##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 000-50698
 GREENFIELD ONLINE, INC.
  Delaware
    
    06-1440369(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 21 River Road, Wilton, CT 06897
 : (203) 834-8585
  
  þ o
  o þ o
 o þ




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##### 



GREENFIELD ONLINE, INC.
 FORM 10-Q
TABLE OF CONTENTS
 PagePart I. Financial InformationItem 1. Financial StatementsConsolidated Balance Sheets at June 30, 2007 (unaudited)
and December 31, 2006
    
    
    1Unaudited Consolidated Statements of Income for the three
and six months ended June 30, 2007 and 2006
    
    
    2Unaudited Consolidated Statement of Changes in
Stockholders Equity for the six months ended June 30, 2007
    
    
    3Unaudited Consolidated Statements of Cash Flows for the
six months ended June 30, 2007 and 2006
    
    
    4Notes to Unaudited Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures About
Market Risk
    
    
    28Item 4. Controls and Procedures
    
    
    28Part II. Other InformationItem 1. Legal Proceedings
    
    
    29Item 1A. Risk Factors
    
    
    29Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    31Item 3. Defaults Upon Senior Securities
    
    
    31Item 4. Submission of Matters to a Vote of Security Holders
    
    
    31Item 5. Other Information
    
    
    31Item 6. Exhibits
    
    
    32Signatures
    
    
    33Exhibit Index
    
    
    34EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION
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##### Table of Contents



GREENFIELD
ONLINE, INC.
 
 CONSOLIDATED BALANCE SHEETS
(In thousands, except share data
 June 30,
    
    
    December 31,2007
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    30,985
    
    
    $
    20,873Investments in marketable securities
    
    
    18,934
    
    
    
    16,167Accounts receivable trade, net (net of
allowances of $1,574 and $1,875 at June 30,
2007 and December 31, 2006, respectively)
    
    
    23,382
    
    
    
    23,485Prepaid expenses and other current assets
    
    
    2,000
    
    
    
    1,550Deferred tax assets, current
    
    
    1,895
    
    
    
    4,905Total current assets
    
    
    77,196
    
    
    
    66,980Property and equipment, net
    
    
    6,586
    
    
    
    6,447Other intangible assets, net
    
    
    15,995
    
    
    
    17,644Goodwill
    
    
    70,901
    
    
    
    70,149Deferred tax assets, long-term
    
    
    21,224
    
    
    
    17,740Security deposits and other long-term assets
    
    
    817
    
    
    
    884Total assets
    
    $
    192,719
    
    
    $
    179,844LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    4,024
    
    
    $
    4,283Accrued expenses and other current liabilities
    
    
    14,863
    
    
    
    15,141Income taxes payable
    
    
    9,252
    
    
    
    6,765Current portion of capital lease obligations
    
    
    13
    
    
    
    25Deferred revenue
    
    
    622
    
    
    
    440Total current liabilities
    
    
    28,774
    
    
    
    26,654Capital lease obligations, long-term
    
    
    15
    
    
    
    22Deferred tax liabilities, long-term
    
    
    2,883
    
    
    
    3,457Income taxes payable, long-term
    
    
    1,646
    
    
    
    Other long-term liabilities
    
    
    84
    
    
    
    90Total liabilities
    
    
    33,402
    
    
    
    30,223Commitments and contingencies (Note 12)Stockholders equity:Common stock; par value $0.0001 per share;
100,000,000 shares authorized; 25,865,923 and
25,490,221 shares issued and outstanding at
June 30, 2007 and December 31, 2006,
respectively
    
    
    3
    
    
    
    3Additional paid-in capital
    
    
    294,401
    
    
    
    290,459Accumulated deficit
    
    
    (131,347
    )
    
    
    (136,176
    )Accumulated other comprehensive loss
    
    
    (3,609
    )
    
    
    (4,534
    )Treasury stock, at cost  9,643 shares
    
    
    (131
    )
    
    
    (131
    )Total stockholders equity
    
    
    159,317
    
    
    
    149,621Total liabilities and stockholders equity
    
    $
    192,719
    
    
    $
    179,844
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GREENFIELD ONLINE, INC.
 
 CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net revenues
    
    $
    30,826
    
    
    $
    24,453
    
    
    $
    58,295
    
    
    $
    45,985Cost of revenues
    
    
    8,258
    
    
    
    5,560
    
    
    
    15,397
    
    
    
    11,108Gross profit
    
    
    22,568
    
    
    
    18,893
    
    
    
    42,898
    
    
    
    34,877Operating expenses:Selling, general and administrative
    
    
    14,208
    
    
    
    10,717
    
    
    
    27,188
    
    
    
    20,252Panel acquisition
    
    
    778
    
    
    
    1,231
    
    
    
    1,826
    
    
    
    2,937Depreciation and amortization
    
    
    2,168
    
    
    
    2,401
    
    
    
    4,321
    
    
    
    4,717Research and development
    
    
    1,004
    
    
    
    821
    
    
    
    2,136
    
    
    
    1,762Restructuring charges
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    188Total operating expenses
    
    
    18,158
    
    
    
    15,190
    
    
    
    35,471
    
    
    
    29,856Operating income
    
    
    4,410
    
    
    
    3,703
    
    
    
    7,427
    
    
    
    5,021Other income (expense):Interest income (expense), net
    
    
    408
    
    
    
    85
    
    
    
    551
    
    
    
    (82
    )Other expense, net
    
    
    (6
    )
    
    
    (206
    )
    
    
    (29
    )
    
    
    (154
    )Total other income (expense), net
    
    
    402
    
    
    
    (121
    )
    
    
    522
    
    
    
    (236
    )Income before income taxes
    
    
    4,812
    
    
    
    3,582
    
    
    
    7,949
    
    
    
    4,785Provision for income taxes
    
    
    1,712
    
    
    
    1,328
    
    
    
    2,890
    
    
    
    1,690Net income
    
    $
    3,100
    
    
    $
    2,254
    
    
    $
    5,059
    
    
    $
    3,095Net income per share available to common stockholders:Basic
    
    $
    0.12
    
    
    $
    0.09
    
    
    $
    0.20
    
    
    $
    0.12Diluted
    
    $
    0.11
    
    
    $
    0.09
    
    
    $
    0.19
    
    
    $
    0.12Weighted average shares outstanding:Basic
    
    
    25,702
    
    
    
    25,353
    
    
    
    25,615
    
    
    
    25,331Diluted
    
    
    27,004
    
    
    
    25,541
    
    
    
    26,886
    
    
    
    25,523
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GREENFIELD ONLINE, INC.
 
 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
 (In thousands)
 Additional
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated 
Other
    
    
    TotalCommon Stock
    
    
    Paid-In
    
    
    Treasury Stock
    
    
    Accumulated
    
    
    Comprehensive
    
    
    Stockholders
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Shares
    
    
    Amount
    
    
    Deficit
    
    
    Income (Loss)
    
    
    Equity
    
    
    IncomeBalance at December 31, 2006
    
    
    25,490
    
    
    $
    3
    
    
    $
    290,459
    
    
    
    9
    
    
    $
    (131
    )
    
    $
    (136,176
    )
    
    $
    (4,534
    )
    
    $
    149,621Six months ended June 30, 2007:Net income for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,059
    
    
    
    
    
    
    
    5,059
    
    
    $
    5,059Impact of the adoption of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (230
    )
    
    
    
    
    
    
    (230
    )
    
    
    Tax benefit from exercise of stock options
    
    
    
    
    
    
    
    
    
    
    55
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55
    
    
    
    Issuance of shares related to the Employee Stock Purchase Plan
    
    
    10
    
    
    
    
    
    
    
    64
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64
    
    
    
    Exercise of stock options
    
    
    366
    
    
    
    
    
    
    
    2,180
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,180
    
    
    
    Unrealized gain on available-for-sale securities, net of related
income tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85
    
    
    
    85
    
    
    
    85Translation adjustments, net of related income tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    840
    
    
    
    840
    
    
    
    840Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,984Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    1,643
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,643Balance at June 30, 2007
    
    
    25,866
    
    
    $
    3
    
    
    $
    294,401
    
    
    
    9
    
    
    $
    (131
    )
    
    $
    (131,347
    )
    
    $
    (3,609
    )
    
    $
    159,317
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##### Table of Contents



GREENFIELD ONLINE, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Six Months EndedJune 30,2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    5,059
    
    
    $
    3,095Adjustments to reconcile net income to net cash provided by operating activities:Deferred income tax benefit
    
    
    (1,181
    )
    
    
    (619
    )Depreciation and amortization
    
    
    5,931
    
    
    
    6,190Stock based compensation
    
    
    1,643
    
    
    
    1,218Restructuring charges
    
    
    
    
    
    
    188Loss on disposal of property and equipment
    
    
    
    
    
    
    31Provision for doubtful accounts
    
    
    277
    
    
    
    52Changes in assets and liabilities, net:Accounts receivable
    
    
    67
    
    
    
    (525
    )Deferred project costs
    
    
    (243
    )
    
    
    41Other current assets
    
    
    (99
    )
    
    
    42Security deposits
    
    
    174
    
    
    
    427Other long-term assets
    
    
    (97
    )
    
    
    (17
    )Accounts payable
    
    
    (271
    )
    
    
    (403
    )Accrued expenses and other current liabilities
    
    
    (280
    )
    
    
    (275
    )Payments of management change accrual
    
    
    (219
    )
    
    
    (226
    )Payments of restructuring charges
    
    
    
    
    
    
    (459
    )Income taxes payable
    
    
    3,000
    
    
    
    1,290Deferred project revenues
    
    
    180
    
    
    
    23Net cash provided by operating activities
    
    
    13,941
    
    
    
    10,073Cash flows from investing activities:Purchases of marketable securities
    
    
    (9,279
    )
    
    
    Sales of marketable securities
    
    
    6,421
    
    
    
    Proceeds from sale of property and equipment
    
    
    1
    
    
    
    2Additions to property and equipment and intangibles
    
    
    (4,158
    )
    
    
    (1,882
    )Net cash used in investing activities
    
    
    (7,015
    )
    
    
    (1,880
    )Cash flows from financing activities:Decrease in other long-term liabilities
    
    
    (12
    )
    
    
    (28
    )Proceeds of options exercised
    
    
    2,173
    
    
    
    104Proceeds of employee stock purchase plan
    
    
    78
    
    
    
    61Excess tax deduction on stock option exercises
    
    
    55
    
    
    
    Principal payments under capital lease obligations
    
    
    (19
    )
    
    
    (4,291
    )Net cash provided by (used in) financing activities
    
    
    2,275
    
    
    
    (4,154
    )Effect of exchange rate changes
    
    
    911
    
    
    
    508Net increase in cash and cash equivalents
    
    
    10,112
    
    
    
    4,547Cash and cash equivalents at beginning of the period
    
    
    20,873
    
    
    
    20,623Cash and cash equivalents at end of the period
    
    $
    30,985
    
    
    $
    25,170Supplemental disclosures of cash flow information:Cash paid during the period for:Interest
    
    $
    5
    
    
    $
    372Income taxes
    
    
    1,013
    
    
    
    1,018Supplemental Schedule of Non-cash Investing and Financing Activities:Purchase of equipment and internal use software financed through capital lease
obligations
    
    $
    
    
    
    $
    263
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##### Table of Contents



GREENFIELD ONLINE, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note 1 Basis of Presentation:
  Segment information.
 Basis of consolidation.
 Note 2  Summary of Significant Accounting Policies:
  Concentration of Credit Risk.
 5




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##### Table of Contents



Use of Estimates.
 Recently Issued Accounting Pronouncements
 Fair Value Measurements.
 Fair Value Option for Financial Assets and Financial Liabilities.
 Accounting for Uncertainty in Income Taxes.
 Note 3  Earnings Per Share:
 Net Income per Share.
 6




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##### Table of Contents



Three Months
    
    Six MonthsEnded
    
    EndedJune 30,
    
    June 30,2007
    
    2006
    
    2007
    
    2006Weighted average number of common and potential
common shares outstanding:Basic number of common shares outstanding
    
    
    25,702
    
    
    
    25,353
    
    
    
    25,615
    
    
    
    25,331Dilutive effect of stock option grants and the
employee stock purchase plan
    
    
    1,302
    
    
    
    188
    
    
    
    1,271
    
    
    
    192Diluted number of common and potential common
shares outstanding
    
    
    27,004
    
    
    
    25,541
    
    
    
    26,886
    
    
    
    25,523
 Note 4  Accumulated Other Comprehensive Income (Loss):
  June 30,
    
    
    December 31,2007
    
    
    2006Cumulative translation adjustment
    
    $
    (3,859
    )
    
    $
    (4,699
    )Unrealized gain on available-for-sale
securities, net of deferred taxes of $173 and
$114 at June 30, 2007 and December 31, 2006,
respectively
    
    
    250
    
    
    
    165Total accumulated other comprehensive loss
    
    $
    (3,609
    )
    
    $
    (4,534
    )
 Note 5  Prepaid Expenses and Other Current Assets:
  June 30,
    
    
    December 31,2007
    
    
    2006Prepaid maintenance and license contracts
    
    $
    450
    
    
    $
    273Prepaid expenses
    
    
    712
    
    
    
    422Prepaid insurance
    
    
    121
    
    
    
    461Deferred project costs
    
    
    342
    
    
    
    97Prepaid and refundable taxes
    
    
    233
    
    
    
    168Other
    
    
    142
    
    
    
    129Total prepaid expenses and other current assets
    
    $
    2,000
    
    
    $
    1,550
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##### Table of Contents



Note 6  Property and Equipment, net:
 
 EstimatedUseful
    
    
    June 30,
    
    
    December 31,Life-Years
    
    
    2007
    
    
    2006Computer and data processing equipment
    
    
    2  4
    
    
    $
    13,030
    
    
    $
    14,070Leasehold improvements
    
    
    2  5
    *
    
    
    2,127
    
    
    
    1,872Furniture and fixtures
    
    
    7-8
    
    
    
    2,613
    
    
    
    2,595Telephone systems
    
    
    4-5
    
    
    
    1,121
    
    
    
    1,121Automobile(s)
    
    
    4
    
    
    
    14
    
    
    
    4318,905
    
    
    
    19,701Less: Accumulated depreciation
    
    
    
    
    
    
    (12,319
    )
    
    
    (13,254
    )Property and equipment, net
    
    
    
    
    
    $
    6,586
    
    
    $
    6,447
 
 *
    
    Lesser of the estimated life of the asset or the life of the underlying lease.  Note 7  Goodwill and Other Intangible Assets:
 Goodwill
   EuropeCiaoInternet
    
    
    CiaoSurvey
    
    
    ComparisonGoodwill
    
    North America
    
    
    Solutions
    
    
    Shopping
    
    
    TotalBalance as of December 31, 2006
    
    $
    31,153
    
    
    $
    9,450
    
    
    $
    29,546
    
    
    $
    70,149Goodwill adjustment*
    
    
    
    
    
    
    (59
    )
    
    
    
    
    
    
    (59
    )Foreign currency translation adjustment
    
    
    
    
    
    
    196
    
    
    
    615
    
    
    
    811Balance as of June 30, 2007
    
    $
    31,153
    
    
    $
    9,587
    
    
    $
    30,161
    
    
    $
    70,901
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##### Table of Contents



*
    
    Goodwill associated with the Ciao acquisition has been adjusted by
$59,000 to reflect an increase in our foreign deferred tax assets
associated with NOLs acquired as a result of our Ciao acquisition. Other Intangible Assets
  As of June 30, 2007
    
    
    As of December 31, 2006Estimated
    
    
    Gross
    
    
    
    
    
    
    
    
    
    
    GrossUseful
    
    
    Carrying
    
    
    Accumulated
    
    
    Net
    
    
    Carrying
    
    
    Accumulated
    
    
    NetLife-Years
    
    
    Cost
    
    
    Amortization
    
    
    Amount
    
    
    Cost
    
    
    Amortization
    
    
    AmountInternal use software
    
    
    2-3
    
    
    $
    7,830
    
    
    $
    3,393
    
    
    $
    4,437
    
    
    $
    5,521
    
    
    $
    2,117
    
    
    $
    3,404Other software acquired
    
    
    0.42
    
    
    
    159
    
    
    
    159
    
    
    
    
    
    
    
    159
    
    
    
    159
    
    
    
    Panel members
    
    
    3-4
    
    
    
    6,849
    
    
    
    4,305
    
    
    
    2,544
    
    
    
    6,819
    
    
    
    3,399
    
    
    
    3,420Backlog
    
    
    0.25
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    447
    
    
    
    447
    
    
    
    Affiliate network
    
    
    3
    
    
    
    347
    
    
    
    275
    
    
    
    72
    
    
    
    347
    
    
    
    217
    
    
    
    130Customer relationships
    
    
    5
    
    
    
    7,829
    
    
    
    3,582
    
    
    
    4,247
    
    
    
    7,694
    
    
    
    2,761
    
    
    
    4,933Non-competition agreements
    
    
    2.75-3
    
    
    
    2,619
    
    
    
    2,133
    
    
    
    486
    
    
    
    2,578
    
    
    
    1,652
    
    
    
    926Domain names and service marks
    
    
    5-10
    
    
    
    7,382
    
    
    
    3,173
    
    
    
    4,209
    
    
    
    7,242
    
    
    
    2,411
    
    
    
    4,831Other intangible assets, net
    
    
    
    
    
    $
    33,015
    
    
    $
    17,020
    
    
    $
    15,995
    
    
    $
    30,807
    
    
    $
    13,163
    
    
    $
    17,644
     AmountFor the remaining six months ended December 31, 2007
    
    $
    4,4012008
    
    $
    6,7832009
    
    $
    3,8592010
    
    $
    7532011
    
    $
    522012
    
    $
    52
 9




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##### Table of Contents



Note 8  Accrued Expenses and Other Current Liabilities:
  June 30,
    
    
    December 31,2007
    
    
    2006Accrued payroll, bonus and commissions
    
    $
    3,688
    
    
    $
    4,710Panelist incentives
    
    
    5,712
    
    
    
    4,905Accrued panel costs
    
    
    164
    
    
    
    212Accrued management change costs
    
    
    100
    
    
    
    319Non-income tax accruals
    
    
    1,437
    
    
    
    1,387Software license liability
    
    
    172
    
    
    
    332Accrued audit and tax costs
    
    
    375
    
    
    
    717Outside sample accruals
    
    
    765
    
    
    
    643Real-Time Sampling accruals
    
    
    283
    
    
    
    187Other
    
    
    2,167
    
    
    
    1,729Total accrued expenses and other current liabilities
    
    $
    14,863
    
    
    $
    15,141
  Note 9  Stock-Based Compensation:
   Note 10  Segment Reporting:
  10




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Gross segment revenues:North American Internet survey solutionsThird-party revenues
    
    $
    17,108
    
    
    $
    14,832
    
    
    $
    32,562
    
    
    $
    28,403Inter-segment revenues
    
    
    220
    
    
    
    278
    
    
    
    353
    
    
    
    522Gross segment revenues
    
    $
    17,328
    
    
    $
    15,110
    
    
    $
    32,915
    
    
    $
    28,925Ciao Internet survey solutionsThird-party revenues
    
    $
    6,223
    
    
    $
    5,390
    
    
    $
    11,478
    
    
    $
    9,944Inter-segment revenues
    
    
    1,999
    
    
    
    2,303
    
    
    
    3,485
    
    
    
    3,494Gross segment revenues
    
    $
    8,222
    
    
    $
    7,693
    
    
    $
    14,963
    
    
    $
    13,438Ciao comparison shopping *Third-party revenues
    
    $
    7,495
    
    
    $
    4,231
    
    
    $
    14,255
    
    
    $
    7,638Inter-segment revenues
    
    
    143
    
    
    
    
    
    
    
    143
    
    
    
    Gross segment revenues
    
    $
    7,638
    
    
    $
    4,231
    
    
    $
    14,398
    
    
    $
    7,638Net revenues:North American Internet survey solutions
    
    $
    17,328
    
    
    $
    15,110
    
    
    $
    32,915
    
    
    $
    28,925Ciao Internet survey solutions
    
    
    8,222
    
    
    
    7,693
    
    
    
    14,963
    
    
    
    13,438Ciao comparison shopping
    
    
    7,638
    
    
    
    4,231
    
    
    
    14,398
    
    
    
    7,638Elimination of inter-segment revenues
    
    
    (2,362
    )
    
    
    (2,581
    )
    
    
    (3,981
    )
    
    
    (4,016
    )Total net revenues
    
    $
    30,826
    
    
    $
    24,453
    
    
    $
    58,295
    
    
    $
    45,985Segment operating income (as defined above):North American Internet survey solutions
    
    $
    3,448
    
    
    $
    3,186
    
    
    $
    6,287
    
    
    $
    6,202Ciao Internet survey solutions
    
    
    2,066
    
    
    
    3,351
    
    
    
    3,929
    
    
    
    5,117Ciao comparison shopping
    
    
    4,205
    
    
    
    2,642
    
    
    
    8,188
    
    
    
    4,292Segment operating income
    
    
    9,719
    
    
    
    9,179
    
    
    
    18,404
    
    
    
    15,611Depreciation and amortization
    
    
    (2,990
    )
    
    
    (3,124
    )
    
    
    (5,931
    )
    
    
    (6,190
    )Stock-based compensation
    
    
    (742
    )
    
    
    (636
    )
    
    
    (1,643
    )
    
    
    (1,218
    )Restructuring charges
    
    
    
    
    
    
    (20
    )
    
    
    
    
    
    
    (188
    )Corporate
    
    
    (1,577
    )
    
    
    (1,696
    )
    
    
    (3,403
    )
    
    
    (2,994
    )Total operating income
    
    
    4,410
    
    
    
    3,703
    
    
    
    7,427
    
    
    
    5,021Interest income (expense), net
    
    
    408
    
    
    
    85
    
    
    
    551
    
    
    
    (82
    )Currency exchange gain (loss), net
    
    
    (6
    )
    
    
    (206
    )
    
    
    (29
    )
    
    
    (154
    )Income before income taxes
    
    $
    4,812
    
    
    $
    3,582
    
    
    $
    7,949
    
    
    $
    4,785
 11




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##### Table of Contents



*
    
    Prior to the separation of the Ciao Internet survey solutions and the Ciao comparison shopping
businesses, the Ciao comparison shopping segment did not have any inter-segment revenues. The legal
separation was completed, and effective May 1, 2007, the Ciao comparison shopping segment began
recording inter-segment revenues from the sale of panelists to the Ciao Internet survey solutions
segment, which panelists are sourced from the Ciao comparison shopping portals. Note 11  Income Taxes:
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Income (loss) before income taxes:Domestic
    
    $
    712
    
    
    $
    (234
    )
    
    $
    311
    
    
    $
    (462
    )Foreign
    
    
    4,100
    
    
    
    3,816
    
    
    
    7,638
    
    
    
    5,247$
    4,812
    
    
    $
    3,582
    
    
    $
    7,949
    
    
    $
    4,785Provision for income taxes:Currently payable:Federal
    
    $
    15
    
    
    $
    307
    
    
    $
    44
    
    
    $
    384State
    
    
    27
    
    
    
    59
    
    
    
    79
    
    
    
    146Foreign
    
    
    2,719
    
    
    
    1,344
    
    
    
    3,948
    
    
    
    1,779Total current income tax provision
    
    
    2,761
    
    
    
    1,710
    
    
    
    4,071
    
    
    
    2,309Deferred income tax provision (benefit):Federal
    
    
    (252
    )
    
    
    (583
    )
    
    
    (806
    )
    
    
    (932
    )State
    
    
    (19
    )
    
    
    (86
    )
    
    
    (5
    )
    
    
    (19
    )Foreign
    
    
    (778
    )
    
    
    287
    
    
    
    (370
    )
    
    
    332Total deferred income tax (benefit)
    
    
    (1,049
    )
    
    
    (382
    )
    
    
    (1,181
    )
    
    
    (619
    )Total income tax provision
    
    $
    1,712
    
    
    $
    1,328
    
    
    $
    2,890
    
    
    $
    1,690
  June 30,
    
    
    December 31,2007
    
    
    2006Deferred tax assets (liabilities):Net operating loss carryforwards
    
    $
    16,344
    
    
    $
    16,265Stock-based compensation
    
    
    4,764
    
    
    
    4,581Capitalized panel costs
    
    
    564
    
    
    
    449Intangible assets acquired
    
    
    (4,515
    )
    
    
    (5,157
    )Foreign exchange
    
    
    (1,605
    )
    
    
    (875
    )Fixed assets
    
    
    1,459
    
    
    
    1,281Federal and state tax credits
    
    
    2,250
    
    
    
    2,256Other deferred tax assets
    
    
    1,098
    
    
    
    589Net deferred tax assets
    
    
    20,359
    
    
    
    19,389Valuation allowance
    
    
    (123
    )
    
    
    (201
    )Total net deferred tax assets
    
    $
    20,236
    
    
    $
    19,188
  12




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13




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##### Table of Contents



Note 12  Commitments and Contingencies:
 Legal Contingencies:
  Note 13  Management Change:
  Note 14  Subsequent event:
   14




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##### Table of Contents



Item 2.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following discussion and analysis of our financial condition and results of operations
should be read in conjunction with our consolidated financial statements and related notes included
elsewhere in this Quarterly Report. This discussion contains forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of various factors, including those discussed in
the section entitled Risk Factors in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2006 and in this Quarterly Report on Form 10-Q . Also see the section entitled
Cautionary Note Regarding Forward-Looking Statements contained in this Quarterly Report on Form
10-Q.
 Segment Information
   Critical Accounting Policies and Estimates
   Recently Issued Accounting Pronouncements .
 15




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##### Table of Contents



Results of Operations
 Three Months Ended June 30, 2007 compared to Three Months Ended June 30, 2006
 Consolidated Results
  Three Months Ended June 30,2007
    
    
    %
    
    
    2006
    
    
    %($ in thousands)Net revenues
    
    $
    30,826
    
    
    
    100.0
    %
    
    $
    24,453
    
    
    
    100.0
    %Cost of revenues
    
    
    8,258
    
    
    
    26.8
    
    
    
    5,560
    
    
    
    22.7Gross profit
    
    
    22,568
    
    
    
    73.2
    
    
    
    18,893
    
    
    
    77.3Operating expenses:Selling, general and administrative
    
    
    14,208
    
    
    
    46.1
    
    
    
    10,717
    
    
    
    43.8Panel acquisition
    
    
    778
    
    
    
    2.5
    
    
    
    1,231
    
    
    
    5.0Depreciation and amortization
    
    
    2,168
    
    
    
    7.0
    
    
    
    2,401
    
    
    
    9.8Research and development
    
    
    1,004
    
    
    
    3.3
    
    
    
    821
    
    
    
    3.4Restructuring charges
    
    
    
    
    
    
    
    
    
    
    20
    
    
    
    0.1Total operating expenses
    
    
    18,158
    
    
    
    58.9
    
    
    
    15,190
    
    
    
    62.1Operating income
    
    
    4,410
    
    
    
    14.3
    
    
    
    3,703
    
    
    
    15.2Other income (expense):Interest income, net
    
    
    408
    
    
    
    1.3
    
    
    
    85
    
    
    
    0.3Other expense, net
    
    
    (6
    )
    
    
    (0.0
    )
    
    
    (206
    )
    
    
    (0.8
    )Total other income (expense), net
    
    
    402
    
    
    
    1.3
    
    
    
    (121
    )
    
    
    (0.5
    )Income before income taxes
    
    
    4,812
    
    
    
    15.6
    
    
    
    3,582
    
    
    
    14.7Provision for income taxes
    
    
    1,712
    
    
    
    5.6
    
    
    
    1,328
    
    
    
    5.5Net income
    
    $
    3,100
    
    
    
    10.0
    %
    
    $
    2,254
    
    
    
    9.2
    %
 Net Revenues.
   Gross Profit.
 16




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##### Table of Contents



Selling, General and Administrative.
      Panel Acquisition.
  Depreciation and Amortization.
 17




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##### Table of Contents



i)
    
    the continuing development of our Unified Panel System, our Survey Management
System, and other Internet survey solutions operating systems in North America;ii)
    
    the expansion of our North American Internet survey solutions operating systems
to a worldwide enterprise system; and,iii)
    
    ongoing enhancements and software re-engineering in our comparison shopping
segments operating systems.
  Research and Development.
 Interest Income, Net.
 Other
Expense, Net.
 Provision for Income Taxes.
 Net Income.
 18




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##### Table of Contents



North American Segment Results
  Three Months Ended June 30,2007
    
    %
    
    2006
    
    %($ in thousands)Gross segment revenues
    
    $
    17,328
    
    
    
    100.0
    %
    
    $
    15,110
    
    
    
    100.0
    %Segment operating income
    
    
    3,448
    
    
    
    19.9
    
    
    
    3,186
    
    
    
    21.1
 Gross Segment revenues.
 i)
    
    the improvement in survey respondent supply via our panel, our Real-Time Sampling
capability and our outside sample suppliers;ii)
    
    a significant investment in the selling, marketing and business development team in North
America; andiii)
    
    improved product quality.
 Segment Operating Income.
 Ciao Internet Survey Solutions Segment Results
  Three Months Ended June 30,2007
    
    %
    
    2006
    
    %($ in thousands)Gross segment revenues
    
    $
    8,222
    
    
    
    100.0
    %
    
    $
    7,693
    
    
    
    100.0
    %Segment operating income
    
    
    2,066
    
    
    
    25.1
    
    
    
    3,351
    
    
    
    43.6
 Gross Segment Revenues.
 Segment Operating Income.
 19




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##### Table of Contents



Ciao Comparison Shopping Segment Results
  Three Months Ended June 30,2007
    
    %
    
    2006
    
    %($ in thousands)Gross segment revenues
    
    $
    7,638
    
    
    
    100.0
    %
    
    $
    4,231
    
    
    
    100.0
    %Segment operating income
    
    
    4,205
    
    
    
    55.1
    
    
    
    2,642
    
    
    
    62.4
 Gross Segment Revenues.
 Segment Operating Income.
 20




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##### Table of Contents



Six Months Ended June 30, 2007 compared to Six Months Ended June 30, 2006
 Consolidated Results
  Six Months Ended June 30,2007
    
    
    %
    
    
    2006
    
    
    %($ in thousands)Net revenues
    
    $
    58,295
    
    
    
    100.0
    %
    
    $
    45,985
    
    
    
    100.0
    %Cost of revenues
    
    
    15,397
    
    
    
    26.4
    
    
    
    11,108
    
    
    
    24.2Gross profit
    
    
    42,898
    
    
    
    73.6
    
    
    
    34,877
    
    
    
    75.8Operating expenses:Selling, general and administrative
    
    
    27,188
    
    
    
    46.6
    
    
    
    20,252
    
    
    
    44.0Panel acquisition
    
    
    1,826
    
    
    
    3.1
    
    
    
    2,937
    
    
    
    6.4Depreciation and amortization
    
    
    4,321
    
    
    
    7.4
    
    
    
    4,717
    
    
    
    10.3Research and development
    
    
    2,136
    
    
    
    3.7
    
    
    
    1,762
    
    
    
    3.8Restructuring charges
    
    
    
    
    
    
    0.0
    
    
    
    188
    
    
    
    0.4Total operating expenses
    
    
    35,471
    
    
    
    60.8
    
    
    
    29,856
    
    
    
    64.9Operating income
    
    
    7,427
    
    
    
    12.8
    
    
    
    5,021
    
    
    
    10.9Other expense:Interest income (expense), net
    
    
    551
    
    
    
    0.9
    
    
    
    (82
    )
    
    
    (0.2
    )Other
expense, net
    
    
    (29
    )
    
    
    (0.0
    )
    
    
    (154
    )
    
    
    (0.3
    )Total other income (expense), net
    
    
    522
    
    
    
    0.9
    
    
    
    (236
    )
    
    
    (0.5
    )Income before income taxes
    
    
    7,949
    
    
    
    13.7
    
    
    
    4,785
    
    
    
    10.4Provision for income taxes
    
    
    2,890
    
    
    
    5.0
    
    
    
    1,690
    
    
    
    3.7Net income
    
    $
    5,059
    
    
    
    8.7
    %
    
    $
    3,095
    
    
    
    6.7
    %
 Net Revenues.
   Gross Profit.
 21




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Selling, General and Administrative.
      Panel Acquisition.
  22




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##### Table of Contents



Depreciation and Amortization.
 i)
    
    the continuing development of our Unified Panel System, our Survey Management
System, and other Internet survey solutions operating systems in North America;ii)
    
    the expansion of our North American Internet survey solutions operating systems
to a worldwide enterprise system; and,iii)
    
    ongoing enhancements and software re-engineering in our comparison shopping
segments operating systems.
  Research and Development.
 Restructuring Charges.
 Interest Income (Expense), Net.
 Other Expense, Net.
 23




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Provision for Income Taxes.
   Net Income.
 North American Segment Results
  Six Months Ended June 30,2007
    
    %
    
    2006
    
    %($ in thousands)Gross segment revenues
    
    $
    32,915
    
    
    
    100.0
    %
    
    $
    28,925
    
    
    
    100.0
    %Segment operating income
    
    
    6,287
    
    
    
    19.1
    
    
    
    6,202
    
    
    
    21.4
 Gross Segment revenues.
 i)
    
    the improvement in survey respondent supply via our panel, our Real-Time Sampling
capability and our outside sample suppliers;ii)
    
    a significant investment in the selling, marketing and business development team in North
America; andiii)
    
    improved product quality.
 Segment Operating Income.
 24




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##### Table of Contents



Ciao Internet Survey Solutions Segment Results
  Six Months Ended June 30,2007
    
    %
    
    2006
    
    %($ in thousands)Gross segment revenues
    
    $
    14,963
    
    
    
    100.0
    %
    
    $
    13,438
    
    
    
    100.0
    %Segment operating income
    
    
    3,929
    
    
    
    26.3
    
    
    
    5,117
    
    
    
    38.1
 Gross Segment Revenues.
 Segment Operating Income.
 Ciao Comparison Shopping Segment Results
  Six Months Ended June 30,2007
    
    %
    
    2006
    
    %($ in thousands)Gross segment revenues
    
    $
    14,398
    
    
    
    100.0
    %
    
    $
    7,638
    
    
    
    100.0
    %Segment operating income
    
    
    8,188
    
    
    
    56.9
    
    
    
    4,292
    
    
    
    56.2
 Gross Segment Revenues.
 Segment Operating Income.
 25




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Liquidity and Capital Resources
  Six Months Ended June 30,2007
    
    
    2006
    
    
    Change($ in thousands)Net cash provided by operating activities
    
    $
    13,941
    
    
    $
    10,073
    
    
    $
    3,868Net cash used in investing activities
    
    
    (7,015
    )
    
    
    (1,880
    )
    
    
    (5,135
    )Net cash provided by (used in) financing activities
    
    
    2,275
    
    
    
    (4,154
    )
    
    
    6,429Effect of exchange rate changes on cash and cash equivalents
    
    
    911
    
    
    
    508
    
    
    
    403Increase in cash and cash equivalents
    
    
    10,112
    
    
    
    4,547
    
    
    
    5,565Cash and cash equivalents at beginning of period
    
    
    20,873
    
    
    
    20,623
    
    
    
    250Cash and cash equivalents at end of period
    
    
    30,985
    
    
    
    25,170
    
    
    
    5,815Short-term investments in marketable securities
    
    
    18,934
    
    
    
    
    
    
    
    18,934Total cash, cash equivalents and short-term investments
    
    $
    49,919
    
    
    $
    25,170
    
    
    $
    24,749
       26




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Contractual Cash Obligations and Other Commercial Commitments and Contingencies
  Total at
    
    
    Years Ended December 31,June 30,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2012 and2007
    
    
    2007 (1)
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    ThereafterContractual obligations:Capital lease obligations
    
    $
    28
    
    
    $
    7
    
    
    $
    14
    
    
    $
    7
    
    
    $
    
    
    
    $
    
    
    
    $
    Non-cancelable operating lease
obligations
    
    
    10,999
    
    
    
    2,050
    
    
    
    3,364
    
    
    
    2,911
    
    
    
    1,477
    
    
    
    745
    
    
    
    452Management change commitments*
    
    
    100
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    11,127
    
    
    $
    2,157
    
    
    $
    3,378
    
    
    $
    2,918
    
    
    $
    1,477
    
    
    $
    745
    
    
    $
    452
 
 (1)
    
    Includes only the remaining six months of the year ending December 31, 2007.*
    
    These management change commitments are a result of our management change announced in the
third quarter of 2005 as described in Note 13 to the consolidated financial statements
included in this Quarterly Report on Form 10-Q.  27




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Item 3: Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4: Controls and Procedures
     28




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PART II   OTHER INFORMATION
 
 Item 1. Legal Proceedings
   
 Item 1A. Risk Factors
  Cautionary Note Regarding Forward-Looking Statements
  
    
    risks related to the separation of our Ciao Internet survey solutions and comparison shopping businesses;
    
    risks related to the success of new business initiatives;
    
    the growing competitiveness of our marketplace and our ability to compete therein;
    
    our ability to develop and deploy new technologies;
    
    risks related to our reliance on search engine algorithm optimization to generate internet traffic;
    
    our client satisfaction levels;
 29




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
    
    our ability to build and maintain the size and demographic composition of the Greenfield Online panel;
    
    our panelists responsiveness to our surveys;
    
    issues related to the development, success and client acceptance of our real-time
sampling methodology for recruiting survey takers on the Internet;
    
    our ability to accurately predict future revenue levels and our ability to manage
expense commensurate with such revenue levels;
    
    our ability to manage pricing pressure in North America and Europe;
    
    our reliance on our largest customers;
    
    our ability to manage or accelerate our growth and international expansion;
    
    our ability to restore and sustain sales growth in our European survey business;
    
    our ability to manage or accelerate our growth and international expansion;
    
    risks related to foreign currency rate fluctuations;
    
    our ability to integrate successfully the businesses we have recently acquired or may
acquire in the future;
    
    risks related to the pending class action lawsuits;
    
    the seasonality of demand for Internet survey solutions and comparison shopping services; and
    
    the strength of our brand.
   We and some of our current and former officers are the subject of securities class action
lawsuits that could require us to pay substantial damages or otherwise have a material adverse
effect on us.
  30




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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
   Number of Shares
    
    Number of SharesVoted For
    
    WithheldPeter Sobiloff
    
    
    21,554,935
    
    
    
    61,232Joel R. Mesznik
    
    
    21,119,010
    
    
    
    497,157Albert Angrisani
    
    
    21,555,085
    
    
    
    61,082
    
 Item 5. Other Information
  31




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Item 6. Exhibits
  ExhibitNo.
    
    Description of Exhibits31.1
    
    Certification of the Chief Executive Officer pursuant to Rule
13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as
amended, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (Filed herewith).31.2
    
    Certification of the Chief Financial Officer pursuant to Rule
13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as
amended, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (Filed herewith).32.1
    
    Certification of the Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
Section 1350 (Filed herewith).32.2
    
    Certifications of the Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
Section 1350 (Filed herewith).
 32




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##### Table of Contents



SIGNATURE
  GREENFIELD ONLINE, INC.By:
    /s/ Robert E. BiesRobert E. BiesExecutive Vice President and
Chief Financial Officer  33




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNo.
    
    Description of Exhibits31.1
    
    Certification of the Chief Executive Officer pursuant to Rule
13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as
amended, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (Filed herewith).31.2
    
    Certification of the Chief Financial Officer pursuant to Rule
13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as
amended, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (Filed herewith).32.1
    
    Certification of the Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
Section 1350 (Filed herewith).32.2
    
    Certifications of the Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
Section 1350 (Filed herewith).
 34