##### 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 March 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period fromto
 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
  GREENFIELD ONLINE, INC.




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##### 



FORM 10-Q
TABLE OF CONTENTS
 PagePart I. Financial InformationItem 1. Financial StatementsConsolidated Balance Sheets at March 31, 2007 (unaudited)
and December 31, 2006
    
    
    1Unaudited Consolidated Statements of Income for the three
months ended March 31, 2007 and 2006
    
    
    2Unaudited Consolidated Statement of Changes in
Stockholders Equity for the three months ended March 31, 2007
    
    
    3Unaudited Consolidated Statements of Cash Flows for the
three months ended March 31, 2007 and 2006
    
    
    4Notes to Unaudited Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    30Item 4. Controls and Procedures
    
    
    30Part II. Other InformationItem 1. Legal Proceedings
    
    
    31Item 1A. Risk Factors
    
    
    31Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    32Item 3. Defaults Upon Senior Securities
    
    
    32Item 4. Submission of Matters to a Vote of Security Holders
    
    
    32Item 5. Other Information
    
    
    32Item 6. Exhibits
    
    
    33Signatures
    
    
    34Exhibit Index
    
    
    35EX-10.70: AMENDMENT NO. 1 TO THE EMPLOYMENT AGREEMENTEX-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
 March 31,
    
    
    December 31,2007
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    21,071
    
    
    $
    20,873Investments in marketable securities
    
    
    21,851
    
    
    
    16,167Accounts receivable trade, net (net of
allowances of $1,691 and $1,875 at March 31,
2007 and December 31, 2006, respectively)
    
    
    22,605
    
    
    
    23,485Prepaid expenses and other current assets
    
    
    1,747
    
    
    
    1,550Deferred tax assets, current
    
    
    2,919
    
    
    
    4,905Total current assets
    
    
    70,193
    
    
    
    66,980Property and equipment, net
    
    
    6,323
    
    
    
    6,447Other intangible assets, net
    
    
    16,653
    
    
    
    17,644Goodwill
    
    
    70,481
    
    
    
    70,149Deferred tax assets, long-term
    
    
    19,896
    
    
    
    17,740Security deposits and other long-term assets
    
    
    863
    
    
    
    884Total assets
    
    $
    184,409
    
    
    $
    179,844LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    3,862
    
    
    $
    4,283Accrued expenses and other current liabilities
    
    
    14,451
    
    
    
    15,141Income taxes payable
    
    
    7,285
    
    
    
    6,765Current portion of capital lease obligations
    
    
    19
    
    
    
    25Deferred revenue
    
    
    332
    
    
    
    440Total current liabilities
    
    
    25,949
    
    
    
    26,654Capital lease obligations, long-term
    
    
    18
    
    
    
    22Deferred tax liabilities, long-term
    
    
    3,287
    
    
    
    3,457Income taxes payable, long-term
    
    
    1,594
    
    
    
    Other long-term liabilities
    
    
    89
    
    
    
    90Total liabilities
    
    
    30,937
    
    
    
    30,223Commitments and contingencies (Note 12)Stockholders equity:Common stock; par value $0.0001 per share;
100,000,000 shares authorized; 25,597,124 and
25,490,221 shares issued and outstanding at
March 31, 2007 and December 31, 2006,
respectively
    
    
    3
    
    
    
    3Additional paid-in capital
    
    
    292,096
    
    
    
    290,459Accumulated deficit
    
    
    (134,447
    )
    
    
    (136,176
    )Accumulated other comprehensive loss
    
    
    (4,049
    )
    
    
    (4,534
    )Treasury stock, at cost
Common stock  9,643 shares
    
    
    (131
    )
    
    
    (131
    )Total stockholders equity
    
    
    153,472
    
    
    
    149,621Total liabilities and stockholders equity
    
    $
    184,409
    
    
    $
    179,844
  1




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##### Table of Contents



GREENFIELD ONLINE, INC.
 
 CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
 Three Months Ended March 31,2007
    
    
    2006Net revenues
    
    $
    27,469
    
    
    $
    21,532Cost of revenues
    
    
    7,139
    
    
    
    5,548Gross profit
    
    
    20,330
    
    
    
    15,984Operating expenses:Selling, general and administrative
    
    
    12,980
    
    
    
    9,535Panel acquisition
    
    
    1,048
    
    
    
    1,706Depreciation and amortization
    
    
    2,153
    
    
    
    2,316Research and development
    
    
    1,132
    
    
    
    941Restructuring charges
    
    
    
    
    
    
    168Total operating expenses
    
    
    17,313
    
    
    
    14,666Operating income
    
    
    3,017
    
    
    
    1,318Other income (expense):Interest income (expense), net
    
    
    143
    
    
    
    (167
    )Other income (expense), net
    
    
    (23
    )
    
    
    52Total other income (expense), net
    
    
    120
    
    
    
    (115
    )Income before income taxes
    
    
    3,137
    
    
    
    1,203Provision for income taxes
    
    
    1,178
    
    
    
    362Net income
    
    $
    1,959
    
    
    $
    841Net income per share available to common stockholdersBasic
    
    $
    0.08
    
    
    $
    0.03Diluted
    
    $
    0.07
    
    
    $
    0.03Weighted average shares outstanding:Basic
    
    
    25,527
    
    
    
    25,310Diluted
    
    
    26,461
    
    
    
    25,505
  2




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##### Table of Contents



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
    )
    
    $
    149,621Three months ended March 31, 2007:Net income for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,959
    
    
    
    
    
    
    
    1,959
    
    
    $
    1,959Impact of the adoption of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (230
    )
    
    
    
    
    
    
    (230
    )
    
    
    Tax benefit from exercise of stock options
    
    
    
    
    
    
    
    
    
    
    41
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41
    
    
    
    Issuance of shares related to the Employee Stock Purchase Plan
    
    
    10
    
    
    
    
    
    
    
    64
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64
    
    
    
    Exercise of stock options
    
    
    97
    
    
    
    
    
    
    
    631
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    631
    
    
    
    Unrealized gain on available-for-sale securities, net of related
income tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    110
    
    
    
    110
    
    
    
    110Translation adjustments, net of related income tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    375
    
    
    
    375
    
    
    
    375Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,444Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    901
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    901Balance at March 31, 2007
    
    
    25,597
    
    
    $
    3
    
    
    $
    292,096
    
    
    
    9
    
    
    $
    (131
    )
    
    $
    (134,447
    )
    
    $
    (4,049
    )
    
    $
    153,472
  3




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GREENFIELD ONLINE, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Three Months EndedMarch 31,2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    1,959
    
    
    $
    841Adjustments to reconcile net income to net cash provided by operating activities:Deferred income tax benefit
    
    
    (132
    )
    
    
    (237
    )Depreciation and amortization
    
    
    2,941
    
    
    
    3,066Stock based compensation
    
    
    901
    
    
    
    582Restructuring charges
    
    
    
    
    
    
    168Loss on disposal of property and equipment
    
    
    
    
    
    
    24Provision for doubtful accounts
    
    
    65
    
    
    
    44Changes in assets and liabilities, net:Accounts receivable
    
    
    858
    
    
    
    2,968Deferred project costs
    
    
    (91
    )
    
    
    194Other current assets
    
    
    (21
    )
    
    
    (223
    )Security deposits
    
    
    26
    
    
    
    477Other long-term assets
    
    
    
    
    
    
    (39
    )Accounts payable
    
    
    (421
    )
    
    
    (536
    )Accrued expenses and other current liabilities
    
    
    (619
    )
    
    
    (1,337
    )Payments of management change accrual
    
    
    (108
    )
    
    
    (103
    )Payments of restructuring charges
    
    
    
    
    
    
    (243
    )Income taxes payable
    
    
    1,124
    
    
    
    (435
    )Deferred project revenues
    
    
    (108
    )
    
    
    (201
    )Net cash provided by operating activities
    
    
    6,374
    
    
    
    5,010Cash flows from investing activities:Purchases of marketable securities
    
    
    (5,223
    )
    
    
    Proceeds from sale of property and equipment
    
    
    
    
    
    
    2Additions to property and equipment and intangibles
    
    
    (1,709
    )
    
    
    (762
    )Net cash used in investing activities
    
    
    (6,932
    )
    
    
    (760
    )Cash flows from financing activities:Decrease in other long-term liabilities
    
    
    (1
    )
    
    
    (26
    )Proceeds of options exercised
    
    
    625
    
    
    
    35Proceeds of employee stock purchase plan
    
    
    38
    
    
    
    31Excess tax deduction on stock option exercises
    
    
    41
    
    
    
    Principal payments under capital lease obligations
    
    
    (9
    )
    
    
    (4,283
    )Net cash provided by (used in) financing activities
    
    
    694
    
    
    
    (4,243
    )Effect of exchange rate changes
    
    
    62
    
    
    
    137Net increase in cash and cash equivalents
    
    
    198
    
    
    
    144Cash and cash equivalents at beginning of the period
    
    
    20,873
    
    
    
    20,623Cash and cash equivalents at end of the period
    
    $
    21,071
    
    
    $
    20,767Supplemental disclosures of cash flow information:Cash paid during the period for:Interest
    
    $
    2
    
    
    $
    372Income taxes
    
    
    143
    
    
    
    1,034Supplemental Schedule of Non-cash Investing and Financing Activities:Purchase of equipment and internal use software financed through capital lease
obligations
    
    $
    
    
    
    $
    263
  4




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GREENFIELD ONLINE, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Unaudited)
 Note 1 Basis of Presentation:
  Segment information.
 Basis of consolidation.
 Reclassifications.
 Note 2  Summary of Significant Accounting Policies:
  Stock-Based Compensation. Share-Based Payment, 25 Accounting for Stock Issued to
Employees
 5




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##### Table of Contents



Share-Based Payment
  Panelist Incentives.
 Concentration of Credit Risk.
 Accounts Receivable Allowances.
 6




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##### Table of Contents



Goodwill and Other Intangible Assets.
  Use of Estimates.
 Recently Issued Accounting Pronouncements
 Fair Value Measurements.
 Fair Value Option for Financial Assets and Financial Liabilities.
 7




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##### Table of Contents



Note 3  Earnings Per Share:
 Net Income per Share.
  Three MonthsEndedMarch 31,2007
    
    
    2006Weighted average number of common and potential
common shares outstanding:Basic number of common shares outstanding
    
    
    25,527
    
    
    
    25,310Dilutive effect of stock option grants and the employee stock
purchase plan
    
    
    934
    
    
    
    195Diluted number of common and potential common shares outstanding
    
    
    26,461
    
    
    
    25,505
 Note 4  Accumulated Other Comprehensive Income (Loss):
  March 31,
    
    
    December 31,2007
    
    
    2006Cumulative translation adjustment
    
    $
    (4,324
    )
    
    $
    (4,699
    )Unrealized gain on available-for-sale
securities, net of deferred taxes of $190
and $114 at March 31, 2007 and December
31, 2006, respectively
    
    
    275
    
    
    
    165Total accumulated other comprehensive loss
    
    $
    (4,049
    )
    
    $
    (4,534
    )
 Note 5  Prepaid Expenses and Other Current Assets:
  March 31,
    
    
    December 31,2007
    
    
    2006Prepaid maintenance and license contracts
    
    $
    283
    
    
    $
    273Prepaid expenses
    
    
    647
    
    
    
    387Prepaid insurance
    
    
    322
    
    
    
    461Deferred project costs
    
    
    189
    
    
    
    97Prepaid and refundable taxes
    
    
    125
    
    
    
    168Other
    
    
    181
    
    
    
    164Total prepaid expenses and other current assets
    
    $
    1,747
    
    
    $
    1,550
 8




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##### Table of Contents



Note 6  Property and Equipment, net:
  EstimatedUseful
    
    
    March 31,
    
    
    December 31,Life-Years
    
    
    2007
    
    
    2006Computer and data processing equipment
    
    
    2  4
    
    
    $
    14,729
    
    
    $
    14,070Leasehold improvements
    
    
    2  5
    *
    
    
    1,971
    
    
    
    1,872Furniture and fixtures
    
    
    7-8
    
    
    
    2,603
    
    
    
    2,595Telephone systems
    
    
    4-5
    
    
    
    1,121
    
    
    
    1,121Automobile(s)
    
    
    4
    
    
    
    43
    
    
    
    4320,467
    
    
    
    19,701Less: Accumulated depreciation
    
    
    
    
    
    
    (14,144
    )
    
    
    (13,254
    )Property and equipment, net
    
    
    
    
    
    $
    6,323
    
    
    $
    6,447
 
 *
    
    Lesser of the estimated life of the asset or the life of the underlying lease.    March 31,
    
    
    December 31,2007
    
    
    2006Computer and data processing equipment
    
    $
    50
    
    
    $
    50Less: Accumulated depreciation
    
    
    (43
    )
    
    
    (38
    )Assets under capital leases, net
    
    $
    7
    
    
    $
    12
 Note 7  Goodwill and Other Intangible Assets:
 Goodwill
  9




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EuropeCiao Internet
    
    
    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
    
    
    
    
    
    
    94
    
    
    
    297
    
    
    
    391Balance as of March 31,2007
    
    $
    31,153
    
    
    $
    9,485
    
    
    $
    29,843
    
    
    $
    70,481
 
 *
    
    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 March 31, 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
    
    
    $
    6,517
    
    
    $
    2,777
    
    
    $
    3,740
    
    
    $
    5,521
    
    
    $
    2,117
    
    
    $
    3,404Other software acquired
    
    
    0.42
    
    
    
    159
    
    
    
    159
    
    
    
    
    
    
    
    159
    
    
    
    159
    
    
    
    Panel members
    
    
    3-4
    
    
    
    6,833
    
    
    
    3,850
    
    
    
    2,983
    
    
    
    6,819
    
    
    
    3,399
    
    
    
    3,420Backlog
    
    
    0.25
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    447
    
    
    
    447
    
    
    
    Affiliate network
    
    
    3
    
    
    
    347
    
    
    
    246
    
    
    
    101
    
    
    
    347
    
    
    
    217
    
    
    
    130Customer relationships
    
    
    5
    
    
    
    7,760
    
    
    
    3,166
    
    
    
    4,594
    
    
    
    7,694
    
    
    
    2,761
    
    
    
    4,933Non-competition agreements
    
    
    2.75-3
    
    
    
    2,598
    
    
    
    1,887
    
    
    
    711
    
    
    
    2,578
    
    
    
    1,652
    
    
    
    926Domain names and service marks
    
    
    5-10
    
    
    
    7,310
    
    
    
    2,786
    
    
    
    4,524
    
    
    
    7,242
    
    
    
    2,411
    
    
    
    4,831Other intangible assets, net
    
    
    
    
    
    $
    31,524
    
    
    $
    14,871
    
    
    $
    16,653
    
    
    $
    30,807
    
    
    $
    13,163
    
    
    $
    17,644
     10




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AmountFor the remaining nine months ended December 31, 2007
    
    $
    6,2532008
    
    $
    6,0682009
    
    $
    3,2842010
    
    $
    8492011
    
    $
    522012
    
    $
    52
 Note 8  Accrued Expenses and Other Current Liabilities:
  March 31,
    
    
    December 31,2007
    
    
    2006Accrued payroll, bonus and commissions
    
    $
    3,922
    
    
    $
    4,710Panelist incentives
    
    
    5,126
    
    
    
    4,905Accrued panel costs
    
    
    83
    
    
    
    212Accrued management change costs
    
    
    211
    
    
    
    319Non-income tax accruals
    
    
    1,279
    
    
    
    1,387Software license liability
    
    
    249
    
    
    
    332Accrued audit and tax costs
    
    
    363
    
    
    
    717Outside sample accruals
    
    
    872
    
    
    
    643Real-Time Sampling accruals
    
    
    308
    
    
    
    187Other
    
    
    2,038
    
    
    
    1,729Total accrued expenses and other current liabilities
    
    $
    14,451
    
    
    $
    15,141
  Note 9  Stock-Based Compensation:
  2004 Employee Stock Purchase Plan
   11




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Stock Options
 1999 Stock Option Plan
   2004 Equity Incentive Plan
  12




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2005 Inducement Options
  Stock-Based Compensation
      13




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Three Months EndedMarch 31,Stock-based compensation included in:
    
    2007
    
    
    2006Cost of revenues
    
    $
    114
    
    
    $
    57Research and development expenses
    
    
    26
    
    
    
    6Selling, general and administrative expenses
    
    
    761
    
    
    
    519Pre-tax stock-based compensation expense
    
    
    901
    
    
    
    582Income tax benefit
    
    
    (351
    )
    
    
    (206
    )Net stock based compensation expense
    
    $
    550
    
    
    $
    376
  1999 Plan
    
    
    2004 Equity Plan
    
    
    2005 Inducement OptionsWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageNumber of
    
    
    Price Per
    
    
    Number of
    
    
    Price Per
    
    
    Number of
    
    
    Price PerShares
    
    
    Share
    
    
    Shares
    
    
    Share
    
    
    Shares
    
    
    ShareOutstanding at December 31,
2006
    
    
    379,805
    
    
    $
    7.15
    
    
    
    3,087,792
    
    
    $
    10.34
    
    
    
    675,000
    
    
    $
    5.29Granted *
    
    
    
    
    
    $
    
    
    
    
    65,000
    
    
    $
    14.00
    
    
    
    
    
    
    $
    Canceled
    
    
    (240
    )
    
    $
    168.84
    
    
    
    (36,482
    )
    
    $
    14.64
    
    
    
    
    
    
    $
    Exercised **
    
    
    (31,416
    )
    
    $
    2.65
    
    
    
    (65,240
    )
    
    $
    8.38
    
    
    
    
    
    
    $
    Outstanding at March 31, 2007
    
    
    348,149
    
    
    $
    7.44
    
    
    
    3,051,070
    
    
    $
    10.41
    
    
    
    675,000
    
    
    $
    5.29Exercisable at March 31, 2007
    
    
    294,572
    
    
    $
    8.31
    
    
    
    1,735,628
    
    
    $
    12.31
    
    
    
    319,165
    
    
    $
    5.28Available for future option
grants at March 31, 2007
    
    
    23,054
    
    
    
    
    
    
    
    401,715
    
    
    
    
    
    
    
    
 
 *
    
    The weighted average fair value at date of grant was $6.77 during the three months ended March
31, 2007.**
    
    The total intrinsic value of options exercised during the three months ended March 31, 2007 was
approximately $859,000.    14




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##### Table of Contents



Options Outstanding
    
    
    
    
    
    
    Options ExercisableWeighted
    
    
    Weighted
    
    
    (000s)
    
    
    
    
    
    
    Weighted
    
    
    (000s)Number of
    
    
    Average
    
    
    Average
    
    
    Aggregate
    
    
    Number of
    
    
    Average
    
    
    AggregateOutstanding
    
    
    Remaining
    
    
    Exercise
    
    
    Intrinsic
    
    
    Exercisable
    
    
    Exercise
    
    
    IntrinsicPlan name
    
    Options
    
    
    Contractual Life
    
    
    Price
    
    
    Value
    
    
    Options
    
    
    Price
    
    
    Value1999 Plan
    
    
    348,149
    
    
    5.9 years
    
    $
    7.44
    
    
    $
    3,732
    
    
    
    294,572
    
    
    $
    8.31
    
    
    $
    3,0232004 Equity Plan
    
    
    3,051,070
    
    
    6.0 years
    
    $
    10.41
    
    
    $
    16,812
    
    
    
    1,735,628
    
    
    $
    12.31
    
    
    $
    6,2922005 Inducement
Options
    
    
    675,000
    
    
    5.7 years
    
    $
    5.29
    
    
    $
    7,165
    
    
    
    319,165
    
    
    $
    5.28
    
    
    $
    3,390Combined
    
    
    4,074,219
    
    
    5.9 years
    
    $
    9.31
    
    
    $
    27,709
    
    
    
    2,349,365
    
    
    $
    10.86
    
    
    $
    12,705
   Three Months Ended March 31, 20072005InducementCombined
    
    2004 Equity Plan
    
    OptionsRisk-free interest rate
    
    
    4.77
    %
    
    
    4.77
    %
    
    
    Weighted average expected life (years)
    
    
    4.66
    
    
    
    4.66
    
    
    
    Volatility factor
    
    
    51.10
    %
    
    
    51.10
    %
    
    
    Expected dividend yield
    
    
    
    
    
    
    
    
    
    
    
 Volatility
 Risk-free interest rate
 Expected term
 Dividend yield
  15




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##### Table of Contents



Note 10  Segment Reporting:
   Three Months EndedMarch 31,2007
    
    
    2006Gross segment revenues: *North American Internet survey solutionsThird-party revenues
    
    $
    15,454
    
    
    $
    13,571Inter-segment revenues
    
    
    133
    
    
    
    244Gross segment revenues
    
    $
    15,587
    
    
    $
    13,815Ciao Internet survey solutionsThird-party revenues
    
    $
    5,255
    
    
    $
    4,554Inter-segment revenues
    
    
    1,486
    
    
    
    1,191Gross segment revenues
    
    $
    6,741
    
    
    $
    5,745Net revenues:North American Internet survey solutions
    
    $
    15,587
    
    
    $
    13,815Ciao Internet survey solutions
    
    
    6,741
    
    
    
    5,745Ciao comparison shopping
    
    
    6,760
    
    
    
    3,407Elimination of inter-segment revenues
    
    
    (1,619
    )
    
    
    (1,435
    )Total net revenues
    
    $
    27,469
    
    
    $
    21,532
 16




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##### Table of Contents



Three Months EndedMarch 31,2007
    
    
    2006Segment operating income (as defined above):North American Internet survey solutions
    
    $
    2,839
    
    
    $
    3,016Ciao Internet survey solutions
    
    
    1,863
    
    
    
    1,766Ciao comparison shopping
    
    
    3,983
    
    
    
    1,650Segment operating income
    
    
    8,685
    
    
    
    6,432Depreciation and amortization
    
    
    (2,941
    )
    
    
    (3,066
    )Stock-based compensation
    
    
    (901
    )
    
    
    (582
    )Restructuring charges
    
    
    
    
    
    
    (168
    )Corporate
    
    
    (1,826
    )
    
    
    (1,298
    )Total operating income
    
    
    3,017
    
    
    
    1,318Interest income (expense), net
    
    
    143
    
    
    
    (167
    )Currency exchange gain (loss), net
    
    
    (23
    )
    
    
    52Income before income taxes
    
    $
    3,137
    
    
    $
    1,203
 
 *
    
    The Ciao comparison shopping segment has no inter-segment revenues, and as a result, gross
segment revenues is equal to net segment revenues, and is not presented under gross segment
revenues. Note 11  Income Taxes:
  For the Three MonthsEnded March 31,2007
    
    
    2006Income (loss) before income taxes:Domestic
    
    $
    (401
    )
    
    $
    (228
    )Foreign
    
    
    3,538
    
    
    
    1,431$
    3,137
    
    
    $
    1,203Provision for income taxes:Currently payable:Federal
    
    $
    29
    
    
    $
    77State
    
    
    52
    
    
    
    87Foreign
    
    
    1,229
    
    
    
    435Total current income tax provision
    
    
    1,310
    
    
    
    599Deferred income tax provision (benefit):Federal
    
    
    (554
    )
    
    
    (349
    )State
    
    
    14
    
    
    
    67Foreign
    
    
    408
    
    
    
    45Total deferred income tax (benefit)
    
    
    (132
    )
    
    
    (237
    )Total income tax provision
    
    $
    1,178
    
    
    $
    362
  March 31,
    
    
    December 31,2007
    
    
    2006Deferred tax assets (liabilities):Net operating loss carryforwards
    
    $
    15,983
    
    
    $
    16,265Stock-based compensation
    
    
    4,767
    
    
    
    4,581Capitalized panel costs
    
    
    505
    
    
    
    449Intangible assets acquired
    
    
    (4,949
    )
    
    
    (5,157
    )Foreign exchange
    
    
    (1,243
    )
    
    
    (875
    )Fixed assets
    
    
    1,382
    
    
    
    1,281Federal and state tax credits
    
    
    2,240
    
    
    
    2,256Other deferred tax assets
    
    
    985
    
    
    
    589Net deferred tax assets
    
    
    19,670
    
    
    
    19,389
 March 31,
    
    
    December 31,2007
    
    
    2006Valuation allowance
    
    
    (142
    )
    
    
    (201
    )Total net deferred tax assets
    
    $
    19,528
    
    
    $
    19,188
 17




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18




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##### Table of Contents



Note 12  Commitments and Contingencies:
 Legal Contingencies:
  Note 13  Management Change:
  19




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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 .
 Stock-Based Compensation . Share-Based Payment Accounting for Stock-Based Compensation,
 20




---



##### Table of Contents



Translation of foreign currencies .
 21




---



##### Table of Contents



Results of Operations
 Three Months Ended March 31, 2007 compared to Three Months Ended March 31, 2006
 Consolidated Results
  Three Months Ended March 31,2007
    
    
    %
    
    
    2006
    
    
    %($ in thousands)Net revenues
    
    $
    27,469
    
    
    
    100.0
    %
    
    $
    21,532
    
    
    
    100.0
    %Cost of revenues
    
    
    7,139
    
    
    
    26.0
    
    
    
    5,548
    
    
    
    25.8Gross profit
    
    
    20,330
    
    
    
    74.0
    
    
    
    15,984
    
    
    
    74.2Operating expenses:Selling, general and administrative
    
    
    12,980
    
    
    
    47.3
    
    
    
    9,535
    
    
    
    44.3Panel acquisition
    
    
    1,048
    
    
    
    3.8
    
    
    
    1,706
    
    
    
    7.9Depreciation and amortization
    
    
    2,153
    
    
    
    7.8
    
    
    
    2,316
    
    
    
    10.7Research and development
    
    
    1,132
    
    
    
    4.1
    
    
    
    941
    
    
    
    4.4Restructuring charges
    
    
    
    
    
    
    0.0
    
    
    
    168
    
    
    
    0.8Total operating expenses
    
    
    17,313
    
    
    
    63.0
    
    
    
    14,666
    
    
    
    68.1Operating income
    
    
    3,017
    
    
    
    11.0
    
    
    
    1,318
    
    
    
    6.1Other income (expense):Interest income (expense), net
    
    
    143
    
    
    
    0.5
    
    
    
    (167
    )
    
    
    (0.8
    )Other income (expense), net
    
    
    (23
    )
    
    
    (0.1
    )
    
    
    52
    
    
    
    0.2Total other income (expense), net
    
    
    120
    
    
    
    0.4
    
    
    
    (115
    )
    
    
    (0.6
    )Income before income taxes
    
    
    3,137
    
    
    
    11.4
    
    
    
    1,203
    
    
    
    5.6Provision for income taxes
    
    
    1,178
    
    
    
    4.3
    
    
    
    362
    
    
    
    1.7Net income
    
    $
    1,959
    
    
    
    7.1
    %
    
    $
    841
    
    
    
    3.9
    %
 Net Revenues.
   Gross Profit.
 22




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##### Table of Contents



Selling, General and Administrative.
           Panel Acquisition.
 23




---



##### 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 improvements and software re-engineering in our comparison shopping
segments operating systems.
  Research and Development.
 Restructuring Charges.
 Interest Income (Expense), Net.
 24




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##### Table of Contents



Other Income (Expense), Net.
 Provision for Income Taxes.
    Net Income.
 North American Segment Results
  Three Months Ended March 31,2007
    
    %
    
    2006
    
    %($ in thousands)Gross segment revenues
    
    $
    15,587
    
    
    
    100.0
    %
    
    $
    13,815
    
    
    
    100.0
    %Segment operating income
    
    
    2,839
    
    
    
    18.2
    
    
    
    3,016
    
    
    
    21.8
 25




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##### Table of Contents



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 March 31,2007
    
    %
    
    2006
    
    %($ in thousands)Gross segment revenues
    
    $
    6,741
    
    
    
    100.0
    %
    
    $
    5,745
    
    
    
    100.0
    %Segment operating income
    
    
    1,863
    
    
    
    27.6
    
    
    
    1,766
    
    
    
    30.7
 Gross Segment Revenues.
 Segment Operating Income.
 Ciao Comparison Shopping Segment Results
  Three Months Ended March 31,2007
    
    %
    
    2006
    
    %($ in thousands)Net revenues
    
    $
    6,760
    
    
    
    100.0
    %
    
    $
    3,407
    
    
    
    100.0
    %Segment operating income
    
    
    3,983
    
    
    
    58.9
    
    
    
    1,650
    
    
    
    48.4
 26




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##### Table of Contents



Net Revenues.
 Segment Operating Income.
 Liquidity and Capital Resources
  As of and for theThree Months Ended March 31,2007
    
    
    2006
    
    
    Change($ in thousands)Net cash provided by operating activities
    
    $
    6,374
    
    
    $
    5,010
    
    
    $
    1,364Net cash used in investing activities
    
    
    (6,932
    )
    
    
    (760
    )
    
    
    (6,172
    )Net cash provided by (used in) financing activities
    
    
    694
    
    
    
    (4,243
    )
    
    
    4,937Effect of exchange rate changes on cash and cash equivalents
    
    
    62
    
    
    
    137
    
    
    
    (75
    )Increase in cash and cash equivalents
    
    
    198
    
    
    
    144
    
    
    
    54Cash and cash equivalents at beginning of period
    
    
    20,873
    
    
    
    20,623
    
    
    
    250Cash and cash equivalents at end of period
    
    
    21,071
    
    
    
    20,767
    
    
    
    304Short-term investments in marketable securities
    
    
    21,851
    
    
    
    
    
    
    
    21,851Total cash, cash equivalents and short-term investments
    
    $
    42,922
    
    
    $
    20,767
    
    
    $
    22,155
      27




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##### Table of Contents



Contractual Cash Obligations and Other Commercial Commitments and Contingencies
  Total at
    
    
    Years Ended December 31,March 31,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2012 and2007
    
    
    2007 (1)
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    ThereafterContractual obligations:Capital lease obligations
    
    $
    37
    
    
    $
    16
    
    
    $
    14
    
    
    $
    7
    
    
    $
    
    
    
    $
    
    
    
    $
    Non-cancelable operating lease
obligations
    
    
    11,282
    
    
    
    2,641
    
    
    
    3,289
    
    
    
    2,798
    
    
    
    1,411
    
    
    
    713
    
    
    
    430Management change commitments*
    
    
    211
    
    
    
    211
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other long-term liabilities
    
    
    10
    
    
    
    5
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    11,540
    
    
    $
    2,873
    
    
    $
    3,308
    
    
    $
    2,805
    
    
    $
    1,411
    
    
    $
    713
    
    
    $
    430
 
 (1)
    
    Includes only the remaining nine 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.  28




---



##### Table of Contents



29




---



##### Table of Contents



Item 3: Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4: Controls and Procedures
     30




---



##### Table of Contents



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;
    
    our ability to bring expenses in line with current revenue levels;
    
    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;
    
    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;
    
    our ability to manage pricing pressure in North America and Europe;
    
    our reliance on our largest customers;
    
    our ability to reaccelerate European sales growth;
    
    the growing competitiveness of our marketplace and our ability to compete therein;
    
    our ability to manage or accelerate our growth and international expansion;
 31




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##### Table of Contents




    
    risks related to foreign currency rate fluctuations;
    
    our ability to integrate successfully the businesses we have recently acquired or may
acquire in the future;
    
    our online business model;
    
    demand for our products and services;
    
    the seasonality of demand for Internet survey solutions and comparison shopping services; and
    
    the strength of our brand.
   
 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
  
 Item 5. Other Information
  32




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##### Table of Contents



Item 6. Exhibits
  Exhibit No.
    
    Description of Exhibits10.70
    
    Amendment No. 1 to the Employment Agreement between Greenfield
Online, Inc., and David St. Pierre, with an effective date of
April 23, 2007 (Filed herewith).31.1
    
    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).
 33




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##### Table of Contents



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

Chief Financial Officer  34




---



##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description of Exhibits10.70
    
    Amendment No. 1 to the Employment Agreement between Greenfield
Online, Inc., and David St. Pierre, with an effective date of
April 23, 2007 (Filed herewith).31.1
    
    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).
 35