EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

Dice Holdings, Inc. Reports Third Quarter 2007 Results

 

   

Revenues totaled $38.2 million, an increase of $16.5 million, or 76%, including $10.3 million from the October 2006 eFinancialCareers acquisition

 

   

Net income increased 33% to $4.2 million

 

   

Earnings per diluted share were $0.07

 

   

Cash flow from operations totaled $11.1 million

 

   

Adjusted EBITDA totaled $16.7 million, an increase of 76% (See “Notes Regarding the Use of Non-GAAP Financial Measures”)

New York, New York, October 31, 2007—Dice Holdings, Inc. (NYSE: DHX), a leading provider of specialized career websites for professional communities, today reported financial results for the quarter ended September 30, 2007.

Third Quarter Operating Results

Total revenues for the quarter ended September 30, 2007 increased 76% to $38.2 million versus $21.7 million in the comparable quarter of 2006. The increase was primarily driven by revenues from the eFinancialCareers businesses acquired in October 2006 and by an increase in the number of recruitment package customers and in the average revenue per recruitment package customer at Dice.com. Pro forma total revenues for the third quarter of 2006 would have been $27.7 million, and the year over year increase would have been 38%, had Dice Holdings owned the eFinancialCareers businesses during that period.

Operating income for the quarter ended September 30, 2007 increased $4.0 million to $9.8 million, from $5.8 million for the comparable period in 2006. The increase in operating income reflects higher revenues and greater operating leverage at Dice.com and the impact of the results of eFinancialCareers. Net income for the current quarter was $4.2 million, an increase of $1.0 million, compared with $3.2 million for the third quarter of 2006. Earnings from continuing operations per diluted share were $0.07 for the current quarter, compared with $0.06 for the same period last year.

Net cash provided by operating activities for the third quarter ended September 30, 2007 was $11.1 million, compared with $8.8 million for the third quarter last year.

Adjusted EBITDA for the third quarter of 2007 was $16.7 million, compared with $9.5 million for the third quarter of 2006. See “Notes Regarding the Use of Non-GAAP Financial Measures.”

Operating Segments

Dice Holdings, Inc. operates in two distinct business segments: DCS Online and eFinancialCareers. The other businesses operated by Dice Holdings, which include the eFinancialCareers operations within the United States, JobsintheMoney.com, Targeted Job Fairs, and the Company’s joint venture in India, are reported in the Other category.


DCS Online, which accounted for 70% of Dice Holdings’ consolidated revenues in the third quarter of 2007, consists of Dice.com and ClearanceJobs.com. For the third quarter of 2007, DCS Online revenues were $26.6 million, a 28% increase over the third quarter of 2006, primarily driven by an increase in recruitment package customers at Dice.com and an overall increase in revenue at ClearanceJobs.com. Within the segment, Dice.com represented a significant majority of total revenues for the period.

eFinancialCareers, which accounted for 22% of Dice Holdings’ consolidated revenues in the third quarter of 2007, consists of the eFinancialCareers operations outside the United States. For the third quarter of 2007, eFinancialCareers’ revenues were $8.3 million. Pro forma revenues for the third quarter of 2006 would have been $4.7 million for this segment had Dice Holdings owned eFinancialCareers during that period.

Other revenues accounted for the remainder of Dice Holdings’ consolidated revenues in the third quarter of 2007. For the third quarter of 2007, Other revenues were $3.3 million, compared with $0.9 million for the comparable period in 2006. Pro forma revenues for the third quarter of 2006 would have been $2.2 million for this segment had Dice Holdings owned the eFinancialCareers businesses during that period.

Nine-Month Operating Results

Total revenues for the nine months ended September 30, 2007 increased 81% to $103.2 million, compared to $57.0 million in the comparable period in 2006. The increase was primarily driven by an increase in the number of recruitment package customers and in the average revenue per recruitment package customer at Dice.com, as well as revenues from the addition of the eFinancialCareers businesses. Pro forma total revenues for the nine months ended September 30, 2006 would have been $72.9 million had Dice Holdings owned the eFinancialCareers businesses during that period.

By segment, DCS Online revenues increased 37% to $75.1 million for the nine month period ended September 30, 2007, while eFinancialCareers contributed revenues of $20.0 million. Other revenues for the nine months ended September 30, 2007 increased to $8.1 million from $2.2 million in the comparable period of 2006. Pro forma revenues for the nine months ended September 30, 2006 would have been $12.0 million for the eFinancialCareers segment and $6.2 million for the Other segment had Dice Holdings owned the eFinancialCareers businesses during that period.

Operating income for the nine months ended September 30, 2007 increased $9.7 million to $21.5 million from $11.8 million for the comparable period in the prior year. Net income for the first nine months of 2007 was $13.7 million, compared with $5.4 million for the year ago period.

For the nine month period ended September 30, 2007, net cash provided by operating activities was $38.6 million, compared with $29.0 million for the same period last year.

Adjusted EBITDA for the nine months ended September 30, 2007 was $42.8 million, compared with $24.4 million for the same period in 2006. See “Notes Regarding the Use of Non-GAAP Financial Measures.”

 

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Balance Sheet

Deferred revenue at September 30, 2007 was $44.0 million, representing a 57% increase from the balance of $27.6 million at September 30, 2006. The increase was primarily attributable to having a greater number of recruitment package customers and a higher percentage of those customers under annual agreements than at September 30, 2006, and to the addition of the eFinancialCareers businesses. This also represented a 28% increase from the $34.5 million balance at December 31, 2006.

Net debt, defined as total debt less cash and cash equivalents and marketable securities, was $81.2 million at September 30, 2007 (consisting of total debt of $124.7 million minus cash and cash equivalents and marketable securities of $43.5 million), compared to a net debt balance of $171.4 million at June 30, 2007 (consisting of total debt of $180.0 million minus cash and cash equivalents and marketable securities of $8.6 million). The Company raised $81.0 million (before expenses) of proceeds from the initial public offering on July 23, 2007.

Management Comments

Scot Melland, Chairman, President and Chief Executive Officer, stated “We were pleased with third quarter results, which were characterized by strong organic growth in a more challenging market environment. Once again, Dice.com was the primary contributor, although eFinancialCareers continued to exhibit strong growth and profitability, particularly in the European marketplace.” Melland continued, “As our recent growth rates suggest, our focus serving professional communities is providing value and efficiency to employers and recruiters, as well as job seekers. We are confident that our model will continue to drive value over the long run.”

Mike Durney, Senior Vice President, Finance and Chief Financial Officer, added “We achieved excellent operating results in each of our segments in the third quarter. Dice.com continued to add recruitment package customers while also generating higher average revenue per customer. At eFinancialCareers we continued our strong year over year performance both in our core European markets, and in the U.S. and Asia. Overall, operating margins for the period reached 43% at the Adjusted EBITDA level, and we generated $11.1 million in cash from operations. The indicators of profitability continue to highlight our ability to generate significant free cash flow above and beyond the investments we make to drive growth over the long term.”

 

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Business Outlook

As of October 31, 2007, the Company anticipates the following financial performance for the remainder of 2007:

 

     Quarter Ended
December 31,
2007
 

Total Revenue

   $ 39 - $40mm  
        

Estimated Contribution % By Segment

  

DCS Online

     68 %

eFinancialCareers

     25 %

Other

     7 %

% of Revenue:

  

Sales & Marketing expense

     37 – 39 %
        

Net Income Margin

     11 – 12 %
        

Adjusted EBITDA Margin

     42 – 43 %
        

Other Items:

  

Non-cash stock based compensation expense

   $ 1.1- 1.2 mm  

Depreciation and Amortization

   $ 5.4 -5.5 mm  

Interest rate on indebtedness

     8.6 %

Effective income tax rate

     40 %

Share count

     62 mm  

Option count

     8.2 mm  

Conference Call Information

The Company will host a conference call to discuss third quarter 2007 financial results today at 8:30 AM Eastern Time. Hosting the call will be Scot W. Melland, Chairman, President and Chief Executive Officer, and Michael P. Durney, Senior Vice President, Finance and Chief Financial Officer.

The conference call can be accessed live over the phone by dialing 866-770-7129 or for international callers by dialing 617-213-8067; the participant passcode is 94327031. A replay will be available two hours after the call and can be accessed by dialing 888-286-8010 or 617-801-6888 for international callers; the replay passcode is 37653331. The replay will be available until November 7, 2007. The call will also be webcast live from the Company’s website at www.diceholdingsinc.com under the investor relations section (www.investor.diceholdingsinc.com).

 

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Contacts

Investor Relations

Don Tomoff or Tom Ryan, ICR Inc.

212.448.4181 | IR@dice.com

Media Relations

Rich Layne or Stephanie Sampiere, ICR Inc.

203.682.8224 | 203.682.8277

About Dice Holdings, Inc.

Dice Holdings, Inc. is a leading provider of specialized career websites for professional communities, including technology and engineering, capital markets and financial services, accounting and finance, and security clearance. Our mission is to help our customers source and hire the most qualified professionals in select and highly skilled occupations, and to help those professionals find the best job opportunities in their respective fields and further their careers. For more than 16 years, we have built our company by providing our customers with quick and easy access to high-quality, unique professional communities and offering those communities access to highly relevant career opportunities and information. Today, we serve multiple markets in North America, Europe, the Middle East, Asia and Australia.

Notes Regarding the Use of Non-GAAP Financial Measures

Dice Holdings, 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 in the United States (“GAAP”) and may be different from non-GAAP measures reported by other companies. The Company believes that its presentation of non-GAAP measures, such as adjusted earnings before interest, taxes, depreciation, amortization, non-cash share based compensation expense and add back of deferred revenue written off (“Adjusted EBITDA”), free cash flow and net debt, provides useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. In addition, the Company’s management uses these measures for reviewing the financial results of the Company and for budgeting and planning purposes.

Adjusted EBITDA

Adjusted EBITDA is a metric used by management to measure operating performance. Management uses Adjusted EBITDA as a performance measure for internal monitoring and planning, including preparation of annual budgets, analyzing investment decisions and evaluating profitability and performance comparisons between us and our competitors. The Company also uses this measure to calculate amounts of performance based compensation under the senior management incentive bonus program. Adjusted EBITDA, as defined in our Amended and Restated Credit Facility, represents net income (loss) before interest expense, interest income, income tax expense, depreciation and amortization, non-cash stock compensation expense, extraordinary or non-recurring non-cash charges or expenses, and to add back the deferred revenues written off in connection with the Dice Inc. acquisition and the eFinancialCareers acquisition purchase accounting adjustments.

 

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We consider Adjusted EBITDA, as defined above, to be an important indicator to investors because it provides information related to our ability to provide cash flows to meet future debt service, capital expenditures and working capital requirements and to fund future growth as well as to monitor compliance with financial covenants. We present Adjusted EBITDA as a supplemental performance measure because we believe that this measure provides our board of directors, management and investors with additional information to measure our performance, provide comparisons from period to period and company to company by excluding potential differences caused by variations in capital structures (affecting interest expense) and tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses), and to estimate our value.

We present this discussion of Adjusted EBITDA because covenants in our Amended and Restated Credit Facility contain ratios based on this measure. Our Amended and Restated Credit Facility is material to us because it is one of our primary sources of liquidity. If our Adjusted EBITDA were to decline below certain levels, covenants in our Amended and Restated Credit Facility that are based on Adjusted EBITDA may be violated and could cause, among other things, an inability to incur further indebtedness and in certain circumstances a default or mandatory prepayment under our Amended and Restated Credit Facility.

Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our profitability or liquidity.

Pro Forma Adjusted EBITDA

Pro Forma Adjusted EBITDA is defined as Adjusted EBITDA (as defined above) with an addition for the Adjusted EBITDA of eFinancialCareers, as though we owned the business for all periods presented. We believe Pro Forma Adjusted EBITDA is an important non-GAAP measure as it provides a basis for comparing the current period performance against prior periods.

Free Cash Flow

We define free cash flow as net cash provided by operating activities from continuing operations minus capital expenditures. We believe free cash flow is an important non-GAAP measure as it provides useful cash flow information regarding our ability to service, incur or pay down indebtedness or repurchase our common stock. We use free cash flow as a measure to reflect cash available to service our debt as well as to fund our expenditures. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities is that free cash flow does not represent the total increase or decrease in the cash balance from operations for the period since it excludes cash used for capital expenditures during the period.

 

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Net Debt

Net Debt is defined as total debt less cash and cash equivalents and marketable securities. We consider net debt to be an important measure of liquidity and an indicator of our ability to meet ongoing obligations. We also use net debt, among other measures, in evaluating our choices for capital deployment. Net Debt presented herein is a non-GAAP measure and may not be comparable to similarly titled measures used by other companies.

Forward-Looking Statements

This press release contains forward-looking statements. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Forward-looking statements include information concerning our possible or assumed future results of operations, including descriptions of our business strategy. These statements often include words such as “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions. These statements are based on assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, competition from existing and future competitors, failure to maintain and develop our reputation and brand recognition, failure to increase or maintain the number of customers who purchase recruitment packages, cyclicality or downturns in the economy or industries we serve, and the failure to attract qualified professionals or grow the number of qualified professionals who use our websites. These factors and others are discussed in more detail in the Company’s filings with the Securities and Exchange Commission, including our Registration Statement on Form S-1, as amended, under the headings “Risk Factors,” “Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our quarterly report on Form 10-Q, all of which are available on the Investor Relations page of our website at www.diceholdingsinc.com.

You should keep in mind that any forward-looking statement made by us herein, or elsewhere, speaks only as of the date on which we make it. New risks and uncertainties come up from time to time, and it is impossible for us to predict these events or how they may affect us. We have no obligation to update any forward-looking statements after the date hereof, except as required by federal securities laws.

 

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DICE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands except per share amounts)

 

     For the three months ended
September 30,
    For the nine months ended
September 30,
 
     2007     2006     2007     2006  

Revenues

   $ 38,208     $ 21,668     $ 103,248     $ 56,984  
                                

Operating expenses:

        

Cost of revenues

     2,503       1,162       6,418       3,321  

Product development

     1,179       511       3,140       1,536  

Sales and marketing

     13,823       8,510       41,469       23,768  

General and administrative

     5,352       2,399       13,848       6,712  

Depreciation

     853       454       2,227       1,174  

Amortization of intangible assets

     4,661       2,825       14,663       8,677  
                                

Total operating expenses

     28,371       15,861       81,765       45,188  
                                

Operating income

     9,837       5,807       21,483       11,796  

Interest expense

     (3,387 )     (751 )     (10,027 )     (3,013 )

Interest income

     372       25       530       81  
                                

Income from continuing operations before income taxes and minority interest

     6,822       5,081       11,986       8,864  

Income tax expense

     2,625       1,975       3,064       3,452  

Minority interest in net loss of subsidiary

     —         68       121       198  
                                

Income from continuing operations

     4,197       3,174       9,043       5,610  

Discontinued operations:

        

Income (loss) from discontinued operations

     —         (34 )     (243 )     (312 )

Income tax expense (benefit) from discontinued operations

     —         (12 )     (4,887 )     (117 )
                                

Income (loss) from discontinued operations, net of tax

     —         (22 )     4,644       (195 )

Net income

     4,197       3,152       13,687       5,415  

Convertible preferred stock dividends

     —         —         (107,718 )     —    
                                

Income (loss) attributable to common stockholders

   $ 4,197     $ 3,152     $ (94,031 )   $ 5,415  
                                

Basic earnings (loss) per share:

        

From continuing operations

   $ 0.07     $ 0.06     $ (5.85 )   $ 0.11  

From discontinued operations

     —         —         0.28       —    
                                
   $ 0.07     $ 0.06     $ (5.57 )   $ 0.11  
                                

Diluted earnings (loss) per share:

        

From continuing operations

   $ 0.07     $ 0.06     $ (5.85 )   $ 0.11  

From discontinued operations

     —         —         0.28       —    
                                
   $ 0.07     $ 0.06     $ (5.57 )   $ 0.11  
                                

 

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DICE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

 

     For the Three Months Ended
September 30,
    For the Nine Months Ended
September 30,
 
     2007     2006     2007     2006  

Cash flows provided by operating activities:

        

Net income

   $ 4,197     $ 3,152     $ 13,687     $ 5,415  

Adjustments to reconcile net income to net cash provided by operating activities:

        

Depreciation

     853       454       2,227       1,174  

Amortization

     4,661       2,825       14,663       8,677  

Deferred income taxes

     1,721       1,675       (1,496 )     2,786  

Amortization of deferred financing costs

     202       78       538       236  

Share based compensation

     1,138       245       2,920       724  

Changes in operating assets and liabilities:

        

Accounts receivable

     (2,727 )     (1,321 )     (1,436 )     (1,391 )

Prepaid expenses and other assets

     165       (185 )     (1,232 )     37  

Accounts payable and accrued expenses

     1,566       48       (326 )     1,000  

Deferred revenue

     (59 )     1,623       9,276       10,576  

Other, net

     (623 )     173       (199 )     (282 )
                                

Net cash provided by operating activities

     11,094       8,767       38,622       28,952  
                                

Cash flows used for investing activities:

        

Purchases of fixed assets

     (974 )     (583 )     (2,524 )     (2,081 )

Purchases of marketable securities

     —         —         (200 )     (100 )

Maturities and sales of marketable securities

     200       —         400       197  

Amounts paid under Targeted Job Fairs acquisition agreement

     —         —         —         (965 )

Other, net

     —         —         (32 )     —    
                                

Net cash used for investing activities

     (774 )     (583 )     (2,356 )     (2,949 )
                                

Cash flows provided by (used for) financing activities:

        

Proceeds from long-term debt

     —         —         113,000       —    

Payments on long-term debt

     (55,300 )     (9,000 )     (77,300 )     (27,000 )

Dividends paid on convertible preferred stock

     —         —         (107,718 )     —    

Dividends paid on common stock

     —         —         (180 )     —    

Payments to holders of vested stock options in lieu of dividends

     —         —         (4,602 )     —    

Financing costs paid

     (7 )     —         (2,246 )     —    

Proceeds from initial public offering

     81,003       —         81,003       —    

Payment of costs related to initial public offering

     (981 )     —         (1,437 )     —    

Proceeds from stock option exercises

     89       —         89       —    

Other

     —         —         (175 )     —    
                                

Net cash provided by financing activities

     24,804       (9,000 )     434       (27,000 )
                                

Net cash provided by (used for) operating activities of discontinued operations

     (102 )     12       88       662  

Net cash used in investing activities of discontinued operations

     —         (4 )     (6 )     (86 )
                                

Net cash provided by discontinued operations

     (102 )     8       82       576  

Effect of exchange rate changes

     29       —         154       —    
                                

Net change in cash and cash equivalents for the period

     35,051       (808 )     36,936       (421 )

Cash and cash equivalents, beginning of period

     7,680       3,750       5,795       3,363  
                                

Cash and cash equivalents, end of period

   $ 42,731     $ 2,942     $ 42,731     $ 2,942  
                                

 

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DICE HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands)

 

      September 30,
2007
   December 31,
2006
ASSETS      

Current assets

     

Cash and cash equivalents

   $ 42,731    $ 5,795

Marketable securities

     750      944

Accounts receivable, net of allowance for doubtful accounts of $1,016 and $795

     16,959      15,014

Deferred income taxes—current

     12,143      14,000

Prepaid and other current assets

     2,556      1,289

Current assets of discontinued operations

     —        809
             

Total current assets

     75,139      37,851
             

Fixed assets, net

     5,842      5,356

Acquired intangible assets, net

     86,240      100,186

Goodwill

     162,448      156,440

Deferred financing costs, net of accumulated amortization of $994 and $457

     3,867      1,972

Other assets

     473      251

Non-current assets of discontinued operations

     —        271
             

Total assets

   $ 334,009    $ 302,327
             
LIABILITIES AND STOCKHOLDERS’ EQUITY      

Current liabilities

     

Accounts payable and accrued expenses

   $ 13,901    $ 12,113

Deferred revenue

     43,997      34,520

Current portion of long-term debt

     750      —  

Other current liabilities

     168      492

Current liabilities of discontinued operations

     —        990
             

Total current liabilities

     58,816      48,115

Long-term debt

     123,950      89,000

Deferred income taxes—non-current

     25,361      29,582

Other long-term liabilities

     6,841      1,295
             

Total liabilities

     214,968      167,992

Total stockholders’ equity

     119,041      134,335
             

Total liabilities and stockholders’ equity

   $ 334,009    $ 302,327
             

 

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Supplemental Information and Non-GAAP Reconciliations

On the pages that follow, the Company has provided certain supplemental information that we believe will assist the reader in assessing our business operations and performance, including certain non-GAAP financial information and required reconciliations to the most comparable GAAP measure. The supplemental schedules provided include:

Historical Quarterly Statement of Operations and Adjusted EBITDA Reconciliation

A quarterly statement of operations reflecting the results of each quarterly period for calendar year 2006 and the first three quarters of calendar year 2007 is provided. This information provides the reader with the information necessary to analyze Dice Holdings, Inc. over the recent past.

Historical Quarterly Statement of Cash Flows and Free Cash Flow Reconciliation

A quarterly statement of cash flows reflecting the results of each quarterly period for calendar year 2006 and the first three quarters of calendar year 2007 is provided. This information provides the reader with the information necessary to analyze Dice Holdings, Inc. over the recent past.

Quarterly Supplemental Data and Certain Non-GAAP Reconciliations

On this schedule, the Company provides certain non-GAAP information of each quarterly period for calendar year 2006 and the first three quarters of calendar year 2007 that we believe is useful to understanding the business operations of the Company. A discussion of the significant sections is below:

Adjusted Pro Forma Revenues By Segment

Adjusted pro forma revenues by segment reflects historical revenues adjusted for the addition of deferred revenue that was previously written off as part of purchase accounting adjustments related to the Dice Inc. and eFinancialCareers acquisitions. In addition, the Company has made an addition for revenues of eFinancialCareers, as though we owned the business for all periods presented, in order to provide a comparable revenue basis.

Add back of Deferred Revenue Written off in Acquisitions

Deferred revenue is a key metric of the Company’s business as it indicates a level of sales already made that will be recognized as revenue in the future. Dice Inc. had recorded deferred revenue of $16.1 million on its consolidated balance sheet, as of August 31, 2005, prior to purchase accounting adjustments related to its acquisition by Dice Holdings, Inc. As required by GAAP, in determining the fair value of the liabilities assumed under purchase accounting, the acquired deferred revenue is to be recorded at fair value to the extent it represents an assumed legal obligation. The Company estimated its obligation related to deferred revenue as a result of

 

11


the Dice Inc. acquisition using the cost build-up approach, which determines fair value by estimating the costs related to fulfilling the obligation plus a normal profit margin. The estimated costs to fulfill the Company’s deferred revenue obligation in connection with the Dice Inc. acquisition were based on the Company’s expected future costs to fulfill its obligation to its customers. As a result, the Company recorded an adjustment to reduce the carrying value of deferred revenue by $6.0 million, to $10.1 million.

Similarly, the Company recorded deferred revenue for eFinancialGroup at the date of the acquisition of $3.6 million, prior to purchase accounting adjustments. The Company estimated its obligation related to deferred revenue based on future costs to fulfill its obligation to its customers. As a result, an adjustment was recorded to reduce the carrying value of deferred revenue for eFinancialGroup by $2.4 million, to $1.2 million.

Pro Forma Sales and Marketing Expense

Pro forma sales and marketing expense reflects historical sales and marketing expense adjusted for the addition of sales and marketing expenses for eFinancialCareers, as though we owned the business for all periods presented, in order to provide expense analysis comparable to our business operations today.

 

12


DICE HOLDINGS, INC.

HISTORICAL QUARTERLY STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands)

 

     Quarters     Full Year
2006
    Quarters     Year to Date  
   Q1 2006     Q2 2006     Q3 2006     Q4 2006       Q1 2007     Q2 2007     Q3 2007     9M 2006     9M 2007  

Revenues

   $ 16,077     $ 19,239     $ 21,668     $ 26,674     $ 83,658     $ 30,540     $ 34,500     $ 38,208     $ 56,984     $ 103,248  
                                                                                

Operating expenses:

                    

Cost of revenues

     1,110       1,049       1,162       1,503       4,824       1,897       2,018       2,503       3,321       6,418  

Product development

     434       591       511       822       2,358       980       981       1,179       1,536       3,140  

Sales and marketing

     7,128       8,130       8,510       10,720       34,488       13,601       14,045       13,823       23,768       41,469  

General and administrative

     2,058       2,255       2,399       3,755       10,467       4,024       4,472       5,352       6,712       13,848  

Depreciation

     335       385       454       656       1,830       651       723       853       1,174       2,227  

Amortization of intangible assets

     3,026       2,826       2,825       4,415       13,092       5,228       4,774       4,661       8,677       14,663  
                                                                                

Total operating expenses

     14,091       15,236       15,861       21,871       67,059       26,381       27,013       28,371       45,188       81,765  
                                                                                

Operating income

     1,986       4,003       5,807       4,803       16,599       4,159       7,487       9,837       11,796       21,483  

Interest expense

     (1,331 )     (931 )     (751 )     (1,775 )     (4,788 )     (2,347 )     (4,293 )     (3,387 )     (3,013 )     (10,027 )

Interest income

     27       29       25       153       234       77       81       372       81       530  
                                                                                

Income from continuing operations before income taxes and minority interest

     682       3,101       5,081       3,181       12,045       1,889       3,275       6,822       8,864       11,986  

Income tax expense (benefit)

     262       1,215       1,975       1,190       4,642       (1,070 )     1,509       2,625       3,452       3,064  

Minority interest in net loss of subsidiary

     53       77       68       98       296       —         121       —         198       121  
                                                                                

Income from continuing operations

     473       1,963       3,174       2,089       7,699       2,959       1,887       4,197       5,610       9,043  
                                                                                

Discontinued operations:

                    

Income (loss) from discontinued operations

     (232 )     (46 )     (34 )     (1,150 )     (1,462 )     (537 )     294       —         (312 )     (243 )

Income tax expense (benefit) from discontinued operations

     (88 )     (17 )     (12 )     (424 )     (541 )     (5,455 )     568       —         (117 )     (4,887 )
                                                                                

Income (loss) from discontinued operations, net of tax

     (144 )     (29 )     (22 )     (726 )     (921 )     4,918       (274 )     —         (195 )     4,644  
                                                                                

Net income

   $ 329     $ 1,934     $ 3,152     $ 1,363     $ 6,778     $ 7,877     $ 1,613     $ 4,197     $ 5,415     $ 13,687  
                                                                                

 

13


DICE HOLDINGS, INC.

HISTORICAL QUARTERLY ADJUSTED EBITDA RECONCILIATIONS

(Unaudited)

(in thousands)

 

     Quarters     Full Year
2006
    Quarters     Year to Date  
   Q1 2006     Q2 2006     Q3 2006     Q4 2006       Q1 2007     Q2 2007     Q3 2007     9M 2006     9M 2007  

Reconciliation of Net Income to Adjusted EBITDA:

                    

Net income

   $ 329     $ 1,934     $ 3,152     $ 1,363     $ 6,778     $ 7,877     $ 1,613     $ 4,197     $ 5,415     $ 13,687  

Discontinued operations

     144       29       22       726       921       (4,918 )     274       —         195       (4,644 )

Minority interest in net loss of subsidiary

     (53 )     (77 )     (68 )     (98 )     (296 )     —         (121 )     —         (198 )     (121 )

Interest income

     (27 )     (29 )     (25 )     (153 )     (234 )     (77 )     (81 )     (372 )     (81 )     (530 )

Interest expense

     1,331       931       751       1,775       4,788       2,347       4,293       3,387       3,013       10,027  

Income tax expense (benefit)

     262       1,215       1,975       1,190       4,642       (1,070 )     1,509       2,625       3,452       3,064  

Depreciation

     335       385       454       656       1,830       651       723       853       1,174       2,227  

Amortization of intangible assets

     3,026       2,826       2,825       4,415       13,092       5,228       4,774       4,661       8,677       14,663  

Non-cash stock compensation expense

     237       242       245       743       1,467       574       1,208       1,138       724       2,920  

Deferred revenue adjustment

     1,202       650       189       926       2,967       758       518       248       2,041       1,524  
                                                                                

Adjusted EBITDA

   $ 6,786     $ 8,106     $ 9,520     $ 11,543     $ 35,955     $ 11,370     $ 14,710     $ 16,737     $ 24,412     $ 42,817  
                                                                                

Reconciliation of Operating Cash Flows to Adjusted EBITDA:

                    

Net cash provided by operating activities

   $ 9,571     $ 10,614     $ 8,767     $ 10,232     $ 39,184     $ 14,594     $ 12,934     $ 11,094     $ 28,952     $ 38,622  

Interest expense

     1,331       931       751       1,775       4,788       2,347       4,293       3,387       3,013       10,027  

Interest income

     (27 )     (29 )     (25 )     (153 )     (234 )     (77 )     (81 )     (372 )     (81 )     (530 )

Income tax expense (benefit)

     262       1,215       1,975       1,190       4,642       (1,070 )     1,509       2,625       3,452       3,064  

Deferred income taxes

     (74 )     (1,037 )     (1,675 )     (341 )     (3,127 )     7,386       (4,169 )     (1,721 )     (2,786 )     1,496  

Change in accounts receivable

     51       19       1,321       3,357       4,748       (1,062 )     (229 )     2,727       1,391       1,436  

Change in deferred revenue

     (6,665 )     (2,288 )     (1,623 )     (5,693 )     (16,269 )     (7,752 )     (1,583 )     59       (10,576 )     (9,276 )

Changes in working capital

     1,122       (1,841 )     (36 )     (262 )     (1,017 )     1,315       1,550       (1,108 )     (755 )     1,757  

Adjustments for discontinued operations

     13       (128 )     (124 )     512       273       (5,069 )     (32 )     (202 )     (239 )     (5,303 )

Deferred revenue adjustment

     1,202       650       189       926       2,967       758       518       248       2,041       1,524  
                                                                                

Adjusted EBITDA

   $ 6,786     $ 8,106     $ 9,520     $ 11,543     $ 35,955     $ 11,370     $ 14,710     $ 16,737     $ 24,412     $ 42,817  
                                                                                

 

14


DICE HOLDINGS, INC.

QUARTERLY STATEMENTS OF CASH FLOWS AND FREE CASH FLOWS

(Unaudited)

(in thousands)

 

     Quarters     Full Year
2006
    Quarters     Year to Date  
   Q1 2006     Q2 2006     Q3 2006     Q4 2006       Q1 2007     Q2 2007     Q3 2007     9M 2006     9M 2007  

Cash flows provided by operating activities:

                    

Net income

   $ 329     $ 1,934     $ 3,152     $ 1,363     $ 6,778     $ 7,877     $ 1,613     $ 4,197     $ 5,415     $ 13,687  

Adjustments to reconcile net income to net cash provided by operating activities:

                    

Depreciation

     335       385       454       656       1,830       651       723       853       1,174       2,227  

Amortization

     3,026       2,826       2,825       4,415       13,092       5,228       4,774       4,661       8,677       14,663  

Deferred income taxes

     74       1,037       1,675       341       3,127       (7,386 )     4,169       1,721       2,786       (1,496 )

Amortization of deferred financing costs

     78       80       78       116       352       151       185       202       236       538  

Share based compensation

     237       242       245       743       1,467       574       1,208       1,138       724       2,920  

Changes in operating assets and liabilities:

             —               —      

Accounts receivable

     (51 )     (19 )     (1,321 )     (3,357 )     (4,748 )     1,062       229       (2,727 )     (1,391 )     (1,436 )

Prepaid expenses and other assets

     (93 )     315       (185 )     (257 )     (220 )     (724 )     (673 )     165       37       (1,232 )

Accounts payable and accrued expenses

     (877 )     1,829       48       (483 )     517       (1,732 )     (160 )     1,566       1,000       (326 )

Deferred revenue

     6,665       2,288       1,623       5,693       16,269       7,752       1,583       (59 )     10,576       9,276  

Other, net

     (152 )     (303 )     173       1,002       720       1,141       (717 )     (623 )     (282 )     (199 )
                                                                                

Net cash provided by operating activities

     9,571       10,614       8,767       10,232       39,184       14,594       12,934       11,094       28,952       38,622  
                                                                                

Cash flows used for investing activities:

                    

Purchases of fixed assets

     (793 )     (705 )     (583 )     (613 )     (2,694 )     (631 )     (919 )     (974 )     (2,081 )     (2,524 )

Purchases of marketable securities

     (100 )     —         —         (100 )     (200 )     —         (200 )     —         (100 )     (200 )

Maturities and sales of marketable securities

     99       98       —         399       596       —         200       200       197       400  

Acquisition of eFinancial Group Limited

     —         —         —         (104,738 )     (104,738 )     —         —         —         —         —    

Proceeds from the sale of eFinancialNews Limited

     —         —         —         41,560       41,560       —         —         —         —         —    

Amounts paid under Targeted Job Fairs acquisition agreement

     (133 )     (832 )     —         —         (965 )     —         —         —         (965 )     —    

Other, net

     —         —         —         —         —         (15 )     (17 )     —         —         (32 )
                                                                                

Net cash used for investing activities

     (927 )     (1,439 )     (583 )     (63,492 )     (66,441 )     (646 )     (936 )     (774 )     (2,949 )     (2,356 )
                                                                                

Cash flows provided by (used for) financing activities:

                    

Proceeds from long-term debt

     —         —         —         77,000       77,000       113,000       —         —         —         113,000  

Payments on long-term debt

     (9,000 )     (9,000 )     (9,000 )     (10,000 )     (37,000 )     (11,000 )     (11,000 )     (55,300 )     (27,000 )     (77,300 )

Dividends paid on convertible preferred stock

     —         —         —         (11,180 )     (11,180 )     (107,718 )     —         —         —         (107,718 )

Dividends paid on common stock

     —         —         —         —         —         (180 )     —         —         —         (180 )

Payments to holders of vested stock options in lieu of dividends

     —         —         —         —         —         (4,602 )     —         —         —         (4,602 )

Financing costs paid

     —         —         —         (856 )     (856 )     (2,239 )     —         (7 )     —         (2,246 )

Proceeds from initial public offering

     —         —         —         —         —         —         —         81,003       —         81,003  

Payment of costs related to initial public offering

     —         —         —         —         —         —         (456 )     (981 )     —         (1,437 )

Proceeds from stock option exercises

     —         —         —         —         —         —         —         89       —         89  

Other

     —         —         —         —         —         —         (175 )     —         —         (175 )
                                                                                

Net cash provided by (used for) financing activities

     (9,000 )     (9,000 )     (9,000 )     54,964       27,964       (12,739 )     (11,631 )     24,804       (27,000 )     434  
                                                                                

Net cash provided by (used for) operating activities of discontinued operations

     173       477       12       1,127       1,789       352       (162 )     (102 )     662       88  

Net cash used in investing activities of discontinued operations

     (6 )     (76 )     (4 )     (69 )     (155 )     (6 )     —         —         (86 )     (6 )
                                                                                

Net cash provided by (used for) discontinued operations

     167       401       8       1,058       1,634       346       (162 )     (102 )     576       82  

Effect of exchange rate changes

     —         —         —         91       91       20       105       29       —         154  
                                                                                

Net change in cash and cash equivalents for the period

     (189 )     576       (808 )     2,853       2,432       1,575       310       35,051       (421 )     36,936  

Cash and cash equivalents, beginning of period

     3,363       3,174       3,750       2,942       3,363       5,795       7,370       7,680       3,363       5,795  
                                                                                

Cash and cash equivalents, end of period

   $ 3,174     $ 3,750     $ 2,942     $ 5,795     $ 5,795     $ 7,370     $ 7,680     $ 42,731     $ 2,942     $ 42,731  
                                                                                

Free cash flow:

                    

Net cash provided by operating activities

   $ 9,571     $ 10,614     $ 8,767     $ 10,232     $ 39,184     $ 14,594     $ 12,934     $ 11,094     $ 28,952     $ 38,622  

Less: Capital expenditures

     (793 )     (705 )     (583 )     (613 )     (2,694 )     (631 )     (919 )     (974 )     (2,081 )     (2,524 )
                                                                                

Free cash flow

   $ 8,778     $ 9,909     $ 8,184     $ 9,619     $ 36,490     $ 13,963     $ 12,015     $ 10,120     $ 26,871     $ 36,098  
                                                                                

 

15


DICE HOLDINGS, INC.

NON-GAAP RECONCILIATIONS AND QUARTERLY SUPPLEMENTAL DATA

(Unaudited)

(dollars in thousands except per customer data)

 

     Quarters     Full Year
2006
    Quarters     Year to Date  
   Q1 2006     Q2 2006     Q3 2006     Q4 2006       Q1 2007     Q2 2007     Q3 2007     9M 2006     9M 2007  

Reconciliation of GAAP Reported Revenue by Segment to Adjusted

Pro Forma Revenue by Segment

                    

DCS Online:

                    

Reported Actual

   $ 15,441     $ 18,513     $ 20,818     $ 22,513     $ 77,285     $ 23,351     $ 25,233     $ 26,557     $ 54,772     $ 75,141  

Deferred Revenue Adjustment (1)

     1,202       650       189       8       2,049       —         —         —         2,041       —    
                                                                                

Dice Online

     16,643       19,163       21,007       22,521       79,334       23,351       25,233       26,557       56,813       75,141  
                                                                                

eFinancialCareers:

                    

Reported Actual

     —         —         —         2,924       2,924       5,145       6,497       8,349       —         19,991  

eFinancialCareers Pro Forma Adjustment

     3,307       4,008       4,687       1,583       13,585       —         —         —         12,002       —    

Deferred Revenue Adjustment (1)

     —         —         —         412       412       379       301       147       —         827  
                                                                                

eFinancialCareers

     3,307       4,008       4,687       4,919       16,921       5,524       6,798       8,496       12,002       20,818  
                                                                                

Other:

                    

Reported Actual

     636       726       850       1,237       3,449       2,044       2,770       3,302       2,212       8,116  

eFinancialCareers Pro Forma Adjustment

     1,234       1,358       1,347       492       4,431       —         —         —         3,939       —    

Deferred Revenue Adjustment (1)

     —         —         —         506       506       379       217       101       —         697  
                                                                                

Other

     1,870       2,084       2,197       2,235       8,386       2,423       2,987       3,403       6,151       8,813  
                                                                                

Consolidated:

                    

Reported Actual

   $ 16,077     $ 19,239     $ 21,668     $ 26,674     $ 83,658     $ 30,540     $ 34,500     $ 38,208     $ 56,984     $ 103,248  

eFinancialCareers Pro Forma Adjustment

     4,541       5,366       6,034       2,075       18,016       —         —         —         15,941       —    
                                                                                
Total Pro Forma Revenue      20,618       24,605       27,702       28,749       101,674       30,540       34,500       38,208       72,925       103,248  

Deferred Revenue Adjustment (1)

     1,202       650       189       926       2,967       758       518       248       2,041       1,524  
                                                                                

Total Pro Forma Adjusted Revenue

   $ 21,820     $ 25,255     $ 27,891     $ 29,675     $ 104,641     $ 31,298     $ 35,018     $ 38,456     $ 74,966     $ 104,772  
                                                                                
Percentage of Pro Forma Adjusted Revenue by Segment                     

DCS Online

     76.3 %     75.9 %     75.3 %     75.9 %     75.8 %     74.6 %     72.1 %     69.1 %     75.8 %     71.7 %

eFinancialCareers

     15.2 %     15.9 %     16.8 %     16.6 %     16.2 %     17.6 %     19.4 %     22.1 %     16.0 %     19.9 %

Other

     8.5 %     8.2 %     7.9 %     7.5 %     8.0 %     7.8 %     8.5 %     8.8 %     8.2 %     8.4 %
     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %
                                                                                

Segment Definitions:

DCS Online: Dice.com and ClearanceJobs.com

eFinancialCareers: eFinancialCareers worldwide, excluding the US

Other: Targeted Job Fairs, eFinancialCareers (US), JobsintheMoney.com, Dice India


(1) Deferred revenue adjustments are related to deferred revenue written off in application of purchase accounting. See discussion at "Supplemental Information and Non-GAAP Reconciliations".
(2) Reflects simple average of three months in each quarterly period.

 

16


DICE HOLDINGS, INC.

NON-GAAP RECONCILIATIONS AND QUARTERLY SUPPLEMENTAL DATA (continued)

(Unaudited)

(dollars in thousands except per customer data)

 

     Quarters     Full Year
2006
    Quarters     Year to Date  
   Q1 2006     Q2 2006     Q3 2006     Q4 2006       Q1 2007     Q2 2007     Q3 2007     9M 2006     9M 2007  
Sales and Marketing Expense                     

Reported Actual

   $ 7,128     $ 8,130     $ 8,510     $ 10,720     $ 34,488     $ 13,601     $ 14,045     $ 13,823     $ 23,768     $ 41,469  

eFinancialCareers Pro Forma Adjustment

     1,933       2,352       2,885       949       8,119       —         —         —         7,170       —    
                                                                                
Total Pro Forma Sales and Marketing Expense    $ 9,061     $ 10,482     $ 11,395     $ 11,669     $ 42,607     $ 13,601     $ 14,045     $ 13,823     $ 30,938     $ 41,469  
                                                                                

Actual Sales and Marketing Expense as a Percentage of Actual Revenue

     44.3 %     42.3 %     39.3 %     40.2 %     41.2 %     44.5 %     40.7 %     36.2 %     41.7 %     40.2 %

Pro Forma Sales and Marketing Expense as a Percentage of Pro Forma Adjusted Revenue

     41.5 %     41.5 %     40.9 %     39.3 %     40.7 %     43.5 %     40.1 %     35.9 %     41.3 %     39.6 %
Reconciliation of Adjusted EBITDA to
Pro Forma Adjusted EBITDA
                    

Adjusted EBITDA

   $ 6,786     $ 8,106     $ 9,520     $ 11,543     $ 35,955     $ 11,370     $ 14,710     $ 16,737     $ 24,412     $ 42,817  

eFinancialCareers Pro Forma Adjustment

     844       401       584       (1,210 )     619       —         —         —         1,829       —    
                                                                                
Pro Forma Adjusted EBITDA    $ 7,630     $ 8,507     $ 10,104     $ 10,333     $ 36,574     $ 11,370     $ 14,710     $ 16,737     $ 26,241     $ 42,817  
                                                                                

Pro Forma Adjusted EBITDA Margin

     35.0 %     33.7 %     36.2 %     34.8 %     35.0 %     36.3 %     42.0 %     43.5 %     35.0 %     40.9 %
                    

Dice.com Recruitment Package Customers (end of period)

     6,800       7,300       7,600       7,600       n.a.       8,500       8,800       9,000       n.a.       n.a.  
                                                              
                    

Dice.com Average Monthly Revenue per Recruitment Package Customer (2) 

   $ 753     $ 772     $ 795     $ 813       n.a.     $ 826     $ 830     $ 839       n.a.       n.a.  
                                                              
                    

Summary of Deferred Revenue Written Off by Segment by Period of Impact

                    

DCS Online

   $ 1,202     $ 650     $ 189     $ 8     $ 2,049     $ —       $ —       $ —       $ 2,041     $ —    

eFinancialCareers

     —         —         —         412       412       379       301       147       —         827  

Other

     —         —         —         506       506       379       217       101       —         697  
                                                                                

Total Deferred Revenue Written Off by Period of Impact

   $ 1,202     $ 650     $ 189     $ 926     $ 2,967     $ 758     $ 518     $ 248     $ 2,041     $ 1,524  
                                                                                

Segment Definitions:

DCS Online: Dice.com and ClearanceJobs.com

eFinancialCareers: eFinancialCareers worldwide, excluding the US

Other: Targeted Job Fairs, eFinancialCareers (US), JobsintheMoney.com, Dice India


(1) Deferred revenue adjustments are related to deferred revenue written off in application of purchase accounting. See discussion at “Supplemental Information and Non-GAAP Reconciliations”.
(2) Reflects simple average of three months in each quarterly period.

 

17


See below for reconciliation of most comparable GAAP measurement to Adjusted EBITDA:

Guidance - Reconcilation of Net Income to Adjusted EBITDA

 

     Quarter Ended
December 31, 2007
 

Net income

   $ 4.3 -4.8  

Depreciation & amortization

     5.4 - 5.5  

Non-cash stock compensation

     1.1 - 1.2  

Interest expense, net

     2.7 - 2.8  

Income taxes

     2.7 - 3.1  
        

Adjusted EBITDA

   $ 16.4 -17.2  
        

Net Income Margin

     11-12 %

Adjusted EBITDA Margin

     42-43 %

 

18