EX-99.2 3 c79956exv99w2.htm EXHIBIT 99.2 Filed by Bowne Pure Compliance
Exhibit 99.2
(MONSTER LOGO)
FINANCIAL SUPPLEMENT
December 31, 2008
Monster Worldwide, Inc. (together with its consolidated subsidiaries, the “Company,” “Monster,” “we,” “our” or “us”) provides this supplement to assist investors in evaluating our Company’s financial and operating metrics. We suggest that the notes to this supplement are read in conjunction with the financial tables. The financial information included in this supplement contains certain non-GAAP financial measures. These measures should be considered in addition to results prepared in accordance with GAAP, but are not a substitute for, or superior to, GAAP results. The non-GAAP measures included in this supplement have been reconciled to the most comparable GAAP measure. The Company intends to update the financial supplement on a quarterly basis.

 

 

 

(MONSTER LOGO)
Notes to Financial Supplement
Presentation
Wind-down of Internet Advertising & Fees Tickle Business.
In May 2008, we announced our intentions to wind-down the operations of Tickle, a business included in the Internet Advertising & Fees segment. As a result of this action, we have reclassified our quarterly financial information to reflect the wind-down as discontinued operations in all periods presented. The financial results from continuing operations, presented herein, reflect the results of the remaining and ongoing portion of our business.
Stock Option Investigation
On June 12, 2006, we announced that a committee of independent directors of the Board of Directors (the “Special Committee”) assisted by independent legal counsel and outside accounting experts were conducting an independent investigation to review our historical stock option grant practices. On December 13, 2006, we restated our historical financial statements to record additional non-cash stock based compensation charges and the related income tax effects based on the findings of the Special Committee. We recorded these non-cash compensation charges as a component of “Corporate expenses” and did not allocate these non-cash costs to our reportable segments. No such amounts were recorded beyond the 2005 periods, as we accelerated the vesting of all unvested outstanding stock options as of December 31, 2005 to mitigate compensation expense we would have had to record upon the effectiveness of SFAS 123R . The restatement did not affect our statements of operations or segment results for periods subsequent to December 31, 2005.
Provision for Legal Settlements, net
On July 30, 2008, Monster entered into a Memorandum of Understanding (“MOU”) with the class representative and the individual defendants in the shareholder securities class action that memorializes the terms pursuant to which the parties intend, subject to Court approval, to settle the securities class action. As full settlement of the claims asserted in the securities class action, the MOU provides for a payment to the class of $47.5 million the cost of which to the Company will be approximately $25.1 million net of its insurance recovery and a payment by another defendant. Also recorded in the provision for legal settlements, net in the second quarter of 2008, was approximately $15.0 million for estimated expenses relating to the other outstanding litigation in connection with Monster’s historical stock option grant practices. On October 2, 2008, the Supreme Court of the State of New York, New York County, granted final approval of the settlement agreement.

 

2

 

Professional Fees
For the three months ended December 31, 2008, we recorded a $6.7 million credit to professional fees as a direct result of payments from our former chief executive officer, partially offsetting payments for ongoing matters relating to our historical stock option grant practices. For the year ended December 31, 2008, we recorded $4.4 million of professional fees as a direct result of ongoing matters relating to our historical stock option grant practices, partially offset by payments from our former chief executive officer. In addition, approximately $1.4 million and $19.1 million of professional fees related to our historical stock option grant practices were included in the three months and year ended December 31, 2007, respectively. These costs primarily relate to legal fees and are a component of “office and general” in our consolidated statement of operations. In addition, we have incurred costs related to litigation, an informal investigation by the SEC and an investigation by the United States Attorney for the Southern District of New York.
We expect to continue to incur significant professional fees related to ongoing matters relating to our historical stock option grant practices. While we cannot quantify or estimate the timing of these costs throughout 2009, we expect to continue to incur significant professional fees related to legal fees paid on behalf of former employees and former members of senior management in connection with ongoing matters relating to our historical stock option grant practices.
Executive Severance
Included in our operating results for the year ended December 31, 2007, is approximately $15.8 million of severance charges related to executive officers who departed the Company in the second quarter of 2007. Of the $15.8 million, approximately $12.8 million is non-cash and relates to the acceleration of equity awards. The severance is recorded as a component of “salaries and related” and the acceleration of equity awards is recorded as a component of “amortization of restricted stock and RSU’s” in our Financial Supplement.
Restructuring Actions
On July 30, 2007, we announced a series of strategic restructuring actions that are intended to position us for sustainable long-term growth in the rapidly evolving global online recruitment advertising industry.
The restructuring plan included an anticipated reduction in the current workforce by approximately 800 associates, or 15% of our full-time staff, through 2008. Subsequent to the announcement of this plan, the Company made a strategic decision to in-source customer service and therefore the current reduction will be approximately 700 associates. The plan also included fixed asset write-offs, accelerated depreciation for assets to be phased out, costs relating to the consolidation of certain office facilities, contract termination costs, relocation costs and professional fees. The restructuring plan arose out of a review commencing in the second quarter of 2007 by our current executive management team of our cost structure and organizational structure. The restructuring is intended to realign the structure to permit investment in key areas that will improve the customer experience and foster revenue growth and long-term operating margin expansion.
For the three months and year ended December 31, 2008, we recorded $3.2 million and $16.4 million of restructuring costs, primarily related to severance. For the three months and year ended December 31, 2007, we recorded $5.4 million and $16.6 million of restructuring costs, respectively.

 

3

 

Security Breach
In August 2007, we announced a security breach related to unauthorized access to our resume database. We took remediation measures, including the procurement of the capability to assist any potentially affected customers. For the three months ended December 31, 2007, we recorded $3.4 million related to the breach.
Deferred revenue related to acquisitions
During the fourth quarter of 2008, we completed the acquisition of ChinaHR. In accordance with existing purchase accounting rules, we are required to write down a portion of ChinaHR’s deferred revenue to its fair value. Consequently, in post acquisition periods, we do not recognize the full amount of this deferred revenue. When measuring the performance of our business, however, we add back the revenue resulting from this fair value adjustment as we believe that the inclusion of this revenue provides useful information to our management, as well as to investors. For the three months ended December 31, 2008, the fair value adjustment to ChinaHR’s deferred revenue was $2.2 million.
Reclassifications
Certain reclassifications of prior year amounts have been made for consistent presentation.
Non-GAAP financial measures
Monster Worldwide, Inc. (the “Company”) has provided certain non-GAAP financial information as additional information for its operating results. These measures are not in accordance with, or an alternative for, generally accepted accounting principles (“GAAP”) and may be different from non-GAAP measures reported by other companies. The Company believes that its presentation of non-GAAP measures provides useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations.
Non-GAAP operating expenses, operating income, operating margin, income from continuing operations and diluted earnings per share all exclude certain pro forma adjustments including: ongoing costs associated with the stock option investigations, related litigation and potential fines or settlements; severance costs for former executive officers incurred in the second quarter of 2007; costs related to the measures taken by the Company in response to a security breach in August 2007; and the strategic restructuring actions initiated in the third quarter of 2007. The Company uses these non-GAAP measures for reviewing the ongoing results of the Company’s core business operations and in certain instances, for measuring performance under certain of the Company’s incentive compensation plans. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.
Operating income before depreciation and amortization (“OIBDA”) is defined as income from operations before depreciation, amortization of intangible assets, amortization of stock based compensation and non-cash costs incurred in connection with the Company’s restructuring program. The Company considers OIBDA to be an important indicator of its operational strength. This measure eliminates the effects of depreciation, amortization of intangible assets, amortization of stock based compensation and non-cash restructuring costs from period to period, which the Company believes is useful to management and investors in evaluating its operating performance. OIBDA is a non-GAAP measure and may not be comparable to similarly titled measures reported by other companies.
Free cash flow is defined as cash flow from operating activities less capital expenditures. Free cash flow is considered a liquidity measure and provides useful information about the Company’s ability to generate cash after investments in property and equipment. Free cash flow reflected herein is a non-GAAP measure and may not be comparable to similarly titled measures reported by other companies. Free cash flow does not reflect the total change in the Company’s cash position for the period and should not be considered a substitute for such a measure.

 

4

 

Net cash and securities is defined as cash and cash equivalents plus short-term and long-term marketable securities, less total debt. The Company considers net cash and securities to be an important measure of liquidity and an indicator of its ability to meet its ongoing obligations. The Company also uses net cash and securities, among other measures, in evaluating its choices for capital deployment. Net cash and securities presented herein is a non-GAAP measure and may not be comparable to similarly titled measures used by other companies.
Selected financial ratios
We have included selected financial ratios in this financial supplement in order to assist investors to further evaluate our business. Our definitions and calculations are as follows:
Annualized return on equity
Annualized return on equity measures our effectiveness and ability to generate future profitability on the earnings that we retain. In addition, the ratio is a strong indicator of how well we utilize shareholders’ investments in our business. We calculate annualized return on equity as follows:
Annualized net income / Average stockholders’ equity
Book value per share
Book value per share is a market value indicator that we utilize when analyzing our stockholders’ equity. We calculate book value per share as follows:
Stockholders’ equity / Total shares outstanding
Cash and marketable securities per share
We calculate cash and marketable securities per share as follows:
(Cash and cash equivalents + Current marketable securities + Non-current marketable securities) / Total shares outstanding
Net cash and securities
We calculate cash and marketable securities per share as follows:
(Cash and cash equivalents + available-for-sale securities, current, + available-for-sale securities, non-current – borrowings on credit facility short-term – current portion of long-term debt – long-term debt, less current portion)

 

5

 

Monster Worldwide, Inc.
Statements of Operations
(unaudited, in thousands, except per share amounts)
                                                                                         
    Trended Quarterly Data     Year to Date Data  
Summary P&L Information   Q4 2006     Q1 2007     Q2 2007     Q3 2007     Q4 2007     Q1 2008     Q2 2008     Q3 2008     Q4 2008     12M 2007     12M 2008  
 
                                                                                        
Monster Careers
   $ 258,260     $ 290,223     $ 291,326     $ 296,996     $ 316,877     $ 336,810     $ 320,953     $ 297,606     $ 257,931     $ 1,195,422     $ 1,213,300  
Internet Advertising & Fees
     31,093       31,607       32,659       33,146       30,970       29,662       33,341       34,583       32,741       128,382       130,327  
 
                                                                  
Revenue
     289,353       321,830       323,985       330,142       347,847       366,472       354,294       332,189       290,672       1,323,804       1,343,627  
 
                                                                                        
Salary and related
     110,773       117,002       127,839       123,965       127,666       135,115       127,346       128,904       123,211       496,472       514,576  
Office and general
     48,924       58,750       51,856       57,621       56,708       61,710       61,754       57,124       44,091       224,935       224,679  
Marketing and promotion
     60,933       72,509       73,568       71,584       76,818       111,854       68,976       57,684       52,684       294,479       291,198  
Provision for legal settlements, net
     —       —       —       —       —       —       40,100       —       —       —       40,100  
Restructuring and other special charges
     —       —       —       11,155       5,442       6,927       2,732       3,592       3,156       16,597       16,407  
Depreciation expense
     7,448       7,860       9,350       10,408       10,589       10,803       12,330       13,336       14,761       38,207       51,230  
Amortization of restricted stock and RSU Plan
     2,424       4,176       17,069       2,871       3,623       5,206       8,351       7,437       7,046       27,739       28,040  
Non-cash stock option expense
     —       186       47       104       105       127       182       165       178       442       652  
Amortization of intangibles
     1,568       1,394       1,413       1,437       1,457       1,386       1,274       1,374       2,756       5,701       6,790  
 
                                                                  
Operating expenses
     232,070       261,877       281,142       279,145       282,408       333,128       323,045       269,616       247,883       1,104,572       1,173,672  
 
                                                                                        
Operating income
     57,283       59,953       42,843       50,997       65,439       33,344       31,249       62,573       42,789       219,232       169,955  
Interest and other, net(1)
     6,504       5,413       6,903       6,507       6,799       7,383       3,057       5,283       1,560       25,622       17,283  
 
                                                                  
Income from cont. operations, pre-tax
     63,787       65,366       49,746       57,504       72,238       40,727       34,306       67,856       44,349       244,854       187,238  
 
                                                                                        
Income taxes
     22,307       23,090       17,587       20,474       25,310       15,143       12,153       22,734       14,880       86,461       64,910  
Losses in equity interests, net
     (1,517 )     (1,420 )     (2,966 )     (3,074 )     (838 )     (1,822 )     (3,592 )     (2,086 )     (339 )     (8,298 )     (7,839 )
 
                                                                  
Income from continuing operations
     39,963       40,856       29,193       33,956       46,090       23,762       18,561       43,036       29,130       150,095       114,489  
 
                                                                                        
Income (loss) from disc. operations, net of tax(2)
     (888 )     (1,374 )     (577 )     (655 )     (1,090 )     (1,171 )     12,269       (258 )     (536 )     (3,696 )     10,304  
 
                                                                  
 
                                                                                        
Net income (loss)
   $ 39,075     $ 39,482     $ 28,616     $ 33,301     $ 45,000     $ 22,591     $ 30,830     $ 42,778     $ 28,594     $ 146,399     $ 124,793  
 
                                                                  
 
                                                                                        
Basic earnings (loss) per share:
                                                                                        
Income from continuing operations
   $ 0.31     $ 0.32     $ 0.22     $ 0.26     $ 0.37     $ 0.19     $ 0.15     $ 0.36     $ 0.25     $ 1.17     $ 0.95  
 
                                                                  
Net income (loss)
   $ 0.30     $ 0.30     $ 0.22     $ 0.26     $ 0.36     $ 0.18     $ 0.26     $ 0.36     $ 0.24     $ 1.14     $ 1.04  
 
                                                                  
 
                                                                                        
Diluted earnings (loss) per share:
                                                                                        
Income from continuing operations
   $ 0.30     $ 0.31     $ 0.22     $ 0.26     $ 0.36     $ 0.19     $ 0.15     $ 0.36     $ 0.24     $ 1.15     $ 0.94  
 
                                                                  
Net income (loss)
   $ 0.30     $ 0.30     $ 0.21     $ 0.25     $ 0.36     $ 0.18     $ 0.25     $ 0.35     $ 0.24     $ 1.12     $ 1.03  
 
                                                                  
 
                                                                                        
Weighted avg. shares outstanding:
                                                                                        
Basic shares
     128,489       129,653       130,542       129,499       125,504       122,711       120,885       120,057       118,601       128,785       120,557  
Diluted shares
     131,209       132,464       133,121       130,757       126,704       123,332       121,541       120,722       119,380       130,755       121,167  
 
                                                                                        
Global employees (ones)
     4,813       5,285       5,442       5,116       5,112       5,164       5,396       5,669       6,961       5,112       6,961  
Annualized revenue per average employee
   $ 246.2     $ 255.0     $ 241.6     $ 250.2     $ 272.1     $ 285.3     $ 268.4     $ 240.2     $ 184.1     $ 252.7     $ 231.8  
     
(1) -  Interest and other, net includes a $1.3 million gain in the fourth quarter of 2006 related to early repayment of a note associated with a disposed company.
 
(2) -  Loss from discontinued operations, net of tax in the second quarter of 2008 includes tax benefits of $29.4 million and long-lived asset write-offs of $13.1 million related to the wind-down of the Tickle business included in our Internet Advertising & Fees business segment.

 

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Monster Worldwide, Inc.
Trailing Twelve Months Statistics — Statements of Operations
(unaudited, in thousands, except per share amounts)
                                                                         
Summary P&L Information   Q4 2006     Q1 2007     Q2 2007     Q3 2007     Q4 2007     Q1 2008     Q2 2008     Q3 2008     Q4 2008  
 
                                                                        
Monster Careers
   $ 964,331     $ 1,029,965     $ 1,084,101     $ 1,136,805     $ 1,195,422     $ 1,242,009     $ 1,271,636     $ 1,272,246     $ 1,213,300  
Internet Advertising & Fees
     115,855       122,785       127,303       128,505       128,382       126,437       127,119       128,556       130,327  
 
                                                      
Revenue
     1,080,186       1,152,750       1,211,404       1,265,310       1,323,804       1,368,446       1,398,755       1,400,802       1,343,627  
 
                                                                        
Salary and related
     396,194       424,621       458,256       479,579       496,472       514,585       514,092       519,031       514,576  
Office and general
     158,728       181,079       200,719       217,151       224,935       227,895       237,793       237,296       224,679  
Marketing and promotion
     251,611       262,872       269,446       278,594       294,479       333,824       329,232       315,332       291,198  
Provision for legal settlements, net
     —       —       —       —       —       —       40,100       40,100       40,100  
Restructuring and other special charges
     —       —       —       11,155       16,597       23,524       26,256       18,693       16,407  
Depreciation expense
     28,757       30,449       31,595       35,066       38,207       41,150       44,130       47,058       51,230  
Amortization of restricted stock and RSU Plan
     10,671       12,913       26,612       26,540       27,739       28,769       20,051       24,617       28,040  
Non-cash stock option expense
     148       239       233       337       442       383       518       579       652  
Amortization of intangibles
     7,671       6,692       5,838       5,812       5,701       5,693       5,554       5,491       6,790  
 
                                                      
Operating expenses
     853,780       918,865       992,699       1,054,234       1,104,572       1,175,823       1,217,726       1,208,197       1,173,672  
 
                                                                        
Operating income
     226,406       233,885       218,705       211,076       219,232       192,623       181,029       192,605       169,955  
Interest and other, net
     19,042       21,095       23,943       25,327       25,622       27,592       23,746       22,522       17,283  
 
                                                      
Income from cont. operations, pre-tax
     245,448       254,980       242,648       236,403       244,854       220,215       204,775       215,127       187,238  
 
                                                                        
Income taxes
     86,517       89,289       85,246       83,458       86,461       78,514       73,080       75,340       64,910  
Losses in equity interests, net
     (7,096 )     (7,275 )     (7,957 )     (8,977 )     (8,298 )     (8,700 )     (9,326 )     (8,338 )     (7,839 )
 
                                                      
Income from continuing operations
     151,835       158,416       149,445       143,968       150,095       133,001       122,369       131,449       114,489  
 
                                                                        
Income (loss) from disc. operations, net of tax(1)
     (114,698 )     (124,059 )     (126,089 )     (3,494 )     (3,696 )     (3,493 )     9,353       9,750       10,304  
 
                                                      
 
                                                                        
Net income
   $ 37,137     $ 34,357     $ 23,356     $ 140,474     $ 146,399     $ 129,508     $ 131,722     $ 141,199     $ 124,793  
 
                                                      
 
                                                                        
Basic earnings per share:
                                                                        
Income from continuing operations
   $ 1.19     $ 1.23     $ 1.16     $ 1.11     $ 1.17     $ 1.05     $ 0.98     $ 1.07     $ 0.95  
 
                                                      
Net income
   $ 0.29     $ 0.27     $ 0.18     $ 1.08     $ 1.14     $ 1.02     $ 1.06     $ 1.15     $ 1.04  
 
                                                      
 
                                                                        
Diluted earnings per share:
                                                                        
Income from continuing operations
   $ 1.16     $ 1.20     $ 1.13     $ 1.09     $ 1.15     $ 1.04     $ 0.97     $ 1.07     $ 0.94  
 
                                                      
Net income
   $ 0.28     $ 0.26     $ 0.18     $ 1.07     $ 1.12     $ 1.01     $ 1.05     $ 1.15     $ 1.03  
 
                                                      
 
                                                                        
Weighted avg. shares outstanding:
                                                                        
Basic shares
     128,077       128,794       129,292       129,546       128,785       127,064       124,650       122,289       120,557  
Diluted shares
     131,247       131,627       131,905       131,888       130,755       128,479       125,584       123,075       121,167  
     
(1) -  Loss from discontinued operations, net of tax in the third quarter of 2006 includes the write-off of $133.0 million of goodwill related to our former TMP Worldwide Advertising & Communications business in North America.

 

7

 

Monster Worldwide, Inc.
Statements of Cash Flows
(unaudited, in thousands, except per share amounts)
                                                                                         
                                                                            Year to Date Data  
    Q4 2006     Q1 2007     Q2 2007     Q3 2007     Q4 2007     Q1 2008     Q2 2008     Q3 2008     Q4 2008     12M 2007     12M 2008  
Cash flows provided by operating activities:
                                                                                        
Net income (loss)
   $ 39,075     $ 39,482     $ 28,616     $ 33,301     $ 45,000     $ 22,591     $ 30,830     $ 42,778     $ 28,594     $ 146,399     $ 124,793  
 
                                                                  
Adjustments to reconcile net income to cash provided by operating activities:
                                                                                        
(Income) loss from discontinued operations, net of tax
     888       1,374       577       655       1,090       1,171       (12,269 )     258       536       3,696       (10,304 )
Depreciation and amortization of intangibles
     9,016       9,254       10,763       11,845       12,046       12,189       13,604       14,710       17,517       43,908       58,020  
Provision for legal settlements, net
     —       —       —       —       —       —       40,100       —       —       —       40,100  
Receipts and payments for legal settlements, net
     —       —       —       —       —       —       —       5,700       (35,587 )     —       (29,887 )
Provision for doubtful accounts
     2,550       2,483       2,630       3,340       4,453       3,564       3,207       4,403       5,057       12,906       16,231  
Non-cash compensation
     2,424       4,362       17,116       2,975       3,728       6,495       8,533       7,602       7,223       28,181       29,853  
Deferred income taxes
     2,267       2,100       (7,605 )     2,808       (2,762 )     (7,319 )     (12,263 )     12,440       14,572       (5,459 )     7,430  
Loss (gain) on disposal of assets
     —       —       (572 )     (2 )     3       725       1,360       924       —       (571 )     3,009  
Loss in equity interests and other, net
     1,521       1,420       2,966       3,074       838       1,822       3,592       2,086       1,263       8,298       8,763  
Changes in assets and liabilities, net of business combinations:
                                                                                        
Accounts receivable
     (122,790 )     25,170       (4,804 )     13,699       (101,843 )     37,848       44,812       49,231       (19,371 )     (67,778 )     112,520  
Prepaid and other
     2,465       (2 )     (4,202 )     (8,007 )     (12,766 )     1,949       17,149       2,522       1,548       (24,977 )     23,168  
Deferred revenue
     97,440       5,691       2,360       (17,515 )     89,650       (2,458 )     (51,465 )     (58,644 )     (5,732 )     80,186       (118,299 )
Accounts payable, accrued expenses and other liabilities
     11,322       (8,950 )     7,163       26,536       27,091       340       (13,937 )     8,673       (27,790 )     51,840       (32,714 )
Net cash provided by (used for) operating activities of discontinued operations
     (1,619 )     (3,385 )     (1,847 )     126       (2,344 )     (560 )     (2,569 )     (962 )     (2,758 )     (7,450 )     (6,849 )
 
                                                                  
Total adjustments
     5,484       39,517       24,545       39,534       19,184       55,766       39,854       48,943       (43,522 )     122,780       101,041  
 
                                                                  
Net cash provided by operating activities
     44,559       78,999       53,161       72,835       64,184       78,357       70,684       91,721       (14,928 )     269,179       225,834  
 
                                                                  
 
Cash flows provided by (used for) investing activities:
                                                                                        
Capital expenditures
     (16,882 )     (21,449 )     (15,515 )     (10,596 )     (16,240 )     (20,559 )     (29,654 )     (21,011 )     (22,403 )     (63,800 )     (93,627 )
Purchase of marketable securities
     (373,959 )     (365,031 )     (317,555 )     (327,250 )     (415,025 )     (149,249 )     (7,633 )     (25,265 )     (1,785 )     (1,424,861 )     (183,932 )
Sale and maturities of marketable securities
     342,351       311,662       277,903       446,418       478,068       414,453       21,852       66,000       36,981       1,514,051       539,286  
Payments for acquisitions and intangible assets, net of cash acquired
     (688 )     (1,664 )     (142 )     (133 )     (610 )     (61,567 )     —       (64,628 )     (166,641 )     (2,549 )     (292,836 )
Dividends received from unconsolidated investee
     —       —       —       —       —       —       1,011       —       —       —       1,011  
Cash funded to equity investee
     (2,800 )     (2,500 )     (1,600 )     (5,900 )     —       (5,000 )     —       —       (1,402 )     (10,000 )     (6,402 )
Net cash used for investing activities of discontinued operations
     (356 )     (163 )     (87 )     (5 )     —       —       —       —       —       (255 )     —  
 
                                                                  
Net cash provided by (used for) investing activities
     (52,334 )     (79,145 )     (56,996 )     102,534       46,193       178,078       (14,424 )     (44,904 )     (155,250 )     12,586       (36,500 )
 
                                                                  
 
Cash flows provided by (used for) financing activities:
                                                                                        
Proceeds from borrowings on credit facility short-term
     —       —       —       —       —       —       —       247,000       4,971       —       251,971  
Payments on borrowings on credit facility short-term
     —       —       —       —       —       —       —       —       (197,893 )     —       (197,893 )
Repurchase of common stock
     (318 )     (3,326 )     (6,716 )     (154,692 )     (97,761 )     (79,469 )     (6,858 )     (41,806 )     (32 )     (262,495 )     (128,165 )
Net borrowings (payments) under capital lease obligations and other debt
     322       —       —       (58 )     (42 )     (80 )     (67 )     (9 )     (15 )     (100 )     (171 )
Payments on acquisition debt
     440       (16,310 )     (5,552 )     —       (1,500 )     —       —       —       —       (23,362 )     —  
Proceeds from the exercise of employee stock options
     1,038       43,395       10,006       651       838       418       628       110       305       54,890       1,461  
Excess tax benefits from (provisions for) stock-based compensation
     632       6,486       5,857       1,611       (155 )     (568 )     688       861       22       13,799       1,003  
 
                                                                  
Net cash provided by (used for) financing activities
     2,114       30,245       3,595       (152,488 )     (98,620 )     (79,699 )     (5,609 )     206,156       (192,642 )     (217,268 )     (71,794 )
 
                                                                  
 
                                                                                        
Effects of exchange rates on cash
     1,553       963       1,037       3,795       772       10,256       (1,933 )     (13,303 )     (20,044 )     6,567       (25,024 )
 
                                                                                        
Net increase (decrease) in cash and cash equivalents
     (4,108 )     31,062       797       26,676       12,529       186,992       48,718       239,670       (382,864 )     71,064       92,516  
Cash and cash equivalents, beginning of period
     62,788       58,680       89,742       90,539       117,215       129,744       316,736       365,454       605,124       58,680       129,744  
 
                                                                  
Cash and cash equivalents, end of period
   $ 58,680     $ 89,742     $ 90,539     $ 117,215     $ 129,744     $ 316,736     $ 365,454     $ 605,124     $ 222,260     $ 129,744     $ 222,260  
 
                                                                  
 
                                                                                        
Non — GAAP Free cash flow(1):
                                                                                        
Net cash provided by operating activities
   $ 44,559     $ 78,999     $ 53,161     $ 72,835     $ 64,184     $ 78,357     $ 70,684     $ 91,721     $ (14,928 )   $ 269,179     $ 225,834  
Less: Capital expenditures
     (16,882 )     (21,449 )     (15,515 )     (10,596 )     (16,240 )     (20,559 )     (29,654 )     (21,011 )     (22,403 )     (63,800 )     (93,627 )
 
                                                                  
Free cash flow
   $ 27,677     $ 57,550     $ 37,646     $ 62,239     $ 47,944     $ 57,798     $ 41,030     $ 70,710     $ (37,331 )   $ 205,379     $ 132,207  
 
                                                                  
     
(1)  -  See notes to financial supplement for further explanation of non-GAAP measures.

 

8

 

Monster Worldwide, Inc.
Consolidated Condensed Balance Sheets
(unaudited, in thousands, except selected financial ratios)
                                                                         
    Trended Quarterly Data  
    Q4 2006     Q1 2007     Q2 2007     Q3 2007     Q4 2007     Q1 2008     Q2 2008     Q3 2008     Q4 2008  
ASSETS
                                                                        
 
                                                                        
Current assets:
                                                                        
Cash and cash equivalents
   $ 58,680     $ 89,742     $ 90,539     $ 117,215       129,744       316,736     $ 365,454     $ 605,124       222,260  
Available-for-sale securities, current
     537,893       591,262       630,914       511,746       448,703       79,236       68,579       33,823       1,425  
Net Accounts Receivable
     444,747       417,329       419,033       401,994       499,854       458,447       410,427       358,214       376,720  
Prepaid and other
     82,488       89,650       100,233       101,950       106,664       97,929       121,093       111,754       82,415  
 
                                                      
Total current assets
     1,123,808       1,187,983       1,240,719       1,132,905       1,184,965       952,348       965,553       1,108,915       682,820  
 
                                                      
 
                                                                        
Available-for-sale securities, non-current
     —       —       —       —       —       102,716       99,330       93,728       90,347  
Property and equipment, net
     97,286       110,875       117,613       117,802       123,397       138,182       149,048       152,352       161,282  
Goodwill
     589,041       590,553       595,850       614,437       615,334       702,598       690,161       707,164       894,546  
Intangibles, net
     39,320       38,191       37,012       36,804       35,351       34,308       32,696       36,694       52,335  
Investment in unconsolidated affiliates
     59,625       57,748       54,782       51,708       50,871       49,049       44,446       42,360       1,843  
Other assets
     43,232       55,540       48,360       52,513       53,162       67,218       70,475       61,761       33,417  
Non-current assets of discontinued operations
     17,491       16,925       16,233       15,461       14,730       13,959       —       —       —  
 
                                                      
Total assets
   $ 1,969,803     $ 2,057,815     $ 2,110,569     $ 2,021,630       2,077,810     $ 2,060,378     $ 2,051,709     $ 2,202,974       1,916,590  
 
                                                      
 
                                                                        
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                                                        
 
                                                                        
Current liabilities:
                                                                        
Accounts payable, accrued expenses and other
   $ 358,850     $ 279,032     $ 278,553     $ 298,023       304,146       297,932     $ 321,077     $ 328,546       254,407  
Deferred revenue
     444,145       449,836       452,196       434,682       524,331       521,873       470,408       411,764       414,312  
Borrowings on credit facilities short-term
     —       —       —       —       —       —       —       247,000       54,971  
Current portion of long-term debt
     23,249       7,074       1,660       1,684       184       158       142       26       18  
 
                                                      
Total current liabilities
     826,244       735,942       732,409       734,389       828,661       819,963       791,627       987,336       723,708  
 
                                                      
 
                                                                        
Non-current income taxes payable
     —       84,480       89,910       94,418       111,108       116,376       119,360       115,318       119,951  
Other liabilities
     28,344       34,590       25,473       25,313       17,033       16,077       17,323       23,682       25,648  
Long-term debt, less current portion
     415       395       312       261       231       177       126       17       10  
Non-current liabilities of discontinued operations
     5,115       4,906       4,696       4,486       4,276       4,067       —       —       —  
 
                                                      
Total liabilities
     860,118       860,313       852,800       858,867       961,309       956,660       928,436       1,126,353       869,317  
 
                                                      
 
                                                                        
Common stock and class B common stock
     131       131       131       131       133       133       134       134       133  
Additional paid-in capital
     1,636,023       1,687,407       1,713,670       1,562,646       1,468,808       1,395,991       1,397,281       1,363,655       1,367,373  
Accumulated other comprehensive income
     87,632       87,708       93,096       115,813       118,387       155,830       143,264       87,460       25,801  
Retained deficit
     (614,101 )     (577,744 )     (549,128 )     (515,827 )     (470,827 )     (448,236 )     (417,406 )     (374,628 )     (346,034 )
 
                                                      
Total stockholders’ equity
     1,109,685       1,197,502       1,257,769       1,162,763       1,116,501       1,103,718       1,123,273       1,076,621       1,047,273  
 
                                                      
 
                                                                        
Total liabilities and stockholders’ equity
   $ 1,969,803     $ 2,057,815     $ 2,110,569     $ 2,021,630       2,077,810     $ 2,060,378     $ 2,051,709     $ 2,202,974       1,916,590  
 
                                                      
 
                                                                        
Selected Financial Ratios(1)
                                                                        
- Annualized return on equity
     14.5 %     13.7 %     9.3 %     11.0 %     15.8 %     8.1 %     11.1 %     15.6 %     10.8 %
- Book value per share
   $ 8.63     $ 9.19     $ 9.60     $ 9.19     $ 9.02     $ 9.13     $ 9.30     $ 9.08     $ 8.83  
- Cash and marketable securities per share
   $ 4.64     $ 5.23     $ 5.51     $ 4.97     $ 4.67     $ 4.13     $ 4.42     $ 6.18     $ 2.65  
- Net cash and securities
   $ 572,909     $ 673,535     $ 719,481     $ 627,016     $ 578,032     $ 498,353     $ 533,095     $ 485,632     $ 259,033  
     
(1)  -  See notes to financial supplement for definitions and calculations of selected financial ratios.

 

9

 

Monster Worldwide, Inc.
Segment Information and Margin Analysis — Non-GAAP
(unaudited, in thousands)
                                                                                         
    Trended Quarterly Data     Year to Date Data  
    Q4 2006     Q1 2007     Q2 2007     Q3 2007     Q4 2007     Q1 2008     Q2 2008     Q3 2008     Q4 2008     12M 2007     12M 2008  
 
                                                                                        
Segment OIBDA(1):
                                                                                        
Monster Careers — North America
   $ 64,984     $ 71,150     $ 60,845     $ 57,589     $ 60,410     $ 47,602     $ 67,636     $ 52,516     $ 44,138     $ 249,994     $ 211,892  
Monster Careers — International
     13,001       12,594       17,362       12,896       29,980       16,662       40,361       39,060       23,833       72,832       119,916  
 
                                                                  
Monster Careers OIBDA(1)
     77,985       83,744       78,207       70,485       90,390       64,264       107,997       91,576       67,971       322,826       331,808  
 
                                                                                        
Internet Advertising & Fees OIBDA(1)
     11,553       7,470       7,438       5,316       3,118       792       7,508       7,425       6,293       23,342       22,018  
 
                                                                  
 
                                                                                        
Total Monster OIBDA(1)
   $ 89,538     $ 91,214     $ 85,645     $ 75,801     $ 93,508     $ 65,056     $ 115,505     $ 99,001     $ 74,264     $ 346,168     $ 353,826  
 
                                                                  
 
                                                                                        
Corporate expenses before D&A(1)
   $ (20,815 )   $ (17,645 )   $ (14,923 )   $ (9,917 )   $ (11,032 )   $ (12,104 )   $ (61,196 )   $ (13,192 )   $ (5,810 )   $ (53,517 )   $ (92,302 )
 
                                                                  
 
                                                                                        
Proforma operating income(1):
                                                                                        
Monster Careers — North America
   $ 59,853     $ 65,878     $ 55,029     $ 59,430     $ 56,482     $ 42,955     $ 59,335     $ 43,771     $ 34,314     $ 236,819     $ 180,375  
Monster Careers — International
     9,658       7,961       12,055       13,589       28,699       12,945       33,316       32,467       17,711       62,304       96,439  
 
                                                                  
Monster Careers Proforma operating income(1)
     69,511       73,839       67,084       73,019       85,181       55,900       92,651       76,238       52,025       299,123       276,814  
 
                                                                                        
Internet Advertising & Fees ProForma operating income (loss)(1)
     10,623       6,062       5,679       5,404       2,658       (609 )     4,994       4,977       3,745       19,803       13,107  
 
                                                                  
 
                                                                                        
Total Monster Proforma income(1)
   $ 80,134     $ 79,901     $ 72,763     $ 78,423     $ 87,839     $ 55,291     $ 97,645     $ 81,215     $ 55,770     $ 318,926     $ 289,921  
 
                                                                  
 
                                                                                        
Corporate Proforma expenses(1)
   $ (9,285 )   $ (10,121 )   $ (8,778 )   $ (8,046 )   $ (12,177 )   $ (11,586 )   $ (19,308 )   $ (11,175 )   $ (14,294 )   $ (39,122 )   $ (56,363 )
 
                                                                  
 
                                                                                        
Segment operating income:(1)
                                                                                        
Monster Careers — North America
   $ 59,853     $ 65,878     $ 54,579     $ 51,455     $ 52,950     $ 39,701     $ 58,409     $ 43,120     $ 34,025     $ 224,862     $ 175,255  
Monster Careers — International
     9,658       7,961       12,055       7,344       24,753       9,643       31,916       30,230       12,938       52,113       84,727  
 
                                                                  
Monster Careers operating income
     69,511       73,839       66,634       58,799       77,703       49,344       90,325       73,350       46,963       276,975       259,982  
 
                                                                                        
Internet Advertising & Fees operating income (loss)
     10,623       6,062       5,679       3,487       1,383       (1,431 )     4,656       4,726       3,715       16,611       11,666  
 
                                                                  
 
                                                                                        
Total Monster operating income
   $ 80,134     $ 79,901     $ 72,313     $ 62,286     $ 79,086     $ 47,913     $ 94,981     $ 78,076     $ 50,678     $ 293,586     $ 271,648  
 
                                                                  
 
                                                                                        
Corporate expenses
   $ (22,851 )   $ (19,948 )   $ (29,470 )   $ (11,289 )   $ (13,647 )   $ (14,569 )   $ (63,732 )   $ (15,503 )   $ (7,889 )   $ (74,354 )   $ (101,693 )
 
                                                                  
 
                                                                                        
Margin Analysis:
                                                                                        
 
                                                                                        
Monster Careers — North America OIBDA margin
     38.6 %     38.7 %     34.9 %     32.8 %     34.8 %     25.9 %     41.2 %     33.8 %     32.7 %     35.3 %     33.2 %
Monster Careers — North America Proforma operating margin
     35.6 %     35.8 %     31.5 %     33.9 %     32.5 %     23.4 %     36.1 %     28.2 %     25.4 %     33.5 %     28.3 %
Monster Careers — North America operating margin
     35.6 %     35.8 %     31.3 %     29.4 %     30.5 %     21.6 %     35.6 %     27.8 %     25.2 %     31.8 %     27.5 %
 
                                                                                        
Monster Careers — International OIBDA margin
     14.5 %     11.9 %     14.9 %     10.6 %     20.9 %     10.9 %     25.8 %     27.4 %     19.4 %     14.9 %     20.8 %
Monster Careers — International Proforma operating margin
     10.7 %     7.5 %     10.3 %     11.2 %     20.0 %     8.4 %     21.3 %     22.8 %     14.2 %     12.8 %     16.7 %
Monster Careers — International operating margin
     10.7 %     7.5 %     10.3 %     6.0 %     17.3 %     6.3 %     20.4 %     21.2 %     10.5 %     10.7 %     14.7 %
 
                                                                                        
Monster Careers OIBDA margin
     30.2 %     28.9 %     26.8 %     23.7 %     28.5 %     19.1 %     33.6 %     30.8 %     26.4 %     27.0 %     27.3 %
Monster Careers Proforma operating margin
     26.9 %     25.4 %     23.0 %     24.6 %     26.9 %     16.6 %     28.9 %     25.6 %     20.0 %     25.0 %     22.8 %
Monster Careers operating margin
     26.9 %     25.4 %     22.9 %     19.8 %     24.5 %     14.7 %     28.1 %     24.6 %     18.2 %     23.2 %     21.4 %
 
                                                                                        
Internet Advertising & Fees OIBDA margin
     37.2 %     23.6 %     22.8 %     16.0 %     10.1 %     2.7 %     22.5 %     21.5 %     19.2 %     18.2 %     16.9 %
Internet Advertising & Fees Proforma operating margin
     34.2 %     19.2 %     17.4 %     16.3 %     8.6 %     -2.1 %     15.0 %     14.4 %     11.4 %     15.4 %     10.1 %
Internet Advertising & Fees operating margin
     34.2 %     19.2 %     17.4 %     10.5 %     4.5 %     -4.8 %     14.0 %     13.7 %     11.3 %     12.9 %     9.0 %
     
(1)  -  See notes to financial supplement for further explanation of non-GAAP measures.

 

10

 

Monster Worldwide, Inc.
Statements of Operations
(unaudited)
                                                                                         
    Trended Quarterly Data     Year to Date Data  
Summary P&L Information   Q4 2006     Q1 2007     Q2 2007     Q3 2007     Q4 2007     Q1 2008     Q2 2008     Q3 2008     Q4 2008     12M 2007     12M 2008  
 
                                                                                        
Monster Careers
     89.3 %     90.2 %     89.9 %     90.0 %     91.1 %     91.9 %     90.6 %     89.6 %     88.7 %     90.3 %     90.3 %
Internet Advertising & Fees
     10.7 %     9.8 %     10.1 %     10.0 %     8.9 %     8.1 %     9.4 %     10.4 %     11.3 %     9.7 %     9.7 %
 
                                                                  
Revenue
     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %
 
                                                                                        
Salary and related
     38.3 %     36.4 %     39.5 %     37.5 %     36.7 %     36.9 %     35.9 %     38.8 %     42.4 %     37.5 %     38.3 %
Office and general
     16.9 %     18.3 %     16.0 %     17.5 %     16.3 %     16.8 %     17.4 %     17.2 %     15.2 %     17.0 %     16.7 %
Marketing and promotion
     21.1 %     22.5 %     22.7 %     21.7 %     22.1 %     30.5 %     19.5 %     17.4 %     18.1 %     22.2 %     21.7 %
Provision for legal settlements, net
     0.0 %     0.0 %     0.0 %     0.0 %     0.0 %     0.0 %     11.3 %     0.0 %     0.0 %     0.0 %     3.0 %
Restructuring and other special charges
     0.0 %     0.0 %     0.0 %     3.4 %     1.6 %     1.9 %     0.8 %     1.1 %     1.1 %     1.3 %     1.2 %
Depreciation expense
     2.6 %     2.4 %     2.9 %     3.2 %     3.0 %     2.9 %     3.5 %     4.0 %     5.1 %     2.9 %     3.8 %
Amortization of restricted stock and RSU Plan
     0.8 %     1.3 %     5.3 %     0.9 %     1.0 %     1.4 %     2.4 %     2.2 %     2.4 %     2.1 %     2.1 %
Non-cash stock option expense
     0.0 %     0.1 %     0.0 %     0.0 %     0.0 %     0.0 %     0.1 %     0.0 %     0.1 %     0.0 %     0.0 %
Amortization of intangibles
     0.5 %     0.4 %     0.4 %     0.4 %     0.4 %     0.4 %     0.4 %     0.4 %     0.9 %     0.4 %     0.5 %
 
                                                                  
Operating expenses
     80.2 %     81.4 %     86.8 %     84.6 %     81.2 %     90.9 %     91.2 %     81.2 %     85.3 %     83.4 %     87.4 %
 
                                                                                        
Operating income
     19.8 %     18.6 %     13.2 %     15.4 %     18.8 %     9.1 %     8.8 %     18.8 %     14.7 %     16.6 %     12.6 %
Interest and other, net
     2.2 %     1.7 %     2.1 %     2.0 %     2.0 %     2.0 %     0.9 %     1.6 %     0.5 %     1.9 %     1.3 %
 
                                                                  
Income from cont. operations, pre-tax
     22.0 %     20.3 %     15.4 %     17.4 %     20.8 %     11.1 %     9.7 %     20.4 %     15.3 %     18.5 %     13.9 %
 
                                                                                        
Income taxes
     7.7 %     7.2 %     5.4 %     6.2 %     7.3 %     4.1 %     3.4 %     6.8 %     5.1 %     6.5 %     4.8 %
Losses in equity interests, net
     -0.5 %     -0.4 %     -0.9 %     -0.9 %     -0.2 %     -0.5 %     -1.0 %     -0.6 %     -0.1 %     -0.6 %     -0.6 %
 
                                                                  
Income from continuing operations
     13.8 %     12.7 %     9.0 %     10.3 %     13.3 %     6.5 %     5.2 %     13.0 %     10.0 %     11.3 %     8.5 %
 
                                                                                        
Income (loss) from disc. operations, net of tax
     -0.3 %     -0.4 %     -0.2 %     -0.2 %     -0.3 %     -0.3 %     3.5 %     -0.1 %     -0.2 %     -0.3 %     0.8 %
 
                                                                  
 
                                                                                        
Net income (loss)
     13.5 %     12.3 %     8.8 %     10.1 %     12.9 %     6.2 %     8.7 %     12.9 %     9.8 %     11.1 %     9.3 %
 
                                                                  

 

11

 

Monster Worldwide, Inc.
Statements of Operations — Reconciliation of Non-GAAP Measures
(unaudited, in thousands, except per share amounts)
                                                                                         
    Trended Quarterly Data     Year to Date Data  
Summary P&L Information   Q4 2006     Q1 2007     Q2 2007     Q3 2007     Q4 2007     Q1 2008     Q2 2008     Q3 2008     Q4 2008     12M 2007     12M 2008  
 
                                                                                        
Proforma revenue(1)
   $ 289,353     $ 321,830     $ 323,985     $ 330,142     $ 347,847     $ 366,472     $ 354,294     $ 332,189     $ 292,885     $ 1,323,804     $ 1,345,840  
 
                                                                                        
Deferred revenue related to acquisitions
     —       —       —       —       —       —       —       —       2,213       —       2,213  
 
                                                                  
 
                                                                                        
Revenue
   $ 289,353     $ 321,830     $ 323,985     $ 330,142     $ 347,847     $ 366,472     $ 354,294     $ 332,189     $ 290,672     $ 1,323,804     $ 1,343,627  
 
                                                                  
 
                                                                                        
OIBDA(1)
   $ 68,723     $ 73,569     $ 70,722     $ 65,884     $ 82,476     $ 52,952     $ 54,309     $ 85,809     $ 68,454     $ 292,651     $ 261,524  
 
                                                                                        
Depreciation expense
     7,448       7,860       9,350       10,408       10,589       10,803       12,330       13,336       14,761       38,207       51,230  
Amortization of restricted stock and RSU Plan
     2,424       4,176       17,069       2,871       3,623       5,206       8,351       7,437       7,046       27,739       28,040  
Non-cash stock option expense
     —       186       47       104       105       127       182       165       178       442       652  
Restructuring non-cash compensation expense
     —       —       —       —       —       1,162       —       —       —       —       1,162  
Restructuring non-cash write-offs
     —       —       —       67       1,263       924       923       924       924       1,330       3,695  
Amortization of intangibles
     1,568       1,394       1,413       1,437       1,457       1,386       1,274       1,374       2,756       5,701       6,790  
 
                                                                  
 
                                                                                        
Operating income
   $ 57,283     $ 59,953     $ 42,843     $ 50,997     $ 65,439     $ 33,344     $ 31,249     $ 62,573     $ 42,789     $ 219,232     $ 169,955  
 
                                                                  
 
                                                                                        
Proforma operating income(1)
   $ 70,849     $ 69,780     $ 63,985     $ 70,377     $ 75,662     $ 43,705     $ 78,337     $ 70,040     $ 41,476     $ 279,804     $ 233,558  
 
                                                                                        
Executive Commitments
     —       —       15,811       —       —       —       —       —       —       15,811       —  
Provision for legal settlements, net
     —       —       —       —       —       —       40,100       —       —       —       40,100  
Stock option investigation
     13,566       9,827       5,331       2,571       1,392       2,983       4,256       3,875       (6,682 )     19,121       4,432  
Security breach
     —       —       —       5,654       3,389       451       —       —       —       9,043       451  
Deferred revenue related to acquisitions
     —       —       —       —       —       —       —       —       2,213       —       2,213  
Restructuring non-cash compensation expense
     —       —       —       —       —       1,162       —       —       —       —       1,162  
Restructuring program non-cash write-offs
     —       —       —       67       1,263       924       923       924       924       1,330       3,695  
Restructuring expenses, less non-cash items
     —       —       —       11,088       4,179       4,841       1,809       2,668       2,232       15,267       11,550  
 
                                                                  
 
                                                                                        
Operating income
   $ 57,283     $ 59,953     $ 42,843     $ 50,997     $ 65,439     $ 33,344     $ 31,249     $ 62,573     $ 42,789     $ 219,232     $ 169,955  
 
                                                                  
     
(1) -  See notes to financial supplement for further explanation of non-GAAP measures.

 

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