**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**WASHINGTON,D.C. 20549

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**FORM 10-Q**

| **x**      | ** ** | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**  |
|------------|------------|---------------------------------------------------------------------------------------------------------|
| ** ** | ** ** | **FOR THE QUARTERLY PERIOD ENDED MARCH 31,  2007**                                                 |
| ** ** | ** ** | **OR**                                                                                                  |
| **o**      | ** ** | **TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

 

**FORTHE TRANSITION PERIOD FROM                 to                 **

**COMMISSIONFILE NUMBER 000-21571**

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**MONSTER WORLDWIDE, INC.**(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

| **DELAWARE**                                                    | ** ** | **13-3906555**                        |
|-----------------------------------------------------------------|------------|---------------------------------------|
| (STATE OR OTHER  JURISDICTION OF INCORPORATION OR ORGANIZATION) |       | (IRS EMPLOYER  IDENTIFICATION NUMBER) |
| **622 Third Avenue, New York, New York 10017**                  |
| (ADDRESS OF  PRINCIPAL EXECUTIVE OFFICES)                       |
| **(212) 351-7000**                                              |
| (REGISTRANT’S  TELEPHONE NUMBER, INCLUDING AREA CODE)      |

 

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Indicateby check mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports) and (2) has been subject tosuch filing requirements for the past 90 days. Yes o  No x

Indicateby checkmark whether the registrant is a large accelerated filer, an acceleratedfiler or a non-accelerated filer. See definition of “accelerated filerand large accelerated filer” in Rule 12b-2 of the Exchange Act.(Check one):

| Large Accelerated Filer x |   | Accelerated Filer o |   | Non-Accelerated Filer o |
|---------------------------|--------|---------------------|--------|-------------------------|

 

Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act). Yes o  No x

Indicatethe number of shares outstanding of each of the issuer’s class of common stockas of May 1, 2007, the latest practicable date.

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| Class                      | ** ** | **Outstanding on  May 1, 2007** | ** **  |
|----------------------------|------------|------------------------------------------------|-------------|
| Common Stock               |       |                                           | 125,828,386 |   |   |
| Class B Common  Stock |       |                                           | 4,762,000   |   |   |

 

 

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**MONSTERWORLDWIDE, INC.INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**

|               | ** ** | ** **                                                                                      | ** ** | **Page** |
|---------------|------------|-------------------------------------------------------------------------------------------------|------------|----------|
| ** **    | ** ** | ** **                                                                                      | ** ** | **No.**  |
| ** **    |       | **PART I – FINANCIAL  INFORMATION**                                         |       |     |   |   |
| **Item 1.**   | ** ** | **Financial  Statements:**                                                                      |       |     |   |   |
|          |       | Consolidated statements of operations                                                           |       |     | 3 |   |
|          |       | Consolidated balance sheets                                                                     |       |     | 4 |   |
|          |       | Consolidated statements of cash flows                                                           |       |     | 5 |   |
|          |       | Notes to consolidated financial statements                                                      |       |     | 6 |   |
|          |       | Report of Independent Registered Public Accounting  Firm                                        |       |     | 17 |   |
| **Item 2.**   | ** ** | **Management’s Discussion and Analysis of Financial  Condition and Results of Operations** |       |     | 18 |   |
| **Item 3.**   | ** ** | **Quantitative and Qualitative Disclosures about Market  Risk**                                 |       |     | 29 |   |
| **Item 4.**   | ** ** | **Controls and Procedures**                                                                     |       |     | 29 |   |
| ** **    | ** ** | **PART II – OTHER  INFORMATION**                                            |       |     |   |   |
| **Item  1.**  | ** ** | **Legal  Proceedings**                                                                          |       |     | 31 |   |
| **Item  1A.** | ** ** | **Risk  Factors**                                                                               |       |     | 32 |   |
| **Item 2.**   | ** ** | **Unregistered Sales of Equity Securities and Use of  Proceeds**                                |       |     | 33 |   |
| **Item 6.**   | ** ** | **Exhibits**                                                                                    |       |     | 33 |   |
|          | ** ** | **Signatures**                                                                                  |       |     | 34 |   |
|          |       | (All other items on this report are inapplicable)                                               |       |     |   |   |

 

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**PART I—FINANCIALINFORMATION**

**ITEM 1. FINANCIALSTATEMENTS**

**MONSTERWORLDWIDE, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share amounts)(unaudited)**
|                                                                            | ** ** | **Three Months Ended March 31,**                                                     | ** ** |
|----------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------|------------|
| ** **                                                                 | ** ** | **        2007        ** | ** ** | **        2006        ** | ** ** |
| **Revenue**                                                                | ** ** |                                                                                                     | **$**      | **329,028** | ** ** |   |   | **$** | **257,036** | ** ** |   |
| Salaries and  related                                                      |       |                                                                                                     | 122,347    |   |   |   | 91,553 |   |   |
| Office and general                                                         |       |                                                                                                     | 70,417     |   |   |   | 46,745 |   |   |
| Marketing and promotion                                                    |       |                                                                                                     | 78,069     |   |   |   | 65,799 |   |   |
| Total operating expenses                                                   |       |                                                                                                     | 270,833    |   |   |   | 204,097 |   |   |
| **Operating  income**                                                      | ** ** |                                                                                                     | **58,195** | ** ** |   |   | **52,939** | ** ** |   |
| Interest and  other, net                                                   |       |                                                                                                     | 5,304      |   |   |   | 3,130 |   |   |
| Income from  continuing operations before income taxes and equity interest |       |                                                                                                     | 63,499     |   |   |   | 56,069 |   |   |
| Income taxes                                                               |       |                                                                                                     | 22,352     |   |   |   | 20,411 |   |   |
| Losses in equity  interests, net                                           |       |                                                                                                     | (1,420     | ) |   |   | (1,241 | ) |   |
| **Income  from continuing operations**                                     | ** ** |                                                                                                     | **39,727** | ** ** |   |   | **34,417** | ** ** |   |
| Income (loss)  from discontinued operations, net of tax                    |       |                                                                                                     | (245       | ) |   |   | 7,845 |   |   |
| **Net income**                                                             | ** ** |                                                                                                     | **$**      | **39,482** | ** ** |   |   | **$** | **42,262** | ** ** |   |
| **Basic  earnings per share:**                                             |       |                                                                                                     |       |   |   |   |   |   |   |
| Earnings per  share from continuing operations                             |       |                                                                                                     | $          | 0.31 |   |   |   | $ | 0.27 |   |   |
| Earnings from  discontinued operations, net of tax                         |       |                                                                                                     | —     |   |   |   | 0.06 |   |   |
| **Basic earnings per share***                                              | ** ** |                                                                                                     | **$**      | **0.30** | ** ** |   |   | **$** | **0.33** | ** ** |   |
| **Diluted  earnings per share:**                                           |       |                                                                                                     |       |   |   |   |   |   |   |
| Earnings per  share from continuing operations                             |       |                                                                                                     | $          | 0.30 |   |   |   | $ | 0.26 |   |   |
| Earnings from  discontinued operations, net of tax                         |       |                                                                                                     | —     |   |   |   | 0.06 |   |   |
| **Diluted earnings per share**                                             | ** ** |                                                                                                     | **$**      | **0.30** | ** ** |   |   | **$** | **0.32** | ** ** |   |
| **Weighted  average shares outstanding:**                                  |       |                                                                                                     |       |   |   |   |   |   |   |
| Basic                                                                      |       |                                                                                                     | 129,653    |   |   |   | 126,753 |   |   |
| Diluted                                                                    |       |                                                                                                     | 132,464    |   |   |   | 130,619 |   |   |

 

* - Basic earningsper share does not add for the quarter ended March 31, 2007 due torounding.

*See accompanying notes.*

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**MONSTERWORLDWIDE, INC.CONSOLIDATED BALANCE SHEETS(in thousands, except per share amounts)(unaudited)**
|                                                                                                                                                                      | ** ** | **March 31,** | ** **    | **December 31,** | ** **    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|---------------|-----------------------|---------------|
| ** **                                                                                                                                                           | ** ** | **2007**           | ** **    | **2006**              | ** **    |
| **ASSETS**                                                                                                                                                           |       |               |          |                  |          |   |   |
| Current assets:                                                                                                                                                      |       |               |          |                  |          |   |   |
| Cash and cash equivalents                                                                                                                                            |       | $                  | 89,742        |                  |          | $ | 58,680 |   |   |
| Available-for-sale securities                                                                                                                                        |       | 591,262            |          |                  | 537,893       |   |   |
| Accounts receivable, net of allowance for doubtful  accounts of $12,194 and $11,924                                                                                  |       | 417,329            |          |                  | 444,747       |   |   |
| Prepaid and other                                                                                                                                                    |       | 89,650             |          |                  | 82,488        |   |   |
| **Total current assets**                                                                                                                                             | ** ** | **1,187,983**      | ** **    | ** **            | **1,123,808** |   |   |
| Property and equipment, net                                                                                                                                          |       | 115,729            |          |                  | 102,402       |   |   |
| Goodwill                                                                                                                                                             |       | 590,553            |          |                  | 589,041       |   |   |
| Intangibles, net                                                                                                                                                     |       | 50,262             |          |                  | 51,695        |   |   |
| Investment in unconsolidated affiliates                                                                                                                              |       | 57,748             |          |                  | 59,625        |   |   |
| Other assets                                                                                                                                                         |       | 55,540             |          |                  | 43,232        |   |   |
| **Total assets**                                                                                                                                                     | ** ** | **$**              | **2,057,815** | ** **            | ** **    | **$** | **1,969,803** |   |   |
| **LIABILITIES  AND STOCKHOLDERS’ EQUITY**                                                                                                                       |       |               |          |                  |          |   |   |
| Current liabilities:                                                                                                                                                 |       |               |          |                  |          |   |   |
| Accounts payable                                                                                                                                                     |       | $                  | 74,992        |                  |          | $ | 56,098 |   |   |
| Accrued expenses and other current liabilities                                                                                                                       |       | 190,394            |          |                  | 218,319       |   |   |
| Income taxes payable                                                                                                                                                 |       | 13,646             |          |                  | 84,433        |   |   |
| Deferred revenue                                                                                                                                                     |       | 449,836            |          |                  | 444,145       |   |   |
| Current portion of long-term debt                                                                                                                                    |       | 7,074              |          |                  | 23,249        |   |   |
| **Total current liabilities**                                                                                                                                        | ** ** | **735,942**        | ** **    | ** **            | **826,244**   |   |   |
| Long-term debt, less current portion                                                                                                                                 |       | 395                |          |                  | 415           |   |   |
| Deferred income taxes                                                                                                                                                |       | 38,530             |          |                  | 32,594        |   |   |
| Long-term income taxes payable                                                                                                                                       |       | 84,480             | ** **    | ** **            | —        |   |   |
| Other long-term liabilities                                                                                                                                          |       | 966                |          |                  | 865           |   |   |
| Long-term liabilities of discontinued operations                                                                                                                     |       | —             |          |                  | —        |   |   |
| **Total  liabilities**                                                                                                                                               | ** ** | **860,313**        | ** **    | ** **            | **860,118**   |   |   |
| Commitments and contingencies                                                                                                                                        | ** ** | ** **         | ** **    | ** **            | ** **    |   |   |
| Stockholders’ equity:                                                                                                                                           | ** ** | ** **         | ** **    | ** **            | ** **    |   |   |
| Preferred stock, $.001 par value, authorized 800  shares; issued and outstanding: none                                                                               |       | —             |          |                  | —        |   |   |
| Common stock $.001 par value, authorized 1,500,000  shares; issued: 127,423 and 125,724 shares, respectively; outstanding:  125,501 and 123,802 shares, respectively |       | 126                |          |                  | 126           |   |   |
| Class B common stock, $.001 par value,  authorized 39,000 shares; issued and outstanding: 4,762 shares                                                          |       | 5                  |          |                  | 5             |   |   |
| Additional paid-in capital                                                                                                                                           |       | 1,687,407          |          |                  | 1,636,023     |   |   |
| Accumulated other comprehensive income                                                                                                                               |       | 87,708             |          |                  | 87,632        |   |   |
| Retained deficit                                                                                                                                                     |       | (577,744           | )             |                  | (614,101      | ) |   |
| **Total stockholders’ equity**                                                                                                                                  | ** ** | **1,197,502**      | ** **    | ** **            | **1,109,685** |   |   |
| **Total liabilities and stockholders’ equity**                                                                                                                  | ** ** | **$**              | **2,057,815** | ** **            | ** **    | **$** | **1,969,803** |   |   |

 

*See accompanying notes.*

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**MONSTERWORLDWIDE, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(unaudited)**
|                                                                                    | ** ** | **Three Months Ended March 31,**                                                     | ** **  |
|------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------|-------------|
| ** **                                                                         | ** ** | **        2007        ** | ** **  | **        2006        ** | ** ** |
| **Cash flows provided by operating activities:**                                   |       |                                                                                                     |        |   |   |   |   |   |   |
| Net income                                                                         | ** ** | ** **                                                                                               | **$**       | **39,482** | ** ** | ** ** | ** ** | **$** | **42,262** | ** ** | ** ** |
| Adjustments to reconcile net income to net cash  provided by operating activities: |       |                                                                                                     |        |   |   |   |   |   |   |
| (Income) loss from discontinued operations, net of  tax                            |       |                                                                                                     | 245         |   |   |   | (7,845 | ) |   |
| Depreciation and amortization                                                      |       |                                                                                                     | 9,981       |   |   |   | 9,772 |   |   |
| Provision for doubtful accounts                                                    |       |                                                                                                     | 2,483       |   |   |   | 2,824 |   |   |
| Non-cash compensation                                                              |       |                                                                                                     | 4,362       |   |   |   | 2,029 |   |   |
| Common stock issued for matching contribution to  401(k) plan                 |       |                                                                                                     | —      |   |   |   | 996 |   |   |
| Deferred income taxes                                                              |       |                                                                                                     | 2,100       |   |   |   | 6,736 |   |   |
| Loss in equity interests and other                                                 |       |                                                                                                     | 1,420       |   |   |   | 1,235 |   |   |
| Changes in assets and liabilities, net of purchase  transactions:                  |       |                                                                                                     |        |   |   |   |   |   |   |
| Accounts receivable                                                                |       |                                                                                                     | 25,170      |   |   |   | (3,062 | ) |   |
| Prepaid and other                                                                  |       |                                                                                                     | (2          | ) |   |   | (1,492 | ) |   |
| Deferred revenue                                                                   |       |                                                                                                     | 5,691       |   |   |   | 15,900 |   |   |
| Accounts payable, accrued liabilities and other                                    |       |                                                                                                     | (8,950      | ) |   |   | 8,377 |   |   |
| Net cash provided by (used for) operating activities  of discontinued operations   |       |                                                                                                     | (2,983      | ) |   |   | 4,326 |   |   |
| **Total adjustments**                                                              |       |                                                                                                     | 39,517      |   |   |   | 39,796 |   |   |
| **Net cash provided by operating activities**                                      | ** ** | ** **                                                                                               | **78,999**  | ** ** | ** ** | ** ** | **82,058** | ** ** | ** ** |
| **Cash flows used for investing activities:**                                      |       |                                                                                                     |        |   |   |   |   |   |   |
| Capital expenditures                                                               |       |                                                                                                     | (21,612     | ) |   |   | (9,416 | ) |   |
| Purchase of marketable securities                                                  |       |                                                                                                     | (365,031    | ) |   |   | (334,990 | ) |   |
| Sales and maturities of marketable securities                                      |       |                                                                                                     | 311,662     |   |   |   | 238,001 |   |   |
| Payments for acquisitions and intangible assets, net  of cash acquired             |       |                                                                                                     | (1,664      | ) |   |   | (1,450 | ) |   |
| Investment in unconsolidated affiliate                                             |       |                                                                                                     | —      |   |   |   | (19,936 | ) |   |
| Cash funded to equity investee                                                     |       |                                                                                                     | (2,500      | ) |   |   | — |   |   |
| Net cash used for investing activities of  discontinued operations                 |       |                                                                                                     | —      |   |   |   | (2,469 | ) |   |
| **Net cash used for investing activities**                                         | ** ** | ** **                                                                                               | **(79,145** | **)** | ** ** | ** ** | **(130,260** | **)** | ** ** |
| **Cash flows provided by financing activities:**                                   |       |                                                                                                     |        |   |   |   |   |   |   |
| Payments on capital lease obligations                                              |       |                                                                                                     | —      |   |   |   | (276 | ) |   |
| Payments on acquisition debt                                                       |       |                                                                                                     | (16,310     | ) |   |   | (22,205 | ) |   |
| Proceeds from exercise of employee stock options                                   |       |                                                                                                     | 43,395      |   |   |   | 59,594 |   |   |
| Excess tax benefits on stock option exercises                                      |       |                                                                                                     | 6,486       |   |   |   | 11,275 |   |   |
| Repurchase of common stock                                                         |       |                                                                                                     | (3,326      | ) |   |   | (8,537 | ) |   |
| Structured stock repurchase                                                        |       |                                                                                                     | —      |   |   |   | (22,758 | ) |   |
| **Net cash provided by financing activities**                                      | ** ** | ** **                                                                                               | **30,245**  | ** ** | ** ** | ** ** | **17,093** | ** ** | ** ** |
| Effects of exchange rates on cash                                                  |       |                                                                                                     | 963         |   |   |   | 547 |   |   |
| **Net increase (decrease) in cash and cash  equivalents**                          |       |                                                                                                     | 31,062      |   |   |   | (30,562 | ) |   |
| **Cash and cash equivalents, beginning of period**                                 |       |                                                                                                     | 58,680      |   |   |   | 196,597 |   |   |
| **Cash and cash equivalents, end of period**                                       | ** ** | ** **                                                                                               | **$**       | **89,742** | ** ** | ** ** | ** ** | **$** | **166,035** | ** ** | ** ** |
| **Supplemental disclosures of cash flow  information:**                            | ** ** | ** **                                                                                               | ** **  | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Cash paid for interest                                                             |       |                                                                                                     | $           | 459 |   |   |   | $ | 673 |   |   |
| Cash paid for income taxes                                                         |       |                                                                                                     | $           | 29,776 |   |   |   | $ | 3,917 |   |   |
| **Non-cash financing and investing activities:**                                   | ** ** | ** **                                                                                               | ** **  | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Liabilities created in connection with business  combinations                      |       |                                                                                                     | $           | 325 |   |   |   | $ | — |   |   |

 

*See accompanying notes.*

5

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**MONSTER WORLDWIDE,INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts)(unaudited)**

**1.   DESCRIPTIONOF BUSINESS AND BASIS OF PRESENTATION**

***Description of Business***

Monster Worldwide, Inc. (the “Company”) hascontinuing operations that consist of three reportable segments: MonsterCareers – North America; Monster Careers – International;and Internet Advertising & Fees. These segments provide onlineservices to customers in a variety of industries throughout North America,Europe and the Asia-Pacific region.

*MonsterCareers (North America and International).**  *The Company’s Monster Careers segmentspredominantly earn revenue from the placement of job postings on the websiteswithin the Monster network, access to the Company’s resume databases and othercareer-related services. The majority of the Monster Careers services are freeto users and revenue is earned in 38 countries around the world.

*Internet Advertising &Fees.**  *The Company’s Internet Advertising &Fees segment earns revenue from leads provided to advertisers, the display ofadvertisements on the Monster network of websites, click-throughs on text-basedlinks and subscriptions to premium services. The majority of the InternetAdvertising & Fees services are free to users and revenue from thissegment is primarily earned in the United States.

***Basis of Presentation***

The consolidated interim financial statements includedherein are unaudited and have been prepared by the Company pursuant to the rules andregulations of the Securities and Exchange Commission. Certain information andfootnote disclosures normally included in financial statements prepared inaccordance with accounting principles generally accepted in the United Stateshave been omitted pursuant to such rules and regulations, although theCompany believes that the disclosures are adequate to make the informationpresented not misleading. The consolidated interim financial statements includethe accounts of the Company and all of its wholly-owned and majority-ownedsubsidiaries. All significant inter-company accounts and transactions have beeneliminated in consolidation.

These statements reflect all normal recurringadjustments that, in the opinion of management, are necessary for fairpresentation of the information contained herein. These consolidated interimfinancial statements should be read in conjunction with the financialstatements and notes thereto included in the Company’s Annual Report on Form 10-Kfor the year ended December 31, 2006. The Company adheres to the sameaccounting policies in preparation of interim financial statements. As permittedunder generally accepted accounting principles, interim accounting for certainexpenses, including income taxes are based on full year assumptions. Suchamounts are expensed in full in the year incurred. For interim financialreporting purposes, income taxes are recorded based upon estimated annualincome tax rates.

Certain reclassificationsof prior year amounts have been made for consistent presentation.

**2.   EARNINGS PERSHARE AND STOCK-BASED COMPENSATION**

**Earnings Per Share**

Basic earnings per share does not include the effectsof potentially dilutive stock options and restricted stock bonus awards, and iscomputed by dividing income available to common stockholders by the weightedaverage number of shares of common stock outstanding for the period. Dilutedearnings per share reflects, in periods in which they have a dilutive effect,commitments to issue common stock and 

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common stock issuable upon exercise of stock optionsfor periods in which the options’ exercise price is lower than the Company’saverage share price for the period.

Certainstock options and stock issuable under employee compensation plans wereexcluded from the computation of earnings per share due to their anti-dilutiveeffect. The weighted average number of such common stock equivalents isapproximately 624,000 and 713,000 for the three months ended March 31,2007 and 2006, respectively. A reconciliation of shares used in calculatingbasic and diluted earnings per common and Class B common share follows:
|                                                                                                                         | ** ** | **Three Months Ended March 31,** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------|------------|
| **(thousands of shares)**                                                                                     | ** ** | ** **                                           | ** ** | **        2007        ** | ** ** | **        2006        ** | ** ** |
| Basic weighted average shares outstanding                                                                               |       |                                                 | 129,653    |   |   |   | 126,753 |   |   |
| Effect of common stock equivalents – stock  options and stock issuable under employee compensation plans |       |                                                 | 2,811      |   |   |   | 3,866 |   |   |
| Diluted weighted average  shares outstanding                                                                            |       |                                                 | 132,464    |   |   |   | 130,619 |   |   |
|                                                                                                                         |            |                                                      |            |  |  |  |  |  |  |  |  |

 

**Stock-BasedCompensation**

The Company adopted Statement of Financial AccountingStandards (“SFAS”) No. 123(R) *Share Based Payment*(“SFAS 123R”) using the modified-prospective-transition method beginning January 1,2006. SFAS 123R requires the recognition of (a) compensation cost for allshare based payments granted, but not yet vested as of January 1, 2006,based on the grant-date fair value estimated in accordance with SFAS No. 123*Accounting for Stock-Based Compensation*,and (b) compensation cost for all share-based payments granted subsequentto January 1, 2006, based on the grant date fair value in accordance withthe provisions of SFAS 123R. As a result of the adoption of SFAS 123R, theCompany recognized stock-based compensation expense of $4,362 and $2,029 duringthe quarters ended March 31, 2007 and 2006, respectively. The Companygrants stock options, non-vested stock and restricted stock units to employees,directors and executive officers.

At March 31, 2007, the Company has the followingstock-based compensation plans:

*StockOptions.*   In January 2007, the Company’sCompensation Committee approved the grant of stock options to certain employeesin France. Under the terms of the award, 25% of the stock options vestedimmediately and the remaining 75% will be amortized over three years, on astraight-line basis. The Company recognized approximately $186 of pre-taxcompensation expense in the consolidated statement of operations related tothis grant. During the three months ended March 31, 2006 the Companyrecognized approximately $95 of pre-tax compensation expense in theconsolidated statement of operations related to stock options granted tomembers of our Board of Directors that were not subject to the acceleratedvesting in December 2005.

*StockBonus Arrangements.**  *TheCompany, from time to time, enters into separate share-based paymentarrangements with executive officers and directors. The terms of suchagreements are subject to various specified performance and/or vestingconditions.  As of March 31, 2007,there were approximately 372,280 non-vested shares outstanding related tothese agreements. The Company measured the equity awards to executive officersusing the fair market value of the Company’s common stock on the date the awardwas approved by the Compensation Committee of the Board of Directors. Directorsof the Company receive automatic grants of equity awards and such awards aremeasured using the fair market value of the Company’s common stock on the dateof the automatic grant. These awards are amortized on a straight-linebasis over the vesting period. For the three months ended March 31, 2007and 2006, the Company recognized approximately $1,605 and $1,290, respectively,of pre-tax compensation expense, as a component of salaries and relatedin the consolidated statements of operations, related to stock bonusarrangements with executive officers and directors.

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*RestrictedStock Units.**  *InMarch 2006, the Compensation Committee of the Board of Directors approvedthe grant of 663,500 restricted stock units to approximately 330 employees ofthe Company, subject to certain specified performance-based conditions. In February 2007,the performance-based conditions were certified by the Compensation Committee. Accordingly,individuals are entitled to their award provided that the recipient iscontinuously employed by the Company or any of its affiliates on eachapplicable vesting date.

During the first quarter of 2007, the CompensationCommittee of the Board of Directors approved the grant of 93,034 restrictedstock units to certain employees. These awards do not have anyperformance-based conditions and are subject to each recipient beingcontinuously employed by the Company or any of its affiliates on eachapplicable vesting date. In March 2007, the Compensation Committee of theBoard of Directors approved the grant of 747,240 restricted stock units toapproximately 800 employees of the Company. The amount of restricted stockunits that are ultimately awarded  basedon performance are subject to reduction or elimination based on whether or notcertain specified performance-based conditions are satisfied. If the minimumperformance-based condition becomes satisfied, the number of restrictedstock units subject to the award will vest in 25% increments in March 2008,March 2009, March 2010 and March 2011, provided that therecipient is continuously employed by the Company or any of its affiliates oneach applicable vesting date.

The Company measured allgrants of restricted stock units using the fair market value of the Company’scommon stock on the date the award was approved by the Compensation Committeeof the Board of Directors. For the three months ended March 31, 2007 and 2006,the Company recorded approximately $2,571 and $644 of pre-taxcompensation expense, as a component of salaries and related in theconsolidated statements of operations, related to the amortization ofrestricted stock units.

**Share-basedPayment Activity**

Thefollowing table summarizes the activity of our employee stock options for thethree months ended March 31, 2007:

| **(thousands of shares)**         | ** ** | ** ** | ** ** | **Shares** | ** ** | **Weighted  Average Exercise  Price** | ** ** | **Weighted  Average  Contractual  Term (in years)** | ** ** | **Aggregate  Intrinsic Value** | ** ** |
|---------------------------------------------|------------|------------|------------|------------|------------|---------------------------------------|------------|----------------------------------------------------------|------------|-------------------------------------|------------|
| ** **                                  | ** ** | ** ** | ** ** |
| Outstanding at  January 1, 2007        |       | 9,573      |       |       | $          | 28.97                                 |       |                                                     |       |                                |       |   |   |   |   |   |
| Granted                                     |       | 17         |       |       | 46.81      |                                  |       |                                                     |       |                                |       |   |   |   |   |
| Exercised                                   |       | (1,520     | )          |       | 28.55      |                                  |       |                                                     |       |                                |       |   |   |   |   |
| Forfeited/expired/cancelled                 |       | (353       | )          |       | 31.36      |                                  |       |                                                     |       |                                |       |   |   |   |   |
| Outstanding at  March 31, 2007         |       | 7,717      |       |       | 28.98      |                                  |       |                                                     | 4.7        |                                |       |   | $ | 141,924 |   |   |
| Options exerciseable at March 31, 2007 |       | 5,799      |       |       | $          | 28.73                                 |       |                                                     |       | 4.4                                 |       |   |   | $ | 108,104 |   |   |

 

The aggregate intrinsicvalue is calculated as the difference between the market price of our commonstock as of March 31, 2007 and the exercise price of the underlying options.During the three months ended March 31, 2007 and 2006, the aggregateintrinsic value of options exercised was $33,142 and $59,897, respectively.There is approximately $211 of unrecognized compensation expense related tounvested stock options awarded under our incentive plan. These costs will berecorded on a straight line basis through 2009.

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Thefollowing table summarizes the activity of our non-vested stock for thethree months ended March 31, 2007:

| ** **                          | ** ** | **Shares** | ** ** | **Weighted  Average Fair  Value at Grant  Date** | ** ** |
|-------------------------------------|------------|------------|------------|-------------------------------------------------------|------------|
| Non-vested at  January 1, 2007 |       | 969,030    |       |                                                  | $          | 44.53 |   |   |
| Granted                             |       | 840,274    |       |                                                  | 47.41      |   |   |
| Forfieted                           |       | (12,000    | )          |                                                  | 48.58      |   |   |
| Vested                              |       | (238,397   | )          |                                                  | 43.86      |   |   |
| Non-vested at March 31, 2007   |       | 1,558,907  |       |                                                  | $          | 46.15 |   |   |

 

As of March 31, 2007there was approximately $55,681 and $12,430 of unrecognized compensation costrelated to the Company’s grant of restricted stock units and stock bonusagreements, respectively. These awards relate to non-vested stock and arebeing amortized over the vesting periods on a straight-line basis.

**3.   BUSINESSCOMBINATIONS**

Forthe period January 1, 2006 through March 31, 2007, the Companycompleted two business combinations. Although the following acquired businesseswere not considered to be significant subsidiaries, either individually or inthe aggregate, they do affect the comparability of results from period toperiod. The acquisitions and the acquisition dates are as follows:
| Acquired Business                    | ** ** | **Acquisition Date**  | ** ** | **Business Segment**                           |
|--------------------------------------|------------|-----------------------|------------|------------------------------------------------|
| Arbeidskamerater AS (Norway)         |       | January 10, 2007 |       | Monster Careers – International |
| PWP, LLC (“Education.org”) |       | May 2, 2006      |       | Internet Advertising & Fees           |

 

**AccruedIntegration and Restructuring Costs**

The Company has formulated integration andrestructuring plans to eliminate redundant facilities, personnel and duplicateassets in connection with its business combinations. These costs wererecognized as liabilities assumed in connection with the Company’s businesscombinations. Accordingly, these costs are considered part of the purchaseprice of the business combinations and have been recorded as increases togoodwill. During the three months ended March 31, 2006, the Companycapitalized $1,340 to goodwill relating to the Company’s February 2005acquisition of Emailjob. The Company did not increase goodwill or therestructuring and integration accrual during the quarter ended March 31,2007.

Changes in the Company’sapproved restructuring plans or costs related to new restructuring initiativesmay be recorded in goodwill for up to one year following the acquisition dateand must be recorded in the Company’s operating results thereafter. Reductionsto integration and restructuring reserves established in connection withpurchase business combinations are recorded as a reduction to goodwill. As ofMarch 31, 2007 and December 31, 2006, the Company had accrued $5,808and $6,075, respectively, for integration and restructuring obligations, mainlyfor future operating lease payments.

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**4.   INVESTMENT INUNCONSOLIDATED AFFILIATE**

In February 2005, the Company acquired a 40%interest in ChinaHR.com Holdings Ltd. (“ChinaHR”) for consideration of $50,000in cash. In March 2006, the Company increased its ownership interest inChinaHR to 44.4% by acquiring an additional 4.4% interest from ChinaHRshareholders, for cash consideration of $19,936. The Company accounts for itsinvestment in ChinaHR using the equity method of accounting, thereby recordingits owned percentage of ChinaHR’s net results of operations as Losses in EquityInterests in the Company’s statements of operations. Such losses reduce thecarrying value of the Company’s investment in ChinaHR.  For the three months ended March 31,2007 and 2006, the Company recorded a loss in equity interest of $2,089 and$1,241, respectively, related to China HR.

In March 2006, the Company entered into a loanagreement with ChinaHR, whereby the Company has agreed to advance ChinaHR up toan aggregate of $20,000, with no more than $10,000 being advanced in the firstyear of the agreement. In January 2007, the Company amended the agreementwith ChinaHR, increasing the maximum allowable amount to be advanced in thefirst year from $10,000 to $12,500. Interest on the loans will be assessed atthe average one-month U.S. Dollar LIBOR rate plus 1% and shall bepayable quarterly, in arrears. The credit facility provides that any advancesshall be due and payable in full on the maturity date, which is the earliest ofMarch 2011 or the consummation of an initial public offering of securitiesby ChinaHR. During the first quarter of 2007, the Company advanced $2,500 underthe credit facility, meeting the maximum allowable advance amount in the firstyear.

ChinaHR is a leading recruitment website in China andprovides online recruiting, campus recruiting and other human resourcesolutions. As a result of its investment, the Company has the right to occupy threeof seven seats on ChinaHR’s Board of Directors. In addition, the Company alsohas certain rights and obligations, the amount and likelihood of which are notcurrently determinable, to acquire a 51% or more interest in ChinaHR in theevent of an initial public offering or February 1, 2008, whichever comesfirst.

The Company has a 25%equity investment in Finland related to a business combination completed in2001. The Company accounts for its investment in Finland using the equitymethod of accounting, thereby recording its owned percentage of Finland’s netresults of operations as a component of “Losses in Equity Interests” in theCompany’s statements of operations. For the three months ended March 31,2007, the Company recorded income of $669 related to the 25% Finland equityinvestment. Included in this amount is $456 of income recorded in 2007 for 2006performance and approximately $213 of income earned in the first quarter of2007.

**5.   COMPREHENSIVEINCOME**

TheCompany’s comprehensive income is as follows:
|                                                    | ** ** | **Three Months ended March 31,** | ** ** |
|----------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                         | ** ** | **2007**                                             | ** ** | **2006** | ** ** |
| Net income                                         |       |                                                 | $          | 39,482 |   |   |   | $ | 42,262 |   |   |
| Foreign currency  translation adjustment and other |       |                                                 | 76         |   |   |   | 7,464 |   |   |
| Comprehensive income                               |       |                                                 | $          | 39,558 |   |   |   | $ | 49,726 |   |   |

 

**6.   STOCKHOLDERS’EQUITY**

**Share RepurchaseProgram**

In November 2005, theBoard of Directors authorized the Company to purchase up to $100,000 of itsshares of common stock in the open market or otherwise from time to time over a30-month period as conditions warrant. Through March 31, 2007, theCompany has repurchased 994,584 shares of its common stock for an aggregatepurchase price of $45,081 of which 294,584 shares were repurchased in openmarket 

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transactions during theyear ended December 31, 2006. The Company did not repurchase stock in theopen market during the three months ended March 31, 2007.

**7.   DISCONTINUEDOPERATIONS**

During the year ended December 31, 2006, theCompany disposed of the following businesses that collectively comprised itsentire Advertising & Communications operating segment. The Companyexecuted these transactions in order to focus more resources to support thegrowth of the Monster franchise on a global basis. The results of operations ofthese businesses and the associated disposal costs are reflected asdiscontinued operations in the consolidated statements of operations for allperiods presented:

·       OnAugust 31, 2006, the Company sold its TMP Worldwide Advertising &Communications business in the United States and Canada, completing the globaldivestiture of the operating unit. The Company received cash of $36,205 (net ofworking capital and other adjustments). The Company recorded a pre-tax loss onthe sale of the business of $125,010 ($123,095 after-tax loss, net of a $1,915tax benefit) in the third quarter of 2006. Included in the pre-tax loss isapproximately $133,000 of remaining goodwill and other intangible assetsassociated with the Advertising & Communications operating segment.This disposition is considered material and included a significant amount ofassets, primarily due to the amount of goodwill on the balance sheet as of August 31,2006.

·       OnMay 10, 2006, the Company sold its TMP Worldwide Advertising &Communications businesses in the United Kingdom and Ireland. In a separate transaction,the Company also sold its recruitment advertising agency in Spain. The Companyreceived cash of $32,950 (net of working capital and other adjustments) andapproximately a $9,000 interest bearing note receivable maturing on May 10,2013. The Company recorded a pre-tax gain on the sale of these businesses of$543 ($812 after-tax loss, net of a $1,355 tax expense) in the second quarterof 2006, included as a component of discontinued operations in the statementsof operations. In the first quarter of 2007, the Company received approximately$6,560 related to the promissory note as a partial repayment. The dispositionwas not considered material and did not include a significant amount of assets.

·       OnMarch 1, 2006, the Company sold its TMP Worldwide Advertising &Communications businesses in Australia/New Zealand and Singapore in twoseparate transactions. The Company recognized a pre-tax gain on the sale ofthese businesses of $2,453 ($5,420 including the tax benefit recognized upondisposition) in the first quarter of 2006. The disposition was not consideredmaterial and did not include a significant amount of assets.

The followingamounts,  related to the operations ofthe Company’s disposed businesses  in2006, and  have been segregated fromcontinuing operations and are reflected as discontinued operations in eachperiod’s consolidated statement of operations:
|                                                         | ** ** | **Three Months ended March 31,**                                         | ** ** |
|---------------------------------------------------------|------------|----------------------------------------------------------------------------------------------|------------|
| ** **                                              | ** ** | **       2007       ** | ** ** | **    **   2006        | ** ** |
| Revenue                                                 |       |                                                                                         | $          | — |   |   |   | $ | 37,107 |   |   |
| Income before  income taxes                             |       |                                                                                         | (376       | ) |   |   | 4,089 |   |   |
| Income tax  expense (benefit)                           |       |                                                                                         | (131       | ) |   |   | 1,664 |   |   |
| Income (loss)  from discontinued operations, net of tax |       |                                                                                         | (245       | ) |   |   | 2,425 |   |   |
| Pre-tax loss on  sale of discontinued operations        |       |                                                                                         | —     |   |   |   | 2,453 |   |   |
| Income tax  benefit                                     |       |                                                                                         | —     |   |   |   | (2,967 | ) |   |
| Gain on sale of  business, net of tax                   |       |                                                                                         | —     |   |   |   | 5,420 |   |   |
| Income (loss) from  discontinued operations, net of tax |       |                                                                                         | $          | (245 | ) |   |   | $ | 7,845 |   |   |

 

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**8.   SEGMENTAND GEOGRAPHIC DATA**

The Company conducts business in three reportablesegments: Monster Careers—North America; Monster Careers—International; andInternet Advertising & Fees. Corporate operating expenses are notallocated to the Company’s reportable segments. See Note 1 for a description ofour operating segments.

The Company’s chief operating decision maker includesthe impact of non-cash compensation expenses when measuring the results of eachreportable segment. The Company has recorded $4,362 and $2,029 of pre-taxnon-cash compensation expense in its statements of operations for the threemonths ended March 31, 2007 and 2006, respectively.

Thefollowing tables present the Company’s operations by business segment and bygeographic region:
|                                        | ** ** | **Three Months ended March 31** | ** **  |
|----------------------------------------|------------|-----------------------------------------------------|-------------|
| **Revenue**                            | ** ** | **2007**                                            | ** **  | **2006** | ** ** |
| Monster:                               |       |                                                |        |   |   |
| Careers – North America |       | $                                                   | 184,017     |   | $ | 159,998 |   |
| Careers – International |       | 106,206                                             |        | 64,591 |   |
| Internet Advertising & Fees   |       | 38,805                                              |        | 32,447 |   |
| **Total Revenue**                      | ** ** | **$**                                               | **329,028** |   | **$** | **257,036** |   |

 
|                                        | ** ** | **Three Months ended March 31** | ** ** |
|----------------------------------------|------------|-----------------------------------------------------|------------|
| **Operating Income**              | ** ** | **2007**                                            | ** ** | **2006** | ** ** |
| Monster:                               |       |                                                |       |   |   |
| Careers – North America |       | $                                                   | 65,878     |   | $ | 54,559 |   |
| Careers – International |       | 7,961                                               |       | 765 |   |
| Internet Advertising  & Fees  |       | 4,304                                               |       | 9,486 |   |
| Total Monster                          |       | 78,143                                              |       | 64,810 |   |
| Corporate expenses                     |       | (19,948                                             | )          | (11,871 | ) |
| **Operating Income**                   | ** ** | **$**                                               | **58,195** |   | **$** | **52,939** |   |

 
|                                                 | ** ** | **Three Months ended March 31** | ** **  |
|-------------------------------------------------|------------|-----------------------------------------------------|-------------|
| **Revenue by Geographic Region** | ** ** | **2007**                                            | ** **  | **2006** | ** ** |
| United States                                   |       | $                                                   | 217,923     |   | $ | 189,820 |   |
| International                                   |       | 111,105                                             |        | 67,216 |   |
| **Total Revenue**                               | ** ** | **$**                                               | **329,028** |   | **$** | **257,036** |   |

 

The following table reconciles each reportable segment’sassets to total assets reported on the Company’s consolidated balance sheets asof March 31, 2007 and December 31, 2006:
| Total Assets by Segment         | ** ** | **March 31, 2007** | ** ** | **December 31,  2006** | ** ** |
|------------------------------------------------|------------|------------------------------|------------|-----------------------------|------------|
| Monster Careers – North America |       |                         | $          | 638,923                     |       |   |   | $ | 669,645 |   |   |
| Monster Careers – International |       |                         | 556,869    |                        |       |   | 516,213 |   |   |
| Internet Advertising & Fees           |       |                         | 159,092    |                        |       |   | 164,482 |   |   |
| Corporate                                      |       |                         | 612,096    |                        |       |   | 540,723 |   |   |
| Shared assets (a)                              |       |                         | 90,835     |                        |       |   | 78,740 |   |   |
| **Total Assets**                               | ** ** | ** **                   | **$**      | **2,057,815**               |       | ** ** | ** ** | **$** | **1,969,803** |   | ** ** |

 

(a)              Shared assets represent assets thatprovide economic benefit to all of the Company’s operating segments. Sharedassets are not allocated to operating segments for internal reporting ordecision-making purposes.

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**9.   INCOME TAXES**

On January 1, 2007, the Company adopted the provisionsof FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes – aninterpretation of SFAS No. 109 (“FIN 48”). FIN 48 establishes asingle model to address accounting for uncertain tax positions and clarifiesthe accounting for income taxes by prescribing a minimum recognition thresholdthat a tax position is required to meet before being recognized in thefinancial statements. Upon adoption on January 1, 2007, the Companyincreased its existing liabilities for uncertain tax positions by $3,125. Thisincrease was recorded as a cumulative effect adjustment to the Company’sopening retained deficit. The Company also reclassified a portion of previouslyaccrued  income tax liabilities fromcurrent to non-current because payment of cash is not anticipated within oneyear of the balance sheet date.

As of January 1, 2007 and March 31, 2007 theCompany has recorded a liability for $79,599 and $84,480, respectively ofunrecognized tax benefits, inclusive of estimated accrued interest andpenalties. In addition as of January 1, 2007 and March 31, 2007 theCompany has reduced its recorded deferred tax assets by $16,478 and $17,172respectively due to unrecognized tax benefits which would otherwise give riseto a deferred tax asset. If the unrecognized tax benefits were to be recognizedin full, the net amount that would be reflected in the income statement taxprovision, thereby impacting the effective tax rate, would be $73,568 at January 1,2007 and $76,788 as of March 31, 2007. The impact of recognition on theincome tax provision reflects the liabilities for unrecognized tax benefits,net of the deferred tax benefit on accrued interest and state income tax items.

Interest and penalties related to the underpayment ofincome taxes are classified as a component of “Income Taxes” in theConsolidated Statement of Operations. Estimated accrued interest and penaltieswere $12,275 as of January 1, 2007 and $13,735 as of March 31, 2007.

The Company conductsbusiness globally and as a result, the Company or one or more subsidiariesfiles income taxes in U.S. Federal jurisdictions and various states andapproximately 20 foreign jurisdictions. In the normal course of business, theCompany is subject to tax examinations by taxing authorities including majorjurisdictions such as France, Germany, India, South Korea, Netherlands, UnitedKingdom, the United States as well as countries in Scandinavia, Eastern Europeand in the Asia/Pacific region. With some exceptions, the Company is generallyno longer subject to examinations in jurisdictions in which returns have beenfiled for years prior to 2003. The Company is currently under audit by theInternal Revenue Service for years 2003-2005. The audit is still in arelatively early stage, and it is likely that the audit will not be fullyconcluded in 2007. At this point it is not possible to provide an estimate ofthe amount, if any, of significant changes in unrecorded tax benefits that arereasonably possible to occur within the next 12 months or upon conclusion ofthe audit.

**10.   RESTATEMENT OF CONSOLIDATED FINANCIALSTATEMENTS AND STOCK OPTION INVESTIGATION**

On June 12, 2006, the Company announced that acommittee of independent directors of the Board of Directors (the “SpecialCommittee”) assisted by independent legal counsel and outside accountingexperts was conducting an investigation to review the Company’s historicalstock option grant practices and related accounting. The Special Committee andits advisors conducted an extensive review of the Company’s historical stockoption grants and related accounting, including an assessment and review of theCompany’s accounting policies, internal records, supporting documentation ande-mail communications, as well as interviews with current and former employeesand current and former members of the Company’s executive management and Boardof Directors.

On December 13, 2006, the Company restated its Form 10-Kfor the year ended December 31, 2005 to reflect additional non-cashstock-based compensation costs and related income tax effects, relating tostock option awards that were granted during the periods 1997 through March 31,2003. The restated 

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consolidated financial statements included cumulativepre-tax compensation expense of $339,586 and $67,656 of related income taxbenefits. As of December 31, 2005, the Company had acceleratedsubstantially all unvested outstanding stock options in order to mitigatecompensation expense that would have been required upon the effectiveness ofSFAS 123R beginning January 1, 2006. Accordingly, the 2006 periods werenot materially affected as a result of this restatement. There was no effect onthe 2007 period as a result of the restatement.

The Company has notified the Internal Revenue Serviceof the stock option review and results thereof. Under Internal Revenue Code section 162(m)(“IRC 162(m)”), stock options that are in-the-money at the time of grant do notqualify as performance-based compensation. The Company is not entitled toa deduction for the compensation expense related to the exercise of thoseoptions held by officers who are covered by IRC 162(m). Certain stock optionswhich were granted on a discounted basis (exercise price is lessthan the fair market value of the stock on the date ofgrant) are subject to Internal Revenue Code section 409A (“409A”). Theprovisions of 409A impose adverse consequences upon the individuals whoreceive such options including excise tax, additional interest charges andaccelerated inclusion in income. In January 2007, the Board ofDirectors approved a tender offer plan to amend certain stock options grantedto approximately 60 individuals who received stock options that aresubject to 409A in order to correct the options such that they are no longersubject to this provision. The correction is made by increasing theexercise price to the same value used in connection with the financialstatement restatement. In April 2007, the tender offer was finalized andfor individuals who agreed to the modification, the Company will compensatethem for the increase in the exercise price by paying an amount equalto the difference in the exercise price for each option. This amount is payableafter January 1, 2008 and the cash payment will be approximately $331.

During the quarter ended March 31,2007, the Company recorded approximately $9,800 of professional fees related tothe ongoing investigation into the Company’s historical stock option grantpractices and related accounting. These costs were recorded as a component of “officeand general” expenses within “Corporate operating expenses” and primarilyrelate to professional services for legal fees. The investigation is being ledby external regulatory and federal agencies, and is focused on the past conductof former employees. While the Company cannot quantify or estimate the amountor timing of these costs throughout 2007 and into the future, they willprimarily relate to legal fees on behalf of former employees and former membersof senior management, fees paid in defense of shareholder lawsuits andpotential fines or settlements. See Note 11 for further discussion.

**11.   STOCK OPTIONINVESTIGATIONS AND LITIGATION**

The United States Attorney’s Office for the SouthernDistrict of New York (“USAO”) and the SEC have informed the Company that eachis conducting an investigation into its past stock option grants. In connectionwith these investigations, the Company has received a grand jury subpoena fromthe United States District Court for the Southern District of New York andrequests for the voluntary production of documents from the SEC. The Company isfully cooperating with the USAO and the SEC. On February 15, 2007, theCompany’s former general counsel pleaded guilty to two felony counts relatingto those historical stock option grants and the SEC instituted a civil actionagainst him. On March 26, 2007, the SEC civil action was settled pursuantto a final judgment permanently enjoining our former general counsel fromviolating the federal securities laws and from acting as an officer or directorof a public company.

In October 2006, a putative class actionlitigation was filed in the United States District Court for the SouthernDistrict of New York by a former Company employee against the Company and anumber of its current and former officers and directors. On February 16,2007, plaintiff served an amended class action complaint. The action purportsto be brought on behalf of all participants in the Company’s 401(k) plan. Theamended complaint alleges that the defendants breached their fiduciaryobligations to plan 

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participants under §§ 404, 405, 409 and 502 of theEmployee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1104 et seq., byallowing Plan participants to purchase and to hold and maintain Company stockin their Plan accounts without disclosing to those Plan participants thehistorical stock option practices. The complaint seeks, among other relief,equitable restitution, attorney’s fees and an order enjoining defendants fromviolations of ERISA. The time for defendants to respond to the amendedcomplaint has not yet expired.

In addition, derivative actions in connection withhistorical stock option practices have been commenced by shareholderspurportedly on behalf of the Company in both the United States District Courtfor the Southern District of New York and in the Supreme Court of the State ofNew York, New York County, against a number of current and former officers anddirectors of the Company, naming the Company as a nominal defendant.

On October 20, 2006, the three federal courtactions were consolidated by the Court and styled as In re Monster Worldwide, Inc.Stock Option Derivative Litigation, Master Docket 1:06:cv-04622(S.D.N.Y.)(NRB-DCF) (Consolidated Action). On or about December 20, 2006,plaintiffs in the consolidated federal actions filed a consolidated amendedcomplaint. The consolidated amended complaint asserts claims for breach offiduciary duty, gross mismanagement, unjust enrichment, and violations ofSections 10(b) and 14(a) of the Securities Exchange Act of 1934 (the “ExchangeAct”) for the period between January 1, 1997 and the present. The federalcourt plaintiffs seek, among other relief, an indeterminate amount of damagesfrom the individual defendants.

On September 18, 2006, the three purportedderivative actions that were filed in the Supreme Court of the State of NewYork, New York County, were also consolidated. The consolidated actions havebeen styled as In re Monster Worldwide Inc. Derivative Litigation, Index. No. 06-108700(Supreme, N.Y. County). On or about December 1, 2006, the plaintiffs inthe consolidated state court actions filed a consolidated amended complaintasserting claims for breach of fiduciary duty and related state law causes ofaction. The state court plaintiffs seek, among other relief, an indeterminateamount of damages from the individual defendants.

On or about March 15, 2007, a putative securitiesshareholder class action was filed in the United States District Court for theSouthern District of New York captioned Middlesex County Retirement System v.Monster Worldwide, Inc., Andrew T. McKelvey, Myron Olesnyckyj, and Charles“Lanny” Baker, 07 Civ. 2237 (S.D.N.Y.) (JSR), seeking an indeterminate amountof damages on behalf of all persons or entities, other than defendants, whopurchased or acquired the securities of the Company from May 6, 2005 untilJune 9, 2006. The Complaint asserts claims against the Company and theindividual defendants based on an alleged violation of Section 10(b) theExchange Act and against the individual defendants based on an allegedviolation of Section 20(a) of the Exchange Act. By Stipulation ofDismissal, dated April 10, 2007, the Complaint as against Charles “Lanny”Baker was dismissed with prejudice.

From July 25, 2006 to December 26, 2006, theCompany suspended its Registration Statement on Form S-8, resultingin a prohibition on the exercise of stock options. The Company receivedcorrespondence from, or on behalf of, certain former employees who are granteesof certain vested stock options that were scheduled to expire or be forfeitedunless exercised during this suspension period. Due to the suspension of theCompany’s S-8, these individuals were precluded from exercising suchoptions prior to the expiration date of the options. The former employees haveinformed the Company that they will seek to hold the Company liable for anyfinancial damages suffered as a result of their inability to exercise theoptions during the suspension period. In December 2006, the Company’sBoard of Directors approved the payment of approximately $5.0 million tocompensate certain former employees for the value of stock options that expiredduring the period that the Company’s equity compensation plans were suspended.In exchange for payment, the Company requested a release of any liability.Approximately all payments have been made under this agreement.

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The Company may becomesubject to additional private or government actions. The expense of defendingsuch litigation may be significant. In addition, an unfavorable outcome in suchlitigation could have a material adverse effect on the Company’s business andresults of operations. The Company may also be obligated under the terms of itsby-laws to advance litigation costs for directors and officers named in litigationrelating to their roles at the Company.

**12.   SUBSEQUENTEVENTS**

On April 12, 2007, the Company announced that itsBoard of Directors named Salvatore Iannuzzi Chairman of the Board of Directorsand Chief Executive Officer. Mr. Iannuzzi has been a member of the Boardof Monster Worldwide since July 2006 and has served as Chairman of theExecutive Committee since October 2006. William Pastore, the Company’sformer Chief Executive Officer resigned from the Company through mutualagreement with its Board of Directors. Mr. Pastore will continue to beemployed by the Company through June 2007 to facilitate an orderlytransition. The Company expects to record a severance charge of approximately$12,700 in the second quarter of 2007 in connection with Mr. Pastore’sseverance agreement. The charge will include approximately $11,100 of non-cashcompensation related to the accelerated vesting of 281,250 shares of restrictedstock and 56,250 restricted stock units and $1,600 related to the cashseverance obligation.

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**Report of Independent RegisteredPublic Accounting Firm**

Board of Directors andStockholdersMonster Worldwide, Inc.New York, New York

We have reviewed the consolidated balance sheet ofMonster Worldwide, Inc. as of March 31, 2007, and the relatedconsolidated statements of operations and cash flows for the three-monthperiods ended March 31, 2007 and 2006 included in the accompanyingSecurities and Exchange Commission Form 10-Q for the period ended March 31,2007. These interim financial statements are the responsibility of the Company’smanagement.

We conducted our reviews in accordance with thestandards of the Public Company Accounting Oversight Board (United States). Areview of interim financial information consists principally of applyinganalytical procedures and making inquiries of persons responsible for financialand accounting matters. It is substantially less in scope than an auditconducted in accordance with the standards of the Public Company AccountingOversight Board, the objective of which is the expression of an opinionregarding the financial statements taken as a whole. Accordingly, we do notexpress such an opinion.

Based on our reviews, we are not aware of any materialmodifications that should be made to the consolidated financial statementsreferred to above for them to be in conformity with accounting principlesgenerally accepted in the United States.

As discussed in Note 9 to the financial statements,effective January 1, 2007 the Company adopted FASB Interpretation No. 48,*Accounting for Uncertainty in Income Taxes*.

We have previouslyaudited, in accordance with the standards of the Public Company AccountingOversight Board, the consolidated balance sheet of Monster Worldwide, Inc.****as of December 31, 2006, and therelated consolidated statements of operations, stockholders’ equity, and cashflows for the year then ended (not presented herein); and in our report dated February 22,2007, we expressed an unqualified opinion on those consolidated financialstatements. In our opinion, the information set forth in the accompanyingconsolidated balance sheet as of December 31, 2006 is fairly stated in allmaterial respects in relation to the consolidated balance sheet from which ithas been derived.

/s/BDO SEIDMAN, LLPBDO Seidman, LLP

New York, New YorkMay 7, 2007

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**ITEM 2.**                MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We make forward-lookingstatements in this report and in other reports and proxy statements that wefile with the SEC. In addition, our senior management might make forward-lookingstatements. Broadly speaking, forward-looking statements include:

·       projectionsof our revenues, income, earnings per share, capital expenditures, capitalstructure or other financial items;

·       descriptionsof plans or objectives of our management for future operations, products orservices, including pending acquisitions and dispositions;

·       forecastsof our future economic performance; and

·       descriptionsof assumptions underlying or relating to the foregoing.

Forward-looking statements discuss matters thatare not historical facts. Because they discuss future events or conditions,forward-looking statements often include words such as “anticipate,” “believe,”“estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,”“should,” “will,” “would,” or similar expressions. Do not unduly rely onforward-looking statements. They give our expectations and are notguarantees. Forward-looking statements speak as of only the date they aremade, and we might not update them to reflect changes that occur after the datethey are made.

There are many factors—manybeyond our control—that could cause results to differ significantly from ourexpectations. Some of these factors are described in “Item 1A. Risk Factors” ofour annual report on Form 10-K for the year ended December 31,2006.

**Overview**

Monster Worldwide, Inc. is the world’s premiereemployment solution, bringing people together to advance their lives, across 38countries around the world. We have been able to build on Monster’s brand andcreate worldwide awareness by offering online recruiting solutions that webelieve are redefining the way employers and job seekers connect. For theemployer, our goal is to provide the most effective solutions and easiest touse technology to simplify the hiring process and deliver access to ourcommunity of job seekers. For job seekers, our purpose is to help advance ourusers’ careers by providing work-related content, services and other highlyinnovative online products.

Our services and solutions include searchable jobpostings, a resume database and other career related content. Users can searchour job postings and post their resumes free of charge on each of our websites.Employers pay to post jobs, search the resume database and other career relatedservices.

Our strategy has been to grow our business organicallyin North America and Internationally and expand through strategic acquisitionsand alliances where the perceived growth prospects fit our plan. We believe thegrowth opportunities overseas are particularly large and believe that we arepositioned to benefit from our expanded reach and increased brand recognitionaround the world. Our International operations are now approximately 37% of ourCareers revenue for the quarter ended March 31, 2007, compared toapproximately 29% in the prior year period. We are positioned to benefit fromthe continued secular shift towards online recruiting. In addition, through abalanced mix of investment, strategic acquisitions and disciplined operatingfocus and execution, we believe we can take advantage of this online migrationto significantly grow our International business in the next several years.

We also operate a networkof websites within our Internet Advertising & Fees division thatconnect companies to highly targeted audiences at critical stages in their life.Our goal is to offer compelling online services for the users throughpersonalization, community features and enhanced content. Our clients 

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range from Fortune 100companies to small and medium-sized enterprises and government agencies. Webelieve that there are significant opportunities to monetize our current webtraffic through lead generation, display advertising and other consumer relatedproducts. These properties are appealing to advertisers and other third partiesas they deliver certain discrete demographics entirely online. The majority ofour services in our Internet Advertising & Fees division are free tousers and are primarily offered in North America. In the latter half of 2007,we intend to expand the division’s offerings in Europe and eventually Asia, tofurther diversify our client base and monetize additional web traffic.

**BusinessCombinations**

Forthe period January 1, 2006 through March 31, 2007, we completed twobusiness combinations. Although the following acquired businesses were notconsidered to be significant subsidiaries, either individually or in the aggregate, they do affect thecomparability of results from period to period. The acquisitions and theacquisition dates are as follows:
| Acquired Business                     | ** ** | **Acquisition  Date** | ** ** | **Business  Segment**                          |
|---------------------------------------|------------|-----------------------|------------|------------------------------------------------|
| Arbeidskamerater AS (Norway)          |       | January 10, 2007 |       | Monster Careers – International |
| PWP, LLC  (“Education.org”) |       | May 2, 2006      |       | Internet Advertising & Fees           |

 

**DiscontinuedOperations**

During the yearended December 31, 2006, we disposed of the following businesses thatcollectively comprised our entire Advertising & Communicationsoperating segment. We executed these transactions in order to focus moreresources to support the growth of the Monster franchise on a global basis. Theresults of operations of these businesses and the associated disposal costs arereflected as discontinued operations in the consolidated statements ofoperations for all periods presented (dollar amounts in thousands):

·       OnAugust 31, 2006, we sold our TMP Worldwide Advertising &Communications business in the United States and Canada, completing the globaldivestiture of the operating unit. We received cash of $36,205 (net of workingcapital and other adjustments). We recorded a pre-tax loss on the sale of thebusiness of $125,010 ($123,095 after-tax loss, net of a $1,915 tax benefit) inthe third quarter of 2006. Included in the pre-tax loss is approximately$133,000 of remaining goodwill and other intangible assets associated with theAdvertising & Communications operating segment. This disposition isconsidered material and included a significant amount of assets, primarily dueto the amount of goodwill on the balance sheet as of August 31, 2006.

·       OnMay 10, 2006, we sold our TMP Worldwide Advertising &Communications businesses in the United Kingdom and Ireland. In a separatetransaction, we also sold our recruitment advertising agency in Spain. Wereceived cash of $32,950 (net of working capital and other adjustments) and a$9,000 interest bearing note receivable maturing on May 10, 2013. Werecorded a pre-tax gain on the sale of these businesses of  $543 ($812 after-tax loss, net of a $1,355tax expense) in the second quarter of 2006, included as a component ofdiscontinued operations in the statements of operations. In the first quarterof 2007, the Company received approximately $6,560 related to the promissorynote as a partial repayment. The disposition was not considered material anddid not include a significant amount of assets.

·       OnMarch 1, 2006, we sold our TMP Worldwide Advertising &Communications businesses in Australia/New Zealand and Singapore in twoseparate transactions. We recognized a pre-tax gain on the sale of thesebusinesses of $2,453 ($5,420 including the tax benefit recognized upondisposition) in the first quarter of 2006. The disposition was not consideredmaterial and did not include a significant amount of assets.

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Thefollowing amounts primarily related to our dispositions in 2006  have been segregated from continuingoperations and are reflected as discontinued operations in each period’sconsolidated statement of operations:
|                                                         | ** ** | **Three Months ended March 31,** | ** ** |
|---------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                              | ** ** | **2007**                                             | ** ** | **2006** | ** ** |
| Revenue                                                 |       | $                                                    | —     |   | $ | 37,107 |   |
| Income before  income taxes                             |       | (376                                                 | )          | 4,089 |   |
| Income tax  expense (benefit)                           |       | (131                                                 | )          | 1,664 |   |
| Income (loss)  from discontinued operations, net of tax |       | (245                                                 | )          | 2,425 |   |
| Pre-tax loss on  sale of discontinued operations        |       | —                                               |       | 2,453 |   |
| Income tax  benefit                                     |       | —                                               |       | (2,967 | ) |
| Gain on sale of  business, net of tax                   |       | —                                               |       | 5,420 |   |
| Income (loss) from  discontinued operations, net of tax |       | $                                                    | (245       | ) | $ | 7,845 |   |

 

**Critical AccountingEstimates**

Our consolidated financial statements are prepared inaccordance with accounting principles generally accepted in the United States (“GAAP”).In connection with the preparation of our financial statements, we are requiredto make assumptions and estimates about future events, and apply judgments thataffect the reported amounts of assets, liabilities, revenue, expenses and therelated disclosures. We base our assumptions, estimates and judgments onhistorical experience, current trends and other factors that managementbelieves to be relevant at the time our consolidated financial statements areprepared. On a regular basis, management reviews the accounting policies,assumptions, estimates and judgments to ensure that our financial statementsare presented fairly and in accordance with GAAP. However, because futureevents and their effects cannot be determined with certainty, actual resultscould differ from our assumptions and estimates, and such differences could bematerial.

Our significant accountingpolicies are discussed in Note 1, *Basis ofPresentation and Significant Accounting Policies*, of the Notes toConsolidated Financial Statements, included in Item 8, *Financial Statements and Supplementary Data*,of our Annual Report on Form 10-K. Management believes that thefollowing accounting policies are the most critical to aid in fullyunderstanding and evaluating our reported financial results, and they requiremanagement’s most difficult, subjective or complex judgments, resulting fromthe need to make estimates about the effect of matters that are inherentlyuncertain. Management has reviewed these critical accounting estimates andrelated disclosures with the Audit Committee of our Board of Directors.

***Revenue Recognition***

*MonsterCareers (North America and International).**  *Our Monster Careers divisionsprimarily earn revenue from the placement of job postings on the websiteswithin the Monster network, access to the Monster network’s online resumedatabase and other career related services. We recognize revenue at the time thatjob postings are displayed on the Monster network websites. Revenue earned fromsubscriptions to the Monster network’s resume database is recognized over thelength of the underlying subscriptions, typically from two weeks to twelvemonths. Revenue associated with multiple element contracts is allocated basedon the relative fair value of the services included in the contract. Unearnedrevenues are reported on the balance sheet as deferred revenue.

*Internet Advertising &Fees.**  *OurInternet Advertising & Fees division primarily earns revenue from thedisplay of advertisements on the Monster network of websites, click throughs ontext based links, leads provided to advertisers and subscriptions to premiumservices. We recognize revenue for online advertising as “impressions” aredelivered. An “impression” is delivered when an advertisement appears in 

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pages viewed by ourusers. We recognize revenue from the display of “click-throughs” on text basedlinks as “click throughs” occur. A “click-through” occurs when a user clicks onan advertiser’s listing. Revenue from lead generation is recognized as leadsare delivered to advertisers. In addition, we recognize revenue for certainsubscription products, which are recognized ratably over the length of thesubscription.

***Asset Impairment***

*BusinessCombinations, Goodwill and Intangible Assets.**  *The purchase method of accountingrequires that assets acquired and liabilities assumed be recorded at their fairvalues on the date of a business acquisition. Our consolidated financialstatements and results of operations reflect an acquired business from thecompletion date of an acquisition. The costs to acquire a business, includingtransaction, integration and restructuring costs, are allocated to the fairvalue of net assets acquired upon acquisition. Any excess of the purchase priceover the estimated fair values of the net tangible and intangible assetsacquired is recorded as goodwill.

The judgments that we make in determining theestimated fair value assigned to each class of assets acquired and liabilitiesassumed, as well as asset lives, can materially impact net income in periodsfollowing a business combination. We generally use either the income, cost ormarket approach to aid in our conclusions of such fair values and asset lives.The income approach presumes that the value of an asset can be estimated by thenet economic benefit to be received over the life of the asset, discounted topresent value. The cost approach presumes that an investor would pay no morefor an asset than its replacement or reproduction cost. The market approachestimates value based on what other participants in the market have paid forreasonably similar assets. Although each valuation approach is considered in valuingthe assets acquired, the approach ultimately selected is based on thecharacteristics of the asset and the availability of information.

We evaluate our goodwill annually for impairment ormore frequently if indicators of potential impairment exist. The determinationof whether or not goodwill has become impaired involves a significant level ofjudgment in the assumptions underlying the approach used to determine the valueof our reporting units. Changes in our strategy and/or market conditions couldsignificantly impact these judgments and require reductions to recorded amountsof intangible assets.

*Long-lived assets.**  *We review long-lived assets forimpairment whenever events or changes in circumstances indicate that therelated carrying amounts may not be recoverable. Determining whether animpairment has occurred typically requires various estimates and assumptions, includingdetermining which cash flows are directly related to the potentially impairedasset, the useful life over which cash flows will occur, their amount and theasset’s residual value, if any. In turn, measurement of an impairment lossrequires a determination of fair value, which is based on the best informationavailable. We use internal discounted cash flows estimates, quoted marketprices when available and independent appraisals, as appropriate, to determinefair value. We derive the required cash flow estimates from our historicalexperience and our internal business plans and apply an appropriate discountrate.

***Income Taxes***

We record a valuation allowance to reduce our deferredtax assets to the amount that is more likely than not to be realized. Indetermining the need for valuation allowances we consider projected futuretaxable income and the availability of tax planning strategies. If, in thefuture we determine that we would not be able to realize our recorded deferredtax assets, an increase in the valuation allowance would decrease earnings inthe period in which such determination is made. In addition, our filed taxreturns are subject to examination by the Internal Revenue Service and othertax authorities. We regularly assess the likelihood of adverse outcomesresulting from these examinations to determine the adequacy of our provisionfor income taxes. Management uses its best judgment in the determination ofthese amounts. An adjustment 

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to tax reserves is recorded through income in the periodin which it becomes more likely than not that a liability has been incurred.Once established, the Company adjusts tax reserves when an event occursnecessitating a change to the reserves.

We record deferred tax benefits on non-cashstock-based compensation expense ratably over the vesting periods for grants toindividuals who were employed in tax jurisdictions where a tax deduction isavailable. Under required accounting standards, we do not record anticipatedloss of tax benefits due to market declines in the value of the Company’scommon stock. Section 162(m) of the Internal Revenue Code providesimportant limitations which affect the ultimate realization of tax benefits onnon-cash stock-based compensation expense for U.S. based executives. In accordancewith Section 162(m), non-performance based compensation in excess of$1 million paid to the Chief Executive Officer and the 4 other listedofficers, whose salary is disclosed in the annual proxy for the year in whichthe salary is paid is not deductible. In order for the limitation to apply theexecutive must still be employed at the end of the year in which the paymentoccurs.

Section 162(m) provides that stock optionsthat are in-the money at the time of grant do not qualify as performance basedcompensation and are potentially subject to the $1 million salarydeduction limitation in the year in which the executive exercises the option.The executive’s status as a listed officer in the year of exercise, the amountof total non-performance based compensation received, and whether the executiveis still employed at the end of the year of exercise determines whether thelimitation applies.

In recording deferred tax assets on discounted stockoption compensation expense, we do not anticipate whether recorded tax benefitscould be subject to Section 162(m) limitations. In the consolidatedfinancial statements we recorded deferred tax assets ratably as the non-cashstock-based compensation expense is recognized in the statement of operations,and in accordance with the applicable vesting periods.

To the extent actual events are inconsistent with theinitial assumption and tax benefits are not ultimately realized, we reverse therecorded tax benefits in the year in which such events occur. When options arecancelled or expire unexercised, recorded tax benefits are reversed toadditional paid in capital to the extent of previous credits to additional paidin capital for excess tax benefits, and then to the income tax provision. If a Section 162(m) limitationis determined to apply, the disallowance of tax benefits is reflected byreducing previously recorded tax benefits in the year of exercise by reversingthe recorded deferred tax asset to the income tax provision on the statement ofoperations. Future year’s financial results may be impacted due to eventsinconsistent with the underlying assumptions.

Effective January 1,2007, we adopted the provisions of FASB Interpretation (FIN) No. 48, *Accounting for Uncertainty in Income Taxes – aninterpretation of FASB Statement No. 109.*FIN 48 contains atwo-step approach to recognizing and measuring uncertain tax positionsaccounted for in accordance with SFAS No. 109. The first step is toevaluate the tax position for recognition by determining if the weight ofavailable evidence indicates it is more likely than not that the position willbe sustained on audit, including resolution of related appeals or litigationprocesses, if any. The second step is to measure the tax benefit as the largestamount which is more than 50% likely of being realized upon ultimatesettlement. We consider many factors when evaluating and estimating our taxpositions and tax benefits, which may require periodic adjustments and whichmay not accurately anticipate actual outcomes.

***Stock-Based Compensation***

Weaccount for stock-based compensation in accordance with Statement of FinancialAccounting Standards (“SFAS”) No. 123 (revised 2004), *Share-Based Payment* (“SFAS 123R”). SFAS 123Reliminates the ability to account for stock-based compensation transactionsusing the intrinsic value method under Accounting Principles Board (“APB”)Opinion No. 25, *Accounting for StockIssued to Employees*(“APB 25”),and instead generally requires that such transactions be accounted for using afair-value-based method. We use the Black-Scholes option-pricing model todetermine the fair value of stock options granted under 

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SFAS 123R. The use ofan option valuation model includes highly subjective assumptions based onlong-term predictions, including the expected stock price volatility andaverage life of each option grant. Prior to January 1, 2006, we accountedfor our equity awards using APB 25.

**Results ofOperations**

Consolidated operating results as a percent of revenuefor the three months ended March 31, 2007 and 2006 are as follows:
|                                                                             | ** ** | **Three Months Ended  March 31,**         | ** ** |
|-----------------------------------------------------------------------------|------------|----------------------------------------------------------|------------|
| ** **                                                                  | ** ** | **    2007    ** | ** ** | **    2006    ** | ** ** |
| **Revenue**                                                                 | ** ** |                                                     | **100.0**  | % |   |   | **100.0** | % |   |
| Salaries and related                                                        |       |                                                     | 37.2       | % |   |   | 35.6 | % |   |
| Office and  general                                                         |       |                                                     | 21.4       | % |   |   | 18.2 | % |   |
| Marketing and  promotion                                                    |       |                                                     | 23.7       | % |   |   | 25.6 | % |   |
| Total operating  expenses                                                   |       |                                                     | 82.3       | % |   |   | 79.4 | % |   |
| **Operating income**                                                        | ** ** |                                                     | **17.7**   | % |   |   | **20.6** | % |   |
| Interest and other, net                                                     |       |                                                     | 1.6        | % |   |   | 1.2 | % |   |
| Income from continuing operations before income  taxes and equity interests |       |                                                     | 19.3       | % |   |   | 21.8 | % |   |
| Income taxes                                                                |       |                                                     | 6.8        | % |   |   | 7.9 | % |   |
| Losses in equity  interest                                                  |       |                                                     | -0.4       | % |   |   | -0.5 | % |   |
| **Income from continuing operations**                                       | ** ** |                                                     | **12.1**   | % |   |   | **13.4** | % |   |
| Income (loss) from discontinued operations, net of  tax                     |       |                                                     | -0.1       | % |   |   | 3.1 | % |   |
| **Net  income**                                                             | ** ** |                                                     | **12.0**   | % |   |   | **16.4** | % |   |

 

The following presentation of our segment results isprepared based on the criteria  weuse when evaluating the performance of our business units. For these purposes,management views certain non-cash expenses, such as depreciation expense,amortization of intangibles and amortization of stock-based compensation, as aseparate component of operating profit. We believe that this presentationprovides important indicators of our operating strength and is useful toinvestors when evaluating our operating performance.

**The Three MonthsEnded March 31, 2007 Compared to the Three Months Ended March 31,2006**

***Monster Careers – North America***

Theoperating results of our Monster Careers – North America division forthe three months ended March 31, 2007 and 2006 are as follows:
| (dollars in thousands)    | ** ** | ** ** | ** ** | **2007** | ** ** | **% of  Revenue** | ** ** | **2006** | ** ** | **% of  Revenue** | ** ** | **Increase** | ** ** | **%  Increase** | ** ** |
|-------------------------------------|------------|------------|------------|----------|------------|------------------------|------------|----------|------------|------------------------|------------|--------------|------------|-----------------|------------|
| Revenue                             |       | $          | 184,017    |     |       | 100.0                  | %          |     | $          | 159,998                |       |         | 100.0      | %               |       | $ | 24,019 |   |   | 15.0 | % |   |
| Selling, general and administrative |       | 112,867    |       |     | 61.3       | %                      |       | 101,346  |       |                   | 63.3       | %            |       | 11,521          |       |   | 11.4 | % |   |
| Depreciation and  amortization*     |       | 5,272      |       |     | 2.9        | %                      |       | 4,093    |       |                   | 2.6        | %            |       | 1,179           |       |   | 28.8 | % |   |
| Operating income                    |       | $          | 65,878     |     |       | 35.8                   | %          |     | $          | 54,559                 |       |         | 34.1       | %               |       | $ | 11,319 |   |   | 20.7 | % |   |

 

*                     Includes amortization of stock based compensation forrestricted stock units.

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Our Monster Careers – North America segmentgenerated a moderate increase in revenue of 15.0% during the first quarter of2007, in contrast to the growth rates delivered throughout the 2006 periods. Theslower growth rate was consistent with the moderating economic trends withinthe labor markets across the United States economy. Revenue from our eCommercechannel, which serves small and medium sized companies, were essentially flatas compared to the prior year period. We are actively working on product enhancements,pricing strategies and marketing efforts designed to rebuild momentum in theeCommerce channel, in addition to taking a fresh perspective of the competitivelandscape. We were able to penetrate deeper into the enterprise market of ourNorth American business in 2007, which services larger companies, a growingnumber of which we serve globally. During the first quarter of 2007, theaverage order size in our enterprise accounts increased and we were able toexpand business with our top customers. Additionally, we are in the earlystages of realizing the opportunity that exists within our multi-nationalcustomers and are actively selling our products and services in conjunctionwith our Monster Careers—International counterpart. In March 2007 we implementedrefinements to our telesales organization which we hope will drive revenuegrowth and expand our sales productivity. We believe that these improvementswill better align our telesales force on a regional basis and increase oursales capacity. Our business leaders continue to pursue alliances and businesspartners to deepen our presence within the local markets of the United States,with the goal to drive small-to-medium sized businesses to our site andincrease our brand recognition. As the domestic labor market continues toexpand at a slower rate, we will continue to monitor our pricing structure inthe local and regional markets in order to achieve a competitive advantage andcontinually focus on improving our customer service with both job seekers andemployers.

Our Monster Careers – NorthAmerica segment generated an operating margin of 35.8% in the first quarter of2007, up slightly from 34.1% in the 2006 period. Salaries and related costsincreased as a direct result of the addition of approximately 200 totalemployees since the first quarter of 2006. Approximately 75% of the additionalheadcount related to our commitment to expand our sales force. Our marketingand promotion efforts were 20.6% of our revenue, down compared to the 25.1%reported in last years first quarter, as we made the strategic decision not toinvest in areas where we were experiencing lower employer and job seeker demand.As a result, our total operating expenses grew at a slower rate than revenueand we were able to deliver operating margin expansion. While we aredisciplined in our cost structure and operations, we remain committed toinvesting in our product, new technology and other assets in order to sustainlong-term profitability.

***Monster Careers – International***

The operatingresults of our Monster Careers – International division for the threemonths ended March 31, 2007 and 2006 are as follows:
| (dollars in thousands)    | ** ** | ** ** | ** ** | **2007** | ** ** | **% of  Revenue** | ** ** | **2006** | ** ** | **% of  Revenue** | ** ** | **Increase** | ** ** | **%  Increase** | ** ** |
|-------------------------------------|------------|------------|------------|----------|------------|------------------------|------------|----------|------------|------------------------|------------|--------------|------------|-----------------|------------|
| Revenue                             |       | $          | 106,206    |     |       | 100.0                  | %          |     | $          | 64,591                 |       |         | 100.0      | %               |       | $ | 41,615 |   |   | 64.4 | % |   |
| Selling, general and administrative |       | 93,612     |       |     | 88.1       | %                      |       | 59,867   |       |                   | 92.7       | %            |       | 33,745          |       |   | 56.4 | % |   |
| Depreciation and  amortization*     |       | 4,633      |       |     | 4.4        | %                      |       | 3,959    |       |                   | 6.1        | %            |       | 674             |       |   | 17.0 | % |   |
| Operating income                    |       | $          | 7,961      |     |       | 7.5                    | %          |     | $          | 765                    |       |         | 1.2        | %               |       | $ | 7,196 |   |   | 940.7 | % |   |

*                     Includes amortization of stock based compensation forrestricted stock units.

Our Monster Careers – International segmentdelivered rapid revenue growth of 64.4% in the first quarter of 2007, driven byour growing sales force and key investments we made in Europe and Asia over thepast two years. We were able to expand revenue in each country where we operateand our revenue now accounts for 32.3% of consolidated revenue, compared to25.1% in the 2006 period. In Europe, our efforts 

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to establish and grow our eCommerce channel isbeginning to yield positive results as revenue more than doubled in the firstquarter of 2007. We believe that our European and Asian eCommerce channel canbe a strong source of revenue and a new resource to capture customer leads. Thelarge labor pool, strong economic growth and rapid Internet adoption presents apromising opportunity for us in Asia that we believe will be a more significantrevenue source for us in the future.

During the first quarterof 2007, we added approximately 375 people in our continuing effort to investin talent, while making incremental investments in our product, technology andmarketing. We are committed to expand our leadership position through increasedpromotion of our brand, as evidenced by our 62.4% increase in marketing fromthe 2006 period. Our investments in marketing continue to increase our brandawareness, driving job seeker traffic to our websites and expanding our reach,both to the job seeker and to the employer. Despite these increased level ofinvestments, we were able to expand our operating margin to 7.5% in 2007. Ourobjective to transition Monster Careers – International into ascalable operation, similar to that of our North American business, is takinghold and we believe that our investments in marketing, training andproductivity will enable us to continue the migration of the European and Asianmarkets online. In addition, we will continue to invest for the future throughproduct enhancements, technology and people.

***InternetAdvertising & Fees***
| (dollars in thousands)    | ** ** | ** ** | ** ** | **2007** | ** ** | **% of  Revenue** | ** ** | **2006** | ** ** | **% of  Revenue** | ** ** | **Increase** | ** ** | **%  Increase** | ** ** |
|-------------------------------------|------------|------------|------------|----------|------------|------------------------|------------|----------|------------|------------------------|------------|--------------|------------|-----------------|------------|
| Revenue                             |       | $          | 38,805     |     |       | 100.0                  | %          |     | $          | 32,447                 |       |         | 100.0      | %               |       | $ | 6,358 |   |   | 19.6 | % |   |
| Selling, general and administrative |       | 32,366     |       |     | 83.4       | %                      |       | 20,839   |       |                   | 64.2       | %            |       | 11,527          |       |   | 55.3 | % |   |
| Depreciation and  amortization*     |       | 2,135      |       |     | 5.5        | %                      |       | 2,122    |       |                   | 6.5        | %            |       | 13              |       |   | 0.6 | % |   |
| Operating income                    |       | $          | 4,304      |     |       | 11.1                   | %          |     | $          | 9,486                  |       |         | 29.2       | %               |       | $ | (5,182 | ) |   | -54.6 | % |   |

*                     Includes amortization of stock based compensation forrestricted stock units.

Revenue at our Internet Advertising & Feessegment increased 19.6%, a much slower growth rate than throughout the periodsin 2006. Several factors contributed to the reduced growth of the InternetAdvertising & Fees segment, however the main drivers were slowergrowth in overall users and reduced lead generation volume. Revenue from leadgeneration approximates 48% of our revenue base and is generated from manysites across our network. During the first quarter of 2007, we experienced areduced volume of users to our sites, and were unable to deliver a high volumeof quality leads to our advertisers. Display advertising approximates 25% ofour revenue base and is the other main source of our revenue. Our websitesacross our network realized a higher ratio of remnant versus brand advertisingduring the first quarter of 2007, resulting in excess inventory and a lowercost per impression, contributing to our overall slower growth rates. Wecontinue to believe that online advertising represents a significant growthopportunity for us, as our audience is appealing to both brand and remnantadvertisers.

We posted an operatingmargin of 11.1% in the first quarter of 2007, a sharp decline from the 29.2%operating margin reported in the 2006 period. Despite slower revenue growth, wecontinued to invest in our business model over the past twelve months by addingsales capacity, increased product and technology expenditures andinfrastructure build-outs. Marketing expenses increased 43.7% over the 2006period as we invested in our websites and expanded their recognition amongstusers. We recognize that we need to keep our sites rich with content,personalization and relevant information. Accordingly, we are committed toinvesting in our products and offerings to deepen our audience and not onlyattract, but retain users.

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***Consolidated Operating Expenses and Operating Income***

Consolidatedoperating expenses and operating income for the three months ended March 31,2007 and 2006 are as follows:
| (dollars in thousands) | ** ** | ** ** | ** ** | **2007** | ** ** | **% of  Revenue** | ** ** | **2006** | ** ** | **% of  Revenue** | ** ** | **Increase** | ** ** | **%  Increase** | ** ** |
|----------------------------------|------------|------------|------------|----------|------------|------------------------|------------|----------|------------|------------------------|------------|--------------|------------|-----------------|------------|
| Salaries and  related            |       | $          | 122,347    |     |       | 37.2                   | %          |     | $          | 91,553                 |       |         | 35.6       | %               |       | $ | 30,794 |   |   | 33.6 | % |   |
| Office and general               |       | 70,417     |       |     | 21.4       | %                      |       | 46,745   |       |                   | 18.2       | %            |       | 23,672          |       |   | 50.6 | % |   |
| Marketing and promotion          |       | 78,069     |       |     | 23.7       | %                      |       | 65,799   |       |                   | 25.6       | %            |       | 12,270          |       |   | 18.6 | % |   |
| Operating expenses               |       | 270,833    |       |     | 82.3       | %                      |       | 204,097  |       |                   | 79.4       | %            |       | 66,736          |       |   | 32.7 | % |   |
| Operating income                 |       | $          | 58,195     |     |       | 17.7                   | %          |     | $          | 52,939                 |       |         | 20.6       | %               |       | $ | 5,256 |   |   | 9.9 | % |   |

 

Our total operatingexpenses grew 32.7% in the first quarter of 2007, as every major line itemincreased over the 2006 period. Since March 2006, we have increased ourglobal headcount by approximately 41%, primarily for sales and support in ourMonster Careers segments. As a result we incurred higher salary, benefits andcommission costs. Included within the salaries and related line item is approximately$4.4 million and $2.0 million of stock-based compensation costs forthe quarters ended March 31, 2007 and 2006, respectively. Office andgeneral expenses increased 50.6% as a direct result of investments in ourinfrastructure, additional headcount and technology costs. Included within theoffice and general expenses are approximately $9.8 million of professionalfees related to the ongoing stock option investigation. We also increasedmarketing and promotion expenditures by $12.3 million primarily as aresult of allocating greater resources to expanding our brand recognition andsales force in our International Careers segment. We will continue to marketour services heavily throughout Europe and Asia, while managing our marketingand promotion expenses in a manner consistent with our revenue expectations. Asa result, our total operating expenses grew to 82.3% of consolidated revenue inthe 2007 period.

***Income Taxes***

Incometaxes for the three months ended March 31, 2007 and 2006 are as follows:
|                                                        | ** ** | **March 31,** | ** ** | **March 31,** | ** ** | **Change** | ** ** |
|--------------------------------------------------------|------------|--------------------|------------|--------------------|------------|------------|------------|
| **(dollars in thousands)**                   | ** ** | ** **         | ** ** | **2007**           | ** ** | **2006**   | ** ** | **$** | ** ** | **%** | ** ** |
| Income from continuing operations before income  taxes |       |               | $          | 63,499             |       |       |       | $ | 56,069 |   |   | $ | 7,430 |   | 13.3 | % |
| Income taxes                                           |       |               | 22,352     |               |       |       | 20,411     |   |   | 1,941 |   | 9.5 | % |
| Effective tax rate                                     |       |               | 35.2       | %                  |       |       | 36.4       | % |   |   |   |   |   |
|                                                        |            |                    |            |                    |            |            |            |  |  |  |  |  |  |  |  |  |  |  |

 

Our effective tax ratesdiffer from the statutory rate due to the impact of state and local incometaxes, certain nondeductible expenses, foreign earnings taxed at different taxrates and valuation allowances. Our future effective tax rates could beadversely affected by earnings being lower than anticipated in countries wherewe have lower statutory rates, changes in the valuation of our deferred taxassets or liabilities, or changes in tax laws or interpretations thereof. Inaddition, our filed tax returns are subject to the examination by the InternalRevenue Service and other tax authorities. We regularly assess the likelihoodof adverse outcomes resulting from these examinations to determine the adequacyof our provision for income taxes.

***Earnings Per Share***

Diluted earnings per sharefrom continuing operations increased 15.4% in the 2007 period, even as dilutedweighted average shares outstanding increased approximately 1.9 millionshares. The share increase is primarily due to shares issued in connection withemployee stock option exercises. Net income was 12.0% 

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of total revenue in the2007 period, compared to 16.4% in the 2006 period. Net income in the 2006 periodincludes approximately $7.8 million of income from discontinuedoperations.

**Financial Condition**

Thefollowing tables details our cash and cash equivalents, marketable securitiesand cash flow components:
|                                                      | ** ** | **March 31,** | ** ** | **December 31,** | ** ** | **Change** | ** ** |
|------------------------------------------------------|------------|--------------------|------------|-----------------------|------------|------------|------------|
| **(dollars in thousands)**                 | ** ** | ** **         | ** ** | **2007**              | ** ** | **2006**   | ** ** | **$** | ** ** | **%** | ** ** |
| ** **                                           | ** ** | ** **         | ** ** |
| Cash and cash  equivalents                           |       | $                  | 89,742     |                  |       | $          | 58,680     |   |   | $ | 31,062 |   | 52.9 | % |
| Marketable  securities                               |       | 591,262            |       |                  | 537,893    |       |       | 53,369 |   | 9.9 | % |
| Cash and cash  equivalents and marketable securities |       | $                  | 681,004    |                  |       | $          | 596,573    |   |   | $ | 84,431 |   | 14.2 | % |
| Percentage of total assets                           |       | 33.1%              |       |                  | 30.3%      |       |       |   |   |   |   |
|                                                      |            |                    |            |                       |            |            |            |  |  |  |  |  |  |  |  |  |

 
|                                                                 | ** ** | **March 31,** | ** ** | **March 31,** | ** ** | **Change** | ** ** |
|-----------------------------------------------------------------|------------|--------------------|------------|--------------------|------------|------------|------------|
| **(dollars in thousands)**                            | ** ** | ** **         | ** ** | **2007**           | ** ** | **2006**   | ** ** | **$** | ** ** | **%** | ** ** |
| ** **                                                      | ** ** | ** **         | ** ** |
| Cash provided by operating activities of continuing  operations |       | $                  | 81,982     |               | $          | 77,732     |       | $ | 4,250 |   | 5.5 | % |
| Cash used for investing activities of continuing  operations    |       | (79,145            | )          | (127,791           | )          | 48,646     |       | -38.1 | % |
| Cash provided by financing activities of continuing  operations |       | 30,245             |       | 17,093             |       | 13,152     |       | 76.9 | % |
| Cash provided by (used in) discontinued operations              |       | (2,983             | )          | 1,857              |       | (4,840     | )          | -260.6 | % |
| Effect of exchage  rates on cash                                |       | 963                |       | 547                |       | 416        |       | 76.1 | % |
|                                                                 |            |                    |            |                    |            |            |            |  |  |  |  |  |  |  |

 

Our principal capital requirements have been to fund (i) workingcapital, (ii) marketing and development of our Monster network, (iii) acquisitionsand (iv) capital expenditures.

Historically, we have relied on funds provided byoperating activities, equity offerings, short and long-term borrowings andseller-financed notes to meet our liquidity needs. We invest our excess cashpredominantly in money market funds, commercial paper that matures within threemonths of its origination date and in marketable securities, such as auctionrate bonds, which are highly liquid and are of high-quality investment gradewith the intent to make such funds readily available for operating andstrategic long-term equity investment purposes.

We believe that our current cash and cash equivalents,marketable securities, revolving credit facility and cash we anticipate togenerate from operating activities will provide us with sufficient liquidity tosatisfy our working capital needs, capital expenditures, meet our investmentrequirements and commitments and fund our share repurchase activities through atleast the next twelve months. Our cash generated from operating activities issubject to fluctuations in the global economy and unemployment rates.

During the first quarter of 2007, we recorded$9.8 million of professional fees as a direct result of the investigationinto our stock option grant practices and related accounting. These costs wererecorded as a component of “office and general” expenses and primarily relateto professional services for legal fees. In addition, in the latter half of2006, we have incurred approximately $13.3 million related to litigation,the informal investigation by the SEC, the investigation by the United StatesAttorney for the Southern District of New York (“USAO”) and the preparation andreview of our restated consolidated financial statements, a portion of whichwas paid in the 2007 period.

We expect to continue to incur significantprofessional fees related to the ongoing stock option investigation. While wecannot quantify or estimate the timing of these costs throughout 2007 and intothe future, they primarily relate to legal fees paid on behalf of current andformer employees, fees paid in defense of shareholder litigation and potentialfines or settlements.

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During 2006, we absorbed the remainder of our U.S.Federal tax loss carryovers, with the exception of certain acquired losseswhose utilization is subject to an annual limitation. We paid approximately$29.8 million of U.S. Federal income tax during the first quarter of 2007which was the remainder of our 2006 income tax liability. In 2007, we expect topay domestic income tax on a quarterly basis and continue to utilize tax lossesin many foreign tax jurisdictions to substantially reduce our cash taxliability.

As of March 31, 2007, we had cash and cashequivalents and marketable securities of $681.0 million, compared to$596.6 million as of December 31, 2006. Our increase in cash andmarketable securities of $84.4 million in the first quarter of 2007,primarily relates to our operating and financing activities offset by cash usedfor investing activities. Cash provided by operating activities was$79.0 million for the three months ended March 31, 2007 and resultedfrom $39.7 million of income from continuing operations and$20.4 million of net non-cash items, increased by an $18.9 millionchange in working capital. Strong revenue growth, accompanied by operatingefficiencies, continually improved operating margins and thus cash flows fromoperations in 2007. Account receivable decreased by $25.2 million due to ahigher level of collections and a slower sales cycle in the 2007 period. Deferredrevenue continued to increase in 2007, resulting in a $5.7 millionincrease to cash from operations and displaying our success in driving morebusiness to Monster. Cash flow from operating activities in 2007 was decreasedby $3.0 million from cash used to fund liabilities related to ourdiscontinued Advertising and Communications businesses.

We used $79.1 million of cash for investingactivities for the quarter ended March 31, 2007. The use of cash mainlyreflects our net purchase of marketable securities of $53.4 million as weinvested our capital in debt instruments yielding higher returns. Capitalexpenditures were $21.6 million in the first quarter of 2007, as weinvested in expanding our infrastructure and systems in Europe and Asia. Weanticipate total capital expenditures to be approximately $75.0 million for2007. Additionally, we funded $2.5 million to ChinaHR under a previouslyestablished credit facility and paid approximately $1.7 million inconnection with an acquisition in Norway in our Monster Careers – Internationalsegment.

We generated cash from financing activities in 2007,resulting from $43.4 million of cash received from employee stock optionexercises and $6.5 million primarily related to the tax benefit on stockoptions exercised. In addition, we used $3.3 million of cash to pay fortax withholdings in connection with the vesting of stock-based awards. Duringthe quarter ended March 31, 2007, we paid $16.3 million for sellernotes on businesses acquired in prior periods, primarily Tickle.

In March 2006, we entered into a loan agreementwith ChinaHR, whereby we have agreed to advance ChinaHR up to an aggregate of$20.0 million with no more than $10.0 million being advanced in thefirst year of the agreement. In January 2007, we amended the agreement withChinaHR, increasing the maximum allowable amount to be advanced in the firstyear from $10.0 million to $12.5 million. Interest on the loans willbe assessed at the average one-month U.S. LIBOR rate plus 1% and shall bepayable quarterly in arrears. The credit facility provides that any advancesshall be due and payable in full on the maturity date, which is the earliest ofMarch 2011 or the consummation of an initial public offering of securitiesby ChinaHR. Through March 2007, we advanced ChinaHR $12.5 million,the maximum allowable advance amount in the first year.

In November 2005, ourBoard of Directors authorized us to purchase up to $100 million of ourcommon stock on the open market, or otherwise from time to time, over a 30-monthperiod as conditions warrant. Through March 31, 2007, we have repurchased994,584 shares of our common stock for an aggregate purchase price of$45.1 million. We did not repurchase any shares on the open market duringthe 2007 first quarter.

**Recent AccountingPronouncements**

In February 2007, theFinancial Accounting Standards Board issued Statement of Financial AccountingStandards No. 159, “The Fair Value Option for Financial Assets andFinancial Liabilities – Including an 

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Amendment of FASBStatement No. 115” which is effective for fiscal years beginning after November 15,2007. This statement permits an entity to choose to measure many financialinstruments and certain other items at fair value at specified election dates.Subsequent unrealized gains and losses on items for which the fair value optionhas been elected will be reported in earnings. We are currently evaluating thepotential impact of this statement.

**ITEM 3.**                QUANTITATIVEAND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our primary market risks include fluctuations ininterest rates and exchange rate variability.

We have risks related to our short-term investmentactivities. The primary objective of our investment activities is to preserveprincipal while at the same time maximizing yields without significantlyincreasing risk. To achieve this objective, we maintain our portfolio of cashand cash equivalents and short-term investments in a variety of marketable debtinstruments of high quality issuers, including auction rate bonds, bank timedeposits, municipal bonds, commercial paper and money market funds. We limitthe amount of credit exposure to any one issuer. Our marketable securities aregenerally classified as available for sale and consequently are recorded on thebalance sheet at fair value with unrealized gains or losses reported as aseparate component of accumulated other comprehensive income. As of March 31,2007, net unrealized losses on these investments were not material.

We have a presence in 38 countries around the world.For the three months ended March 31, 2007, approximately 33.8% of ourrevenue was earned outside the United States and collected in local currencyand related operating expenses were also paid in such corresponding localcurrency. Accordingly, we will be subject to risk for exchange ratefluctuations between such local currencies and the dollar.

The financial statements of our non-U.S. subsidiariesare translated into U.S. dollars using current rates of exchange, with gains orlosses included in the cumulative translation adjustment account, a componentof stockholders’ equity. During the quarter ended March 31, 2007, ourcumulative translation adjustment account increased $0.1 million,primarily attributable to the weakening of the U.S. dollar.

We have interest rate riskprimarily related to our short-term investment portfolio. Our short-terminvestments will produce less income than expected if market interest ratesfall therefore our future investment income may fall short of expectations dueto changes in market interest rates or we may suffer losses in principal ifforced to sell short-term investments which have declined in market valuedue to increases in interest rates.

**ITEM 4.**                CONTROLSAND PROCEDURES

Monster Worldwide maintains “disclosure controls andprocedures,” as such term is defined under Securities Exchange Act Rule 13a-15(e),that are designed to ensure that information required to be disclosed in ourExchange Act reports is recorded, processed, summarized and reported within thetime periods specified in the SEC’s rules and forms, and that suchinformation is accumulated and communicated to our management, including ourChief Executive Officer and Chief Financial Officer, as appropriate, to allowtimely decisions regarding required disclosures. In designing and evaluatingthe disclosure controls and procedures, Monster Worldwide’s managementrecognized that any controls and procedures, no matter how well designed andoperated, can provide only reasonable assurance of achieving the desiredcontrol objectives and Monster Worldwide’s management necessarily was requiredto apply its judgment in evaluating the cost-benefit relationship of possiblecontrols and procedures. Monster Worldwide has carried out an evaluation, as ofthe end of the period covered by this report, under the supervision and withthe participation of Monster Worldwide’s management, including MonsterWorldwide’s Chief Executive Officer and Chief Financial Officer, of theeffectiveness of the design and operation of Monster Worldwide’s disclosurecontrols and procedures. Based upon their evaluation and subject to theforegoing, the Chief Executive Officer and Chief Financial Officer concludedthat Monster 

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Worldwide’s disclosure controls and procedures wereeffective in ensuring that material information relating to Monster Worldwideis made known to the Chief Executive Officer and Chief Financial Officer byothers within Monster Worldwide during the period in which this report wasbeing prepared.

There have been no significant changes in MonsterWorldwide’s internal controls over financial reporting that occurred during ourmost recent fiscal quarter that have materially affected, or are reasonablylikely to materially affect, our internal controls over financial reporting.

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**PART II—OTHERINFORMATION**

**ITEM 1.**                LEGALPROCEEDINGS

The Company is involved in various legal proceedingsthat are incidental to the conduct of its business. It is not involved in anypending or threatened legal proceedings aside from the stock option litigationdiscussed below that it believes could reasonably be expected to have amaterial adverse effect on its financial condition or results of operations.

As stated in Note 10 of its consolidated financialstatements, the Company announced on June 12, 2006 that a committee ofindependent directors of the Board of Directors (the “Special Committee”),assisted by outside counsel, was conducting an independent investigation toreview the Company’s historical stock option grant practices and relatedaccounting.

The United States Attorney’s Office for the SouthernDistrict of New York (“USAO”) and the SEC have informed the Company that eachis conducting an investigation into its past stock option grants. In connectionwith these investigations, the Company has received a grand jury subpoena fromthe United States District Court for the Southern District of New York andrequests for the voluntary production of documents from the SEC. The Company isfully cooperating with the USAO and the SEC. On February 15, 2007, theCompany’s former general counsel pleaded guilty to two felony counts relatingto those historical stock option grants and the SEC instituted a civil actionagainst him. On March 26, 2007, the SEC civil action was settled pursuantto a final judgment permanently enjoining our former general counsel fromviolating the federal securities laws and from acting as an officer or directorof a public company.

In October 2006, a putative class actionlitigation was filed in the United States District Court for the SouthernDistrict of New York by a former Company employee against the Company and anumber of its current and former officers and directors. On February 16,2007, plaintiff served an amended class action complaint. The action purportsto be brought on behalf of all participants in the Company’s 401(k) plan. Theamended complaint alleges that the defendants breached their fiduciaryobligations to plan participants under §§ 404, 405, 409 and 502 of the EmployeeRetirement Income Security Act (“ERISA”), 29 U.S.C. § 1104 et seq., by allowingPlan participants to purchase and to hold and maintain Company stock in theirPlan accounts without disclosing to those Plan participants the historicalstock option practices. The complaint seeks, among other relief, equitablerestitution, attorney’s fees and an order enjoining defendants from violationsof ERISA. The time for defendants to respond to the amended complaint has notyet expired.

In addition, derivative actions in connection withhistorical stock option practices have been commenced by shareholderspurportedly on behalf of the Company in both the United States District Courtfor the Southern District of New York and in the Supreme Court of the State ofNew York, New York County, against a number of current and former officers anddirectors of the Company, naming the Company as a nominal defendant.

On October 20, 2006, the three federal courtactions were consolidated by the Court and styled as In re Monster Worldwide, Inc.Stock Option Derivative Litigation, Master Docket 1:06:cv-04622(S.D.N.Y.)(NRB-DCF) (Consolidated Action). On or about December 20, 2006,plaintiffs in the consolidated federal actions filed a consolidated amendedcomplaint. The consolidated amended complaint asserts claims for breach of fiduciaryduty, gross mismanagement, unjust enrichment, and violations of Sections 10(b) and14(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) for theperiod between January 1, 1997 and the present. The federal courtplaintiffs seek, among other relief, an indeterminate amount of damages fromthe individual defendants.

On September 18, 2006, the three purportedderivative actions that were filed in the Supreme Court of the State of NewYork, New York County, were also consolidated. The consolidated actions havebeen styled 

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as In re Monster Worldwide Inc. Derivative Litigation,Index. No. 06-108700 (Supreme, N.Y. County). On or about December 1,2006, the plaintiffs in the consolidated state court actions filed aconsolidated amended complaint asserting claims for breach of fiduciary dutyand related state law causes of action. The state court plaintiffs seek, amongother relief, an indeterminate amount of damages from the individualdefendants.

On or about March 15, 2007, a putative securitiesshareholder class action was filed in the United States District Court for theSouthern District of New York captioned Middlesex County Retirement System v.Monster Worldwide, Inc., Andrew T. McKelvey, Myron Olesnyckyj, and Charles“Lanny” Baker, 07 Civ. 2237 (S.D.N.Y.) (JSR), seeking an indeterminate amountof damages on behalf of all persons or entities, other than defendants, whopurchased or acquired the securities of the Company from May 6, 2005 untilJune 9, 2006. The Complaint asserts claims against the Company and theindividual defendants based on an alleged violation of Section 10(b) theExchange Act and against the individual defendants based on an allegedviolation of Section 20(a) of the Exchange Act. By Stipulation ofDismissal, dated April 10, 2007, the Complaint as against Charles “Lanny”Baker was dismissed with prejudice.

From July 25, 2006 to December 26, 2006, theCompany suspended its Registration Statement on Form S-8, resultingin a prohibition on the exercise of stock options. The Company receivedcorrespondence from, or on behalf of, certain former employees who are granteesof certain vested stock options that were scheduled to expire or be forfeitedunless exercised during this suspension period. Due to the suspension of theCompany’s S-8, these individuals were precluded from exercising suchoptions prior to the expiration date of the options. The former employees haveinformed the Company that they will seek to hold the Company liable for anyfinancial damages suffered as a result of their inability to exercise theoptions during the suspension period. In December 2006, the Company’sBoard of Directors approved the payment of approximately $5.0 million tocompensate certain former employees for the value of stock options that expiredduring the period that the Company’s equity compensation plans were suspended.In exchange for payment, the Company requested a release of any liability.Approximately all payments have been made under this agreement.

The Company may becomesubject to additional private or government actions. The expense of defendingsuch litigation may be significant. In addition, an unfavorable outcome in suchlitigation could have a material adverse effect on the Company’s business andresults of operations. The Company may also be obligated under the terms of itsby-laws to advance litigation costs for directors and officers named inlitigation relating to their roles at the Company.

**ITEM 1A.**        RISKFACTORS

In addition to the otherinformation set forth in this report, you should carefully consider the factorsdiscussed in Part I, Item 1A. “Risk Factors” in the Company’s AnnualReport on Form 10-K for the year ended December 31, 2006, whichcould materially affect our business, financial position and results ofoperations. There are no material changes from the risk factors set forth in Part I,Item 1A., “Risk Factors,” of the Company’s Annual Report on Form 10-Kfor the year ended December 31, 2006.

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**ITEM 2.**                UNREGISTEREDSALES OF EQUITY SECURITIES AND USE OF PROCEEDS

TheCompany has a stock repurchase plan in place that allows it to purchasesecurities on the open market or otherwise from time to time as conditionswarrant. A summary of the Company’s repurchase activity for the three monthsended March 31, 2007 is as follows:
| Period                                        | ** ** | **Total number  of shares  repurchased** | ** ** | **Average  Price  Paid Per  Share** | ** ** | **Total Number  of Shares  Purchased as  Part of Publicly  Announced  Plans or  Programs** | ** ** | **Maximum Dollar  Value of Shares  That  May Yet Be  Purchased Under  the  Plans or  Programs(a)** | ** ** |
|-----------------------------------------------|------------|----------------------------------------------------|------------|------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------|------------|
| *As of December 31,  2006*               |       |                                               |       |                                     |       |                                                                                                                     |       |                                                                                                                                  |       |   |   |   |   |   | $ | 54,919,200 |   |   |
| January 1 –  January 31   |       |                                               | —     |                                     |       |                                                                                                                     | N/A        |                                                                                                                                  |       |   | — |   |   |   | 54,919,200 |   |   |
| February 1 –  February 28 |       |                                               | —     |                                     |       |                                                                                                                     | N/A        |                                                                                                                                  |       |   | — |   |   |   | 54,919,200 |   |   |
| March 1 –  March 31       |       |                                               | —     |                                     |       |                                                                                                                     | N/A        |                                                                                                                                  |       |   | — |   |   |   | 54,919,200 |   |   |
| **Total Q1 2007**                             |       |                                               | —     |                                     |       |                                                                                                                     | N/A        |                                                                                                                                  |       |   | — |   |   |   | $ | 54,919,200 |   |   |

 

(a)           OnNovember 10, 2005, the Board of Directors approved a share repurchaseplan, authorizing the Company to purchase up to $100 million of shares of itscommon stock. The share repurchase plan expires 30 months from theauthorization date.

**ITEM 6.**                EXHIBITS.

Thefollowing exhibits are filed as a part of this report:

| 15   |   | Letter from BDO Seidman, LLP regarding unaudited  interim financial information.                                                                                                   |
|------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1 |   | Certification by Salvatore Iannuzzi pursuant to  Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 31.2 |   | Certification by Charles Baker pursuant to Exchange  Act Rule 13a-14(a) and 15d-14(a), as adopted pursuant  to Section 302 of the Sarbanes-Oxley Act of 2002.       |
| 32.1 |   | Certification by Salvatore Iannuzzi pursuant to 18  U.S.C. Section 1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002.                          |
| 32.2 |   | Certification by Charles Baker pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley  Act of 2002.                               |

 

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**SIGNATURES**

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.
|                         |   | MONSTER WORLDWIDE, INC.  (Registrant) |
|-------------------------|--------|---------------------------------------|
|                    |   |                                  |   |   |
| Dated: May 9, 2007 |   | By:                                   |   | /s/ SALVATORE  IANNUZZI |
|                    |   |                                  |   | Salvatore  Iannuzzi |
|                    |   |                                  |   | Chairman and  Chief Executive Officer |
|                    |   |                                  |   | (principal  executive officer) |
|                    |   |                                  |   |   |
| Dated: May 9, 2007 |   | By:                                   |   | /s/ CHARLES  BAKER |
|                    |   |                                  |   | Charles Baker |
|                    |   |                                  |   | Senior Vice  President and Chief Financial Officer |
|                    |   |                                  |   | (principal  financial officer) |
|                    |   |                                  |   |   |
| Dated: May 9, 2007 |   | By:                                   |   | /s/ JONATHAN  TRUMBULL |
|                    |   |                                  |   | Jonathan Trumbull |
|                    |   |                                  |   | Chief Accounting  Officer and Global Controller |
|                    |   |                                  |   | (principal  accounting officer) |

 

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