**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 JUNE 30, 2007**                                                                                     |
| **OR**                                                                                                                               |
| o                                                                                                                                    | ** ** | **TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
| **FOR THE TRANSITION PERIOD FROM        to        ** |

**COMMISSION FILENUMBER 000-21571**

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

| **DELAWARE**                                                     |   | **13-3906555**                        |
|------------------------------------------------------------------|--------|---------------------------------------|
| (STATE OR OTHER  JURISDICTION OF  INCORPORATION OR ORGANIZATION) |   | (IRS EMPLOYER  IDENTIFICATION NUMBER) |

**622Third Avenue, New York, New York 10017**(ADDRESSOF PRINCIPAL EXECUTIVE OFFICES)

**(212) 351-7000**(REGISTRANT’STELEPHONE NUMBER, INCLUDING AREA CODE)

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Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to filesuch reports) and (2) has been subject to such filing requirements for thepast 90 days. Yes oNo x

Indicate by checkmarkwhether the registrant is a large accelerated filer, an accelerated filer or anon-accelerated filer. See definition of “accelerated filer and largeaccelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer x           AcceleratedFiler o           Non-AcceleratedFiler  ̈

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act).  ̈ Yes x No

Indicate the number ofshares outstanding of each of the issuer’s class of common stock as of August 3,2007 the latest practicable date.

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| Class                     | ** ** | **Outstanding on  August 3, 2007** |
|---------------------------|------------|-----------------------------------------|
| Common Stock              |       | 127,597,200                             |
| 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                                                          |          |       | 18 | ** ** |   |
| **Item 2.**   | ** ** | **Management’s Discussion and Analysis of Financial  Condition and Results of Operations**    |          |       | 19 | ** ** |   |
| **Item 3.**   | ** ** | **Quantitative and Qualitative Disclosures about Market  Risk**                                                   |          |       | 34 | ** ** |   |
| **Item 4.**   | ** ** | **Controls and Procedures**                                                                                       |          |       | 35 | ** ** |   |
| ** **    | ** ** | **PART II  – OTHER INFORMATION**                                                                        | ** **    |       | ** ** | ** ** |   |
| **Item  1.**  | ** ** | **Legal  Proceedings**                                                                                            |          |       | 35 | ** ** |   |
| **Item  1A.** | ** ** | **Risk  Factors**                                                                                                 |          |       | 37 | ** ** |   |
| **Item 2.**   | ** ** | **Unregistered Sales of Equity Securities and Use of  Proceeds**                                                  |          |       | 37 | ** ** |   |
| **Item 4.**   | ** ** | **Submission of Matters to a Vote of Security Holders**                                                           |          |       | 38 | ** ** |   |
| **Item 6.**   | ** ** | **Exhibits**                                                                                                      |          |       | 38 | ** ** |   |
|          | ** ** | **Signatures**                                                                                                    |          |       | 39 | ** ** |   |

 

(All other items on this report are inapplicable)

2

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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  June  30,**    | ** **  | **Six Months Ended  June  30,** | ** ** |
|----------------------------------------------------------------------------|------------|----------------------------------------------------------|-------------|-----------------------------------------------------|------------|
| ** **                                                                 | ** ** | **    2007    ** | ** **  | **2006**                                            | ** ** | **2007** | ** ** | **2006** | ** ** |
| **Revenue**                                                                | ** ** | **$**                                                    | **331,149** | ** **                                          | **$**      | **275,169** | ** ** | **$** | **660,177** | ** ** | **$** | **532,205** | ** ** |
| Salaries  and related                                                      |       | 146,153                                                  |        | 98,862                                              |       | 268,500 |   | 190,415 |   |
| Office  and general                                                        |       | 64,576                                                   |        | 43,827                                              |       | 134,993 |   | 90,572 |   |
| Marketing  and promotion                                                   |       | 78,045                                                   |        | 73,212                                              |       | 156,114 |   | 139,011 |   |
| Total  operating expenses                                                  |       | 288,774                                                  |        | 215,901                                             |       | 559,607 |   | 419,998 |   |
| **Operating  income**                                                      | ** ** | **42,375**                                               | ** **  | **59,268**                                          | ** ** | **100,570** | ** ** | **112,207** | ** ** |
| Interest and  other, net                                                   |       | 6,912                                                    |        | 3,940                                               |       | 12,216 |   | 7,070 |   |
| Income from  continuing operations before income taxes and equity interest |       | 49,287                                                   |        | 63,208                                              |       | 112,786 |   | 119,277 |   |
| Income taxes                                                               |       | 17,406                                                   |        | 22,077                                              |       | 39,758 |   | 42,488 |   |
| Losses  in equity interests, net                                           |       | (2,966                                                   | )           | (2,284                                              | )          | (4,386 | ) | (3,525 | ) |
| **Income  from continuing operations**                                     | ** ** | **28,915**                                               | ** **  | **38,847**                                          | ** ** | **68,642** | ** ** | **73,264** | ** ** |
| Income (loss)  from discontinued operations, net of tax                    |       | (299                                                     | )           | 770                                                 |       | (544 | ) | 8,615 |   |
| **Net  income**                                                            | ** ** | **$**                                                    | **28,616**  | ** **                                          | **$**      | **39,617** | ** ** | **$** | **68,098** | ** ** | **$** | **81,879** | ** ** |
| **Basic  earnings per share:**                                             | ** ** | ** **                                               | ** **  | ** **                                          | ** ** | ** ** | ** ** | ** ** | ** ** |
| Earnings per  share from continuing operations                             |       | $                                                        | 0.22        |                                                | $          | 0.30 |   | $ | 0.53 |   | $ | 0.57 |   |
| Earnings  from discontinued operations, net of tax                         |       | -                                                        |        | 0.01                                                |       | - |   | 0.07 |   |
| **Basic earnings per share***                                              | ** ** | **$**                                                    | **0.22**    | ** **                                          | **$**      | **0.31** | ** ** | **$** | **0.52** | ** ** | **$** | **0.64** | ** ** |
| **Diluted  earnings per share:**                                           | ** ** | ** **                                               | ** **  | ** **                                          | ** ** | ** ** | ** ** | ** ** | ** ** |
| Earnings per  share from continuing operations                             |       | $                                                        | 0.22        |                                                | $          | 0.29 |   | $ | 0.51 |   | $ | 0.56 |   |
| Earnings  from discontinued operations, net of tax                         |       | -                                                        |        | 0.01                                                |       | - |   | 0.07 |   |
| **Diluted earnings per share***                                            | ** ** | **$**                                                    | **0.21**    | ** **                                          | **$**      | **0.30** | ** ** | **$** | **0.51** | ** ** | **$** | **0.62** | ** ** |
| **Weighted  average shares outstanding:**                                  | ** ** | ** **                                               | ** **  | ** **                                          | ** ** | ** ** | ** ** | ** ** | ** ** |
| Basic                                                                      |       | 130,542                                                  |        | 128,551                                             |       | 130,268 |   | 127,662 |   |
| Diluted                                                                    |       | 133,121                                                  |        | 132,009                                             |       | 133,324 |   | 131,390 |   |

 

* - Earnings per share may not add in certain periodsdue to rounding.

*See accompanying notes.*

3

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**MONSTER WORLDWIDE, INC.CONSOLIDATED BALANCE SHEETS(in thousands, except per share amounts)**

| ** **                                                                                                                                                           | ** ** | **June 30,** | ** **    | ** **            | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|---------------|-----------------------|------------|
| **ASSETS**                                                                                                                                                           | ** ** | **2007**          | ** **    | **December 31,** | ** ** |
| ** **                                                                                                                                                           | ** ** | **(Unaudited)**   | ** **    | **2006**              | ** ** |
| Current assets:                                                                                                                                                      |       |              |          |                  |       |
| Cash and cash equivalents                                                                                                                                            |       | $                 | 90,539        |                  | $          | 58,680 |   |
| Available-for-sale securities                                                                                                                                        |       | 630,914           |          | 537,893               |       |
| Accounts receivable, net of allowance for doubtful  accounts of $13,284 and $11,924                                                                                  |       | 419,033           |          | 444,747               |       |
| Prepaid and other                                                                                                                                                    |       | 100,233           |          | 82,488                |       |
| **Total current assets**                                                                                                                                             | ** ** | **1,240,719**     | ** **    | **1,123,808**         |       |
| Property and equipment,  net                                                                                                                                         |       | 122,077           |          | 102,402               |       |
| Goodwill                                                                                                                                                             |       | 595,850           |          | 589,041               |       |
| Intangibles, net                                                                                                                                                     |       | 48,781            |          | 51,695                |       |
| Investment in unconsolidated affiliates                                                                                                                              |       | 54,782            |          | 59,625                |       |
| Other assets                                                                                                                                                         |       | 48,360            |          | 43,232                |       |
| **Total assets**                                                                                                                                                     | ** ** | **$**             | **2,110,569** | ** **            | **$**      | **1,969,803** |   |
| **LIABILITIES  AND STOCKHOLDERS’ EQUITY**                                                                                                                       | ** ** | ** **        | ** **    |                  |       |
| Current liabilities:                                                                                                                                                 |       |              |          |                  |       |
| Accounts payable                                                                                                                                                     |       | $                 | 64,896        |                  | $          | 56,098 |   |
| Accrued expenses and other current liabilities                                                                                                                       |       | 200,336           |          | 218,319               |       |
| Income taxes payable                                                                                                                                                 |       | 13,321            |          | 84,433                |       |
| Deferred revenue                                                                                                                                                     |       | 452,196           |          | 444,145               |       |
| Current portion of long-term debt                                                                                                                                    |       | 1,660             |          | 23,249                |       |
| **Total current liabilities**                                                                                                                                        | ** ** | **732,409**       | ** **    | **826,244**           |       |
| Long-term debt, less  current portion                                                                                                                                |       | 312               |          | 415                   |       |
| Deferred income taxes                                                                                                                                                |       | 28,875            |          | 32,594                |       |
| Long-term income taxes payable                                                                                                                                       |       | 89,910            |          | -                     |       |
| Other long-term liabilities                                                                                                                                          |       | 1,294             |          | 865                   |       |
| **Total liabilities**                                                                                                                                                | ** ** | **852,800**       | ** **    | **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: 128,175 and 125,724 shares, respectively; outstanding:  126,253 and 123,802 shares, respectively |       | 126               |          | 126                   |       |
| Class B common stock, $.001 par value,  authorized 39,000 shares; issued and outstanding: 4,762 shares                                                          |       | 5                 |          | 5                     |       |
| Additional paid-in capital                                                                                                                                           |       | 1,713,670         |          | 1,636,023             |       |
| Accumulated other comprehensive income                                                                                                                               |       | 93,096            |          | 87,632                |       |
| Accumulated deficit                                                                                                                                                  |       | (549,128          | )             | (614,101              | )          |
| **Total stockholders’ equity**                                                                                                                                  | ** ** | **1,257,769**     | ** **    | **1,109,685**         |       |
| **Total liabilities and stockholders’ equity**                                                                                                                  | ** ** | **$**             | **2,110,569** | ** **            | **$**      | **1,969,803** |   |

 

*See accompanying notes.*

4

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**MONSTERWORLDWIDE, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(unaudited)**

| ** **                                                                         | ** ** | **Six Months Ended June 30,** | ** ** |
|------------------------------------------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                                                         | ** ** | **2007**                                          | ** ** | **2006** | ** ** |
| **Cash flows provided by operating activities:**                                   |       |                                              |       |   |   |
| Net income                                                                         | ** ** | **$**                                             | **68,098** |   | **$** | **81,879** | ** ** |
| Adjustments to reconcile  net income to net cash provided by operating activities: |       |                                              |       |   |   |
| (Income) loss from discontinued operations, net of  tax                            |       | 544                                               |       | (8,615 | ) |
| Depreciation and amortization                                                      |       | 21,524                                            |       | 20,927 |   |
| Provision for doubtful accounts                                                    |       | 5,113                                             |       | 4,664 |   |
| Non-cash compensation                                                              |       | 21,478                                            |       | 5,452 |   |
| Common stock issued for matching contribution to  401(k) plan                 |       | -                                                 |       | 1,854 |   |
| Deferred income taxes                                                              |       | (5,505                                            | )          | 9,329 |   |
| Gain on disposal of assets                                                         |       | (572                                              | )          |   |   |
| Loss in equity interests and other                                                 |       | 4,386                                             |       | 3,519 |   |
| Changes in assets and  liabilities, net of business combinations:                  |       |                                              |       |   |   |
| Accounts receivable                                                                |       | 20,366                                            |       | (24,450 | ) |
| Prepaid and other                                                                  |       | (4,204                                            | )          | (9,740 | ) |
| Deferred revenue                                                                   |       | 8,051                                             |       | 21,444 |   |
| Accounts payable, accrued liabilities and other                                    |       | (1,787                                            | )          | 32,855 |   |
| Net cash provided by (used for) operating activities  of discontinued operations   |       | (5,332                                            | )          | 5,668 |   |
| **Total adjustments**                                                              |       | 64,062                                            |       | 62,907 |   |
| **Net cash provided by operating activities**                                      | ** ** | **132,160**                                       | ** ** | **144,786** | ** ** |
| **Cash flows used for investing activities:**                                      |       |                                              |       |   |   |
| Capital expenditures                                                               |       | (37,214                                           | )          | (25,543 | ) |
| Purchase of marketable securities                                                  |       | (682,586                                          | )          | (943,763 | ) |
| Sales and maturities of marketable securities                                      |       | 589,565                                           |       | 644,538 |   |
| Payments for acquisitions and intangible assets, net  of cash acquired             |       | (1,806                                            | )          | (18,282 | ) |
| Investments in unconsolidated affiliates                                           |       | -                                                 |       | (19,936 | ) |
| Net proceeds from sale of businesses                                               |       | -                                                 |       | 32,950 |   |
| Cash funded to equity investee                                                     |       | (4,100                                            | )          | (4,800 | ) |
| Net cash used for investing activities of  discontinued operations                 |       | -                                                 |       | (2,469 | ) |
| **Net cash used for investing  activities**                                        | ** ** | **(136,141**                                      | **)**      | **(337,305** | **)** |
| **Cash flows provided by financing  activities:**                                  |       |                                              |       |   |   |
| Payments on capital lease obligations                                              |       | -                                                 |       | (363 | ) |
| Payments on acquisition debt                                                       |       | (21,862                                           | )          | (29,685 | ) |
| Proceeds from exercise of employee stock options                                   |       | 53,401                                            |       | 91,165 |   |
| Excess tax benefits on stock option exercises                                      |       | 12,343                                            |       | 17,324 |   |
| Repurchase of common stock                                                         |       | (10,042                                           | )          | (14,416 | ) |
| Structured stock repurchase, net                                                   |       | -                                                 |       | (22,758 | ) |
| **Net cash provided by financing  activities**                                     | ** ** | **33,840**                                        | ** ** | **41,267** | ** ** |
| Effects of exchange rates  on cash                                                 |       | 2,000                                             |       | 1,714 |   |
| **Net increase (decrease) in cash  and cash equivalents**                          |       | 31,859                                            |       | (149,538 | ) |
| **Cash and cash equivalents,  beginning of period**                                |       | 58,680                                            |       | 196,597 |   |
| **Cash and cash equivalents, end  of period**                                      | ** ** | **$**                                             | **90,539** | ** ** | **$** | **47,059** | ** ** |
| **Supplemental disclosures of  cash flow information:**                            | ** ** | ** **                                        | ** ** | ** ** | ** ** |
| Cash paid for interest                                                             |       | $                                                 | 796        |   | $ | 2,090 |   |
| Cash paid for income taxes                                                         |       | $                                                 | 43,986     |   | $ | 4,795 |   |
| **Non-cash financing and  investing activities:**                                  | ** ** | ** **                                        | ** ** | ** ** | ** ** |
| Common stock issued in connection with business  combinations                      |       | $                                                 | -          |   | $ | 1,164 |   |
| Liabilities created in connection with business  combinations                      |       | $                                                 | 325        |   | $ | 4,556 |   |

 

*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 InternetAdvertising & Fees. These segments provide online services tocustomers in a variety of industries throughout North America, Europe and theAsia-Pacific region.

*MonsterCareers (North America and International).**  *The Company’s Monster Careerssegments predominantly earn revenue from the placement of job postings on thewebsites within the Monster network, access to the Company’s resume databasesand other career-related services. The majority of the Monster Careers servicesare free to job seekers and revenue is earned in approximately 40 countriesaround the world.

*Internet Advertising &Fees.**  *TheCompany’s Internet Advertising & Fees segment earns revenue from leadsprovided to advertisers, the display of advertisements on the Monster networkof websites, click-throughs on text-based links and subscriptions to premiumservices. The majority of the Internet Advertising & Fees services arefree to users and revenue from this segment is primarily earned in the UnitedStates.

***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 the consolidated interim financialstatements. As permitted under generally accepted accounting principles,interim accounting for certain expenses, including income taxes are based onfull year assumptions. Such amounts are expensed in full in the year incurred.For interim financial reporting purposes, income taxes are recorded based uponestimated annual income tax rates.

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

6

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

**Earnings Per Share**

Basic earnings per share does not include the effectsof potentially dilutive stock options, restricted stock awards or restrictedstock units, and is computed by dividing income available to commonshareholders by the weighted average number of common stock  outstanding for the period. Diluted earningsper share reflects restricted stock awards, restricted stock units and commonstock issuable upon exercise of stock options for periods in which the options’exercise price is lower than the Company’s average share price for the period.

Certainstock options were excluded from the computation of diluted earnings per sharedue to their anti-dilutive effect. The weighted average number of such commonstock equivalents is approximately 531,000 and 681,000 for the three monthsended June 30, 2007 and 2006, respectively and 469,000 and  682,000 for the six months ended June 30,2007 and 2006, respectively. A reconciliation of shares used in calculatingbasic and diluted earnings per common and Class B common share follows.
| (thousands of shares)                                                                          | ** ** | ** ** | ** ** | **Three Months Ended June 30,** | ** ** | **Six Months Ended June 30,** | ** ** |
|----------------------------------------------------------------------------------------------------------|------------|------------|------------|-----------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                                                                               | ** ** | **2007**   | ** ** | **2006**                                            | ** ** | **2007**                                          | ** ** | **2006** | ** ** |
| Basic weighted  average shares outstanding                                                               |       | 130,542    |       | 128,551                                             |       | 130,268                                           |       | 127,662 |   |
| Effect of common stock equivalents - stock options,  restricted stock awards, and restricted stock units |       | 2,579      |       | 3,458                                               |       | 3,056                                             |       | 3,728 |   |
| Diluted weighted average  shares outstanding                                                             |       | 133,121    |       | 132,009                                             |       | 133,324                                           |       | 131,390 |   |

 

**Stock-BasedCompensation**

The Company adopted Statement of Financial AccountingStandards (“SFAS”) No. 123(R) *ShareBased Payment* (“SFAS 123R”) using themodified-prospective-transition method beginning January 1, 2006. SFAS123R requires the recognition of (a) compensation cost for all share basedpayments granted, but not yet vested as of January 1, 2006, based on thegrant-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. The Company grants stock options, non-vestedstock and restricted stock units to employees, directors and executiveofficers. The Company recognized stock-based compensation expense of  approximately $17,116 and $3,423 for the threemonths ended June 30, 2007 and 2006, respectively and approximately$21,478 and $5,452 for the six months ended June 30, 2007 and 2006,respectively.

At June 30, 2007, the Company has the followingstock-based employee compensation arrangements:

*StockOptions.**  *InMay 2007, the Compensation Committee of the Company’s Board of Directors(the “Compensation Committee”) approved the grant of stock options to certainemployees in France. Under the tems of the awards, the stock options vest 25%over four years with the first vesting commencing on the first anniversary dateof the award. In January 2007, the Company’s Compensation Committeeapproved the grant of stock options to certain employees in France. Under theterms of the award, 25% of the stock options vested immediately and theremaining 75% will vest over three years. The fair value of  stock options granted during the first sixmonths of 2007 was estimated on the grant date using the Black-Scholesoption-pricing model. The Company recognized approximately$47 and $233 of pre-tax compensation expense in the consolidatedstatement of operations related to these grants for the three and six monthsended June 30, 2007, respectively. During the three and six monthsended June 30, 2006 the Company recognized approximately $53 and $148 ofpre-tax compensation expense in the consolidated statement of operationsrelated to stock options granted to members of the Company’s Board of Directorsthat became fully vested in 2006.

7

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*RestrictedStock Awards.**  *TheCompany, from time to time, enters into separate share-based paymentarrangements with executive officers, other employees and directors. The termsof such agreements are subject to various specified performance and/or vestingconditions. As of June 30, 2007, there were approximately 400,030 non-vestedshares outstanding related to these agreements. The Company measures the awardsto executive officers and other employees using the fair market value of theCompany’s common stock on the date the award is approved by the CompensationCommittee or by the Board of Directors. Directors of the Company receiveautomatic grants of equity awards and such awards are measured using the fairmarket value of the Company’s commons stock on the date of the automatic grant.Restricted stock awards are amortized on a straight-line basis over thevesting period. The Company recognized pre-tax compensation expense ofapproximately $11,422 and $1,405, for the three months ended June 30, 2007and 2006, respectively, and approximately $13,027 and $2,695 for the six monthsended June 30, 2007 and 2006 respectively, as a  component of salaries andrelated in the consolidated statements of operations, related to restrictedstock awards. Included in the second quarter 2007 results is approximately$9,000 related to the accelerated vesting of stock awards related to two formerexecutive officers in accordance with their severance agreements.

*RestrictedStock Units.**  *InMarch 2006, the Compensation Committee approved the grant of 663,500restricted stock units to approximately 330 employees of the Company, subjectto certain specified performance-based conditions. In February 2007, theperformance-based conditions were certified by the Compensation Committee.Accordingly, individuals are entitled to their award provided that therecipient is continuously employed by the Company or any of its affiliates oneach applicable vesting date.

During the first quarter of 2007, the CompensationCommittee approved the grant of 93,034 restricted stock units to certainemployees. These awards do not have any performance-based conditions and aresubject to each recipient being continuously employed by the Company or any ofits affiliates on each applicable vesting date. The Compensation Committee alsoapproved the grant of 747,240 performance-based restricted stock units toapproximately 800 employees of the Company during the first quarter of 2007.

During the second quarter of 2007, the CompensationCommittee approved grants aggregating 74,833 restricted stock units to certainemployees of the Company. The grants consisted of 72,983 restricted stock unitsthat do not have any performance-based conditions and are subject to eachrecipient being continuously employed by the Company or any of its affiliateson each applicable vesting date. The grant also consisted of 1,850 restrictedstock units that have performance-based conditions and are subject to eachrecipient being continuously employed by the Company or any of its affiliateson each applicable vesting date.

The amount of performance-based restricted stock unitsthat are ultimately awarded are subject to reduction or elimination based onwhether or not certain specified performance-based conditions are satisfied. Ifthe minimum performance-based condition becomes satisfied, the number ofrestricted stock units subject to the award will vest in 25% increments overfour years with the first vesting commencing on the anniversary date of eachgrant, provided that the recipient is continuously employed by the Company orany of its affiliates on each applicable vesting date.

The Company measures allgrants of restricted stock units using the fair market value of the Company’scommon stock on the date the award is approved by the Compensation Committee orby the Board of Directors. The Company recorded pre-tax compensation expense,as a component of salaries and related in the consolidated statements ofoperations, related to the amortization of restricted stock units ofapproximately $5,647 and $1,965 for the three months ended June 30, 2007and 2006, respectively and $8,218 and $2,609 for the six months ended June 30,2007 and 2006 respectively. Included in thesecond quarter 2007 results is approximately $3,800 related to the acceleratedvesting of stock awards related to two former executive officers in accordancewith their  severance agreements.

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**Share-BasedPayment Activity**

Thefollowing table summarizes the activity of our employee stock options for thesix months ended June 30, 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                                     |       | 83         |       |       | 46.70      |                                       |       |                                                              |       |                                |       |   |   |   |   |
| Exercised                                   |       | (2,061     | )          |       | 25.91      |                                       |       |                                                              |       |                                |       |   |   |   |   |
| Forfeited/expired/cancelled                 |       | (541       | )          |       | 39.44      |                                       |       |                                                              |       |                                |       |   |   |   |   |
| Outstanding at June 30, 2007           |       | 7,054      |       |       | 29.21      |                                       |       |                                                              | 4.5        |                                |       |   | $ |       86,572 |   |   |
| Options  exerciseable at June 30, 2007 |       | 5,142      |       |       | $          | 28.74                                      |       |                                                              |       | 4.2                                 |       |   |   | $ |       65,538 |   |   |

 

The aggregate intrinsic value is calculated as thedifference between the market price of our common stock as of June 30,2007 and the exercise price of the underlying options. During the six monthsended June 30, 2007 and 2006, the aggregate intrinsic value of optionsexercised was $47,493 and $92,306, respectively. There is approximately $1,458of unrecognized compensation expense related to unvested stock options awardedunder our incentive plan. These costs will be recorded on a straight line basisthrough 2011.

Thefollowing table summarizes the activity of our non-vested stock for thesix months ended June 30, 2007:

| ** **                         | ** ** | **Shares** | ** ** | **Weighted Average  Fair Value at  Grant Date** | ** ** |
|------------------------------------|------------|------------|------------|---------------------------------------------------------------------|------------|
| Non-vested at January 1, 2007 |       | 969,030    |       |                                                                | $          |       44.53 |   |   |
| Granted                            |       | 1,260,107  |       |                                                                | 45.73      |   |   |
| Forfeited                          |       | (122,438   | )          |                                                                | 47.42      |   |   |
| Vested                             |       | (609,397   | )          |                                                                | 42.91      |   |   |
| Non-vested at  June 30, 2007  |       | 1,497,302  |       |                                                                | $          |       45.96 |   |   |

 

As ofJune 30, 2007 there was approximately $49,716 and $15,427 of unrecognizedcompensation cost related to restricted stock units and restricted stockawards, respectively. These awards relate to non-vested stock and are beingamortized over the vesting periods on a straight-line basis.

**3.   BUSINESSCOMBINATIONS**

For the period January 1, 2006 through June 30,2007, the Company completed two business combinations. Although the followingacquired businesses were not considered to be significant subsidiaries, eitherindividually or in the aggregate, they do affect the comparability of resultsfrom period to period. The acquisitions and the acquisition dates are asfollows:
| 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 |

 

**Accrued Integrationand 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 

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as liabilities assumed in connection with the Company’sbusiness combinations. Accordingly, these costs are considered part of thepurchase price of the business combinations and have been recorded as increasesto goodwill. During the six months ended June 30, 2006, the Companycapitalized $1,340 to goodwill relating to the Company’s February 2005acquisition of Emailjob and reversed $333 of previously capitalized costsrelated to acquisitions in the Internet Advertising & Fees segment.The Company did not record any additional restructuring or integration chargesduring the six months ended June 30, 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 of June 30,2007 and December 31, 2006, the Company had accrued $5,544 and $6,075,respectively, for integration and restructuring obligations, mainly for futureoperating lease payments.

**4.**   INVESTMENTIN UNCONSOLIDATED AFFILIATES

In February 2005, the Company acquired a 40%interest in China HR.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 monthsended June 30, 2007 and 2006, the Company recorded a loss in equity interestof $3,174 and $2,284, respectively, and $5,263 and $3,525 for the six monthsended June 30, 2007 and 2006 respectively, related to ChinaHR.

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 be payablequarterly, in arrears. The credit facility provides that any advances shall bedue and payable in full on the maturity date, which is the earliest of March 2011or the consummation of an initial public offering of securities by ChinaHR.During 2007 the Company has advanced $4,100 to ChinaHR under the creditfacility. At June 30, 2007, the total amount outstanding under the creditfacility was $14,100.

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 occupythree of seven seats on ChinaHR’s Board of Directors. In addition, the Companyalso has certain rights and obligations, the amount and likelihood of which arenot currently 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 Finlandrelated to a business combination completed in 2001. The Company accounts forits investment in Finland using the equity method of accounting, therebyrecording its owned percentage of the business’s net results of operations as acomponent of “Losses in Equity Interests” in the Company’s statements ofoperations. For the three and six months ended June 30, 2007, the Companyrecorded income of $208 and $877, respectively, related to the 25% Finlandequity investment. Included in the six month amount is $456 of income recordedin 2007 for 2006 performance.

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**5.   COMPREHENSIVEINCOME**

TheCompany’s comprehensive income is as follows:

| ** **                                         | ** ** | **Three Months ended June 30,**                              | ** ** | **Six Months ended June 30,**                                | ** ** |
|----------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|
| ** **                                         | ** ** | **      2007      ** | ** ** | **      2006      ** | ** ** | **      2007      ** | ** ** | **      2006      ** | ** ** |
| Net income                                         |       | $                                                                                | 28,616     |                                                                             | $          | 39,617 |   | $ | 68,098 |   | $ | 81,879 |   |
| Foreign  currency translation adjustment and other |       | 5,388                                                                            |       | 21,445                                                                           |       | 5,464 |   | 28,909 |   |
| Comprehensive income                               |       | $                                                                                | 34,004     |                                                                             | $          | 61,062 |   | $ | 73,562 |   | $ | 110,788 |   |

 

**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 June 30, 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 transactions during the year ended December 31, 2006. The Companydid not repurchase stock in the open market during the six months ended June 30,2007.

**7.   DISCONTINUEDOPERATIONS**

During the yearended December 31, 2006, the Company disposed of the following businessesthat collectively comprised its entire Advertising & Communicationsoperating segment. The Company executed these transactions in order to focusmore resources to support the growth of the Monster franchise on a globalbasis. The results of operations of these businesses and the associateddisposal costs are reflected as discontinued operations in the consolidatedstatements of operations for all periods presented:

·       On August 31, 2006,the Company sold its TMP Worldwide Advertising & Communicationsbusiness in the United States and Canada, completing the global divestiture ofthe operating unit. The Company received cash of $36,205 (net of workingcapital and other adjustments). The Company recorded a pre-tax loss on the saleof the business of $125,010 ($123,095 after-tax loss, net of a $1,915 taxbenefit) 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.

·       On May 10, 2006, theCompany sold its TMP Worldwide Advertising & Communications businessesin the United Kingdom and Ireland. In a separate transaction, the Company alsosold its recruitment advertising agency in Spain. The Company received cash of$32,950 (net of working capital and other adjustments) and approximately a$9,000 interest bearing note receivable maturing on May 10, 2013. TheCompany recorded a pre-tax gain on the sale of these businesses of $543 ($812after-tax loss, net of a $1,355 tax expense) in the second quarter of 2006,included as a component of discontinued operations in the statements ofoperations. 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.

·       On March 1, 2006, theCompany sold its TMP Worldwide Advertising & Communications businessesin Australia/New Zealand and Singapore in two separate transactions. TheCompany recognized a pre-tax gain on the sale of these businesses of $2,453($5,420 including the tax benefit 

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recognized upondisposition) in the first quarter of 2006. The disposition was not consideredmaterial and did not include a significant amount of assets.

Thefollowing amounts, related to the operations of the Company’s disposedbusinesses in 2006 have been segregated from continuing operationsand are reflected as discontinued operations in each period’s consolidated statementof operations:

| ** **                                              | ** ** | **Three Months ended June 30,**                              | ** ** | **Six Months ended June 30,**                                | ** ** |
|---------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|
| ** **                                              | ** ** | **      2007      ** | ** ** | **      2006      ** | ** ** | **      2007      ** | ** ** | **      2006      ** | ** ** |
| Revenue                                                 |       |                                                                             | $          | -                                                                                |       |   | $ | 25,547   25,547 |   |   | $ | - |   |   |   | $ | 62,654 |   |   |   |
| Gain (loss) before income taxes                         |       |                                                                             | $          | (462                                                                             | )          |   | $ | 2,528 |   |   | $ | (838 | ) |   |   | $ | 6,617 |   |   |   |
| Income tax expense (benefit)                            |       |                                                                             | (163       | )                                                                                |       | 1,065 |   |   | (294 | ) |   |   | 2,729 |   |   |   |
| Income (loss) from discontinued operations, net of  tax |       |                                                                             | (299       | )                                                                                |       | 1,463 |   |   | (544 | ) |   |   | 3,888 |   |   |   |
| Pre-tax gain on sales of discontinued operations        |       |                                                                             | -          |                                                                             |       | 726 |   |   | - |   |   |   | 3,179 |   |   |   |
| Income tax expense (benefit)                            |       |                                                                             | -          |                                                                             |       | 1,419 |   |   | - |   |   |   | (1,548 | ) |   |   |
| Gain (loss) on sale of business, net of tax             |       |                                                                             | -          |                                                                             |       | (693 | ) |   | - |   |   |   | 4,727 |   |   |   |
| Income (loss)  from discontinued operations, net of tax |       |                                                                             | $          | (299   (299                                                            | )          |   | $ | 770 |   |   | $ | (544 | ) |   |   | $ | 8,615 |   |   |   |

 

**8.   SEGMENT AND GEOGRAPHICDATA**

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 ofthe Company’s operating segments.

TheCompany’s chief operating decision maker includes the impact of non-cashcompensation expenses when measuring the results of each reportable segment.The Company has recorded pre-tax non-cash compensation expense in itsstatements of operations for the three months ended June 30, 2007 and2006, respectively of $17,116 and $3,423 and $21,478 and $5,452 for the sixmonths ended June 30, 2007 and 2006 respectively. The following tablespresent the Company’s operations by business segment and by geographic region:

| ** **                           | ** ** | **Three Months ended June 30,**                              | ** **  | **Six Months ended June 30,**                                | ** ** |
|--------------------------------------|------------|----------------------------------------------------------------------------------|-------------|----------------------------------------------------------------------------------|------------|
| **Revenue**                          | ** ** | **      2007      ** | ** **  | **      2006      ** | ** ** | **      2007      ** | ** ** | **     2006      ** | ** ** |
| Monster:                             |       |                                                                             |        |                                                                             |       |   |   |   |   |
| Careers - North America              |       | $                                                                                | 174,481     |                                                                             | $          | 162,816 |   | $ | 358,498 |   | $ | 322,814 |   |
| Careers - International              |       | 116,845                                                                          |        | 74,374                                                                           |       | 223,051 |   | 138,965 |   |
| Internet Advertising & Fees |       | 39,823                                                                           |        | 37,979                                                                           |       | 78,628 |   | 70,426 |   |
| **Total Revenue**                    | ** ** | **$**                                                                            | **331,149** |                                                                             | **$**      | **275,169** |   | **$** | **660,177** |   | **$** | **532,205** |   |

 

| ** **                           | ** ** | **Three Months ended June 30,**                              | ** **                                             | **Six Months ended June 30,**                                | ** ** |
|--------------------------------------|------------|----------------------------------------------------------------------------------|--------------------------------------------------------|----------------------------------------------------------------------------------|------------|
| **Operating Income**            | ** ** | **      2007      ** | ** **                                             | **      2006      ** | ** ** | **      2007      ** | ** ** | **     2006      ** | ** ** |
| Monster:                             |       |                                                                             |                                                   |                                                                             |       |   |   |   |   |
| Careers - North America              |       | $                                                                                |         54,579 |                                                                             | $          |         55,597 |   | $ |       120,457 |   | $ | 110,156      110,156 |   |
| Careers - International              |       | 12,055                                                                           |                                                   | 2,003                                                                            |       | 20,016 |   | 2,768 |   |
| Internet Advertising & Fees |       | 5,211                                                                            |                                                   | 12,563                                                                           |       | 9,515 |   | 22,049 |   |
| Total Monster                        |       | 71,845                                                                           |                                                   | 70,163                                                                           |       | 149,988 |   | 134,973 |   |
| Corporate  expenses                  |       | (29,470                                                                          | )                                                      | (10,895                                                                          | )          | (49,418 | ) | (22,766 | ) |
| **Operating Income**                 | ** ** | **$**                                                                            | **42,375**                                             |                                                                             | **$**      | **59,268** |   | **$** | **100,570** |   | **$** | **112,207** |   |

 

 

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| ** **                                      | ** ** | **Three Months ended June 30,**                              | ** **  | **Six Months ended June 30,**                                | ** ** |
|-------------------------------------------------|------------|----------------------------------------------------------------------------------|-------------|----------------------------------------------------------------------------------|------------|
| **Revenue by Geographic Region** | ** ** | **      2007      ** | ** **  | **      2006      ** | ** ** | **      2007      ** | ** ** | **      2006      ** | ** ** |
| United States                                   |       | $                                                                                | 208,054     |                                                                             | $          | 197,728 |   | $ | 425,977 |   | $ | 387,548 |   |
| International                                   |       | 123,095                                                                          |        | 77,441                                                                           |       | 234,200 |   | 144,657 |   |
| **Total Revenue**                               | ** ** | **$**                                                                            | **331,149** |                                                                             | **$**      | **275,169** |   | **$** | **660,177** |   | **$** | **532,205** |   |

 

Thefollowing table reconciles each reportable segment’s assets to total assetsreported on the Company’s consolidated balance sheets as of June 30, 2007and December 31, 2006:

| **Total Assets by Segment** | ** ** | **June 30, 2007** | ** **    | **December 31, 2006** | ** ** |
|--------------------------------------------|------------|-----------------------------|---------------|---------------------------------|------------|
| Monster Careers -  North America           |       | $                           | 631,017       |                            |       | $ | 669,645 |   |   |
| Monster Careers -  International           |       | 584,761                     |          |                            | 516,213    |   |   |
| Internet  Advertising & Fees      |       | 161,206                     |          |                            | 164,482    |   |   |
| Corporate                                  |       | 633,419                     |          |                            | 540,723    |   |   |
| Shared assets (a)                          |       | 100,166                     |          |                            | 78,740     |   |   |
| **Total Assets**                           | ** ** | **$**                       | **2,110,569** |                            | ** ** | **$** | **1,969,803** |   |   |

 

(a) Shared assets representassets that provide economic benefit to all of the Company’s operatingsegments. Shared assets are not allocated to operating segments for internalreporting or decision-making purposes.

**9.   EXECUTIVECOMMITMENTS**

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 Directors since July 2006 and has served as Chairman of the ExecutiveCommittee of the Board of Directors since October 2006. The Company and Mr. Iannuzzientered into an employment agreement, effective as of April 11, 2007,witha term through December 31, 2012. Pursuant to the employment agreement, Mr. Iannuzzi’sannual base salary will be $1,000, subject to discretionary increases by theBoard of Directors. Mr. Iannuzzi received a grant of 225,000 sharesof restricted stock, which will vest in equal parts on each of the first four anniversariesof the effective date of the Employment Agreement, subject to continuedemployment.

William Pastore, the Company’s former Chief ExecutiveOfficer resigned as Chief Executive Officer through mutual agreement with theCompany’s Board of Directors on April 12, 2007, and continued to beemployed by the Company through June 2007 to facilitate an orderlytransition. The Company recorded a severance charge of approximately $12,700 inthe second quarter of 2007 in connection with Mr. Pastore’s severanceagreement. The charge included approximately $11,100 of non-cash compensationrelated to the accelerated vesting of 281,250 shares of restricted stock and56,250 restricted stock units and $1,600 related to the cash severanceobligation.

On June 6, 2007, the Company announced that twoexecutive officers left the Company in order to pursue other careeropportunities and business interests, effective June 6, 2007. The Companyrecorded a severance charge of approximately $3,100 in the second quarter of2007 in connection with their severance agreements. The charge includedapproximately $1,700 of non-cash compensation related to the acceleratedvesting of 16,000 shares of restricted stock and 30,000 restricted stock unitsand $1,400 related to the cash severance obligation.

On June 6, 2007, theCompany announced that Timothy T. Yates joined the Company as Executive VicePresident and Chief Financial Officer and as a member of its Board ofDirectors. The Company and Mr. Yates entered into an employment agreement,effective as of June 7, 2007,with a term through June 7, 2011.Pursuant to the employment agreement, Mr. Yates’s annual base salary willbe $500, subject to discretionary increases by the Board of Directors. Mr. Yatesreceived a grant of 100,000 shares of 

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restricted stock, whichwill vest in equal parts on each of the first four anniversaries of theeffective date of the Employment Agreement, subject to continued employment.

**10.   INCOME TAXES**

On January 1, 2007, the Company adopted theprovisions of FASB Interpretation No. 48, *Accountingfor Uncertainty in Income Taxes – an interpretation of SFAS No. 109*(“FIN 48”). FIN 48 establishes a single model to address accounting foruncertain tax positions and clarifies the accounting for income taxes byprescribing a minimum recognition threshold that a tax position is required tomeet before being recognized in the financial statements. Upon adoption on January 1,2007, the Company increased its existing liabilities for uncertain taxpositions by $3,125. This increase was recorded as a cumulative effectadjustment to the Company’s opening accumulated deficit. The Company alsoreclassified a portion of previously accrued 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 June 30, 2007 theCompany has recorded a liability for $79,599 and $89,910, respectively ofunrecognized tax benefits, inclusive of estimated accrued interest andpenalties. In addition as of January 1, 2007 and June 30, 2007 theCompany has reduced its recorded deferred tax assets by $16,478 and $17,903respectively 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 $80,226 as of June 30, 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 $15,496 as of June 30, 2007.

The Company conductsbusiness globally and as a result, the Company or one or more subsidiaries issubject to U.S. federal income taxes and files income tax returns in variousU.S. states and approximately 20 foreign jurisdictions. In the normal course ofbusiness, the Company is subject to tax examinations by taxing authoritiesincluding major jurisdictions such as France, Germany, India, South Korea,Netherlands, United Kingdom, the United States as well as countries inScandinavia, Eastern Europe and in the Asia/Pacific region. With someexceptions, the Company is generally no longer subject to examinations withrespect to returns that have been filed for years prior to 2003. The Company iscurrently under audit by the Internal Revenue Service for years 2003 through 2005.It is likely that the audit will not be fully concluded in 2007. At this pointit is not possible to provide an estimate of the amount, if any, of significantchanges in unrecorded tax benefits that are reasonably possible to occur withinthe next 12 months.

**11.   RESTATEMENTOF CONSOLIDATED FINANCIAL STATEMENTS AND STOCK OPTION INVESTIGATION**

On June 12, 2006, theCompany announced that a committee of independent directors of the Board ofDirectors (the “Special Committee”) assisted by independent legal counsel andoutside accounting experts was conducting an investigation to review theCompany’s historical stock option grant practices and related accounting. TheSpecial Committee and its advisors conducted an extensive review of the Company’shistorical stock option grants and related accounting, including an assessmentand review of the Company’s accounting policies, internal records, supportingdocumentation and e-mail communications, as well as interviews with current andformer employees and current and former members of the Company’s executivemanagement and Board of Directors.

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On December 13, 2006,the Company restated its Form 10-K for the year ended December 31,2005 to reflect additional non-cash stock-based compensation costs and relatedincome tax effects, relating to stock option awards that were granted duringthe periods 1997 through March 31, 2003. The restated consolidatedfinancial statements included cumulative pre-tax compensation expense of$339,586 and $67,656 of related income tax benefits. As of December 31,2005, the Company had accelerated substantially all unvested outstanding stockoptions in order to mitigate compensation expense that would have been requiredupon the effectiveness of SFAS 123R beginning January 1, 2006.Accordingly, the 2006 periods were not materially affected as a result of thisrestatement. There was no effect on the 2007 periods as a result of therestatement.

The Company has notifiedthe Internal Revenue Service of the stock option review and results thereof.Under Internal Revenue Code section 162(m) (“IRC 162(m)”), stockoptions that are in-the-money at the time of grant do not qualify asperformance-based compensation. The Company is not entitled to a deduction forthe compensation expense related to the exercise of those options held byofficers 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.

The Company recordedprofessional fees related to the ongoing investigation into the Company’shistorical stock option grant practices and related accounting of approximately$5,300 and $600 for the three months ended June 30, 2007 and 2006respectively, and $15,100 and $600 for the six months ended June 30, 2007and 2006 respectively. These costs were recorded as a component of “office andgeneral” expenses within “Corporate operating expenses” and primarily relate toprofessional services for legal fees. The investigation is being led byexternal regulatory and federal agencies, and is focused on the past conduct offormer employees. While the Company cannot quantify or estimate the amount ortiming of these costs throughout the remainder of 2007 and into the future,they will primarily relate to legal fees on behalf of former employees andformer members of senior management, fees paid in defense of shareholderlawsuits and potential fines or settlements. See Note 12 for further discussion

**12.   STOCKOPTION INVESTIGATIONS AND LITIGATION**

The United States Attorney’sOffice for the Southern District of New York (“USAO”) and the Securities andExchange Commission (“SEC”) have informed the Company that each is conductingan investigation into its past stock option grants. In connection with theseinvestigations, the Company has received a grand jury subpoena from the UnitedStates District Court for the Southern District of New York and requests forthe voluntary production of documents from the SEC. The Company is fullycooperating with the USAO and the SEC. On February 15, 2007, the Company’sformer general counsel pleaded guilty to two felony counts relating to thosehistorical stock option grants and the SEC instituted a civil action againsthim. On March 26, 2007, the SEC civil action was settled pursuant to afinal judgment permanently enjoining our former general counsel from violatingthe federal securities laws and from acting as an officer or director of apublic company.

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In October 2006, a putativeclass action litigation was filed in the United States District Court for theSouthern District of New York by a former Company employee against the Companyand a number 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.The amended 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 Company and the individual defendants have moved to dismiss theamended complaint.

In addition, derivativeactions in connection with historical stock option practices have beencommenced by shareholders purportedly on behalf of the Company in both theUnited States District Court for the Southern District of New York and in theSupreme Court of the State of New York, New York County, against a number ofcurrent and former officers and directors of the Company, naming the Company asa nominal defendant.

On October 20, 2006,the three federal court actions were consolidated by the Court and styled as Inre Monster Worldwide, Inc. Stock Option Derivative Litigation, MasterDocket 1:06:cv-04622 (S.D.N.Y.)(NRB-DCF) (Consolidated Action). On orabout December 20, 2006, plaintiffs in the consolidated federal actionsfiled a consolidated amended complaint. The consolidated amended complaintasserts claims for breach of fiduciary duty, gross mismanagement, unjustenrichment, and violations of Sections 10(b) and 14(a) of theSecurities Exchange Act of 1934 (the “Exchange Act”) for the period between January 1,1997 and the present. The federal court plaintiffs seek, among other relief, anindeterminate amount of damages from the individual defendants.

On September 18,2006, the three purported derivative actions that were filed in the SupremeCourt of the State of New York, New York County, were also consolidated. Theconsolidated actions have been 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 in the consolidated statecourt actions filed a consolidated amended complaint asserting claims forbreach of fiduciary duty and related state law causes of action. The statecourt plaintiffs seek, among other relief, an indeterminate amount of damagesfrom the individual defendants.

On or about March 15,2007, a putative securities shareholder class action was filed by MiddlesexCounty Retirement System against the Company and certain former employees inthe United States District Court for the Southern District of New Yorkdesignated as In re Monster Worldwide Securities Litigation, 07 Civ.2237 (S.D.N.Y.) (JSR), seeking an indeterminate amount of damages on behalf ofall persons or entities, other than defendants, who purchased or acquired thesecurities of the Company from May 6, 2005 until June 9, 2006. On July 9,2007, plaintiffs filed an amended complaint in the securities class actionasserting claims against the Company, Andrew McKelvey and Myron Olesnyckyjbased on an alleged violation of Section 10(b) the Exchange Act andagainst the individual defendants based on an alleged violation of Section 20(a) ofthe Exchange Act.   The Company has notyet responded to the amended complaint.

From July 25, 2006 toDecember 26, 2006, the Company suspended its Registration Statement on Form S-8,resulting in a prohibition on the exercise of stock options. The Companyreceived correspondence from, or on behalf of, certain former employees who aregrantees of certain vested stock options that were scheduled to expire or beforfeited unless exercised during this suspension period. Due to the suspensionof the Company’s S-8, these individuals were precluded from exercisingsuch options prior to the expiration date of the options. The formeremployees  informed the Company that theywould seek to hold the Company liable for any financial damages suffered as aresult of their inability to exercise 

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the options during thesuspension period. In December 2006, the Company’s Board of Directorsapproved the payment of approximately $5.0 million to compensate certainformer employees for the value of stock options that expired during the periodthat the Company’s equity compensation plans were suspended. In exchange forpayment, the Company requested a release of any liability. Substantially allpayments 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.

**13.   SUBSEQUENTEVENTS**

On July 26, 2007, theBoard of Directors of the Company approved the grant of stock awards to 56employees of the Company for an aggregate of 965,000 shares of restrictedstock  under the Company’s 1999 Long TermIncentive Plan. The Company measured the equity awards using the fairmarket value of the Company’s common stock on July 26, 2007. The aggregatevalue of the restricted stock grant is $36,342. The awards will be amortized ona straight-line basis over the vesting period. The awards will vest in 50%increments on each of the second and fourth anniversaries of the grant date of July 26,2007, subject to the recipient’s continued employment through each applicablevesting date.

On July 30, 2007, theCompany announced a series of strategic restructuring actions that are intendedto position the Company for sustainable long-term growth in the rapidlyevolving global online recruitment advertising industry. The restructuring planincludes an anticipated reduction in the Company’s current workforce byapproximately 800 associates, or 15% of its full-time staff, beginningimmediately and continuing into 2008. The Company anticipates the majority ofthe reductions will occur by the end of 2007. The plan also includes fixedasset write-offs, accelerated depreciation for assets to be phased out, costsrelating to the consolidation of certain office facilities, contracttermination costs, relocation costs and professional fees. The restructuringplan arose out of a review commencing in the second quarter of 2007 by theCompany’s current executive management team of the Company’s cost structure andorganizational structure. The restructuring is intended to realign the Company’sstructure to permit investment in key areas that will improve the customerexperience and foster revenue growth and margin expansion.

As aresult of the restructuring initiatives, the Company expects to record acumulative pre-tax charge within the range of $55,000 to $70,000, beginning inthe third quarter of 2007 and into 2008. The breakdown of the expected pre-taxcumulative charge is as follows: 

| **Category**                                                                | ** ** | **Range**          | ** ** |
|-----------------------------------------------------------------------------|------------|--------------------|------------|
| Employee Severance                                                          |       | $26,000 to $33,000 |       |
| Fixed Asset Write-Offs                                                      |       | $6,000 to $8,000   |       |
| Accelerated Depreciation                                                    |       | $8,000 to $11,000  |       |
| Consolidation of Office Facilities                                          |       | $6,000 to $8,000   |       |
| Other (Contract  termination costs, relocation costs and professional fees) |       | $9,000 to $10,000  |       |

 

Of the aggregate pre-taxcharge, the Company expects to incur approximately $41,000 to $51,000 incash expenditures. Approximately $14,000 to $19,000 of the pre-tax charge willbe non-cash, primarily related to fixed asset write-offs and accelerateddepreciation. The Company anticipates that these initiatives will reduce thecurrent operating expense base by approximately $150,000 to $170,000 on anannualized basis.

The Company expects theseactions to be substantially completed by the end of 2008.

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**Reportof Independent Registered Public Accounting Firm**

Board of Directors and StockholdersMonster Worldwide, Inc.New York, New York

We have reviewed the consolidated balance sheet ofMonster Worldwide, Inc. as of June 30, 2007, and the relatedconsolidated statements of operations and cash flows for the three andsix-month periods ended June 30, 2007 and 2006 included in theaccompanying Securities and Exchange Commission Form 10-Q for theperiod ended June 30, 2007. These interim financial statements are theresponsibility of the Company’s management.

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 10 to the financial statements,effective January 1, 2007 the Company adopted FASB Interpretation No. 48,*Accounting for Uncertainty in Income Taxes*-*an interpretation of FASB Statement No. 109.*

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 YorkAugust 6, 2007

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

We makeforward-looking statements in this report and in other reports and proxystatements that we file with the SEC. In addition, our senior management mightmake forward-looking statements. Broadly speaking, forward-looking statementsinclude:

·       projections of ourrevenues, income, earnings per share, capital expenditures, capital structureor other financial items;

·       descriptions of plans orobjectives of our management for future operations, products or services,including pending acquisitions and dispositions;

·       forecasts of our futureeconomic performance; and

·       descriptions of assumptionsunderlying or relating to the foregoing.

Forward-looking statements discuss matters that arenot 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 not guarantees.Forward-looking statements speak as of only the date they are made, and wemight not update them to reflect changes that occur after the date they aremade.

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. RiskFactors” of our 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, acrossapproximately 40 countries around the world. We have been able to build onMonster’s brand and create worldwide awareness by offering online recruitingsolutions that we believe are redefining the way employers and job seekersconnect. For the employer, our goal is to provide the most effective solutionsand easiest to use technology to simplify the hiring process and deliver accessto our community of job seekers. For job seekers, our purpose is to helpadvance our users’ careers by providing work-related content, services andother highly innovative 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 utilize other careerrelated services.

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 approximately 37% of ourtotal revenue for the quarter ended June 30, 2007, compared toapproximately 28% 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 that connectcompanies to highly targeted audiences at critical stages in their life. Ourgoal is to offer compelling online services for the users throughpersonalization, community features and enhanced content. Our clients 

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range from Fortune 100 companiesto small and medium-sized enterprises and government agencies. We believe thatthere are significant opportunities to monetize our current web traffic throughlead generation, display advertising and other consumer related products. Theseproperties are appealing to advertisers and other third parties as they delivercertain discrete demographics entirely online. The majority of our services inour Internet Advertising & Fees division are free to users and areprimarily offered in North America.

**RestructuringInitiatives**

On July 30, 2007, we announced a series ofstrategic restructuring actions that are intended to position us forsustainable long-term growth in the rapidly evolving global online recruitmentadvertising industry.

The restructuring plan includes an anticipatedreduction in the current workforce by approximately 800 associates, or 15% ofour full-time staff, beginning immediately and into 2008. We anticipate themajority of the reductions will occur by the end of this year. The plan alsoincludes fixed asset write-offs, accelerated depreciation for assets to bephased out, costs relating to the consolidation of certain office facilities,contract termination costs, relocation costs and professional fees. Therestructuring plan arose out of a review commencing in the second quarter of2007 by our current executive management team of our cost structure andorganizational structure. The restructuring is intended to realign thestructure to permit investment in key areas that will improve the customerexperience and foster revenue growth and long-term operating margin expansion.

As aresult of the restructuring initiatives, we expect to record a cumulativepre-tax charge within the range of $55 million to $70 million, beginning in thethird quarter of 2007 and into 2008. The breakdown of the expected pre-taxcumulative charge is as follows: 
| Category                                                                    | ** ** | **Range**                           | ** **                         |
|-----------------------------------------------------------------------------|------------|-------------------------------------|------------------------------------|
| Employee  Severance                                                         |       | $                                   | 26 million – $33 million |   |
| Fixed Asset  Write-Offs                                                     |       | $6 million – $8 million   |                               |
| Accelerated Depreciation                                                    |       | $8 million – $11 million  |                               |
| Consolidation of  Office Facilities                                         |       | $6 million – $8 million   |                               |
| Other (Contract  termination costs, relocation costs and professional fees) |       | $9 million –  $10 million |                               |
|                                                                             |            |                                     |                                    |  |

 

Of the aggregate pre-tax charge, we expect to incur approximately$41 million to $51 million in cash expenditures. Approximately$14 million to $19 million of the pre-tax charge will be non-cash,primarily related to fixed asset write-offs and accelerated depreciation.

We expect these actions tobe substantially completed by the end of 2008.

**BusinessCombinations**

Forthe period January 1, 2006 through June 30, 2007, we completed twobusiness combinations. Although the following acquired businesses were notconsidered to be significant subsidiaries, either individually or in theaggregate, they do affect the comparability of results from period to period.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      |

 

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**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):

·       On August 31, 2006, wesold our TMP Worldwide Advertising & Communications business in theUnited States and Canada, completing the global divestiture of the operatingunit. We received cash of $36,205 (net of working capital and otheradjustments). We recorded a pre-tax loss on the sale of the business of$125,010 ($123,095 after-tax loss, net of a $1,915 tax benefit) in the thirdquarter of 2006. Included in the pre-tax loss is approximately $133,000 ofremaining goodwill and other intangible assets associated with the Advertising &Communications operating segment. This disposition is considered material andincluded a significant amount of assets, primarily due to the amount ofgoodwill on the balance sheet as of August 31, 2006.

·       On May 10, 2006, wesold our TMP Worldwide Advertising & Communications businesses in theUnited Kingdom and Ireland. In a separate transaction, we also sold ourrecruitment advertising agency in Spain. We received cash of $32,950 (net ofworking capital and other adjustments) and a $9,000 interest bearing notereceivable maturing on May 10, 2013. We recorded a pre-tax gain on thesale of these businesses of $543 ($812 after-tax loss, net of a $1,355 taxexpense) in the second quarter of 2006, included as a component of discontinuedoperations in the statements of operations. In the first quarter of 2007, theCompany received approximately $6,560 related to the promissory note as apartial repayment. The disposition was not considered material and did notinclude a significant amount of assets.

·       On March 1, 2006, wesold our TMP Worldwide Advertising & Communications businesses inAustralia/New Zealand and Singapore in two separate transactions. We recognizeda pre-tax gain on the sale of these businesses of $2,453 ($5,420 including thetax benefit recognized upon disposition) in the first quarter of 2006. The dispositionwas not considered material and did not include a significant amount of assets.

Thefollowing amounts primarily related to our dispositions in 2006 have beensegregated from continuing operations and are reflected as discontinuedoperations in each period’s consolidated statement of operations:
|                                                         | ** ** | **Three Months ended June 30,**                                          | ** ** | **Six Months ended June 30,**                                | ** ** |
|---------------------------------------------------------|------------|----------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|
| **(in thousands)**                                 | ** ** | **       2007       ** | ** ** | **      2006      ** | ** ** | **      2007      ** | ** ** | **      2006     ** | ** ** |
| Revenue                                                 |       |                                                                                         | $          | –                                                                           |       |   | $ | 25,547         25,547 |   |   | $ | – |   |   | $ | 62,654         62,654 |   |
| Gain (loss) before income taxes                         |       |                                                                                         | $          | (462 (462                                                                        | )          |   | $ | 2,528 |   |   | $ |       (838 | ) |   | $ | 6,617 |   |
| Income tax expense (benefit)                            |       |                                                                                         | (163       | )                                                                                |       | 1,065 |   |   | (294 | ) |   | 2,729 |   |
| Income (loss) from discontinued operations, net of  tax |       |                                                                                         | (299       | )                                                                                |       | 1,463 |   |   | (544 | ) |   | 3,888 |   |
| Pre-tax gain on sales of discontinued operations        |       |                                                                                         | –     |                                                                             |       | 726 |   |   | – |   |   | 3,179 |   |
| Income tax expense (benefit)                            |       |                                                                                         | –     |                                                                             |       | 1,419 |   |   | – |   |   | (1,548 | ) |
| Gain (loss) on sale of business, net of tax             |       |                                                                                         | –     |                                                                             |       | (693 | ) |   | – |   |   | 4,727 |   |
| Income (loss)  from discontinued operations, net of tax |       |                                                                                         | $          | (299                                                                             | )          |   | $ | 770 |   |   | $ | (544 | ) |   | $ | 8,615 |   |

 

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**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, *Basisof Presentation 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 timethat job postings are displayed on the Monster network websites. Revenue earnedfrom subscriptions to the Monster network’s resume database is recognized overthe length 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 pages viewedby our users. We recognize revenue from the display of “click-throughs” on textbased links as “click throughs” occur. A “click-through” occurs when a userclicks on an advertiser’s listing. Revenue from lead generation is recognizedas leads are 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, including transaction,integration and restructuring costs, are allocated to the fair value of netassets acquired upon acquisition. Any excess of the purchase price over theestimated fair values of the net tangible and intangible assets acquired isrecorded as goodwill.

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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 invaluing the 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 or morefrequently if indicators of potential impairment exist. The determination ofwhether 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 to tax reserves is recorded through income in theperiod in which it becomes more likely than not that a liability has beenincurred. Once established, the Company adjusts tax reserves when an eventoccurs necessitating 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 three highestcompensated officers (other than the CEO or CFO), whose salary is disclosed inthe annual proxy for the year in which the salary is paid is not deductible. Inorder for the limitation to apply, the executive must still be employed at theend of the year in which the payment occurs.

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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)limitation is determined to apply, the disallowance of tax benefits isreflected by reducing previously recorded tax benefits in the year of exerciseby reversing the recorded deferred tax asset to the income tax provision on thestatement of operations. Future financial results may be impacted due to eventsinconsistent with the underlying assumptions.

Effective January 1,2007, we adopted the provisions of FASB Interpretation  No. 48, *Accountingfor Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109*(“FIN 48”).**FIN 48 contains a two-stepapproach to recognizing and measuring uncertain tax positions accounted for inaccordance with Statement of Financial Accounting Standards (“SFAS”) No. 109,*Accounting for Income Taxes*. The firststep is to evaluate the tax position for recognition by determining if theweight of available evidence indicates it is more likely than not that theposition will be sustained on audit, including resolution of related appeals orlitigation processes, if any. The second step is to measure the tax benefit asthe largest amount which is more than 50% likely of being realized uponultimate settlement. We consider many factors when evaluating and estimatingour tax positions and tax benefits, which may require periodic adjustments andwhich may not accurately anticipate actual outcomes.

***Stock-Based Compensation***

Weaccount for stock-based compensation in accordance with SFAS No. 123(revised 2004), *Share-Based Payment*(“SFAS 123R”). SFAS 123R eliminates the ability to account forstock-based compensation transactions using the intrinsic value method underAccounting Principles Board (“APB”) Opinion No. 25, *Accounting for Stock Issued 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 SFAS 123R. The useof an 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.

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**Results ofOperations**

Consolidatedoperating results as a percent of revenue for the three and six months endedJune 30, 2007 and 2006 are as follows:
|                                                                             | ** ** | **Three Months Ended  June 30,** | ** ** | **Six Months Ended  June 30,** | ** ** |
|-----------------------------------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                                  | ** ** | **   2007   **    | ** ** | **   2006   **  | ** ** | **   2007   ** | ** ** | **   2006   ** | ** ** |
| **Revenue**                                                                 | ** ** | **100.0%**                                      | ** ** | **100.0%**                                    | ** ** | **100.0%** | ** ** | **100.0%** | ** ** |
| Salaries and related                                                        |       | 44.1%                                           | ** ** | 35.9%                                         | ** ** | 40.7% | ** ** | 35.8% | ** ** |
| Office and general                                                          |       | 19.5%                                           | ** ** | 15.9%                                         | ** ** | 20.4% | ** ** | 17.0% | ** ** |
| Marketing and promotion                                                     |       | 23.6%                                           | ** ** | 26.6%                                         | ** ** | 23.6% | ** ** | 26.1% | ** ** |
| Total operating expenses                                                    |       | 87.2%                                           | ** ** | 78.5%                                         | ** ** | 84.8% | ** ** | 78.9% | ** ** |
| **Operating income**                                                        | ** ** | **12.8%**                                       | ** ** | **21.5%**                                     | ** ** | **15.2%** | ** ** | **21.1%** | ** ** |
| Interest and other, net                                                     |       | 2.1%                                            | ** ** | 1.4%                                          | ** ** | 1.9% | ** ** | 1.3% | ** ** |
| Income from continuing operations before income  taxes and equity interests |       | 14.9%                                           | ** ** | 23.0%                                         | ** ** | 17.1% | ** ** | 22.4% | ** ** |
| Income taxes                                                                |       | 5.3%                                            | ** ** | 8.0%                                          | ** ** | 6.0% | ** ** | 8.0% | ** ** |
| Losses in equity interests                                                  |       | -0.9%                                           | ** ** | -0.8%                                         | ** ** | -0.7% | ** ** | -0.7% | ** ** |
| **Income from continuing operations**                                       | ** ** | **8.7%**                                        | ** ** | **14.1%**                                     | ** ** | **10.4%** | ** ** | **13.8%** | ** ** |
| Income (loss) from discontinued operations, net of  tax                     |       | -0.1%                                           | ** ** | 0.3%                                          | ** ** | -0.1% | ** ** | 1.6% | ** ** |
| **Net  income**                                                             | ** ** | **8.6%**                                        | ** ** | **14.4%**                                     | ** ** | **10.3%** | ** ** | **15.4%** | ** ** |

 

Thefollowing presentation of our segment results is prepared based on thecriteria we use when evaluating the performance of our businessunits. For these purposes, management views certain non-cash expenses, such asdepreciation expense, amortization of intangibles and amortization ofstock-based compensation, as a separate component of operating profit. Webelieve that this presentation provides important indicators of our operatingstrength and is useful to investors when evaluating our operating performance.

**The Three MonthsEnded June 30, 2007 Compared to the Three Months Ended June 30, 2006**

***Monster Careers - North America***

Theoperating results of our Monster Careers - North America division for the threemonths ended June 30, 2007 and 2006 are as follows:
| (dollars in thousands)     | ** ** | ** ** | ** ** | **2007** | ** ** | **% of  Revenue** | ** ** | **2006** | ** ** | **% of  Revenue** | ** ** | **$ Increase** | ** ** | **%  Increase** | ** ** |
|--------------------------------------|------------|------------|------------|----------|------------|------------------------|------------|----------|------------|------------------------|------------|---------------------|------------|-----------------|------------|
| Revenue                              |       | $          | 174,481    |     | 100.0%     |                   | $          | 162,816  |       | 100.0%                 |       | $                   | 11,665     |            |       | 7.2% |   |   |
| Selling,  general and administrative |       | 113,637    |       | 65.1%    |       | 101,479                |       | 62.3%    |       | 12,159                 |       |                | 12.0%      |            |       |
| Depreciation  and amortization*      |       | 6,265      |       | 3.6%     |       | 5,740                  |       | 3.5%     |       | 524                    |       |                | 9.1%       |            |       |
| Operating income                     |       | $          | 54,579     |     | 31.3%      |                   | $          | 55,597   |       | 34.1%                  |       | $                   | (1,018     | )               |       | -1.8% |   |   |

*   Includes amortization of stock basedcompensation.

Our Monster Careers – North America segment generatedan increase in revenue of 7.2% during the second quarter of 2007. The slowergrowth rate was impacted by moderating employment and economic conditions, achange in our Telesales model, underperformance of our eCommerce channel and achange in marketing spending patterns. In the second quarter of 2007, wemodified our Telesales model by 

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changing the percentage of sales reps, which werepreviously dedicated to new customer acquisition, to a higher percentage withcustomer retention responsibilities. As a result, revenue contribution from newcustomers was negatively effected. We are currently reviewing thesemodifications and conducting a rigorous analysis to determine the optimal mixof acquisition and retention sales reps in order to bring the telesales forceback to its historical productivity levels. Revenue from our eCommerce channel,which serves small and medium sized companies, was down slightly as compared tothe prior year period. We are actively working on product enhancements, pricingstrategies and marketing efforts designed to rebuild momentum in the eCommercechannel. We intend to invest heavily in the eCommerce platform as part of therestructuring initiatives announced in July 2007. Although marketing andpromotional costs remained flat as compared to 2006, there was a shift inspending away from our core marketing channels to the newspaper and mediaalliances which contributed to the revenue growth deceleration. We intend toincrease the marketing spend on our core product offerings over the second halfof 2007 in order to drive incremental revenue growth. During the second quarterwe also realigned management responsibilities in order to simplify andstreamline operations and leverage our global capabilities. We will continue tomonitor our pricing structure in the local and regional markets in order toachieve a competitive advantage and continually focus on improving our customerservice with both job seekers and employers.

During the second quarterof 2007, our operating expenses grew at a faster rate than our revenue. Salaryand related expenses were 26.5% of revenue, compared to the 24.6% reported inthe prior year period. Marketing and promotional costs were 22.0% of revenue,slightly down compared to the 23.6% reported in the prior year period as weshifted a larger portion of our advertising budget to newspaper alliances andscaled back efforts to promote our core products. The overall increase inoperating expenses coupled with lower sales productivity rates resulted in anoperating margin of 31.3% down slightly from 34.1% in the 2006 period. While weare committed to investing in the North American business we will maintain avigilant approach toward controlling our cost base in line with our revenue expectations.

***Monster Careers - International***

Theoperating results of our Monster Careers - International division for the threemonths ended June 30, 2007 and 2006 are as follows:
| (dollars in thousands)    | ** ** | ** ** | ** ** | **2007** | ** ** | **% of  Revenue** | ** ** | **2006** | ** ** | **% of  Revenue** | ** ** | **$  Increase** | ** ** | **%  Increase** | ** ** |
|-------------------------------------|------------|------------|------------|----------|------------|------------------------|------------|----------|------------|------------------------|------------|-----------------|------------|-----------------|------------|
| Revenue                             |       | $          | 116,845    |     | 100.0%     |                   | $          | 74,374   |       | 100.0%                 |       | $               | 42,471     |            | 57.1%      |   |
| Selling, general and administrative |       | 99,482     |       | 85.1%    |       | 67,310                 |       | 90.5%    |       | 32,172                 |       | 47.8%           |       |
| Depreciation and amortization*      |       | 5,308      |       | 4.5%     |       | 5,061                  |       | 6.8%     |       | 247                    |       | 4.9%            |       |
| Operating income                    |       | $          | 12,055     |     | 10.3%      |                   | $          | 2,003    |       | 2.7%                   |       | $               | 10,052     |            | 501.8%     |   |

*   Includes amortization of stock basedcompensation.

Our Monster Careers – International segment increasedrevenue in each country where we operate and now comprises 35% of our totalrevenue compared to 27% in the 2006 period. Our considerable investments inmarketing and sales reps in the major countries across Europe and Asia haveresulted in revenue growth of 57.1% in the second quarter of 2007, including a$6.0 million benefit from the effects of foreign currency exchange rates.In Europe, our eCommerce channel, which allows our clients to service theiraccounts online without assistance, continues to generate strong growth asrevenue increased in excess of 100% as compared to the 2006 period. We intendto leverage the successes in our International eCommerce channel as we work toimprove the North American eCommerce model. We believe that our European andAsian eCommerce channel can be a strong source of revenue and a new resource tocapture customer leads. We continue to see a migration of help wantedadvertising online across Europe and Asia. 

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In Asia, the large labor pool, strong economic growthand rapid Internet adoption presents a promising opportunity for us that webelieve will be a more significant revenue source for us in the future.

Our Monster Careers –International segment generated an operating margin of 10.3% up from 2.7% inthe 2006 period. We strategically made investments overseas through a refinedmix of marketing, sales and product enhancements, which have yielded strongreturns. We have added approximately 940 people in the past twelve months inour continuing effort to invest in talent, and accordingly our salaries andrelated costs increased. Our marketing expenses have increased 17.9% over the2006 period, although with the increasing revenue they are now 24.2% of revenueas compared to 32.2% in the 2006 period. We are committed to expanding ourleadership position through increased promotion of our brand and believe ourinvestments in marketing continue to increase our brand awareness, driving jobseeker traffic to our websites and expanding our reach, both to the job seekerand to the employer. Our objective to transition Monster Careers – Internationalinto a scalable operation, similar to that of our North American business, istaking hold 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.

***Internet Advertising & Fees***

Theoperating results of our Internet Advertising and Fees segment for the threemonths ended June 30, 2007 and 2006 are as follows:
| (dollars in thousands)    | ** ** | ** ** | ** ** | **2007** | ** ** | **% of  Revenue** | ** ** | **2006** | ** ** | **% of  Revenue** | ** ** | **$  Increase** | ** ** | **%  Increase** | ** ** |
|-------------------------------------|------------|------------|------------|----------|------------|------------------------|------------|----------|------------|------------------------|------------|-----------------|------------|-----------------|------------|
| Revenue                             |       | $          | 39,823     |     | 100.0%     |                   | $          | 37,979   |       | 100.0%                 |       | $               | 1,844      |            | 4.9%       |   |
| Selling, general and administrative |       | 32,073     |       | 80.5%    |       | 23,744                 |       | 62.5%    |       | 8,329                  |       | 35.1%           |       |
| Depreciation and amortization*      |       | 2,539      |       | 6.4%     |       | 1,672                  |       | 4.4%     |       | 867                    |       | 51.9%           |       |
| Operating income                    |       | $          | 5,211      |     | 13.1%      |                   | $          | 12,563   |       | 33.1%                  |       | $               | (7,352     | )               | -58.5%     |   |

*   Includes amortization of stock basedcompensation.

Revenue at our Internet Advertising & Feessegment (“IA&F”) generated a modest increase of 4.9%, during the secondquarter of 2007, a much slower growth rate than throughout the periods in 2006.Several factors contributed to the reduced revenue growth in IA&F, howeverthe main drivers were decreased traffic on certain properties and managementdecisions to curtail some non-core advertising. During the second quarter of2007, we began to reduce the placement of certain interstitial advertisementson the Monster.com site. Although this decision will have short term revenueimplications over the remainder of 2007, we believe it was the appropriateaction to take to improve the quality of the job seeker experience. Decreasedtraffic on certain properties has led to a slight decrease in revenue from leadgeneration as compared to 2006, particularly on the Tickle.com property. Approximately46% of our IA&F revenue base is related to lead generation from many sitesacross our network. As previously discussed the decrease in traffic is due, inpart, to our shift in the mix of advertising spending which we intend toaddress in the second half of 2007. Offsetting the decrease in lead generationrevenue is an increase in display advertising revenue of approximately 22%. Displayadvertising represented approximately 28% of IA&F revenue for the secondquarter of 2007. Display advertising was up based on solid contributions fromthe Monster.com and Military.com sites. We continue to believe that onlineadvertising represents a significant growth opportunity for us, as our audienceis appealing to both brand and remnant advertisers.

We posted an operatingmargin of 13.1% in the second quarter of 2007, a sharp decline from the 33.1%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, increasing product and technology expenditures and initiatinginfrastructure build-outs. Marketing expenses increased 6.0% over 

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the 2006 period as weinvested in our websites and expanded their recognition among users. While weremain committed to investing in our products and offerings to deepen ouraudience and attract new users, we will monitor and control our cost base inline with revenue expectations.

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

Consolidatedoperating expenses and operating income for the three months ended June 30,2007 and 2006 are as follows:
| (dollars in thousands) | ** ** | ** ** | ** ** | **2007** | ** ** | **% of  Revenue** | ** ** | **2006** | ** ** | **% of  Revenue** | ** ** | **$  Increase** | ** ** | **%  Increase** | ** ** |
|----------------------------------|------------|------------|------------|----------|------------|------------------------|------------|----------|------------|------------------------|------------|-----------------|------------|-----------------|------------|
| Salaries  and related            |       | $          | 146,153    |     |       | 44.1%                  |       |     | $          | 98,862                 |       |            | 35.9%      |            |       | $ | 47,291 |   | 47.8% |   |
| Office  and general              |       | 64,576     |       |     | 19.5%      |                   |       | 43,827   |       |                   | 15.9%      |            |       | 20,749          |       | 47.3% |   |
| Marketing  and promotion         |       | 78,045     |       |     | 23.6%      |                   |       | 73,212   |       |                   | 26.6%      |            |       | 4,833           |       | 6.6% |   |
| Operating  expenses              |       | 288,774    |       |     | 87.2%      |                   |       | 215,901  |       |                   | 78.5%      |            |       | 72,873          |       | 33.8% |   |
| Operating income                 |       | $          | 42,375     |     |       | 12.8%                  |       |     | $          | 59,268                 |       |            | 21.5%      |            |       | $ | (16,893 | ) | -28.5% |   |

 

Our total operatingexpenses grew 33.8% in the second quarter of 2007, as every major line itemincreased over the 2006 period. Our Monster Careers - North America and MonsterCareers - International segments accounted for a majority of the year over yearincrease in total operating expenses, stemming mainly from hiring initiativesin 2006 and 2007. Since June 2006, we have increased our global headcountby approximately 30%, primarily in the areas of sales and support staff in ourMonster Careers segments. As a result we incurred higher salary, benefits andcommission costs. Included in salaries and related is approximately $15.8 millionof severance charges related to the departure of three former executiveofficers. Of that amount, approximately $12.8 million is non-cash andrelates to the accelerated vesting of equity awards. Office and generalexpenses increased 47.3% as a direct result of investments in ourinfrastructure, additional headcount and technology costs. Included within theoffice and general expenses is approximately $5.3 million of professionalfees related to the ongoing stock option investigation compared to $0.6 millionin the prior year period. We also increased marketing and promotionexpenditures by $4.8 million over the prior year period primarily as aresult of allocating greater resources to expanding our brand recognition andincreasing our reach in the International Careers segment. We will continue tomarket our services heavily throughout Europe and Asia, while controlling our marketingand promotion expenses in a manner consistent with our revenue expectations. Asa result of the foregoing factors, our total operating expenses grew to 87.2%of consolidated revenue in the 2007 period resulting in an operating margin of12.8%.

***Income Taxes***

Incometaxes for the three months ended June 30, 2007 and 2006 are as follows:
|                                                        | ** ** | ** ** | ** ** | ** ** | ** ** | **Change** | ** ** |
|--------------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|
| **(dollars in thousands)**                   | ** ** | ** ** | ** ** | **2007**   | ** ** | **2006**   | ** ** | **$** | ** ** | **%** | ** ** |
| Income  from continuing operations before income taxes |       | $          | 49,287     |       | $          | 63,208     |       | $ | (13,921 | ) | -22.0% |   |
| Income  taxes                                          |       | 17,406     |       | 22,077     |       | (4,671     | )          | -21.2% |   |
| Effective tax rate                                     |       | 35.3%      |       | 34.9%      |       |       |       |   |   |
|                                                        |            |            |            |            |            |            |            |  |  |  |  |  |  |  |

 

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 examination 

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by the Internal RevenueService and other tax authorities. We regularly assess the likelihood ofadverse outcomes resulting from these examinations to determine the adequacy ofour provision for income taxes.

***Earnings Per Share***

Diluted earnings per sharefrom continuing operations decreased 24.1% in the second quarter of 2007compared to the 2006 period. Diluted weighted average shares outstandingincreased by 1.1 million shares. The share increase is primarily theresult of additional shares issued in connection with employee stock optionexercises. Net income was 8.6% of total revenue in the 2007 period, compared to14.4% in the 2006 period.

**The Six MonthsEnded June 30, 2007 Compared to the Six Months Ended June 30, 2006**

***Monster Careers - North America***

The operating results ofour Monster Careers - North America division for the six months endedJune 30, 2007 and 2006 are as follows:

*Monster Careers - North America*
| (dollars in thousands)     | ** ** | ** ** | ** ** | **2007** | ** ** | **% of  Revenue** | ** ** | **2006** | ** ** | **% of  Revenue** | ** ** | **$  Increase** | ** ** | **%  Increase** | ** ** |
|--------------------------------------|------------|------------|------------|----------|------------|------------------------|------------|----------|------------|------------------------|------------|-----------------|------------|-----------------|------------|
| Revenue                              |       | $          | 358,498    |     | 100.0%     |                   | $          | 322,814  |       | 100.0%                 |       | $               | 35,684     |            |       | 11.1% |   |   |
| Selling,  general and administrative |       | 226,504    |       | 63.2%    |       | 202,825                |       | 62.8%    |       | 23,679                 |       |            | 11.7%      |            |       |
| Depreciation  and amortization*      |       | 11,537     |       | 3.2%     |       | 9,833                  |       | 3.0%     |       | 1,704                  |       |            | 17.3%      |            |       |
| Operating income                     |       | $          | 120,457    |     | 33.6%      |                   | $          | 110,156  |       | 34.1%                  |       | $               | 10,301     |            |       | 9.4% |   |   |

*   Includes amortization of stock basedcompensation.

Our Monster Careers - North America segment wasaffected by the sluggish economic trends within the labor markets across theUnited States economy. However, we continue to benefit from a migration toonline employment advertising, and we believe that we continue to gain marketshare within the recruitment advertising industry. The division grew revenue11.1% as we continued to penetrate and increase the revenue contribution fromour enterprise customers. Revenue from our eCommerce channel, which allows ourclients to self-serve their job-posting needs, has remainedessentially flat as compared to the first six months of 2006. We intend toinvest aggressively in our eCommerce platform during the remainder of 2007 asthe model serves an attractive market of small to medium sized businesses, andgenerates high margin returns despite the smaller average order size. Webelieve that our primary opportunity for future growth in North America is atthe regional and local market level and we therefore continue to monitor ourpricing structure in the local and regional markets in order to achieve acompetitive advantage.

Our Monster Careers -North America segment generated an operating margin of 33.6% slightly down from34.1% reported in the 2006 period. Total operating expense grew 11.9% comparedto revenue growth of 11.1%. While we remain committed to investing in product,marketing, talent, and technology upgrades to grow the business, we willclosely monitor the operating expense base in line with our revenueexpectations.

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***Monster Careers - International***

Theoperating results of our Monster Careers - International division for the sixmonths ended June 30, 2007 and 2006 are as follows:
| (dollars in thousands)     | ** ** | ** ** | ** ** | **2007** | ** ** | **% of  Revenue** | ** ** | **2006** | ** ** | **% of  Revenue** | ** ** | **$  Increase** | ** ** | **%  Increase** | ** ** |
|--------------------------------------|------------|------------|------------|----------|------------|------------------------|------------|----------|------------|------------------------|------------|-----------------|------------|-----------------|------------|
| Revenue                              |       | $          | 223,051    |     | 100.0%     |                   | $          | 138,965  |       | 100.0%                 |       | $               | 84,086     |            | 60.5%      |   |
| Selling,  general and administrative |       | 193,094    |       | 86.6%    |       | 127,177                |       | 91.5%    |       | 65,917                 |       | 51.8%           |       |
| Depreciation  and amortization*      |       | 9,941      |       | 4.5%     |       | 9,020                  |       | 6.5%     |       | 921                    |       | 10.2%           |       |
| Operating income (loss)              |       | $          | 20,016     |     | 9.0%       |                   | $          | 2,768    |       | 2.0%                   |       | $               | 17,248     |            | 623.1%     |   |

*   Includes amortization of stock basedcompensation.

Our Monster Careers - International segment increasedrevenue in each country where we operate and comprised  33.8% of our total revenue during the sixmonths ended June 30, 2007. Our considerable investments in marketing andsales staff in the major countries across Continental Europe and Asia arepaying off, evidenced by the segment’s organic revenue growth rate of 52% excludingthe effects of currency exchange rates and the results of businesses acquiredwithin the trailing twelve month period. We continue to see a rapid migrationof help wanted advertising online. Our three largest international markets theUnited Kingdom, Germany and France contributed approximately 53% of totalInternational revenue. We are actively marketing and promoting our eCommercemodel throughout Continental Europe and early indicators suggest that it is becominga strong complement to our field and telesales groups.

We have been aggressivelyincreasing our investments overseas through a refined mix of marketing, salesand product enhancements. Marketing expenses increased 34.5% over the 2006period as we have invested to increase our brand awareness, driving job seekertraffic to our websites and expanding our reach, both to the job seeker and tothe employer. Those investments, combined with the addition of approximately500 sales and support staff during the first half of 2007, have helped usachieve a significant portion of our overall revenue growth and gain marketshare in key European and Asian countries. We are committed to growing ourbusiness overseas, while still mindful of profitability and the cost structure.In the first six months of 2007, the division increased total expenses by49.1%, while increasing operating margin to 9.0%.

***Internet Advertising & Fees***

Theoperating results of our IA&F segment for the six months endedJune 30, 2007 and 2006 are as follows:
| (dollars in thousands)     | ** ** | ** ** | ** ** | **2007** | ** ** | **% of  Revenue** | ** ** | **2006** | ** ** | **% of  Revenue** | ** ** | **$  Increase** | ** ** | **%  Increase** | ** ** |
|--------------------------------------|------------|------------|------------|----------|------------|------------------------|------------|----------|------------|------------------------|------------|-----------------|------------|-----------------|------------|
| Revenue                              |       | $          | 78,628     |     | 100.0%     |                   | $          | 70,426   |       | 100.0%                 |       | $               | 8,202      |            | 11.6%      |   |
| Selling,  general and administrative |       | 64,439     |       | 82.0%    |       | 44,583                 |       | 63.3%    |       | 19,856                 |       | 44.5%           |       |
| Depreciation  and amortization*      |       | 4,674      |       | 5.9%     |       | 3,794                  |       | 5.4%     |       | 880                    |       | 23.2%           |       |
| Operating income                     |       | $          | 9,515      |     | 12.1%      |                   | $          | 22,049   |       | 31.3%                  |       | $               | (12,534    | )               | -56.8%     |   |

*   Includes amortization of stock basedcompensation.

Revenue at our IA&F segment increased 11.6%, amuch slower growth rate than throughout 2006. During the first half of 2007, weexperienced a reduced volume of users to our sites, and were unable to delivera high volume of quality leads to our advertisers, resulting in a slower growthrate in our lead generation business than anticipated. The websites across ournetwork realized a higher ratio of remnant versus brand 

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advertising during the first six months of 2007,resulting in excess inventory and a lower cost per impression, contributing toour overall slower growth rates. We continue to believe that online advertisingrepresents a significant growth opportunity for us, as our audience isappealing to both brand and remnant advertisers.

We posted an operatingmargin of 12.1% in the first six months of 2007, a sharp decline from the 31.3%operating margin reported in the same period in 2006 as our expense base grewat a faster rate than our revenue. Despite slower revenue growth, we continuedto invest in our business model over the past twelve months by adding salescapacity, increasing product and technology expenditures and initiatinginfrastructure build-outs. Marketing expenses increased 22.1% over the 2006period as we invested in our websites and expanded their recognition amongusers. While we remain committed to investing in and developing our IA&Fbusiness, we will closely monitor our cost structure in line with our revenueexpectations.

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

Consolidatedoperating expenses and operating income for the six months ended June 30,2007 and 2006 are as follows:
| (dollars in thousands) | ** ** | ** ** | ** ** | **2007** | ** ** | **% of  Revenue** | ** ** | **2006** | ** ** | **% of  Revenue** | ** ** | **$  Increase** | ** ** | **%  Increase** | ** ** |
|----------------------------------|------------|------------|------------|----------|------------|------------------------|------------|----------|------------|------------------------|------------|-----------------|------------|-----------------|------------|
| Salaries  and related            |       | $          | 268,500    |     |       | 40.7%                  |       |     | $          | 190,415                |       |            | 35.8%      |            |       | $ | 78,085 |   | 41.0% |   |
| Office  and general              |       | 134,993    |       |     | 20.4%      |                   |       | 90,572   |       |                   | 17.0%      |            |       | 44,421          |       | 49.0% |   |
| Marketing  and promotion         |       | 156,114    |       |     | 23.6%      |                   |       | 139,011  |       |                   | 26.1%      |            |       | 17,103          |       | 12.3% |   |
| Operating  expenses              |       | 559,607    |       |     | 84.8%      |                   |       | 419,998  |       |                   | 78.9%      |            |       | 139,609         |       | 33.2% |   |
| Operating income                 |       | $          | 100,570    |     |       | 15.2%                  |       |     | $          | 112,207                |       |            | 21.1%      |            |       | $ | (11,637 | ) | -10.4% |   |

 

Our total operating expenses grew 33.2% in the firsthalf of 2007 compared to the prior year period, as every major line itemincreased over the 2006 period. We have increased our global headcount byapproximately 30% over the 2006 period, primarily for sales and support in ourMonster Careers segments. As a result we incurred higher salary, benefits andcommission costs. Included in salaries and related is approximately $15.8 millionof severance charges related to the departure of three former executiveofficers. Of that amount, approximately $12.8 million is non-cash chargesrelated to the accelerated vesting of equity awards. Office and generalexpenses increased 49.0% as a direct result of investments in ourinfrastructure, additional headcount and technology costs. Included within theoffice and general expenses is approximately $15.1 million of professionalfees related to the ongoing stock option investigation. We also increasedmarketing and promotion expenditures by $17.1 million primarily as aresult of allocating greater resources to expanding our brand recognition andsales force in key countries overseas. We will continue to market our servicesheavily throughout Europe and Asia, while managing our marketing and promotionexpenses in a manner consistent with our revenue expectations.

***Income Taxes***

Incometaxes for the six months ended June 30, 2007 and 2006 are as follows:
|                                                        | ** ** | ** ** | ** ** | ** ** | ** ** | **Change** | ** ** |
|--------------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|
| **(dollars in thousands)**                   | ** ** | ** ** | ** ** | **2007**   | ** ** | **2006**   | ** ** | **$** | ** ** | **%** | ** ** |
| Income  from continuing operations before income taxes |       | $          | 112,786    |       | $          | 119,277    |       | $ | (6,491 | ) | -5.4% |   |
| Income  taxes                                          |       | 39,758     |       | 42,488     |       | (2,730     | )          | -6.4% |   |
| Effective tax rate                                     |       | 35.3%      |       | 35.6%      |       |       |       |   |   |
|                                                        |            |            |            |            |            |            |            |  |  |  |  |  |  |  |

 

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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 be adverselyaffected by earnings being lower than anticipated in countries where we havelower statutory rates, changes in the valuation of our deferred tax assets orliabilities, or changes in tax laws or interpretations thereof. In addition,our filed tax returns are subject to the examination by the Internal RevenueService and other tax authorities. We regularly assess the likelihood ofadverse outcomes resulting from these examinations to determine the adequacy ofour provision for income taxes.

***Earnings Per Share***

Diluted earnings per sharefrom continuing operations decreased 8.9% for the first six months of 2007compared to the 2006 period, as diluted weighted average shares outstandingincreased approximately 1.9 million shares. The share increase is primarilydue to shares issued in connection with employee stock option exercises. Netincome was 10.3% of total revenue in the 2007 period, compared to 15.4% in the2006 period. Net income in the 2006 period includes approximately$8.6 million of income from discontinued operations.

**Financial Condition**

Thefollowing table details our cash and cash equivalents, marketable securitiesand cash flow components:
|                                                      | ** ** | **June 30,** | ** ** | **December 31,** | ** ** | **Change** | ** ** |
|------------------------------------------------------|------------|-------------------|------------|-----------------------|------------|------------|------------|
| **(dollars in thousands)**                 | ** ** | ** **        | ** ** | **2007**              | ** ** | **2006**   | ** ** | **$** | ** ** | **%** | ** ** |
| Cash  and cash equivalents                           |       | $                 | 90,539     |                  | $          | 58,680     |       | $ | 31,859 |   | 54.3% |   |
| Marketable  securities                               |       | 630,914           |       | 537,893               |       | 93,021     |       | 17.3% |   |
| Cash  and cash equivalents and marketable securities |       | $                 | 721,453    |                  | $          | 596,573    |       | $ | 124,880 |   | 20.9% |   |
| Percentage of total  assets                          |       | 34.2%             |       | 30.3%                 |       |       |       |   |   |
|                                                      |            |                   |            |                       |            |            |            |  |  |  |  |  |  |  |

 
|                                                                 | ** ** | ** ** | ** ** | ** ** | ** ** | **Change** | ** ** |
|-----------------------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|
| **(dollars in thousands)**                            | ** ** | ** ** | ** ** | **2007**   | ** ** | **2006**   | ** ** | **$** | ** ** | **%** | ** ** |
| Cash  provided by operating activities of continuing operations |       | $          | 137,492    |       | $          | 139,118    |       | $ | (1,626 | ) | -1.2% |   |
| Cash  used for investing activities of continuing operations    |       | (136,141   | )          | (334,836   | )          | 198,695    |       | -59.3% |   |
| Cash  provided by financing activities of continuing operations |       | 33,840     |       | 41,267     |       | (7,427     | )          | -18.0% |   |
| Cash  provided by (used in) discontinued operations             |       | (5,332     | )          | 3,199      |       | (8,531     | )          | -266.7% |   |
| Effect of exchange rates  on cash                               |       | 2,000      |       | 1,714      |       | 286        |       | 16.7% |   |
|                                                                 |            |            |            |            |            |            |            |  |  |  |  |  |  |  |

 

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.

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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 throughat least the next twelve months. Our cash generated from operating activitiesis subject to fluctuations in the global economy and unemployment rates.

During the six months ended June 30, 2007, werecorded $15.1 million of professional fees as a direct result of theinvestigation into our stock option grant practices and related accounting.These costs were recorded as a component of “office and general” expenses andprimarily relate to professional services for legal fees. In addition, in thelatter half of 2006 we incurred approximately $17.7 million related tolitigation, the informal investigation by the SEC, the investigation by theUSAO and the preparation and review of our restated consolidated financialstatements, a portion of which was 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 the remainderof 2007 and into the future, they primarily relate to legal fees paid on behalfof current and former employees, fees paid in defense of shareholder litigationand potential fines or settlements.

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. In 2007, we expect to paydomestic income tax on a quarterly basis and continue to utilize tax losses inmany foreign tax jurisdictions to substantially reduce our cash tax liability.During the first half of 2007, we paid approximately $44 million relatedto income taxes, a portion of which related to our 2006 U.S. federal income taxliability.

On July 30, 2007, we announced a series ofstrategic restructuring actions that are intended to position us forsustainable long-term growth in the rapidly evolving global online recruitmentadvertising industry. We expect to record a cumulative pre-tax charge within therange of $55 million to $70 million, beginning in the third quarterof 2007 and into 2008 related to the restructuring actions. Of the aggregatepre-tax charge, we expect to incur approximately $41 million to$51 million in cash expenditures. Approximately $14 million to$19 million of the pre-tax charge will be non-cash, primarily related tofixed asset write-offs and accelerated depreciation. We anticipate that theseinitiatives will reduce our current run rate of operating expenses byapproximately $150 to $170 million on an annualized basis. In addition, weexpect to invest up to an additional $50 million in incremental capitalexpenditures through the end of 2007 and into 2008.

As of June 30, 2007, we had cash and cashequivalents and marketable securities of $721.5 million, compared to$596.6  million as of December 31, 2006. Our increase in cash andmarketable securities of $124.9 million during the six months endedJune 30, 2007, primarily relates to our operating and financing activitiesoffset by cash used for investing activities. Cash provided by operatingactivities was $132.2 million for the six months ended June 30, 2007and resulted from $68.6 million of income from continuing operations and$47 million of net non-cash items, increased by a $17.1 millionchange in working capital. Strong operating income before taking into accountdepreciation and amortization of intangibles and stock-based compensation(“OIBDA”) and cash received from the exercise of employee stock options,including their associated tax benefit revenue growth, improved cash flows fromoperations in 2007. Accounts receivable decreased by $20.4 million due toa higher level of collections in the 2007 period. Deferred revenue increased in2007, resulting in an $8.1 million increase to cash from operations. Cashflow from operating activities in 2007 was decreased by $5.3 million fromcash used to fund liabilities related to our discontinuedAdvertising & Communications businesses.

We used $136.1 million of cash for investingactivities for the six months ended June 30, 2007. The use of cash mainlyreflects our net purchase of marketable securities of $93.0 million as weinvested our capital in debt instruments yielding higher returns. Capitalexpenditures were $37.2 million for the first six months of 2007, as weinvested in expanding our infrastructure and systems in Europe and Asia.Additionally, we 

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funded $4.1 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 thefirst six months of 2007, resulting from $53.4 million of cash receivedfrom employee stock option exercises and $12.3 million related to the taxbenefit on stock options exercised. In addition, we used $10.0 million ofcash to pay for tax withholdings in connection with the vesting of stock-basedawards. During the  six months endedJune 30, 2007, we paid $21.9 million for notes payable on businessesacquired 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 agreementwith ChinaHR, increasing the maximum allowable amount to be advanced in thefirst year from $10.0 million to $12.5 million. Interest on the loanswill be 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. For the six months ended June 30, 2007 we have advancedChinaHR $4.1 million. From the inception of the loan agreement throughJune 30, 2007, we advanced ChinaHR $14.1 million.

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 June 30, 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 first six months of 2007.

**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 Amendment of FASB Statement 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 June 30,2007, net unrealized losses on these investments were not material.

We have a presence in approximately 40 countriesaround the world. For the three and six months ended June 30, 2007,approximately 37.2% and 35.5%, respectively of our revenue was earned outsidethe United States and collected in local currency and related operatingexpenses were also paid in such corresponding local currency. Accordingly, wewill be subject to risk for exchange rate fluctuations between such local 

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currencies and the dollar. We may use forward foreign exchange contracts as cash flow hedges tooffset risks related to foreign currency transactions. These transactionsprimarily relate to non-functional currency denominated inter-companyfunding loans and non-functional currency accounts receivable andnon-functional currency indebtedness. We do not trade derivative financialinstruments for speculative purposes.

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 three and six months ended June 30,2006, we had a translation gain of $5.4 million and $5.5 million, respectively,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 value dueto 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 Worldwide’s disclosure controls and procedures were effective inensuring that material information relating to Monster Worldwide is made knownto the Chief Executive Officer and Chief Financial Officer by others withinMonster Worldwide during the period in which this report was being prepared.

There have been nosignificant changes in Monster Worldwide’s internal controls over financialreporting that occurred during our most recent fiscal quarter that havematerially affected, or are reasonably likely to materially affect, ourinternal controls over financial reporting.

**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 11 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 

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by outside counsel, was conducting an independentinvestigation to review the Company’s historical stock option grant practicesand related accounting.

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.The amended 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 Company and the individual defendants have moved to dismiss theamended complaint.

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 by Middlesex County Retirement Systemagainst the Company and certain former employees in the United States DistrictCourt for the Southern District of New York designated as In re MonsterWorldwide Securities Litigation, 07 Civ. 2237 (S.D.N.Y.) (JSR), seeking anindeterminate amount of damages on behalf of all persons or 

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entities, other than defendants, who purchased oracquired the securities of the Company from May 6, 2005 until June 9,2006. On July 9, 2007, plaintiffs filed an amended complaint in thesecurities class action asserting claims against the Company, Andrew McKelveyand Myron Olesnyckyj 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. The Company has notyet responded to the amended complaint.

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 informedthe Company that they would seek to hold the Company liable for any financialdamages suffered as a result of their inability to exercise the options duringthe suspension period. In December 2006, the Company’s Board of Directorsapproved the payment of approximately $5.0 million to compensate certainformer employees for the value of stock options that expired during the periodthat the Company’s equity compensation plans were suspended. In exchange forpayment, the Company requested a release of any liability. Substantiallyall  payments have been made under thisagreement.

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.

**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 June 30, 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)** | ** ** |
|------------------------------------------------|------------|----------------------------------------------------|------------|------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------|------------|
| April 1 - April 30              |       | —                                             |       | N/A                                      |       | —                                                                                                                   |       |                                                                                                                                          | $          | 54,919,200 |   |   |
| May 1 - May 31                  |       | —                                             |       | N/A                                      |       | —                                                                                                                   |       |                                                                                                                                          | $          | 54,919,200 |   |   |
| June 1 - June 30                |       | —                                             |       | N/A                                      |       | —                                                                                                                   |       |                                                                                                                                          | $          | 54,919,200 |   |   |
| **Total Q2 2007**                              |       |                                               |       | N/A                                      |       |                                                                                                                     |       |                                                                                                                                          | $          | 54,919,200 |   |   |
| **Total  six months ended June 30, 2007** |       |                                               |       | N/A                                      |       |                                                                                                                     |       |                                                                                                                                          | $          | 54,919,200 |   |   |

 

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(a) - On November 10,2005, the Board of Directors approved a share repurchase plan, authorizing theCompany to purchase up to $100 million of shares of its common stock. Theshare repurchase plan expires 30 months from the authorization date.

**ITEM 4.**                SUBMISSIONOF MATTERS TO A VOTE OF SECURITY HOLDERS.

(a)          The annual meeting ofstockholders was held on May 30, 2007.

(b)         Thefollowing directors were elected at the Annual Meeting and received the voteindicated.

|                             | ** ** | **FOR**     | ** ** | **WITHHELD** | ** ** |
|-----------------------------|------------|-------------|------------|--------------|------------|
| Salvatore Iannuzzi          |       | 153,364,849 |       | 2,982,815    |       |
| Robert J. Chrenc            |       | 154,544,023 |       | 1,803,641    |       |
| George R. Eisele            |       | 154,507,057 |       | 1,840,607    |       |
| John Gaulding               |       | 120,251,677 |       | 36,095,987   |       |
| Michael Kaufman             |       | 119,642,398 |       | 36,705,266   |       |
| Ronald J. Kramer            |       | 120,036,676 |       | 36,310,988   |       |
| Philip R. Lochner, Jr. |       | 154,308,301 |       | 2,039,363    |       |
| David A. Stein              |       | 152,021,949 |       | 4,325,715    |       |

 

(c)          Theproposal to ratify the appointment of BDO Seidman, LLP as the Company’sindependent registered public accounting firm for the year ending December 31,2007 was approved by the vote indicated:

| FOR         |   | 145,063,787 |   |
|-------------|--------|-------------|--------|
| AGAINST     |   | 10,639,888  |   |
| ABSTENTIONS |   | 639,488     |   |

 

**ITEM 6.**                EXHIBITS.

Thefollowing exhibits are filed as a part of this report:

|   | 10.1 |   | Employment Agreement, dated April 11, 2007,  between Monster Worldwide, Inc. and Salvatore Iannuzzi (filed as  Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated  April 11, 2007, filed on April 16, 2007, and incorporated herein by  reference). |
|--------|------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 10.2 |   | Employment Agreement,  dated June 7, 2007, between Monster Worldwide, Inc. and Timothy T. Yates  (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K  dated June 6, 2007, filed on June 11, 2007, and incorporated herein  by reference).        |
|        | 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 Timothy  T. Yates 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 Timothy  T. Yates 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**

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned, thereunto duly authorized.

|                            |   | MONSTER WORLDWIDE, INC. |
|----------------------------|--------|-------------------------|
|                       |   | (Registrant)            |
|                       |   |                    |   |   |
| Dated: August 9, 2007 |   | By:                     | /s/ Salvatore Iannuzzi |
|                       |   |                    |   | Salvatore Iannuzzi  Chairman, President and Chief Executive Officer  (principal executive officer) |
|                       |   |                    |   |   |
| Dated: August 9, 2007 |   | By:                     | /s/ Timothy T. Yates |
|                       |   |                    |   | Timothy T. Yates  Executive Vice President and Chief Financial Officer  (principal financial officer) |
|                       |   |                    |   |   |
| Dated: August 9, 2007 |   | By:                     | /s/ Jonathan Trumbull |
|                       |   |                    |   | Jonathan Trumbull  Chief Accounting Officer and Global Controller  (principal accounting officer) |

 

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