##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Fiscal Year Ended: December 31, 2010
 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: 0-21878
 SIMON WORLDWIDE, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    04-3081657(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 5200 W. Century Boulevard, Los Angeles, California 90045
 (310) 417-4660
 Securities registered pursuant to Section 12(b) of the Act:
 Name of each exchangeTitle of each class
    
    on which registeredCommon Stock, $0.01 Par Value Per Share
    
    NONE
 Securities registered pursuant to Section 12(g) of the Act:
  o þ
 o þ
 þ o
 o o
 þ
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company þ o þ




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##### 



SIMON WORLDWIDE, INC.
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010
  
 INDEX
 PART I
    
    
    3Item 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    4Item 1B. Unresolved Staff Comments
    
    
    5Item 2. Properties
    
    
    5Item 3. Legal Proceedings
    
    
    5Item 4. (Removed and Reserved)
    
    
    5PART II
    
    
    6Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    6Item 6. Selected Financial Data
    
    
    6Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    6Item 8. Financial Statements and Supplementary Data
    
    
    10Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    10Item 9A. Controls and Procedures
    
    
    11Item 9B. Other Information
    
    
    11PART III
    
    
    12Item 10. Directors, Executive Officers and Corporate Governance
    
    
    12Item 11. Executive Compensation
    
    
    14Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    19Item 13. Certain Relationships, Related Transactions and Director Independence
    
    
    21Item 14. Principal Accountant Fees and Services
    
    
    21PART IV
    
    
    23Item 15. Exhibits and Financial Statement Schedules
    
    
    23SIGNATURES
    
    
    24EX-31EX-32
  2




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##### Table of Contents



PART I
 
 Item 1. Business
 General
       3




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Item 1A. Risk Factors
  Uncertain Outlook
  Dependence on Key Personnel
  Investments
  4




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Forward Looking Information
  
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
  
 Item 3. Legal Proceedings
  
 Item 4. (Removed and Reserved)
 5




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PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
  2010
    
    2009High
    
    Low
    
    High
    
    LowFirst quarter
    
    $
    0.51
    
    
    $
    0.20
    
    
    $
    0.37
    
    
    $
    0.17Second quarter
    
    
    0.40
    
    
    
    0.20
    
    
    
    0.35
    
    
    
    0.15Third quarter
    
    
    0.35
    
    
    
    0.20
    
    
    
    0.35
    
    
    
    0.15Fourth quarter
    
    
    0.33
    
    
    
    0.24
    
    
    
    0.35
    
    
    
    0.21
    
 Item 6. Selected Financial Data
  
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Statements and Associated Risks
  Critical Accounting Policies
  6




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Long-Term Investments
   InvestmentsDebt and Equity Securities
 InvestmentsOther Fair Value Measurements and Disclosures
 Contingencies
  Recently Issued Accounting Standards
 TM Subsequent Events
  7




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Results of Continuing and Discontinued Operations
   Continuing Operations
 2010 Compared to 2009
    Discontinued Operations
 2010 Compared to 2009
   Liquidity and Capital Resources
   8




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Continuing Operations
        Discontinued Operations
      Off-Balance Sheet Arrangements
  9




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Item 8. Financial Statements and Supplementary Data
 Description
    
    PageReports
of Independent Registered Public Accounting Firms
    
    F-1Consolidated Balance Sheets as of December 31, 2010 and 2009
    
    F-3Consolidated Statements of Operations for the Years Ended December 31, 2010 and 2009
    
    F-4Consolidated Statements of Stockholders Equity for the Years ended December 31, 2010 and 2009
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2010 and 2009
    
    F-6Notes to Consolidated Financial Statements
    
    F-7
 
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
 Previous Independent Registered Public Accounting Firm
    New Independent Registered Public Accounting Firm
   10




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Item 9A. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Report of Management on Internal Control Over Financial Reporting
     Changes in Internal Control Over Financial Reporting
  
 Item 9B. Other Information
  11




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PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
    Year TermName
    
    Age
    
    Class
    
    Expires
    
    Service as DirectorJoseph W. Bartlett
    
    
    77
    
    
    
    I
    
    
    
    2009
    
    
    1993 to presentAllan I. Brown
    
    
    70
    
    
    
    I
    
    
    
    2009
    
    
    1999 to presentGreg Mays
    
    
    64
    
    
    II
    
    
    2010
    
    
    2004 to presentBradford Nugent
    
    
    31
    
    
    II
    
    
    2010
    
    
    2009 to presentIra Tochner
    
    
    49
    
    
    II
    
    
    2010
    
    
    2006 to presentTerrence Wallock
    
    
    66
    
    
    III
    
    
    2008
    
    
    2006 to present
   Business History of Directors and Executive Officers
    12




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Board Committees
  The Audit Committee
   13




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The Compensation Committee
  Nominating Committee
  Section 16(a) Beneficial Ownership Reporting Compliance
  Code of Ethics
  
 Item 11. Executive Compensation
 Compensation Discussion and Analysis
 Overview
  
    
    to discharge the Board of Directors responsibilities relating to the compensation of
the Companys directors, officers and key employees;
    
    to be responsible for the administration of the Companys incentive compensation and
stock plans;
    
    to be responsible for the review and recommendation to the Board of Directors of the
Companys Compensation Discussion and Analysis; and
    
    to be responsible for the production of an annual report on executive compensation for
inclusion in the Companys proxy statement or Form 10-K, as applicable.
  14




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Compensation Philosophy and Objectives
  
    
    provide competitive compensation that will attract and retain qualified officers and key
employees;
    
    reward officers and key employees for their contributions to the Company; and
    
    align officers and key employees interests with the interests of shareholders.
  Setting Executive Compensation
   2010 Executive Compensation Components
     15




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Tax and Accounting Implications
 Deductibility of Executive Compensation:
  Nonqualified Deferred Compensation:
  Summary Compensation Table
  (b)(a)
    
    All OtherName
    
    Year
    
    Salary
    
    Compensation
    
    TotalGreg Mays
    
    
    2010
    
    
    $
    210,000
    
    
    $
    66,000
    (c)
    
    $
    276,000Chief Executive Officer, Chief Financial Officer,
and Director
    
    
    2009
    
    
    
    210,000
    
    
    
    56,000
    (d)
    
    
    266,000
 
 (a)
    
    All cash compensation received in capacity as an executive officer consists of salary.(b)
    
    In accordance with the rules of the Securities and Exchange Commission, other compensation in
the form of perquisites and other personal benefits have been omitted because the aggregate amount
of such perquisites and other personal benefits was less than $10,000.(c)
    
    Amount consists of $50,000 for board retainer and $16,000 for board meeting fees.(d)
    
    Amount consists of $50,000 for board retainer and $6,000 for board meeting fees. Grants of Plan-Based Awards
  Executive Services Agreements with Officers
   16




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Outstanding Equity Awards at Fiscal Year-End
  Number ofSecuritiesUnderlying
    
    Option
    
    OptionUnexercised Options
    
    Exercise
    
    ExpirationName and Principal Position
    
    Exercisable
    
    Price
    
    DateGreg Mays
    
    
    10,000
    
    
    $
    0.10
    
    
    
    05/09/13Chief Executive Officer,
Chief Financial Officer, and
Director
 Option Exercises and Stock Vested
  Post-Employment Compensation
  Potential Payments upon Termination
 Voluntary Termination:
  Involuntary Termination:
  Retirement:
  Change in Control:
  17




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Health Insurance Benefits:
  Directors Compensation
  (a)FeesEarnedor PaidName
    
    in Cash
    
    TotalJoseph Bartlett
    
    $
    108,000
    (b)
    
    $
    108,000Allan Brown
    
    
    103,000
    (c)
    
    
    103,000Bradford Nugent
    
    
    58,000
    (d)
    
    
    58,000Ira Tochner
    
    
    64,000
    (e)
    
    
    64,000Terry Wallock
    
    
    66,000
    (f)
    
    
    66,000
 
 (a)
    
    Directors are paid an annual retainer of $50,000. Directors also receive a fee of $2,000
for each Board of Directors, Audit and Compensation Committee meeting attended. The chairmen of
the Audit and the Compensation Committees also receive annual retainers of $7,500 and $5,000,
respectively, plus an additional $500 for each committee meeting they chair.(b)
    
    Amount consists of $50,000 for board retainer, $28,500 for board meeting fees, $12,000 in
other board fees, $10,000 for Special Committee fee, and $7,500 for Audit Committee chair fee. Mr.
Bartlett held 25,000 stock options, all of which were vested, at December 31, 2010.(c)
    
    Amount consists of $50,000 for board retainer, $26,000 for board meeting fees, $12,000 in
other board fees, $10,000 for Special Committee fee, and $5,000 for Compensation Committee chair
fee. Mr. Brown held 20,000 stock options, all of which were vested, at December 31, 2010.(d)
    
    Amount consists of $50,000 for board retainer and $8,000 for board meeting fees.(e)
    
    Amount consists of $50,000 for board retainer and $14,000 for board meeting fees.(f)
    
    Amount consists of $50,000 for board retainer and $16,000 for board meeting fees. Mr. Wallock
held 5,000 stock options, all of which were vested, at December 31, 2010. Executive Services Agreements with Directors
  18




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Compensation Committee Interlocks and Insider Participation
  Compensation Committee Report
   
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
  Security Ownership of Certain Beneficial Owners
  Number of SharesName and Address
    
    Of Common Stock
    
    
    Percentage OfOf Beneficial Owner (a)
    
    Beneficially Owned
    
    
    ClassThe Yucaipa Companies and affiliates
(b)(c)(d)
Overseas Toys, L.P.
OA3, LLC
Multi-Accounts, LLC
Ronald W. Burkle
    
    
    41,763,668
    
    
    
    82.5
    %
 
 (a)
    
    The number of shares beneficially owned by each stockholder is determined in accordance with
the rules of the Securities and Exchange Commission and is not necessarily indicative of beneficial
ownership for any other purpose. Under these rules, beneficial ownership includes those shares of
common stock that the stockholder has sole or shared voting or investment power and any shares of
common stock that the stockholder has a right to acquire within sixty (60) days after March 23,
2011, through the exercise of any option, warrant or other right. The percentage ownership of the
outstanding common stock, however, is based on the assumption, expressly required by the rules of
the Securities and Exchange 19




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Commission, that only the person or entity whose ownership is being reported has converted options,
warrants or other rights into shares of common stock.(b)
    
    Overseas Toys, L.P. is an affiliate of The Yucaipa Companies. Multi-Accounts, LLC is the sole
general partner of Overseas Toys, L.P., and OA3, LLC is the sole managing member of Multi-Accounts,
LLC. Ronald W. Burkle is the sole managing member of OA3, LLC. The address of each of Overseas
Toys, L.P., Multi-Accounts, LLC, OA3, LLC, and Ronald W. Burkle is 9130 West Sunset Boulevard, Los
Angeles, California 90069.(c)
    
    Based on 50,611,879 shares of common stock outstanding as of March 23, 2011.(d)
    
    The information concerning these holders is based solely on information contained in filings
pursuant to the Securities Exchange Act of 1934. Security Ownership of Management
  Number of SharesName and Address
    
    Of Common Stock
    
    Percentage OfOf Beneficial Owner (a)
    
    Beneficially Owned
    
    Class (b)Allan I. Brown (c)
    
    
    1,133,023
    
    
    
    2.2
    %Joseph W. Bartlett (d)
    
    
    25,000
    
    
    
    *Greg Mays (e)
    
    
    10,000
    
    
    
    *Bradford Nugent
    
    
    
    
    
    
    Ira Tochner
    
    
    
    
    
    
    Terrence Wallock (f)
    
    
    5,000
    
    
    
    *All directors and executive officers as
a group (6 persons)
    
    
    1,173,023
    
    
    
    2.3
    %
 
 *
    
    Represents less than 1%(a)
    
    The address of each of the directors and executive officers is c/o Simon Worldwide, Inc., 5200
W. Century Boulevard, Suite 420, Los Angeles, California, 90045. The number of shares beneficially
owned by each stockholder is determined in accordance with the rules of the Securities and Exchange
Commission and is not necessarily indicative of beneficial ownership for any other purpose. Under
these rules, beneficial ownership includes those shares of common stock that the stockholder has
sole or shared voting or investment power and any shares of common stock that the stockholder has a
right to acquire within sixty (60) days after March 23, 2011, through the exercise of any option,
warrant or other right. The percentage ownership of the outstanding common stock, however, is
based on the assumption, expressly required by the rules of the Securities and Exchange Commission,
that only the person or entity whose ownership is being reported has converted options, warrants or
other rights.(b)
    
    Based on 50,611,879 shares of common stock outstanding as of March 23, 2011.(c)
    
    Includes 20,000 shares issuable pursuant to stock options exercisable within 60 days of March
23, 2011. Mr. Brown has the sole power to vote, or to direct the vote of, and the sole power to
dispose, or to direct the disposition of, 1,113,023 shares of common stock.(d)
    
    The 25,000 shares are issuable pursuant to stock options exercisable within 60 days of March
23, 2011. 20




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(e)
    
    The 10,000 shares are issuable pursuant to stock options exercisable within 60 days of March
23, 2011.(f)
    
    The 5,000 shares are issuable pursuant to stock options exercisable within 60 days of March 23,
2011. Securities Authorized for Issuance Under Equity Compensation Plans
  Number of Sharesof Common StockNumber of Shares
    
    
    
    
    
    Available forof Common Stock
    
    Weighted-
    
    Future Issuanceto be Issued Upon
    
    Average
    
    (excluding thoseExercise of
    
    Exercise Price
    
    in column (a))Outstanding Stock
    
    of Outstanding
    
    Under the StockOptions
    
    Stock Options
    
    Option PlansPlans Approved by Stockholders
    
    
    60,000
    
    
    $.26 per share
    
    NonePlans Not Approved by
Stockholders
    
    Not applicable
    
    Not applicable
    
    Not applicableTotal
    
    
    60,000
    
    
    $.26 per share
    
    None
 
 Item 13. Certain Relationships, Related Transactions and Director Independence
  
 Item 14. Principal Accountant Fees and Services
  Fiscal Year2010
    
    
    2009(in thousands)Audit fees (a)
    
    $
    127
    
    
    $
    139Audit-related fees (b)
    
    
    
    
    
    
    Tax fees (c)
    
    
    3
    
    
    
    35All other fees (d)
    
    
    
    
    
    
    Total
    
    $
    130
    
    
    $
    174
 
 (a)
    
    Audit fees are related to the audit of the Companys consolidated annual financial statements,
review of the interim consolidated financial statements, and services normally provided by the
Companys independent registered public accounting firm in connection with statutory and regulatory
filings and engagements. The amount for 2010 consists of fees to EY of $90,000 and fees to BDO of
$37,000. The entire amount for 2009 consists of fees to BDO. 21




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(b)
    
    Audit-related fees are for assurance and related services that are reasonably related to the
performance of the audit or review of the Companys consolidated financial statements and are not
reported under Audit fees.(c)
    
    Tax fees are related to tax compliance, planning, and consulting. The amounts for 2010 and
2009 consist of fees to BDO.(d)
    
    All other fees are for services other than those reported in the other categories. Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent Auditor
  22




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PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 Documents Filed as Part of this Report
  
    
    Consolidated Balance Sheets as of December 31, 2010 and 2009
    
    Consolidated Statements of Operations for the years ended December 31, 2010 and 2009
    
    Consolidated Statements of Stockholders Equity for the years ended December 31,
2010 and 2009
    
    Consolidated Statements of Cash Flows for the years ended December 31, 2010 and 2009
    
    Notes to Consolidated Financial Statements
  Exhibits
  23




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SIGNATURES
  SIMON WORLDWIDE, INC./s/  Greg MaysGreg MaysChief Executive Officer and
Chief Financial Officer   /s/ Joseph W. Bartlett

Joseph W. Bartlett
    
    Director
    
    March 30, 2011/s/ Allan I. Brown

Allan I. Brown
    
    Director
    
    March 30, 2011/s/ Greg Mays

Greg Mays
    
    Director, Chief Executive Officer, and
Chief Financial Officer
    
    March 30, 2011/s/ Bradford Nugent

Bradford Nugent
    
    Director
    
    March 30, 2011/s/ Ira Tochner

Ira Tochner
    
    Director
    
    March 30, 2011/s/ Terrence Wallock

Terrence Wallock
    
    Director
    
    March 30, 2011
 24




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EXHIBITS
 ExhibitNumber
    
    Description2.1(4)
    
    Securities Purchase Agreement dated September 1, 1999, between the Registrant and Overseas Toys,
L.P.2.2(6)
    
    Purchase Agreement between the Company and Rockridge Partners, Inc., dated January 20, 2001, as
amended by Amendment No. 1 to the Purchase Agreement, dated February 15, 20012.3(7)
    
    March 12, 2002, Letter Agreement between Cyrk and Simon, as amended by Letter Agreement dated as
of March 22, 20022.4(7)
    
    Mutual Release Agreement between Cyrk and Simon2.5(8)
    
    Letter Agreement Between Cyrk and Simon, dated December 20, 20022.6(10)
    
    Settlement Agreement and Mutual General Release between Cyrk and Simon dated January 31, 20062.7(10)
    
    Subordinated Promissory Note in the principal amount of $1,410,000 from Cyrk to Simon dated
January 31, 20063.1(11)
    
    Restated Certificate of Incorporation of the Registrant3.2(10)
    
    Amended and Restated By-laws of the Registrant, effective March 27, 20063.3(5)
    
    Certificate of Designation for Series A Senior Cumulative Participating Convertible Preferred Stock4.1(1)
    
    Specimen certificate representing Common Stock10.1(2)(3)
    
    1993 Omnibus Stock Plan, as amended10.10(5)
    
    Registration Rights Agreement between the Company and Overseas Toys, L.P.10.18(6)
    
    Subordinated Promissory Note by Rockridge Partners, Inc. in favor of the Company dated February
15, 200110.28(9)
    
    February 7, 2003, letter agreement with Greg Mays regarding 2002 and 2003 compensation10.29(9)
    
    May 30, 2003, Executive Services Agreements with Joseph Bartlett, Allan Brown, Gregory Mays, and
Terrence Wallock10.30(10)
    
    May 3, 2004, Amendment No. 1 to Executive Services Agreements with Messrs. Bartlett and Brown,
(replaces previously filed copies of these amendments)10.31(10)
    
    March 27, 2006, Amendment No. 2 to Wallock Executive Services Agreement10.32(10)
    
    March 27, 2006, New Executive Services Agreement with Mr. Mays31
    
    Certifications pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 (the Exchange
Act), filed herewith32
    
    Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the
Sarbanes- Oxley Act of 2002, filed herewith
 25




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Footnotes:
 
 (1)
    
    Filed as an exhibit to the Registrants Registration Statement on
Form S-1 (Registration No. 33-63118) or an amendment thereto and
incorporated herein by reference.(2)
    
    Management contract or compensatory plan or arrangement.(3)
    
    Filed as an exhibit to the Annual Report on Form 10-K for the year
ended December 31, 1994, and incorporated herein by reference.(4)
    
    Filed as an exhibit to the Registrants Report on Form 8-K dated
September 1, 1999, and incorporated herein by reference.(5)
    
    Filed as an exhibit to the Annual Report on Form 10-K for the year
ended December 31, 1999, and incorporated herein by reference.(6)
    
    Filed as an exhibit to the Registrants Report on Form 8-K dated
February 15, 2001, and incorporated herein by reference.(7)
    
    Filed as an exhibit to the Registrants original Report on Form 10-K
for the year ended December 31, 2001, filed on March 29, 2002, and
incorporated herein by reference.(8)
    
    Filed as an exhibit to the Registrants Report on Form 10-K/A for the
year ended December 31, 2001, filed on April 18, 2003, and
incorporated herein by reference.(9)
    
    Filed as an exhibit to the Registrants Report on Form 10-K for the
year ended December 31, 2002, filed on July 29, 2003, and
incorporated herein by reference.(10)
    
    Filed as an exhibit to the Registrants Report on Form 10-K for the
year ended December 31, 2005, filed on March 31, 2006, and
incorporated herein by reference.(11)
    
    Filed as an exhibit to the Registrants Report on Form 8-K, filed on
September 23, 2008, and incorporated herein by reference. 26




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F-1




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
      
 F-2




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PART IV  FINANCIAL INFORMATION
 
 SIMON WORLDWIDE, INC.
CONSOLIDATED BALANCE SHEETS
As of December 31, 2010 and 2009
 December 31,
    
    
    December 31,2010
    
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    10,625
    
    
    $
    14,765Prepaid expenses and other current assets
    
    
    190
    
    
    
    155Total current assets
    
    
    10,815
    
    
    
    14,920Investments
    
    
    66
    
    
    
    137Other assets
    
    
    409
    
    
    
    386Total non-current assets
    
    
    475
    
    
    
    523$
    11,290
    
    
    $
    15,443LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    135
    
    
    $
    56Accrued expenses and other current liabilities
    
    
    59
    
    
    
    152Liabilities from discontinued operations  current (Note 4)
    
    
    
    
    
    
    560Total current liabilities
    
    
    194
    
    
    
    768Commitments and ContingenciesStockholders equity:Common stock, $.01 par value; 100,000,000 shares authorized;
54,613,949 shares issued at December 31, 2010 and December 31, 2009;
50,611,879 shares outstanding net of 4,002,070 treasury shares
at par value at December 31, 2010, and 54,201,080 shares
outstanding net of 412,869 treasury shares at par value at December 31, 2009
    
    
    506
    
    
    
    542Additional paid-in capital
    
    
    152,083
    
    
    
    153,303Accumulated deficit
    
    
    (141,500
    )
    
    
    (139,171
    )Accumulated other comprehensive income
    
    
    7
    
    
    
    1Total stockholders equity
    
    
    11,096
    
    
    
    14,675$
    11,290
    
    
    $
    15,443
  F-3




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SIMON WORLDWIDE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2010 and 2009
 2010
    
    
    2009Revenue
    
    $
    
    
    
    $
    General and administrative expenses
    
    
    2,274
    
    
    
    2,263Operating loss from continuing operations
    
    
    (2,274
    )
    
    
    (2,263
    )Interest income
    
    
    45
    
    
    
    140Gain on settlement
    
    
    
    
    
    
    7Equity in Yucaipa AEC earnings (loss) (Note 5)
    
    
    (3
    )
    
    
    7Loss from continuing operations before income taxes
    
    
    (2,232
    )
    
    
    (2,109
    )Income tax provision
    
    
    (4
    )
    
    
    Net loss from continuing operations
    
    
    (2,236
    )
    
    
    (2,109
    )Loss from discontinued operations, net of tax (Note 4)
    
    
    (93
    )
    
    
    (7
    )Net loss
    
    $
    (2,329
    )
    
    $
    (2,116
    )Loss per share from continuing operations:Loss per common share  basic and diluted
    
    $
    (0.05
    )
    
    $
    (0.04
    )Weighted average shares outstanding  basic and diluted
    
    
    51,753
    
    
    
    54,201Loss per share from discontinued operations:Loss per common share  basic and diluted
    
    $
    
    
    
    $
    Weighted average shares outstanding  basic and diluted
    
    
    51,753
    
    
    
    54,201Net loss per share:Loss per common share  basic and diluted
    
    $
    (0.05
    )
    
    $
    (0.04
    )Weighted average shares outstanding  basic and diluted
    
    
    51,753
    
    
    
    54,201
  F-4




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##### Table of Contents



SIMON WORLDWIDE, INC.  CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
For the Years ended December 31, 2010 and 2009
 AccumulatedCommon
    
    
    Additional
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    TotalStock
    
    
    Paid-in
    
    
    Retained
    
    
    Comprehensive
    
    
    Comprehensive
    
    
    Stockholders($.01 Par Value)
    
    
    Capital
    
    
    Deficit
    
    
    Income (Loss)
    
    
    Income (Loss)
    
    
    EquityBalance, December 31, 2008
    
    $
    542
    
    
    $
    153,303
    
    
    $
    (137,055
    )
    
    
    
    
    
    $
    132
    
    
    $
    16,922Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    (2,116
    )
    
    $
    (2,116
    )
    
    
    
    
    
    
    (2,116
    )Other comprehensive loss:Unrealized loss on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (131
    )
    
    
    (131
    )
    
    
    (131
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (2,247
    )Balance, December 31, 2009
    
    $
    542
    
    
    $
    153,303
    
    
    $
    (139,171
    )
    
    
    
    
    
    $
    1
    
    
    $
    14,675Repurchase of 3,589,201 shares
common stock
    
    
    (36
    )
    
    
    (1,220
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,256
    )Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    (2,329
    )
    
    $
    (2,329
    )
    
    
    
    
    
    
    (2,329
    )Other comprehensive loss:Net unrealized gain on
available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    6
    
    
    
    6Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (2,323
    )Balance, December 31, 2010
    
    $
    506
    
    
    $
    152,083
    
    
    $
    (141,500
    )
    
    
    
    
    
    $
    7
    
    
    $
    11,096
  F-5




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##### Table of Contents



SIMON WORLDWIDE, INC.  CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2010 and 2009
 2010
    
    
    2009Cash flows from operating activities:Net loss
    
    $
    (2,329
    )
    
    $
    (2,116
    )Less: Loss from discontinued operations
    
    
    (93
    )
    
    
    (7
    )Loss from continuing operations
    
    
    (2,236
    )
    
    
    (2,109
    )Adjustments to reconcile net loss to net
cash used in operating activities:Equity in Yucaipa AEC loss (earnings)
    
    
    3
    
    
    
    (7
    )Gain on settlement
    
    
    
    
    
    
    (7
    )Impairment of investments and other assets
    
    
    
    
    
    
    3Change in value of other assets
    
    
    6
    
    
    
    74Increase (decrease) in cash from changes
in working capital items:Prepaid expenses and other current assets
    
    
    (35
    )
    
    
    375Accounts payable
    
    
    79
    
    
    
    (69
    )Accrued expenses and other current liabilities
    
    
    (93
    )
    
    
    (220
    )Cash used by continuing operations
    
    
    (2,276
    )
    
    
    (1,960
    )Operating activities from discontinued operations
    
    
    (608
    )
    
    
    65Net cash used in operating activities
    
    
    (2,884
    )
    
    
    (1,895
    )Cash flows from continuing financing activities:Repurchase of common stock
    
    
    (1,256
    )
    
    
    Cash used by continuing financing activities
    
    
    (1,256
    )
    
    
    Financing activities from discontinued operations
    
    
    
    
    
    
    Cash used in financing activities
    
    
    (1,256
    )
    
    
    Net decrease in cash and cash equivalents
    
    
    (4,140
    )
    
    
    (1,895
    )Cash and cash equivalents, beginning of period
    
    
    14,765
    
    
    
    16,660Cash and cash equivalents, end of period
    
    $
    10,625
    
    
    $
    14,765Supplemental disclosure of cash flow information:Cash paid during the period for:Income taxes
    
    $
    4
    
    
    $
    76
  F-6




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##### Table of Contents



SIMON WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Nature of Business, Loss of Customers, Resulting Events, and Managements Plans
     2. Significant Accounting Policies
 Principles of Consolidation
  Use of Estimates
  F-7




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##### Table of Contents



Stock-Based Compensation
  Concentration of Credit Risk
  Financial Instruments
  Cash Equivalents
  Investments
 Limited Liability Entities
 InvestmentsDebt and Equity Securities
 InvestmentsOther
 Income Taxes
 Income Taxes
  F-8




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##### Table of Contents



Earnings (Loss) Per Common Share
 Earnings Per Share
 Recently Issued Accounting Standards
 TM Subsequent Events
  3. Commitments and Contingencies
   4. Discontinued Operations
    F-9




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##### Table of Contents



2010
    
    
    2009Net sales
    
    $
    
    
    
    $
    Cost of sales
    
    
    
    
    
    
    Gross profit
    
    
    
    
    
    
    General and administrative expenses
    
    
    93
    
    
    
    40Gain on settlements
    
    
    
    
    
    
    (33
    )Operating loss
    
    
    (93
    )
    
    
    (7
    )Interest income
    
    
    
    
    
    
    Net loss from discontinued operations
    
    
    (93
    )
    
    
    (7
    )Income tax provision
    
    
    
    
    
    
    Net loss
    
    $
    (93
    )
    
    $
    (7
    )
 General and Administrative Expenses
  Gain on Settlement of Obligations
   5. Investments
      F-10




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##### Table of Contents



6. Lease Obligations and Other Commercial Commitments
    F-11




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##### Table of Contents



7. Income Taxes
   December 31,2010
    
    
    2009Deferred tax assets:Net operating losses
    
    $
    27,989
    
    
    $
    26,476Capital losses
    
    
    6,201
    
    
    
    6,599Other asset reserves
    
    
    2,261
    
    
    
    4,965AMT credit
    
    
    649
    
    
    
    649Deferred compensation
    
    
    48
    
    
    
    49Total deferred tax assets
    
    
    37,148
    
    
    
    38,738Valuation allowance
    
    
    (34,604
    )
    
    
    (36,223
    )2,544
    
    
    
    2,515Deferred tax liabilities:Depreciation
    
    
    
    
    
    
    (1
    )State deferreds
    
    
    (2,544
    )
    
    
    (2,514
    )Total deferred tax liabilities
    
    
    (2,544
    )
    
    
    (2,515
    )Net deferred taxes
    
    $
    
    
    
    $
    
   2010
    
    2009Federal tax (benefit) rate
    
    
    (34.0
    )%
    
    
    (34.0
    )%Increase (decrease) in taxes resulting from:State income taxes
    
    
    (5.8
    )
    
    
    (5.8
    )Change in valuation allowance
    
    
    38.5
    
    
    
    37.8Life insurance
    
    
    1.4
    
    
    
    2.0Minimum tax
    
    
    0.1
    
    
    
    0.2
    %
    
    
    0.0
    %
 F-12




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##### Table of Contents



8. Accrued Expenses and Other Current Liabilities
  Discontinued
    
    
    ContinuingOperations
    
    
    Operations
    
    
    TotalAs of December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009(in thousands)Accrued payroll, related items and
deferred compensation
    
    $
    
    
    
    $
    
    
    
    $
    38
    
    
    $
    34
    
    
    $
    38
    
    
    $
    34Professional and other service providers
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    118
    
    
    
    10
    
    
    
    118Post-employment obligation
    
    
    
    
    
    
    560
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    560Franchise tax payable
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    11
    
    
    
    $
    
    
    
    $
    560
    
    
    $
    59
    
    
    $
    152
    
    
    $
    59
    
    
    $
    712
 9. Stock Plan
 1993 Omnibus Stock Plan
    F-13




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##### Table of Contents



2010
    
    2009Weighted
    
    
    
    
    
    WeightedExercise
    
    
    
    
    
    ExerciseShares
    
    Price
    
    Shares
    
    PriceOutstanding at the beginning of year
    
    
    65,000
    
    
    $
    0.92
    
    
    
    100,000
    
    
    $
    2.59Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired/Forfeited
    
    
    (5,000
    )
    
    
    8.81
    
    
    
    35,000
    
    
    
    5.69Outstanding at end of year
    
    
    60,000
    
    
    
    0.26
    
    
    
    65,000
    
    
    
    0.92Options exercisable at year-end
    
    
    60,000
    
    
    
    0.26
    
    
    
    65,000
    
    
    
    0.92Options available for future grant
    
    
    
    
    
    
    
    
    
    
    Weighted average fair value of
options granted during the year
    
    Not applicable
    
    
    
    
    
    Not applicable
  Options Outstanding and ExercisableWeightedAverageRange of
    
    
    Number
    
    Remaining
    
    Weighted
    
    AggregateExercise
    
    
    Outstanding and
    
    Contractual
    
    Average
    
    IntrinsicPrices
    
    
    Exercisable
    
    Life
    
    Price
    
    Value$
    0.01
    
    -
    
    $
    1.00
    
    
    
    55,000
    
    
    
    2.35
    
    
    $
    0.10
    
    
    $
    8,250$
    1.01
    
    -
    
    $
    2.00
    
    
    
    5,000
    
    
    
    0.24
    
    
    
    2.00
    
    
    
    $
    0.01
    
    -
    
    $
    2.00
    
    
    
    60,000
    
    
    
    2.17
    
    
    $
    0.26
  10. Related Party Transactions
     F-14




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##### Table of Contents



11. Earnings per Share Disclosure
   2010
    
    
    2009Income
    
    
    Shares
    
    
    Per Share
    
    
    Income
    
    
    Shares
    
    
    Per Share(Numerator)
    
    
    (Denominator)
    
    
    Amount
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    AmountBasic and Diluted EPS:Loss from continuing
operations
    
    $
    (2,236
    )
    
    
    51,752,557
    
    
    $
    (0.05
    )
    
    $
    (2,109
    )
    
    
    54,201,080
    
    
    $
    (0.04
    )Loss from discontinued
operations
    
    $
    (93
    )
    
    
    51,752,557
    
    
    $
    
    
    
    $
    (7
    )
    
    
    54,201,080
    
    
    $
    Net loss
    
    $
    (2,329
    )
    
    
    51,752,557
    
    
    $
    (0.05
    )
    
    $
    (2,116
    )
    
    
    54,201,080
    
    
    $
    (0.04
    )
  F-15