##### Table of Contents



SIMON WORLDWIDE, INC.
 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, 2006
 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.
  DELAWARE
(State or other jurisdiction of 
incorporation or organization)
    
    04-3081657
(I.R.S. Employer
Identification No.)
 5200 W. CENTURY BOULEVARD, LOS ANGELES, CALIFORNIA 90045
  (310) 417-4660
     Name of each exchangeTitle of each class
    
    on which registeredCommon Stock, $0.01 Par Value Per Share
    
    NONE
 o þ
 o þ
 þ o
 þ
  o o þ
 o þ




---



##### 



SIMON WORLDWIDE, INC.
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006
INDEX
 PART I
    
    
    3Item 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    6Item 1B. Unresolved Staff Comments
    
    
    7Item 2. Properties
    
    
    7Item 3. Legal Proceedings
    
    
    7Item 4. Submission of Matters to a Vote of Security Holders
    
    
    7PART II
    
    
    8Item 5. Market for Registrants Common Equity and Related Stockholder Matters
    
    
    8Item 6. Selected Financial Data
    
    
    10Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    19Item 8. Financial Statements and Supplementary Data
    
    
    20Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    20Item 9A. Controls and Procedures
    
    
    20Item 9B. Other Information
    
    
    20PART III
    
    
    21Item 10. Directors and Executive Officers of the Registrant
    
    
    21Item 11. Executive Compensation
    
    
    23Item 12. Security Ownership of Certain Beneficial Owners and Management
    
    
    30Item 13. Certain Relationships and Related Transactions
    
    
    33Item 14. Principal Accountant Fees and Services
    
    
    33PART IV
    
    
    35Item 15. Exhibits and Financial Statement Schedules
    
    
    35EX-31.1 SECTION 302 CERTIFICATION OF CEOEX-31.2 SECTION 302 CERTIFICATION OF CFOEX-32 SECTION 906 CERTIFICATION OF CEO AND CFO
  2




---



##### Table of Contents



PART I
 
 Item 1. Business
       3




---



##### Table of Contents



4




---



##### Table of Contents



5




---



##### Table of Contents



Item 1A. Risk Factors
             6




---



##### Table of Contents



Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
  
 Item 3. Legal Proceedings
     
 Item 4. Submission of Matters to a Vote of Security Holders
  7




---



##### Table of Contents



PART II
 
 Item 5. Market for Registrants Common Equity and Related Stockholder Matters
  2006
    
    
    2005High
    
    
    Low
    
    
    High
    
    
    LowFirst quarter
    
    $
    0.60
    
    
    $
    0.22
    
    
    $
    0.17
    
    
    $
    0.12Second quarter
    
    
    0.60
    
    
    
    0.30
    
    
    
    0.32
    
    
    
    0.17Third quarter
    
    
    0.42
    
    
    
    0.30
    
    
    
    0.30
    
    
    
    0.20Fourth quarter
    
    
    0.38
    
    
    
    0.25
    
    
    
    0.40
    
    
    
    0.22
       8




---



##### Table of Contents



Comparison of Cumulative Total Return
 
 Fiscal Year Ended2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005
    
    
    2006SWWI
    
    $
    100
    
    
    $
    49
    
    
    $
    38
    
    
    $
    81
    
    
    $
    138
    
    
    $
    181NASDAQ
    
    
    100
    
    
    
    68
    
    
    
    103
    
    
    
    112
    
    
    
    113
    
    
    
    124Russell 2000
    
    
    100
    
    
    
    77
    
    
    
    98
    
    
    
    108
    
    
    
    112
    
    
    
    130
 9




---



##### Table of Contents



Item 6. Selected Financial Data
  For the Years Ended December 31,2006
    
    2005
    
    2004
    
    2003
    
    2002(in thousands, except per share data)Selected statement of operations data:Continuing operations:Revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Net loss
    
    
    (2,625
    )
    
    
    (2,684
    )
    
    
    (3,625
    )
    
    
    (5,270
    )
    
    
    (15,406
    )Loss per common share available
to common shareholders-basic and diluted
    
    
    (0.23
    )
    
    
    (0.23
    )
    
    
    (0.29
    )
    
    
    (0.38
    )
    
    
    (0.99
    )Discontinued operations:Revenues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    
    707
    
    
    
    (478
    )
    
    
    24,261
    (1)
    
    
    (3,591
    )
    
    
    6,120
    (2)Earnings (loss) per common share available
to common shareholders-basic and diluted
    
    
    0.04
    
    
    
    (0.03
    )
    
    
    1.46
    
    
    
    (0.22
    )
    
    
    0.37
 December 31,2006
    
    2005
    
    2004
    
    2003
    
    2002(in thousands)Selected balance sheet data:Cash and cash equivalents (3)
    
    $
    17,637
    
    
    $
    16,473
    
    
    $
    18,892
    
    
    $
    10,065
    
    
    $
    14,417Total assets
    
    
    26,590
    
    
    
    31,822
    
    
    
    26,123
    
    
    
    19,838
    
    
    
    26,440Redeemable preferred stock
    
    
    32,381
    
    
    
    31,118
    
    
    
    29,904
    
    
    
    28,737
    
    
    
    27,616Stockholders deficit
    
    
    (7,236
    )
    
    
    (841
    )
    
    
    (7,749
    )
    
    
    (27,213
    )
    
    
    (17,225
    )
 
 (1)
    
    In connection with the Companys settlement of its litigation with McDonalds and related
entities, the Company received net cash proceeds, after attorneys fees, of approximately $13,000
and due to the elimination of liabilities associated with the settlement of approximately $12,000,
the Company recorded a gain of approximately $25,000.(2)
    
    Includes $4,574 of pre-tax charges attributable to loss of significant customers, $12,023 of
pre-tax net gain on settlement of vendor payables, and $4,432 on settlement of lease and other
obligations.(3)
    
    Includes only non-restricted cash and cash included in discontinued operations in the balance
sheets of $408 and $163 as of December 31, 2006 and 2005, respectively. 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
     10




---



##### Table of Contents



11




---



##### Table of Contents



12




---



##### Table of Contents



13




---



##### Table of Contents



Payments Due by PeriodLess Than
    
    
    1-3
    
    
    4-5
    
    
    After 5Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    Years(in thousands)Operating leases (a)
    
    $
    36
    
    
    $
    36
    
    
    $
    
    
    
    $
    
    
    
    $
    Other long-term obligations (b)
    
    
    240
    
    
    
    80
    
    
    
    160
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    276
    
    
    $
    116
    
    
    $
    160
    
    
    $
    
    
    
    $
    
 
 (a)
    
    Payments for operating leases are recognized as an expense in the consolidated statement
of operations on a straight-line basis over the term of the lease.(b)
    
    Relates to life insurance premiums for the benefit of a former Company executive and for which
the Company is obligated. 14




---



##### Table of Contents



TotalCommitted atDecember 31,
    
    
    Total Committed at End Of2006
    
    
    1 Year
    
    
    2 Years
    
    
    3 Years
    
    
    4 Years
    
    
    5 Years
    
    
    Thereafter(in thousands)Standby letters of credit
    
    $
    203
    
    
    $
    35
    
    
    $
    35
    
    
    $
    35
    
    
    $
    35
    
    
    $
    35
    
    
    $
    35
           15




---



##### Table of Contents



16




---



##### Table of Contents



17




---



##### Table of Contents



18




---



##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    19




---



##### Table of Contents



Item 8. Financial Statements and Supplementary Data
 Description
    
    PageReport of Independent Registered Public Accounting Firm
    
    
    F-1Consolidated Balance Sheets as of December 31, 2006 and 2005
    
    
    F-2Consolidated Statements of Operations for the years ended December
31, 2006, 2005 and 2004
    
    
    F-3Consolidated Statements of Stockholders Deficit for the years ended
December 31, 2006, 2005 and 2004
    
    
    F-4Consolidated Statements of Cash Flows for the years ended December
31, 2006, 2005 and 2004
    
    
    F-5Notes to Consolidated Financial Statements
    
    
    F-6Schedule II: Valuation and Qualifying Accounts
    
    
    F-20
 
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
   
 Item 9B. Other Information
  20




---



##### Table of Contents



PART III
 
 Item 10. Directors and Executive Officers of the Registrant
      21




---



##### Table of Contents



Name
    
    Age
    
    Service as DirectorJoseph Bartlett
    
    
    73
    
    
    1993 to presentAllan Brown
    
    
    66
    
    
    1999 to presentJoseph Anthony Kouba
    
    
    59
    
    
    1997 to presentGreg Mays
    
    
    60
    
    
    2004 to presentErika Paulson
    
    
    33
    
    
    2006 to present1999 to 2001Ira Tochner
    
    
    45
    
    
    2006 to presentTerrence Wallock
    
    
    62
    
    
    2006 to present
           22




---



##### Table of Contents



Item 11. Executive Compensation
  Overview
   Compensation Philosophy and Objectives
  Setting Executive Compensation
    23




---



##### Table of Contents



2006 Executive Compensation Components
    Tax and Accounting Implications
 Deductibility of Executive Compensation:
  Nonqualified Deferred Compensation:
  Accounting for Stock-Based Compensation:
  24




---



##### Table of Contents



(c)(a)
    
    All OtherName and Principal Position
    
    Year
    
    Salary
    
    Compensation
    
    TotalJ. Anthony Kouba
    
    
    2006
    
    
    $
    350,000
    
    
    $
    88,000
    (d)
    
    $
    438,000Chief Executive Officer
and DirectorGeorge Golleher
    
    
    2006
    
    
    
    103,654
    (b)
    
    
    384,264
    (e)
    
    
    487,918Former Co-Chief Executive Officer
and former DirectorGreg Mays
    
    
    2006
    
    
    
    210,000
    
    
    
    289,467
    (f)
    
    
    499,467Chief Financial Officer
and Director
 
 (a)
    
    All cash compensation received by each individual in their capacity as an executive
officer consists of salary.(b)
    
    Mr. Golleher resigned on April 18, 2006. Prior to his resignation, his annual salary was
$350,000.(c)
    
    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 for all of the individuals in
the table because the aggregate amount of such perquisites and other personal benefits was less
than $10,000.(d)
    
    Consists of $50,000 for board retainer and $38,000 for board meeting fees.(e)
    
    Consists of $350,000 for severance paid for termination of 2003 Executive Services Agreement,
$14,000 for board meeting fees, $14,808 for board retainer, and $5,456 for other accrued
compensation paid.(f)
    
    Consists of $210,000 for severance paid for termination of 2003 Executive Services Agreement,
$48,077 for board retainer, $26,000 for board meeting fees, and $5,390 for other accrued
compensation paid. The Company and Mr. Mays subsequently entered into a new agreement in March
2006 which provided for the same annual salary and is terminable by either party upon 90 days
notice.     25




---



##### Table of Contents



Option AwardsNumber ofSecuritiesUnderlyingUnexercised
    
    OptionOptions
    
    Exercise
    
    Option ExpirationName
    
    Exercisable
    
    Price
    
    DateJ. Anthony Kouba
    
    
    5,000
    
    
    $
    15.50
    
    
    
    03/31/08Chief Executive Officer and Director
    
    
    20,000
    
    
    
    5.38
    
    
    
    02/23/095,000
    
    
    
    7.56
    
    
    
    03/31/095,000
    
    
    
    8.81
    
    
    
    03/31/105,000
    
    
    
    2.00
    
    
    
    03/30/1120,000
    
    
    
    0.10
    
    
    
    05/09/13Greg Mays
    
    
    10,000
    
    
    
    0.10
    
    
    
    05/09/13Chief Financial Officer
and Director
   Option AwardsNumber ofSharesAcquired
    
    Valueon
    
    Realized onName
    
    Exercise
    
    ExerciseGeorge Golleher
    
    
    20,000
    
    
    $
    6,000
    (a)Former Co-Chief Executive Officer
and former Director
 
 (a)
    
    This value realized is the difference between the market price of $.40 of our common stock on
May 24, 2006 (as no price was available for the exercise date of May 25, 2006) and the option
exercise price of $.10. 26




---



##### Table of Contents



Potential Payments upon Termination
 Voluntary Termination:
  Involuntary Termination:
  Retirement:
  Change in Control:
  Health Insurance Benefits:
  27




---



##### Table of Contents



FeesEarnedor PaidName
    
    in Cash (a)
    
    TotalJoseph Bartlett
    
    $
    111,500
    (b)
    
    $
    111,500Allan Brown
    
    
    111,400
    (c)
    
    
    111,400Erika Paulson
    
    
    43,139
    (d)
    
    
    43,139Ira Tochner
    
    
    45,139
    (e)
    
    
    45,139Terry Wallock
    
    
    58,269
    (f)
    
    
    58,269
 
 (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)
    
    Consists of $50,000 for board retainer, $42,000 for board meeting fees, $12,000 in other board
fees, and $7,500 for Audit Committee chair fee. Mr. Bartlett held 85,000 stock options, all of
which were vested, at December 31, 2006.(c)
    
    Consists of $50,000 for board retainer, $39,000 for board meeting fees, $12,000 in other board
fees, $5,400 fees for additional time spent per Mr. Browns Executive Services Agreement, and
$5,000 for Compensation Committee chair fee. Mr. Brown held 20,000 stock options, all of which
were vested, at December 31, 2006.(d)
    
    Ms. Paulson became a member of the board on April 18, 2006. Amount consists of $35,139 for
board retainer and $8,000 for board meeting fees.(e)
    
    Mr. Tochner became a member of the board on April 18, 2006. Amount consists of $35,139 for
board retainer and $10,000 for board meeting fees.(f)
    
    Mr. Wallock became a member of the board on March 27, 2006. Amount consists of $38,269 for
board retainer and $20,000 for board meeting fees. Mr. Wallock held 5,000 stock options, all of
which were vested, at December 31, 2006.    28




---



##### Table of Contents



29




---



##### Table of Contents



Item 12. Security Ownership of Certain Beneficial Owners and Management
    Number of SharesName and Address
    
    Of Common Stock
    
    Percentage OfOf Beneficial Owner (1)
    
    Beneficially Owned
    
    ClassYucaipa and affiliates (2)(3)
Overseas Toys, L.P.
OA3, LLC
Multi-Accounts, LLC
Ronald W. Burkle
    
    
    3,947,203
    
    
    
    19.1
    %Everest Special Situations Fund L.P. (4)(5)
Maoz Everest Fund Management Ltd.
Elchanan Maoz
Platinum House
21 H arba a Street
Tel Aviv 64739 Israel
    
    
    2,023,732
    
    
    
    12.1
    %Hazelton Capital Limited (4)(5)
28 Hazelton Avenue
Toronto, Ontario Canada M5R 2E2
    
    
    1,130,537
    
    
    
    6.8
    %Eric Stanton (4)(5)(6)
39 Gloucester Road
6th Floor
Wanchai
Hong Kong
    
    
    1,123,023
    
    
    
    6.7
    %Gregory P. Shlopak (4)(5)(7)
63 Main Street
Gloucester, MA 01930
    
    
    1,064,900
    
    
    
    6.4
    %H. Ty Warner (4)(5)
P.O. Box 5377
Oak Brook, IL 60522
    
    
    975,610
    
    
    
    5.9
    %
 
 1.
    
    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 December 31,
2006, through the exercise of any option, warrant or other right including the conversion of the
series A preferred stock. 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 into shares of common stock including the conversion of the series A preferred stock. 30




---



##### Table of Contents



2.
    
    Represents shares of common stock issuable upon conversion of 32,564 shares of outstanding
series A preferred stock and accrued dividends. Percentage based on common stock outstanding, plus
all such convertible shares. Overseas Toys, L.P. is an affiliate of Yucaipa and is the holder of
record of all the outstanding shares of series A preferred stock. 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. Overseas Toys, L.P. is party to a Voting Agreement, dated September 1, 1999, with Patrick D. Brady,
Allan I. Brown, Gregory P. Shlopak, the Shlopak Foundation, Cyrk International Foundation, and the
Eric Stanton Self-Declaration of Revocable Trust, pursuant to which Overseas Toys, L.P.,
Multi-Accounts, LLC, OA3, LLC, and Ronald W. Burkle may be deemed to have shared voting power over
8,233,616 shares for the purpose of election of certain nominees of Yucaipa to the Companys Board
of Directors, and may be deemed to be members of a group for the purposes of Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended. Overseas Toys, L.P., Multi-Accounts, LLC, OA3,
LLC and Ronald W. Burkle disclaim beneficial ownership of any shares, except for the shares as to
which they possess sole dispositive and voting power. 3.
    
    Based on 20,620,396 shares of common stock outstanding and issuable upon conversion of 32,564
shares of outstanding series A preferred stock and accrued dividends as of December 31, 2006.4.
    
    Based on 16,673,193 shares of common stock outstanding as of December 31, 2006.5.
    
    The information concerning these holders is based solely on information contained in filings
pursuant to the Securities Exchange Act of 1934.6.
    
    Eric Stanton, as trustee of the Eric Stanton Self-Declaration of Revocable Trust, has the sole
power to vote, or to direct the vote of, and the sole power to dispose, or to direct the
disposition of, 1,123,023 shares. Mr. Stanton, as trustee of the Eric Stanton Self-Declaration of
Revocable Trust, is a party to a Voting Agreement, dated September 1, 1999, with Yucaipa and
Patrick D. Brady, Allan I. Brown, Gregory P. Shlopak, the Shlopak Foundation Trust, and the Cyrk
International Foundation Trust pursuant to which Messrs. Brady, Brown, Shlopak, and Stanton and the
trusts have agreed to vote in favor of certain nominees of Yucaipa to the Companys Board of
Directors. Mr. Stanton expressly disclaims beneficial ownership of any shares except for the
1,123,023 shares as to which he possesses sole voting and dispositive power.7.
    
    The information concerning this holder is based solely on information contained in filings Mr.
Shlopak has made with the Securities and Exchange Commission pursuant to Sections 13(d) and 13(g)
of the Securities Exchange Act of 1934, as amended. Includes 84,401 shares held by a private
charitable foundation as to which Mr. Shlopak, as trustee, has sole voting and dispositive power.
Mr. Shlopak is a party to a Voting Agreement, dated September 1, 1999, with Yucaipa, Patrick D.
Brady, Allan I. Brown, the Shlopak Foundation, Cyrk International Foundation, and the Eric Stanton
Self-Declaration of Revocable Trust, pursuant to which Messrs. Brady, Brown, Shlopak, and Stanton
and the trusts have agreed to vote in favor of certain nominees of Yucaipa to the Companys Board
of Directors. Mr. Shlopak expressly disclaims beneficial ownership of any shares except for the
1,064,900 shares as to which he possesses sole voting and dispositive power. 31




---



##### Table of Contents



Number of SharesName and Address
    
    Of Common Stock
    
    Percentage OfOf Beneficial Owner (a)
    
    Beneficially Owned
    
    Class (b)Allan I. Brown (c)
    
    
    1,133,023
    
    
    
    6.8
    %Joseph W. Bartlett (d)
    
    
    85,000
    
    
    
    *J. Anthony Kouba (e)
    
    
    60,000
    
    
    
    *Greg Mays (f)
    
    
    10,000
    
    
    
    *Erika Paulson
    
    
    
    
    
    
    Ira Tochner
    
    
    
    
    
    
    Terrence Wallock (g)
    
    
    5,000
    
    
    
    *All directors and executive officers as
a group (7 persons) (h)
    
    
    1,293,023
    
    
    
    7.8
    %
 
 *
    
    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 December 31, 2006, through the exercise of any
option, warrant or other right including the conversion of the series A preferred stock. 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 including
the conversion of the series A preferred stock into shares of common stock.(b)
    
    Based on 16,673,193 shares of common stock outstanding as of December 31, 2006.(c)
    
    Includes 20,000 shares issuable pursuant to stock options exercisable within 60 days of
December 31, 2006. 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. Mr. Brown is
party to a Voting Agreement, dated September 1, 1999, with Yucaipa, Patrick D. Brady, Gregory P.
Shlopak, the Shlopak Foundation, Cyrk International Foundation, and the Eric Stanton
Self-Declaration of Revocable Trust, pursuant to which Messrs. Brady, Brown, Shlopak, and Stanton
and the trusts have agreed to vote in favor of certain nominees of Yucaipa to the Companys Board
of Directors. Mr. Brown expressly disclaims beneficial ownership of any shares except for the
1,133,023 shares as to which he possesses sole voting and dispositive power.(d)
    
    The 85,000 shares are issuable pursuant to stock options exercisable within 60 days of
December 31, 2006.(e)
    
    The 60,000 shares are issuable pursuant to stock options exercisable within 60 days of
December 31, 2006.(f)
    
    The 10,000 shares are issuable pursuant to stock options exercisable within 60 days of
December 31, 2006. 32




---



##### Table of Contents



(g)
    
    The 5,000 shares are issuable pursuant to stock options exercisable within 60 days of December
31, 2006.(h)
    
    Includes a total of 180,000 stock options exercisable within 60 days of December 31, 2006.   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
    
    
    180,000
    
    
    $4.62 per share
    
    
    1,000,000
    (1)Plans not approved by stockholders
    
    Not applicable
    
    Not applicable
    
    Not applicableTotal
    
    
    180,000
    
    
    $4.62 per share
    
    
    1,000,000
    (1)
 
 (1)
    
    Available for issuance under the 1997 Plan. 
 Item 13. Certain Relationships and Related Transactions
  
 Item 14. Principal Accountant Fees and Services
  Fiscal Year2006
    
    
    2005(in thousands)Audit fees (1)
    
    $
    119
    
    
    $
    100Audit-related fees (2)
    
    
    
    
    
    
    15Tax fees (3)
    
    
    40
    
    
    
    42All other fees (4)
    
    
    
    
    
    
    Total
    
    $
    159
    
    
    $
    157
 
 (1)
    
    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.(2)
    
    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. This category includes fees billed related to an employee benefit plan
audit. The Companys last required employee benefit audit was for fiscal year 2005. 33




---



##### Table of Contents



(3)
    
    Tax fees are related to tax compliance, planning, and consulting.(4)
    
    All other fees are for services other than those reported in the other categories.   34




---



##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 (a)
    
    DOCUMENTS FILED AS PART OF THIS REPORT
 1.
    
    FINANCIAL STATEMENTS:
      2.
    
    FINANCIAL STATEMENT SCHEDULES FOR THE FISCAL YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004:
   (b)
    
    EXHIBITS
  35




---



##### Table of Contents



SIGNATURES
  Date: March 30, 2007
    
    SIMON WORLDWIDE, INC./s/ J. Anthony Kouba

J. ANTHONY KOUBA
Chief Executive Officer
  /s/ Joseph W. Bartlett

JOSEPH W. BARTLETT
    
    Director
    
    March 30, 2007/s/ Allan I. Brown

ALLAN I. BROWN
    
    Director
    
    March 30, 2007/s/ J. Anthony Kouba

J. ANTHONY KOUBA
    
    Director and
Chief Executive Officer
    
    March 30, 2007/s/ Greg Mays

GREG MAYS
    
    Director and
Chief Financial Officer
    
    March 30, 2007/s/ Erika Paulson

ERIKA PAULSON
    
    Director
    
    March 30, 2007/s/ Ira Tochner

IRA TOCHNER
    
    Director
    
    March 30, 2007/s/ Terrence Wallock

TERRENCE WALLOCK
    
    Director
    
    March 30, 2007
 36




---



##### Table of Contents



EXHIBITS
 ExhibitNumber
    
    Description2.1 (5)
    
    Securities Purchase Agreement dated September 1, 1999, between the
Registrant and Overseas Toys, L.P.2.2 (7)
    
    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 (8)
    
    March 12, 2002, Letter Agreement between Cyrk and Simon, as amended by
Letter Agreement dated as of March 22, 20022.4 (8)
    
    Mutual Release Agreement between Cyrk and Simon2.5 (9)
    
    Letter Agreement Between Cyrk and Simon, dated December 20, 20022.6 (11)
    
    Settlement Agreement and Mutual General Release between Cyrk and Simon
dated January 31, 20062.7 (11)
    
    Subordinated Promissory Note in the principal amount of $1,410,000 from
Cyrk to Simon dated January 31, 20063.1 (3)
    
    Restated Certificate of Incorporation of the Registrant3.2 (11)
    
    Amended and Restated By-laws of the Registrant, effective March 27, 20063.3 (6)
    
    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 amended10.5 (2)(4)
    
    1997 Acquisition Stock Plan10.6 (4)
    
    Securities Purchase Agreement dated February 12, 1998, by and between
the Company and Ty Warner10.10 (6)
    
    Registration Rights Agreement between the Company and Overseas Toys, L.P.10.18 (7)
    
    Subordinated Promissory Note by Rockridge Partners, Inc. in favor of the
Company dated February 15, 200110.28 (10)
    
    February 7, 2003, letter agreements with George Golleher, J. Anthony
Kouba and Greg Mays regarding 2002 and 2003 compensation10.29 (10)
    
    May 30, 2003, Executive Services Agreements with Joseph Bartlett, Allan
Brown, George Golleher, J. Anthony Kouba, Gregory Mays, and Terrence
Wallock10.30 (11)
    
    May 3, 2004, Amendment No. 1 to Executive Services Agreements with
Messrs. Bartlett, Brown, Golleher, and Kouba, (replaces previously filed
copies of these amendments)10.31 (11)
    
    March 27, 2006, Amendment No. 2 to Wallock Executive Services Agreement10.32 (11)
    
    March 27, 2006, New Executive Services Agreement with Mr. Mays
 37




---



##### Table of Contents



ExhibitNumber
    
    Description31
    
    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 herewithFootnotes:(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 Annual Report on Form 10-K for the year ended
December 31, 1997, and incorporated herein by reference.(5)
    
    Filed as an exhibit to the Registrants Report on Form 8-K dated
September 1, 1999, and incorporated herein by reference.(6)
    
    Filed as an exhibit to the Annual Report on Form 10-K for the year ended
December 31, 1999, and incorporated herein by reference.(7)
    
    Filed as an exhibit to the Registrants Report on Form 8-K dated
February 15, 2001, and incorporated herein by reference.(8)
    
    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.(9)
    
    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.(10)
    
    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.(11)
    
    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.
 38




---



##### Table of Contents



F-1




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 SIMON WORLDWIDE, INC.
 
 CONSOLIDATED BALANCE SHEETS
 December 31,
    
    
    December 31,2006
    
    
    2005ASSETSCurrent assets:Cash and cash equivalents
    
    $
    17,229
    
    
    $
    16,310Restricted cash
    
    
    
    
    
    
    2,818Prepaid expenses and other current assets
    
    
    204
    
    
    
    316Assets from discontinued operations to be disposed of  current (Note 4)
    
    
    576
    
    
    
    541Total current assets
    
    
    18,009
    
    
    
    19,985Non-current assets:Property and equipment, net
    
    
    
    
    
    
    4Investments, at market value
    
    
    8,247
    
    
    
    11,456Other assets
    
    
    90
    
    
    
    109Assets from discontinued operations to be disposed of  non-current (Note 4)
    
    
    244
    
    
    
    268Total non-current assets
    
    
    8,581
    
    
    
    11,837$
    26,590
    
    
    $
    31,822LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Accounts payable:Trade
    
    $
    146
    
    
    $
    187Affiliates
    
    
    183
    
    
    
    176Accrued expenses and other current liabilities
    
    
    296
    
    
    
    373Liabilities from discontinued operations  current (Note 4)
    
    
    820
    
    
    
    809Total current liabilities
    
    
    1,445
    
    
    
    1,545Commitments and contingenciesRedeemable preferred stock, Series A1 senior cumulative participating
convertible, $.01 par value; 32,381 and 31,118 shares issued and
outstanding at December 31, 2006 and 2005, respectively, stated at
redemption value of $1,000 per share
    
    
    32,381
    
    
    
    31,118Stockholders deficit:Common stock, $.01 par value; 50,000,000 shares authorized;
16,673,193 and 16,653,193 shares issued and outstanding at
December 31, 2006 and 2005, respectively
    
    
    167
    
    
    
    167Additional paid-in capital
    
    
    138,502
    
    
    
    138,500Deficit
    
    
    (153,990
    )
    
    
    (150,802
    )Accumulated other comprehensive income
    
    
    8,085
    
    
    
    11,294Total stockholders deficit
    
    
    (7,236
    )
    
    
    (841
    )$
    26,590
    
    
    $
    31,822
  F-2




---



##### Table of Contents



SIMON WORLDWIDE, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 2006
    
    
    2005
    
    
    2004Revenues
    
    $
    
    
    
    $
    
    
    
    $
    General and administrative expenses
    
    
    3,488
    
    
    
    3,086
    
    
    
    3,625Operating loss from continuing operations
    
    
    (3,488
    )
    
    
    (3,086
    )
    
    
    (3,625
    )Interest income
    
    
    879
    
    
    
    623
    
    
    
    Investment impairments
    
    
    (16
    )
    
    
    (221
    )
    
    
    Loss from continuing operations before income taxes
    
    
    (2,625
    )
    
    
    (2,684
    )
    
    
    (3,625
    )Income tax benefit
    
    
    
    
    
    
    
    
    
    
    Net loss from continuing operations
    
    
    (2,625
    )
    
    
    (2,684
    )
    
    
    (3,625
    )Income (loss) from discontinued operations, net of tax (Note 4)
    
    
    707
    
    
    
    (478
    )
    
    
    24,261Net income (loss)
    
    
    (1,918
    )
    
    
    (3,162
    )
    
    
    20,636Redeemable preferred stock dividends
    
    
    (1,270
    )
    
    
    (1,224
    )
    
    
    (1,172
    )Net income (loss) available to common stockholders
    
    $
    (3,188
    )
    
    $
    (4,386
    )
    
    $
    19,464Loss per share from continuing operations available
to common stockholders:Loss per common share  basic and diluted
    
    $
    (0.23
    )
    
    $
    (0.23
    )
    
    $
    (0.29
    )Weighted average shares outstanding  basic and diluted
    
    
    16,665
    
    
    
    16,653
    
    
    
    16,653Income (loss) per share from discontinued operations:Income (loss) per common share  basic and diluted
    
    $
    0.04
    
    
    $
    (0.03
    )
    
    $
    1.46Weighted average shares outstanding  basic and diluted
    
    
    16,665
    
    
    
    16,653
    
    
    
    16,653Net income (loss) available to common stockholders:Net income (loss) per common share  basic and diluted
    
    $
    (0.19
    )
    
    $
    (0.26
    )
    
    $
    1.17Weighted average shares outstanding  basic and diluted
    
    
    16,665
    
    
    
    16,653
    
    
    
    16,653
  F-3




---



##### Table of Contents



SIMON WORLDWIDE, INC.
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT
   AccumulatedCommon
    
    
    Additional
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    TotalStock
    
    
    Paid-in
    
    
    
    
    
    
    Comprehensive
    
    
    Comprehensive
    
    
    Stockholders'($.01 Par Value)
    
    
    Capital
    
    
    Deficit
    
    
    Income (Loss)
    
    
    Income (Loss)
    
    
    DeficitBalance, December 31, 2003
    
    $
    167
    
    
    $
    138,500
    
    
    $
    (165,880
    )
    
    
    
    
    
    $
    
    
    
    $
    (27,213
    )Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    20,636
    
    
    $
    20,636
    
    
    
    
    
    
    
    20,636Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    20,636Dividends on redeemable preferred stock
    
    
    
    
    
    
    
    
    
    
    (1,172
    )
    
    
    
    
    
    
    
    
    
    
    (1,172
    )Balance, December 31, 2004
    
    
    167
    
    
    
    138,500
    
    
    
    (146,416
    )
    
    
    
    
    
    
    
    
    
    
    (7,749
    )Comprehensive income:Net loss
    
    
    
    
    
    
    
    
    
    
    (3,162
    )
    
    $
    (3,162
    )
    
    
    
    
    
    
    (3,162
    )Other comprehensive income:Unrealized gain on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,294
    
    
    
    11,294
    
    
    
    11,294Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    8,132Dividends on redeemable preferred stock
    
    
    
    
    
    
    
    
    
    
    (1,224
    )
    
    
    
    
    
    
    
    
    
    
    (1,224
    )Balance, December 31, 2005
    
    
    167
    
    
    
    138,500
    
    
    
    (150,802
    )
    
    
    
    
    
    
    11,294
    
    
    
    (841
    )Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    (1,918
    )
    
    $
    (1,918
    )
    
    
    
    
    
    
    (1,918
    )Other comprehensive loss:Unrealized loss on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,209
    )
    
    
    (3,209
    )
    
    
    (3,209
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (5,127
    )Exercise of stock options
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Dividends on preferred stock
    
    
    
    
    
    
    
    
    
    
    (1,270
    )
    
    
    
    
    
    
    
    
    
    
    (1,270
    )Balance, December 31, 2006
    
    $
    167
    
    
    $
    138,502
    
    
    $
    (153,990
    )
    
    
    
    
    
    $
    8,085
    
    
    $
    (7,236
    )
  F-4




---



##### Table of Contents



SIMON WORLDWIDE, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
   2006
    
    
    2005
    
    
    2004Cash flows from operating activities:Net income (loss)
    
    $
    (1,918
    )
    
    $
    (3,162
    )
    
    $
    20,636Income (loss) from discontinued operations
    
    
    707
    
    
    
    (478
    )
    
    
    24,261Loss from continuing operations
    
    
    (2,625
    )
    
    
    (2,684
    )
    
    
    (3,625
    )Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:Depreciation
    
    
    4
    
    
    
    9
    
    
    
    20Charge for impaired investments
    
    
    16
    
    
    
    221
    
    
    
    Gain on settlement of obligations, included in discontinued operations
    
    
    
    
    
    
    
    
    
    
    (11,500
    )Cash received from settlement, included in discontinued operations
    
    
    
    
    
    
    
    
    
    
    13,000Cash provided by (used in) discontinued operations
    
    
    718
    
    
    
    (2,731
    )
    
    
    9,108Cash transferred from (to) discontinued operations
    
    
    (266
    )
    
    
    (58
    )
    
    
    10,066Increase (decrease) in cash from changes
in working capital items:Prepaid expenses and other current assets
    
    
    112
    
    
    
    167
    
    
    
    257Accounts payable
    
    
    (34
    )
    
    
    (29
    )
    
    
    156Accrued expenses and other current liabilities
    
    
    (77
    )
    
    
    (139
    )
    
    
    389Net cash provided by (used in) operating activities
    
    
    (2,152
    )
    
    
    (5,244
    )
    
    
    17,871Cash flows from investing activities:Decrease (increase) in restricted cash
    
    
    2,818
    
    
    
    155
    
    
    
    (2,639
    )Cash provided by discontinued operations
    
    
    234
    
    
    
    2,418
    
    
    
    3,582Other, net
    
    
    19
    
    
    
    89
    
    
    
    78Net cash provided by investing activities
    
    
    3,071
    
    
    
    2,662
    
    
    
    1,021Cash flows from financing activities
    
    
    
    
    
    
    
    
    
    
    Net increase (decrease) in cash and cash equivalents
    
    
    919
    
    
    
    (2,582
    )
    
    
    18,892Cash and cash equivalents, beginning of period
    
    
    16,310
    
    
    
    18,892
    
    
    
    Cash and cash equivalents, end of period
    
    $
    17,229
    
    
    $
    16,310
    
    
    $
    18,892Supplemental disclosure of cash flow information:Cash paid during the period for:Income taxes
    
    $
    3
    
    
    $
    6
    
    
    $
    23Supplemental non-cash investing activities:Dividends paid in kind on redeemable preferred stock
    
    $
    1,263
    
    
    $
    1,214
    
    
    $
    1,167
  F-5




---



##### Table of Contents



SIMON WORLDWIDE, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Nature of Business, Loss of Customers, Resulting Events, Going Concern and Managements Plans
       F-6




---



##### Table of Contents



2. Significant Accounting Policies
      F-7




---



##### Table of Contents



2005
    
    
    2004(in thousands)Net income (loss) available to common stockholders  as reported
    
    $
    (4,386
    )
    
    $
    19,464Add:Stock-based compensation expense included in
reported net income, net of income tax
    
    
    
    
    
    
    Deduct:Total stock-based employee compensation expense determined
under fair value based method for all awards, net of income taxes
    
    
    (11
    )
    
    
    Net income (loss) available to common stockholders  pro forma
    
    $
    (4,397
    )
    
    $
    19,464Income (loss) per common share  basic and diluted  as reported
    
    $
    (0.26
    )
    
    $
    1.17Income (loss) per common share  basic and diluted  pro forma
    
    $
    (0.26
    )
    
    $
    1.17
            F-8




---



##### Table of Contents



3. Commitments and Contingencies
    F-9




---



##### Table of Contents



F-10




---



##### Table of Contents



4. Discontinued Operations
   December 31,
    
    
    December 31,2006
    
    
    2005(in thousands)Assets:Cash and cash equivalents
    
    $
    408
    
    
    $
    163Restricted cash
    
    
    168
    
    
    
    378Total current assets
    
    
    576
    
    
    
    541Other assets
    
    
    244
    
    
    
    268Assets from discontinued operations to be disposed of
- non-current
    
    $
    820
    
    
    $
    809Liabilities:Accounts payable  trade
    
    $
    
    
    
    $
    19Accrued expenses and other current liabilities
    
    
    820
    
    
    
    790Total current liabilities
    
    
    820
    
    
    
    809Liabilities from discontinued operations
    
    $
    820
    
    
    $
    809
  2006
    
    
    2005
    
    
    2004(in thousands)Net sales
    
    $
    
    
    
    $
    
    
    
    $
    Cost of sales
    
    
    
    
    
    
    
    
    
    
    Gross profit
    
    
    
    
    
    
    
    
    
    
    General and administrative expenses
    
    
    
    
    
    
    175
    
    
    
    1,990Loss (gain) on settlement of obligations
    
    
    (675
    )
    
    
    555
    
    
    
    (24,500
    )Operating income (loss)
    
    
    675
    
    
    
    (730
    )
    
    
    22,510Interest income
    
    
    59
    
    
    
    
    
    
    
    283Other income (expense)
    
    
    (27
    )
    
    
    252
    
    
    
    1,468Income (loss) before income taxes
    
    
    707
    
    
    
    (478
    )
    
    
    24,261Income tax expense
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    707
    
    
    $
    (478
    )
    
    $
    24,261
   F-11




---



##### Table of Contents



5. Restricted Cash
   6. Property and Equipment
  Discontinued
    
    
    ContinuingOperations
    
    
    Operations
    
    
    TotalAs of December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005(in thousands)Furniture and equipment
    
    $
    
    
    
    $
    
    
    
    $
    27
    
    
    $
    27
    
    
    $
    27
    
    
    $
    27Less: Accumulated depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    (27
    )
    
    
    (23
    )
    
    
    (27
    )
    
    
    (23
    )$
    
    
    
    $
    
    
    
    $
    
    
    
    $
    4
    
    
    $
    
    
    
    $
    4
  F-12




---



##### Table of Contents



7. Investments
       8. Lease Obligations
   F-13




---



##### Table of Contents



9. Income Taxes
   2006
    
    
    2005Deferred tax assets:Net operating losses
    
    $
    25,429
    
    
    $
    28,792Capital Losses
    
    
    9,818
    
    
    
    7,137Other asset reserves
    
    
    9,501
    
    
    
    2,959AMT credit
    
    
    649
    
    
    
    649Deferred compensation
    
    
    7
    
    
    
    38Foreign tax credits
    
    
    82
    
    
    
    82Depreciation
    
    
    2
    
    
    
    Valuation Allowance
    
    
    (45,488
    )
    
    
    (39,657
    )$
    
    
    
    $
    
   2006
    
    
    2005
    
    
    2004Federal tax (benefit) rate
    
    
    (34
    )%
    
    
    (34
    )%
    
    
    (34
    )%Increase (decrease) in taxes resulting from:State income taxes
    
    
    (6
    )
    
    
    (6
    )
    
    
    (6
    )Effect of foreign income or loss
    
    
    (128
    )
    
    
    2
    
    
    
    (8
    )Change in valuation allowance
    
    
    166
    
    
    
    37
    
    
    
    48Life insurance
    
    
    2
    
    
    
    1
    
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
  F-14




---



##### Table of Contents



10. Accrued Expenses and Other Current Liabilities
  Discontinued
    
    
    ContinuingOperations
    
    
    Operations
    
    
    TotalAs of December 31,2006
    
    
    2005
    
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005(in thousands)Accrued payroll, related items, and
deferred compensation
    
    $
    
    
    
    $
    
    
    
    $
    18
    
    
    $
    35
    
    
    $
    18
    
    
    $
    35Contingent loss
    
    
    460
    
    
    
    460
    
    
    
    
    
    
    
    
    
    
    
    460
    
    
    
    460Professional fees
    
    
    
    
    
    
    
    
    
    
    278
    
    
    
    282
    
    
    
    278
    
    
    
    282Insurance premiums
    
    
    360
    
    
    
    280
    
    
    
    
    
    
    
    
    
    
    
    360
    
    
    
    280Other
    
    
    
    
    
    
    50
    
    
    
    
    
    
    
    56
    
    
    
    
    
    
    
    106$
    820
    
    
    $
    790
    
    
    $
    296
    
    
    $
    373
    
    
    $
    1,116
    
    
    $
    1,163
 11. Indemnification Trust Agreement
  12. Redeemable Preferred Stock
      F-15




---



##### Table of Contents



13. Stock Plan
        F-16




---



##### Table of Contents



2006
    
    
    2005
    
    
    2004Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding at the beginning of year
    
    
    215,000
    
    
    $
    4.51
    
    
    
    220,000
    
    
    $
    4.80
    
    
    
    225,000
    
    
    $
    5.33Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    20,000
    
    
    
    0.10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired/Forfeited
    
    
    15,000
    
    
    
    9.10
    
    
    
    5,000
    
    
    
    17.25
    
    
    
    5,000
    
    
    
    28.75Outstanding at end of year
    
    
    180,000
    
    
    
    4.62
    
    
    
    215,000
    
    
    
    4.51
    
    
    
    220,000
    
    
    
    4.80Options exercisable at year-end
    
    
    180,000
    
    
    
    4.62
    
    
    
    215,000
    
    
    
    4.51
    
    
    
    172,500
    
    
    
    6.09Options available for future grant
    
    
    1,000,000
    (1)
    
    
    
    
    
    
    1,000,000
    (1)
    
    
    
    
    
    
    1,000,000
    (1)Weighted average fair value of
options granted during the year
    
    Not applicable
    
    
    
    
    
    Not applicable
    
    
    
    
    
    Not applicable
 
 (1)
    
    Available for issuance under the 1997 Plan.  Options Outstanding and ExercisableNumber
    
    
    WeightedRange of
    
    
    Outstanding
    
    
    Average
    
    
    Weighted
    
    
    AggregateExercise
    
    
    and
    
    
    Remaining
    
    
    Average
    
    
    IntrinsicPrices
    
    
    Exercisable
    
    
    Contractual Life
    
    
    Price
    
    
    Value$
    0.10
    
    
    
    
    $
    0.10
    
    
    
    75,000
    
    
    
    6.35
    
    
    $
    0.10
    
    
    $
    14,250$
    2.00
    
    
    
    
    $
    5.38
    
    
    
    60,000
    
    
    
    2.49
    
    
    
    4.81
    
    
    
    $
    7.56
    
    
    
    
    $
    8.81
    
    
    
    20,000
    
    
    
    2.74
    
    
    
    8.19
    
    
    
    $
    12.25
    
    
    
    
    $
    15.50
    
    
    
    25,000
    
    
    
    1.04
    
    
    
    14.85
    
    
    
    $
    0.10
    
    
    
    
    $
    15.50
    
    
    
    180,000
    
    
    
    3.93
    
    
    $
    4.62
 14. Related Party Transactions
  F-17




---



##### Table of Contents



15. Segments and Related Information
     16. Earnings per Share Disclosure
  For the Years Ended December 31,2006
    
    
    2005
    
    
    2004Income
    
    
    Shares
    
    
    Per Share
    
    
    Income
    
    
    Shares
    
    
    Per Share
    
    
    Income
    
    
    Shares
    
    
    Per Share(Numerator)
    
    
    (Denominator)
    
    
    Amount
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    Amount
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    Amount(in thousands, except share data)Basic and diluted EPS:Loss from continuing operations
    
    $
    (2,625
    )
    
    
    
    
    
    
    
    
    
    $
    (2,684
    )
    
    
    
    
    
    
    
    
    
    $
    (3,625
    )Preferred stock dividends
    
    
    (1,270
    )
    
    
    
    
    
    
    
    
    
    
    (1,224
    )
    
    
    
    
    
    
    
    
    
    
    (1,172
    )Loss from continuing
operations available
to common stockholders
    
    $
    (3,895
    )
    
    
    16,665,248
    
    
    $
    (0.23
    )
    
    $
    (3,908
    )
    
    
    16,653,193
    
    
    $
    (0.23
    )
    
    $
    (4,797
    )
    
    
    16,653,193
    
    
    $
    (0.29
    )Income (loss) from
discontinued operations
    
    $
    707
    
    
    
    16,665,248
    
    
    $
    0.04
    
    
    $
    (478
    )
    
    
    16,653,193
    
    
    $
    (0.03
    )
    
    $
    24,261
    
    
    
    16,653,193
    
    
    $
    1.46Net income (loss)
    
    $
    (1,918
    )
    
    
    
    
    
    
    
    
    
    $
    (3,162
    )
    
    
    
    
    
    
    
    
    
    $
    20,636Preferred stock dividends
    
    
    (1,270
    )
    
    
    
    
    
    
    
    
    
    
    (1,224
    )
    
    
    
    
    
    
    
    
    
    
    (1,172
    )Net income (loss) available to
common stockholders
    
    $
    (3,188
    )
    
    
    16,665,248
    
    
    $
    (0.19
    )
    
    $
    (4,386
    )
    
    
    16,653,193
    
    
    $
    (0.26
    )
    
    $
    19,464
    
    
    
    16,653,193
    
    
    $
    1.17
  F-18




---



##### Table of Contents



17. Quarterly Results of Operations (Unaudited)
  First
    
    Second
    
    Third
    
    Fourth2006
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter(in thousands, except per share data)Continuing operations:Revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Net loss
    
    
    (797
    )
    
    
    (852
    )
    
    
    (498
    )
    
    
    (478
    )Loss per common share available to common  basic & diluted
    
    
    (0.07
    )
    
    
    (0.07
    )
    
    
    (0.05
    )
    
    
    (0.04
    )Discontinued operations:Revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Net income
    
    
    438
    
    
    
    89
    
    
    
    90
    
    
    
    90Income (loss) per common share available to common  basic & diluted
    
    
    0.026
    
    
    
    0.005
    
    
    
    0.005
    
    
    
    0.005
 First
    
    Second
    
    Third
    
    Fourth2005
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter(in thousands, except per share data)Continuing operations:Revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Net loss
    
    
    (660
    )
    
    
    (580
    )
    
    
    (587
    )
    
    
    (857
    )Loss per common share available to common  basic & diluted
    
    
    (0.06
    )
    
    
    (0.05
    )
    
    
    (0.05
    )
    
    
    (0.07
    )Discontinued operations:Revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Net income (loss)
    
    
    300
    
    
    
    (122
    )
    
    
    (661
    )
    
    
    5Income (loss) per common share available to common  basic & diluted
    
    
    0.02
    
    
    
    (0.01
    )
    
    
    (0.04
    )
    
    
    
 F-19




---



##### Table of Contents



Schedule IISimon Worldwide, Inc.Valuation and Qualifying AccountsFor the Years Ended December 31, 2006, 2005 and 2004(in thousands)
 AdditionsAccounts Receivable,
    
    Balance At
    
    Charged To
    
    
    
    
    
    
    
    
    
    Balance AtAllowance For
    
    Beginning
    
    Costs And
    
    
    
    
    
    
    
    
    
    EndDoubtful Accounts
    
    Of Period
    
    Expenses
    
    Recoveries
    
    Deductions
    
    Of Period2006
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2004
    
    
    13,852
    
    
    
    
    
    
    
    
    
    
    
    13,852
    (a)
    
    
    
 
 (a)
    
    As a result of the loss of business from McDonalds in 2001, the Company recorded a 100%
allowance against its accounts receivable to reduce them to their net realizable value. In 2004,
the Company completed its settlement with McDonalds and, as such, removed any accounts receivable
and related allowance for doubtful accounts from its books. F-20