**UNITED STATES**

**SECURITIES 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,  2005**                                                                                                                                      |
| ** ** | **OR**                                                                                                                                                                                      |
| o          | **TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT  OF 1934**                                                                     |
|       | **FOR THE TRANSITION PERIOD  FROM             to            ** |

 

**COMMISSIONFILE NUMBER 000-21571**

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MONSTER WORLDWIDE, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

| **DELAWARE**                     | **13-3906555**          |
|----------------------------------|-------------------------|
| (STATE OR OTHER  JURISDICTION OF | (IRS EMPLOYER           |
| INCORPORATION OR  ORGANIZATION)  | 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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Indicateby check mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports) and (2) has been subject tosuch filing requirements for the past 90 days. Yes x  No o

Indicate by checkmark whether the registrant is an accelerated filer(as defined in Exchange Act Rule 12 b-2). Yes x  No o

Indicate the number of shares outstanding of each of the issuer’s classof common stock as of August 1, 2005, the latest practicable date.

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| Class                      | ** ** | **Outstanding on  August 1, 2005** | ** **  |
|----------------------------|------------|---------------------------------------------------|-------------|
| Common Stock               |       |                                              | 117,027,558 |   |   |
| 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                                        |       | 15         |
| **Item 2.** | ** ** | **Management’s  Discussion and Analysis of Financial Condition and Results of Operations** |       | 16         |
| **Item 3.** | ** ** | **Quantitative  and Qualitative Disclosures about Market Risk**                                 |       | 27         |
| **Item 4.** | ** ** | **Controls and  Procedures**                                                                    |       | 27         |
| ** **  | ** ** | **PART II – OTHER  INFORMATION**                                            | ** ** | ** ** |
| **Item 4.** | ** ** | **Submission of Matters to a vote of Security  Holders**                                        | ** ** | **28**     |
| **Item 6.** | ** ** | **Exhibits**                                                                                    |       | 28         |
|        | ** ** | **Signatures**                                                                                  |       | 29         |

 

(All other items onthis report are inapplicable)

2

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**PART I—FINANCIAL INFORMATION**

**ITEM 1. FINANCIAL STATEMENTS**

**MONSTERWORLDWIDE, INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

**(in thousands, except per share amounts)**

**(unaudited)**
| ** ** | ** **                                              | ** ** | **Three Months Ended** | ** **  | **Six Months Ended** | ** ** |        |
|------------|---------------------------------------------------------|------------|----------------------------------|-------------|--------------------------------|------------|-------------|
| ** ** | ** **                                              | ** ** | **June 30,**                | ** **  | **June 30,**              | ** ** |        |
| ** ** | ** **                                              | ** ** | **2005**                         | ** **  | **2004**                       | ** ** | **2005**    | ** ** | **2004** | ** ** |   |
| ** ** | **Revenue**                                             | ** ** | **$**                            | **238,979** | ** **                     | **$**      | **181,328** | ** ** | **$** | **471,032** | ** ** | **$** | **342,538** | ** ** |
|       | Salaries  and related                                   |       | 105,564                          |        | 82,353                         |       | 206,120     |   | 153,822 |   |
|       | Office and  general                                     |       | 44,588                           |        | 36,961                         |       | 88,616      |   | 71,902 |   |
|       | Marketing and  promotion                                |       | 47,692                           |        | 38,086                         |       | 96,138      |   | 75,931 |   |
|       | Amortization of intangibles                             |       | 2,274                            |        | 1,241                          |       | 4,628       |   | 1,846 |   |
| ** ** | **Total  operating expenses**                           | ** ** | **200,118**                      | ** **  | **158,641**                    | ** ** | **395,502** | ** ** | **303,501** | ** ** |
| ** ** | **Operating income**                                    | ** ** | **38,861**                       | ** **  | **22,687**                     | ** ** | **75,530**  | ** ** | **39,037** | ** ** |
|       | Interest and other, net                                 |       | 1,043                            |        | (429                           | )          | 976         |   | (715 | ) |
|       | Income from continuing  operations before income taxes  |       | 39,904                           |        | 22,258                         |       | 76,506      |   | 38,322 |   |
|       | Income taxes                                            |       | 13,967                           |        | 7,428                          |       | 27,035      |   | 12,763 |   |
|       | Losses in equity  interests                             |       | (367                             | )           | —                         |       | (576        | ) | — |   |
| ** ** | **Income from continuing  operations**                  | ** ** | **25,570**                       | ** **  | **14,830**                     | ** ** | **48,895**  | ** ** | **25,559** | ** ** |
|       | Income (loss) from  discontinued operations, net of tax |       | (5,994                           | )           | 1,410                          |       | (8,749      | ) | 3,086 |   |
| ** ** | **Net income**                                          | ** ** | **$**                            | **19,576**  | ** **                     | **$**      | **16,240**  | ** ** | **$** | **40,146** | ** ** | **$** | **28,645** | ** ** |
| ** ** | **Basic  earnings (loss) per share:**                   |       |                             |        |                           |       |        |   |   |   |
|       | Income from  continuing operations                      |       | $                                | 0.21        |                           | $          | 0.13        |   | $ | 0.40 |   | $ | 0.22 |   |
|       | Income (loss)  from discontinued operations, net of tax |       | (0.05                            | )           | 0.01                           |       | (0.07       | ) | 0.03 |   |
|       | Net income                                              |       | $                                | 0.16        |                           | $          | 0.14        |   | $ | 0.33 |   | $ | 0.25 |   |
| ** ** | **Diluted  earnings (loss) per share(1):**              |       |                             |        |                           |       |        |   |   |   |
|       | Income from  continuing operations                      |       | $                                | 0.21        |                           | $          | 0.12        |   | $ | 0.40 |   | $ | 0.21 |   |
|       | Income (loss)  from discontinued operations, net of tax |       | (0.05                            | )           | 0.01                           |       | (0.07       | ) | 0.03 |   |
|       | Net income                                              |       | $                                | 0.16        |                           | $          | 0.14        |   | $ | 0.33 |   | $ | 0.24 |   |
| ** ** | **Weighted  average shares outstanding:**               |       |                             |        |                           |       |        |   |   |   |
|       | Basic                                                   |       | 121,049                          |        | 117,431                        |       | 120,853     |   | 116,479 |   |
|       | Diluted                                                 |       | 123,181                          |        | 120,192                        |       | 123,320     |   | 119,004 |   |

 

(1)** **Earningsper share in the three months ended June 30, 2004 period do not add due torounding.

*See accompanying notes.*

3

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**MONSTER WORLDWIDE, INC.CONSOLIDATED BALANCE SHEETS(in thousands, except per share amounts)**
| ** ** | ** **                                                                                                                                                            | ** ** | **June 30,** | ** **    | **December 31,** | ** **  |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|---------------|-----------------------|-------------|
| ** ** | ** **                                                                                                                                                            | ** ** | **2005**          | ** **    | **2004**              | ** **  |
| ** ** | ** **                                                                                                                                                            | ** ** | **(unaudited)**   | ** **    | ** **            | ** **  |
| ** ** | **ASSETS**                                                                                                                                                            |       |              |          |                  |        |   |   |
|       | Current assets:                                                                                                                                                       |       |              |          |                  |        |   |   |
|       | Cash and cash  equivalents                                                                                                                                            |       | $                 | 235,818       |                  |        | $ | 198,111 |   |   |
|       | Accounts  receivable, net of allowance for doubtful accounts of $14,779 and $12,551 in  2005 and 2004, respectively                                                   |       | 317,378           |          |                  | 318,530     |   |   |
|       | Prepaid and other                                                                                                                                                     |       | 54,128            |          |                  | 51,826      |   |   |
|       | Current assets of  discontinued operations                                                                                                                            |       | —            |          |                  | 135,044     |   |   |
| ** ** | **Total  current assets**                                                                                                                                             | ** ** | **607,324**       | ** **    | ** **            | **703,511** |   |   |
|       | Property and  equipment, net                                                                                                                                          |       | 83,352            |          |                  | 81,415      |   |   |
|       | Goodwill                                                                                                                                                              |       | 592,752           |          |                  | 607,753     |   |   |
|       | Other  intangibles, net                                                                                                                                               |       | 48,198            |          |                  | 56,985      |   |   |
|       | Investment in  unconsolidated affiliate                                                                                                                               |       | 49,351            |          |                  | —      |   |   |
|       | Other assets                                                                                                                                                          |       | 26,640            |          |                  | 17,171      |   |   |
|       | Non-current  assets of discontinued operations                                                                                                                        |       | —            |          |                  | 76,778      |   |   |
| ** ** | **Total  assets**                                                                                                                                                     | ** ** | **$**             | **1,407,617** | ** **            | ** **  | **$** | **1,543,613** |   |   |
| ** ** | **LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                                                         |       |              |          |                  |        |   |   |
|       | Current liabilities:                                                                                                                                                  |       |              |          |                  |        |   |   |
|       | Accounts payable                                                                                                                                                      |       | $125,145          |          |                  | $111,430    |   |   |
|       | Accrued expenses  and other current liabilities                                                                                                                       |       | 200,954           |          |                  | 196,630     |   |   |
|       | Deferred revenue                                                                                                                                                      |       | 245,713           |          |                  | 231,382     |   |   |
|       | Current portion  of long-term debt                                                                                                                                    |       | 26,572            |          |                  | 29,262      |   |   |
|       | Current  liabilities of discontinued operations                                                                                                                       |       | —            |          |                  | 162,039     |   |   |
| ** ** | **Total  current liabilities**                                                                                                                                        | ** ** | **598,384**       | ** **    | ** **            | **730,743** |   |   |
|       | Long-term  debt, less current portion                                                                                                                                 |       | 14,363            |          |                  | 33,975      |   |   |
|       | Other long-term  liabilities                                                                                                                                          |       | 36,156            |          |                  | 23,259      |   |   |
|       | Non-current  liabilities of discontinued operations                                                                                                                   |       | —            |          |                  | 122         |   |   |
| ** ** | **Total  liabilities**                                                                                                                                                | ** ** | **648,903**       | ** **    | ** **            | **788,099** |   |   |
|       | 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: 117,737 and 116,697  shares, respectively; outstanding: 116,810 and 115,770 shares, respectively |       | 117               |          |                  | 117         |   |   |
|       | Class B  common stock, $.001 par value, authorized 39,000 shares; issued and  outstanding: 4,762 shares                                                          |       | 5                 |          |                  | 5           |   |   |
|       | Additional paid-in  capital                                                                                                                                           |       | 1,167,900         |          |                  | 1,146,708   |   |   |
|       | Accumulated other  comprehensive income                                                                                                                               |       | 40,267            |          |                  | 98,027      |   |   |
|       | Unamortized stock-based  compensation                                                                                                                                 |       | (2,981            | )             |                  | (2,603      | ) |   |
|       | Accumulated  deficit                                                                                                                                                  |       | (446,594          | )             |                  | (486,740    | ) |   |
| ** ** | **Total  stockholders’ equity**                                                                                                                                  | ** ** | **758,714**       | ** **    | ** **            | **755,514** |   |   |
| ** ** | **Total liabilities and  stockholders’ equity**                                                                                                                  | ** ** | **$**             | **1,407,617** | ** **            | ** **  | **$** | **1,543,613** |   |   |

 

*See accompanyingnotes.*

4

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**MONSTERWORLDWIDE, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(unaudited)**
| ** ** | ** **                                                                         | ** ** | **Six Months Ended** | ** **  |
|------------|------------------------------------------------------------------------------------|------------|--------------------------------|-------------|
| ** ** | ** **                                                                         | ** ** | **June 30,**              | ** **  |
| ** ** | ** **                                                                         | ** ** | **2005**                       | ** **  | **2004** | ** ** |
|       | Cash flows provided by  operating activities:                                      |       |                           |        |   |   |   |
| ** ** | **Net  income**                                                                    | ** ** | **$**                          | **40,146**  | ** ** | **$** | **28,645** | ** ** |   |
|       | Adjustments to reconcile  net income to net cash provided by operating activities: |       |                           |        |   |   |   |
|       | (Income) loss from  discontinued operations, net of tax                            |       | 8,749                          |        | (3,086 | ) |   |
|       | Depreciation and  amortization                                                     |       | 18,459                         |        | 14,834 |   |   |
|       | Provision for  doubtful accounts                                                   |       | 4,379                          |        | 2,301 |   |   |
|       | Tax benefit from  stock option exercises                                           |       | 3,840                          |        | 1,605 |   |   |
|       | Net loss on  disposal and write-off of fixed assets                                |       | (63                            | )           | 306 |   |   |
|       | Non-cash  compensation                                                             |       | 1,981                          |        | 1,346 |   |   |
|       | Common stock  issued for matching contribution to 401(k) plan and other       |       | 2,005                          |        | 3,474 |   |   |
|       | Deferred income  taxes                                                             |       | 9,609                          |        | 14,751 |   |   |
|       | Minority interests  and other                                                      |       | 576                            |        | 26 |   |   |
|       | Changes in assets and  liabilities, net of businesses  acquired and divested:      |       |                           |        |   |   |   |
|       | Accounts  receivable                                                               |       | 96                             |        | (31,297 | ) |   |
|       | Prepaid and other                                                                  |       | (22,114                        | )           | 8,287 |   |   |
|       | Deferred revenue                                                                   |       | 10,341                         |        | 11,652 |   |   |
|       | Accounts payable,  accrued liabilities and other                                   |       | 35,131                         |        | 3,790 |   |   |
|       | Net cash used for  operating activities of discontinued operations                 |       | (18,850                        | )           | (50,297 | ) |   |
|       | Total adjustments                                                                  |       | 54,139                         |        | (22,308 | ) |   |
| ** ** | **Net cash  provided by operating activities**                                     | ** ** | **94,285**                     | ** **  | **6,337** | ** ** |   |
|       | Cash flows used for  investing activities:                                         |       |                           |        |   |   |   |
|       | Capital  expenditures                                                              |       | (15,553                        | )           | (9,038 | ) |   |
|       | Payments for  acquisitions and intangible assets, net of cash acquired             |       | (49,487                        | )           | (116,113 | ) |   |
|       | Investment in  unconsolidated affiliate                                            |       | (50,137                        | )           | — |   |   |
|       | Cash funded for  sale of subsidiaries                                              |       | (432                           | )           | — |   |   |
|       | Sale of long-term  investment                                                      |       | 1,878                          |        | — |   |   |
|       | Net proceeds from  sales of businesses                                             |       | 50,181                         |        | — |   |   |
|       | Net cash used for  investing activities of discontinued operations                 |       | (710                           | )           | (7,495 | ) |   |
| ** ** | **Net cash  used for investing activities**                                        | ** ** | **(64,260**                    | **)**       | **(132,646** | **)** |   |
|       | Cash flows provided by  financing activities:                                      |       |                           |        |   |   |   |
|       | Net repayments  under line of credit and capital lease obligations                 |       | (1,835                         | )           | (370 | ) |   |
|       | Proceeds from the  issuance of common stock                                        |       | —                         |        | 55,673 |   |   |
|       | Cash received from  the exercise of employee stock options                         |       | 14,386                         |        | 10,765 |   |   |
|       | Repurchase of  common stock                                                        |       | (1,398                         | )           | — |   |   |
| ** ** | **Net cash  provided by financing activities**                                     | ** ** | **11,153**                     | ** **  | **66,068** | ** ** |   |
|       | Effect of exchange rate  changes on cash and cash equivalents                      |       | (3,471                         | )           | 190 |   |   |
|       | Net increase (decrease) in cash and  cash equivalents                              |       | 37,707                         |        | (60,051 | ) |   |
|       | Cash and cash  equivalents, beginning of period                                    |       | 198,111                        |        | 142,255 |   |   |
| ** ** | **Cash and cash equivalents, end of period**                                       | ** ** | **$**                          | **235,818** | ** ** | **$** | **82,204** | ** ** |   |
| ** ** | **Supplemental  disclosures of cash flow information:**                            |       |                           |        |   |   |   |
|       | Cash paid (received)  during the period for:                                       |       |                           |        |   |   |   |
|       | Interest                                                                           |       | $                              | 1,493       |   | $ | 512 |   |   |
|       | Income taxes                                                                       |       | $                              | 1,919       |   | $ | (1,854 | ) |   |
| ** ** | **Non-cash financing and  investing activities:**                                  |       |                           |        |   |   |   |
|       | Common stock issued in  connection with business combinations                      |       | $                              | —      |   | $ | 55,852 |   |   |
|       | Liabilities created in connection with business combinations                       |       | $                              | 10,236      |   | $ | 52,762 |   |   |
|            |                                                                                    |            |                                |             |  |  |  |  |  |  |  |  |

 

*See accompanyingnotes.*

5

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**MONSTERWORLDWIDE, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(dollars and shares in thousands, except per share amounts)(unaudited)**

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

***Description ofBusiness***

Monster Worldwide Inc. (the “Company”) has continuingoperations that consist of two operating segments: Monster and Advertising &Communications. Revenue in the Company’s Monster segment is primarily earnedfrom job postings placed on the Company’s career website; licensed access tothe Company’s resume database; and the display of advertising on the Company’sonline properties. Revenue in the Company’s Advertising &Communications division is primarily earned from selling and placingrecruitment advertising and resume screening services. These services areprovided to customers in a variety of industries throughout North America,Europe and the Asia-Pacific region.

***Basis ofPresentation***

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 transactionshave been eliminated 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 interim financial statementsshould be read in conjunction with the financial statements and notes theretoincluded in the Company’s Annual Report on Form 10-K for the year ended December 31,2004. The Company adheres to the same accounting policies in preparation ofinterim financial statements. As permitted under generally accepted accountingprinciples, interim accounting for certain expenses, including income taxes arebased on full year assumptions. Such amounts are expensed in full in the yearincurred. For interim financial reporting purposes, income taxes are recordedbased upon estimated annual income tax rates.

For the period January 1,2004 through June 30, 2005, the Company completed five businesscombinations (see Note 3). Although none of the acquisitions was considered tobe a significant subsidiary, either individually or in the aggregate, they doaffect the comparability of results from period to period.

**2. EARNINGSPER SHARE AND STOCK-BASED COMPENSATION**

**Earnings Per Share**

Basic earnings per share does not include the effectsof potentially dilutive stock options and is computed by dividing incomeavailable to common shareholders by the weighted average number of commonshares outstanding for the period. Diluted earnings per share reflects, inperiods in which they have a dilutive effect, commitments to issue common stockand common stock issuable upon exercise of stock options for periods in whichthe options’ exercise price is lower than the Company’s average share price forthe period.

Areconciliation of shares used in calculating basic and diluted earnings percommon and Class B common share follows. Certain stock options and stockissuable under employee compensation plans were excluded 

6

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fromthe computation of earnings per share due to their anti-dilutive effect. Theweighted average number of such common stock equivalents is approximately 6,535and 4,500 for the three months ended June 30, 2005 and 2004, respectivelyand 6,459 and 7,039 for the six months ended June 30, 2005 and 2004,respectively.
| ** **                                                                                                | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|-----------------------------------------------------------------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                                                                                | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** |
| ****                                                                                                      | ** ** | ** **                       | ** ** | **2005**                       | ** ** | **2004** | ** ** | **2005** | ** ** | **2004** | ** ** |
| Basic weighted  average shares outstanding                                                                |       | 121,049                          |       | 117,431                        |       | 120,853 |   | 116,479 |   |
| Effect of common  stock equivalents - stock options and stock issuable under employee  compensation plans |       | 2,132                            |       | 2,761                          |       | 2,467 |   | 2,525 |   |
| Diluted weighted average  shares outstanding                                                              |       | 123,181                          |       | 120,192                        |       | 123,320 |   | 119,004 |   |
|                                                                                                           |            |                                  |            |                                |            |  |  |  |  |  |  |

 

**Stock-BasedCompensation**

The Company’s financialstatements are presented in accordance with Accounting Principles Board (“APB”)Opinion No. 25, *Accounting for StockIssued to Employees*. Under APB 25, generally, no compensationexpense is recognized in connection with the awarding of stock option grants toemployees provided that, as of the grant date, all terms associated with theaward are fixed and the quoted market price of the stock is equal to or lessthan the amount an employee must pay to acquire the stock as defined. As theCompany has only issued fixed term employee stock option grants at or above thequoted market price on the date of the grant, there has been no compensationexpense associated with stock options recognized in the accompanying financialstatements. The Company adopted the disclosure only provisions ofSFAS 123, *Accounting for Stock-BasedCompensation*, which requires certain financial statementdisclosures, including pro forma operating results had the Company prepared itsconsolidated financial statements in accordance with the fair value basedmethod of accounting for stock-based compensation.

The Black-Scholesoption-pricing model was developed for use in estimating the fair valueof traded options that have no restrictions and are fully transferable andnegotiable in a free trading market. Black-Scholes does not consider theemployment, transfer or vesting restrictions that are inherent in the Company’semployee options. Use of an option valuation model, as required bySFAS 123, includes highly subjective assumptions based on long-termpredictions, including the expected stock price volatility and average life ofeach option grant. Because the Company’s employee options have characteristicssignificantly different from those of freely traded options, and becausechanges in the subjective input assumptions can materially affect the Company’sestimate of the fair value of those options, in the Company’s opinion, theexisting valuation models, including Black-Scholes, are not reliablesingle measures and may misstate the fair value of the Company’s employeeoptions.

Thepro forma effects of stock-based compensation on net income and netincome per share have been estimated at the date of grant using the Black-Scholesoption-pricing model based on the following weighted average assumptions:
| ** **               | ** ** | **Three Month Ended** | ** ** | **Six Months Ended** | ** ** |
|--------------------------|------------|---------------------------------|------------|--------------------------------|------------|
| ** **               | ** ** | **June 30,**               | ** ** | **June 30,**              | ** ** |
| ** **               | ** ** | **2005**                        | ** ** | **2004**                       | ** ** | **2005** | ** ** | **2004** | ** ** |
| Risk-free  interest rate |       |                            | 3.7        | %                              |       |   | 4.6 | % |   |   | 3.7 | % |   |   | 4.6 | % |   |
| Volatility               |       |                            | 47.2       | %                              |       |   | 56.5 | % |   |   | 47.2 | % |   |   | 56.5 | % |   |
| Expected life (years)    |       |                            | 4.2        |                           |       |   | 5.0 |   |   |   | 4.2 |   |   |   | 5.0 |   |   |

 

7

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Forpurposes of pro forma disclosures, the estimated fair value of the options isassumed to be expensed over the options’ vesting periods. The pro forma effectsof recognizing compensation expense under the fair value method on the Company’soperating results and per share data are as follows:
| ** **                                                                                         | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|----------------------------------------------------------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                                                                         | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** |
| ** **                                                                                         | ** ** | **2005**                         | ** ** | **2004**                       | ** ** | **2005** | ** ** | **2004** | ** ** |
| Net income as  reported                                                                            |       | $                                | 19,576     |                           | $          | 16,240 |   | $ | 40,146 |   | $ | 28,645 |   |
| Add: Stock based  employee compensation expense included in reported net income, net of tax        |       | 347                              |       | 567                            |       | 976 |   | 875 |   |
| Deduct:  Compensation expense determined under fair value based method for all awards,  net of tax |       | (34,122                          | )          | (8,549                         | )          | (55,674 | ) | (16,180 | ) |
| Pro forma net  income (loss)                                                                       |       | $                                | (14,199    | )                              | $          | 8,258 |   | $ | (14,552 | ) | $ | 13,340 |   |
| **Basic  earnings (loss) per share:**                                                              | ** ** | ** **                       | ** ** | ** **                     | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net income -  as reported                                                                          |       | $                                | 0.16       |                           | $          | 0.14 |   | $ | 0.33 |   | $ | 0.25 |   |
| Net income (loss)-  pro forma                                                                      |       | (0.12                            | )          | 0.07                           |       | (0.12 | ) | 0.11 |   |
| **Diluted  earnings (loss) per share:**                                                            |       |                             |       |                           |       |   |   |   |   |
| Net income -  as reported                                                                          |       | $                                | 0.16       |                           | $          | 0.14 |   | $ | 0.33 |   | $ | 0.24 |   |
| Net income (loss)-  pro forma                                                                      |       | (0.12                            | )          | 0.07                           |       | (0.12 | ) | 0.11 |   |

 

On December 28, 2004,the Company granted 2.8 million options to executives and employees. Suchoptions vested over a five-month period ending on May 31, 2005 and vestedoptions generally become exercisable in four annual installments commencing December 28,2005. For the three and six months ended June 30, 2005, the Companyrecognized approximately $8,619 and $22,229, respectively, of pro formacompensation expense, net of tax, related to this grant.

On February 10, 2005,the Company’s board of directors approved accelerated option vesting terms forapproximately 134,000 employee stock options whose exercise price was above theCompany’s closing stock price on such date. As a result, included in pro formacompensation expense for the six months ended June 30, 2005 is a charge ofapproximately $940 net of tax, resulting from accelerated vesting of suchoptions. The decision to accelerate vestingof these options was made primarily to avoid recognizing compensation cost inthe consolidated statement of operations in the Company’s future financialstatements upon the effectiveness of SFAS 123R.

On May 4, 2005, theCompany’s board of directors approved accelerated option vesting terms forapproximately 2.6 million employee stock options whose exercise price was abovethe Company’s closing stock price on such date. As a result, included in proforma compensation expense for the three and six months ended June 30,2005 is a charge of approximately $20,500 net of tax, resulting fromaccelerated vesting of such options. Thedecision to accelerate vesting of these options was made primarily to avoidrecognizing compensation cost in the consolidated statement of operations inthe Company’s future financial statements upon the effectiveness ofSFAS 123R. As a result of this acceleration, it is estimated thatapproximately $24.0 million of pre-tax compensation expense will be avoidedupon implementation of SFAS 123R on January 1, 2006.

**Share BasedPayments**

In December 2004 theFinancial Accounting Standards Board (“FASB”) issued Statement 123R (Revised2004), *Share Based Payment*, which requires allcompanies to measure compensation cost for all share-based payments,including employee stock options, at fair value.  The Company is required to adopt the statementbeginning with the first quarter of 2006. Upon adoption, the Company will berequired to recognize compensation on all share-based grants made on or after January 1,2006, and for the unvested 

8

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portion of share-basedgrants made prior to January 1, 2006. Restatement of previously issuedstatements is permitted, but not required.

As a result ofSFAS 123R, the Company will be required to expense the fair value of ourstock option grants rather than disclose the impact on its consolidatedstatement of operations within the Company’s footnotes, as is current practice.Based on stock options currently outstanding and utilizing the Company’s currentBlack Scholes valuation model, share based payment expense is anticipated to beapproximately $7,300 ($4,500, net of tax), in the year ending December 31,2006.

**3. BUSINESSCOMBINATIONS**

**Acquisitions**

Thefollowing table summarizes the Company’s business combinations completed from January 1,2004 through June 30, 2005:
| **Acquired  Business**                      | ** ** | **Acquisition Date**   | ** ** | **Business Segment/Region** |
|---------------------------------------------|------------|------------------------|------------|-----------------------------|
| Military Advantage, Inc.               |       | March 1, 2004     |       | Monster,  North America     |
| jobpilot GmbH                               |       | April 22, 2004    |       | Monster,  Europe            |
| Tickle Inc.                                 |       | May 21, 2004      |       | Monster,  North America     |
| WebNeuron  Services Limited (JobsAhead.com) |       | June 18, 2004     |       | Monster,  Asia/Pacific      |
| Emailjob.com SAS                            |       | February 11, 2005 |       | Monster,  Europe            |

 

In February 2005, theCompany’s Monster division purchased Emailjob.com SAS, a leading onlinerecruiter in France. The acquisition of Emailjob.com SAS was made to establishMonster’s leadership position in France and strengthen the Company’s positionin a key European market. Under the terms of the purchase agreement, theconsideration for this acquisition was approximately $26,000 in cash, of which$23,000 was paid on February 11, 2005. The remaining $3,000 is payableover the next twelve months. As of June 30, 2005, the Company haspreliminarily recorded $25,154 of goodwill and is in the process of determiningthe fair value of all assets acquired and liabilities assumed, in order tocomplete the final purchase price allocation.None of the goodwill recorded in connection with the acquisition is deductiblefor tax purposes.

During the year ended December 31,2004, the Company’s Monster division acquired WebNeuron Services Limited (“JobsAhead”),a leading job search website in India. The acquisition of JobsAhead was made toexpand Monster’s market share and geographic reach in the Asia-Pacific region.Consideration for the acquisition included $4,483 of net cash paid and 147,156shares of the Company’s common stock. None of the goodwill recorded in connectionwith the acquisition is deductible for tax purposes.

In May 2004, the Company’s Monster divisionpurchased Tickle Inc. (“Tickle”), a market leader in online careerassessment testing. The addition of Tickle’s popular interpersonal content andsubscriber services in the areas of self-discovery, career assessment andsocial networking was done with a view toward expanding Monster’s subscriberbase, enhancing its career-related content and further fueling its viralmarketing growth. Initial consideration for this acquisition included $24,454of net cash paid, 1,000,000 shares of the Company’s common stock and minimumcash payments of $13,332 per year, over a three-year period following theacquisition date. Future minimum cash payments have been recorded as long-termdebt, at their present values, in the accompanying consolidated balance sheet.Additional purchase price commitments are possible, subject to Tickle achievingcertain agreed-upon financial thresholds for each of the years ending December 31,2005 and 2006. Such financial thresholds were exceeded in 2004 and therefore anadditional $798 was recorded in current portion of long-term debt and goodwillas of December 31, 2004. None of the goodwill recorded in connection withthe acquisition is deductible for tax purposes.

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In April 2004, the Company’s Monster divisionpurchased jobpilot GmbH (“jobpilot”), a leading European online career portal,from Adecco S.A. The acquisition of jobpilot was made to help establish Monsteras one of the leaders in key European markets, particularly Germany.Consideration for the acquisition included $60,552 net cash paid and 1,000,000shares of common stock. The Company has incurred charges to integrate andrestructure jobpilot’s operations and therefore has recorded additional coststo goodwill since the acquisition date, as described in “Accrued Integrationand Restructuring Costs” below. Goodwill recorded in connection with thejobpilot acquisition is fully deductible for tax purposes.

In March 2004, the Company’s Monster divisionpurchased Military Advantage, Inc. as a complementary business to Monster’sgovernment product offerings. Military Advantage, Inc. offers its membersaccess to information about benefits and career opportunities. Considerationfor the acquisition included $23,418 of net cash paid and $7,500 guaranteedcash payments in each of 2005 and 2006, recorded at their present values in theaccompanying consolidated balance sheet. None of the goodwill recorded inconnection with the acquisition is deductible for tax purposes.

None of the businesscombinations made by the Company in 2005 or 2004 were considered to besignificant subsidiaries, either individually or in the aggregate.

**Unaudited Pro FormaResults**

Thefollowing unaudited pro forma financial information presents the combinedresults of operations of the Company and its purchase acquisitions as if theyhad occurred as of the beginning of the periods presented. The unaudited proforma financial information is not necessarily indicative of what the Company’sresults of operations would have been had the acquisitions been completed atthe beginning of each period. In addition, the unaudited pro forma financialinformation does not attempt to project the future results of operations of thecombined company.

| ** **                                 | ** ** | **Three Months** | ** ** | ** **                     | ** ** |
|--------------------------------------------|------------|-----------------------|------------|--------------------------------|------------|
| ** **                                 | ** ** | **Ended**             | ** ** | **Six Months Ended** | ** ** |
| ** **                                 | ** ** | **June 30,**     | ** ** | **June 30,**              | ** ** |
| ** **                                 | ** ** | **2004**              | ** ** | **2005**                       | ** ** | **2004** | ** ** |
| Revenue                                    |       |                  | $          | 205,261                        |       |   | $ | 472,406 |   | $ | 378,283 |   |
| Income from continuing  operations         |       |                  | 17,722     |                           |       | 49,225 |   | 29,730 |   |
| Net income                                 |       |                  | 19,132     |                           |       | 40,476 |   | 32,816 |   |
| **Pro-forma  basic earnings per share:**   |       |                  |       |                           |       |   |   |   |   |
| Income from  continuing operations         |       |                  | $          | 0.15                           |       |   | $ | 0.41 |   | $ | 0.25 |   |
| Net income                                 |       |                  | $          | 0.16                           |       |   | $ | 0.33 |   | $ | 0.27 |   |
| **Pro-forma  diluted earnings per share:** |       |                  |       |                           |       |   |   |   |   |
| Income from  continuing operations         |       |                  | $          | 0.14                           |       |   | $ | 0.40 |   | $ | 0.25 |   |
| Net income                                 |       |                  | $          | 0.16                           |       |   | $ | 0.33 |   | $ | 0.27 |   |

 

The unaudited proforma financial information above reflects the following:

a.                  Interest expense, net of tax benefits, of approximately$430 for the three months ended June 30, 2004.  For the six months ended June 30, 2005and 2004, interest expense, net of tax benefits was $12 and $636, respectively.Incremental interest expense has been recorded for guaranteed deferred purchaseprice payable for acquired companies. The decrease in interest income relatesto interest foregone on the aggregate cash paid for the acquisitions.

b.                 Additional depreciation and amortization expense, netof tax benefits, of $2,203 for the three months ended June 30, 2004. Forthe six months ended June 30, 2004, additional depreciation andamortization expense was $3,262. Additional depreciation and amortizationrelate to the estimated fair value of identifiable intangible assets andproprietary software from the purchase price allocation. Identifiableintangible assets are being amortized over their estimated useful lives over arange of 1 to 10 years and proprietary software is being depreciated overits estimated useful life of 6 years.

c.                  Additional weighted average sharesoutstanding of 2,147 for the three months ended June 30, 2004. Incrementalshares reflect the amounts issued upon acquisition as being outstanding fromthe beginning of the periods presented.

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**AccruedIntegration and Restructuring Costs**

The Company has formulated integration andrestructuring plans to eliminate redundant facilities, personnel and duplicateassets in connection with its business combinations. These costs wererecognized as liabilities assumed in connection with the Company’s businesscombinations. Accordingly, these costs are considered part of the purchaseprice of the business combinations and have been recorded as increases togoodwill. Amounts charged to goodwill for the six months ended June 30,2005 primarily relate to the Company’s acquisitions of Emailjob.com andjobpilot.

Thecomponents of the accrued integration and restructuring costs, reported as acomponent of accrued expenses and other current liabilities, are as follows:

| ** **                                                    | ** ** | **Liability at** | ** ** | **Charged to** | ** ** | **Change in** | ** ** | ** **      | ** ** | **Liability at** | ** ** |
|---------------------------------------------------------------|------------|-----------------------|------------|---------------------|------------|--------------------|------------|-----------------|------------|-----------------------|------------|
| **Six Months Ended June 30, 2005**   | ** ** | **12/31/04**          | ** ** | **Goodwill**        | ** ** | **Estimate**       | ** ** | **Utilization** | ** ** | **6/30/05**           | ** ** |
| Assumed lease  obligations and office consolidation costs (a) |       |                  | $          | 8,247               |       |               |       | $               | 1,357      |                  |       |   | $ | 460 |   |   |   | $ | (2,342) |   |   |   | $ | 7,722 |   |   |
| Employee  terminations and other (b)                          |       |                  | 1,245      |                |       |               | 190        |            |       |                  | —     |   |   |   | (965) |   |   |   | 470 |   |   |
| Total                                                         |       |                  | $          | 9,492               |       |               |       | $               | 1,547      |                  |       |   | $ | 460 |   |   |   | $ | (3,307) |   |   |   | $ | 8,192 |   |   |

 

a)                 Accrued liabilities for assumed lease obligationsrepresent the present value of lease payments (net of expected sublease income)for office locations of acquired companies that are either under utilized priorto the acquisition date or closed by the Company in connection with acquisition-relatedrestructuring plans. Office consolidation costs represent charges to terminatecontracts in connection with software and computer systems, other contractualarrangements with third parties and above market lease costs.

b)                Costs associated with employee severance, benefits andrelocation and other miscellaneous costs associated with the integration ofacquired businesses.

Changes in the Company’sapproved restructuring plans or costs related to new restructuring initiativesmay be recorded in goodwill for up to one year following acquisition date andmust be recorded in the Company’s operating results thereafter. Reductions tointegration and restructuring reserves established in connection with purchasebusiness combinations are recorded as a reduction to goodwill. Due to changesin estimates and assumptions, the Company provided additional real estateprovisions of $460 during the six months ended June 30, 2005. The amounthas been recorded in operating expenses in the 2005 periods.

**4.** INVESTMENTIN UNCONSOLIDATED AFFILIATE

In February 2005, the Company acquired a 40%interest in ChinaHR.com Holdings Ltd. (“ChinaHR”) for consideration of $50,000in cash. ChinaHR is a leading recruitment website in China and provides online recruiting, campusrecruiting and other human resource solutions. As a result of the transaction,the Company has the right to occupy three of seven seats onChinaHR’s Board of Directors. In addition, the Company  also has certain rights and obligations toacquire a 51% or more interest in ChinaHR in the event of an initial publicoffering or February 1, 2008, whichever comes first.

The Company accounts forits investment in ChinaHR under the equity method. As of June 30, 2005,the carrying value of the investment was $49,351 and is recorded on theconsolidated balance sheet as an investment in unconsolidated affiliate. TheCompany is in the process of determining the fair value of the assets andliabilities of ChinaHR and has preliminarily attributed its entire investmentto goodwill. In addition, the Company accounts for its share in the earningsand losses of ChinaHR as an equity interest in the consolidated statements ofoperations. For the six months ended June 30, 2005, the Company recorded aloss in equity interest of $576, which is 40% of ChinaHR’s results from thedate the Company acquired its equity interest.

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**5.** BUSINESSREORGANIZATION AND OTHER SPECIAL CHARGES

In the secondquarter of 2002, the Company announced a reorganization initiative tostreamline its operations, lower its cost structure, integrate businessespreviously acquired and improve its return on capital. The reorganizationprogram included workforce reduction, consolidation of excess facilities,restructuring of certain business functions and other special charges,primarily for exiting activities that were no longer part of the Company’sstrategic plan. In the fourth quarter of 2002, the Company announced furtherreorganization efforts related to the spin-off of Hudson Highland Group, Inc.The additional charge consisted of further workforce reduction, officeconsolidation costs, related asset write-offs, professional fees and otherspecial charges. Substantially all of these charges were recorded in the fourthquarter of 2002 and first quarter of 2003.

| ** **                          | ** ** | **Liability at**       | ** ** | **Change in** | ** ** | **Liability at** | ** ** | ** **                  | ** ** |
|-------------------------------------|------------|-----------------------------|------------|--------------------|------------|-----------------------|------------|-----------------------------|------------|
| ** **                          | ** ** | **Dec. 31, 2004** | ** ** | **Estimate**       | ** ** | **Utilization**       | ** ** | **June 30, 2005** | ** ** |
| Consolidation of  excess facilities |       |                        | $          | 21,177             |       |                  |       | $                           | (460       | ) |   |   | $ | (2,661 | ) |   |   | $ | 18,056 |   |   |
| Other costs                         |       |                        | 418        |               |       |                  | —     |                        |       |   | (284 | ) |   |   | 134 |   |   |
| Total                               |       |                        | $          | 21,595             |       |                  |       | $                           | (460       | ) |   |   | $ | (2,945 | ) |   |   | $ | 18,190 |   |   |

 

Consolidation of excessfacilities includes property consolidation and abandonment costs (includingrelated professional fees) and disposal of property and equipment related tosuch properties. Property and equipment disposed of included leaseholdimprovements, computer equipment, software, and furniture and fixtures. Othercosts primarily relate to workforce reduction and professional fees. Due tochanges in estimates and assumptions, the Company reversed excess real estateprovisions during the six months ended June 30, 2005. As a result, $460has been recorded as a reduction to operating expenses in the 2005 period.

**6.** COMPREHENSIVEINCOME (LOSS)

TheCompany’s comprehensive income (loss) is as follows:

| ** **                                         | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|----------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                         | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** |
| ** **                                         | ** ** | **2005**                         | ** ** | **2004**                       | ** ** | **2005** | ** ** | **2004** | ** ** |
| Net income                                         |       | $                                | 19,576     |                           | $          | 16,240 |   | $ | 40,146 |   | $ | 28,645 | ) |
| Foreign currency  translation adjustment and other |       | (31,536                          | )          | 2,105                          |       | (57,760 | ) | (3,168 | ) |
| Comprehensive income  (loss)                       |       | $                                | (11,960    | )                              | $          | 18,345 |   | $ | (17,614 | ) | $ | 25,477 |   |

 

**7.** DISCONTINUEDOPERATIONS

During the six months ended June 30, 2005, theCompany disposed of the following businesses that comprised substantially allof its former Directional Marketing operating segment. These businesses arereflected as discontinued operations in the consolidated statements ofoperations for the three and six months ended June 30, 2005 and 2004:

·       OnJune 1, 2005, the Company  soldsubstantially all of its Directional Marketing division to a private equityfirm for net cash consideration of $49,586 ($80 million purchase price lessworking capital and other adjustments and $2,500 of cash placed in escrow foran 18 month period following the disposition date) and a $7,000, 3% promissorynote due to the Company after 7 years. The sale included the Company’s Yellow Pages businessin North America and Japan along with its online relocation business. TheCompany recognized a loss on sale of these businesses of $10,729 ($1,803 net oftax benefits) in the second quarter of 2005. The sale of the DirectionalMarketing business did not include the Company’s Directional Marketingoperations in the United Kingdom. The Company’s European Advertising &Communications management will continue to operate that 

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business, and accordingly,those results have been reclassified to our Advertising &Communications operating segment.

·       On May 2, 2005, theCompany sold its interests in TMP Direct, an order fulfillment business,formerly part of the Company’s Directional Marketing segment. The business waspurchased by GECKO Inc., an entity owned 65% by George Eisele, a director ofMonster Worldwide, for $2,500 cash, paid at closing plus an amount equal to 50%of TMP Direct’s working capital as of the closing date payable on May 2,2006. George Eisele and another individual shareholder of GECKO personallyguaranteed the May 2, 2006 payment obligation of GECKO Inc. The sale wasnot considered material and did not include a significant amount of assets. TheCompany recognized a pre-tax and after tax loss on sale of this business of$551 in the second quarter of 2005.

During the yearended December 31, 2004, the Company disposed of the following businesses,which are reflected as discontinued operations in the consolidated statementsof operations for the three and six months ended June 30, 2004:

·       In December 2004, theCompany sold and disposed of certain Advertising & Communicationsbusinesses in Continental Europe, in order to focus more fully on our Monsterbusiness. None of these dispositions were considered material or included asignificant amount of assets. The Company recognized a loss on sale of thesebusinesses of $7,055 ($6,234 net of tax) in the fourth quarter of 2004.

·       On October 5, 2004,the Company completed the sale of our wholly owned subsidiary US Motivation, Inc.,formerly part of our Directional Marketing segment, to General Yellow Pages Consultants, Inc.d/b/a The Marquette Group for $10,000 cash, subject to a post-closingadjustment. The Company recognized a pre-tax and after-tax gain on the sale ofUS Motivation of $7,413 in the fourth quarter of 2004.

Thefollowing amounts related to our dispositions in 2005 and 2004, as well asresidual costs related to our disposition of HH Group in 2003, have beensegregated from continuing operations and are reflected as discontinuedoperations in each period’s consolidated statement of operations:

| ** **                                                  | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|-------------------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                                  | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** |
| ** **                                                  | ** ** | **2005**                         | ** ** | **2004**                       | ** ** | **2005** | ** ** | **2004** | ** ** |
| **Revenue**                                                 |       | $                                | 8,500      |                           | $          | 28,056 |   | $ | 23,402 |   | $ | 54,578 |   |
| Income (loss)  before income taxes                          |       | $                                | (5,967     | )                              | $          | 2,737 |   | $ | (10,339 | ) | $ | 5,769 |   |
| Income tax  expense (benefit)                               |       | (2,327                           | )          | 1,372                          |       | (3,944 | ) | 2,683 |   |
| Net income (loss)  of discontinued operations               |       | (3,640                           | )          | 1,410                          |       | (6,395 | ) | 3,086 |   |
| Pre-tax loss on  sale of discontinued businesses            |       | (11,280                          | )          | —                         |       | (11,280 | ) | — |   |
| Income tax  benefit                                         |       | (8,926                           | )          | —                         |       | (8,926 | ) | — |   |
| Loss on sale of  businesses, net of tax                     |       | (2,354                           | )          | —                         |       | (2,354 | ) | — |   |
| **Income (loss) from discontinued  operations, net of tax** | ** ** | **$**                            | **(5,994** | **)**                          | **$**      | **1,410** | ** ** | **$** | **(8,749** | **)** | **$** | **3,086** | ** ** |

 

**8.**   SEGMENT ANDGEOGRAPHIC DATA

The Company conducts business in two operatingsegments: Monster and Advertising & Communications. Corporateoperating expenses are not allocated to the Company’s operating segments. TheCompany’s Advertising & Communications division recognizes acommission on the sale of certain Monster products. Revenue recognized by theAdvertising & Communications segment for such sales was $5,179 and$2,709 for the three months ended June 30, 2005 and 2004, respectively and$8,614 and $4,794 for the six months ended June 30, 2005 and 2004,respectively.

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Thefollowing tables present the Company’s operations by business segment and bygeographic region, for the three and six months ended June 30, 2005 and2004.
| ** **                             | ** ** | **Three Months Ended** | ** **  | **Six Months Ended** | ** ** |
|----------------------------------------|------------|----------------------------------|-------------|--------------------------------|------------|
| ** **                             | ** ** | **June 30,**                | ** **  | **June 30,**              | ** ** |
| **Revenue**                            | ** ** | **2005**                         | ** **  | **2004**                       | ** ** | **2005** | ** ** | **2004** | ** ** |
| Monster                                |       | $                                | 198,091     |                           | $          | 141,904 |   | $ | 387,625 |   | $ | 264,066 |   |
| Advertising &  Communications |       | 40,888                           |        | 39,424                         |       | 83,407 |   | 78,472 |   |
| **Total  revenue**                     | ** ** | **$**                            | **238,979** | ** **                     | **$**      | **181,328** | ** ** | **$** | **471,032** | ** ** | **$** | **342,538** | ** ** |

 
| ** **                             | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|----------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                             | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** |
| **Operating Income (Loss)**  | ** ** | **2005**                         | ** ** | **2004**                       | ** ** | **2005** | ** ** | **2004** | ** ** |
| Monster                                |       | $                                | 48,215     |                           | $          | 30,528 |   | $ | 92,692 |   | $ | 53,234 |   |
| Advertising &  Communications |       | 763                              |       | 1,478                          |       | 3,202 |   | 2,646 |   |
| Corporate                              |       | (10,117                          | )          | (9,319                         | )          | (20,364 | ) | (16,843 | ) |
| **Total  operating income**            | ** ** | **$**                            | **38,861** | ** **                     | **$**      | **22,687** | ** ** | **$** | **75,530** | ** ** | **$** | **39,037** | ** ** |

 
| ** **                                      | ** ** | **Three Months Ended** | ** **  | **Six Months Ended** | ** ** |
|-------------------------------------------------|------------|----------------------------------|-------------|--------------------------------|------------|
| ** **                                      | ** ** | **June 30,**                | ** **  | **June 30,**              | ** ** |
| **Revenue by Geographic Region** | ** ** | **2005**                         | ** **  | **2004**                       | ** ** | **2005** | ** ** | **2004** | ** ** |
| United States                                   |       | $                                | 168,094     |                           | $          | 132,734 |   | $ | 333,803 |   | $ | 251,648 |   |
| United Kingdom                                  |       | 27,374                           |        | 22,107                         |       | 50,638 |   | 44,660 |   |
| Continental  Europe                             |       | 33,163                           |        | 21,458                         |       | 67,942 |   | 33,710 |   |
| Other (a)                                       |       | 10,348                           |        | 5,029                          |       | 18,649 |   | 12,520 |   |
| **Total**                                       | ** ** | **$**                            | **238,979** | ** **                     | **$**      | **181,328** | ** ** | **$** | **471,032** | ** ** | **$** | **342,538** | ** ** |

 

Thefollowing table reconciles each reportable segment’s assets to total assetsreported on the Company’s consolidated balance sheets as of June 30, 2005and December 31, 2004:

| ** **                             | ** ** | **June 30,** | ** **    | **December 31,** | ** ** |
|----------------------------------------|------------|-------------------|---------------|-----------------------|------------|
| **Total Assets**                  | ** ** | **2005**          | ** **    | **2004**              | ** ** |
| Monster                                |       | $                 | 827,756       |                  |       | $ | 747,066 |   |   |
| Advertising &  Communications |       | 296,575           |          |                  | 364,014    |   |   |
| Corporate                              |       | 237,392           |          |                  | 161,598    |   |   |
| Shared Assets (b)                      |       | 45,894            |          |                  | 59,113     |   |   |
| Assets of  discontinued operations     |       | —            |          |                  | 211,822    |   |   |
| **Total**                              | ** ** | **$**             | **1,407,617** | ** **            | ** ** | **$** | **1,543,613** |   |   |

 

(a)          Includes Canada and theAsia Pacific region.

(b)         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.

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**Reportof Independent Registered Public Accounting Firm**

Boardof Directors and Stockholders

MonsterWorldwide, Inc.

New York, New York

We have reviewed theconsolidated balance sheet of Monster Worldwide, Inc. as of June 30,2005, and the related consolidated statements of operations for the three-monthand six-month periods ended June 30, 2005 and 2004, and cash flows for thesix-month periods ended June 30, 2005 and 2004 included in theaccompanying Securities and Exchange Commission Form 10-Q for theperiod ended June 30, 2005. These interim financial statements are theresponsibility of the Company’s management.

We conducted our reviewsin accordance with the standards of the Public Company Accounting OversightBoard (United States). A review of interim financial information consistsprincipally of applying analytical procedures and making inquiries of personsresponsible for financial and accounting matters. It is substantially less inscope than an audit conducted in accordance with the standards of the PublicCompany Accounting Oversight Board, the objective of which is the expression ofan opinion regarding the financial statements taken as a whole. Accordingly, wedo not express such an opinion.

Based on our reviews, weare not aware of any material modifications that should be made to theconsolidated financial statements referred to above for them to be inconformity with accounting principles generally accepted in the United States.

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, 2004, and the related consolidated statements ofoperations, stockholders’ equity, and cash flows for the year then ended (notpresented herein); and in our report dated February 18, 2005, we expressedan unqualified opinion on those consolidated financial statements. In ouropinion, the information set forth in the accompanying consolidated balancesheet as of December 31, 2004 is fairly stated in all material respects inrelation to the consolidated balance sheet from which it has been derived.

/s/BDO SEIDMAN, LLP

BDO Seidman, LLP

NewYork, New York

July 26, 2005

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**ITEM2.**   MANAGEMENT’S DISCUSSION AND ANALYSISOF 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:

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

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

·       forecastsof our future economic performance; and

·       descriptionsof assumptions underlying or relating to the foregoing.

Forward-looking statements discuss matters 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 manyfactors—many beyond our control—that could cause results to differsignificantly from our expectations. Some of these factors are described in “Item1. Business Risk Factors” of our annual report on Form 10-K.

**Overview**

Founded in 1967, we are the parent company of Monster,the leading global online careers property. We also own TMP Worldwide, one ofthe world’s largest recruitment advertising agency networks.  Our clients range from Fortune 100 companiesto small and medium-sized enterprises and government agencies.

Monster is our flagshipbrand. Our Monster division operates in 23 countries and accounted for 82% ofour total revenue for the six months ended June 30, 2005. Monster connectsemployers with job seekers and offers innovative technology and services thatgive employers more control over the recruiting process. We have been able tocapitalize on Monster’s brand and create worldwide awareness by offering onlinerecruiting solutions that we believe are redefining the way employers and jobseekers connect. These tools, which include searchable job postings, a resumedatabase and career management content and advice, provide users with morecontrol over the employment process. Monster’s job search, resume postingservices and basic networking are free to the job seeker. Monster also offerspremium career services at a fee to job seekers. Employers and human resourcesprofessionals pay to post jobs, search Monster’s resume database and use careersite hosting and applicant tracking systems and other ancillary services.

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**Business Combinations**

Forthe period January 1, 2004 through June 30, 2005, we completed fivebusiness combinations accounted for using the purchase method of accounting.Although none of the following acquisitions was considered to be a significantsubsidiary, either individually or in the aggregate, they do affect thecomparability of results from period to period. The acquisitions and theacquisition dates are as follows:
| **Acquired Business**                       | ** ** | **Acquisition Date**    | ** ** | **Business Segment/Region** |
|---------------------------------------------|------------|-------------------------|------------|-----------------------------|
| Military  Advantage, Inc.              |       | March 1,  2004     |       | Monster, North America      |
| jobpilot GmbH                               |       | April 22,  2004    |       | Monster, Europe             |
| Tickle Inc.                                 |       | May 21,  2004      |       | Monster, North America      |
| WebNeuron Services  Limited (JobsAhead.com) |       | June 18,  2004     |       | Monster, Asia/Pacific       |
| Emailjob.com SAS                            |       | February 11,  2005 |       | Monster, Europe             |

 

**DiscontinuedOperations**

During the sixmonths ended June 30, 2005, the Company disposed of the followingbusinesses that comprised substantially all of its former Directional Marketingoperating segment. These businesses are reflected as discontinued operations inthe consolidated statements of operations for the three and six months ended June 30,2005 (dollar amounts in thousands):

·       OnJune 1, 2005, the Company sold substantially all of its DirectionalMarketing division to a private equity firm for net cash consideration of$49,586 ($80 million purchase price less working capital and other adjustmentsand $2,500 of cash placed in escrow for an 18 month period following thedisposition date) and a $7,000, 3% promissory note due to the Company after 7years. The sale included the Company’s Yellow Pages business in NorthAmerica and Japan along with its online relocation business. The Companyrecognized a loss on sale of these businesses of $10,729 ($1,803 net of taxbenefits) in the second quarter of 2005. The sale of the Directional Marketingbusiness did not include the Company’s Directional Marketing operations in theUnited Kingdom. The Company’s  EuropeanAdvertising & Communications management will continue to operate thatbusiness, and accordingly, those results have been reclassified to ourAdvertising & Communications operating segment.

·       On May 2, 2005, theCompany sold its interests in TMP Direct, an order fulfillment business,formerly part of the Company’s Directional Marketing segment. The business waspurchased by GECKO Inc, an entity owned 65% by George Eisele, a director ofMonster Worldwide, for $2,500 cash, paid at closing plus an amount equal to 50%of TMP Direct’s working capital as of the closing date payable on May 2,2006. George Eisele and another individual shareholder of GECKO personallyguaranteed the May 2, 2006 payment obligation of GECKO Inc. The sale wasnot considered material and did not include a significant amount of assets. TheCompany recognized a pre-tax and after tax loss on sale of this business of$551 in the second quarter of 2005.

During the yearended December 31, 2004, the Company disposed of the following businesses,which are reflected as discontinued operations in the consolidated statementsof operations for the three and six months ended June 30, 2004:

·       In December 2004, theCompany sold and disposed of certain Advertising & Communicationsbusinesses in Continental Europe, in order to focus more fully on our Monsterbusiness. None of these dispositions were considered material or included asignificant amount of assets. The Company recognized a loss on sale of thesebusinesses of $7,055 ($6,234 net of tax) in the fourth quarter of 2004.

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·       On October 5, 2004,the Company completed the sale of our wholly owned subsidiary US Motivation, Inc.,formerly part of our Directional Marketing segment, to General Yellow Pages Consultants, Inc.d/b/a The Marquette Group for $10,000 cash, subject to a post-closingadjustment. The Company recognized a pre-tax and after-tax gain on the sale ofUS Motivation of $7,413 in the fourth quarter of 2004.

Thefollowing amounts related to our dispositions in 2005 and 2004, as well asresidual costs related to our disposition of HH Group in 2003, have beensegregated from continuing operations and are reflected as discontinuedoperations in each period’s consolidated statement of operations:
| ** **                                                  | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|-------------------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                                  | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** |
| ** **                                                  | ** ** | **2005**                         | ** ** | **2004**                       | ** ** | **2005** | ** ** | **2004** | ** ** |
| **Revenue**                                                 |       | $                                | 8,500      |                           | $          | 28,056 |   | $ | 23,402 |   | $ | 54,578 |   |
| Income (loss)  before income taxes                          |       | $                                | (5,967     | )                              | $          | 2,737 |   | $ | (10,339 | ) | $ | 5,769 |   |
| Income tax  expense (benefit)                               |       | (2,327                           | )          | 1,372                          |       | (3,944 | ) | 2,683 |   |
| Net income (loss)  of discontinued operations               |       | (3,640                           | )          | 1,410                          |       | (6,395 | ) | 3,086 |   |
| Pre-tax loss on  sale of discontinued businesses            |       | (11,280                          | )          | —                         |       | (11,280 | ) | — |   |
| Income tax  benefit                                         |       | (8,926                           | )          | —                         |       | (8,926 | ) | — |   |
| Loss on sale of  businesses, net of tax                     |       | (2,354                           | )          | —                         |       | (2,354 | ) | — |   |
| **Income (loss) from discontinued  operations, net of tax** | ** ** | **$**                            | **(5,994** | **)**                          | **$**      | **1,410** | ** ** | **$** | **(8,749** | **)** | **$** | **3,086** | ** ** |

 

**CriticalAccounting Policies and Items Affecting Comparability**

Quality financialreporting relies on consistent application of Company accounting policies thatare based on accounting principles generally accepted in the United States. Thepolicies discussed below are considered by management to be critical tounderstanding our financial statements and often require management judgmentand estimates regarding matters that are inherently uncertain. When suchjudgments and estimates are required, all material developments and resolutionsare discussed with our audit committee.

***Revenue Recognition***

*Monster.  *OurMonster division primarily earns revenue from the placement of job postings onthe websites within the Monster network, access to the Monster network’s onlineresume database and other ancillary 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.

*Advertising &Communications.  *Our Advertising &Communications division derives revenue from job advertisements placed innewspapers, Internet career job boards such as Monster and other media, plusassociated fees for related services. Revenue is recorded net of mediaplacement costs, which are passed on to the customer. Revenue is generallyrecognized upon placement date for newspapers and other print and offlinemedia. Online media revenue is recognized when services are purchased.

***Accounts Receivable***

We are required toestimate the collectibility of our trade receivables. A considerable amount ofjudgment is required in assessing the ultimate realization of thesereceivables, including the current credit-worthiness of our customers. Changesin required reserves may occur due to changing circumstances, including 

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changes in the currentmarket environment or in the particular circumstances of individual customers.We assess the recoverability of accounts receivable by performing a specificaccount review of significant customer accounts and applying general reservepercentages (based on historical collection experience) to the remainingpopulation of customer accounts. The allowance for doubtful accountsapproximates 4.4% of our accounts receivable portfolio as of June 30,2005. A 1% change in the calculation of bad debt reserves for the six monthsended June 30, 2005 would have impacted the allowance for doubtfulaccounts by approximately $3.3 million.

***Business Combinations, Goodwill and Intangible Assets***

The purchase method of accounting requires that assetsacquired and liabilities assumed be recorded at their fair values on the dateof a business acquisition. Our consolidated financial statements and results ofoperations reflect an acquired business from the completion date of anacquisition and are not restated. The costs to acquire a business, includingtransaction costs, are allocated to the fair value of net assets acquired uponacquisition. Any excess of the purchase price over the estimated fair values ofthe net assets acquired is recorded as goodwill.

The judgments that we makein determining the estimated fair value assigned to each class of assetsacquired and liabilities assumed, as well as asset lives, can materially impactnet income in periods following a business combination. For material purchaseacquisitions, we often use independent valuation specialists to aid in ourconclusions of such fair values and asset lives. We evaluate our goodwillannually for impairment or more frequently if indicators of potentialimpairment exist. The determination of whether or not goodwill has becomeimpaired involves a significant level of judgment in the assumptions underlyingthe approach used to determine the value of our reporting units. Changes in ourstrategy and/or market conditions could significantly impact these judgmentsand require reductions to recorded amounts of intangible assets.

***Merger, Integration, Restructuring and BusinessReorganization and Spin-off Plans***

We have recordedsignificant charges and accruals in connection with our merger, integration,restructuring and business reorganization and spin-off plans. These accrualsinclude estimates pertaining to future lease obligations, employee separationcosts and the settlements of contractual obligations resulting from ouractions. Our accruals for future lease obligations include estimates ofsublease income and can extend for several years, depending on the terms ofeach lease. Although we do not anticipate significant changes, the actual costsmay differ from these estimates.

**Results of Operations**

***Constant Currencies***

We define the term “constant currency” to be acomparison of financial information from period to period that excludes theeffect of translating foreign currencies to U.S. dollars at differing exchangerates. Changes in our revenues and core operating expenses, which we identifyas salaries and related, office and general, and marketing and promotionexpenses, include the effect of changes in foreign currency exchange ratesbecause they are translated at average exchange rates for each period, asrequired by generally accepted accounting principles.

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Webelieve that these calculations are a useful measure, providing additionaldetail about the change in operations from period to period. Earnings fromsubsidiaries are rarely repatriated to the United States and there are nosignificant gains or losses on foreign currency transactions betweensubsidiaries. Therefore, changes in foreign currency exchange rates generallyimpact only reported earnings.
| **(dollars in thousands)**   | ** ** | **Three Months Ended  June 30, 2004** | ** ** | **Three Months  Ended  June 30,  2005** | ** ** | **Constant Currency  Change** | ** ** |
|----------------------------------------|------------|-----------------------------------------------------------|------------|---------------------------------------------------|------------|------------------------------------|------------|
| ** **                             | ** ** | **Reported  Amount**                                      | ** ** | **Currency  Translation**                         | ** ** | **Constant  Currency**             | ** ** | **Reported  Amount** | ** ** | **$** | ** ** | **      %      ** | ** ** |
| **Revenue:**                           |       |                                                      |       |                                              |       |                               |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Monster                                |       | $                                                         | 141,904    |                                              |       | $                                  | 891        |   |   | $ | 142,795 |   |   | $ | 198,091 |   |   | $ | 55,296 |   |   | 38.7 |   |   |
| Advertising &  Communications |       | 39,424                                                    |       |                                              | 851        |                               |       | 40,275 |   |   | 40,888 |   |   | 613 |   |   | 1.5 |   |   |
| Total revenue                          |       | $                                                         | 181,328    |                                              |       | $                                  | 1,742      |   |   | $ | 183,070 |   |   | $ | 238,979 |   |   | $ | 55,909 |   |   | 30.5 |   |   |
| **Core Operating Expenses:**           |       |                                                      |       |                                              |       |                               |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and  related                  |       | $                                                         | 82,353     |                                              |       | $                                  | 1,277      |   |   | $ | 83,630 |   |   | $ | 105,564 |   |   | $ | 21,934 |   |   | 26.2 |   |   |
| Office and  general                    |       | 36,961                                                    |       |                                              | 504        |                               |       | 37,465 |   |   | 44,588 |   |   | 7,123 |   |   | 19.0 |   |   |
| Marketing and  promotion               |       | 38,086                                                    |       |                                              | 211        |                               |       | 38,297 |   |   | 47,692 |   |   | 9,395 |   |   | 24.5 |   |   |
| Core operating expenses                |       | $                                                         | 157,400    |                                              |       | $                                  | 1,992      |   |   | $ | 159,392 |   |   | $ | 197,844 |   |   | $ | 38,452 |   |   | 24.1 |   |   |

 
| **(dollars in thousands)**   | ** ** | **Six Months Ended  June 30, 2004** | ** ** | **Six Months  Ended  June 30,  2005** | ** ** | **Constant Currency  Change** | ** ** |
|----------------------------------------|------------|---------------------------------------------------------|------------|-------------------------------------------------|------------|------------------------------------|------------|
| ** **                             | ** ** | **Reported  Amount**                                    | ** ** | **Currency  Translation**                       | ** ** | **Constant  Currency**             | ** ** | **Reported  Amount** | ** ** | **$** | ** ** | **     %     ** | ** ** |
| **Revenue:**                           |       |                                                    |       |                                            |       |                               |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Monster                                |       | $                                                       | 264,066    |                                            |       | $                                  | 1,887      |   |   | $ | 265,953 |   |   | $ | 387,625 |   |   | $ | 121,672 |   |   | 45.7 |   |   |
| Advertising &  Communications |       | 78,472                                                  |       |                                            | 1,627      |                               |       | 80,099 |   |   | 83,407 |   |   | 3,308 |   |   | 4.1 |   |   |
| Total revenue                          |       | $                                                       | 342,538    |                                            |       | $                                  | 3,514      |   |   | $ | 346,052 |   |   | $ | 471,032 |   |   | $ | 124,980 |   |   | 36.1 |   |   |
| **Core Operating Expenses:**           |       |                                                    |       |                                            |       |                               |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Salaries and  related                  |       | $                                                       | 153,822    |                                            |       | $                                  | 2,355      |   |   | $ | 156,177 |   |   | $ | 206,120 |   |   | $ | 49,943 |   |   | 32.0 |   |   |
| Office and  general                    |       | 71,902                                                  |       |                                            | 880        |                               |       | 72,782 |   |   | 88,616 |   |   | 15,834 |   |   | 21.8 |   |   |
| Marketing and  promotion               |       | 75,931                                                  |       |                                            | 433        |                               |       | 76,364 |   |   | 96,138 |   |   | 19,774 |   |   | 25.9 |   |   |
| Core operating expenses                |       | $                                                       | 301,655    |                                            |       | $                                  | 3,668      |   |   | $ | 305,323 |   |   | $ | 390,874 |   |   | $ | 85,551 |   |   | 28.0 |   |   |

 

**TheThree Months Ended June 30, 2005 Compared to the Three Months Ended June 30,2004**

***Monster***

Theoperating results of our Monster division for the three months ended June 30,2005 and 2004 are as follows:
| ** **                           | ** ** | **Three Months Ended  June 30,** | ** ** | **Increase** | ** ** |
|--------------------------------------|------------|-------------------------------------------------|------------|--------------|------------|
| **(dollars in thousands)** | ** ** | **2005**                                        | ** ** | **2004**     | ** ** | **$** | ** ** | **    %    ** | ** ** |
| Revenue                              |       | $                                               | 198,091    |         | $          | 141,904 |   | $ | 56,187 |   |   | 39.6 |   |   |
| Operating income                     |       | $                                               | 48,215     |         | $          | 30,528 |   | $ | 17,687 |   |   | 57.9 |   |   |

 

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Our Monster divisionbenefited significantly from our 2004 sales force expansion and an acceleratingshift of recruitment advertising to the Internet, particularly overseas. Monster’sinternational revenue, which includes Europe and the Asia-Pac region, increased76.4% over the prior year period and currently accounts for 23.2% of theMonster divisions’ revenue, compared to 18.3% in the 2004 period. On an organicbasis, which excludes the effects of currency exchange rates and theacquisitions that have not been owned the entire duration of each comparableperiod, international revenue increased $10.4 million, or 38.5%. Revenue in ourNorth American operations increased 31.3% over the 2004 period, as wepenetrated deeper into local help-wanted markets and targeted a greater numberof small to medium sized businesses. In addition, we are continuing to seegreater demand for our self-service job-posting product, which we refer to asour eCommerce channel. Our eCommerce channel is an excellent source of new customersin North America and we are in the process of implementing this model acrossour international operations.

Operating income at theMonster division increased due to the strong operating leverage in our NorthAmerican operations. North American operating income was $50.3 million, a 69.6%increase over the prior year period. Our international operations posted anoperating loss in the second quarter of 2005 of $2.1 million, as we continue toinvest in additional sales people and continued our marketing and re-brandingefforts of our jobpilot Gmbh properties.

***Advertising &Communications***

Theoperating results of our Advertising & Communications division for thethree months ended June 30, 2005 and 2004 are as follows:
| ** **                           | ** ** | **Three Months Ended** | ** ** | **Increase**   | ** ** |
|--------------------------------------|------------|----------------------------------|------------|----------------|------------|
| ** **                           | ** ** | **June 30,**                | ** ** | **(Decrease)** | ** ** |
| **(dollars in thousands)** | ** ** | **2005**                         | ** ** | **2004**       | ** ** | **$** | ** ** | **    %    ** | ** ** |
| Revenue                              |       | $                                | 40,888     |           | $          | 39,424 |   | $ | 1,464 |   | 3.7 |   |
| Operating income                     |       | $                                | 763        |           | $          | 1,478 |   | $ | (715) |   | (48.4) |   |

 

Revenue at our Advertising &Communications division increased primarily due to a stronger recruitmentadvertising market in North America, while international revenue was flatcompared to the second quarter of 2004. The division made stronger progress inNorth America, with revenue growth of approximately 8% compared to the sameperiod last year. The increase in North America was offset by a lack of growthinternationally. For the three months ended June 30, 2005 and 2004,Advertising & Communications recognized approximately $5.2 million and$2.7 million of commissions related to the sale of certain Monster products.

The division postedoperating income in the second quarter of 2005, however both North American andinternationaloperating results decreased compared to the 2004 period. We focused onmanagement of expenses in the current period in order to maintain positiveoperating income. We remain dedicated to monitoring our cost structure toensure that costs are in line with revenue.

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***ConsolidatedOperating Expenses and Operating Income***

Consolidatedoperating expenses and operating income for the three months ended June 30,2005 and 2004 are as follows:
| ** **                           | ** ** | **Three Months Ended** | ** ** | ** **   | ** ** |
|--------------------------------------|------------|----------------------------------|------------|--------------|------------|
| ** **                           | ** ** | **June 30,**                | ** ** | **Increase** | ** ** |
| **(dollars in thousands)** | ** ** | **2005**                         | ** ** | **2004**     | ** ** | **$** | ** ** | **    %    ** | ** ** |
| Salaries and  related                |       | $                                | 105,564    |         | $          | 82,353 |   | $ | 23,211 |   |   | 28.2 |   |   |
| Office and  general                  |       | 44,588                           |       | 36,961       |       | 7,627 |   |   | 20.6 |   |   |
| Marketing and  promotion             |       | 47,692                           |       | 38,086       |       | 9,606 |   |   | 25.2 |   |   |
| Amortization of  intangibles         |       | 2,274                            |       | 1,241        |       | 1,033 |   |   | 83.2 |   |   |
| Total operating  expenses            |       | $                                | 200,118    |         | $          | 158,641 |   | $ | 41,477 |   |   | 26.1 |   |   |
| Operating income                     |       | $                                | 38,861     |         | $          | 22,687 |   | $ | 16,174 |   |   | 71.3 |   |   |

 

Our Monster divisionaccounted for substantially all of the year over year increase in totaloperating expenses, stemming mainly from hiring initiatives that we undertookin the 2004 period, acquisitions and increased marketing and promotion of theMonster brand. Costs associated with our hiring initiatives mainly reflectincreased commissions and the addition of approximately 440 sales and supportstaff across the Monster division since the second quarter of 2004. Inaddition, approximately $8.7 million of the increase in operating expenses isassociated with acquired companies. The 2005 period also includes a $2.0million increase in operating expenses related to currency exchange rates.

***Income Taxes***

Incometaxes for the three months ended June 30, 2005 and 2004 are as follows:
| ** **                                             | ** ** | **Three Months Ended** | ** ** | ** **   | ** ** |
|--------------------------------------------------------|------------|----------------------------------|------------|--------------|------------|
| ** **                                             | ** ** | **June 30,**                | ** ** | **Increase** | ** ** |
| **(dollars in thousands)**                   | ** ** | **2005**                         | ** ** | **2004**     | ** ** | **$** | ** ** | **    %    ** | ** ** |
| Income from  continuing operations before income taxes |       | $                                | 39,904     |         | $          | 22,258 |   | $ | 17,646 |   |   | 79.3 |   |   |
| Income taxes                                           |       | $                                | 13,967     |         | $          | 7,428 |   | $ | 6,539 |   |   | 88.0 |   |   |
| Effective tax rate                                     |       | 35.0%                            |       | 33.4%        |       |   |   |   |   |   |   |

 

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

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***Income fromContinuing Operations and Net Income***

Incomefrom continuing operations, net income and per share amounts for the threemonths ended June 30, 2005 and 2004 are as follows:
| ** **                                                                         | ** ** | **Three Months Ended** | ** ** | ** **              | ** ** |
|------------------------------------------------------------------------------------|------------|----------------------------------|------------|-------------------------|------------|
| ** **                                                                         | ** ** | **June 30,**                | ** ** | **Increase (Decrease)** | ** ** |
| **(dollars in thousands, except per share amounts)** | ** ** | **2005**                         | ** ** | **2004**                | ** ** | **Amount** | ** ** | **%** | ** ** |
| **Net income:**                                                                    |       |                             |       |                    |       |   |   |   |   |
| Income from  continuing operations                                                 |       | $                                | 25,570     |                    | $          | 14,830 |   | $ | 10,740 |   | 72.4 |   |
| Income (loss)  from discontinued operations, net of tax                            |       | (5,994                           | )          | 1,410                   |       | (7,404 | ) | (525.1 | ) |
| Net income                                                                         |       | $                                | 19,576     |                    | $          | 16,240 |   | $ | 3,336 |   | 20.5 |   |
| **Diluted earnings (loss) per share:**                                             |       |                             |       |                    |       |   |   |   |   |
| Income from continuing  operations                                                 |       | $                                | 0.21       |                    | $          | 0.12 |   | $ | 0.09 |   |   |   |
| Income (loss) per  share from discontinued operations, net of tax                  |       | (0.05                            | )          | 0.01                    |       | (0.06 | ) |   |   |
| Diluted earnings  per share                                                        |       | $                                | 0.16       |                    | $          | 0.14 |   | $ | 0.02 |   |   |   |
| Diluted weighted average  shares outstanding                                       |       | 123,181                          |       | 120,192                 |       | 2,989 |   | 2.5 |   |

 

*        Earnings per share does not add in the2004 period due to rounding

**TheSix Months Ended June 30, 2005 Compared to the Six Months Ended June 30,2004**

***Monster***

Theoperating results of our Monster division for the six months ended June 30,2005 and 2004 are as follows:
| ** **                           | ** ** | **Six Months Ended** | ** ** | ** **   | ** ** |
|--------------------------------------|------------|--------------------------------|------------|--------------|------------|
| ** **                           | ** ** | **June 30,**              | ** ** | **Increase** | ** ** |
| **(dollars in thousands)** | ** ** | **2005**                       | ** ** | **2004**     | ** ** | **$** | ** ** | **    %    ** | ** ** |
| Revenue                              |       | $                              | 387,625    |         | $          | 264,066 |   | $ | 123,559 |   |   | 46.8 |   |   |
| Operating income                     |       | $                              | 92,692     |         | $          | 53,234 |   | $ | 39,458 |   |   | 74.1 |   |   |

 

Our Monster division’sincrease in revenue over the prior year period was primarily driven by ourNorth American and European operations. North American revenue increased 36.1%and represents 77.5% of our total Monster revenue. The increase in revenue is adirect result of investments we made in our sales force in the latter half of2004 and the integration of acquired companies. In addition, our self servicejob-posting product, referred to as our eCommerce channel, continues to attractnew customers and generate strong revenue across North America. International revenueincreased 101.7% over the 2004 period as our acquisitions of jobpilot GmbH inGermany and Emailjob.com in France increased our presence in these two keyEuropean markets. Additional increases in international revenue resulted fromour continued investments in sales force expansion and marketing effortsthroughout Europe. Revenue from our international operations accounted for22.5% of our Monster revenue. We are encouraged by the current pace of adoptionof online recruitment in the United Kingdom and Europe.

Our North Americanoperations accounted for the entire increase in total operating income over the2004 period. Our North American management has been diligent managing costs andkeeping expenses in line with revenues. Expenses increased across the divisionprimarily due to the addition of sales staff, our investments in marketing andadditional costs associated with businesses that we acquired. North Americanoperating income was $96.4 million for the six months ended June 30, 2005,a 77.2% increase over the prior year period. Our international operationsposted a $3.7 million operating loss in the first six 

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months of 2005, asinvestments in marketing and additional sales people negatively impactedoperating margins.

***Advertising &Communications***

Theoperating results of our Advertising & Communications division for thesix months ended June 30, 2005 and 2004 are as follows:
| ** **                           | ** ** | **Six Months Ended** | ** ** | ** **   | ** ** |
|--------------------------------------|------------|--------------------------------|------------|--------------|------------|
| ** **                           | ** ** | **June 30,**              | ** ** | **Increase** | ** ** |
| **(dollars in thousands)** | ** ** | **2005**                       | ** ** | **2004**     | ** ** | **$** | ** ** | **    %    ** | ** ** |
| Revenue                              |       | $                              | 83,407     |         | $          | 78,472 |   | $ | 4,935 |   |   | 6.3 |   |   |
| Operating income                     |       | $                              | 3,202      |         | $          | 2,646 |   | $ | 556 |   |   | 21.0 |   |   |

 

Advertising &Communications’ revenue primarily increased due to higher demand of onlineprint advertising, especially in North America. Our North American revenueincreased 10.4% over the 2004 period, while our international revenue increased3.0%. For the six months ended June 30, 2005, our international revenueaccounted for 53.6% of the total divisions’ revenue, while North America madeup the remaining 46.4%.   For the sixmonths ended June 30, 2005, the division recognized approximately $8.6million of revenue related to the sale of certain Monster products tocustomers, an increase of 79.8% over the $4.8 million of revenue the divisionrecorded in the first six months of 2004.

Operating income increased21.0% over the first half of 2004, primarily due to increased revenue anddisciplined management of core operating expenses. Management is continuallyanalyzing the cost structure of the business to ensure that costs are in linewith revenues.

***ConsolidatedOperating Expenses and Operating Income***

Consolidatedoperating expenses and operating income for the six months ended June 30,2005 and 2004 are as follows:
| ** **                           | ** ** | **Six Months Ended** | ** ** | ** **   | ** ** |
|--------------------------------------|------------|--------------------------------|------------|--------------|------------|
| ** **                           | ** ** | **June 30,**              | ** ** | **Increase** | ** ** |
| **(dollars in thousands)** | ** ** | **2005**                       | ** ** | **2004**     | ** ** | **$** | ** ** | **    %    ** | ** ** |
| Salaries and  related                |       | $                              | 206,120    |         | $          | 153,822 |   | $ | 52,298 |   | 34.0 |   |
| Office and  general                  |       | 88,616                         |       | 71,902       |       | 16,714 |   | 23.2 |   |
| Marketing and  promotion             |       | 96,138                         |       | 75,931       |       | 20,207 |   | 26.6 |   |
| Amortization of  intangibles         |       | 4,628                          |       | 1,846        |       | 2,782 |   | 150.7 |   |
| Total operating  expenses            |       | $                              | 395,502    |         | $          | 303,501 |   | $ | 92,001 |   | 30.3 |   |
| Operating income                     |       | $                              | 75,530     |         | $          | 39,037 |   | $ | 36,493 |   | 93.5 |   |

 

Our Monster division accounted for substantially allof the year over year increase in total operating expenses, stemming mainlyfrom the hiring initiatives we undertook in the latter half of 2004 and costsassociated with acquisitions, particularly Tickle, jobpilot GmbH and Emailjob. Costsassociated with our hiring initiatives mainly reflect higher commissions paidto sales professionals and sales and support staff. In addition, we continue toinvest in the Monster brand, both in North America and in key internationalmarkets. Our acquisition of jobpilot GmbH increased our presence in severalcountries across Europe and helped establish us as a leader in Germany. Ourmarketing and promotion in the 2005 period also includes resources allocated tore-brand our jobpilot GmbH properties. Corporate operating expenses increased$3.5 million over the 2004 period mainly due to higher salary and relatedexpenses and severance costs in the current period. We remain committed toanalyzing our expense infrastructure to ensure that costs are in line withrevenues, especially given the uneven employment market in North America andEurope.

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***Income Taxes***

Incometaxes for the six months ended June 30, 2005 and 2004 are as follows:
| ** **                                             | ** ** | **Six Months Ended** | ** ** | ** **   | ** ** |
|--------------------------------------------------------|------------|--------------------------------|------------|--------------|------------|
| ** **                                             | ** ** | **June 30,**              | ** ** | **Increase** | ** ** |
| **(dollars in thousands)**                   | ** ** | **2005**                       | ** ** | **2004**     | ** ** | **$** | ** ** | **    %    ** | ** ** |
| Income from continuing  operations before income taxes |       | $                              | 76,506     |         | $          | 38,322 |   | $ | 38,184 |   | 99.6 |   |
| Income taxes                                           |       | $                              | 27,035     |         | $          | 12,763 |   | $ | 14,272 |   | 111.8 |   |
| Effective tax rate                                     |       | 35.3%                          |       | 33.3%        |       |   |   |   |   |

 

Our effective tax rates differ from the statutory ratedue to the impact of state and local income taxes, certain nondeductibleexpenses, foreign earnings taxed at different tax rates and valuationallowances. Our future effective tax rates could be adversely affected byearnings being lower than anticipated in countries where we have lowerstatutory 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.

***Income fromContinuing Operations and Net Income***

Incomefrom continuing operations, net income and per share amountsfor the six months ended June 30, 2005 and 2004 are as follows:
| ** **                                                                         | ** ** | **Six Months Ended** | ** ** | ** **                   | ** ** |
|------------------------------------------------------------------------------------|------------|--------------------------------|------------|------------------------------|------------|
| ** **                                                                         | ** ** | **June 30,**              | ** ** | **Increase (Decrease)** | ** ** |
| **(dollars in thousands, except per share amounts)** | ** ** | **2005**                       | ** ** | **2004**                     | ** ** | **Amount** | ** ** | **    %    ** | ** ** |
| **Net  income:**                                                                   | ** ** | ** **                     | ** ** | ** **                   | ** ** | ** ** | ** ** | ** ** | ** ** |
| Income from  continuing operations                                                 |       | $                              | 48,895     |                         | $          | 25,559 |   | $ | 23,336 |   | 91.3 |   |
| Income (loss)  from discontinued operations, net of tax                            |       | (8,749                         | )          | 3,086                        |       | (11,835 | ) | (383.5 | ) |
| Net income                                                                         |       | $                              | 40,146     |                         | $          | 28,645 |   | $ | 11,501 |   | 40.2 |   |
| **Diluted earnings (loss) per share:**                                             | ** ** | ** **                     | ** ** | ** **                   | ** ** | ** ** | ** ** | ** ** | ** ** |
| Income from continuing  operations                                                 |       | $                              | 0.40       |                         | $          | 0.21 |   | $ | 0.19 |   |   |   |
| Income (loss) per  share from discontinued operations, net of tax                  |       | (0.07                          | )          | 0.03                         |       | (0.10 | ) |   |   |
| Diluted earnings  per share                                                        |       | $                              | 0.33       |                         | $          | 0.24 |   | $ | 0.09 |   |   |   |
| Diluted weighted average  shares outstanding                                       |       | 123,320                        |       | 119,004                      |       | 4,316 |   | 3.6 |   |

 

**Financial Condition**
| ** **                                                        | ** ** | **Six Months Ended** | ** ** |
|-------------------------------------------------------------------|------------|--------------------------------|------------|
| ** **                                                        | ** ** | **June 30,**              | ** ** |
| **(in thousands)**                                           | ** ** | **2005**                       | ** ** | **2004** | ** ** |
| Cash provided by operating activities of continuing  operations   |       | $                              | 113,135    |   | $ | 56,634 |   |
| Cash used for investing activities of continuing  operations      |       | (63,550)                       |       | (125,151) |   |
| Cash provided by financing activities of continuing  operations   |       | 11,153                         |       | 66,068 |   |
| Cash used for  discontinued operations and business held for sale |       | (19,560)                       |       | (57,792) |   |
| Effect of exchange rate  changes on cash and cash equivalents     |       | (3,471)                        |       | 190 |   |
|                                                                   |            |                                |            |  |  |  |  |

 

Ourprincipal capital requirements have been to fund (i) working capital, (ii) marketingand development of our Monster network, (iii) acquisitions (iv) capitalexpenditures and (v) the 2003 spin-off of Hudson Highland Group, Inc.Prior to the sale of our Directional Marketing segment, our working capitalrequirements were generally higher in the first half of each year, whenpayments to major Yellow Page directory publishers were at their highestlevels. In addition, because of recent business acquisitions 

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andour 2002 and 2003 reorganization initiatives, we have substantial cashcommitments over the next several years. These commitments as of June 30,2005 are as follows (amounts in thousands):
| ** **                                                      | ** ** | **Payments due by period** | ** ** |
|-----------------------------------------------------------------|------------|-------------------------------------------|------------|
| ** **                                                      | ** ** | ** **                                | ** ** | **Less than** | ** ** | ** ** | ** ** | ** ** | ** ** | **More than** | ** ** |
| **Contractual Obligations (in thousands)**       | ** ** | **Total**                                 | ** ** | **1 year** | ** ** | **1 - 3 years** | ** ** | **3-5 years** | ** ** | **5 years** | ** ** |
| Purchase commitments –  advertising contracts              |       | $                                         | 6,460      |   |   | $ | 6,460 |   |   |   | $ | — |   |   | $ | — |   | $ | — |   |
| Borrowings under  financing arrangement and other notes payable |       | 468                                       |       |   | 85 |   |   |   | 173 |   |   | 170 |   | 40 |   |
| Capital lease  obligations                                      |       | 923                                       |       |   | 753 |   |   |   | 170 |   |   | — |   | — |   |
| Operating lease  obligations                                    |       | 286,274                                   |       |   | 27,713 |   |   |   | 61,240 |   |   | 56,970 |   | 140,351 |   |
| Acquisition notes  payable                                      |       | 39,544                                    |       |   | 25,734 |   |   |   | 13,599 |   |   | 211 |   | — |   |
| Total                                                           |       | $                                         | 333,669    |   |   | $ | 60,745 |   |   |   | $ | 75,182 |   |   | $ | 57,351 |   | $ | 140,391 |   |

 

Historically, we haverelied on funds provided by operating activities, equity offerings, short andlong-term borrowings and seller-financed notes to meet our liquidity needs. Weinvest our excess cash predominantly in money market funds, overnight deposits,and commercial paper each having maturities of less than three months and inauction rate bonds, all of which are highly liquid and are of high-qualityinvestment grade with the intent to make such funds readily available foroperating and strategic long-term equity investment purposes.

As of June 30, 2005,we had cash and cash equivalents of $235.8 million, compared to $198.1 millionas of December 31, 2004. Our increase in cash of $37.7 million in the sixmonths ended June 30, 2005, primarily relates to our operating andfinancing activities offset by cash used for investing activities. Cashprovided by operating activities was $94.3 million for the six months ended June 30,2005 and resulted from $48.9 million of income from continuing operations and$49.5 million of net non-cash items, increased by a $23.5 million change inworking capital. Prepaid and other assets increased with the disposition of ourDirectional Marketing segment. As a result of the disposition, we recordeddeferred consideration receivable related to the sale as well as certaindeferred tax assets. Deferred revenue continued to increase in 2005 due to oursuccess in driving more business to Monster, both in North America and Europe.Increases in accounts payable and accrued expenses mainly reflect timing ofaccounts payable and general accruals as well as increased deferred taxliabilities related to our continuing operations. Cash flow from operatingactivities was decreased by $18.9 million of cashused in our discontinued Directional Marketing businesses.

We used $64.3 million ofcash for investing activities in the six months ended June 30, 2005. Theuse of cash mainly reflects our net cash purchase of Emailjob SAS for $19.3million and our $50.1 million cash investment for 40% of ChinaHR.com  We also paid $27.3 million of indebtednessrelated to our purchases of Military Advantage Inc., QuickHire, Inc., andTickle, Inc. These uses of cash were substantially offset by $50.2 millionof cash received from the sale of our Directional Marketing businesses. Furthermore,we used $15.6 million of cash for capital expenditures in the first half of2005.

Cash provided by financingactivities consists of $14.4 million of cash received from employee stockoption exercises, slightly offset by $1.8 million of payments on capitalizedlease obligations. In addition, we used $1.4 million of cash to repurchasecommon stock that was issued under a pre-existing employment agreement.

We believe that ourcurrent cash and cash equivalents, revolving credit facility and cash weanticipate to generate from operating activities will provide us withsufficient liquidity to satisfy our working capital needs, capitalexpenditures, investment requirements and commitments through at least the nexttwelve months. Our cash generated from operating activities is subject tofluctuations in the global economy and unemployment rates.

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**ITEM3.** QUANTITATIVE AND QUALITATIVEDISCLOSURES ABOUT MARKET RISK

Our primary market risksinclude fluctuations in interest rates, variability in interest rate spreadrelationships (i.e., prime to LIBOR spreads) and exchange rate variability. At June 30,2005, the utilized portion of our three-year revolving credit agreement wasapproximately $4.1 million for standby letters of credit and approximately$95.9 million was unused. Interest on future outstanding loans under therevolving credit agreement shall be charged based on a variable interest raterelated to our choice of (1) the higher of (a) the prime rate or (b) theFederal Funds rate plus  1¤2of 1%, plus a margin determined by the ratio of our debt to earnings beforeinterest, taxes, depreciation and amortization (“EBITDA”) as defined in therevolving credit agreement or (2) the London Interbank Offered Rate(LIBOR) plus a margin determined by the ratio of our debt to EBITDA as definedin the revolving credit agreement. We use forward foreign exchange contracts ascash flow hedges to offset risks related to foreign currency transactions.These transactions primarily relate to non-functional currency denominatedinter-company funding loans. We do not trade derivative financialinstruments for speculative purposes.

We also conduct operationsin various foreign countries, including Australia, Belgium, Canada, France,Germany, Ireland, India, Italy, the Netherlands, New Zealand, Sweden, Spain,and the United Kingdom. For the three and six months ended June 30, 2005,approximately 30% and 29%, respectively, of our revenue was earned outside theUnited States and collected in local currency and related operating expenseswere also paid in such corresponding local currency. Accordingly, we will besubject to risk for exchange rate fluctuations between such local currenciesand the dollar.

The financial statementsof our non-U.S. subsidiaries are translated into U.S. dollars using currentrates of exchange, with gains or losses included in the cumulative translationadjustment account, a component of stockholders’ equity. During the three andsix months ended June 30, 2005, we had a translation losses of$31.5 million and $57.8 million, respectively, primarily attributable tothe weakening of the U.S. dollar against the Euro, the British Pound and theSwedish Krona.

**ITEM4.** CONTROLS AND PROCEDURES

Monster Worldwidemaintains “disclosure controls and procedures”, as such term is defined underSecurities Exchange Act Rule 13a-15(e), that are designed to ensurethat information required to be disclosed in our Exchange Act reports isrecorded, processed, summarized and reported within the time periods specifiedin the SEC’s rules and forms, and that such information is accumulated andcommunicated to our management, including our Chief Executive Officer and ChiefFinancial Officer, as appropriate, to allow timely decisions regarding requireddisclosures. In designing and evaluating the disclosure controls andprocedures, Monster Worldwide’s management recognized that any controls andprocedures, no matter how well designed and operated, can provide onlyreasonable assurance of achieving the desired control objectives and MonsterWorldwide’s management necessarily was required to apply its judgment inevaluating the cost-benefit relationship of possible controls and procedures.Monster Worldwide has carried out an evaluation, as of the end of the periodcovered by this report, under the supervision and with the participation ofMonster Worldwide’s management, including Monster Worldwide’s Chief ExecutiveOfficer and Chief Financial Officer, of the effectiveness of the design andoperation of Monster Worldwide’s disclosure controls and procedures. Based upontheir evaluation and subject to the foregoing, the Chief Executive Officer andChief Financial Officer concluded that Monster Worldwide’s disclosure controlsand procedures were effective in ensuring that material information relating toMonster Worldwide is made known to the Chief Executive Officer and ChiefFinancial Officer by others within Monster Worldwide during the period in whichthis 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.

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**PART II—OTHERINFORMATION**

**ITEM4.** SUBMISSION OF MATTERS TO A VOTE OFSECURITY HOLDERS.

(a)          Theannual meeting of stockholders was held on June 16, 2005.

(b)         Thefollowing directors were elected at the Annual Meeting and received the voteindicated:
| ** **          | ** ** | ** **  | **FOR** | ** ** | ** ** | **WITHHELD** | ** ** |
|---------------------|------------|-------------|---------|------------|------------|--------------|------------|
| Andrew J.  McKelvey |       | 147,611,316 |    |       | 5,559,219  |         |       |
| George R. Eisele    |       | 150,275,776 |    |       | 2,894,759  |         |       |
| John Gaulding       |       | 141,909,783 |    |       | 11,260,752 |         |       |
| Michael Kaufman     |       | 132,798,478 |    |       | 20,372,057 |         |       |
| Ronald J. Kramer    |       | 136,592,176 |    |       | 16,578,359 |         |       |
| David A. Stein      |       | 148,159,371 |    |       | 5,011,164  |         |       |
| John Swann          |       | 143,760,254 |    |       | 9,410,281  |         |       |

 

(c)          Theamendment to the Monster Worldwide, Inc. 1999 Long Term Incentive Plan wasapproved by the vote indicated:
| FOR         |   | 139,111,594 |   |
|-------------|--------|-------------|--------|
| AGAINST     |   | 4,977,078   |   |
| ABSTENTIONS |   | 628,337     |   |

 

**ITEM 6.** EXHIBITS.

Thefollowing exhibits are filed as a part of this report:
|   | 15   |   |   | Letter from BDO Seidman, LLP regarding unaudited  interim financial information.                                                                                                   |
|--------|------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 31.1 |   |   | Certification by Andrew J. McKelvey pursuant to  Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|   | 31.2 |   |   | Certification by Charles Baker pursuant to Exchange  Act Rule 13a-14(a) and 15d-14(a), as adopted pursuant  to Section 302 of the Sarbanes-Oxley Act of 2002.       |
|   | 32.1 |   |   | Certification by Andrew J. McKelvey pursuant to 18  U.S.C. Section 1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002.                          |
|   | 32.2 |   |   | Certification by Charles Baker pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley  Act of 2002.                               |

 

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**SIGNATURES**

Pursuantto the requirements of Section 13 or 15(d) of the Securities andExchange Act of 1934, the registrant has duly caused this report to besigned on its behalf by the undersigned, thereunto duly authorized.
|                             |   | MONSTER WORLDWIDE, INC.  (Registrant) |
|-----------------------------|--------|--------------------------------------------|
| Dated: August 8,  2005 |   | By:                                        |   | /s/ ANDREW J. MCKELVEY |
|                        |   |                                       |   | Andrew J. McKelvey  Chairman of the Board and Chief Executive Officer  (principal executive officer) |
| Dated: August 8,  2005 |   | By:                                        |   | /s/ CHARLES BAKER |
|                        |   |                                       |   | Charles Baker  Chief Financial Officer  (principal financial officer) |
| Dated: August 8,  2005 |   | By:                                        |   | /s/ JONATHAN TRUMBULL |
|                        |   |                                       |   | Jonathan Trumbull  Chief Accounting Officer and Global Controller  (principal accounting officer) |

 

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