. results, due to the size of our foreign operations in comparison to our consolidated operations. However, if the operating profits in Europe increase and we continue to expand globally, our exposure to the appreciation or depreciation in the U.S. Dollar could have a more significant impact on our net income and cash flows. Thus, we evaluate our exposure to foreign currency fluctuation risk on an ongoing basis.

Since our foreign operations are conducted using a foreign currency, we bear additional risk of fluctuations in exchange rates because of instruments denominated in a foreign currency. We have historically had low exposure to changes in foreign currency exchange rates with regard to instruments denominated in a foreign currency, given the amount and short-term nature of the maturity of these instruments. The carrying values of financial instruments denominated in a foreign currency, including cash, cash equivalents, accounts receivable and accounts payable, approximate fair value because of the short-term nature of the maturity of these instruments.

We performed a sensitivity analysis at June 30, 2007. Holding all other variables constant, we have determined that the impact of a near-term 10% appreciation or depreciation of the U.S. Dollar would have an insignificant effect on our financial condition, results of operations and cash flows.

49

Item 8.   Financial Statements and Supplementary Data

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm	51
Consolidated Balance Sheets at June 30, 2007 and 2006	52
Consolidated Statements of Operations for the years ended June 30, 2007, 2006 and 2005	53
Consolidated Statements of Cash Flows for the years ended June 30, 2007, 2006 and 2005	54
Consolidated Statements of Changes in Stockholders’ Equity for the years ended June 30, 2007, 2006 and 2005	55
Notes to Consolidated Financial Statements (including unaudited quarterly results of operations)	56
Index to Financial Statement Schedules	89
Schedule II — Valuation and Qualifying Accounts	94

All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and have therefore been omitted.

50

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Harris Interactive Inc.

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Harris Interactive Inc. and its subsidiaries at June 30, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2007 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for share-based payments in 2006 and its method of accounting for pension and postretirement benefit plans in 2007.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers LLP

Rochester, New York
September 12, 2007

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HARRIS INTERACTIVE INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

	June 30,			June 30,
	2007			2006
ASSETS
Current assets:
Cash and cash equivalents	$	28,911		$	11,465
Marketable securities		4,418			45,145
Accounts receivable, less allowances of $82 and $70, respectively		34,794			34,539
Unbilled receivables		9,938			9,377
Prepaid expenses and other current assets		6,964			5,296
Deferred tax assets		3,754			3,534
Assets held for sale		1,074			2,458
Total current assets		89,853			111,814
Property, plant and equipment, net		9,902			9,697
Goodwill		111,554			103,058
Other intangibles, net		11,788			11,648
Deferred tax assets		13,628			16,768
Other assets		1,401			1,572
Total assets	$	238,126		$	254,557
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,079		$	11,274
Accrued expenses		22,198			21,518
Short-term borrowings		19,625			—
Deferred revenue		17,575			16,651
Liabilities held for sale		330			345
Total current liabilities		67,807			49,788
Deferred tax liabilities		859			563
Other long-term liabilities		1,016			2,928
Commitments and contingencies (Note 18)
Stockholders’ equity:
Preferred stock, $.001 par value, 5,000,000 shares authorized; 0 shares issued and outstanding at June 30, 2007 and 2006		—			—
Common stock, $.001 par value, 100,000,000 shares authorized; 52,833,874 shares issued and outstanding at June 30, 2007 and 60,832,558 shares issued and outstanding at June 30, 2006		53			61
Additional paid-in capital		177,169			219,954
Accumulated other comprehensive income		1,480			597
Accumulated deficit		(10,258	)		(19,334	)
Total stockholders’ equity		168,444			201,278
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	238,126		$	254,557

The accompanying notes are an integral part of these consolidated financial statements.

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HARRIS INTERACTIVE INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

	For the Years Ended June 30,
	2007			2006			2005
Revenue from services	$	211,803		$	212,184		$	193,635
Cost of services		103,273			102,133			90,451
Gross profit		108,530			110,051			103,184
Operating expenses:
Sales and marketing		21,151			20,540			20,366
General and administrative		68,730			68,158			65,608
Depreciation and amortization		6,783			7,212			7,348
Gain on sale of assets		(788	)		—			—
Restructuring charges		337			250			1,132
Total operating expenses		96,213			96,160			94,454
Operating income		12,317			13,891			8,730
Interest and other income		2,246			1,534			742
Interest expense		(290	)		(20	)		(150	)
Income from continuing operations before income taxes		14,273			15,405			9,322
Provision for income taxes		5,319			6,205			4,978
Income from continuing operations		8,954			9,200			4,344
Income (loss) from discontinued operations (including loss on disposal of $2,684 in 2005), net of provision for income tax of $66, 141 and 105, respectively		122			260			(2,761	)
Net income	$	9,076		$	9,460		$	1,583
Basic net income (loss) per share(*):
Continuing operations	$	0.16		$	0.15		$	0.07
Discontinued operations		0.00			0.00			(0.05	)
Basic net income per share	$	0.16		$	0.15		$	0.03
Diluted net income (loss) per share(*):
Continuing operations	$	0.16		$	0.15		$	0.07
Discontinued operations		0.00			0.00			(0.05	)
Diluted net income per share	$	0.16		$	0.15		$	0.03
Weighted-average shares outstanding — basic		56,133,355			61,511,031			60,264,152
Weighted-average shares outstanding — diluted		56,397,600			61,685,777			61,238,064

(*) Figures may not add due to rounding

The accompanying notes are an integral part of these consolidated financial statements.

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HARRIS INTERACTIVE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	For the Years Ended June 30,
	2007			2006			2005
Cash flows from operating activities:
Net income	$	9,076		$	9,460		$	1,583
Adjustments to reconcile net income to net cash provided by operating activities —
Depreciation and amortization		6,783			7,212			7,348
Deferred taxes		2,764			5,208			3,759
Stock-based compensation		3,787			3,141			—
Impairment of goodwill attributable to discontinued operations		—			—			2,954
Restructuring charges		337			250			1,132
Less: Cash outflows related to restructuring charges		(399	)		(590	)		(643	)
Fair value of shares received as consideration in sale of discontinued operations and subsequently retired		—			—			(1,108	)
401(k) matching contribution		1,298			1,166			1,032
Income tax benefit from exercise of stock options		—			—			859
Amortization of premium and (discount) on marketable securities		(37	)		(40	)		22
Gain on sale of assets held for sale		(788	)		—			—
Loss on disposal of fixed assets		103			—			—
(Increase) decrease in assets, net of acquisition —
Accounts receivable		1,149			39			(6,299	)
Unbilled receivables		649			475			(1,220	)
Prepaid expenses and other current assets		(2,952	)		(1,968	)		(504	)
Other assets		322			(183	)		1,566
(Decrease) increase in liabilities, net of acquisition —
Accounts payable		(3,555	)		1,821			1,685
Accrued expenses		(1,228	)		(361	)		2,302
Deferred revenue		625			2,804			770
Other liabilities		(1,913	)		(495	)		1,072
Cash provided by operating activities of discontinued operations		618			(54	)		1,218
Net cash provided by operating activities		16,639			27,885			17,528
Cash flows from investing activities:
Cash paid in connection with acquisitions, net of cash acquired		(9,790	)		—			(20,767	)
Cash proceeds from sale of discontinued operations		—			—			768
Purchase of marketable securities		(74,052	)		(49,223	)		(27,323	)
Proceeds from maturities and sales of marketable securities		114,883			27,547			46,580
Capital expenditures		(3,879	)		(2,143	)		(9,421	)
Acquisition of intangible assets		—			(525	)		(4,000	)
Proceeds from sale of assets		1,652			—			—
Cash (used in) provided by investing activities of discontinued operations		(14	)		(2	)		181
Net cash provided by (used in) investing activities		28,800			(24,346	)		(13,982	)
Cash flows from financing activities:
Increase in short-term borrowings		19,625			—			—
Repayments of outstanding notes		—			—			(6,076	)
Repurchases of common stock		(50,540	)		(6,459	)		—
Proceeds from exercise of employee stock options and employee stock purchases		2,246			1,087			2,282
Excess tax benefits from share-based payment awards		418			—			—
Net cash (used in) financing activities		(28,251	)		(5,372	)		(3,794	)
Effect of exchange rate changes on cash and cash equivalents		258			180			175
Net increase (decrease) in cash and cash equivalents		17,446			(1,653	)		(73	)
Decrease (increase) in cash and cash equivalents from discontinued operations		—			—			680
Cash and cash equivalents at beginning of period		11,465			13,118			12,511
Cash and cash equivalents at end of period	$	28,911		$	11,465		$	13,118

The accompanying notes are an integral part of these consolidated financial statements.

54

HARRIS INTERACTIVE INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)

										Accumulated			Retained
	Common Stock						Additional			Other			Earnings			Total
	Outstanding						Paid-in			Comprehensive			(Accumulated			Stockholders’
	Shares			Amount			Capital			Income (Loss)			Deficit)			Equity
Balance at June 30, 2004		57,013		$	57		$	195,817		$	(8	)	$	(30,377	)	$	165,489
Comprehensive income:
Net income														1,583			1,583
Unrealized gain on marketable securities											76						76
Foreign currency translation											126						126
Total comprehensive income																	1,785
Exercise of options		776						1,792									1,792
Issuance of common stock under Employee Stock Purchase Plan		109						515									515
Issuance of common stock under 401(k) Plan		196						1,032									1,032
Income tax benefit on exercise of stock options								859									859
Issuance of common stock for acquisitions		3,525			4			22,125									22,129
Retirement of common stock surrendered in connection with sale of Japanese subsidiaries		(244	)					(1,108	)								(1,108	)
Balance at June 30, 2005		61,375			61			221,032			194			(28,794	)		192,493
Comprehensive income:
Net income														9,460			9,460
Unrealized gain on marketable securities											47						47
Foreign currency translation											356						356
Total comprehensive income																	9,863
Issuance of restricted stock and exercise of options		356						542									542
Issuance of common stock under Employee Stock Purchase Plan		142						532									532
Issuance of common stock under 401(k) Plan		235						1,166									1,166
Stock-based compensation expense								3,141									3,141
Retirement of common stock repurchased through Share Repurchase Program		(1,275	)					(6,459	)								(6,459	)
Balance at June 30, 2006		60,833			61			219,954			597			(19,334	)		201,278
Comprehensive income:
Net income														9,076			9,076
Unrealized gain on marketable securities											90						90
Foreign currency translation											816						816
Total comprehensive income																	9,982
Adjustment for initial implementation of SFAS No. 158											(23	)					(23	)
Issuance of restricted stock and exercise of options		678						1,638									1,638
Issuance of common stock under Employee Stock Purchase Plan		142						606									606
Issuance of common stock under 401(k) Plan		229						1,298									1,298
Income tax benefit on exercise of stock options								418									418
Stock-based compensation expense								3,787									3,787
Retirement of common stock repurchased through Share Repurchase Program		(9,048	)		(8	)		(50,532	)								(50,540	)
Balance at June 30, 2007		52,834			53		$	177,169		$	1,480		$	(10,258	)	$	168,444

55

HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended June 30, 2007, 2006 and 2005

(In thousands, except share and per share amounts)

1.   Description of Business

Harris Interactive Inc. (the “Company”) is a leading global market research, polling and consulting firm, using Internet-based and traditional methodologies to provide clients with information about the views, behaviors and attitudes of people worldwide. Known for The Harris Poll, the Company is one of the world’s largest full service market research and consulting firms, and the global leader in conducting Internet-based survey research.

2.   Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the assets, liabilities and results of operations of the Company and its wholly-owned subsidiaries. There are no unconsolidated entities or off-balance sheet arrangements. All intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities, if any, at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

It is the Company’s policy to reclassify amounts in prior years’ consolidated financial statements to conform to the current year’s presentation. For the fiscal year ended June 30, 2006, the Company reclassified stock-based compensation expense to allocate such expense between cost of services, sales and marketing and general and administrative expense in its consolidated statement of operations, in order to conform to the current year’s presentation. For the impact of this reclassification, see Note 13, “Stock-Based Compensation.”

Cash and Cash Equivalents

Cash and cash equivalents include all highly liquid instruments with a remaining maturity of three months or less at date of purchase.

Marketable Securities

The Company accounts for its investments in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 115, Accounting for Certain Investments in Debt and Equity Securities. All investments have been classified as available-for-sale securities at June 30, 2007 and 2006. Available-for-sale securities are stated at fair value, with the unrealized gains and losses reported in accumulated other comprehensive income (loss). Realized gains and losses, as well as interest and dividends on available-for-sale securities, are included in interest and other income. The cost of securities sold is based on the specific identification method.

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HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

2.   Summary of Significant Accounting Policies — (Continued)

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount and do not bear interest. The collectibility of outstanding client invoices is continually assessed. The Company maintains an allowance for estimated losses resulting from the inability of clients to make required payments. In estimating the allowance, the Company considers factors such as historical collections, a client’s current creditworthiness, age of the receivable balance both individually and in the aggregate and general economic conditions that may affect a client’s ability to pay.

Concentration of Credit Risk

Financial instruments which potentially expose the Company to concentrations of credit risk consist principally of accounts receivable and unbilled receivables. An allowance for doubtful accounts is provided for in the consolidated financial statements and are monitored by management to ensure that they are consistent with management’s expectations. Credit risk is limited with respect to accounts receivable by the Company’s large client base. For fiscal years 2007, 2006 and 2005, no single client accounted for more than 10% of the Company’s consolidated revenue.

Property, Plant and Equipment

Property, plant and equipment, including improvements that significantly add to productive capacity or extend useful life, are recorded at cost. Maintenance and repairs are expensed as incurred. Upon sale or other disposition, the applicable amounts of asset cost and accumulated depreciation are removed from the accounts and the net amount, less proceeds from disposal, is charged or credited to income.

Depreciation is calculated using the straight-line or accelerated methods over the estimated useful lives of the assets. Specifically, the estimated useful lives for computer equipment, all other equipment and furniture and fixtures are 3, 5 and 7 years, respectively. In accordance with SFAS No. 13, Accounting for Leases, leasehold improvements are amortized using the straight-line method over the lesser of estimated useful life of the assets or term of the underlying lease arrangements.

Goodwill

Acquisitions are accounted for under the purchase method of accounting pursuant to SFAS No. 141, Business Combinations. Accordingly, the purchase price is allocated to the tangible assets and liabilities and intangible assets acquired, based on their estimated fair values. The excess purchase price over the fair value is recorded as goodwill. Identifiable intangible assets are valued separately and are amortized over their expected useful life.

Effective January 1, 2002, the Company adopted SFAS No. 142, Goodwill and Other Intangible Assets, and ceased amortizing goodwill as of that date. SFAS No. 142 requires the Company to test goodwill for impairment on an annual basis, and between annual tests in certain circumstances, and to write down goodwill and non-amortizable intangible assets when impaired. These events or circumstances generally would include the occurrence of operating losses or a significant decline in earnings associated with the asset. As the Company has one reportable segment, the entity-wide approach for assessing goodwill is utilized. Goodwill is evaluated for impairment using the two-step process as prescribed in SFAS No. 142. The first step is to compare the fair value of the reporting unit to the carrying amount of the reporting unit. If the carrying amount exceeds the fair value, a

57

HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

2.   Summary of Significant Accounting Policies — (Continued)

second step must be followed to calculate impairment. Otherwise, if the fair value of the reporting unit exceeds the carrying amount, the goodwill is not considered to be impaired as of the measurement date. The Company performed the initial step by comparing the Company’s fair market value as determined by its publicly traded stock to the carrying amount of the reporting unit. Based upon its annual evaluations, the Company determined that the fair value of the reporting unit exceeded the carrying amount at June 30, 2007, 2006 and 2005, resulting in no impairment. If impairment had occurred, any excess of carrying value over fair value would have been recorded as a loss.

Prior to performing its annual impairment analysis for the fiscal year ended June 30, 2005, the Company recorded a $2,954 impairment charge during the third quarter of fiscal 2005 for the full amount of the goodwill attributable to HI Japan, the operations of which were classified as discontinued operations (see Note 5, “Discontinued Operations”).

Intangible and Other Long-Lived Assets

The Company’s intangible assets are stated at cost less accumulated amortization and are amortized over estimated useful lives that range as follows:

Contract-based intangibles	2 to 4 years
Internet respondent database	2 to 9 years
Customer relationships	3 to 10 years
Trade names	0.5 to 20 years

Computer Software Developed or Obtained for Internal Use

The Company follows the provisions of Statement of Position (“SOP”) 98-1, Accounting for Costs of Computer Software Developed or Obtained for Internal Use, issued by the American Institute of Certified Public Accountants, which addresses the accounting for the costs of computer software developed or obtained for internal use and identifies the characteristics of internal use software. Costs that satisfy the capitalization criteria prescribed in SOP 98-1 are included in other assets in the consolidated balance sheet and amounted to $2,598 and $2,421 at June 30, 2007 and 2006, respectively. Amortization expense related to these costs amounted to $1,488, $1,251 and $1,118 for the fiscal years ended June 30, 2007, 2006 and 2005, respectively.

Long-Lived Assets

In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company evaluates the recoverability of the carrying value of its long-lived assets, excluding goodwill, based on estimated undiscounted cash flows to be generated from each of such assets compared to the original estimates used in measuring the assets. To the extent impairment is identified, the Company reduces the carrying value of such impaired assets to fair value based on estimated discounted future cash flows.

Fair Value of Financial Instruments

In accordance with SFAS No. 107, Disclosures about Fair Value of Financial Instruments, the Company calculates the fair value of its financial instruments using quoted market prices wherever possible. The Company’s financial instruments principally consist of cash, marketable securities,

58

HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

2.   Summary of Significant Accounting Policies — (Continued)

accounts receivable, accounts payable, and accrued expenses. The carrying amounts of cash, accounts receivable, accounts payable and accrued expenses approximate their fair value. The fair value of marketable securities is based on quoted market prices.

Post-employment Payments

The Company has entered into employment agreements with certain of its executives which obligate the Company to make payments for varying periods of time and under terms and circumstances set forth in the agreements. In part, the payments are in consideration for obligations of the executives not to compete with the Company after termination of their employment, and in part, the payments relate to other relationships between the parties. The Company accounts for its obligations under these agreements in accordance with SFAS No. 112, Employers’ Accounting for Postemployment Benefits, an Amendment of FASB Statements No. 5 and 43.

Revenue Recognition

The Company recognizes revenue from services on a proportional performance basis. In assessing contract performance, both input and output criteria are reviewed. Costs incurred are used as an objective input measure of performance. The primary input of all work performed under these arrangements is labor. As a result of the relationship between labor and cost, there is normally a direct relationship between the costs incurred and the proportion of the contract performed to date. Costs incurred as an initial proportion of expected total costs is used as an initial proportional performance measure. This indicative proportional performance measure is always subsequently validated against more subjective criteria (i.e. relevant output measures) such as the percentage of interviews completed, percentage of reports delivered to a client and the achievement of any project milestones stipulated in the contract. In the event of divergence between the objective and more subjective measures, the more subjective measures take precedence since these are output measures.

Clients are obligated to pay based upon services performed, and in the event that a client cancels the contract, the client is responsible for payment for services performed through the date of cancellation. Losses expected to be incurred, if any, on jobs in progress are charged to income as soon as it becomes probable that such losses will occur. Invoices to clients in the ordinary course are generated based upon the achievement of specific events, as defined by each contract, including deliverables, timetables, and incurrence of certain costs. Such events may not be directly related to the performance of services. Revenues earned on contracts in progress in excess of billings are classified as unbilled receivables. Amounts billed in excess of revenues earned are classified as deferred revenue.

In accordance with Emerging Issues Task Force (“EITF”) Issue No. 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent, revenue includes amounts billed to clients for subcontractor costs incurred in the completion of surveys. Furthermore, reimbursements of out-of-pocket expenses related to service contracts are also included in revenue in accordance with EITF Issue No. 01-14, Income Statement Characterization of Reimbursements Received for “Out-of-Pocket” Expenses Incurred.

In 2003, the EITF issued Issue No. 00-21, Revenue Arrangements with Multiple Deliverables. Issue No. 00-21 addresses certain aspects of the accounting by a vendor for arrangements under which it will perform multiple revenue-generating activities to determine if separate units of accounting

59

HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

2.   Summary of Significant Accounting Policies — (Continued)

exist in such projects. The Company has reviewed the provisions of Issue No. 00-21 and determined that those provisions are consistent with the Company’s existing policies and therefore, the implementation of Issue No. 00-21 did not have a significant effect on the consolidated statements of operations for the fiscal years ended June 30, 2007, 2006 or 2005.

Cost of Services

The Company’s direct costs of providing services principally consist of project personnel, which relate to the labor costs directly associated with a project, panelist incentives, which represent cash and non-cash incentives awarded to individuals who complete surveys, data processing, which represents both the internal and out-sourced processing of survey data, and other direct costs related to survey production.

Panelist Incentives

Since July 2001, the Company has had a customer loyalty program, HIpoints, whereby points are awarded to market survey respondents who register for the Company’s online panel, complete online surveys and refer others to join the Company’s online panel. The earned points are non-transferable and may be redeemed for gifts from a specific product folio at any time prior to expiration, which occurs after one year of account inactivity. The Company maintains a reserve for its obligations with respect to future redemption of outstanding points based on the expected redemption rate of the points. This expected redemption rate is estimated based on the Company’s actual redemption rates since the inception of the program.

In addition, the Company’s panelists receive cash incentives for participating in surveys from the Company, which are earned by the panelist when the Company receives a timely survey response. The Company accrues these incentives as they are earned.

Advertising Expenses

Advertising costs are expensed as incurred and are included in sales and marketing expense in the accompanying consolidated statements of operations. Such expenses amounted to $1,496, $1,476 and $1,917 for the fiscal years ended June 30, 2007, 2006 and 2005, respectively.

Stock-Based Compensation

In December 2004, the FASB issued SFAS No. 123 (revised 2004) (“SFAS No. 123(R)”), Share-Based Payment. SFAS No. 123(R) replaces SFAS No. 123, Accounting for Stock-Based Compensation and supersedes Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees. The Company adopted SFAS No. 123(R) on July 1, 2005 using the modified prospective approach. Under the modified prospective approach, stock-based compensation expense has been and will be recorded for the unvested portion of previously issued awards that remain outstanding at July 1, 2005 using the same estimate of the grant date fair value and the same attribution method used to determine the pro forma disclosure under SFAS No. 123. SFAS No. 123(R) also requires that all share-based payments to employees after July 1, 2005, including employee stock options and shares issued to employees under the Employee Stock Purchase Plan (“ESPP”), be recognized in the financial statements as stock-based compensation expense based on their fair value on the date of grant using an option-pricing model, such as the Black-Scholes model. Accordingly, prior period amounts have not been revised.

60

HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

2.   Summary of Significant Accounting Policies — (Continued)

SFAS No. 123(R) requires that the Company estimate forfeitures when recognizing stock-based compensation expense and that this estimate of forfeitures be adjusted over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures are recognized through a cumulative catch-up adjustment, which is recognized in the period of change, and also impact the amount of unamortized stock-based compensation expense to be recognized in future periods.

See Note 13, “Stock-Based Compensation,” for further information on stock-based compensation.

Income Taxes

The Company follows the asset and liability approach to account for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes, which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of operating loss carryforwards and temporary differences between the carrying amounts and the tax bases of assets and liabilities. The Company has not provided U.S. deferred income taxes applicable to the unremitted earnings of its foreign subsidiaries, as these amounts are considered to be indefinitely reinvested outside the U.S.

Net Income per Share

In accordance with SFAS No. 128, Earnings Per Share, basic net income per share amounts are computed based on the weighted-average number of shares of common stock outstanding during the year. Diluted net income per share reflects the assumed exercise and conversion of employee stock options that have an exercise price that is below the average market price of the common shares for the respective periods. The treasury stock method is used in calculating diluted shares outstanding whereby assumed proceeds from the exercise of stock options, net of average unrecognized stock-based compensation expense for stock options and restricted stock, and the related tax benefit are assumed to be used to repurchase common stock at the average market price during the period.

Foreign Currency Translation

For the Company’s subsidiaries located outside of the United States, the local currency is the functional currency. In accordance with SFAS No. 52, Foreign Currency Translation, the financial statements of those subsidiaries are translated into U.S. Dollars as follows. Consolidated assets and liabilities are translated at the exchange rates in effect at the balance sheet date. Consolidated income, expenses and cash flows are translated at the average exchange rates for each period and stockholders’ equity is translated using historical exchange rates. The resulting translation adjustment is recorded as a component of accumulated other comprehensive income (loss) in the accompanying consolidated balance sheets.

Comprehensive Income

The Company accounts for comprehensive income in accordance with SFAS No. 130, Reporting Comprehensive Income. Comprehensive income consists of two components, net income and accumulated other comprehensive income (loss). Accumulated other comprehensive income (loss) refers to revenue, expenses, gains and losses that, under generally accepted accounting principles, are recorded as an element of stockholders’ equity but are excluded from net income. The Company’s accumulated other comprehensive income (loss) is comprised of the unrealized holding gain (loss) on

61

HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

2.   Summary of Significant Accounting Policies — (Continued)

available-for-sale marketable securities and the foreign currency translation adjustments from those subsidiaries not using the U.S. dollar as their functional currency.

Segment Reporting

The Company reports segment information in accordance with SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information. The Company operates a globally consistent business model, offering custom market research to its customers in the geographic regions in which it operates. Geographic management facilitates local execution of the Company’s global strategies. However, the Company maintains global leaders for the majority of its critical business processes, and the most significant performance evaluations and resources allocations made by the Company’s chief operating decision-maker are made on a global basis. Accordingly, the Company has concluded that it has one reportable segment.

Recent Accounting Pronouncements

FIN 48

In July 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes, which supplements Statement of Financial Accounting Standards (“SFAS”) No. 109, Accounting for Income Taxes, by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. Interpretation No. 48 requires that the tax effects of a position be recognized only if it is “more-likely-than-not” to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not threshold represents a positive assertion by management that a company is entitled to the economic benefits of a tax position. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are to be recognized. Moreover, the more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition of a benefit. At adoption, companies must adjust their financial statements to reflect only those tax positions that are more-likely-than-not to be sustained as of the adoption date. Any necessary adjustment would be recorded directly to retained earnings in the period of adoption and reported as a change in accounting principle. This Interpretation is effective as of the beginning of the first fiscal year beginning after December 15, 2006. The Company will adopt Interpretation No. 48 on July 1, 2007 and does not expect that it will have a material impact on the Company’s consolidated financial statements.

SFAS No. 157

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles (“GAAP”), and expands disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company will adopt SFAS No. 157 on July 1, 2008 and does not expect that it will have a material impact on the Company’s consolidated financial statements.

62

HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

2.   Summary of Significant Accounting Policies — (Continued)

SFAS No. 158

In September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans. SFAS No. 158 amends SFAS No. 87, Employers’ Accounting for Pensions, SFAS No. 88 Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits, SFAS No. 106, Employers’ Accounting for Postretirement Benefits Other than Pensions, and SFAS No. 132, Employers’ Disclosures about Pensions and Other Postretirement Benefits. The amendments retain most of the existing measurement and disclosure guidance and will not change the amounts recognized in the statement of operations. SFAS No. 158 requires companies to recognize a net asset or liability with an offset to equity, by which the defined-benefit-postretirement obligation is over or under-funded. SFAS No. 158 requires prospective application, and the recognition and disclosure requirements were effective for the Company’s fiscal year ended June 30, 2007. SFAS No. 158 did not have a material impact on the Company’s consolidated financial statements.

SFAS No. 159

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS No. 159 does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company will adopt SFAS No. 159 on July 1, 2008, and does not expect that it will have a material impact on the Company’s consolidated financial statements.

SAB No. 108

In September 2006, the SEC issued Staff Accounting Bulletin (“SAB”) No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. This SAB provides guidance on the consideration of the effects of prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment. SAB No. 108 establishes an approach that requires quantification of financial statement errors based on the effects on the Company’s consolidated financial statements and the related financial statement disclosures. SAB No. 108 permits existing public companies to record the cumulative effect of initially applying this approach in the first fiscal year ending after November 15, 2006 by recording the necessary correcting adjustments to the carrying values of assets and liabilities as of the beginning of that year with the offsetting adjustment recorded to the opening balance of retained earnings. Additionally, the use of the cumulative effect transition method requires detailed disclosure of the nature and amount of each individual error being corrected through the cumulative adjustment and how and when it arose. The Company adopted SAB No. 108 on June 30, 2007. There was no impact on the Company’s consolidated financial statements upon adoption.

63

HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

3.   Business Combinations

MediaTransfer

Effective on April 1, 2007, pursuant to a Share Sale and Purchase Agreement dated March 30, 2007 (the “Purchase Agreement”) by and among the Company, its wholly-owned subsidiary, Harris Interactive International Inc. (“HII”), and the stockholders of MediaTransfer AG Netresearch & Consulting (“MediaTransfer”), a German stock corporation (such stockholders, collectively, the “MT Sellers”), HII purchased 100% of the outstanding shares of MediaTransfer (the “MT Shares”).

The Company believes that this acquisition will allow it to expand its access into the European research market and enable it to better serve its multinational clients. MediaTransfer has extensive experience and deep expertise in the Consumer Packaged Goods (“CPG”) industry, including the application of proprietary technology that creates virtual retail shopping simulations to test package design, shelf placement configurations, pricing etc. In addition to its CPG practice, MediaTransfer has expertise in telecom, financial services and pharmaceutical research.

The aggregate purchase price for the MT Shares was € 9,000 ($12,042, based on the March 30, 2007 Euro to U.S. Dollar conversion rate), of which € 8,100 was paid to the MT Sellers in cash at closing, and the remaining € 900 was placed in escrow. The purchase price was subject to adjustment in accordance with a formula set forth in the Purchase Agreement if the net working capital of MediaTransfer at closing, as finally determined post-closing, exceeded or fell below certain specified amounts as of the closing date. No actual adjustment was required. The escrowed amount secures representations and covenants of the MT Sellers contained in the Purchase Agreement and, absent claims by HII, will be released to the MT Sellers in stages through August 31, 2008. Total transaction costs amounted to $238.

This acquisition was accounted for under the purchase method in accordance with SFAS No. 141 and was included in the Company’s financial statements commencing on April 1, 2007. The Company recorded $8,391 in goodwill, $1,570 in intangible assets and a deferred tax liability of $628 related to the acquisition, along with the other tangible assets acquired and liabilities assumed. The goodwill is not deductible for tax purposes. The intangible assets consisted of customer relationships, Internet panel, trade names and covenants not to compete with assigned values of $1,200, $341, $18 and $11, respectively, and useful lives (in years) of 6, 2, 0.5 and 2, respectively.

64

HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

3.   Business Combinations — (Continued)

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition:

Current assets	$	4,066
Property, plant and equipment, net		204
Goodwill		8,391
Intangible assets		1,570
Other long-term assets		145
Deferred tax assets		223
Total assets acquired		14,599
Current liabilities		(1,691	)
Deferred tax liability		(628	)
Total liabilities assumed		(2,319	)
Net assets acquired	$	12,280

MediaTransfer, whose fiscal year prior to the acquisition was the calendar year, was a private organization prior to the acquisition. Therefore, the Company does not have audited financial statements that are presented in accordance with accounting principles generally accepted in the United States of America to provide relevant pro-forma financial results for the fiscal years ended June 30, 2007, 2006 and 2005, and no such results are reported.

Wirthlin Worldwide

On September 8, 2004, the Company acquired all of the issued and outstanding capital stock of Wirthlin Worldwide, Inc., (“Wirthlin”), a privately held opinion research and strategic consulting firm headquartered in Reston, Virginia, pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) among the Company, Wirthlin, Capitol Merger Sub, LLC (“Capitol”) and the stockholders of Wirthlin. The transaction included the merger of Wirthlin into Capitol, a wholly owned subsidiary of the Company.

The Company and Wirthlin were engaged in complementary businesses in the market research and polling industry. This acquisition created opportunities for revenue growth, cost savings and other synergies, including the ability to cross-sell to one another’s clients, offer more comprehensive and diverse services and use a combined worldwide network. This acquisition also provided the opportunity to convert Wirthlin’s traditional-based clients to the Internet. Additionally, this acquisition assisted in the Company’s expansion in a number of different service areas including Brand and Strategic Consulting, Government and Policy, Financial Services and Consumer Packaged Goods.

Taking into account closing balance sheet adjustments made during the second quarter of fiscal 2005, pursuant to the terms of the Merger Agreement, the aggregate purchase price was $44,175 including the purchase price consisting of cash and shares of the Company’s common stock and cash paid for covenants not to compete and transaction costs. The cash portion of the purchase price amounted to $21,455, $5,000 of which the Company was required to deposit in escrow to be released to Wirthlin stockholders to the extent not used to pay certain claims within certain time periods described in the Merger Agreement. The entire balance was distributed as described in the Escrow

65

HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

3.   Business Combinations — (Continued)

Agreement. In addition, an aggregate of 3,524,990 shares of common stock with an estimated fair value of $22,129 were issued to the stockholders of Wirthlin. The fair value was based on the average closing price of the Company’s common stock for the five day period ending September 10, 2004. Of the total consideration, the Company paid $500 to certain Wirthlin stockholders in consideration of a covenant not to compete. Total transaction costs amounted to $591.

The acquisition was accounted for under the purchase method in accordance with SFAS No. 141 and was included in the Company’s financial statements commencing on September 9, 2004. The Company recorded $39,782 in goodwill, $7,780 in intangible assets and a deferred tax liability of $2,742 related to the acquisition, along with the other intangible assets acquired and liabilities assumed as shown below. The goodwill is not deductible for tax purposes. The intangible assets consisted of customer relationships, trade names and covenants not to compete with assigned values of $6,990, $290, and $500, respectively, and useful lives (in years) of 10, 2, and 2, respectively.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition:

Current assets	$	11,827
Property, plant and equipment, net		1,687
Goodwill, including $3,926 of acquired goodwill		39,782
Intangible assets		7,780
Other long-term assets		2,280
Total assets acquired		63,356
Current liabilities		(10,363	)
Deferred tax liability		(2,742	)
Notes payable, current		(2,828	)
Notes payable, long-term		(3,248	)
Total liabilities assumed		(19,181	)
Net assets acquired	$	44,175

Prior to the Company’s acquisition of Wirthlin, Wirthlin entered into agreements with certain former holders of stock in a Wirthlin U.K. subsidiary pursuant to which they could receive up to $206 in contingent consideration for achieving established revenue targets for each of the three years ended September 30, 2005, 2006 and 2007. The contingent payment related to the year ended September 30, 2005 was previously recorded as a goodwill adjustment during the fourth quarter of the prior fiscal year. During the fourth quarter of fiscal 2006, it became probable that the contingent payment related to year two would be made and thus, goodwill was adjusted accordingly (see Note 8, “Goodwill”). As of June 30, 2007, it is not probable that the payment related to year three of the agreement will be made.

4.   Restructuring Charges

Fiscal 2007

During the fourth quarter of fiscal 2007, the Company recorded $337 in restructuring charges directly related to a facilities consolidation and headcount reduction, both designed to ensure the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

4.   Restructuring Charges — (Continued)

alignment of its cost structure with the operational needs of the business. The Company negotiated an amendment to the lease agreement for its Reston, Virginia office, which resulted in a reduction of the square footage of rented space at that office by 5,192 square feet, located on the first floor, in exchange for a payment of $230 to the landlord, and contingent upon the landlord entering into a lease for the aforementioned first floor space, which subsequently occurred in June 2007. As a result of the amendment, the Company’s lease obligation over the remaining term of the lease will be reduced by approximately $500 from the initial lease, which when offset against the payment to the landlord for the space reduction noted above, will result in anticipated net savings of approximately $300 over the remaining lease term.

The Company also reduced the staff of its U.S. operations by 6 full-time equivalents and incurred $107 in severance charges, all of which will involve cash payments. The reduction in staff was communicated to the affected employees during the fourth quarter of fiscal 2007.

The following table summarizes activity with respect to the restructuring charges for the fiscal 2007 plan during the fiscal year ended June 30, 2007:

				Lease
	Severance			Commitments			Total
Net charge during fiscal 2007	$	107		$	230		$	337
Cash payments during fiscal 2007		(45	)		(230	)		(275	)
Remaining reserve at June 30, 2007	$	62		$	—		$	62

All actions in the plan were completed by June 30, 2007. Cash payments in connection with the plan will be completed by December 2007.

Fiscal 2006

During the fourth quarter of fiscal 2006, the Company recorded $250 in restructuring charges directly related to certain actions designed to align the cost structure of its U.K. operations with the operational needs of that business. Management developed a formal plan that included the closure of two facilities in Macclesfield and Stockport and consolidation of those operations into the Company’s Hazel Grove location. This facilities consolidation was completed by June 30, 2006 at a cost of $59, the majority of which represented cash payments on the remaining lease commitment for the Macclesfield facility. Additionally, the Company classified the Stockport facility and the related property, plant and equipment as assets held for sale in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. On December 29, 2006, the Company completed the sale of the Stockport facility and the related property, plant and equipment for total cash consideration of $1,273, which resulted in a gain of $410. The gain is recorded under “Gain on sale of assets” in the Company’s consolidated statement of operations for the fiscal year ended June 30, 2007.

In connection with the facilities consolidation discussed above, the Company reduced the staff of the affected operations by 15 full-time equivalents and as a result, incurred $191 in severance charges, all of which involved cash payments. The reduction in staff was communicated to the affected employees during the fourth quarter of fiscal 2006.

The restructuring charges described above are recorded under “Restructuring charges” in the Company’s consolidated statement of operations. The following table summarizes activity with respect

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HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

4.   Restructuring Charges — (Continued)

to the restructuring charges for the fiscal 2006 plan during the fiscal years ended June 30, 2007 and 2006:

				Lease
	Severance			Commitments			Total
Net charge during fiscal 2006	$	191		$	59		$	250
Cash payments during fiscal 2006		(101	)		—			(101	)
Remaining reserve at June 30, 2006	$	90		$	59		$	149
Cash payments during fiscal 2007		(90	)		(34	)		(124	)
Remaining reserve at June 30, 2007	$	—		$	25		$	25

All actions in the plan were completed by June 30, 2006. Cash payments in connection with the plan will be completed no later than August 2007.

Fiscal 2005

During the third quarter of fiscal 2005, the Company recorded restructuring charges directly related to cost reduction initiatives implemented by the Company’s management. Management developed a formal plan that included a reduction in the staffs of both the Company’s U.S. and U.K. operations. As a result of the plan, the Company also recorded a reserve for a lease commitment related to office space in London, which the Company leased prior to the acquisition of Wirthlin, that the Company determined was no longer needed as a result of the aforementioned reduction in staff, as well as the integration of the U.K. operations of Wirthlin. The plan was formally communicated to the affected employees during the third quarter of fiscal 2005. The total number of affected employees from the Company’s U.S. and U.K. operations was 27.

The restructuring charges described above are recorded under “Restructuring charges” in the Company’s statement of operations. The following table summarizes activity with respect to the restructuring charges for the fiscal 2005 plan during the fiscal years ended June 30, 2006 and 2005:

				Lease
	Severance			Commitments			Total
Net charge during fiscal 2005	$	841		$	214		$	1,055
Cash payments during fiscal 2005		(608	)		(35	)		(643	)
Fiscal 2005 adjustments		77			—			77
Remaining reserve at June 30, 2005	$	310		$	179		$	489
Cash payments during fiscal 2006		(310	)		(179	)		(489	)
Remaining reserve at June 30, 2006	$	—		$	—		$	—

During the fourth quarter of fiscal 2005, the Company reduced the reserve for restructuring charges by $10 for outplacement benefits offered to employees under the plan which expired prior to being utilized. These charges were reversed through the same income statement line item where the costs were initially recognized. In addition, the reserve for restructuring charges was increased by $87 for employees who were included in the fiscal 2005 plan but whose severance plans were not finalized at the end of the third quarter of fiscal 2005.

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HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

4.   Restructuring Charges — (Continued)

All actions in the plan were completed by June 30, 2005. However, cash payments for severance and the lease commitment were made on a longer-term basis according to the contractually scheduled payments of such commitments. Specifically, cash payments for severance were completed in April 2006. Cash payments on the lease commitment, which were to continue through January 2009, were completed in December 2005 as a result of an early buyout agreement reached with the landlord.

5.   Discontinued Operations

Rent and Recruit

During the fourth quarter of fiscal 2007, the Company committed to a plan to sell its Rent and Recruit business (“Rent and Recruit”). Based upon the Company’s review and assessment of Rent and Recruit’s net assets, the book values of its remaining net assets approximated their estimated fair value.

The Company classified Rent and Recruit as a discontinued operation, consistent with the provisions of SFAS No. 144. At June 30, 2007, the Company was in the process of identifying potential buyers or other interested parties and discussing a possible transaction with them. On August 23, 2007, the sale of Rent and Recruit was completed.

The results of operations, net of taxes, and the carrying value of the assets and liabilities of Rent and Recruit are reflected in the accompanying consolidated financial statements as discontinued operations, assets held for sale and liabilities held for sale, respectively. All prior periods presented were reclassified to conform to this presentation. These reclassifications of the prior period consolidated financial statements did not impact total assets, liabilities, stockholders’ equity, net income or cash flows.

The revenues and income attributable to Rent and Recruit and reported in discontinued operations were as follows for the fiscal years ended June 30:

	2007		2006		2005
Revenues	$	3,546	$	3,827	$	3,330
Income from discontinued operations, net of tax		122		260		194

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HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

5.   Discontinued Operations — (Continued)

The following assets and liabilities of Rent and Recruit to be sold are reported as assets and liabilities held for sale in the accompanying consolidated balance sheets for the fiscal years ended June 30:

	2007			2006
Accounts receivable	$	535		$	915
Unbilled receivables		28			125
Prepaid expenses and other current assets		17			140
Property, plant and equipment, net		50			62
Goodwill		396			396
Deferred tax assets		48			59
Assets held for sale	$	1,074		$	1,697
Accounts payable	$	(212	)	$	(221	)
Accrued expenses		(57	)		(55	)
Deferred revenue		(61	)		(69	)
Liabilities held for sale	$	(330	)	$	(345	)

Japanese Operations

During the third quarter of fiscal 2005, the Company committed to a plan to sell its Japanese subsidiaries (collectively, “HI Japan”). At that time, the Company recorded an anticipated loss on disposal of $3,104. Of the anticipated loss, $2,954 represented the impairment charge for full amount of the goodwill attributable to HI Japan, and $150 represented a reserve for the anticipated costs of selling the business. The Company based its impairment determination on the fact that HI Japan did not contribute to the profitability of the Company at the level that was anticipated at the time of acquisition. As a result of recording the goodwill write-down and reserve for anticipated costs to sell the business, the book values of the remaining net assets of HI Japan approximated their estimated fair value.

On May 19, 2005, the Company sold HI Japan to Mr. Minoru Aoo, HI Japan’s former president, for an aggregate purchase price consisting of a cash payment to the Company of $768 and Mr. Aoo’s surrender to the Company of 243,811 shares of the Company’s common stock with an estimated fair value of $1,108, based on the average closing price of the Company’s common stock for the three day period ending May 21, 2005. All of the shares were subsequently retired by the Company. The final loss on disposal as a result of the sale was $2,684 and resulted in a capital loss for tax purposes of $3,305. The Company did not realize an income tax benefit as a result of the loss on disposal, as the loss was a capital loss, and the Company had no significant capital gains against which the capital loss could have been offset. At the time, the Company recorded a full valuation allowance against the related deferred tax asset, as more fully described in Note 15, “Income Taxes”.

The Company classified HI Japan as a discontinued operation, consistent with the provisions of SFAS No. 144. As such, the results of operations, net of taxes, and the carrying value of the assets and liabilities of HI Japan are reflected in the accompanying consolidated financial statements as discontinued operations, assets from discontinued operations and liabilities from discontinued operations, respectively. All prior periods presented were reclassified to conform to this presentation. These

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

5.   Discontinued Operations — (Continued)

reclassifications of the prior period consolidated financial statements did not impact total assets, liabilities, stockholders’ equity, net income or cash flows.

The revenues and income (loss) attributable to HI Japan and reported in discontinued operations were as follows for the fiscal year ended June 30:

	2005
Revenues	$	4,938
Income (loss) from discontinued operations (excluding loss on disposal of $2,684 in 2005)		(271	)

6.   Marketable Securities

At June 30, marketable securities consisted of the following:

	2007				2006
	Cost		Fair Value		Cost		Fair Value
Type of issue:
Auction rate securities	$	3,000	$	3,000	$	28,800	$	28,800
Corporate bonds		920		919		11,269		11,219
Government securities		500		499		5,156		5,126
Total available-for-sale securities	$	4,420	$	4,418	$	45,225	$	45,145

Gross unrealized gains and losses on available-for-sale securities at June 30, 2007 were $0 and $1, respectively. Gross unrealized gains and losses on available-for-sale securities at June 30, 2006 were $0 and $80, respectively.

The cost and fair value of available-for-sale securities at June 30, by contractual maturity, were as follows:

	2007				2006
	Cost		Fair Value		Cost		Fair Value
Maturity date:
Due in one year or less	$	1,420	$	1,418	$	42,313	$	42,263
Due after one year through three years		—		—		2,912		2,882
Due after greater than three years		3,000		3,000		—		—
Total available-for-sale securities	$	4,420	$	4,418	$	45,225	$	45,145

There were no realized gains or losses from sales of available-for-sale securities during the fiscal years ended June 30, 2007 and 2006.

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HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

7.   Property, Plant and Equipment

At June 30, property, plant and equipment consisted of the following:

	2007			2006
Furniture and fixtures	$	5,466		$	4,990
Equipment		28,494			26,289
Leasehold improvements		8,870			8,219
		42,830			39,498
Accumulated depreciation		(32,928	)		(29,801	)
	$	9,902		$	9,697

Depreciation expense on property, plant and equipment amounted to $3,966, $4,217 and $4,570 for the fiscal years ended June 30, 2007, 2006 and 2005, respectively.

8.   Goodwill

The changes in the carrying amount of goodwill for the fiscal years ended June 30, 2005, 2006 and 2007 were as follows:

Balance at June 30, 2004	$	63,906
Acquisition of Wirthlin Worldwide, Inc. during the quarter ended September 30, 2004 (Note 3)		37,164
Cumulative purchase accounting adjustments in connection with the acquisition of Wirthlin (Note 3)		2,625
Impairment of goodwill attributable to Japanese subsidiaries (Note 5)		(2,954	)
First installment of Novatris contingent consideration — net profit target		546
Balance at June 30, 2005	$	101,287
First quarter Wirthlin goodwill adjustment		(47	)
Second installment of Novatris contingent consideration — net profit target		534
Novatris contingent consideration — panel growth target		1,640
Second installment of Wirthlin contingent consideration (Note 3)		40
Balance at June 30, 2006	$	103,454
Acquisition of MediaTransfer AG during the quarter ended June 30, 2007 (Note 3)		8,391
Goodwill attributable to Rent and Recruit business (Note 5)		(396	)
Prior period purchase accounting adjustment of deferred taxes		105
Balance at June 30, 2007	$	111,554

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HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

9.   Acquired Intangible Assets Subject to Amortization

At June 30, acquired intangible assets subject to amortization consisted of the following:

	2007						2006
	Gross				Net		Gross				Net
	Carrying		Accumulated		Book		Carrying		Accumulated		Book
	Amount		Amortization		Value		Amount		Amortization		Value
Amortized intangible assets Contract-based intangibles	$	1,761	$	1,751	$	10	$	1,750	$	1,708	$	42
Internet respondent database		2,341		783		1,558		2,000		519		1,481
Customer relationships		8,430		2,271		6,159		7,230		1,468		5,762
Trade names		5,033		972		4,061		5,015		652		4,363
Total	$	17,565	$	5,777	$	11,788	$	15,995	$	4,347	$	11,648

	For the Fiscal Years Ended
	June 30,
	2007		2006		2005
Aggregate amortization expense:
For the fiscal year ended	$	1,430	$	1,742	$	1,660
Estimated amortization expense for the fiscal years ending June 30,:
2008	$	1,592
2009	$	1,539
2010	$	1,396
2011	$	1,374
2012	$	1,374

10.   Accrued Expenses

At June 30, accrued expenses consisted of the following:

	2007		2006
HIpoints accrual	$	4,305	$	3,470
Bonuses		3,353		4,761
Payroll and withholding expenses		2,688		3,043
Accrued vacation		1,544		1,390
Other		10,308		8,854
	$	22,198	$	21,518

“Other” consists of accrued expenses that are individually less than 5% of total current liabilities.

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HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

11.   Line and Letters of Credit

On August 15, 2006, the Company entered into a Credit Agreement (the “Agreement”) with JPMorgan Chase Bank N.A. (the “Bank”) for a line of credit which enabled it to borrow up to a maximum of $15,000 at any one time outstanding through May 31, 2007 (the “Credit Facility”). Borrowings under the Credit Facility were repayable as set forth in a Line of Credit Note (the “Note”) executed concurrently with the Agreement. Under the Agreement, the Bank agreed to issue letters of credit under the line of credit at the Company’s request in an aggregate amount not to exceed the amount of the Credit Facility. Availability under the line of credit is reduced by the face amount of outstanding letters of credit. Upon termination of the line of credit, the Company must cash collateralize outstanding letters of credit. The Company entered into amendments to the Agreement and Note on April 3, 2007 that increased the Credit Facility from $15,000 to $25,000 and extended the maturity date of the Note from May 31, 2007 to April 1, 2008. The Credit Agreement and Note were further amended on July 23, 2007 to increase the Credit Facility to $37,000.

The Note, as amended, bears interest at either the Prime Rate, LIBOR plus 75 basis points or the Federal Funds rate plus 75 basis points, based upon instructions provided by the Company as to whether advances are Prime Rate, LIBOR or Federal Funds Rate advances. Accrued interest is payable monthly, or in the case of LIBOR rate loans, at the end of LIBOR rate periods but at least every three months, and all accrued interest and outstanding principal is payable in full on April 1, 2008.

The Credit Facility contains affirmative covenants that require the Company to maintain insurance, maintain its existence, provide financial information to the Bank, and provide the Bank with notice of material claims against the Company and defaults under the Credit Facility. It also contains covenants that, among other things, limit the Company’s ability to change the nature of our business, cease operations, merge, acquire or consolidate with any other entity (unless the Company is the surviving entity in such a merger, acquisition or consolidation), change its name, or sell a material part of our assets outside of the ordinary course of business, which sale would have a material adverse effect on it. The Company also agrees not to grant security interests in its accounts, its payment intangibles and its general intangibles relating to the payment of money.

12.   Stockholders’ Equity

Common Stock

In fiscal 2000, the Company amended its Certificate of Incorporation to increase the number of shares of its authorized common stock to 100,000,000 shares. At June 30, 2007, 2006 and 2005, the Company had no outstanding stock warrants.

Share Repurchase Program

In May 2006, the Company’s Board of Directors (the “Board”) authorized a Share Repurchase Program (the “Repurchase Program”). Under the Repurchase Program, up to $25,000 could be used by the Company, in the discretion of its Board of Directors from time to time, to acquire the Company’s common stock during the twelve months following the date the program was authorized. On January 31, 2007, the Board approved expanding the capacity of the Repurchase Program by $30,000 and extending its duration through December 31, 2007. On May 2, 2007, the Board further expanded the capacity of the Repurchase Program by $25,000. The expiration date of the Repurchase

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HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

12.   Stockholders’ Equity — (Continued)

Program remains December 31, 2007. Purchases may be made in the open market or in any private transaction, in accordance with applicable laws, rules, and regulations.

Under the Repurchase Program, the Company repurchased 9,048,570 shares of its common stock at an average price per share of $5.59 for an aggregate purchase price of $50,540, during the fiscal year ended June 30, 2007. Since the Repurchase Program’s inception, the Company has repurchased 10,323,970 shares of its common stock at an average price per share of $5.52 for an aggregate purchase price of $57,000. All repurchased shares were subsequently retired.

At June 30, 2007, the Repurchase Program had $23,000 in remaining capacity.

Decisions under the Repurchase Program on amounts of repurchases and their timing have been and will continue to be based on factors such as the stock price and availability, as well as general Company, economic and market conditions. The Company has made and may make broker, open market and privately negotiated block purchases from time to time.

Stockholder Rights Plan

On March 11, 2005, the Company’s Board of Directors adopted a stockholder rights plan, as set forth in the Rights Agreement, dated March 11, 2005 (the “Rights Agreement”). Under the Rights Agreement, the Board of Directors declared a dividend distribution of one preferred share purchase right (a “Right”) for each outstanding share of the Company’s common stock, par value $.001 per share, to stockholders of record as of the close of business on March 29, 2005 (the “Record Date”). In addition, one Right automatically attaches to each share of common stock issued between the Record Date and the Distribution Date (defined below). Each Right entitles the holder to purchase from the Company a unit consisting of one one-thousandth of a share (a “Unit”) of the Company’s Series A Preferred Stock, par value $.01 per share, at a cash exercise price of $27.48 per Unit, subject to adjustment under certain conditions specified in the Rights Agreement. The Rights will separate from the common stock and will become exercisable only when a public announcement has been made that a person or group acquires beneficial ownership of 15% or more of the outstanding shares of the Company’s common stock (an “Acquiring Person”), other than as a result of repurchases of stock by the Company or certain inadvertent actions by a stockholder, or ten days after a person commences, or publicly announces the intention to commence (which intention to commence remains in effect for five business days after such announcement), a tender offer or exchange offer that could result in the person or group becoming an Acquiring Person and that is not terminated within such ten-day period (the earlier of such dates being referred to as the “Distribution Date”). If a person or group becomes an Acquiring Person, each holder of a Right (other than the Acquiring Person and certain of its related parties, whose Rights become null and void) will be entitled to receive upon exercise of each Right that number of Units equal to $27.48 (as adjusted) multiplied by the number of Units for which the Right is then exercisable, divided by 50% of the then current per share market price of the Company’s common stock. If there are insufficient shares of preferred stock to permit full exercise of all of the Rights, holders of Rights may instead receive shares of the Company’s common stock, other securities, cash or property, or a combination thereof. If, at any time after a person or group becomes an Acquiring Person, the Company is acquired in a merger or other business combination transaction with an Acquiring Person or certain other types of transaction specified in the Rights Agreement, each holder of a Right (other than the Acquiring Person and certain of its related parties, whose Rights become null and void) will be entitled to receive upon exercise of each Right, in lieu of shares of preferred stock, that number of shares of the common stock of the surviving entity equal to $27.48 (as

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HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

12.   Stockholders’ Equity — (Continued)

adjusted) multiplied by the number of Units for which the Right is then exercisable, divided by 50% of the then current per share market price of the surviving entity’s common stock.

The Rights are not exercisable until a Distribution Date occurs and will expire on March 11, 2015, unless earlier redeemed by the Company in accordance with the Rights Agreement. Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including without limitation the right to vote or receive dividends. The Rights Agreement will be reviewed and evaluated at least once every three years by a “TIDES Committee” of independent directors. During fiscal 2007, the TIDES Committee reviewed the Rights Agreement and recommended no changes to it.

13.   Stock-Based Compensation

As discussed in Note 2, the Company adopted SFAS No. 123(R) on July 1, 2005 using the modified prospective approach. Prior to July 1, 2005, the Company accounted for stock-based awards in accordance with APB Opinion No. 25.

For the fiscal years ended June 30, 2007 and 2006, the Company recorded stock-based compensation expense for the cost of stock options and restricted stock issued under its Long-Term Incentive Plan (“Incentive Plan”), stock options issued to new employees outside the Incentive Plan and shares issued under the ESPP of $3,787 and $3,141, respectively. The Company’s expensing of stock-based compensation decreased both its basic and diluted net income per share by $0.07 and $0.05 for the fiscal years ended June 30, 2007 and 2006, respectively. Any potential tax benefits associated with incentive stock options are recognized if and when the Company receives a tax deduction associated with the options. Accordingly, due to the timing of the recognition of the tax benefit versus the related stock-based compensation expense, the Company’s effective tax rate was increased for the fiscal years ended June 30, 2007 and 2006.

Under the provisions of APB Opinion No. 25, the Company was not required to recognize compensation expense for the cost of stock options, restricted stock or shares issued under the Company’s ESPP. The following table illustrates the effect on net income and net income per share as if the Company had applied the fair value recognition provisions of SFAS No. 123, as amended by SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure for the fiscal year ended June 30:

	2005
Net income, as reported	$	1,583
Deduct: Total stock-based compensation expense determined under fair value method of all awards, net of related tax effect		1,490
Pro-forma net income	$	93
Basic net income per share:
As reported	$	0.03
Pro-forma	$	0.00
Diluted net income per share:
As reported	$	0.03
Pro-forma	$	0.00

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HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

13.   Stock-Based Compensation — (Continued)

The Company did not capitalize stock-based compensation expense as part of the cost of an asset for any periods presented. The following table illustrates the stock-based compensation expense included in the Company’s consolidated statements of operations for the fiscal years ended June 30:

	2007		2006
Cost of services	$	97	$	95
Sales and marketing		195		204
General and administrative		3,495		2,842
	$	3,787	$	3,141

The Company determines the fair value of each option award on the date of grant using the Black-Scholes option-pricing model. Expected volatilities are based on historical volatilities from daily share price observations for the Company’s stock covering a period commensurate with the expected term of the options granted. The Company has elected to use the “simplified method” as allowed by Staff Accounting Bulletin No. 107 for purposes of determining the expected life of options when granted. The risk-free interest rate is based on the implied yield available at the time the options were granted on U.S. Treasury zero coupon issues with a remaining term equal to the expected life of the options when granted. The expected dividend yield is based on the Company’s historical practice of electing not to pay dividends to its shareholders.

Long-Term Incentive Plan

The Company maintains the Incentive Plan, a nonqualified and incentive stock option and stock awards plan that enables key employees and directors of the Company to purchase and receive shares of common stock of the Company. The Company grants options to purchase its common stock at an exercise price equal to the fair market value as of the date of grant. Options generally vest over a period of up to four years for employees and three years for directors, and expire after ten years from the date of grant or earlier, if in connection with termination of employment or service as a director. In addition, the Incentive Plan also allows for the issuance of restricted stock awards, which the Company began issuing in fiscal 2006. Restricted stock awards generally vest over a period of up to four years for employees and one year for directors, and any unvested portion forfeits upon termination of employment or service as a director. The Company has registered a total of 7,250,000 shares of common stock for issuance under the Incentive Plan. 851,774 shares were unissued and available for grant at June 30, 2007 under the Incentive Plan.

Options Issued Outside the Incentive Plan

During fiscal 2006, the Company registered an additional 350,000 shares for issuance upon exercise of non-qualified stock options that were issued in connection with the hiring of its current Chief Financial Officer.

During fiscal 2005, the Company registered an additional 235,000 shares for issuance upon exercise of non-qualified stock options that were issued in connection with the hiring of its former Chief Financial Officer.

77

HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

13.   Stock-Based Compensation — (Continued)

Investor Stock Options

At June 30, 2007 and 2006, the Company had outstanding investor options to acquire 88,887 shares of its common stock that were issued in connection with the Company’s acquisition of Novatris in March 2004. Investor options are not included as options under the Company’s Incentive Plan.

Summary of Options and Restricted Stock Status

The following table provides a summary of the status of the Company’s employee stock options (including options issued under the Incentive Plan and options issued outside the Incentive Plan to new employees) for the fiscal years ended June 30:

	2007					2006					2005
				Weighted					Weighted					Weighted
				Average					Average					Average
				Exercise					Exercise					Exercise
	Shares			Price		Shares			Price		Shares			Price
Options outstanding at July 1		6,150,034		$	5.41		5,928,222		$	6.14		4,128,702		$	5.38
Granted		652,500			5.54		851,333			4.99		3,565,300			5.68
Forfeited		(751,591	)		7.31		(414,200	)		6.73		(989,790	)		8.36
Exercised		(474,570	)		3.46		(215,321	)		2.53		(775,990	)		2.31
Options outstanding at June 30		5,576,373		$	5.34		6,150,034		$	5.41		5,928,222		$	6.14

The total intrinsic value of options exercised during the fiscal years ended June 30, 2007, 2006 and 2005 was $1,107, $551 and $3,646, respectively.

The following weighted-average assumptions were used to value options granted by the Company during the fiscal years ended June 30:

	2007			2006			2005
Risk-free interest rate		4.6	%		4.6	%		3.4	%
Weighted-average expected life (in years)		6.3			6.3			4.0
Volatility factor		63	%		80	%		48	%
Dividend yield		—			—			—
Weighted-average fair value	$	3.50		$	3.63		$	2.32

Cash received from the exercise of employee stock options was $1,640, $545 and $1,792 respectively, for the fiscal years ended June 30, 2007, 2006 and 2005, respectively.

78

HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

13.   Stock-Based Compensation — (Continued)

The following table summarizes stock options under the Company’s stock option plans at June 30, 2007:

	Options Outstanding								Options Exercisable
			Weighted-								Weighted-
	Number		Average		Weighted-						Average		Weighted
	Outstanding		Remaining		Average		Aggregate				Remaining		Average		Aggregate
Range of	at June 30,		Contractual		Exercise		Intrinsic		Number of		Contractual		Exercise		Intrinsic
Exercise Prices	2007		Life (In Years)		Price		Value		Options		Life (In Years)		Price		Value
$ 0.47 – 0.47		116,000		0.3	$	0.47				116,000		0.3	$	0.47
1.26 – 2.42		480,958		4.7		2.25				480,958		4.7		2.25
3.00 – 4.98		1,588,844		6.9		4.28				900,005		6.0		4.16
5.00 – 6.38		1,969,571		8.5		5.56				716,373		7.7		5.68
6.56 – 8.96		1,369,887		6.8		7.39				1,098,880		6.7		7.47
11.00		140,000		2.7		11.00				140,000		2.7		11.00
		5,665,260		7.0	$	5.39	$	947		3,452,216		6.1	$	5.42	$	493

The following table provides a summary of the status of the Company’s employee and director restricted stock awards for the fiscal years ended June 30:

	2007					2006
				Weighted					Weighted
				Average					Average
				Fair Value at					Fair Value at
	Shares			Date of Grant		Shares			Date of Grant
Restricted shares outstanding at July 1		116,333		$	5.05		—		$	—
Granted		209,135			6.00		140,500			5.07
Forfeited		(5,028	)		6.53		—			—
Vested		(119,818	)		5.67		(24,167	)		5.15
Restricted shares outstanding at June 30		200,622		$	5.63		116,333		$	5.05

At June 30, 2007, unamortized stock-based compensation expense for stock options and restricted stock awards issued and outstanding at June 30, 2007 will be recognized during the fiscal years ending June 30 as follows:

			Restricted
	Stock		Stock
	Options		Awards		Total
2008	$	2,756	$	416	$	3,172
2009		2,054		265		2,319
2010		1,017		259		1,276
2011		427		166		593
Total	$	6,254	$	1,106	$	7,360
Weighted-average vesting period (in years)		3.0		3.6		3.1

79

HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

13.   Stock-Based Compensation — (Continued)

Employee Stock Purchase Plan

The Company registered 500,000 shares of common stock in March 2000, and an additional 500,000 shares in November 2004, for issuance under the Company’s 1999 ESPP. The ESPP provides employees with an opportunity to purchase the Company’s common stock through payroll deductions. Under the ESPP, the Company’s employees may purchase, subject to certain restrictions, shares of common stock at the lesser of 85% of the fair value at either the beginning or the end of each six month offering period. During fiscal years 2007, 2006 and 2005, employees purchased 142,310, 142,126 and 108,690 shares of common stock through the ESPP, respectively.

The ESPP is considered compensatory under SFAS No. 123(R) and thus, a portion of the cost related to the July and January ESPP offerings is included in the Company’s stock-based compensation expense for the fiscal years ended June 30, 2007 and 2006.

The fair value of the July and January ESPP offerings was determined on the date of grant using the Black-Scholes option-pricing model. Expected volatility was determined based on the historical volatility from daily share price observations for the Company’s stock covering a period commensurate with the expected life of the ESPP rights. The risk-free interest rate is based on the implied yield currently available at the time the ESPP rights were granted on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life of the ESPP rights when granted. The expected dividend yield is based on the Company’s historical practice of electing not to pay dividends to its shareholders.

The following weighted-average assumptions were used to value ESPP rights for the July and January offerings for the fiscal years ended June 30:

	2007			2006
Risk-free interest rate		5.0	%		3.9	%
Weighted-average expected life (in years)		0.5			0.5
Volatility factor		40	%		51	%
Dividend yield		—			—
Weighted-average fair value	$	1.37		$	1.32

14.   401(k) Plan

The Company established a 401(k) Plan (the “Plan”) effective January 1, 1995. Eligible employees may begin to participate in the Plan the first of the month following their date of hire, but are not eligible to receive employer matching contributions, if any, until the first of the calendar quarter following one anniversary year of service during which they have worked at least 1,000 hours.

Participants may contribute from 1% to 60% of compensation up to federally established limitations. Employer matching contributions are discretionary and are generally made in the form of Company stock. Non-cash matching contribution expense incurred by the Company during the fiscal years ended June 30, 2007, 2006 and 2005 was $1,298, $1,166 and $1,032, respectively.

80

HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

15.   Income Taxes

For the fiscal years ended June 30, the U.S. and Foreign components of income (loss) from continuing operations before income taxes were as follows:

	2007		2006		2005
U.S.	$	11,410	$	15,065	$	9,940
Foreign		2,863		340		(618	)
	$	14,273	$	15,405	$	9,322

For the fiscal years ended June 30, the provision (benefit) for income taxes for continuing operations consisted of the following:

	2007		2006			2005
Current:
Federal	$	1,273	$	279		$	136
State		802		402			290
Foreign		583		306			—
	$	2,658	$	987		$	426
Deferred:
Federal	$	2,459	$	6,225		$	3,371
State		156		(235	)		1,291
Foreign		46		(772	)		(110	)
	$	2,661	$	5,218		$	4,552
	$	5,319	$	6,205		$	4,978

The provision for income taxes for continuing operations differs from the amount of income tax computed by applying the applicable U.S. statutory federal income tax rate to income from continuing operations before income taxes as follows:

	2007			2006			2005
Provision at federal statutory rate	$	4,996		$	5,392		$	3,263
State income tax provision net of federal effect		817			921			1,478
Unremitted earnings and rate differential of foreign subsidiaries		(275	)		221			106
Stock-based compensation		386			539			—
Valuation allowance reversal		(998	)		(1,036	)		—
Other		393			168			131
	$	5,319		$	6,205		$	4,978

The state income tax provision for fiscal 2005 includes the effects of a change in estimate associated with state tax apportionment factors, partially attributable to the Company’s acquisition of Wirthlin during fiscal 2005, as more fully described in Note 3, “Business Combinations.”

81

HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

15.   Income Taxes — (Continued)

At June 30, deferred tax assets (liabilities) consisted of the following:

	2007			2006
Operating loss carryforwards	$	14,059		$	17,877
Internet database development expenses		1,133			1,243
Stock-based compensation		1,338			784
HIpoints accrual		1,724			1,392
Capital loss carryforward		835			1,326
Minimum tax credits		11			771
Property, plant and equipment		760			422
Accrued expenses		204			354
Other		584			441
Gross deferred tax assets		20,648			24,610
Valuation allowance		(796	)		(1,794	)
		19,852			22,816
Goodwill		(1,561	)		(1,304	)
Other intangibles		(1,768	)		(1,773	)
Gross deferred tax liabilities		(3,329	)		(3,077	)
Net deferred tax assets	$	16,523		$	19,739

As of June 30, 2007, the Company has federal and various state net operating loss carryforwards of approximately $35,398 that will begin to expire in 2020.

Under existing Federal tax laws, Internal Revenue Code Section 382 provides for an annual limitation on the utilization of federal operating loss and tax credit carryforwards generated prior to certain ownership changes. The Company’s acquisition of Total Research Corporation in November 2001 resulted in an ownership change for federal income tax purposes and accordingly, this could limit the Company’s ability to use its federal operating loss and tax credit carryforwards in future years. As of June 30, 2007, of the Company’s total federal operating loss carryover, approximately $5,097 is subject to an annual limitation under Internal Revenue Code Section 382.

Harris Interactive Europe, the Company’s wholly owned subsidiary, had operating loss carryforwards in the United Kingdom of approximately $2,016, all of which have no expiration. A valuation allowance of approximately $605 was recorded against the portion of the deferred tax asset related to the United Kingdom operating loss carryforwards for which management believes that it is not more likely than not that the related deferred tax asset will be realized. In accordance with SFAS No. 109, to the extent acquired tax benefits (such as operating loss carryforwards) are not recognized at the acquisition date, the subsequent recognition of those benefits are applied (a) first to reduce to zero any goodwill related to the acquisition, (b) second to reduce to zero other noncurrent intangible assets related to the acquisition, and (c) third to reduce income tax expense. Acquired tax benefits of $670 associated with operating loss carryforwards of Wirthlin and Telegen have not yet been recognized.

The sale of the Company’s Japanese operations during fiscal 2005, as more fully described in Note 5, “Discontinued Operations”, resulted in a capital loss carryover of $3,305 for U.S. tax purposes, which expires if not utilized by June 30, 2010. Although realization is not assured, management has determined that it is more likely than not that a portion of the deferred tax asset associated with this carryover will be realized during the carryover period. As such, a portion of the valuation allowance,

82

HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

15.   Income Taxes — (Continued)

$655 and $229 were reversed in the fourth quarter of fiscal 2007 and 2006, respectively, as a result of utilization and tax planning measures taken at that time. A valuation allowance is recorded for the remaining portion. Adjustments to the valuation allowance may be necessary in the future if estimates of capital gain income are revised. The remaining capital loss at June 30, 2007 is $2,386.

Deferred tax assets have been recognized to the extent management believes it is more likely than not that the asset will be realized. Changes in facts, circumstances and projections may have an effect on the amount of the asset recognized in future periods.

Undistributed earnings of foreign subsidiaries of $2,703 at June 30, 2007 are considered to be permanently reinvested outside the United States and, accordingly, no U.S. income taxes have been provided thereon. If such earnings were remitted to the U.S., the Company may be subject to U.S. income taxes and foreign withholding taxes, net of allowable foreign tax credits.

16.   Net Income per Share

The following table presents the shares used in computing basic and diluted net income per share for the fiscal years ended June 30, 2007, 2006 and 2005. Unvested restricted stock and unexercised stock options to purchase 2,500,831, 3,660,271 and 2,834,919 shares of the Company’s common stock for the fiscal years ended June 30, 2007, 2006 and 2005, respectively, at weighted-average prices per share of $7.02, $6.83 and $8.08, respectively, were not included in the computations of diluted net income per share because their grant prices were greater than the average market price of the Company’s common stock for fiscal 2007, 2006 and 2005, respectively.

	For the Years Ended June 30,
	2007		2006		2005
Weighted-average outstanding common shares for basic net income per share		56,133,355		61,511,031		60,264,152
Dilutive effect of outstanding stock options and restricted stock		264,245		174,746		973,912
Shares for diluted net income per share		56,397,600		61,685,777		61,238,064

The following table sets forth the computation of basic and diluted net income per share for the fiscal years ended June 30:

	2007		2006		2005
Numerator:
Net income	$	9,076	$	9,460	$	1,583
Denominator for basic net income per share — weighted-average shares		56,133,355		61,511,031		60,264,152
Basic net income per share	$	0.16	$	0.15	$	0.03
Denominator for diluted net income per share — weighted-average shares		56,397,600		61,685,777		61,238,064
Diluted net income per share	$	0.16	$	0.15	$	0.03

83

HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

17.   Enterprise-Wide Disclosures

The Company is comprised principally of operations in the United States and Europe, and to a more limited extent, Asia. Non-U.S. market research is comprised principally of operations in the United Kingdom, Germany and France, and to a more limited extent, Hong Kong and China. There were no intercompany transactions that materially affected the financial statements, and all intercompany sales have been eliminated upon consolidation. All information has been revised as applicable to reflect results from continuing operations only and therefore excludes the results of the Company’s discontinued operations (see Note 5, “Discontinued Operations”).

The Company’s business model for offering custom market research is consistent across the geographic regions in which it operates. Geographic management facilitates local execution of the Company’s global strategies. However, the Company maintains global leaders for the majority of its critical business processes, and the most significant performance evaluations and resources allocations made by the Company’s chief operating decision-maker are made on a global basis. Accordingly, the Company has concluded that it has one reportable segment.

The Company has prepared the financial results for geographic information on a basis that is consistent with the manner in which management internally disaggregates information to assist in making internal operating decisions. The Company has allocated common expenses among these geographic regions differently than it would for stand-alone information prepared in accordance with accounting principles generally accepted in the United States of America. Geographic operating income (loss) may not be consistent with measures used by other companies.

Geographic information from continuing operations for the fiscal years ended June 30 was as follows:

	U.S.		Europe			Asia			Total
2007:
Revenue from services	$	159,843	$	51,960		$	—		$	211,803
Operating income (loss)		9,802		2,734			(219	)		12,317
Long-lived assets		7,298		2,604			—			9,902
Deferred tax assets		16,815		(541	)		249			16,523
2006:
Revenue from services	$	166,228	$	45,956		$	—		$	212,184
Operating income (loss)		13,837		293			(239	)		13,891
Long-lived assets		7,691		2,005			1			9,697
Deferred tax assets		19,682		(105	)		162			19,739
2005:
Revenue from services	$	146,589	$	46,523		$	523		$	193,635
Operating income (loss)		9,530		(636	)		(164	)		8,730
Long-lived assets		9,302		2,399			4			11,705
Deferred tax assets		25,758		(877	)		66			24,947

84

HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

18.   Commitments and Contingencies

The Company has several non-cancelable operating leases for office space, vehicles and equipment, including certain leases with related parties as discussed in Note 20, “Related Party Transactions”. Certain of the lease agreements contain rent escalation clauses based on increases in the Consumer Price Index or the landlords’ operating costs. Rent expense under such agreements is recorded using the straight-line method over the term of the lease. Future minimum lease payments under non-cancelable operating leases at June 30, 2007 are as follows:

Fiscal Years Ending June 30:
2008	$	5,558
2009		4,843
2010		4,453
2011		2,624
2012		1,915
2013 and thereafter		4,294

Total rental expense for operating leases during the fiscal years ended June 30, 2007, 2006 and 2005 was $7,536, $7,439 and $7,416, respectively.

19.   Legal Proceedings

In the normal course of business, the Company is at times subject to pending and threatened legal actions and proceedings. After reviewing pending and threatened actions and proceedings with counsel, management believes that the outcome of such actions or proceedings is not expected to have a material adverse effect on the Company’s business, financial condition or results of operations. At June 30, 2007 and through the date of the filing of this report on Form 10-K, the Company has no threatened or pending legal actions or proceedings to report.

20.   Related Party Transactions

Pursuant to the Agreement and Plan of Merger dated September 8, 2004 among the Company, Capital Merger Sub, LLC, and the stockholders of Wirthlin Worldwide, Inc. (“Wirthlin”), Wirthlin became a wholly owned subsidiary of the Company and Dr. Richard B. Wirthlin was elected to the Company’s Board. Dr. Wirthlin resigned from the Board on January 31, 2007.

Dr. Wirthlin is a member in Richard B. Wirthlin Family LLC (the “Wirthlin LLC”), in which he holds a 34.3% direct interest and 100% beneficial interest. The Wirthlin LLC is the landlord under a Lease Agreement with Wirthlin, dated April 23, 2002 (the “Wirthlin LLC Lease”), as amended pursuant to a First Amendment dated May 10, 2007 (the “Amendment”), covering facilities used by Wirthlin located at 1920 Association Drive, Reston, Virginia. Under the terms of the Wirthlin LLC Lease, Wirthlin paid base rent in the amount of $47 per month between July 1, 2006 and May 31, 2007, for an aggregate of $518. The Amendment provided for a reduction in the square footage of rented space by 5,192 square feet, a payment on June 1, 2007 of $230 by Wirthlin to the Wirthlin LLC, and a reduction in base rental payments over the remaining lease term. Pursuant to the Amendment, for the period between June 1, 2007 and April 30, 2010, the aggregate base rent under the Wirthlin LLC Lease is $1,229, payable monthly. In addition to base rent, during the entire term of the Wirthlin LLC Lease Wirthlin is obligated to reimburse Wirthlin LLC for increases in operating expenses for the premises over the amount of such expenses in calendar 2002, which increased amount resulted in a payment

85

HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

20.   Related Party Transactions — (Continued)

of $45 for the period July 1, 2006 through June 30, 2007. For the period July 1, 2006 through the end of the lease term on April 30, 2010, Wirthlin’s obligation under the Wirthlin LLC Lease, including base rentals, the one-time payment with respect to the Amendment, and increased operating expense payments (assuming no further increase after June 30, 2007) totals an aggregate of $2,151. Dr. Wirthlin has a beneficial interest in 100% of the payments under the Wirthlin LLC Lease.

WB&H Investments, in which the Wirthlin LLC holds an 88.4% interest, is the landlord under a Lease Agreement between that entity and Wirthlin, dated September 15, 1985, and amended as of August 23, 2005 (the “WB&H Lease”), covering facilities used by Wirthlin located at 1998 Columbia Lane, Orem, Utah. Under the original terms of the WB&H Lease, Wirthlin was obligated to pay base rent in the amount of $12 per month, subject to annual adjustment based upon 60% of annual increases in the consumer price index, so that for the period from July 1, 2006 through August 31, 2006, Wirthlin paid base rent of $13 per month and for the period September 1, 2006 through June 30, 2007 Wirthlin paid base rent of $11 per month. In addition, Wirthlin is responsible for payment of its proportionate share of annual operating expenses, for the premises in which the space covered by the WB&H Lease is located, in excess of $2.56 per square usable foot, and Wirthlin’s share equaled $16 between July 1, 2006 and June 30, 2007. For the period from July 1, 2006 through the end of the term of the WB&H Lease on August 31, 2008, Wirthlin’s obligation under the WB&H Lease totals $331, including the aggregate of base rent payments and operating expense payments, which amount will increase on January 1, 2008 based upon any increases in the consumer price index and operating expenses, and Dr. Wirthlin’s beneficial interest is $292.

On July 5, 2006, Dr. Wirthlin sold 400,000 shares of the Company’s common stock in a privately-negotiated sale with the Company through its share repurchase program. The shares were held indirectly through the Wirthlin Family Trust, over which Dr. Wirthlin has sole voting and investment power, and were sold to the Company at a per share price of $5.54. The per share price was based upon the discounted average per share price of the Company’s common stock at market close for the five trading days ended July 5, 2006. The aggregate purchase price received by Dr. Wirthlin was $2,216.

21.   Supplemental Cash Flow Information

Cash paid (received) during the fiscal years ended June 30 for interest and taxes was as follows:

	2007			2006			2005
Interest	$	(2,057	)	$	(1,571	)	$	(423	)
Taxes	$	3,153		$	1,229		$	389

86

HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

22.   Unaudited Quarterly Results of Operations

The following table presents unaudited consolidated quarterly statement of operations data for the fiscal years ended June 30, 2007 and 2006 and reflects the classification of the Company’s Rent and Recruit business as a discontinued operation. In management’s opinion, this information has been prepared on the same basis as the audited consolidated financial statements and includes all adjustments, consisting only of normal recurring adjustments necessary for the fair statement of the unaudited information in the periods presented. This information should be read in conjunction with the consolidated financial statements and related notes included under this Item 8 and in conjunction with other financial information included elsewhere in this Form 10-K. The results of operations for any quarter are not necessarily indicative of results that may be expected for any future periods.

	Three Months Ended
	Sept. 30,			Dec. 31,			Mar. 31,			June 30,			Sept. 30,			Dec. 31,			Mar. 31,			June 30,
	2005			2005			2006			2006			2006			2006			2007			2007
	(In thousands, except per share data)
Revenue from services	$	48,169		$	53,820		$	51,428		$	58,767		$	47,213		$	55,735		$	51,748		$	57,107
Cost of services		22,912			26,463			23,770			28,988			22,477			26,616			26,132			28,048
Gross profit		25,257			27,357			27,658			29,779			24,736			29,119			25,616			29,059
Operating expenses:
Sales and marketing		4,956			4,964			5,168			5,452			4,659			5,316			5,642			5,534
General and administrative		16,435			16,724			16,702			18,297			17,335			16,917			16,945			17,533
Depreciation and amortization		1,910			1,799			1,720			1,782			1,710			1,606			1,604			1,864
Gain on sale of assets		—			—			—			—			—			(410	)		—			(378	)
Restructuring charges		—			—			—			250			—			—			—			337
Total operating expenses		23,301			23,487			23,590			25,781			23,704			23,429			24,191			24,890
Operating income		1,956			3,870			4,068			3,998			1,032			5,690			1,425			4,169
Interest and other income		202			266			396			669			578			615			580			477
Interest expense		(5	)		(6	)		(6	)		(3	)		—			(5	)		(5	)		(284	)
Income from continuing operations before income taxes		2,153			4,130			4,458			4,664			1,610			6,300			2,000			4,362
Provision for income taxes		957			1,833			1,948			1,467			673			2,719			879			1,048
Income from continuing operations		1,196			2,297			2,510			3,197			937			3,581			1,121			3,314
Income (loss) from discontinued operations		44			53			25			136			(5	)		43			35			49
Net income	$	1,240		$	2,350		$	2,535		$	3,333		$	932		$	3,624		$	1,156		$	3,363
Basic net income (loss) per share*:
Continuing operations	$	0.02		$	0.04		$	0.04		$	0.05		$	0.02		$	0.06		$	0.02		$	0.06
Discontinued operations		0.00			0.00			0.00			0.00			(0.00	)		0.00			0.00			0.00
Basic net income per share	$	0.02		$	0.04		$	0.04		$	0.05		$	0.02		$	0.06		$	0.02		$	0.06
Diluted net income (loss) per share*:
Continuing operations	$	0.02		$	0.04		$	0.04		$	0.05		$	0.02		$	0.06		$	0.02		$	0.06
Discontinued operations		0.00			0.00			0.00			0.00			(0.00	)		0.00			0.00			0.00
Diluted net income per share	$	0.02		$	0.04		$	0.04		$	0.05		$	0.02		$	0.06		$	0.02		$	0.06

87

HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

23.   Subsequent Events

Decima Research Acquisition

Effective on August 16, 2007, the Company, 2144798 Ontario Inc. (the Company’s wholly-owned, indirect subsidiary, “Canco”), a corporation incorporated under the laws of the Province of Ontario, Canada, and all of the stockholders of Decima Research Inc., a corporation amalgamated under the laws of Province of Ontario, Canada (“Decima”) (such stockholders, collectively, the “Decima Sellers”) entered into a Share Purchase Agreement dated August 16, 2007 (the “Decima Purchase Agreement”) pursuant to which Canco purchased 100% of the outstanding shares (the “Decima Shares”) of Decima.

The Decima Purchase Agreement provided for an aggregate up-front purchase price for the Decima Shares of CAD$22,400 (approximately US$21,300, based on the August 15, 2007 Canadian to U.S. Dollar conversion rate), less the amount of Decima interest bearing debt at the time of closing (“Closing Debt”), and subject to increase or decrease to the extent the working capital of Decima at closing (“Closing Working Capital”) exceeded or fell below a target of CAD$2,700. Decima interest bearing debt will be repaid promptly following closing. The up-front purchase price was payable in cash, and based upon estimated Closing Debt and Closing Working Capital, resulted in a net adjusted cash up-front payment at closing of CAD$19,100. The up-front purchase price is subject to further adjustment as the amounts of Closing Debt and Closing Working Capital are finally determined post-closing. As provided in the Decima Purchase Agreement, CAD$2,000 was withheld from the up-front purchase price payment and placed in escrow to secure the Decima Sellers’ representations, warranties, and covenants. 50% of the escrowed amount, less Canco claims, will be released to the Decima Sellers on each of August 16, 2008 and November 16, 2008.

In addition to the up-front purchase price, the Decima Purchase Agreement provided for contingent consideration in the form of (i) a short-term earn-out payment of CAD$2,000 if Decima EBITDA, subject to certain pre-closing and closing-related credits (the “Credits”), exceeds CAD$7,540 for the period between closing and February 16, 2009, and (ii) long-term earn-out payments (“Decima Long-Term Earn-Out”), uncapped, and targeted at an aggregate of CAD$15,000 based upon achievement of Decima historical growth and profitability levels. The Decima Long-Term Earn-Out is measured and paid based on performance during the periods ending on each of June 30, 2008, 2009, 2010, 2011, and 2012. The Decima Purchase Agreement provided protections intended to preserve the opportunity for the Decima Sellers to achieve the Decima Long-Term Earn-Out targets.

Marketshare Acquisition

Effective on August 16, 2007, HII, Harris Interactive Asia Limited, (HII’s Hong Kong wholly-owned subsidiary, “Harris Asia”), and all the stockholders of (i) Marketshare Limited, a company incorporated under the laws of Hong Kong (“Marketshare”), and (ii) Marketshare Pte Ltd, a company incorporated under the laws of Singapore (“Marketshare Pte”) (such stockholders, collectively, the “Marketshare Sellers”), entered into an Agreement Relating to the Sale and Purchase of the Entire Issued Share Capitals of Marketshare Limited and Marketshare Pte Ltd dated August 16, 2007 (the “Marketshare Purchase Agreement,”), pursuant to which Harris Asia purchased 100% of the issued share capital (the “Marketshare Shares”) of Marketshare and Marketshare Pte.

88

HARRIS INTERACTIVE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Years Ended June 30, 2007, 2006 and 2005

23.   Subsequent Events — (Continued)

The Marketshare Purchase Agreement provided for an aggregate purchase price for the Marketshare Shares of US$2,800 of which US$2,380 was paid to the Marketshare Sellers in cash at closing, and the remaining US$420 was held back in escrow to secure the Marketshare Sellers’ representations, warranties, and covenants. The escrowed amount, less any Harris Asia claims, will be released to the Marketshare Sellers on August 16, 2008.

In addition to the up-front purchase price, the Marketshare Purchase Agreement provided for contingent consideration in the form of long-term earn-out payments (“Marketshare Long-Term Earn-Out”). Marketshare Long-Term Earn-Out payments will be due if Marketshare and Marketshare Pte achieve growth and profitability expectations with respect to periods ending June 30 of each of 2008, 2009, 2010, 2011, and 2012. Such payments are targeted to be aggregate of US$1,800 but are contingent and uncapped.

Index to Financial Statement Schedules

Schedule II — Valuation Qualifying Accounts 94

89

Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.   Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act, that are designed to ensure that information required to be disclosed in reports that the Company files or submits pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of each fiscal quarter and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the Company’s management conducts an evaluation of the effectiveness of the Company’s disclosure controls and procedures. It is the conclusion of the Company’s Chief Executive Officer and Chief Financial Officer, based upon an evaluation completed as of June 30, 2007, the end of the most recent fiscal quarter covered by this Annual Report on Form 10-K, that the Company’s disclosure controls and procedures were effective.

Management’s Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America.

The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the Company’s consolidated financial statements. Internal control over financial reporting includes the controls themselves, monitoring and internal auditing practices and actions taken to correct deficiencies as identified.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company’s internal control over financial reporting was effective as of June 30, 2007. Management has reviewed the results of its assessment with the Audit Committee of the Board of Directors. Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of June 30, 2007 has been audited by PricewaterhouseCoopers LLP, an

90

independent registered public accounting firm, as stated in their report which is included under Item 8, “Financial Statements and Supplementary Data,” of this Form 10-K.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2007 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B.   Other Information

On September 6, 2007 the Company and each of Dee T. Allsop and George H. Terhanian entered into Employment Agreements which superseded and replaced existing Employment Agreements and Change In Control Agreements with each of them. The Employment Agreements were a result of efforts by the Compensation Committee to achieve as much uniformity as practical among the Company’s executive employment agreements, and include:

•  Continuation of Dr. Terhanian’s base salary at $299,000 and increase of his target bonus to $100,000, each subject to certain adjustments for currency fluctuations,

•  Continuation of Dr. Allsop’s base salary at $275,000 and his target bonus at $75,000,

•  Continuation of Dr. Terhanian’s benefits related to his residence in the United Kingdom,

•  Post-termination payments in the event Dr. Terhanian’s employment is terminated without cause or by him for good reason (in each case including after a change in control), equal to one-year’s base salary, one-year’s health benefits, and a pro rated bonus payment, with a requirement for delivery of a general release as a condition for the receipt of such payments,

•  Post-termination payments in the event Dr. Allsop’s employment is terminated without cause or by him for good reason equal to six month’s base salary, six-month’s health benefits and a pro rated bonus payment, and post-termination payments in the event Dr. Allsop’s employment is terminated without cause or by him for good reason in the first year after a change in control equal to one year’s base salary, one year’s health benefits and a pro rated bonus payment, in each case with a requirement for delivery of a general release as a condition for the receipt of such payments, and

•  Non-compete/non-solicitation, non-disparagement, and confidentiality terms with a claw-back of post-termination payments in the event of a violation of the terms of the agreement.

Copies of Dr. Terhanian’s and Dr. Allsop’s Employment Agreements are attached to this Annual Report on Form 10-K as Exhibits 10.4.34 and 10.4.2, respectively.

On September 6, 2007, the Company entered into a Change in Control Agreement with Eric W. Narowski, the Company’s Vice President, Corporate Controller and Principal Accounting Officer. The form of Change in Control Agreement with Mr. Narowski is the form previously used by the Company in connection with other executive officers, and was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 31, 2005 and incorporated herein by reference.

PART III

Item 10.   Directors, Executive Officers and Corporate Governance

The information required by Item 10 of Form 10-K with respect to our directors is incorporated by reference from the information contained in the section captioned “Election of Directors” in our definitive Proxy Statement for the Annual Meeting of Stockholders to be held on October 30, 2007 (the “Proxy Statement”), a copy of which will be filed with the Securities and Exchange Commission within 120 days after the end of our fiscal year ended June 30, 2007. The information required by

91

Item 10 of Form 10-K with respect to our executive officers is incorporated by reference from “Item 1 — Business — Executive Officers of Harris Interactive” of this Annual Report on Form 10-K.

The information required by Item 10 of Form 10-K with respect to the identification of our Audit Committee and Audit Committee financial expert is incorporated by reference from the information contained in the section captioned “Corporate Governance — Committees of the Board of Directors” in the Proxy Statement.

The information required by Item 10 of Form 10-K with respect to compliance with Section 16(a) of the Exchange Act is incorporated by reference from the information contained in the section captioned “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement.

Our employees, officers, directors, representatives, consultants, contractors, and agents are subject to our Code of Ethics. An Addendum to the Code of Ethics contains additional requirements for our Chief Executive Officer and senior financial officers. The Code of Ethics and Addendum are available in the Investor Relations section of our website at www.harrisinteractive.com. We intend to satisfy the disclosure requirements of Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of our Code of Ethics or the Addendum applicable to our Chief Executive Officer and senior financial officers by posting such information in the Investor Relations section of our website.

Item 11.   Executive Compensation

The information required by Item 11 of Form 10-K is incorporated by reference from the information contained in the sections captioned “Compensation of Executive Officers and Directors and Other Matters” and “Compensation Committee Report” in the Proxy Statement.

Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Item 12 of Form 10-K is incorporated by reference from the information contained in the sections captioned “Security Ownership of Certain Beneficial Owners”, “Security Ownership of Directors and Executive Officers” and “Equity Compensation Plan Information” in the Proxy Statement.

Item 13.   Certain Relationships and Related Transactions, and Director Independence

The information required by Item 13 of Form 10-K with respect to transactions with related persons is incorporated by reference from the information contained in the section captioned “Certain Relationships and Related Transactions” in the Proxy Statement.

The information required by Item 13 of Form 10-K with respect to director independence is incorporated by reference from the information contained in the section captioned “Corporate Governance — Committees of the Board of Directors” in the Proxy Statement.

Item 14.   Principal Accountant Fees and Services

The information required by Item 14 of Form 10-K is incorporated by reference from the information contained in the section captioned “Audit Fees” in the Proxy Statement.

92

PART IV

Item 15.   Exhibit and Financial Statements Schedules

Financial Statements

Reference is made to Item 8, “Financial Statements and Supplementary Data,” of Part II of this Form 10-K.

Exhibits

Reference is made to the Index of Exhibits accompanying this Form 10-K as filed with the Securities and Exchange Commission. The Company will furnish to any shareholder, upon written request, any exhibit listed in such Index to Exhibits upon payment by such shareholder of the Company’s reasonable expenses in furnishing such exhibit.

93

Schedule II
Valuation and Qualifying Accounts
(In thousands)

	Balance at		Additions		Deductions		Balance
	Beginning		Charged to		Amounts		at End
	of Period		Earnings		Written Off		of Period
Fiscal year ended June 30, 2005
Deducted in the consolidated balance sheet:
Allowance for doubtful accounts receivable	$	224	$	225	$	244	$	205
Deferred tax valuation allowance	$	1,417	$	1,536	$	123	$	2,830
Fiscal year ended June 30, 2006
Deducted in the consolidated balance sheet:
Allowance for doubtful accounts receivable	$	205	$	25	$	160	$	70
Deferred tax valuation allowance	$	2,830	$	—	$	1,036	$	1,794
Fiscal year ended June 30, 2007
Deducted in the consolidated balance sheet:
Allowance for doubtful accounts receivable	$	70	$	34	$	22	$	82
Deferred tax valuation allowance	$	1,794	$	—	$	998	$	796

94

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized,

HARRIS INTERACTIVE INC.

Date: September 12, 2007

By:  /s/  Ronald E. Salluzzo

Ronald E. Salluzzo

Executive Vice President, Chief

Financial Officer,

Treasurer and Secretary

(On Behalf of the Registrant and as

Principal Financial Officer)

95

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints, jointly and severally, Gregory T. Novak and Ronald E. Salluzzo and each of them, as his true and lawful attorneys-in-fact and agents, each with full power of substitution, for him, and in his name, place and stead, in any and all capacities, to sign any amendments to this Report on Form 10-K, and to file the same, with Exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Capacity	Date
/s/  Gregory T. Novak Gregory T. Novak	President and Chief Executive Officer (Principal Executive Officer) and Director	September 12, 2007
/s/  Ronald E. Salluzzo Ronald E. Salluzzo	Executive Vice President, Chief Financial Officer, Treasurer and Secretary (Principal Financial Officer)	September 12, 2007
/s/  Eric W. Narowski Eric W. Narowski	Vice President and Corporate Controller (Principal Accounting Officer)	September 12, 2007
/s/  Leonard R. Bayer Leonard R. Bayer	Director	September 12, 2007
/s/  George Bell George Bell	Director	September 12, 2007
/s/  David Brodsky David Brodsky	Director	September 12, 2007
/s/  Stephen D. Harlan Stephen D. Harlan	Director	September 12, 2007
/s/  James R. Riedman James R. Riedman	Director	September 12, 2007
/s/  Subrata K. Sen Subrata K. Sen	Director	September 12, 2007
/s/  Howard L. Shecter Howard L. Shecter	Director	September 12, 2007
/s/  Antoine G. Treuille Antoine G. Treuille	Director	September 12, 2007

96

INDEX OF EXHIBITS

Exhibit
Number			Exhibit Title
	2	.1	Agreement and Plan of Merger, dated August 5, 2001, among Harris Interactive Inc. (the “Company”), Total Merger Sub Inc., and Total Research Corporation (filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed August 14, 2001 and incorporated herein by reference).
	2	.2	Share Purchase Agreement dated March 2, 2004 among Harris Interactive International Inc. (‘‘HII”) and the Shareholders of Novatris, S.A. (filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-3 filed March 8, 2004 (Registration No. 333-113389) and incorporated herein by reference).
	2	.3	Agreement and Plan of Merger, dated as of September 8, 2004, by and among the Company, Wirthlin Worldwide, Inc. (‘‘Wirthlin”), Capitol Merger Sub, LLC and the Stockholders of Wirthlin (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed September 9, 2004 and incorporated herein by reference).
	2	.4	Stock Purchase Agreement dated May 19, 2005, by and among Minoru Aoo, M&A Create Co., Ltd., and HII (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 23, 2005 and incorporated herein by reference).
	2	.5	Share Sale and Purchase Agreement, dated March 30, 2007, among the Company, HII, and the stockholders of MediaTransfer AG Netresearch & Consulting (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed April 2, 2007 and incorporated herein by reference).
	2	.6	Share Purchase Agreement dated August 16, 2007 by and among the Company, 2144798 Ontario Inc., and all the stockholders of Decima Research Inc. (filed as Exhibit 2.1.1 to the Company’s Current Report on Form 8-K filed August 16, 2007 and incorporated herein by reference).
	2	.7	Agreement Relating to the Sale and Purchase of the Entire Issued Share Capitals of Marketshare Limited and Marketshare Pte Ltd dated August 16, 2007 by and among Harris Interactive Asia Limited, HII, and all the stockholders of Marketshare Limited and Marketshare Pte Ltd (filed as Exhibit 2.1.6 to the Company’s Current Report on Form 8-K filed August 16, 2007 and incorporated herein by reference).
	3	.1	Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2000 and incorporated herein by reference).
	3	.2	By-laws of the Company (filed as Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2001 and incorporated herein by reference).
	3	.3	Certificate of Designation, Preferences and Rights of Series A Preferred Stock of the Company (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed March 14, 2005 and incorporated herein by reference).
	4	.1	Rights Agreement, dated as of March 11, 2005, by and between the Company and American Stock Transfer & Trust Company, as Rights Agent (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed March 14, 2005 and incorporated herein by reference).
	10	.1.1*	Long-Term Incentive Plan of the Company (included as Appendix B to the Company’s Definitive Proxy Statement on Schedule 14A filed October 8, 2004 and incorporated herein by reference).
	10	.1.2*	Form of Non-Qualified Stock Option Agreement (filed as Exhibit 10.3 to the Company’s Registration Statement on Form S-8 filed December 14, 2004 (Registration No. 333-121250) and incorporated herein by reference).
	10	.1.3*	Form of Non-Qualified Stock Option Agreement (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2006 and incorporated herein by reference)

97

Exhibit
Number			Exhibit Title
	10	.1.4*	Form of Non-Qualified Stock Option Agreement (filed as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2007 and incorporated herein by reference).
	10	.1.5*	Form of Incentive Stock Option Agreement (filed as Exhibit 10.4 to the Company’s Registration Statement on Form S-8 filed December 14, 2004 (Registration No. 333-121250) and incorporated herein by reference).
	10	.1.6*	Form of Restricted Stock Agreement for Non-Employee Directors (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed May 9, 2006 and incorporated herein by reference).
	10	.1.7*	Form of Restricted Stock Agreement for Non-Employee Directors (filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2007 and incorporated herein by reference).
	10	.1.8*	Form of Restricted Stock Agreement for Employees (filed as Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2006 and incorporated herein by reference).
	10	.1.9*	Form of Restricted Stock Agreement for Employees (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2006 and incorporated herein by reference.
	10	.1.10*	Form of Restricted Stock Agreement for Employees (filed as Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2007 and incorporated herein by reference).
	10	.1.11*	Form of Restricted Stock Agreement for Employees (2007 Performance Based Award Grants).
	10	.2.1*	1999 Employee Stock Purchase Plan of the Company (included as Appendix C to the Company’s Definitive Proxy Statement on Schedule 14A filed October 8, 2004 and incorporated herein by reference).
	10	.2.2*	Form of Subscription Agreement under 1999 Employee Stock Purchase Plan of the Company (included as Exhibit A to Exhibit 10.2 to the Company’s Registration Statement on Form S-1 filed September 17, 1999 (Registration No. 333-87311) and incorporated herein by reference).
	10	.3.1	Share Repurchase Program 10b5-1 Plan Document, dated as of June 9, 2006 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed June 12, 2006 and incorporated herein by reference).
	10	.3.2	Share Repurchase Program 10b5-1 Plan Document, dated as of March 9, 2007 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 12, 2007 and incorporated herein by reference).
	10	.4.1*	Letter Agreement between the Company and Dee Allsop, dated September 9, 2004 (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2004 and incorporated herein by reference).
	10	.4.2*	Employment Agreement between the Company and Dee Allsop, dated September 6, 2007.
	10	.4.3*	Employment Agreement dated August 16, 2007 between Decima Research Inc. and Bruce Anderson (filed as Exhibit 2.1.3 to the Company’s Current Report on Form 8-K filed August 16, 2007 and incorporated herein by reference)
	10	.4.4*	Non-Qualified Option Agreement with Bruce Anderson dated August 16, 2007 (filed as Exhibit 2.1.4 to the Company’s Current Report on Form 8-K filed August 16, 2007 and incorporated herein by reference)
	10	.4.5*	Restricted Stock Agreement with Bruce Anderson dated August 16, 2007(filed as Exhibit 2.1.5 to the Company’s Current Report on Form 8-K filed August 16, 2007 and incorporated herein by reference)

98

Exhibit
Number			Exhibit Title
	10	.4.6*	Amended and Restated Employment Agreement between the Company and Albert Angrisani, effective as of April 1, 2004 (filed as Exhibit 99.2 to the Company’s Current Report on Form 8-K filed April 2, 2004 and incorporated herein by reference).
	10	.4.7*	Employment Agreement by and between the Company and Leonard R. Bayer, dated July 1, 2003 (filed as Exhibit 10.31 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2003 and incorporated herein by reference).
	10	.4.8*	Amendment to Employment Agreement between the Company and Leonard R. Bayer, dated as of January 1, 2005 (filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed January 4, 2005 and incorporated herein by reference).
	10	.4.9*	Amendment Number 2 to Employment Agreement between the Company and Leonard R. Bayer, dated as of June 15, 2006 and effective as of July 1, 2006 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed June 20, 2006 and incorporated herein by reference).
	10	.4.10*	Employment Agreement between the Company and Leonard R. Bayer, dated as of April 30, 2007 (filed as Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2007 and incorporated herein by reference).
	10	.4.11*	Employment Agreement between the Company and Gordon S. Black, dated as of December 16, 2002 (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2002 (erroneously referenced therein as Confidentiality and Non-Competition Agreement) and incorporated herein by reference).
	10	.4.12*	Amendment to Employment Agreement by and between the Company and Gordon S. Black, dated July 1, 2003 (filed as Exhibit 10.30 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2003 and incorporated herein by reference).
	10	.4.13*	Employment Agreement between the Company and Frank J. Connolly, Jr., dated as of January 1, 2005 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 4, 2005 and incorporated herein by reference).
	10	.4.14*	Non-Qualified Stock Option Agreement between the Company and Frank J. Connolly, Jr., dated as of January 3, 2005 (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed January 4, 2005 and incorporated herein by reference).
	10	.4.15*	Amendment to Employment Agreement between the Company and Frank J. Connolly, Jr. dated as of April 28, 2006 (filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2006 and incorporated herein by reference).
	10	.4.16*	Employment Agreement by and between Total Research Corporation and Theresa Flanagan, dated January 1, 1999 (filed as Exhibit 10.34 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2003 and incorporated herein by reference).
	10	.4.17*	Letter agreement between the Company and Theresa A. Flanagan, dated as of April 26, 2005 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 29, 2005 and incorporated herein by reference).
	10	.4.18*	Employment Agreement between the Company and Robert E. Knapp, dated as of December 31, 2003 and effective as of January 26, 2004 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 6, 2004 and incorporated herein by reference).
	10	.4.19*	Amendment to Employment Agreement between the Company and Robert E. Knapp, dated as of January 1, 2005 (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed January 4, 2005 and incorporated herein by reference).
	10	.4.20*	Separation Agreement and Mutual Release of Claims effective as of June 30, 2005 between the Company and Robert E. Knapp (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 6, 2005 and incorporated herein by reference).
	10	.4.21*	Employment Agreement between the Company and Gregory T. Novak, dated April 1, 2004 (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2004 and incorporated herein by reference).

99

Exhibit
Number			Exhibit Title
	10	.4.22*	Amendment to Employment Agreement between the Company and Gregory T. Novak, dated as of January 1, 2005 (filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K filed January 4, 2005 and incorporated herein by reference).
	10	.4.23*	Amendment to Employment Agreement by and between the Company and Gregory T. Novak, dated as of May 24, 2005 and effective as of May 23, 2005 (filed as Exhibit 10.3.30 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2005 and incorporated herein by reference).
	10	.4.24*	Amended and Restated Employment Agreement between the Company and Gregory T. Novak, dated as of September 28, 2005 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 3, 2005 and incorporated herein by reference).
	10	.4.25*	Modification of Salary Arrangement between the Company and Gregory T. Novak (filed as Exhibit 10.3.42 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2006 and incorporated herein by reference).
	10	.4.26*	Employment Agreement between the Company and Gregory T. Novak, dated as of April 30, 2007 (filed as Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2007 and incorporated herein by reference).
	10	.4.27*	Letter Agreement between the Company and David Richardson, dated September 9, 2004 (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2004 and incorporated herein by reference).
	10	.4.28*	Employment Agreement between the Company and Ronald E. Salluzzo, dated as of February 16, 2006 and effective as of March 6, 2006 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed February 17, 2006 and incorporated herein by reference).
	10	.4.29*	Form of Non-Qualified Stock Option Agreement between the Company and Ronald E. Salluzzo, dated as of March 6, 2006 (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed February 17, 2006 and incorporated herein by reference).
	10	.4.30*	Modification of Salary Arrangement between the Company and Ronald E. Salluzzo (filed as Exhibit 10.3.41 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2006 and incorporated herein by reference).
	10	.4.31*	Employment Agreement between the Company and Ronald E. Salluzzo, dated as of April 30, 2007 (filed as Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2007 and incorporated herein by reference).
	10	.4.32*	Employment Agreement by and between the Company and George Terhanian, dated September 26, 2002 (filed as Exhibit 10.32 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2003 and incorporated herein by reference).
	10	.4.33*	Modification of Salary Arrangement between the Company and George B. Terhanian (filed as Exhibit 10.3.45 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2006 and incorporated herein by reference).
	10	.4.34*	Employment Agreement between the Company and George H. Terhanian, dated as of September 6, 2007.
	10	.4.35*	Employment Agreement between the Company and David Vaden, dated January 1, 2004 (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2004 and incorporated herein by reference).
	10	.4.36*	Employment Agreement between the Company and David B. Vaden, dated as of April 3, 2006 and effective as of February 20, 2006 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 7, 2006 and incorporated herein by reference).
	10	.4.37*	Employment Agreement between the Company and David B. Vaden, dated as of April 30, 2007 (filed as Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2007 and incorporated herein by reference).

100

Exhibit
Number			Exhibit Title
	10	.4.38*	Letter Agreement between the Company and Richard B. Wirthlin, dated September 9, 2004 (filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2004 and incorporated herein by reference).
	10	.4.39*	Salary and Termination Arrangements for Executive Officers between the Company and each of Katherine A. Binns, Richard W. Millard, Michelle F. O’Neill and Arthur E. Coles (filed as Exhibit 10.13 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2007 and incorporated herein by reference).
	10	.4.40*	Form of Change in Control Agreement entered into by Company with each of the following individuals (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2003 and incorporated herein by reference):

Dennis K. Bhame	Arthur E. Coles
Gareth Davies	James E. Fredrickson
Ronald B. Knight	Peter J. Milla
Gregory T. Novak
David B. Vaden

10	.4.41*	Form of Change in Control Agreement between the Company and each of Aled Morris, David Richardson and Stephan Sigaud (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 31, 2005 and incorporated herein by reference).
10	.4.42*	Change in Control Agreements between the Company and each of Katherine A. Binns, Richard W. Millard and Michelle F. O’Neill (filed as Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2007 and incorporated herein by reference).
10	.4.43*	Form of Change in Control Agreement between the Company and Eric W. Narowski.
10	.4.44*	Form of Non-Qualified Stock Option Agreement between the Company and certain employees of Novatris, S.A. dated as of March 2, 2004 (filed as Exhibit 4.2 to the Company’s Registration Statement on Form S-8 filed March 8, 2004 (Registration No. 333-113392) and incorporated herein by reference).
10	.4.45*	Summary of Compensation Arrangements for Non-Employee Directors of Harris Interactive Inc. (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed June 13, 2005 and incorporated herein by reference).
10	.4.46*	Summary of Compensation Arrangements for Non-Employee Directors of Harris Interactive Inc. (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 9, 2006 and incorporated herein by reference).
10	.4.47*	Summary of Compensation Arrangements for Non-Employee Directors of Harris Interactive, effective as of November 1, 2006 (filed as Exhibit 10.3.43 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2006 and incorporated herein by reference).
10	.4.48*	Description of Changes to Compensation Arrangements for Non-Employee Directors of Harris Interactive Inc. effective as of September 6, 2007.
10	.4.49*	Description of Amended Executive Cash Bonus Plan as amended September 7, 2005 and September 8, 2005 (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed October 3, 2005 and incorporated herein by reference).
10	.4.50*	Description of Cash Bonus Plan as amended August 21, 2006 (filed under Item 1.01 of the Company’s Current Report on Form 8-K filed August 25, 2006 and incorporated herein by reference).
10	.4.51*	Description of Executive Officer Compensation Arrangements (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 12, 2005 and incorporated herein by reference).
10	.4.52*	Summary of Salary Arrangements for Executive Officers (filed as Exhibit 10.3.44 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2006 and incorporated herein by reference).

101

Exhibit
Number			Exhibit Title
	10	.4.53*	Description of Salary and Bonus Arrangements with Executive Officers — Fiscal 2007 and 2008.
	10	.5	Form of Option Agreement between the Company and certain of the Shareholders of Novatris, S.A. (filed as Exhibit 10.2 to the Company’s Registration Statement on Form S-3 filed March 8, 2004 (Registration No. 333-113389) and incorporated herein by reference).
	10	.6.1	Leases for 135, 155 & 60 Corporate Woods, Rochester, New York dated April 12, 1991 between Gordon S. Black Corporation and Corporate Woods Associates, together with all amendments thereto (filed as Exhibit 10.6.1 to the Company’s Registration Statement on Form S-1 filed September 17, 1999 and incorporated herein by reference); amendments dated February 11, 2000, March 14, 2000 and October 1, 2000 (filed as Exhibit 10.6.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2001 and incorporated herein by reference).
	10	.6.2	Lease Agreement for 60 and 135 Corporate Woods, Rochester, New York dated February 2, 2007 between the Company and Corporate Woods Associates, LLC (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2006 and incorporated herein by reference).
	10	.6.3	Lease for 70 Carlson Road, Rochester, New York dated July 1, 1998 between Gordon S. Black Corporation and Carlson Park Associates, together with all amendments thereto (filed as Exhibit 10.6.2 to the Company’s Registration Statement on Form S-1 filed September 17, 1999 (Registration No. 333-87311) and incorporated herein by reference).
	10	.6.4	Agreement of Sublease between the Company and The McCall Pattern Company, Inc., as successor-in-interest by merger to Butterick Company, Inc., dated as of June 8, 2004 (filed as Exhibit 10.5.4 to the Company’s Current Report on Form 8-K filed March 18, 2005 and incorporated herein by reference).
	10	.6.5	Agreement of Sublease between the Company and McCann Erickson Inc., dated as of March 29, 2007 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 4, 2007 and incorporated herein by reference).
	10	.6.6	Lease Agreement between Wirthlin (formerly known as Decima Research) and WB&H Investments, dated September 15, 1985 (filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2004 and incorporated herein by reference).
	10	.6.7	Lease Agreement Amendment Number 1 between Wirthlin Worldwide, LLC and WB&H Investments, dated as of August 23, 2005 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 26, 2005 and incorporated herein by reference).
	10	.6.8	Lease Agreement between Wirthlin (formerly known as Decima Research) and Richard B. Wirthlin Family LLC, dated April 23, 2002 (filed as Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2004 and incorporated herein by reference).
	10	.6.9	First Amendment to Lease Agreement between the Company and Richard B. Wirthlin Family LLC, dated as of May 10, 2007 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 16, 2007 and incorporated herein by reference).
	10	.6.10	Lease between Silk Developments Limited and Business Market Research Limited, dated July 15, 1997 (filed as Exhibit 10.5.8 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2005 and incorporated herein by reference).
	10	.6.11	Rent Review Memorandum between Silk Developments Limited and Business Market Research Limited dated August 30, 2002 (filed as Exhibit 10.5.9 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2005 and incorporated herein by reference).
	10	.6.12	Lease among Procter & Gamble (LLCP Limited), Procter & Gamble (Health & Beauty Care Limited, HI Europe Limited and Harris Interactive Inc, dated May 9, 2005 (filed as Exhibit 10.5.10 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2005 and incorporated herein by reference).

102

Exhibit
Number			Exhibit Title
	10	.6.13	Agreement for Surrender among Procter & Gamble (LLCP Limited), Procter & Gamble (Health & Beauty Care Limited, HI Europe Limited and Harris Interactive Inc., dated April 4, 2005 (filed as Exhibit 10.5.11 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2005 and incorporated herein by reference).
	10	.6.14	Lease between Merritt 7 Venture LLC and Harris Interactive, Inc., dated March 27, 2001 (filed as Exhibit 10.5.12 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2005 and incorporated herein by reference).
	10	.6.15	Lease amendment Number 1 between Merritt 7 Venture LLC, and Harris Interactive Inc., dated as of January 21, 2005 (filed as Exhibit 10.5.13 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2005 and incorporated herein by reference).
	10	.6.16	Lease Agreement Amendment Number 2 for 4665 Cornell Rd, Blue Ash, Ohio dated April 9, 2003 between Wirthlin Worldwide LLC and CR Blue Ash LLC. (filed as Exhibit 10.5.15 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2005 and incorporated herein by reference).
	10	.6.17	Lease Agreement Amendment Number 8 between Harris Interactive Inc, and 5 Independence Associates Limited Partnership for 5 Independence Way, Princeton, New Jersey dated February 24, 2004 (filed as Exhibit 10.5.16 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2005 and incorporated herein by reference).
	10	.6.18	Lease between Meggitt Properties plc and Business Market Research Limited, dated July 31, 2000 (filed as Exhibit 10.5.15 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2006 and incorporated herein by reference).
	10	.6.19	Rent Review Memorandum between Meggitt Properties plc and Business Market Research Limited dated May 9, 2006 (filed as Exhibit 10.5.16 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2006 and incorporated herein by reference).
	10	.6.20	Lease between Seiko UK Limited and HI Europe Limited, dated July 29, 2005 (filed as Exhibit 10.5.17 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2006 and incorporated herein by reference).
	10	.7.1	Revolving Credit Facility between Gordon S. Black Corporation and Manufacturers and Traders Trust Company dated August 18, 1999 (filed as Exhibit 10.9 to the Company’s Registration Statement on Form S-1/A filed October 26, 1999 (Registration No. 333-87311) and incorporated herein by reference).
	10	.7.2	Amendment to Revolving Credit Facility between the Company and Manufacturers and Traders Trust Company dated March 2, 2004 (filed as Exhibit 10.6.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2004 and incorporated herein by reference).
	10	.7.3	Credit Agreement between JPMorgan Chase Bank, N.A. and the Company, dated as of August 15, 2006 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 21, 2006 and incorporated herein by reference).
	10	.7.4	Line of Credit Note between JPMorgan Chase Bank, N.A. and the Company, dated as of August 15, 2006 (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed August 21, 2006 and incorporated herein by reference).
	10	.7.5	Amendment to Credit Agreement by and between the Company and JPMorgan Chase Bank, N.A., dated April 3, 2007 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 9, 2007 and incorporated herein by reference).
	10	.7.6	Amendment to Line of Credit Note by and between the Company and JPMorgan Chase Bank, N.A., dated April 3, 2007 (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed April 9, 2007 and incorporated herein by reference).
	10	.7.7	Amendment to Credit Agreement by and between the Company and JPMorgan Chase Bank, N.A., dated as of July 2, 2007 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 27, 2007 and incorporated herein by reference).

103

Exhibit
Number			Exhibit Title
	10	.7.8	Amendment to Line of Credit Note by and between the Company and JPMorgan Chase Bank, N.A., dated as of July 2, 2007 (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed July 27, 2007 and incorporated herein by reference).
	10	.7.9	Interest Rate Swap Confirmation by and between the Company and JPMorgan Chase Bank, N.A., dated as of July 2, 2007
	10	.8.1	Amended and Restated Investment Agreement between Riedman Corporation and the Company dated October 15, 1991 (filed as Exhibit 10.12 to the Company’s Registration Statement on Form S-1/A filed October 26, 1999 (Registration No. 333-87311) and incorporated herein by reference).
	10	.8.2	Registration Agreement between the Company and Riedman Corporation dated as of October 15, 1999 (filed as Exhibit 10.17 to the Company’s Registration Statement on Form S-1/A filed October 26, 1999 (Registration No. 333-87311) and incorporated herein by reference).
	10	.9	Escrow Agreement by and among the Company, Manufacturers and Traders Trust Company, and the Stockholders of Wirthlin, dated as of September 8, 2004 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed September 9, 2004 and incorporated herein by reference).
	10	.10	Form of Noncompetition, Nondisclosure and Nonsolicitation Agreement by and among the Company and certain of the Stockholders of Wirthlin, dated as of September 8, 2004 (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed September 9, 2004 and incorporated herein by reference).
	10	.11	Form of Release given by each of the Stockholders of Wirthlin, dated as of September 8, 2004 (filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed September 9, 2004 and incorporated herein by reference).
	10	.12	Consent, Waiver and Amendment to Loan Agreement by and between Wirthlin and SunTrust Bank, dated as of September 7, 2004 (filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K filed September 9, 2004 and incorporated herein by reference).
	10	.13	Letter agreement by and among Wirthlin, SunTrust Bank and the guarantors party thereto dated as of February 6, 2002 (filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K filed September 9, 2004 and incorporated herein by reference).
	10	.14	Commercial Note by Wirthlin in favor of SunTrust Bank, dated as of September 7, 2004 (filed as Exhibit 10.7 to the Company’s Current Report on Form 8-K filed September 9, 2004 and incorporated herein by reference).
	10	.15	Commercial Note by Wirthlin in favor of SunTrust Bank, dated as of February 6, 2002 (filed as Exhibit 10.8 to the Company’s Current Report on Form 8-K filed September 9, 2004 and incorporated herein by reference).
	10	.16	Promissory Note issued by Wirthlin to James Granger, dated April 29, 2004 (filed as Exhibit 10.14 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2004 and incorporated herein by reference).
	10	.17	Exclusive License Agreement by and between the Company and Taylor Nelson Sofres Plc, dated as of December 31, 2004 (filed as Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2004 and incorporated herein by reference).
	10	.18	Trade Mark Assignment Agreement by and between the Company and Taylor-Nelson Sofres Plc, dated as of January 31, 2006 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed February 2, 2006 and incorporated herein by reference).
	10	.20	Purchase/Sale Agreement between the Company, Charles J. Fombrun and Reputation Institute, Inc., dated as of May 15, 2006 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 19, 2006 and incorporated herein by reference).

104

Exhibit
Number			Exhibit Title
	10	.21	Non-Competition Agreement dated August 16, 2007 by and among Decima Research Inc., 2144798 Ontario Inc., Bruce Anderson, Kevin Loiselle, Michel Lucas, Daniel Kirkland, and Ed Hum (filed as Exhibit 2.1.2 to the Company’s Current Report on Form 8-K filed August 16, 2007 and incorporated herein by reference).
	21		List of Subsidiaries.
	23		Consent of Independent Registered Public Accounting Firm (filed herewith).
	24		Power of Attorney (included on page 82 of this Report).
	31	.1	Certificate of the Chief Executive Officer pursuant to 18 U.S.C. §1350 (Section 302 of the Sarbanes-Oxley Act of 2002) (filed herewith).
	31	.2	Certificate of the Chief Financial Officer pursuant to 18 U.S.C. §1350 (Section 302 of the Sarbanes-Oxley Act of 2002) (filed herewith).
	32	.1	Certificate of the Chief Executive Officer pursuant to 18 U.S.C. §1350 (Section 906 of the Sarbanes-Oxley Act of 2002) (filed herewith).
	32	.2	Certificate of the Chief Financial Officer pursuant to 18 U.S.C. §1350 (Section 906 of the Sarbanes-Oxley Act of 2002) (filed herewith).

*  Denotes management contract or compensatory plan or arrangement.

105

EX-10.1.11

Exhibit 10.1.11

HARRIS INTERACTIVE INC.

RESTRICTED STOCK AGREEMENT

     This Agreement is made effective on August 31, 2007, between HARRIS INTERACTIVE INC., a Delaware Corporation (the “Company”), and ___ (“Participant”).

     WHEREAS, the Company maintains the Harris Interactive Inc. Long-Term Incentive Plan (the “Plan”), which is incorporated into and forms a part of this Agreement, and

     WHEREAS, the Participant has been selected by the committee administering the Plan (the “Committee”) to receive a Restricted Stock Award under the Plan;

     NOW, THEREFORE, IT IS AGREED, by and between the Company and the Participant, as follows:

     1. Award.

          (a) Grant. The Participant is hereby granted ___ shares (the “Restricted Stock”) of the Company’s common stock, par value $.001 per share (“Stock”), which shall be issued as hereinafter provided in Participant’s name subject to certain restrictions thereon. Participant hereby accepts the Restricted Stock subject to the terms and conditions of this Agreement.

          (b) Plan Incorporated. Participant acknowledges receipt of a copy of the Plan and agrees that this award of Restricted Stock shall be subject to all of the terms and conditions set forth in the Plan, including future amendments thereto, if any, pursuant to the terms thereof, which Plan is incorporated herein by reference as a part of this Agreement.

          (c) Statement of Election. In connection with this Agreement, the Participant will deliver to the Company an executed and completed Statement of Decision Regarding Section 83(b) Election in the form provided by the Company.

     2. Risk of Forfeiture (“Forfeiture Restrictions”).

          (a) Forfeiture Due to Failure to Meet Performance Requirements.

               (i) Subject to Sections 2(b) and 3(b), Participant shall forfeit the right to receive the Restricted Stock should the Company’s EBITDA with stock compensation expense added back (“Adjusted EBITDA”) as a percentage of revenue, and the Company’s revenue, for fiscal 2007 not be at least 9.5% and $254,800,000 respectively (the “Minimum Threshold”).

               (ii) If the Minimum Threshold is met, Participant’s rights in the Restricted Stock shall vest in the percentages shown in Schedule A, and the remainder of the Restricted Stock shall be forfeited on August 31, 2008. Such vesting is based upon the average of performance, weighted 60% on Adjusted EBITDA and 40% on revenue.

               (iii) The Minimum Threshold and Schedule A will be adjusted by the Compensation Committee of the Board of Directors of the Company, in its sole discretion, to account for its expectations as to the effect of acquisitions made by the Company in fiscal 2007.

          (b) Forfeiture Due to Termination of Employment. Subject to Section 3(b), should either a Date of Termination or a violation of Section 7 occur prior to the vesting date provided in Section 3, Participant shall forfeit the right to receive the Restricted Stock that would otherwise have vested on date.

          (c) Date of Termination. For purposes of this Section 2, the Participant’s “Date of Termination” shall be the first day occurring on or after the date of this Agreement on which the Participant’s employment with the Company and all Related Companies (as defined in the Plan) terminates (irrespective of the reason for termination and whether such termination is voluntary or involuntary); provided that a termination of employment shall not be deemed to occur by reason of a transfer of the Participant between the Company and a Related Company or between two Related Companies; and further provided that the Participant’s employment shall not be considered terminated while the Participant is on a leave of absence from the Company or a Related Company approved by the Participant’s employer. If, as a result of a sale or other transaction, the Participant’s employer ceases to be a Related Company (and the Participant’s employer is or becomes an entity that is separate from the Company), the occurrence of such transaction shall be treated as the Participant’s Date of Termination caused by the Participant being discharged by the employer.

          (d) Restrictions on Transfer. Neither the Restricted Stock nor any of it may be voluntarily or involuntarily sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of until such time as the restrictions contained in Section 2 lapse as to the applicable Restricted Stock and it is fully vested. Upon any violation of this restriction, the Restricted Stock not theretofore vested shall be forfeited.

     3. Lapse of Forfeiture Restrictions.

          (a) Vesting. Subject to Section 2, all of the Restricted Stock shall vest on August 31, 2008.

          (b) Change in Control. If a Change in Control (as defined in the Plan) shall occur, then immediately all non-vested Restricted Stock, not previously forfeited, shall fully vest and all Forfeiture Restrictions with respect to such shares shall lapse.

          (c) Delivery of Certificates. Restricted Stock with respect to which the forfeiture restrictions have lapsed shall cease to be subject to any restrictions except as provided

2

in Section 4(c), and the Company shall deliver to Participant a certificate representing the shares as to which the Forfeiture Restrictions have lapsed.

     4. Custody of Restricted Stock.

          (a) Custody. One or more certificates evidencing the Restricted Stock shall be issued by the Company in Participant’s name, or at the option of the Company, in the name of a nominee of the Company. The Company may cause the certificate or certificates to be delivered upon issuance to the Secretary of the Company or to such other depository as may be designated by the Committee as a depository for safekeeping until forfeiture occurs or the Forfeiture Restrictions lapse pursuant to the terms of the Plan and this Agreement. Upon request of the Committee, Participant shall deliver to the Company a stock power, endorsed in blank, relating to the Restricted Stock then subject to the Forfeiture Restrictions.

          (b) Additional Securities as Restricted Stock. Any securities received as the result of ownership of Restricted Stock, including without limitation, warrants, options, and securities received as a stock dividend or stock split, or as a result of a recapitalization or reorganization (all such securities to be considered “Restricted Stock” for all purposes under this Agreement), shall be held in custody in the same manner and subject to the same conditions as the Restricted Stock with respect to which they were issued. Participant shall be entitled to direct the Company to exercise any warrant or option received and considered Restricted Stock hereunder upon supplying the funds necessary to do so, in which event securities so purchased shall constitute Restricted Stock. In the event any Restricted Stock at any time consists of a security by its terms or otherwise convertible into or exchangeable for another security at the election of the older thereof, Participant may exercise such right of conversion or exchange in the event the failure to exercise or delay in exercising such right would result in its loss or diminution of value, and any securities so acquired shall be deemed Restricted Stock. In the event of any change in certificates evidencing Restricted Stock by reason of any recapitalization, reorganization or other transaction which results in a creation of Restricted Stock the Company is authorized to deliver to the issuer the certificate evidencing the Restricted Stock in exchange for a replacement certificate, which shall be deemed to be Restricted Stock.

          (c) Delivery to Participant. Upon the lapse of the Forfeiture Restrictions without forfeiture, the Company shall cause certificate(s) for the vested Restricted Stock to be issued in the name of Participant in exchange for the certificate evidencing the previously Restricted Stock. Notwithstanding any other provisions of this Agreement, the issuance or delivery of any shares of Stock (whether subject to restrictions or unrestricted) may be postponed for such period as may be required to comply with applicable requirements of any national securities exchange or any requirements of any regulation applicable to the issuance or delivery of such shares. The Company shall not be obligated to issue or deliver any shares of Stock if the issuance or delivery thereof shall constitute a violation of any provision of any law or of any regulation of any governmental authority or any securities exchange.

3

     5. Status of Stock.

          (a) Rights as Stockholder. Subject to the restrictions contained herein, the Participant shall have all voting and ownership rights applicable to the Restricted Stock, including the right to receive dividends, whether or not such Restricted Stock is vested and unless and until the Restricted Stock is forfeited pursuant to the provisions of this Agreement.

          (b) Compliance with Securities Laws. Participant agrees that the Restricted Stock will not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or state securities laws. Participant also agrees (i) that the legend or legends as the Committee deems appropriate in order to assure compliance with applicable securities laws may be applicable to the Restricted Stock, (ii) that the Company may refuse to register the transfer of the Restricted Stock on the stock transfer records of the Company if such proposed transfer would in the opinion of counsel satisfactory to the Company constitute a violation of any applicable securities law, and (iii) that the Company may give related instructions to its transfer agent, if any, to stop registration of the transfer of the Restricted Stock.

     6. Relationship to Company.

          (a) The existence of this Restricted Stock Agreement shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganization or other changes in the Company’s capital structure or its business, or any merger or consolidation of Company or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Restricted Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding , whether of a similar character or otherwise.

          (b) No Guarantee of Service. This Restricted Stock Agreement shall not confer upon Participant any right with respect to continuance of employment by the Company or any of its affiliates, nor shall it interfere in any way with any right the Company, or its directors or stockholders, would otherwise have to terminate such Participant’s employment at any time.

     7. Non—Competition; Non-Solicitation.

          (a) Consideration for this Section. Participant acknowledges and agrees that:

                    (i) the benefits afforded by this Agreement are discretionary and over and above the ordinary employment compensation provided by the Company to Participant, and in making its decision to offer Participant the benefits afforded by this Agreement the Company relied upon and was induced by the covenants made by Participant in this section,

                    (ii) in accepting the grant evidenced by this Agreement Participant is receiving an asset of significant value, which is adequate consideration for the restrictions imposed by this Agreement,

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                    (iii) Participant’s position with the Company places Participant in a position of confidence and trust with the clients and employees of the Company,

                    (iv) the Company’s business is carried on throughout the world and accordingly, it is reasonable that the restrictive covenants set forth below are not limited by specific geographic area,

                    (v) the course of Participant’s employment with the Company necessarily requires the disclosure of confidential information and trade secrets related to the Company’s relationships with clients (such as, without limitation, pricing information, marketing plans, budgets, designs, methodologies, products, client preferences and policies, and identity of appropriate personnel of clients with sufficient authority to influence a shift in suppliers) as well as other confidential and proprietary information, (such as databases, methodologies, and technologies),

                    (vi) Participant’s employment affords Participant the opportunity to develop a personal acquaintanceship and relationship with the Company’s employees and clients, which in some cases may constitute the Company’s primary or only contact with such employees and clients, and to develop a knowledge of those client’s and employee’s affairs and requirements,

                    (vii) the Company’s relationships with its established clientele and employees are placed in Participant’s hands in confidence and trust, and

                    (viii) it is reasonable and necessary for the protection of the goodwill and business of the Company that Participant make the covenants contained in this Agreement.

          (b) Restricted Activity.

                    (i) Participant agrees that during the term of Participant’s employment, Participant shall not, directly or indirectly, as a director, officer, employee, agent, partner or equity owner of any entity (except as owner of less than 4.9% of the shares of the publicly traded stock of a corporation which Participant does not have in fact the power to control or direct), or in any other manner directly or indirectly engage in any activity or business competitive in any manner with the activities or business of the Company.

                    (ii) For a period of one year after Participant’s Date of Termination, with respect to any services, products, or business pursuits competitive with those of the Company, Participant shall not, directly or indirectly, whether as a director, officer, employee, consultant, agent, partner, equity owner of any entity (except as owner of less than 4.9% of the shares of the publicly traded stock of a corporation which Participant does not have in fact the power to control or direct), participant, proprietor, manager, operator, independent contractor, representative, advisor, trustee, or otherwise, solicit or otherwise deal in any way with any of the clients or customers of the Company:

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               (A) with whom Participant in the course of employment by the Company acquired a relationship or had dealings,

               (B) with respect to whom Participant in the course of employment by the Company was privy to material or proprietary information, or

               (C) with respect to whom Participant was otherwise involved in the course of employment by the Company, whether in a supervisory, managerial, consultative, policy-making, or other capacity involving other Company employees who had direct dealings with such clients and customers.

Such clients and customers include any client or customer to whom the Company sold services or products in the two years prior to the Date of Termination, any prospective client or customer of the Company for whom a proposal was prepared or to whom any other marketing presentation was made within the year prior to the Date of Termination, or any prospective client or customer for whom pursuit was actively planned by the Company within the year prior to the Date of Termination and in respect of whom the Company has not determined to cease such pursuit.

                    (iii) For a period of one year after the Date of Termination, Participant shall not (including without limitation on behalf of, for the benefit of, or in conjunction with or as part of, any other person or entity) directly or indirectly:

               (A) solicit, assist, discuss with or advise, influence, induce or otherwise encourage in any way, any employee of Company to terminate such employee’s relationship with Company for any reason, or assist any person or entity in doing so,

               (B) employ, assist, engage, or otherwise contract or create any relationship with, any employee or former employee of Company in any business or venture of any kind or nature, in the case of a former employee unless such person shall not have been employed by Company for a period of at least one year and no solicitation prohibited hereby shall have occurred prior to the end of such one year period, or

               (C) interfere in any manner with the relationship between any employee and Company.

          (c) Remedies. Participant acknowledges that the Company’s legal remedies for a breach of this Section 7 shall be inadequate, and that without limitation of Company’s rights to any other remedy at law or equity available to it, the Company (i) shall be entitled to obtain injunctive relief to enforce this provision, and (ii) shall be entitled to cancel any rights under this Agreement, and (iii) shall be entitled to recover from the Participant any Stock granted hereunder, whether or not vested, or if such Stock has been transferred or sold, an amount equal to the value thereof, and such Stock and the proceeds thereof shall be held in a constructive trust for the purposes of enforcement hereof. The Company’s rights to enforce this Agreement shall survive any vesting and/or forfeiture of rights hereunder. If any part of this Section 7 shall be

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deemed illegal or unenforceable, this section shall be deemed modified and then enforced to the greatest extent legally enforceable.

     8. Committee’s Powers. No provision contained in this Agreement shall in any way terminate, modify or alter, or be construed or interpreted as terminating, modifying or altering any of the powers, rights or authority vested in the Committee pursuant to the terms of the Plan, including, without limitation, the Committee’s rights to make certain determinations and elections with respect to the Restricted Stock.

     9. Binding Effect. This Agreement shall be binding upon and inure to the benefit of any successors and assigns of the Company and all persons lawfully claiming under Participant.

     10. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

     11. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware.

     THIS AGREEMENT SHALL NOT BE EFFECTIVE UNLESS A COPY SIGNED BY THE PARTICIPANT IS DELIVERED TO THE COMPANY WITHIN THIRTY (30) DAYS AFTER THE GRANT DATE.

     IN WITNESS WHEREOF , the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and Participant has executed this Agreement, all effective as of the date of first above written.

HARRIS INTERACTIVE INC.
By:		(Participant)
Title:	Dated:

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EX-10.4.2

Exhibit 10.4.2

EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT (“Agreement”) effective as of September 6, 2007 (the “Effective Date”) between HARRIS INTERACTIVE INC., a Delaware corporation (“Company”), and DEE ALLSOP (“Executive”).

     This Agreement amends, restates, and replaces in its entirety (i) the Agreement dated June 7, 2005 between the Company and the Executive related to change in control of the Company, and (ii) the Employment Agreement between Company and Executive dated as of October 5, 1990, as amended by letter dated September 9, 2004 (collectively, the “Prior Agreement”); provided, however, that all rights of Executive to payments and benefits under the Prior Agreement fully earned and accrued but unpaid as of the Effective Date shall survive execution of this Agreement. This Agreement does not modify the terms of any stock option agreements between the Company and the Executive in effect on the Effective Date, which stock option agreements shall remain unchanged and in full force according and subject to the terms contained therein.

1. CAPACITY AND DUTIES

     1.1 Employment; Acceptance of Employment. Company hereby employs Executive and Executive hereby accepts employment by Company for the period and upon the terms and conditions hereinafter set forth.

     1.2 Capacity and Duties.

          (a) Executive shall serve as the President, U.S. Solutions Research Groups. Executive shall perform duties and shall have authority as may from time to time be specified by the Chief Executive Officer and the Board of Directors of Company (the “Board”). Executive’s title and duties may be changed from time to time by the Chief Executive Officer and the Board; provided, however, that (i) Executive’s position, authority, duties, and responsibilities shall be no less senior and executive in nature than those of President of U.S. Solutions and Research Groups and shall be consistent with those of an executive vice president of a public company of the size and type similar to the Company, and (ii) the duties assigned to the Executive shall be in all respects consistent with all applicable laws and regulations. Executive will report to the Chief Executive Officer of the Company.

          (b) Executive shall devote full time efforts to the performance of Executive’s duties hereunder, in a manner that will faithfully and diligently further the business and interests of Company.

          (c) Executive acknowledges that Company’s reputation is important in the continued success of its business, and agrees that he will not discuss or comment in such a manner as may adversely impact the reputation or public perception, or otherwise disparage, Company or its officers, employees, or directors in any manner; provided, however, that Executive may make such disclosures as may be required by law. Company acknowledges that Executive’s reputation is important to his continued success. Company agrees that it will not, and that it will use all reasonable efforts to cause its officers, employees, and directors not to, defame, disparage, or otherwise discuss or comment about Executive in such a manner as may adversely impact his reputation or public perception; provided, however, that Company may make such disclosures as may be required by law.

2. TERM OF EMPLOYMENT

     2.1 Term.

          (a) The term of Executive’s employment hereunder, for all purposes of this Agreement, shall commence on the Effective Date (the “Commencement Date”) and continue through and including the earliest to occur of (i) June 30, 2008, if and as further extended to subsequent June 30ths as provided in Section 2.1(b), (ii) the date on which Executive dies, and (iii) the date on which either the Company or Executive terminates Executive’s employment for any reason (collectively, the “Termination Date”).

          (b) Except as hereinafter provided, on each June 30 this Agreement shall be automatically extended for an additional one-year term, and if so extended shall be automatically extended for successive additional one-year terms, unless either the Executive or Company shall have given the other written notice of non-renewal of this Agreement on or before the March 31 immediately prior to the end of the initial one-year term, or if applicable any one-year extension term then in effect. Executive’s employment under this Agreement shall terminate on the June 30 immediately following the date of any timely non-renewal notice.

3. COMPENSATION

     3.1 Base Compensation. As compensation for Executive’s services, Company shall pay to Executive base compensation in the form of salary (“Base Compensation”) in the amount of $275,000 per annum. The salary shall be payable in periodic installments in accordance with

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Company’s regular payroll practices for its executive personnel at the time of payment, but in no event less frequently than monthly. The Compensation Committee of the Board shall review Base Compensation periodically for the purpose of determining, in its sole discretion, whether Base Compensation should be adjusted; provided, however, that Executive’s Base Compensation shall not be less than $275,000.

     3.2 Performance Bonus. As additional compensation for the services rendered by Executive to Company Executive shall be paid a performance bonus (“Performance Bonus”) payable in full at the same time as payment of other executive bonuses by the Company but no later than two and one-half (2.5) months after the end of the applicable fiscal year. The Performance Bonus award criteria and amounts shall be those established on an annual basis by the Compensation Committee of the Board of Directors of the Company based upon performance guidelines established for executive officers of the Company; provided, however, Executive’s target bonus shall not be less than $75,000. No bonus will be due in the event that award criteria established by the Compensation Committee are not met.

     3.3 Employee Benefits. Executive shall be entitled to participate in such of Company’s employee benefit plans and benefit programs as may from time to time be provided by Company for its senior executives generally. Company shall have no obligation, however, to maintain any particular program or level of benefits referred to in this Section 3.3.

     3.4 Vacation. Executive shall be entitled to the normal and customary amount of paid vacation provided to senior executive officers of the Company, but in no event less than 20 days during each calendar year. Any vacation days that are not taken in a given calendar year period shall accrue and carry over from year to year, or be paid or lost, according to the Company’s standard vacation policies. The Executive may be granted leaves of absence with or without pay for such valid and legitimate reasons as the Chief Executive Officer in his sole and absolute discretion may determine, and is entitled to the same personal days and holidays provided to other senior executives the of Company.

     3.5 Expense Reimbursement.

          (a) Company shall reimburse Executive for all reasonable and documented expenses incurred by Executive in connection with the performance of Executive’s duties hereunder in accordance with its regular reimbursement policies as in effect from time to time.

          (b) The Company shall reimburse the Executive for reasonable costs up to a maximum of $2,500 incurred in the negotiation of this Employment Agreement.

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     3.6 Withholding. All payments under this Agreement shall be subject to any required withholding of Federal, state and local taxes pursuant to any applicable law or regulation.

4. TERMINATION OF EMPLOYMENT

     4.1 Accrued Obligations. For purposes of this Agreement:

          (a) “Accrued Base Obligations” shall mean amounts for Base Compensation, expense reimbursement, and employee benefits which have accrued, vested, and are unpaid as of the Termination Date.

          (b) “Accrued Bonus Obligations” shall mean, for the year in which the Termination Date occurs, a prorated Performance Bonus for the partial-year period ending on the Termination Date (the “Partial Period”). The prorated Performance Bonus shall be based on the same metrics as then in effect for calculation of bonuses on an annual basis (for example, net earnings or revenues) and shall be calculated by (1) dividing actual performance as of the end of the Applicable Calculation Quarter (described below) by budgeted performance (per the budget previously approved by the Board) for the Applicable Calculation Quarter, and then (2) using the resulting percentage in determining the dollar value bonus that would have been paid under the Company’s executive performance bonus plan had such percentage performance been achieved for the full fiscal year, and then (3) multiplying the result by a fraction, the numerator of which is the number of days elapsed in the fiscal year prior to the Termination Date and the denominator of which is 365. If the Termination Date is in the first half of a fiscal quarter the “Applicable Calculation Quarter” is the fiscal quarter most recently ended before the Termination Date, and if the Termination Date is in the second half of a fiscal quarter, the Applicable Calculation Quarter is the first fiscal quarter ending after the Termination Date.

          (c) Accrued Base Obligations shall be paid within thirty (30) days after the Termination Date. Accrued Bonus Obligations shall be paid on the date on which they would have been paid under this Agreement absent the occurrence of the Termination Date.

     4.2 Termination Procedures. Except as otherwise provided in this Agreement, any termination of Executive’s employment by the Company or by Executive (other than termination pursuant to death) shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and, if applicable, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated.

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     4.3 Death of Executive. If Executive dies, Company shall not be obligated to make any further payments under this Agreement except amounts for:

          (a) Accrued Base Obligations,

          (b) earned but unpaid Performance Bonus for fiscal years already ended, payable on the date on which such Performance Bonus would be paid absent Executive’s death, and,

          (c) if Executive’s death is in the Company’s third or fourth fiscal quarter, Accrued Bonus Obligations.

     4.4 Disability of Executive. If Executive is permanently disabled (as defined in Company’s long-term disability insurance policy then in effect), then the Company shall have the right to terminate Executive’s employment upon 15 days’ prior written notice to Executive at any time during the continuation of such disability (“Disability”). In the event Executive’s employment is terminated for Disability in accordance with this Section 4.4, Company shall not be obligated to make any further payments under this Agreement except for:

          (a) Accrued Base Obligations,

          (b) earned but unpaid Performance Bonus for fiscal years ended prior to the Termination Date, payable on the date on which such Performance Bonus would be paid absent Executive’s Disability, and

          (c) if the Termination Date occurs in the Company’s third or fourth fiscal quarter, Accrued Bonus Obligations.

     4.5 Termination for Cause.

          (a) Executive’s employment shall terminate immediately upon a Notice of Termination from the Company that Executive is being terminated for Cause (as defined herein), in which event Company shall not thereafter be obligated to make any further payments under this Agreement except for:

               (i) Accrued Base Obligations,

               (ii) earned but unpaid Performance Bonus for fiscal years ended prior to the Termination Date, payable on the date on which such Performance Bonus would be paid absent the termination of Executive, and

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               (iii) if the Termination Date occurs in the Company’s third or fourth fiscal quarter, Accrued Bonus Obligations.

          (b) “Cause” shall be limited to the following:

               (i) willful failure to substantially perform Executive’s duties as described in Section 1.2 after demand for substantial performance is delivered by Company in writing that specifically identifies the manner in which Company believes Executive has not substantially performed Executive’s duties and Executive’s failure to cure such non-performance within thirty (30) days after receipt of the Company’s written demand; provided, however, that a failure to perform such duties during the remedy period set forth in subsection (i) of the definition of Good Reason set forth in Section 4.7 hereof, following the issuance of a Notice of Termination (as herein defined) by Executive for Good Reason, shall not be Cause unless an arbitrator acting pursuant to Section 6.1 hereof finds Executive to have acted in bad faith in issuing such Notice of Termination;

               (ii) willful conduct that is materially and demonstrably injurious to Company or any of its subsidiaries, but not including good faith conduct taken without intention to injure the Company or its subsidiaries that, at the time engaged in, could not reasonably be expected to be more likely than not to be materially injurious to the Company; or

               (iii) conviction or plea of guilty or nolo contendere to a felony or to any other crime which involves moral turpitude or, if not including moral turpitude, arises from an act that is materially and demonstrably injurious to the Company or any of its subsidiaries;

               (iv) material violation of Section 5 of this Agreement,

               (v) or material violation of Company polices set forth in Company manuals or written statements of policy provided in the case of violation of policy that such violation is either materially and demonstrably injurious to Company or, if curable, continues for more then three (3) days after written notice thereof is given to Executive by the Company; and

               (vi) material breach of any material provision of this Agreement by Executive, which breach continues for more than ten (10) days after written notice thereof is given by the Company to Executive.

     4.6 Termination Without Cause or by Executive for Good Reason.

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          (a) The Company reserves the right to terminate Executive’s employment at any time. If, however, a Termination Date occurs due to Company terminating Executive without Cause or Executive terminating for Good Reason, then Company shall have no further obligations under this Agreement except that Company shall pay to Executive the amounts shown in Section 4.6(c).

          (b) For the avoidance of doubt, Section 4.6(c) shall not apply to (i) termination in the ordinary course on any applicable June 30 if the term of this Agreement is not automatically renewed, which circumstance is covered by Section 4.6(d), (ii) termination for Cause which circumstance is covered by Section 4.5, (iii) termination by Executive without Good Reason which circumstance is covered by Section 4.7, (iv) termination by reason of death which circumstance is covered by Section 4.3, or (v) termination by reason of Disability which circumstance is covered by Section 4.4.

          (c) If Company terminates Executive without Cause or Executive terminates with Good Reason, then the Company shall pay to Executive:

               (i) the Accrued Base Obligations through the Termination Date, payable promptly after the Termination Date,

               (ii) any unpaid Performance Bonus earned for any fiscal year ended on or before the Termination Date payable on the date on which such Performance Bonus would be paid absent termination,

               (iii) Accrued Bonus Obligations,

               (iv) amounts equal to Base Compensation through and including the date six months after the Termination Date, and

               (v) health and medical benefits as required by Section 3.3 of this Agreement during the same period that amounts equal to Base Compensation are due under Section 4.6(c)(iv); provided, however, if Executive, Executive’s spouse or Executive’s dependents are ineligible to participate in the Company benefit programs under Section 3.3, the Company shall arrange to reimburse Executive for coverage reasonably comparable to that previously provided under Section 3.3, and further provided that such benefits shall become secondary to primary coverage upon the date or dates Executive receives coverage and benefits which are substantially similar, taken as a whole, without waiting period or pre-existing condition limitations, under the plans and programs of a subsequent employer.

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          (d) If this Agreement is terminated in the ordinary course on any applicable June 30 because of a non-renewal notice given by the Company under Section 2.1, then Company shall have no further obligations under this Agreement except that Company shall pay to Executive the same payments as to which the Executive would be entitled under Section 4.6(c)(i), (ii), (iv), and (v). If this Agreement is terminated in the ordinary course on any applicable June 30 because of a non-renewal notice given by the Executive under Section 2.1, then Company shall have no further obligations under this Agreement except that Company shall pay to Executive the payments to which the Executive would be entitled under Section 4.6(c)(i) and (ii).

     4.7 Termination by Executive without Good Reason.

          (a) Executive may terminate this Agreement without Good Reason upon fifteen (15) days prior notice. In the event Executive’s employment is voluntarily terminated by Executive without Good Reason, Company shall not be obligated to make any further payments to Executive hereunder other than:

               (i) Accrued Base Obligations through the Termination Date,

               (ii) earned but unpaid Performance Bonus for fiscal years ended prior to the Termination Date, payable on the date on which such Performance Bonus would be paid absent Executive’s termination, and

               (iii) if the Termination Date occurs in the Company’s third or fourth fiscal quarter, Accrued Bonus Obligations.

          (b) “Good Reason” shall mean the following:

               (i) material breach of Company’s obligations hereunder, including any assignment of duties not included within the Executive’s duties described in Section 1.2 unless previously agreed to in writing by Executive, provided that Executive shall have given reasonably specific written notice thereof to Company, and Company shall have failed to remedy the circumstances within thirty (30) days thereafter;

               (ii) any decrease in Executive’s salary as it may have increased during the term of this Agreement, except for decreases that are in conjunction with decreases in executive salaries by the Company generally and that do not result in a decrease in Executive’s annual salary below $275,000 per annum;

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               (iii) any decrease of Executive’s target Performance Bonus below $75,000,

               (iv) any relocation of the principal office from which Executive’s duties are performed to a location more than 50 miles outside of Reston, Virginia, provided, however, that travel to Company’s and its affiliates’ various offices and to other locations in furtherance of Company’s business will be required in connection with the performance of Executive’s duties hereunder and requirements for such travel shall not constitute Good Reason, or

               (v) the failure of any successor in interest of the Company to be bound by the terms of this Agreement in accordance with Section 6.4 hereof.

Notwithstanding subsections (i) and (iii) above, after a Change of Control, Good Reason shall not include a change of title, reporting line, responsibilities, and duties so long as such changed title, reporting line, and reassignment of executive duties are at a level commensurate with the level of participation of the Company in the controlling person (such as, for example, executive duties at a divisional, subsidiary, or group level, if the Company becomes a division, subsidiary, or group within the controlling person), or assignment of other duties not materially inconsistent with duties appropriate for a past executive vice president of a public company of the size and type similar to the Company officer.

          (c) Executive must provide a Notice of Termination to the Company that he is intending to terminate his employment for Good Reason within one hundred and eighty (180) days after Executive has actual knowledge of the occurrence of the latest event he believes constitutes Good Reason, which termination notice shall specify a termination date within thirty (30) days after the date of such notice except for termination under subsection (i) in which case the termination date shall be as provided in such subsection. Executive’s right to terminate Executive’s employment hereunder for Good Reason shall not be affected by Executive’s subsequent Disability provided that the notice of intention to terminate is given prior to the onset of such Disability. Subject to compliance by Executive with the notice provisions of this Section 4.7, Executive’s continued employment prior to terminating employment for Good Reason shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason. In the event Executive delivers to the Company a Notice of Termination for Good Reason, upon request of the Board Executive agrees to appear before a meeting of the Board called and held for such purpose (after reasonable notice) and specify to the Board the particulars as to why Executive believes adequate grounds for termination for Good

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Reason exist. No action by the Board, other than the remedy of the circumstances within the time periods specified in this Section 4.7, shall be binding on Executive.

     4.8 Mitigation. Executive shall not be required to mitigate amounts payable under this Section 4 by seeking other employment or otherwise, and there shall be no offset against amounts due Executive under this Agreement on account of subsequent employment except as specifically provided herein.

     4.9 Change of Control.

          (a) If Executive is terminated without Cause, a Termination Date occurs on a June 30 due to non-renewal by the Company of the term of this Agreement under Section 2.1, or Executive terminates his employment for Good Reason, in each such case during the one year period following a Change of Control (as defined below), then in addition to payments and benefits to which Executive is entitled under Section 4.6, Executive also shall receive (i) reimbursement for reasonable (in the discretion of the Company) and actual expenses incurred by Executive for six months of out-placement services, and (ii) Base Compensation pursuant to Section 4.6(c)(iv) and benefits pursuant to Section 4.6(c)(v) for a one year period rather than the six month period referenced therein.

          (b) If a Change of Control shall have occurred:

               (i) after such Change of Control Executive’s entitlement to Bonus under Section 3.2 may be modified by the new controlling Person in a reasonable manner (not to afford Executive with materially less opportunity to earn bonus than existed prior to the Change of Control) so that such Bonus is calculated with reference to a performance-based bonus plan provided by the new controlling Person; and

               (ii) after such Change of Control Executive’s entitlement to payments and benefits under Sections 3.3 and 3.4 may be modified by the new controlling Person to entitlement to those benefits generally provided to senior executives of the new controlling Person.

          (c) A “Change of Control” shall be deemed to have occurred if:

               (i) a change in control has occurred of a nature that would be required to be reported in a proxy statement with respect to the Company (even if the Company is not actually subject to said reporting requirements) in response to Item 6(e) (or any comparable or

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successor Item) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), except that any merger, consolidation or corporate reorganization in which the owners of the Company’s capital stock entitled to vote in the election of directors (the “Voting Stock”) prior to said combination receive 75% or more of the resulting entity’s Voting Stock shall not be considered a change in control for the purposes of this Plan;

               (ii) any “person” (as that term is used in Sections 13(d) and 14(d)(2) of the Exchange Act, excluding any stock purchase or employee stock ownership plan maintained by the Company or a Related Company) becomes the “beneficial owner” (as that term is defined by the Securities and Exchange Commission for purposes of Section 13(d) of the Exchange Act), directly or indirectly, of more than 15% of the outstanding voting stock of the Company or its successors; or

               (iii) during any period of two consecutive years a majority of the Board of Directors no longer consists of individuals who were members of the Board of Directors at the beginning of such period, unless the election of each director who was not a director at the beginning of the period was approved by a vote of at least 75% of the directors still in office who were directors at the beginning of the period.

     4.10 Effect of Section 409A. Notwithstanding anything to the contrary contained herein, in the event that (i) Executive notifies the Company, or the Company notifies Executive, in either case prior to the date on which a payment would otherwise be due under this agreement that Executive (or the Company, as applicable) believe that (x) the operation of this Agreement with respect to any such payment hereunder would fall within the coverage of Section 409A(a)(1) of the Internal Revenue Code (“IRC”) and (y) any payment hereunder is to be made on account of IRC Section 409A(a)(2)(A)(i) and Executive is a “specified employee” pursuant to IRC Section 409A(a)(2)(B)(i) then (ii) if Executive’s legal counsel and the Company’s legal counsel, in each case acting reasonably, agree that the foregoing analysis is correct, then such payment shall not be made until the date which is the earlier of the date of Executive’s death and the date which is six (6) months after the date of separation from service (the Termination Date).

     4.11 Precondition to Post-Termination Payments. As a condition for the payment of any post-Termination Date benefits to be provided hereunder except for Accrued Base Obligations earned but unpaid Performance Bonus for fiscal years ended prior to the Termination Date, and Accrued Bonus Obligations, Executive shall deliver to the Company a release in favor of the Company in the form attached hereto as Exhibit A.

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5. NON-COMPETITION AND CONFIDENTIALITY

     5.1 Non-Competition.

          (a) Consideration for this Section. Executive acknowledges and agrees that:

               (i) the benefits, including in particular and without limitation those obligations under Section 4.6(b)(iv), afforded by this Agreement are over and above those otherwise afforded by Company policy, and in making its decision to offer Executive the benefits afforded by this agreement and bind itself in advance to the obligations hereunder the Company relied upon and was induced by the covenants made by Executive in this Section 5,

               (ii) in accepting the benefits evidenced by this Agreement Executive is receiving an asset of significant value, and Company’s entry into this Agreement and its incurrence of the related payment and other obligations hereunder are fair and adequate consideration for the Executive’s obligations under this Section 5,

               (iii) Executive’s position with the Company places Executive in a position of confidence and trust with the clients and employees of the Company,

               (iv) the Company’s business is carried on throughout the world and accordingly, it is reasonable that the restrictive covenants set forth below are not limited by specific geographic area,

               (v) the course of Executive’s employment with the Company necessarily requires the disclosure of confidential information and trade secrets related to the Company’s relationships with clients (such as, without limitation, pricing information, marketing plans, budgets, designs, methodologies, products, client preferences and policies, and identity of appropriate personnel of clients with sufficient authority to influence a shift in suppliers) as well as other confidential and proprietary information, (such as databases, methodologies, and technologies),

               (vi) Executive’s employment affords Executive the opportunity to develop a personal acquaintanceship and relationship with the Company’s employees and clients, which in some cases may constitute the Company’s primary or only contact with such employees and clients, and to develop a knowledge of those client’s and employee’s affairs and requirements,

               (vii) the Company’s relationships with its established clientele and employees are placed in Executive’s hands in confidence and trust,

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               (viii) it is reasonable and necessary for the protection of the goodwill and business of the Company that Executive make the covenants contained in this agreement, and

               (ix) the Executive understands that the provisions of this Section 5 may limit Executive’s ability to earn a livelihood in a business similar or related to the business of Company, but nevertheless agrees and acknowledges that (A) the provisions of Section 5 are reasonable and necessary for the protection of Company, and do not impose a greater restraint than necessary to protect the goodwill or other business interest of Company, (B) such provisions contain reasonable limitations as to the time and the scope of activity to be restrained, and (C) the Company’s advance agreement to make payments under the various circumstances set forth in this Agreement provide Executive with benefits adequate to fully compensate Executive for any lost opportunity due to the operation of Section 5.

In consideration of the foregoing, Executive agrees that all defenses by Executive to the strict enforcement of such provisions are hereby waived by Executive.

     5.2 Restricted Activity.

          (a) During the period that Executive is employed by the Company, and for a period of six months after the Termination Date, or for a period of one year in the case of a termination pursuant to which Executive is receiving payments under subclause (ii) of Section 4.9(a) (the “Non-Competition Period”), Executive shall not, directly or indirectly, own, manage, operate, join, control, participate in, invest in or otherwise be connected or associated with, in any manner, including, without limitation, as an officer, director, employee, distributor, independent contractor, independent representative, partner, consultant, advisor, agent, proprietor, trustee or investor, any Competing Business (defined below); provided, however, that (i) ownership of 4.9% or less of the stock or other securities of a corporation, the stock of which is listed on a national securities exchange shall not constitute a breach of this Section 5, so long as the Executive does not in fact have the power to control, or direct the management of, or is not otherwise engaged in activities with, such corporation, and (ii) Executive without restriction may engage in a Competing Business limited to activities for or related to the Church of Jesus Christ of the Latter Day Saints, Robert Grow, Esq., and Strat@comm.

          (b) For purposes of this Section 5.2, the term “Competing Business” shall mean any business or venture which is substantially similar to the whole or any significant part

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of the business conducted by Company, and which is in material competition with the Company, and the term “Affiliate” of any person or entity shall mean any other person or entity directly or indirectly controlling, controlled by or under common control with such particular person or entity, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of a person or entity whether through the ownership of voting securities, contract, or otherwise.

          (c) During the Non-Competition Period, Executive shall not (including without limitation on behalf of, for the benefit of, or in conjunction with, any other person or entity) directly or indirectly:

               (i) solicit, assist, discuss with or advise, influence, induce or otherwise encourage in any way, any employee of Company to terminate such employee’s relationship with Company for any reason, or assist any person or entity in doing so,

               (ii) employ, assist, engage or otherwise contract or create any relationship with any employee or former employee of Company in any business or venture of any kind or nature, in the case of a former employee unless such person shall not have been employed by Company for a period of at least one year and no solicitation prohibited hereby shall have occurred prior to the end of such one year period, or

               (iii) interfere in any manner with the relationship between any employee and Company.

     5.3 Confidential Information.

          (a) “Confidential Information” shall mean all proprietary or confidential records and information, including, but not limited to, development, marketing, purchasing, organizational, strategic, financial, managerial, administrative, production, distribution and sales information, distribution methods, data, specifications, technologies, methods, and processes (including the Transferred Property as hereinafter defined) presently owned or at any time hereafter developed by Company, or its agents, consultants, or otherwise on its behalf, or used presently or at any time hereafter in the course of the business of Company, that are not otherwise part of the public domain.

          (b) Executive hereby sells, transfers and assigns to Company, or to any person or entity designated by Company, all of Executive’s entire right, title and interest in and to all inventions, ideas, methods, developments, disclosures and improvements (the “Inventions”),

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whether patented or unpatented, and copyrightable material, and all trademarks, trade names, all goodwill associated therewith and all federal and state registrations or applications thereof, made, adopted or conceived by solely or jointly, in whole or in part prior to the Termination Date which (i) relate to methods, apparatus, designs, products, processes or devices sold, leased, used or under construction or development by Company or (ii) otherwise relate to or pertain to the business, products, services, functions or operations of the Company (collectively, the “Transferred Property”). Executive shall make adequate written records of all Inventions, which records shall be Company’s property and shall communicate promptly and disclose to Company, in such forms Company requests, all information, details and data pertaining to the aforementioned Inventions. Whether during the term of this Agreement or thereafter, Executive shall execute and deliver to Company such formal transfers and assignments and such other papers and documents as may be required of Executive to permit Company, or any person or entity designated by Company, to file and prosecute patent applications (including, but not limited to, records, memoranda or instruments deemed necessary by Company for the prosecution of the patent application or the acquisition of letters patent in the United states, foreign counties or otherwise) and, as to copyrightable material, to obtain copyrights thereon, and as to trademarks, to record the transfer of ownership of any federal or state registrations or applications.

          (c) All Confidential Information is considered secret and will be disclosed to the Executive in confidence, and Executive acknowledges that, as a consequence of Executive’s employment and position with Company, Executive may have access to and become acquainted with Confidential Information. Except in the performance of Executive’s duties as an employee of Company, Executive shall not, during the term and at all times thereafter, directly or indirectly for any reason whatsoever, disclose or use any such Confidential Information. All records, files, drawings, documents, equipment and other tangible items (whether in electronic form or otherwise), wherever located, relating in any way to or containing Confidential Information, which Executive has prepared, used or encountered or shall in the future prepare, use or encounter, shall be and remain Company’s sole and exclusive property and shall be included in the Confidential Information. Upon termination of this Agreement, or whenever requested by Company, Executive shall promptly deliver to Company any and all of the Confidential Information and copies thereof, not previously delivered to Company, that may be in the possession or under the control of the Executive. The foregoing restrictions shall not apply to the use, divulgence, disclosure or grant of access to Confidential Information to the extent, but only to the extent, (i) expressly permitted or required pursuant to any other written agreement between Executive and Company, (ii) such Confidential Information has been publicly disclosed

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(not due to a breach by the Executive of Executive’s obligations hereunder, or by breach of any other person, of a fiduciary or confidential obligation to Company) or (iii) the Executive is required to disclose Confidential Information by or to any court of competent jurisdiction or any governmental or quasi-governmental agency, authority or instrumentality of competent jurisdiction, provided, however, that the Executive shall, prior to any such disclosure, immediately notify Company of such requirements and provided further, however, that the Company shall have the right, at its expense, to object to such disclosures and to seek confidential treatment of any Confidential Information to be so disclosed on such terms as it shall determine.

     5.4 Acknowledgement; Remedies; Survival of this Agreement.

          (a) Executive acknowledges that violation of any of the covenants and provisions set forth in Section 5 of this Agreement would cause Company irreparable damage and agrees that Company’s remedies at law for a breach or threatened breach of any of the provisions of this Section 5 would be inadequate and, in recognition of this fact, in the event of a breach or threatened breach by Executive of any of the provisions of this Agreement, it is agreed that, in addition to the remedies at law or in equity, Company shall be entitled, without the posting of a bond, to equitable relief in the form of specific performance, a temporary restraining order, temporary or permanent injunction, or any other equitable remedy which may then be available for the purposes of restraining Executive from any actual or threatened breach of such covenants. Without limiting the generality of the foregoing, if Executive breaches or threatens to breach this Section 5 hereof, such breach or threatened breach will entitle Company (i) to terminate its obligations to make further payments otherwise required under this Agreement, (ii) to recover from the Executive any payments previously made under Section 4.6(b)(iv), (iii) to extend the Non-Competition Period by a period equal to the period in which Executive was in violation of this Section 5, and (iv) to enjoin Executive from disclosing any Confidential Information to any Competing Business, to enjoin any Competing Business from retaining Executive or using any such Confidential Information, and to enjoin Executive from rendering personal services to or in connection with any Competing Business, it being understood that the embedded knowledge of Executive gained at the Company will be impossible to separate from the performance of duties for a Competing Business. The rights and remedies hereunder are cumulative and shall not be exclusive, and the Company shall be entitled to pursue all legal and equitable rights and remedies and to secure performance of the obligations and duties of the Executive under this Agreement, and the enforcement of one or more of such rights and remedies by the Company shall in no way preclude the Company from pursuing, at the same time or

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subsequently, any and all other rights and remedies available to it.

          (b) The provisions of this Section 5 shall survive the termination of Executive’s employment with Company.

6. MISCELLANEOUS

     6.1 Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Rochester, New York, in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The parties consent to the authority of the arbitrator, if the arbitrator so determines, to award fees and expenses (including legal fees) to the prevailing party in the arbitration. Notwithstanding the foregoing, Company shall be entitled to enforce the provisions of Section 5 hereof through proceedings brought in a court of competent jurisdiction as contemplated by Section 6.7 hereof.

     6.2 Severability; Reasonableness of Agreement. If any term, provision or covenant of this Agreement or part thereof, or the application thereof to any person, place or circumstance shall be held to be invalid, unenforceable or void by an arbitrator or court of competent jurisdiction, the remainder of this Agreement and such term, provision or covenant shall remain in full force and effect, and any such invalid, unenforceable or void term, provision or covenant shall be deemed, without further action on the part of the parties hereto, modified, amended and limited, and the arbitrator or court shall have the power to modify, amend and limit any such term, provision or covenant, to the extent necessary to render the same and the remainder of the Agreement valid, enforceable and lawful.

     6.3 Key Employee Insurance. Company in its sole discretion shall have the right at its expense to purchase insurance on the life of Executive, in such amounts as it shall from time to time determine, of which Company shall be the beneficiary. Executive shall submit to such physical examinations as may reasonably be required and shall otherwise cooperate with Company in obtaining such insurance.

     6.4 Assignment; Benefit. This Agreement shall not be assignable by Executive, other than Executive’s rights to payments or benefits hereunder, which may be transferred only by will or the laws of descent and distribution. Upon Executive’s death, this Agreement and all rights of Executive hereunder shall inure to the benefit of and be enforceable by Executive’s beneficiary or beneficiaries, personal or legal representatives, or estate, to the extent any such person succeeds to Executive’s interests under this Agreement. No rights or obligations of Company

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under this Agreement may be assigned or transferred except to any successor to the Company’s business and/or assets (by merger, purchase of stock or assets, or otherwise) which, to the extent not otherwise automatically provided by operation of law, expressly assumes and agrees to perform this Agreement in the same manner and to the same extent that Company would be required to perform if no such succession had taken place.

     6.5 Notices. All notices hereunder shall be in writing and shall be deemed sufficiently given (i) if hand-delivered, on the date of delivery, (ii) if sent by documented overnight delivery service, on the first business day after deposit with such service for overnight delivery, and (iii) if sent by registered or certified mail, postage prepaid, return receipt requested, on the third business day after deposit in the U.S. mail, in each case addressed as set forth below or at such other address for either party as may be specified in a notice given as provided herein by such party to the other. Any and all service of process and any other notice in any such action, suit or proceeding shall be effective against any party if given as provided in this Agreement; provided that nothing herein shall be deemed to affect the right of any party to serve process in any other manner permitted by law.

     If to Company:

Harris Interactive Inc.
135 Corporate Woods
Rochester, New York 14623
Attention: Chief Executive Officer

     With A Copy To:

Beth Ela Wilkens, Esq.
Harris Beach PLLC
99 Garnsey Road
Pittsford, New York 14534

     If to Executive:

Dee Allsop
12756 Misty Creek Lane
Fairfax, Virginia 22033

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     6.6 Entire Agreement; Modification. This Agreement constitutes the entire agreement between the parties hereto with respect to the matters contemplated herein and supersedes all prior agreements and understandings with respect thereto. No amendment, modification, or waiver of this Agreement shall be effective unless in writing. Neither the failure nor any delay on the part of any party to exercise any right, remedy, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power, or privilege with respect to such occurrence or with respect to any other occurrence.

     6.7 Governing Law. This Agreement is made pursuant to, and shall be construed and enforced in accordance with, the laws of the State of Delaware and the federal laws of the United States of America, to the extent applicable, without giving effect to otherwise applicable principles of conflicts of law. Subject to Section 6.1 of this Agreement, the parties hereto expressly consent to the jurisdiction of any state or federal court located in the State of New York, and to venue therein, and consent to the service of process in any such action or proceeding by certified or registered mailing of the summons and complaint therein directed to Executive or Company, as the case may be, at its address as provided in Section 6. hereof.

     6.8 Prevailing Party. Should either party breach the terms of this Agreement, the prevailing party who seeks to enforce the terms and conditions of this Agreement shall be entitled to recover its attorneys fee and disbursements.

     6.9 Headings; Counterparts; Interpretation.

          (a) The headings of paragraphs in this Agreement are for convenience only and shall not affect its interpretation.

          (b) This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which, when taken together, shall be deemed to constitute the same Agreement.

          (c) The Company and the Executive each acknowledge that it has been represented by legal counsel in the negotiation and drafting of this Agreement, that this Agreement has been drafted by mutual effort, and that no ambiguity in this Agreement shall be construed against either party as draftsperson.

     6.10 Further Assurances. Each of the parties hereto shall execute such further

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instruments and take such other actions as the other party shall reasonably request in order to effectuate the purposes of this Agreement.

[Signature Page Follows]

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          IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the date first above written.

HARRIS INTERACTIVE INC.
By:	/s/ Gregory T. Novak Gregory T. Novak
	President and Chief Executive Officer
	/s/ Dee Allsop DEE ALLSOP

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EXHIBIT A

RELEASE

     In consideration of the benefits provided under an Employment Agreement (“Agreement”) effective as of                      by and between Dee Allsop (“Executive”) and Harris Interactive Inc. (“Harris”), Executive hereby releases Harris and its employees, officers, directors, attorneys, affiliates, subsidiaries, successors and assigns, from any and all claims, causes of action, and/or liabilities of any kind or nature whatsoever, known or unknown, at law, in equity, or otherwise, that may have occurred at any time up to the date hereof, arising from his employment relationship with Harris or as a result of the parties’ agreement to modify and end the employment relationship, including, without limitation, any and all claims arising under any federal, state or local laws, rules or regulations pertaining to employment or pay or benefit practices, including, but not limited to, claims under the Age Discrimination in Employment Act, Older Workers’ Benefit Protection Act, Equal Pay Act, Title VII of the Civil Rights Act of 1964, as amended, Fair Labor Standards Act, Americans with Disabilities Act, the Employee Retirement Income Security Act (ERISA), Family and Medical Leave Act (FMLA), New York State Human Rights Law, New York Labor Law and any other provisions relating to employment or pay or benefit practices, or relating to discrimination on the basis of race, creed, color, age, sex, national origin, disability, or arrest record, and Executive hereby agrees not to asset such claims or causes of action for monetary damages; provided, however, that Executive is not releasing any claims other than those expressly released hereby. Without limiting the foregoing proviso, Executive is not releasing any claims (i) arising from or relating to the breach of the Agreement or any document executed in connection therewith, or breach of any agreement covering equity grants (stock options, restricted stock, or otherwise) made to Executive prior to the date hereof, (ii) arising from or relating to any rights Executive may have to indemnity or contribution in connection with actions, proceedings, or investigations, (iii) to enforce vested rights under pension, benefit, or insurance plans, policies, programs or arrangements, or (iv) arising out of or relating to Executive’s status as a director or shareholder of Harris.

     In the event that Executive brings a claim which is determined by a court of law to have been released by the terms of this Release, he understands and agrees that, unless otherwise expressly prohibited by law or regulation, he will be required to reimburse the defending parties for their reasonable attorneys’ fees in connection with their defense of any such claim.

     Executive acknowledges that he has been advised to consult with legal counsel prior to signing this Release. Executive further understands and agrees that he is being provided with twenty-one (21) calendar days after his Termination Date (as defined in the Agreement) to

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consider the terms of this Release, and that this Release will expire and become null and void if it is not executed and returned before the end of the twenty-one (21) calendar-day period. Executive further understands and agrees that he shall have the right to execute this Release at any time before the expiration of the twenty-one (21) calendar-day period, and that if he does so, he agrees that he has thereby waived the remainder of that twenty-one (21) day period. Finally, Executive acknowledges and agrees that after executing this Release, he has the right to revoke his acceptance of this Release by delivering a written revocation within seven (7) calendar days after his execution of the Release, provided such revocation is received within said seven (7) day period by legal counsel for Harris: Beth Ela Wilkens, Harris Beach PLLC, 99 Garnsey Road, Pittsford, New York, 14534. This Release shall become effective only after it has been executed by Executive and only after the seven (7) day revocation period has expired without revocation by Executive.

          IN WITNESS WHEREOF, Executive has executed and delivered this Release as of the date shown below.

          Dee Allsop

STATE OF	)
	) SS.:
COUNTY OF	)

     On the ___ day of                      in the year 20___ before me, the undersigned, a notary public in and for said state, personally appeared Dee Allsop, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual executed the instrument.

          Notary Public

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EX-10.4.34

Exhibit 10.4.34

EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT (“Agreement”) effective as of September 1, 2007 (the “Effective Date”) between HARRIS INTERACTIVE INC., a Delaware corporation (“Company”), and GEORGE H. TERHANIAN (“Executive”).

     This Agreement amends, restates, and replaces in its entirety the letter employment agreement between the Company and Executive dated as of September 6, 2002 and the Change in Control Agreement provided by the Company to Executive in 2003 and executed August 21, 2007 (the “Prior Agreements”); provided, however, that all rights of Executive to payments and benefits under the Prior Agreements that are accrued but unpaid as of the Effective Date shall survive execution of this Agreement. This Agreement does not modify the terms of any stock option agreements and restricted stock agreements between Company and Executive in effect on the Effective Date, which stock option agreements and restricted stock agreements shall remain unchanged and in full force and effect according and subject to the terms contained therein.

1. CAPACITY AND DUTIES

     1.1 Employment; Acceptance of Employment. Company hereby employs Executive and Executive hereby accepts employment by Company for the period and upon the terms and conditions hereinafter set forth.

     1.2 Capacity and Duties.

          (a) Executive shall serve as the President, Harris Interactive Europe and Global Internet Research. Executive shall perform duties and shall have authority as may from time to time be specified by the Chief Executive Officer and the Board of Directors of Company (the “Board”). Executive’s title and duties may be changed from time to time by the Chief Executive Officer and the Board; provided, however, that (i) Executive’s position, authority, duties, and responsibilities shall be no less senior and executive in nature than those of President, Harris Interactive Europe and Global Internet Research, and (ii) the duties assigned to the Executive shall be in all respects consistent with all applicable laws and regulations. Executive will report to the Chief Executive Officer of the Company.

          (b) Executive shall devote full time efforts to the performance of Executive’s duties hereunder, in a manner that will faithfully and diligently further the business and interests of Company.

          (c) Executive acknowledges that Company’s reputation is important in the continued success of its business, and agrees that he will not discuss or comment in such a manner as may adversely impact the reputation or public perception, or otherwise disparage, Company or its officers, employees, or directors in any manner; provided, however, that Executive may make such disclosures as may be required by law. Company acknowledges that Executive’s reputation is important to his continued success. Company agrees that it will not, and that it will use all reasonable efforts to cause its officers, employees, and directors not to, defame, disparage, or otherwise discuss or comment about Executive in such a manner as may adversely impact his reputation or public perception; provided, however, that Company may make such disclosures as may be required by law.

2. TERM OF EMPLOYMENT

     2.1 Term.

          (a) The term of Executive’s employment hereunder, for all purposes of this Agreement, shall commence on the Effective Date (the “Commencement Date”) and continue through and including the earliest to occur of (i) June 30, 2008, if and as further extended to subsequent June 30ths as provided in Section 2.1(b), (ii) the date on which Executive dies, and (iii) the date on which either the Company or Executive terminates Executive’s employment for any reason (collectively, the “Termination Date”).

          (b) Except as hereinafter provided, on each June 30 this Agreement shall be automatically extended for an additional one-year term, and if so extended shall be automatically extended for successive additional one-year terms, unless either the Executive or Company shall have given the other written notice of non-renewal of this Agreement on or before the March 31 immediately prior to the end of the initial one-year term, or if applicable any one-year extension term then in effect. Executive’s employment under this Agreement shall terminate on the June 30 immediately following the date of any timely non-renewal notice.

3. COMPENSATION

     3.1 Base Compensation. As compensation for Executive’s services, Company shall pay to Executive base compensation in the form of salary (“Base Compensation”) in the amount of $299,000 per annum. The Company acknowledges that Executive’s primary business location

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is in the United Kingdom, Executive receives his Base Compensation payments in U.S. dollars, and that therefore Executive’s Base Compensation will be adjusted from time to time to reflect changes in the exchange rate (“Exchange Adjustments”) that have an adverse effect on him. So long as Executive’s primary duties are in the United Kingdom, at the end of each fiscal quarter, if cumulative changes in the exchange rate between the U.S. dollar and the British pound are 5% or greater since the date of the most recent Exchange Adjustment, Executive’s salary will be adjusted up or down in the same percentage as cumulative changes in the exchange rate since the most recent Exchange Adjustment; provided, however, in no event shall Executive’s Base Compensation be less than $299,000. Base Compensation shall be payable in periodic installments in accordance with Company’s regular payroll practices for its executive personnel at the time of payment, but in no event less frequently than monthly. The Compensation Committee of the Board shall review Base Compensation periodically for the purpose of determining, in its sole discretion, whether Base Compensation should be adjusted for reasons other than Exchange Adjustments; provided, however, that Executive’s Base Compensation shall not be less than $299,000.

     3.2 Performance Bonus. As additional compensation for the services rendered by Executive to Company Executive shall be paid a performance bonus (“Performance Bonus”) payable in full at the same time as payment of other executive bonuses by the Company but no later than two and one-half (2.5) months after the end of the applicable fiscal year. The Performance Bonus award criteria and amounts shall be those established on an annual basis by the Compensation Committee of the Board of Directors of the Company based upon performance guidelines established for executive officers of the Company; provided, however, that the target bonus for Executive for the fiscal year ending June 30, 2008 shall be $100,000 provided that performance guidelines are met. No bonus will be due in the event that award criteria established by the Compensation Committee are not met. Executive’s target bonus applicable for any fiscal year will be adjusted to correspond with changes in the exchange rate between the first and last day of the applicable fiscal year; provided, however, in no event shall Executive’s target Performance Bonus be less than $100,000.

     3.3 Employee Benefits. Executive shall be entitled to participate in such of Company’s employee benefit plans and benefit programs as may from time to time be provided by Company for its senior executives in Europe generally. Company shall have no obligation, however, to maintain any particular program or level of benefits referred to in this Section 3.3.

     3.4 Vacation. Executive shall be entitled to the normal and customary amount of paid vacation provided to senior executive officers of the Company, but in no event less than 20 days

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during each calendar year. Any vacation days that are not taken in a given calendar year shall accrue and carry over from year to year, or be paid or lost, according to the Company’s standard vacation policies. The Executive may be granted leaves of absence with or without pay for such valid and legitimate reasons as the Chief Executive Officer in its sole and absolute discretion may determine, and is entitled to the same personal days and holidays provided to other senior executives the of Company.

     3.5 Expense Reimbursement.

          (a) Company shall reimburse Executive for all reasonable and documented expenses incurred by Executive in connection with the performance of Executive’s duties hereunder in accordance with its regular reimbursement policies as in effect from time to time.

          (b) The Company shall reimburse the Executive for reasonable costs up to a maximum of $2,500 incurred in the negotiation of this Employment Agreement.

     3.6 Term Life Insurance. In addition to the Company-paid life insurance made available to senior executives of the Company generally, the Company shall provide Executive with $250,000 face value of term life insurance. Upon the request of the Executive made in connection with a Termination Date, the Company shall take all reasonable steps to provide Executive the right to continue such life insurance at his own expense after the Termination Date.

     3.7 Foreign Location Benefits. In consideration of Executive’s agreement to maintain his principal office in the United Kingdom, the Company shall provide Executive with (i) an apartment allowance of a minimum of $2,436 per month, adjusted from time to time in the discretion of the Company, (ii) reimbursement in each fiscal year for two round trip economy class airfares to the United States for home leave, and (iii) income tax preparation and filing assistance during your assignment in the United Kingdom and final preparation and filing of returns upon your return to the United States.

     3.8 Withholding. All payments under this Agreement shall be subject to any required withholding of foreign, Federal, state and local taxes pursuant to any applicable law or regulation.

4. TERMINATION OF EMPLOYMENT

     4.1 Accrued Obligations. For purposes of this Agreement:

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          (a) “Accrued Base Obligations” shall mean amounts for Base Compensation, expense reimbursement, and employee benefits which have accrued, vested, and are unpaid as of the Termination Date.

          (b) “Accrued Bonus Obligations” shall mean, for the year in which the Termination Date occurs, a prorated Performance Bonus for the partial-year period ending on the Termination Date (the “Partial Period”). The prorated Performance Bonus shall be based on the same metrics as then in effect for calculation of bonuses on an annual basis (for example, net earnings or revenues) and shall be calculated by (1) dividing actual performance as of the end of the Applicable Calculation Quarter (described below) by budgeted performance (per the budget previously approved by the Board) for the Applicable Calculation Quarter, and then (2) using the resulting percentage in determining the dollar value bonus that would have been paid under the Company’s executive performance bonus plan had such percentage performance been achieved for the full fiscal year, and then (3) multiplying the result by a fraction, the numerator of which is the number of days elapsed in the fiscal year prior to the Termination Date and the denominator of which is 365. If the Termination Date is in the first half of a fiscal quarter the “Applicable Calculation Quarter” is the fiscal quarter most recently ended before the Termination Date, and if the Termination Date is in the second half of a fiscal quarter, the Applicable Calculation Quarter is the first fiscal quarter ending after the Termination Date.

          (c) Accrued Base Obligations shall be paid within thirty (30) days after the Termination Date. Accrued Bonus Obligations shall be paid on the date on which they would have been paid under this Agreement absent the occurrence of the Termination Date.

     4.2 Termination Procedures. Except as otherwise provided in this Agreement, any termination of Executive’s employment by the Company or by Executive (other than termination pursuant to death) shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and, if applicable, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated.

     4.3 Death of Executive. If Executive dies, Company shall not be obligated to make any further payments under this Agreement except amounts for:

          (a) Accrued Base Obligations,

          (b) earned but unpaid Performance Bonus for fiscal years already ended,

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payable on the date on which such Performance Bonus would be paid absent Executive’s death, and,

          (c) if Executive’s death is in the Company’s third or fourth fiscal quarter, Accrued Bonus Obligations.

     4.4 Disability of Executive. If Executive is permanently disabled (as defined in Company’s long-term disability insurance policy then in effect), then the Company shall have the right to terminate Executive’s employment upon 15 days’ prior written notice to Executive at any time during the continuation of such disability (“Disability”). In the event Executive’s employment is terminated for Disability in accordance with this Section 4.4, Company shall not be obligated to make any further payments under this Agreement except for:

          (a) Accrued Base Obligations,

          (b) earned but unpaid Performance Bonus for fiscal years ended prior to the Termination Date, payable on the date on which such Performance Bonus would be paid absent Executive’s Disability, and

          (c) if the Termination Date occurs in the Company’s third or fourth fiscal quarter, Accrued Bonus Obligations.

     4.5 Termination for Cause.

          (a) Executive’s employment shall terminate immediately upon a Notice of Termination from the Company that Executive is being terminated for Cause (as defined herein), in which event Company shall not thereafter be obligated to make any further payments under this Agreement except for:

               (i) Accrued Base Obligations,

               (ii) earned but unpaid Performance Bonus for fiscal years ended prior to the Termination Date, payable on the date on which such Performance Bonus would be paid absent the termination of Executive, and

               (iii) if the Termination Date occurs in the Company’s third or fourth fiscal quarter, Accrued Bonus Obligations.

          (b) “Cause” shall be limited to the following:

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               (i) willful failure to substantially perform Executive’s duties as described in Section 1.2 after demand for substantial performance is delivered by Company in writing that specifically identifies the manner in which Company believes Executive has not substantially performed Executive’s duties and Executive’s failure to cure such non-performance within thirty (30) days after receipt of the Company’s written demand; provided, however, that a failure to perform such duties during the remedy period set forth in subsection (i) of the definition of Good Reason set forth in Section 4.7 hereof, following the issuance of a Notice of Termination (as herein defined) by Executive for Good Reason, shall not be Cause unless an arbitrator acting pursuant to Section 6.1 hereof finds Executive to have acted in bad faith in issuing such Notice of Termination;

               (ii) willful conduct that is materially and demonstrably injurious to Company or any of its subsidiaries, but not including good faith conduct taken without intention to injure the Company or its subsidiaries that, at the time engaged in, could not reasonably be expected to be more likely than not to be materially injurious to the Company; or

               (iii) conviction or plea of guilty or nolo contendere to a felony or to any other crime which involves moral turpitude or, if not including moral turpitude, arises from an act that is materially and demonstrably injurious to the Company or any of its subsidiaries;

               (iv) material violation of Section 5 of this Agreement,

               (v) or material violation of Company polices set forth in Company manuals or written statements of policy provided in the case of violation of policy that such violation is either materially and demonstrably injurious to Company or, if curable, continues for more then three (3) days after written notice thereof is given to Executive by the Company; and

               (vi) material breach of any material provision of this Agreement by Executive, which breach continues for more than ten (10) days after written notice thereof is given by the Company to Executive.

     4.6 Termination Without Cause or by Executive for Good Reason.

          (a) The Company reserves the right to terminate Executive’s employment at any time. If, however, a Termination Date occurs due to Company terminating Executive without Cause or Executive terminating for Good Reason, then Company shall have no further obligations under this Agreement except that Company shall pay to Executive the amounts shown in Section 4.6(c).

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          (b) For the avoidance of doubt, Section 4.6(c) shall not apply to (i) termination in the ordinary course on any applicable June 30 if the term of this Agreement is not automatically renewed, which circumstance is covered by Section 4.6(d), (ii) termination for Cause which circumstance is covered by Section 4.5, (iii) termination by Executive without Good Reason which circumstance is covered by Section 4.7, (iv) termination by reason of death which circumstance is covered by Section 4.3, or (v) termination by reason of Disability which circumstance is covered by Section 4.4.

          (c) If Company terminates Executive without Cause or Executive terminates with Good Reason, then the Company shall pay to Executive:

               (i) the Accrued Base Obligations through the Termination Date, payable promptly after the Termination Date,

               (ii) any unpaid Performance Bonus earned for any fiscal year ended on or before the Termination Date payable on the date on which such Performance Bonus would be paid absent termination,

               (iii) Accrued Bonus Obligations,

               (iv) amounts equal to Base Compensation through and including the date one year after the Termination Date, and

               (v) health and medical benefits as required by Section 3.3 of this Agreement during the same period that amounts equal to Base Compensation are due under Section 4.6(c)(iv); provided, however, if Executive, Executive’s spouse or Executive’s dependents, if any, are ineligible to participate in the Company benefit programs under Section 3.3, the Company shall arrange to reimburse Executive for coverage reasonably comparable to that previously provided under Section 3.3, and further provided that such benefits shall become secondary to primary coverage upon the date or dates Executive receives coverage and benefits which are substantially similar, taken as a whole, without waiting period or pre-existing condition limitations, under the plans and programs of a subsequent employer.

          (d) If this Agreement is terminated in the ordinary course on any applicable June 30 because of a non-renewal notice given by the Company under Section 2.1, then Company shall have no further obligations under this Agreement except that Company shall pay to Executive the same payments as to which the Executive would be entitled under Section 4.6(c)(i), (ii), (iv), and (v). If this Agreement is terminated in the ordinary course on any

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applicable June 30 because of a non-renewal notice given by the Executive under Section 2.1, then Company shall have no further obligations under this Agreement except that Company shall pay to Executive the payments to which the Executive would be entitled under Section 4.6(c)(i) and (ii).

     4.7 Termination by Executive without Good Reason.

          (a) Executive may terminate this Agreement without Good Reason upon fifteen (15) days prior notice. In the event Executive’s employment is voluntarily terminated by Executive without Good Reason, Company shall not be obligated to make any further payments to Executive hereunder other than:

               (i) Accrued Base Obligations through the Termination Date,

               (ii) earned but unpaid Performance Bonus for fiscal years ended prior to the Termination Date, payable on the date on which such Performance Bonus would be paid absent Executive’s termination, and

               (iii) if the Termination Date occurs in the Company’s third or fourth fiscal quarter, Accrued Bonus Obligations.

          (b) “Good Reason” shall mean the following:

               (i) material breach of Company’s obligations hereunder, including any assignment of duties not included within the Executive’s duties described in Section 1.2 unless previously agreed to in writing by Executive, provided that Executive shall have given reasonably specific written notice thereof to Company, and Company shall have failed to remedy the circumstances within thirty (30) days thereafter;

               (ii) any decrease in Executive’s salary as it may have increased during the term of this Agreement, except for decreases that are in conjunction with decreases in executive salaries by the Company generally and that do not result in a decrease in Executive’s annual salary below $299,000 per annum as adjusted by Exchange Adjustments;

               (iii) any decrease of Executive’s target Performance Bonus below $100,000 (as adjusted for exchange rate differences as described herein, or

               (iv) the failure of any successor in interest of the Company to be bound by the terms of this Agreement in accordance with Section 6.4 hereof.

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Notwithstanding subsections (i) and (iii) above, after a Change of Control, Good Reason shall not include a change of title, reporting line, responsibilities, and duties so long as such changed title, reporting line, and reassignment of executive duties are at a level commensurate with the level of participation of the Company in the controlling person (such as, for example, executive duties at a divisional, subsidiary, or group level, if the Company becomes a division, subsidiary, or group within the controlling person), or assignment of other duties not materially inconsistent with duties appropriate for a past president of European operations and head of global Internet research provided that following such Change in Control Executive reports to the highest ranking employee of such division, subsidiary, or group within the controlling person.

          (c) Executive must provide a Notice of Termination to the Company that he is intending to terminate his employment for Good Reason within one hundred and eighty (180) days after Executive has actual knowledge of the occurrence of the latest event he believes constitutes Good Reason, which termination notice shall specify a termination date within thirty (30) days after the date of such notice except for termination under subsection (i) in which case the termination date shall be as provided in such subsection. Executive’s right to terminate Executive’s employment hereunder for Good Reason shall not be affected by Executive’s subsequent Disability provided that the notice of intention to terminate is given prior to the onset of such Disability. Subject to compliance by Executive with the notice provisions of this Section 4.7, Executive’s continued employment prior to terminating employment for Good Reason shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason. In the event Executive delivers to the Company a Notice of Termination for Good Reason, upon request of the Board Executive agrees to appear before a meeting of the Board called and held for such purpose (after reasonable notice) and specify to the Board the particulars as to why Executive believes adequate grounds for termination for Good Reason exist. No action by the Board, other than the remedy of the circumstances within the time periods specified in this Section 4.7, shall be binding on Executive.

     4.8 Mitigation. Executive shall not be required to mitigate amounts payable under this Section 4 by seeking other employment or otherwise, and there shall be no offset against amounts due Executive under this Agreement on account of subsequent employment except as specifically provided herein.

     4.9 Change of Control.

          (a) If Executive is terminated without Cause, a Termination Date occurs on a June 30 due to non-renewal by the Company of the term of this Agreement under Section 2.1, or

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Executive terminates his employment for Good Reason, in each such case during the one year period following a Change of Control (as defined below), then in addition to payments and benefits to which Executive is entitled under Section 4.6, Executive also shall receive reimbursement for reasonable (in the discretion of the Company) and actual expenses incurred by Executive for six months of out-placement services.

          (b) If a Change of Control shall have occurred:

               (i) after such Change of Control Executive’s entitlement to Bonus under Section 3.2 may be modified by the new controlling Person in a reasonable manner (not to afford Executive with materially less opportunity to earn bonus than existed prior to the Change of Control) so that such Bonus is calculated with reference to a performance-based bonus plan provided by the new controlling Person; and

               (ii) after such Change of Control Executive’s entitlement to payments and benefits under Sections 3.3 and 3.4 may be modified by the new controlling Person to entitlement to those benefits generally provided to senior executives of the new controlling Person.

          (c) A “Change of Control” shall be deemed to have occurred if:

               (i) a change in control has occurred of a nature that would be required to be reported in a proxy statement with respect to the Company (even if the Company is not actually subject to said reporting requirements) in response to Item 6(e) (or any comparable or successor Item) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), except that any merger, consolidation or corporate reorganization in which the owners of the Company’s capital stock entitled to vote in the election of directors (the “Voting Stock”) prior to said combination receive 75% or more of the resulting entity’s Voting Stock shall not be considered a change in control for the purposes of this Plan;

               (ii) any “person” (as that term is used in Sections 13(d) and 14(d)(2) of the Exchange Act, excluding any stock purchase or employee stock ownership plan maintained by the Company or a Related Company) becomes the “beneficial owner” (as that term is defined by the Securities and Exchange Commission for purposes of Section 13(d) of the Exchange Act), directly or indirectly, of more than 15% of the outstanding voting stock of the Company or its successors; or

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               (iii) during any period of two consecutive years a majority of the Board of Directors no longer consists of individuals who were members of the Board of Directors at the beginning of such period, unless the election of each director who was not a director at the beginning of the period was approved by a vote of at least 75% of the directors still in office who were directors at the beginning of the period.

          (d) In connection with, or within one year after, a Change of Control, if all or any portion of the payments or other benefits paid or payable to Executive under this Agreement and under any other plan, program or agreement of the Company or its affiliates are determined to constitute an excess parachute payment within the meaning of Section 280G of the Internal Revenue Code of 1986, as it may have been or may be amended on or after the date of this Agreement (the “Code”), and results in the imposition on Executive of an excise tax under Section 4999 of the Code, then, in addition to any other benefits to which Executive is entitled under this Agreement, Harris shall pay to Executive an amount equal to the sum of (i) the excise tax payable by Executive by reason of receiving excess payments; and (ii) a gross-up amount necessary to offset any and all applicable federal, state, and local excise, income, or other taxes incurred by Executive by reason of Harris’s payment of the excise tax described in (i) above (but not including any additional amount to offset any taxes on the excise tax reimbursement or gross-up amount paid pursuant to this subclause (ii)).

     4.10 Effect of Section 409A. Notwithstanding anything to the contrary contained herein, in the event that (i) Executive notifies the Company, or the Company notifies Executive, in either case prior to the date on which a payment would otherwise be due under this agreement that Executive (or the Company, as applicable) believe that (x) the operation of this Agreement with respect to any such payment hereunder would fall within the coverage of Section 409A(a)(1) of the Internal Revenue Code (“IRC”) and (y) any payment hereunder is to be made on account of IRC Section 409A(a)(2)(A)(i) and Executive is a “specified employee” pursuant to IRC Section 409A(a)(2)(B)(i) then (ii) if Executive’s legal counsel and the Company’s legal counsel, in each case acting reasonably, agree that the foregoing analysis is correct, then such payment shall not be made until the date which is the earlier of the date of Executive’s death and the date which is six (6) months after the date of separation from service (the Termination Date).

     4.11 Precondition to Post-Termination Payments. As a condition for the payment of any post-Termination Date benefits to be provided hereunder except for Accrued Base Obligations, earned but unpaid Performance Bonus for fiscal years ended prior to the Termination Date, and Accrued Bonus Obligations, Executive shall deliver to the Company a release in favor of the Company in the form attached hereto as Exhibit A.

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5. NON-COMPETITION AND CONFIDENTIALITY

     5.1 Non-Competition.

          (a) Consideration for this Section. Executive acknowledges and agrees that:

               (i) the benefits, including in particular and without limitation those obligations under Section 4.6(b)(iv), afforded by this Agreement are over and above those otherwise afforded by Company policy, and in making its decision to offer Executive the benefits afforded by this agreement and bind itself in advance to the obligations hereunder the Company relied upon and was induced by the covenants made by Executive in this Section 5,

               (ii) in accepting the benefits evidenced by this Agreement Executive is receiving an asset of significant value, and Company’s entry into this Agreement and its incurrence of the related payment and other obligations hereunder are fair and adequate consideration for the Executive’s obligations under this Section 5,

               (iii) Executive’s position with the Company places Executive in a position of confidence and trust with the clients and employees of the Company,

               (iv) the Company’s business is carried on throughout the world and accordingly, it is reasonable that the restrictive covenants set forth below are not limited by specific geographic area,

               (v) the course of Executive’s employment with the Company necessarily requires the disclosure of confidential information and trade secrets related to the Company’s relationships with clients (such as, without limitation, pricing information, marketing plans, budgets, designs, methodologies, products, client preferences and policies, and identity of appropriate personnel of clients with sufficient authority to influence a shift in suppliers) as well as other confidential and proprietary information, (such as databases, methodologies, and technologies),

               (vi) Executive’s employment affords Executive the opportunity to develop a personal acquaintanceship and relationship with the Company’s employees and clients, which in some cases may constitute the Company’s primary or only contact with such employees and clients, and to develop a knowledge of those client’s and employee’s affairs and requirements,

               (vii) the Company’s relationships with its established clientele and

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employees are placed in Executive’s hands in confidence and trust,

               (viii) it is reasonable and necessary for the protection of the goodwill and business of the Company that Executive make the covenants contained in this agreement, and

               (ix) the Executive understands that the provisions of this Section 5 may limit Executive’s ability to earn a livelihood in a business similar or related to the business of Company, but nevertheless agrees and acknowledges that (A) the provisions of Section 5 are reasonable and necessary for the protection of Company, and do not impose a greater restraint than necessary to protect the goodwill or other business interest of Company, (B) such provisions contain reasonable limitations as to the time and the scope of activity to be restrained, and (C) the Company’s advance agreement to make payments under the various circumstances set forth in this Agreement provide Executive with benefits adequate to fully compensate Executive for any lost opportunity due to the operation of Section 5.

In consideration of the foregoing and in light of Executive’s education, skills and abilities, which are sufficient to enable Executive to earn a living in way that is not competitive with the Company’s business, Executive agrees that all defenses by Executive to the strict enforcement of such provisions are hereby waived by Executive.

     5.2 Restricted Activity.

          (a) During the period that Executive is employed by the Company, and for a period of one year after the Termination Date (the “Non-Competition Period”), Executive shall not, directly or indirectly, own, manage, operate, join, control, participate in, invest in or otherwise be connected or associated with, in any manner, including, without limitation, as an officer, director, employee, distributor, independent contractor, independent representative, partner, consultant, advisor, agent, proprietor, trustee or investor, any Competing Business (defined below); provided, however, that ownership of 4.9% or less of the stock or other securities of a corporation, the stock of which is listed on a national securities exchange shall not constitute a breach of this Section 5, so long as the Executive does not in fact have the power to control, or direct the management of, or is not otherwise engaged in activities with, such corporation.

          (b) For purposes of this Section 5.2, the term “Competing Business” shall mean any business or venture which is substantially similar to the whole or any significant part of the business conducted by Company, and which is in material competition with the Company,

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and the term “Affiliate” of any person or entity shall mean any other person or entity directly or indirectly controlling, controlled by or under common control with such particular person or entity, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of a person or entity whether through the ownership of voting securities, contract, or otherwise.

          (c) During the Non-Competition Period, Executive shall not (including without limitation on behalf of, for the benefit of, or in conjunction with, any other person or entity) directly or indirectly:

               (i) solicit, assist, discuss with or advise, influence, induce or otherwise encourage in any way, any employee of Company to terminate such employee’s relationship with Company for any reason, or assist any person or entity in doing so,

               (ii) employ, assist, engage or otherwise contract or create any relationship with any employee or former employee of Company in any business or venture of any kind or nature, in the case of a former employee unless such person shall not have been employed by Company for a period of at least one year and no solicitation prohibited hereby shall have occurred prior to the end of such one year period, or

               (iii) interfere in any manner with the relationship between any employee and Company.

     5.3 Confidential Information.

          (a) “Confidential Information” shall mean all proprietary or confidential records and information, including, but not limited to, development, marketing, purchasing, organizational, strategic, financial, managerial, administrative, production, distribution and sales information, distribution methods, data, specifications, technologies, methods, and processes (including the Transferred Property as hereinafter defined) presently owned or at any time hereafter developed by Company, or its agents, consultants, or otherwise on its behalf, or used presently or at any time hereafter in the course of the business of Company, that are not otherwise part of the public domain.

          (b) Executive hereby sells, transfers and assigns to Company, or to any person or entity designated by Company, all of Executive’s entire right, title and interest in and to all inventions, ideas, methods, developments, disclosures and improvements (the “Inventions”), whether patented or unpatented, and copyrightable material, and all trademarks, trade names, all

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goodwill associated therewith and all federal and state registrations or applications thereof, made, adopted or conceived by solely or jointly, in whole or in part prior to the Termination Date which (i) relate to methods, apparatus, designs, products, processes or devices sold, leased, used or under construction or development by Company or (ii) otherwise relate to or pertain to the business, products, services, functions or operations of the Company (collectively, the “Transferred Property”). Executive shall make adequate written records of all Inventions, which records shall be Company’s property and shall communicate promptly and disclose to Company, in such forms Company requests, all information, details and data pertaining to the aforementioned Inventions. Whether during the term of this Agreement or thereafter, Executive shall execute and deliver to Company such formal transfers and assignments and such other papers and documents as may be required of Executive to permit Company, or any person or entity designated by Company, to file and prosecute patent applications (including, but not limited to, records, memoranda or instruments deemed necessary by Company for the prosecution of the patent application or the acquisition of letters patent in the United states, foreign counties or otherwise) and, as to copyrightable material, to obtain copyrights thereon, and as to trademarks, to record the transfer of ownership of any federal or state registrations or applications.

          (c) All Confidential Information is considered secret and will be disclosed to the Executive in confidence, and Executive acknowledges that, as a consequence of Executive’s employment and position with Company, Executive may have access to and become acquainted with Confidential Information. Except in the performance of Executive’s duties as an employee of Company, Executive shall not, during the term and at all times thereafter, directly or indirectly for any reason whatsoever, disclose or use any such Confidential Information. All records, files, drawings, documents, equipment and other tangible items (whether in electronic form or otherwise), wherever located, relating in any way to or containing Confidential Information, which Executive has prepared, used or encountered or shall in the future prepare, use or encounter, shall be and remain Company’s sole and exclusive property and shall be included in the Confidential Information. Upon termination of this Agreement, or whenever requested by Company, Executive shall promptly deliver to Company any and all of the Confidential Information and copies thereof, not previously delivered to Company, that may be in the possession or under the control of the Executive. The foregoing restrictions shall not apply to the use, divulgence, disclosure or grant of access to Confidential Information to the extent, but only to the extent, (i) expressly permitted or required pursuant to any other written agreement between Executive and Company, (ii) such Confidential Information has been publicly disclosed (not due to a breach by the Executive of Executive’s obligations hereunder, or by breach of any

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other person, of a fiduciary or confidential obligation to Company) or (iii) the Executive is required to disclose Confidential Information by or to any court of competent jurisdiction or any governmental or quasi-governmental agency, authority or instrumentality of competent jurisdiction, provided, however, that the Executive shall, prior to any such disclosure, immediately notify Company of such requirements and provided further, however, that the Company shall have the right, at its expense, to object to such disclosures and to seek confidential treatment of any Confidential Information to be so disclosed on such terms as it shall determine.

     5.4 Acknowledgement; Remedies; Survival of this Agreement.

          (a) Executive acknowledges that violation of any of the covenants and provisions set forth in Section 5 of this Agreement would cause Company irreparable damage and agrees that Company’s remedies at law for a breach or threatened breach of any of the provisions of this Section 5 would be inadequate and, in recognition of this fact, in the event of a breach or threatened breach by Executive of any of the provisions of this Agreement, it is agreed that, in addition to the remedies at law or in equity, Company shall be entitled, without the posting of a bond, to equitable relief in the form of specific performance, a temporary restraining order, temporary or permanent injunction, or any other equitable remedy which may then be available for the purposes of restraining Executive from any actual or threatened breach of such covenants. Without limiting the generality of the foregoing, if Executive breaches or threatens to breach this Section 5 hereof, such breach or threatened breach will entitle Company (i) to terminate its obligations to make further payments otherwise required under this Agreement, (ii) to recover from the Executive any payments previously made under Section 4.6(b)(iv), (iii) to extend the Non-Competition Period by a period equal to the period in which Executive was in violation of this Section 5, and (iv) to enjoin Executive from disclosing any Confidential Information to any Competing Business, to enjoin any Competing Business from retaining Executive or using any such Confidential Information, and to enjoin Executive from rendering personal services to or in connection with any Competing Business, it being understood that the embedded knowledge of Executive gained at the Company will be impossible to separate from the performance of duties for a Competing Business. The rights and remedies hereunder are cumulative and shall not be exclusive, and the Company shall be entitled to pursue all legal and equitable rights and remedies and to secure performance of the obligations and duties of the Executive under this Agreement, and the enforcement of one or more of such rights and remedies by the Company shall in no way preclude the Company from pursuing, at the same time or subsequently, any and all other rights and remedies available to it.

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          (b) The provisions of this Section 5 shall survive the termination of Executive’s employment with Company.

6. MISCELLANEOUS

     6.1 Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Rochester, New York, in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The parties consent to the authority of the arbitrator, if the arbitrator so determines, to award fees and expenses (including legal fees) to the prevailing party in the arbitration. Notwithstanding the foregoing, Company shall be entitled to enforce the provisions of Section 5 hereof through proceedings brought in a court of competent jurisdiction as contemplated by Section 6.7 hereof.

     6.2 Severability; Reasonableness of Agreement. If any term, provision or covenant of this Agreement or part thereof, or the application thereof to any person, place or circumstance shall be held to be invalid, unenforceable or void by an arbitrator or court of competent jurisdiction, the remainder of this Agreement and such term, provision or covenant shall remain in full force and effect, and any such invalid, unenforceable or void term, provision or covenant shall be deemed, without further action on the part of the parties hereto, modified, amended and limited, and the arbitrator or court shall have the power to modify, amend and limit any such term, provision or covenant, to the extent necessary to render the same and the remainder of the Agreement valid, enforceable and lawful.

     6.3 Key Employee Insurance. Company in its sole discretion shall have the right at its expense to purchase insurance on the life of Executive, in such amounts as it shall from time to time determine, of which Company shall be the beneficiary. Executive shall submit to such physical examinations as may reasonably be required and shall otherwise cooperate with Company in obtaining such insurance.

     6.4 Assignment; Benefit. This Agreement shall not be assignable by Executive, other than Executive’s rights to payments or benefits hereunder, which may be transferred only by will or the laws of descent and distribution. Upon Executive’s death, this Agreement and all rights of Executive hereunder shall inure to the benefit of and be enforceable by Executive’s beneficiary or beneficiaries, personal or legal representatives, or estate, to the extent any such person succeeds to Executive’s interests under this Agreement. No rights or obligations of Company under this Agreement may be assigned or transferred except to any successor to the Company’s

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business and/or assets (by merger, purchase of stock or assets, or otherwise) which, to the extent not otherwise automatically provided by operation of law, expressly assumes and agrees to perform this Agreement in the same manner and to the same extent that Company would be required to perform if no such succession had taken place.

     6.5 Notices. All notices hereunder shall be in writing and shall be deemed sufficiently given (i) if hand-delivered, on the date of delivery, (ii) if sent by documented overnight delivery service, on the first business day after deposit with such service for overnight delivery, and (iii) if sent by registered or certified mail, postage prepaid, return receipt requested, on the third business day after deposit in the U.S. mail, in each case addressed as set forth below or at such other address for either party as may be specified in a notice given as provided herein by such party to the other. Any and all service of process and any other notice in any such action, suit or proceeding shall be effective against any party if given as provided in this Agreement; provided that nothing herein shall be deemed to affect the right of any party to serve process in any other manner permitted by law.

     If to Company:

Harris Interactive Inc.
135 Corporate Woods
Rochester, New York 14623
Attention: Chief Executive Officer

     With A Copy To:

Beth Ela Wilkens, Esq.
Harris Beach PLLC
99 Garnsey Road
Pittsford, New York 14534

     If to Executive:

George Terhanian
367A Portobello Road
London W10 5SG, U.K.

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     6.6 Entire Agreement; Modification. This Agreement constitutes the entire agreement between the parties hereto with respect to the matters contemplated herein and supersedes all prior agreements and understandings with respect thereto. No amendment, modification, or waiver of this Agreement shall be effective unless in writing. Neither the failure nor any delay on the part of any party to exercise any right, remedy, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power, or privilege with respect to such occurrence or with respect to any other occurrence.

     6.7 Governing Law. This Agreement is made pursuant to, and shall be construed and enforced in accordance with, the laws of the State of Delaware and the federal laws of the United States of America, to the extent applicable, without giving effect to otherwise applicable principles of conflicts of law. Subject to Section 6.1 of this Agreement, the parties hereto expressly consent to the jurisdiction of any state or federal court located in the State of New York, and to venue therein, and consent to the service of process in any such action or proceeding by certified or registered mailing of the summons and complaint therein directed to Executive or Company, as the case may be, at its address as provided in Section 6. hereof.

     6.8 Prevailing Party. Should either party breach the terms of this Agreement, the prevailing party who seeks to enforce the terms and conditions of this Agreement shall be entitled to recover its attorneys fee and disbursements.

     6.9 Headings; Counterparts; Interpretation.

          (a) The headings of paragraphs in this Agreement are for convenience only and shall not affect its interpretation.

          (b) This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which, when taken together, shall be deemed to constitute the same Agreement.

          (c) The Company and the Executive each acknowledge that it has been represented by legal counsel in the negotiation and drafting of this Agreement, that this Agreement has been drafted by mutual effort, and that no ambiguity in this Agreement shall be construed against either party as draftsperson.

     6.10 Further Assurances. Each of the parties hereto shall execute such further instruments and take such other actions as the other party shall reasonably request in order to effectuate the purposes of this Agreement.

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          IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the date first above written.

[Signature Page Follows]

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HARRIS INTERACTIVE INC.
By:	/s/ Gregory T. Novak Gregory T. Novak
	President and Chief Executive Officer
	/s/ George H. Ternhanian GEORGE H. TERHANIAN

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EXHIBIT A

RELEASE

     In consideration of the benefits provided under an Employment Agreement (“Agreement”) effective as of                      by and between George H. Terhanian (“Executive”) and Harris Interactive Inc. (“Harris”), Executive hereby releases Harris and its employees, officers, directors, attorneys, affiliates, subsidiaries, successors and assigns, from any and all claims, causes of action, and/or liabilities of any kind or nature whatsoever, known or unknown, at law, in equity, or otherwise, that may have occurred at any time up to the date hereof, arising from his employment relationship with Harris or as a result of the parties’ agreement to modify and end the employment relationship, including, without limitation, any and all claims arising under any federal, state or local laws, rules or regulations pertaining to employment or pay or benefit practices, including, but not limited to, claims under the Age Discrimination in Employment Act, Older Workers’ Benefit Protection Act, Equal Pay Act, Title VII of the Civil Rights Act of 1964, as amended, Fair Labor Standards Act, Americans with Disabilities Act, the Employee Retirement Income Security Act (ERISA), Family and Medical Leave Act (FMLA), New York State Human Rights Law, New York Labor Law and any other provisions relating to employment or pay or benefit practices, or relating to discrimination on the basis of race, creed, color, age, sex, national origin, disability, or arrest record, and Executive hereby agrees not to asset such claims or causes of action for monetary damages; provided, however, that Executive is not releasing any claims other than those expressly released hereby. Without limiting the foregoing proviso, Executive is not releasing any claims (i) arising from or relating to the breach of the Agreement or any document executed in connection therewith, or breach of any agreement covering equity grants (stock options, restricted stock, or otherwise) made to Executive prior to the date hereof, (ii) arising from or relating to any rights Executive may have to indemnity or contribution in connection with actions, proceedings, or investigations, (iii) to enforce vested rights under pension, benefit, or insurance plans, policies, programs or arrangements, or (iv) arising out of or relating to Executive’s status as a director or shareholder of Harris.

     In the event that Executive brings a claim which is determined by a court of law to have been released by the terms of this Release, he understands and agrees that, unless otherwise expressly prohibited by law or regulation, he will be required to reimburse the defending parties for their reasonable attorneys’ fees in connection with their defense of any such claim.

     Executive acknowledges that he has been advised to consult with legal counsel prior to signing this Release. Executive further understands and agrees that he is being provided with

23

twenty-one (21) calendar days after his Termination Date (as defined in the Agreement) to consider the terms of this Release, and that this Release will expire and become null and void if it is not executed and returned before the end of the twenty-one (21) calendar-day period. Executive further understands and agrees that he shall have the right to execute this Release at any time before the expiration of the twenty-one (21) calendar-day period, and that if he does so, he agrees that he has thereby waived the remainder of that twenty-one (21) day period. Finally, Executive acknowledges and agrees that after executing this Release, he has the right to revoke his acceptance of this Release by delivering a written revocation within seven (7) calendar days after his execution of the Release, provided such revocation is received within said seven (7) day period by legal counsel for Harris: Beth Ela Wilkens, Harris Beach PLLC, 99 Garnsey Road, Pittsford, New York, 14534. This Release shall become effective only after it has been executed by Executive and only after the seven (7) day revocation period has expired without revocation by Executive.

          IN WITNESS WHEREOF, Executive has executed and delivered this Release as of the date shown below.

          George H. Terhanian

STATE OF	)
	) SS.:
COUNTY OF	)

     On the ___ day of                      in the year 20___ before me, the undersigned, a notary public in and for said state, personally appeared George H. Terhanian, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual executed the instrument.

          Notary Public

24

EX-10.4.43

Exhibit 10.4.43

CHANGE IN CONTROL AGREEMENT

     On September 6, 2007, the Company entered into a Change in Control Agreement with Eric W. Narowski, the Company’s Vice President, Corporate Controller and Principal Accounting Officer. The form of Change in Control Agreement with Mr. Narowski is the form previously used by the Company in connection with other executive officers, and was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 31, 2005 and incorporated herein by reference.

EX-10.4.48

Exhibit 10.4.48

Board of Directors Compensation

On September 6, 2007 the Compensation Committee of the Board of Directors and the Board of Directors approved changes in the method of calculation of director compensation received in the form of restricted stock under the Company’s Long Term Incentive Plan. Previously directors received a grant of restricted stock on November 1 of each year. During 2007, the Compensation Committee established regularly scheduled quarterly dates for all awards made under the Long Term Incentive Plan. Consistent with this policy, the award date for grants to directors was changed to November 15, or if later, one week following the earnings announcement for the Company’s fiscal quarter ended September 30.

The value of the grant of restricted stock received as part of each non-employee director’s retainer equals as closely as possible, subject to rounding to prevent issuance of fractional shares, the annual cash retainer paid to non-employee directors (currently $41,500 for each period beginning November 1 through and including the following October 31). Previously, the number of shares awarded was calculated based upon the average closing price for the Company’s stock for the four weeks ending prior to November 1 of each year. Starting in 2007, the number of shares awarded will be calculated based upon the closing price for the Company’s stock on the award date.

EX-10.4.53

Exhibit 10.4.53

COMPENSATION ARRANGEMENTS WITH EXECUTIVE OFFICERS

     Certain of the executive officers of Harris Interactive Inc. (the “Company”) including Messrs. Allsop, Bayer, Novak, Salluzzo, Terhanian, and Vaden, have Employment Agreements with the Company which provide for their respective base salaries and target bonuses, subject to adjustment from time to time in the discretion of the Compensation Committee of the Board of Directors. Their respective salaries and target bonuses for fiscal 2008 have not been adjusted and are shown below in the Executive Officer Compensation Table (“Table”). The bonus actually received by each of them for fiscal 2007 is also shown in the Table.

     The remaining executive officers, including Messrs. Bhame, Millard, and Narowski and Mss. Binns and O’Neill, do not have employment agreements. Under the Company’s arrangements with them, their respective salaries and target bonuses for fiscal 2008, as well as the bonus actually received by each of them for fiscal 2007, are shown below in the Table.

     The Company has two bonus plans in which its executive officers, together with other employees, participate including a Corporate Bonus Plan and a Business Unit Bonus Plan.

     Under the Corporate Bonus Plan, for fiscal 2008 a fixed dollar pool for all participants of $945,000 is established. The actual payout from the pool increases or decreases based upon achievement of pre-set levels of “Adjusted EBITDA” (EBITDA adjusted to remove the effect of non-cash stock-based compensation expense). Each participant in the Corporate Bonus Plan is allocated a specified percentage of the pool. In order for a participant in the Corporate Bonus Plan to achieve his full personal target bonus, Adjusted EBITDA would have to be 4% greater than budget. Based upon better or worse performance, bonus payouts can increase or decrease. Absent any discretionary allocation, 64% of targeted bonus pool is payable if performance is equal to budget and no bonus is payable if performance is less than 90% of budget.

     Under the Business Unit Bonus Plan for fiscal 2008, individual metrics are established for each participant. In general, 25% of each participant’s bonus is determined based upon the same Company-wide Adjusted EBITDA results as are applicable under the Corporate Bonus Plan. In addition, 65% of bonus is earned by achievement of budgeted operating income for the particular business unit with which the officer is associated, and 10% of the bonus is based upon evaluation of performance against individual management objectives. Within the Business Unit Bonus Plan bonuses may be increased or decreased by set percentages based upon client satisfaction scores for the business unit with which a particular officer is associated.

     Up to $850,000 under all of the Company’s bonus plans is available to be awarded to the participants in any of those plans in the discretion of the Chief Executive Officer, subject in the case of executive officers to approval by the Compensation Committee. The Compensation Committee of the Board of Directors also reserves the right to increase the payouts that would otherwise be applicable.

EXECUTIVE OFFICER COMPENSATION TABLE

							FY2008
	FY2007 Actual			FY2008 Bonus			Applicable Bonus	FY2008
Executive Officer	Bonus Payout			Target			Plan	Salary
Dee T. Allsop	$	7,500		$	75,000		Business Unit	$	275,000
Leonard R. Bayer	$	51,866		$	135,000		Corporate	$	330,000
Dennis K. Bhame	$	23,052		$	60,000		Corporate	$	205,000
Katherine Binns	$	6,500		$	65,000		Business Unit	$	210,000
Richard Millard	$	55,000	*	$	65,000		Business Unit	$	200,000
Eric W. Narowski	$	12,000		$	30,000	**	Corporate	$	155,000
Gregory T. Novak	$	96,048		$	250,000		Corporate	$	500,000
Michelle F. O’Neill	$	10,000		$	65,000		Business Unit	$	235,000
Ronald E. Salluzzo	$	57,629		$	150,000		Corporate	$	335,000
George H. Terhanian	$	71,197		$	100,000		Business Unit	$	299,000
David B. Vaden	$	94,294		$	150,000		Business Unit	$	350,000

*	Corrected From Amount Previously Reported
**	Increased Over Amount Previously Reported

EX-10.7.9

Exhibit 10.7.9

Interest Rate Swap Transaction

The purpose of this letter agreement is to confirm the terms and conditions of the Transaction entered into between:

JPMORGAN CHASE BANK, N.A.
(“JPMorgan”)

and

HARRIS INTERACTIVE INC
(the “Counterparty”)

on the Trade Date and identified by the JPMorgan Deal Number specified below (the “Transaction”). This letter agreement constitutes a “Confirmation” as referred to in the Master Agreement specified below, and supersedes any previous confirmation or other writing with respect to the transaction described below.

The definitions and provisions contained in the 2006 ISDA Definitions (the “Definitions”), as published by the International Swaps and Derivatives Association, Inc. are incorporated into this Confirmation. In the event of any inconsistency between those definitions and provisions and this Confirmation, this Confirmation will govern.

This Confirmation supplements, forms part of, and is subject to, the ISDA Master Agreement dated as of 23 August 2007, as amended and supplemented from time to time (the ‘Agreement’), between JPMORGAN CHASE BANK N.A. (‘JPMorgan’) and HARRIS INTERACTIVE INC (the ‘Counterparty’). All provisions contained in the Agreement govern this Confirmation except as expressly modified below.

Page 1 of 7

The terms of the particular Interest Rate Swap Transaction to which this Confirmation relates are as follows:

A. TRANSACTION DETAILS
JPMorgan Deal Number(s):	6900043624393 / 00115009143
Notional Amount:	As set forth in the Notional Amount Schedule hereto
Trade Date:	23 August 2007
Effective Date:	10 September 2007
Termination Date:	10 September 2012 subject to adjustment in accordance with the Modified Following Business Day Convention.
Fixed Amounts:
Fixed Rate Payer:	Counterparty
Fixed Rate Payer Payment Dates:	The 10 October, 10 November, 10 December, 10 January, 10 February, 10 March, 10 April, 10 May, 10 June, 10 July, 10 August and 10 September in each year, from and including 10 October 2007 to and including the Termination Date, subject to adjustment in accordance with the Modified Following Business Day Convention and there will be an adjustment to the Calculation Period.
Fixed Rate:	5.08000 percent
Fixed Rate Day Count Fraction:	Actual/360
Business Days:	New York, London
Floating Amounts:
Floating Rate Payer:	JPMorgan
Floating Rate Payer Payment Dates:	The 10 October, 10 November, 10 December, 10 January, 10 February, 10 March, 10 April, 10 May, 10 June, 10 July, 10 August and 10 September in each year, from and including 10 October 2007 to and including the Termination Date, subject to adjustment in accordance with the Modified Following Business Day Convention and there will be an adjustment to the Calculation Period.

Page 2 of 7

Floating Rate for initial Calculation Period:	To be determined
Floating Rate Option:	USD-LIBOR-BBA
Designated Maturity:	1 Month
Spread:	None
Floating Rate Day Count Fraction:	Actual/360
Reset Dates:	The first day of each Calculation Period.
Compounding:	Inapplicable
Business Days:	New York, London
Calculation Agent:	JPMorgan, unless otherwise stated in the Agreement.
Notional Amount Schedule:

Effective From:	Notional Amount:
10 September 2007	USD	33,800,000.00
10 October 2007	USD	33,236,666.67
13 November 2007	USD	32,673,333.33
10 December 2007	USD	32,110,000.00
10 January 2008	USD	31,546,666.67
11 February 2008	USD	30,983,333.33
10 March 2008	USD	30,420,000.00
10 April 2008	USD	29,856,666.67
12 May 2008	USD	29,293,333.33
10 June 2008	USD	28,730,000.00
10 July 2008	USD	28,166,666.67
11 August 2008	USD	27,603,333.33
10 September 2008	USD	27,040,000.00
10 October 2008	USD	26,476,666.67
10 November 2008	USD	25,913,333.33
10 December 2008	USD	25,350,000.00
12 January 2009	USD	24,786,666.67
10 February 2009	USD	24,223,333.33
10 March 2009	USD	23,660,000.00
14 April 2009	USD	23,096,666.67
11 May 2009	USD	22,533,333.33
10 June 2009	USD	21,970,000.00
10 July 2009	USD	21,406,666.67
10 August 2009	USD	20,843,333.33
10 September 2009	USD	20,280,000.00
13 October 2009	USD	19,716,666.67
10 November 2009	USD	19,153,333.33
10 December 2009	USD	18,590,000.00
11 January 2010	USD	18,026,666.67
10 February 2010	USD	17,463,333.33
10 March 2010	USD	16,900,000.00
12 April 2010	USD	16,336,666.67
10 May 2010	USD	15,773,333.33
10 June 2010	USD	15,210,000.00
12 July 2010	USD	14,646,666.67

Page 3 of 7

Effective From:	Notional Amount:
10 August 2010	USD	14,083,333.33
10 September 2010	USD	13,520,000.00
12 October 2010	USD	12,956,666.67
10 November 2010	USD	12,393,333.33
10 December 2010	USD	11,830,000.00
10 January 2011	USD	11,266,666.67
10 February 2011	USD	10,703,333.33
10 March 2011	USD	10,140,000.00
11 April 2011	USD	9,576,666.67
10 May 2011	USD	9,013,333.33
10 June 2011	USD	8,450,000.00
11 July 2011	USD	7,886,666.67
10 August 2011	USD	7,323,333.33
12 September 2011	USD	6,760,000.00
11 October 2011	USD	6,196,666.67
10 November 2011	USD	5,633,333.33
12 December 2011	USD	5,070,000.00
10 January 2012	USD	4,506,666.67
10 February 2012	USD	3,943,333.33
12 March 2012	USD	3,380,000.00
10 April 2012	USD	2,816,666.67
10 May 2012	USD	2,253,333.33
11 June 2012	USD	1,690,000.00
10 July 2012	USD	1,126,666.67
10 August 2012	USD	563,333.33

B. ACCOUNT DETAILS
Payments to JPMorgan in USD:	JPMORGAN CHASE BANK, N.A.
	JPMORGAN CHASE BANK, NATIONAL
	ASSOCIATION
	BIC: CHASUS33XXX
	AC No: 099997979
Payments to Counterparty in USD:	As per your standard settlement instructions.
C. OFFICES
JPMorgan:	NEW YORK
Counterparty:	ROCHESTER

D. GOVERNING LAW

The laws of the State of New York, provided, however, that upon execution of the Master Agreement, this Confirmation shall be governed by the law governing such Master Agreement.

E. DOCUMENTS TO BE DELIVERED

Each party shall deliver to the other, at the time of its execution of this Confirmation, evidence of the incumbency and specimen signature of the person(s) executing this Confirmation, unless such evidence has been previously supplied and remains true and in effect.

Page 4 of 7

F. RELATIONSHIP BETWEEN PARTIES

Each party will be deemed to represent to the other party on the date on which it enters into a Transaction that (absent a written agreement between the parties that expressly imposes affirmative obligations to the contrary for that Transaction):

(a) Non-Reliance. It is acting for its own account, and it has made its own independent decisions to enter into that Transaction and as to whether that Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into that Transaction; it being understood that information and explanations related to the terms and conditions of a Transaction shall not be considered investment advice or a recommendation to enter into that Transaction. No communication (written or oral) received from the other party shall be deemed to be an assurance or guarantee as to the expected results of that Transaction.

(b) Assessment and Understanding. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of that Transaction. It is capable of assuming, and assumes the risks of that Transaction.

(c) Status of Parties. The other party is not acting as a fiduciary for or an adviser to it in respect of that Transaction.

Page 5 of 7

Please confirm that the foregoing correctly sets forth the terms of our agreement by executing a copy of this Confirmation and returning it to us or by sending to us a letter, telex or facsimile substantially similar to this letter, which letter, telex or facsimile sets forth the material terms of the Transaction to which this Confirmation relates and indicates agreement to those terms. When referring to this Confirmation, please indicate: JPMorgan Deal Number(s): 6900043624393 / 00115009143

JPMorgan Chase Bank, N.A.
/s/ Carmine Pilla
Name:	Carmine Pilla
Title:	Vice President
Accepted and confirmed as of the date first written: HARRIS INTERACTIVE INC
/s/ Ronald E. Salluzzo
Name:	Ronald E. Salluzzo
Title:	Chief Financial Officer

Your reference number: _________________________

Page 6 of 7

Client Service Group

All queries regarding confirmations should be sent to:

JPMorgan Chase Bank, N.A.

Contacts
JPMorgan Contact	Telephone Number
Client Service Group	(001) 3026344960
Group E-mail address:
Facsimile:	(001) 888 803 3606
Telex:
Cable:

Please quote the JPMorgan deal number(s): 6900043624393 / 00115009143.

Page 7 of 7

EX-21

Exhibit 21

Subsidiaries of Harris Interactive Inc.

Decima, Inc., a Delaware corporation

Decima Research, Inc., an Ontario, Canada corporation

GSBC Ohio Corporation, an Ohio corporation

Harris Interactive Asia Limited, a Hong Kong corporation

Harris Interactive Asia, LLC, a Delaware limited liability company

Harris Interactive International Inc., a Delaware corporation

Harris Interactive U.K. Limited, a United Kingdom corporation

HI U.K. Holdings Limited, a United Kingdom corporation

Louis Harris & Associates, Inc., a New York corporation

Marketshare Limited, a Hong Kong corporation

Marketshare Pte Ltd, a Singapore corporation

MediaTransfer AG Netresearch & Consulting, a German stock corporation

Novatris, S.A., a French corporation

Opinion Search Inc., an Ontario, Canada corporation

Opinion Search Inc., a Delaware corporation

Romtec U.K. Limited, a United Kingdom corporation

Teligen U.K. Limited, a United Kingdom corporation

The Wirthlin Group International, LLC, a Delaware limited liability company

Wirthlin Europe Limited, a United Kingdom corporation

Wirthlin U.K. Limited, a United Kingdom corporation

Wirthlin Worldwide, LLC, a Delaware limited liability company

2144798 Ontario Inc., an Ontario, Canada corporation

EX-23

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-31776, No. 333-31778, No. 333-49336, No. 333-69056, No. 333-72842, No. 333-113392, No. 333-121250, No. 333-123771 and No. 333-135536) and the Registration Statement on Form S-3 (No. 333-73778) of Harris Interactive Inc. of our report, dated September 12, 2007, relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PRICEWATERHOUSECOOPERS LLP
	Rochester, New York
	September 12, 2007

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Gregory T. Novak, certify that:

1. I have reviewed this report on Form 10-K of Harris Interactive Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 12, 2007	Signature:	/s/ GREGORY T. NOVAK Gregory T. Novak
		President and Chief Executive Officer,
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Ronald E. Salluzzo, certify that:

1. I have reviewed this report on Form 10-K of Harris Interactive Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 12, 2007	Signature:	/s/ RONALD E. SALLUZZO Ronald E. Salluzzo
		Executive Vice President,
		Chief Financial Officer,
		Treasurer and Secretary
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

     In connection with the Annual Report on Form 10-K of Harris Interactive Inc. (the “Company”) for the fiscal year ended June 30, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gregory T. Novak, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Signature:	/s/ GREGORY T. NOVAK Gregory T. Novak
	President and Chief Executive Officer

Dated: September 12, 2007

EX-32.2

Exhibit 32.2

Certification Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

     In connection with the Annual Report on Form 10-K of Harris Interactive Inc. (the “Company”) for the fiscal year ended June 30, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ronald E. Salluzzo, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Signature:	/s/ RONALD E. SALLUZZO Ronald E. Salluzzo
	Executive Vice President, Chief Financial
	Officer, Treasurer and Secretary

Dated: September 12, 2007