<PAGE>   1
================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K
   FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15 (d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934
              FOR THE TRANSITION PERIOD FROM          TO           .

                       COMMISSION FILE NUMBER 000 - 25949
                               CAREERBUILDER, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                      DELAWARE                               54-1779164
           (STATE OR OTHER JURISDICTION OF                (I.R.S. EMPLOYER
           INCORPORATION OR ORGANIZATION)                IDENTIFICATION NO.)

              10780 PARKRIDGE BOULEVARD                         20191
                      SUITE 200                              (ZIP CODE)
                  RESTON, VIRGINIA
      (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
        REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 703-259-5500
        SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT: NONE

          SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:
                    COMMON STOCK, $.001 PAR VALUE PER SHARE
                                (TITLE OF CLASS)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.   YES [X] NO [ ].

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. [ ]

     The aggregate market value of the common equity held by non-affiliates of
the registrant (11,963,774 shares), computed using the closing sales price of
Common Stock on March 15, 2000, as reported on the Nasdaq National Market, was
approximately $68,791,000.

     As of March 15, 2000 there were 23,753,160 shares of Common Stock
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE
     Portions of the definitive Proxy Statement to be delivered with the Notice
of Annual Meeting of the Stockholders to be held on May 11, 2000 are
incorporated by reference into Part III of this Form 10-K.



                                       1

<PAGE>   2

                               CAREERBUILDER, INC.
                                    FORM 10-K
                                TABLE OF CONTENTS
<TABLE>
<S>                                                                                             <C>
PART I............................................................................................3

    ITEM 1.  BUSINESS.............................................................................3
    ITEM 2.  PROPERTIES...........................................................................8
    ITEM 3.  LEGAL PROCEEDINGS....................................................................8
    ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................................8

PART II...........................................................................................9

    ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS................9
    ITEM 6.  SELECTED FINANCIAL DATA.............................................................10
    ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
             OPERATIONS..........................................................................11
    ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..........................26
    ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.........................................26
    ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL...........
             DISCLOSURE..........................................................................26
PART III.........................................................................................27
    ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.................................27
    ITEM 11.  EXECUTIVE COMPENSATION.............................................................27
    ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.....................27
    ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.....................................27

PART IV..........................................................................................27

    ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K...................27
    SIGNATURES...................................................................................30
</TABLE>

               SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

     Certain statements contained in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and other sections herein,
including statements regarding the development of the Company's business, the
markets for the Company's services, the Company's anticipated capital
expenditures, and other similar statements, are forward-looking statements (as
such term is defined in the Private Securities Litigation Reform Act of 1995)
which can be identified as any statement that does not relate strictly to
historical or current facts. Forward-looking statements use such words as
"plans", "expects", "will", "will likely result", "are expected to", "will
continue", "is anticipated", "estimate", "project", "believes", "anticipates",
"intends", "may", "should", "continue", "seek", "could" and other similar
expressions. Although the Company believes that its expectations are based on
reasonable assumptions, it can give no assurance that its expectations will be
achieved. The important factors that could cause actual results to differ
materially from those in the forward-looking statements herein (the "Cautionary
Statements") include, without limitation, those factors set forth below under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Certain Factors That May Affect Future Results," as well as the
other risks referenced from time to time in the Company's filings with the
Securities and Exchange Commission, including the Company's Quarterly Reports on
Form 10-Q that the Company files in 2000. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by the Cautionary Statements.
The Company does not undertake any obligation to release publicly any revisions
to such forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.








                                        2

<PAGE>   3

                                     PART I

ITEM 1.  BUSINESS

     CareerBuilder provides comprehensive online recruitment offerings for
employers and job seekers. CareerBuilder brings employers and job seekers
together by:

     - providing employers with the ability to advertise job openings and manage
      their online recruitment efforts on a network of integrated Internet
      sites, including CareerBuilder.com and career sites for 25 premier
      interactive media companies such as Microsoft MSN, Bloomberg.com,
      CitySearch, USA Today and NBC Interactive.

     - providing job seekers with the tools to find, explore, evaluate and
      compare job opportunities. These tools include CareerBuilder's unique Mega
      Job-Search(SM) features that enable job seekers to search over 50 career
      sites across the Internet, and "mycareerbuilder"(SM), which enables job
      seekers to personalize and manage their career search efforts and post a
      resume in the CareerBuilder resume database for employers to search.

At December 31, 1999, nearly 1,300 employers subscribed for CareerBuilder's
offerings. Media Metrix reported that over 1.5 million unique monthly job
seekers visited the CareerBuilder Network in December 1999. As ranked by Media
Metrix, the CareerBuilder Network was the third largest destination for job
seekers across the Internet in December 1999.

THE CAREERBUILDER SOLUTION

     CareerBuilder provides comprehensive, online recruitment offerings for
employers and job seekers. CareerBuilder's offerings:

     ENABLE EMPLOYERS TO REACH AND TARGET JOB SEEKERS ACROSS A WIDE VARIETY OF
PREMIER INTERNET SITES. Employers can post their jobs through the CareerBuilder
Network, including the Company's flagship site CareerBuilder.com and career
sites for 25 premier interactive media companies such as Microsoft's MSN.com,
Bloomberg.com, TicketMaster, CitySearch, USA Today and NBC Interactive. By using
the CareerBuilder Network, employers can choose their desired reach and focus
for each job opening. For example, a company with a job opening wishing to reach
as broad an audience as possible may advertise job openings on major career
sites such as CareerBuilder.com, Microsoft MSN's Career Center and USA Today's
Career Center. A company with more specific industry openings may choose to
advertise their jobs on key vertical industry sites such as Bloomberg and
ITcareers.com. Specific geographic openings could be advertised on career sites
such as TicketMaster City Search, the Dallas Morning News, and NBC Interactive.
Diversity candidates are targeted through sites such as Black Enterprise Online,
HISPANIC Online and WomenCONNECT.com. Employers can also utilize CareerBuilder
banner advertising offerings to target key job seeker profiles on
CareerBuilder.com, across the CareerBuilder Network and on selected other
Internet web sites.

     PROVIDE EMPLOYERS WITH THE ABILITY TO EASILY ACCESS AND MANAGE ONLINE
RECRUITING. CareerBuilder enables an employer, using a single point of access,
to post job advertisements across their choice of sites on the CareerBuilder
Network and receive resumes from interested job seekers. CareerBuilder
facilitates management of the recruiting process by enabling employers to
measure their online recruiting efforts by tracking the number of times a job
advertisement is viewed, the number of resumes received for each job
advertisement and the quantity and quality of the resumes received.
CareerBuilder also provides internal workflow and resume management
capabilities.

     PROVIDE JOB SEEKERS WITH THE ABILITY TO EASILY RESEARCH, FIND, COMPARE AND
APPLY FOR JOBS. Using Mega Job-Search(SM), job seekers can search for over 50
career sites across the Internet, including CareerBuilder.com, each of the other
career sites in the CareerBuilder Network, as well as many other major internet
job posting sites. Job seekers can search possible job opportunities based on a
set of job characteristics that they establish and can then easily send in
their resumes electronically. Job seekers may also establish a Personal Search
Agent(SM) that reflects their profile and job search characteristics. Job
seekers with Personal Search Agents receive by email specific job postings that
match their search criteria, with electronic links to more information
regarding those positions. In addition, job seekers can manage their online job
search efforts through "my careerbuilder", enabling them to post and edit
resumes, manage up to 5 Personal Search Agents, and automatically keep abreast
of key information and news concerning potential employers and other employment
information.





                                        3

<PAGE>   4
PRODUCTS AND SERVICES

     THE CAREERBUILDER NETWORK. The CareerBuilder Network consists of
CareerBuilder.com, the Company's flagship career site, and career sites located
on the Internet sites of 25 premier interactive media companies, including
Microsoft MSN, Bloomberg.com, CitySearch, USA Today and NBC Interactive. Through
the use of the CareerBuilder Network, an employer can directly solicit and
target job seekers in a broad range of online communities. Employers can
directly access the CareerBuilder Network, through their browser, to post job
advertisements and manage their online recruiting efforts.

     JOB POSTINGS. Employer customers generally access the CareerBuilder
offerings through multi-month subscriptions. Each subscription enables a
customer to post a set number of job postings across the CareerBuilder Network.
The customer can determine, for each job posted, which sites on the
CareerBuilder Network best target the job seekers for that job. Customers
typically subscribe for three-, six- or twelve-month subscriptions. Customers
may also subscribe on an individual posting basis. For the year ended December
31, 1999, approximately 94% of CareerBuilder's revenue was derived from
multiple-month subscriptions and approximately 6% of CareerBuilder's revenue
was derived from individual postings.

     ADVERTISING. CareerBuilder also offers employer customers the ability to
advertise their recruitment efforts through banner advertising programs. These
programs include:

     -   Regional, national and "Hot Company" advertising on CareerBuilder.com

     -   Bullseye(TM) and Pinpoint(TM) banner advertisements, enabling customers
         to more ably target key job seeker profiles on CareerBuilder.com,
         across the CareerBuilder Network and on selected other Internet web
         sites.

     CAREERBUILDER NETWORK AFFILIATE PARTNERS. By becoming part of the
CareerBuilder Network, major interactive media companies can provide a
complete, branded career service to their online customers without having to
build and maintain their own career site and job advertising engines. This
capability enables major interactive media companies to take advantage of
CareerBuilder's established customer base and sales channels and create a new
source of revenue. Using proprietary technology, CareerBuilder can quickly
build a private label career site for an interactive media partner, seamlessly
integrated with that of the interactive media organization's existing web site,
including its "look and feel." CareerBuilder hosts the sites and provides and
maintains the search engine and other technological features of the sites, as
well as providing customer support. The sites are also located on servers
operated by CareerBuilder. Each site is integrated into the CareerBuilder
Network and employers can readily advertise job openings on any site on the
CareerBuilder Network. Employers can immediately access information on the
demographics of the community of users of each site on the CareerBuilder
Network, which helps employers plan where to advertise their job openings.
Employers are also able to quickly measure the response to each job
advertisement, which enables employers to continually refine their recruiting
efforts to more selectively reach their intended audience and generate better
responses. The CareerBuilder Network consists of:


blackenterprise.com                     MarketingClick
Bloomberg.com                           MediaCentral
Business Week ONLINE                    Microsoft Network (MSN)
CareerBuilder.com                       NBC Interactive
Career Engine                           PDR.net Career Pulse
citysearch.com                          Questlink EE Design Center
ComputerJobs.com                        r-dental.com
The Dallas Morning News                 TelecomWeb Career Center
EDN Access                              Test & Measurement World Online
e-inSite.com                            USATODAY.com
HISPANIC Online                         WETA Online
Internet.com                            WomenCONNECT.com
ITcareers.com










                                        4
<PAGE>   5
CareerBuilder also has a contractual arrangement with Yahoo! which provides
for companies' job advertisements placed on CareerBuilder.com to automatically
appear on Yahoo! This provides more exposure for these job advertisements. No
fees are paid by, or charged by, CareerBuilder or Yahoo! for this arrangement
and CareerBuilder does not currently view the arrangement as material. The
agreement between CareerBuilder and Yahoo! has a one year term. For an
additional fee paid by customers, job advertisements can also appear on
CareerMosaic.

JOB SEEKER PRODUCTS AND SERVICES

     MEGA JOB-SEARCH(SM). CareerBuilder's Mega Job-Search enables job seekers
to search, based on their specific defined job characteristics, over 50 career
sites across the Internet, not only CareerBuilder.com and the CareerBuilder
Network, but other major job posting sites.

     MY CAREERBUILDER. Introduced in February 2000, "my careerbuilder"(SM)
provides job seekers with a customized place to search for and manage
activities in support of finding jobs. Features include up to 5 Job Search
Profiles, with optional e-mail alerts, ability to file favorite postings to act
on later, and daily news feeds with career news related to their selected
industry.

     CAREERBUILDER'S TOTAL CUSTOMER CARE ORGANIZATION. CareerBuilder's total
customer care organization helps new CareerBuilder customers establish their
online recruiting programs by assisting them in organizing, planning and
placing their job advertisements. This organization regularly contacts
customers to help them integrate CareerBuilder's offerings into their
recruiting efforts and also provides technical support. For an additional fee,
the total customer care organization offers customers assistance in designing
and enhancing their online recruiting strategies as well as assisting them with
advertising specific job openings.

TECHNOLOGY

     CareerBuilder believes that one of its principal strengths is the
proprietary technology it has developed and deployed in its product and service
offerings, and that the investments it has made and plans to make in its
technologies result in a superior solution for its customers.

     The key architectural components of the CareerBuilder offering, including
the CareerBuilder Network, the Personal Search Agent and Mega Job-Search, are
proprietary to CareerBuilder. These components employ an object-oriented design
and implementation methodology that can be quickly and efficiently upgraded to
deliver new features and functionality. CareerBuilder implements code in a wide
variety of languages and technologies, including C++, Java, Java Script, HTML,
DHTML and XML. The core of the components is a modern SQL compliant database
architecture, with extensive use of a text search engine. As newer alternative
languages and technologies become available, each is evaluated for suitability
and employed where appropriate. CareerBuilder's components use a proprietary
scripting language to rapidly develop templates that enable dynamic content
replacement in the web pages that comprise much of the job advertisement and job
search applications. This scripting language enables efficient access to
databases, text search engines, operating system structures and compiled-code
constructs and provides a powerful and extensible programming language for
extending the functionality of CareerBuilder's offerings. Further, the
Personal Search Agent (SM) automatically locates preferred jobs, notifies the
candidate of matches via confidential e-mail, and offers the job seeker the
ability to follow up by providing a direct link to the employer's posting.
CareerBuilder's distributed system architecture maximizes the interconnectivity
of the Web, providing powerful and effective recruiting solutions.

     On November 9, 1999, CareerBuilder was awarded a patent for the Company's
unique interactive recruiting business methods. CareerBuilder's patented system
permits employers to easily post job openings and efficiently receive and
organize resumes from qualified candidates.

CUSTOMERS

     At December 31, 1999, CareerBuilder's customer base included approximately
1,300 subscriber customers in industries such as technology, financial services,
health care, professional services, retail and telecommunications/
communications. The following table lists the Company's top 10 subscriber
customers for the year ended December 31, 1999. Each of the companies represents
less than 1% of the total operating revenue for the fiscal year.



                                        5

<PAGE>   6

     Top 10 Customers as a % of Revenue (listed alphabetically)

     Bell Atlantic Network Integration
     Bristol-Myers Squibb Company
     Cable & Wireless Communications plc
     Deloitte & Touche LLP
     Edward Jones Inc.
     Microsoft Corporation
     PricewaterhouseCoopers LLP
     Putnam Mutual Funds Corp.
     Stop & Shop Supermarket Co.
     Tricon Global Restaurants, Inc.

SALES, MARKETING AND BUSINESS DEVELOPMENT

     SALES. CareerBuilder sells its offerings in the United States through a
sales and marketing organization which consisted of 115 employees at December
31, 1999. These employees are located at CareerBuilder's headquarters in
Reston, Virginia, and in CareerBuilder's offices in Atlanta, Boston, Chicago,
Dallas, Houston, Los Angeles, New York, San Francisco and Seattle. The sales
organization is divided into three dedicated groups:

     -  a direct sales force which focuses on employer customers with more
        than 500 employees

     -  a telesales force which focuses on employer customers with under
        100 employees, and on customers in geographies not actively
        addressed by the direct sales force; and

     -  a channel sales force that currently supports ADP's CareerBuilder
        sales efforts across the United States, which is generally focused
        on customers with 100 to 1,000 employees, (see ADP Relationship
        below).

     MARKETING. To support and actively promote the CareerBuilder.com and
CareerBuilder Network brands among Internet users and particularly online job
seekers, and to support its direct and ADP sales efforts, CareerBuilder
conducts comprehensive marketing programs. These programs include public
relations, targeted television advertising, local radio advertising, targeted
and national online advertising, online recruiting seminars, print advertising,
trade shows and customer communication programs.

     BUSINESS DEVELOPMENT. CareerBuilder 's business development group
identifies, evaluates and recruits appropriate interactive media companies as
affiliate members of the CareerBuilder Network. The business development group
establishes key categories of affiliates, based on the recruiting needs of
CareerBuilder's customers, and focuses on soliciting leading interactive media
companies in each category.

ADP RELATIONSHIP

     In January 1998, CareerBuilder and ADP, Inc. ("ADP") entered into a joint
marketing and sales representative agreement. ADP is a provider of payroll
processing and other human resource services. CareerBuilder and ADP amended this
agreement in March 1999. The amended agreement provides for ADP to market
CareerBuilder's services to ADP's customers using ADP's approximately
500-person Major Accounts Division direct sales force. CareerBuilder and ADP
introduced CareerBuilder's products to this sales force between April and
September 1998. Sales of CareerBuilder's services by ADP accounted for
approximately 38% of CareerBuilder's total revenue for the year ended December
31, 1999, up from 11% for the year ended December 31, 1998. Based on
CareerBuilder's current revenues, the agreement provides for sales commissions
to ADP ranging from 33 1/3% to 50% of revenue generated by a customer for which
ADP acted as a sales agent. The agreement generally prohibits ADP's Employer
Services Division, during the term of the agreement, from entering into any new
joint marketing, reseller, distribution or other arrangement with another
provider of Internet recruitment offerings which offers products or services
similar to CareerBuilder's offerings in the United States or Canada. However,
under the terms of this agreement, if ADP determines that the CareerBuilder's
offerings have material inadequacies that reduce their ability to perform
competitively in relation to other online recruiting products, CareerBuilder
must correct the deficiencies specified by ADP or



                                        6

<PAGE>   7

ADP is free to market alternative online recruitment services, including those
of CareerBuilder's competitors, during the term of the agreement. This agreement
also generally provides that, during the term of the agreement, CareerBuilder
will not enter into any new reseller, distribution or similar agreement with any
provider of human resource information systems which offers payroll software or
payroll processing services similar to those offered by ADP to sell
CareerBuilder's online recruiting offerings in the United States or Canada, or
with another payroll or benefits administration provider. The ADP agreement may
be terminated by ADP at any time after January 23, 2002 upon at least 120 days
notice.

     In connection with the execution of the joint marketing and sales
representative agreement and its amendment and the sale of shares of Series D
preferred stock to ADP, the Company issued a warrant to ADP, which vests in
three installments. The first installment of 380,000 shares vested at the
signing of the amendment. The exercise price of the first installment is $12.00
per share. Warrants for the second and third installments of up to 380,000
shares of common stock each will vest based on ADP achieving specified
revenue-based milestones. The revenue-based milestones are measured for a
specific time period, by subtracting from total revenue received from customers
for which ADP has acted as sales agent, sales commissions paid to ADP. In order
for the minimum number of shares under the March 2001 installment of the
warrant to vest, the milestone of revenue minus sales commissions for the
period from April 1, 2000 through March 31,2001 must exceed $10.2 million, with
$20.4 million required for the maximum number of shares issuable under the
installment to vest. In order for the minimum number of shares under the March
2002 installment to vest, the milestone of revenue minus sales commissions for
the period from April 1, 2001 through March 31,2002 must exceed $23.0 million,
with $30.0 million required for the maximum number of shares issuable under the
installment to vest. The exercise price for the second and third installments
is $5.00 per share. The ADP warrant contains antidilution provisions that
increase the number of shares for which the warrant is exercisable if the
Company issues additional equity securities primarily for financing purposes.
Each remaining installment of the warrant may be issuable upon exercise for a
maximum of 516,824 shares based on current antidilution calculations. The
number of shares of Common Stock issuable upon exercise of the warrant may
increase up to a maximum of 568,506 shares for each of the second and third
installments as a result of these antidilution provisions. The first, second
and third installments are each exercisable, to the extent vested, during the
five-year period following March 4, 1999, March 31, 2001 and March 31, 2002,
respectively. As the ADP warrant vests, CareerBuilder may be required to record
significant expenses. See Note 8 of Notes to Financial Statements.

COMPETITION

     CareerBuilder competes with companies, including recruiting search firms,
that offer a single database "job board" solution, such as Monster.com and
Hotjobs.com, as well as newspapers, magazines and other traditional media
companies that provide online job search services, such as CareerPath.com.
CareerBuilder also competes with large Internet information hubs, or portals,
such as AOL.com. CareerBuilder may experience competition from potential
customers to the extent that they develop their own online recruitment solutions
internally. In addition, CareerBuilder competes with traditional recruiting
services, such as newspapers and employee recruiting agencies, for a share of
employers' total recruiting budgets. CareerBuilder expects to face additional
competition as other established and emerging companies, including print media
companies and employee recruiting agencies with established brands, enter the
online recruitment market.

     Many of CareerBuilder's current and potential competitors have longer
operating histories, significantly greater financial, technical, marketing and
other resources, greater brand recognition and a larger installed customer base
than CareerBuilder does. In addition, current and potential competitors may make
strategic acquisitions or establish cooperative relationships to expand their
offerings and to offer more comprehensive solutions.

     CareerBuilder believes that there will be rapid business consolidation in
the online recruitment industry. Accordingly, competitors may rapidly acquire
significant market share. In addition, new technologies will likely increase the
competitive pressures that CareerBuilder faces. The development of competing
technologies by market participants or the emergence of new industry standards
may adversely affect CareerBuilder's competitive position. As a result of these
and other factors, if CareerBuilder is not able to compete effectively with
current or future competitors, its business, results of operations and financial
condition could be materially and adversely affected.

     Although CareerBuilder believes it competes favorably in the online
recruitment market, the online recruitment market is intensely competitive and a
number of factors could adversely affect CareerBuilder's ability to compete in
the future, including those identified in "Management's Discussion and Analysis
of Financial Condition and Results of Operations - Certain Factors That May
Affect Future Results."



                                        7

<PAGE>   8

PROPRIETARY RIGHTS

     CareerBuilder relies upon a combination of copyright, patent, trade secret
and trademark laws, and non-disclosure and other contractual arrangements to
protect its proprietary rights. CareerBuilder holds a patent for its interactive
recruiting business methods. There can be no assurance that the steps
CareerBuilder has taken to protect its proprietary rights, however, will be
adequate to deter misappropriation of proprietary information, and CareerBuilder
may not be able to detect unauthorized use and take appropriate steps to enforce
its intellectual property rights. Although CareerBuilder believes that its
products and services do not infringe upon the intellectual property rights of
others and that it has all rights necessary to utilize the intellectual property
employed in its business, CareerBuilder is subject to the risk of claims
alleging infringement of third-party intellectual property rights. Any such
claims could require CareerBuilder to spend significant sums on litigation, pay
damages, delay product installments, develop non-infringing intellectual
property or acquire licenses to intellectual property that is the subject of any
such infringement. Therefore, such claims could have a material adverse effect
on CareerBuilder's business, operating results and financial condition.

EMPLOYEES

     At December 31, 1999, CareerBuilder had a total of 179 employees. Of these
employees, 115 were involved in sales, marketing and business development, 38
were involved in technical support and engineering and 26 were involved in
finance, administration and corporate operations. None of CareerBuilder's
employees is represented by a labor union. CareerBuilder has not experienced any
work stoppages and considers relations with its employees to be good.

ITEM 2.  PROPERTIES

     CareerBuilder currently leases approximately 52,000 square feet of space at
its headquarters in Reston, Virginia. This lease expires in February 2008.
CareerBuilder also maintains field sales offices in Atlanta, Boston, Chicago,
Dallas, Houston, Los Angeles, New York, San Francisco and Seattle.

     CareerBuilder contracts with Global Center to host its communications
hardware and other computer hardware operations that maintain the CareerBuilder
Network. Global Center provides site hosting, systems management, network
optimization, and environmental security consistent with accepted standards for
high availability around-the-clock data center operations.

ITEM 3.  LEGAL PROCEEDINGS

     CareerBuilder is not a party to any material legal proceedings.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      No matters were submitted to a vote of security holders during the fourth
quarter of the year ended December 31, 1999.



                                        8

<PAGE>   9

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

PRICE RANGE OF COMMON STOCK
     Since May 12, 1999, the Company's Common Stock has been traded on the
Nasdaq National Market under the symbol "CBDR". The following table sets forth,
for the periods indicated, the high and low sales prices of the Common Stock
since commencement of trading, as reported on the Nasdaq National Market.

                                                 HIGH PRICE       LOW PRICE
                                                 ----------       ---------
PERIOD ENDED DECEMBER 31, 1999
  Second Quarter                                     $16.00          $10.38
  Third Quarter                                       16.50            6.25
  Fourth Quarter                                       9.25            5.63

HOLDERS OF RECORD

     As of March 20, 2000, there were approximately 4,111 holders of record of
Common Stock.

DIVIDEND POLICY

     The Company has never paid dividends on the Common Stock and does not
expect to declare any dividends on the Common Stock in the foreseeable future.
The Company currently intends to retain earnings, if any, to fund the
development and growth of its business. The terms of the Company's revolving
credit agreement restrict its ability to declare and pay dividends.

RECENT SALES OF UNREGISTERED SECURITIES

     In January 1999, the Company sold 2,018,350 shares of Class F Convertible
Preferred Stock to new & existing investors for approximately $10,986,000. All
of the shares of Class F Convertible Preferred Stock automatically converted
into Common Stock at the closing of the Company's initial public offering.

     In March 1999, in connection with an agreement with NBC, the Company issued
a warrant to purchase 93,750 shares of Common Stock at an exercise price of
$8.00 per share and a warrant to purchase 53,571 shares of Common Stock at an
exercise price of $14.00 per share.

     On May 4, 1999, the Company issued 1,372,817 shares of Common Stock to
Microsoft Corporation for an aggregate purchase price of approximately $17.8
million. In addition, for no additional cash consideration, the Company issued a
warrant to Microsoft representing the right to purchase 873,534 shares of Common
Stock at an exercise price of $13 per share.

      Between April 1, 1999 and May 11, 1999, the Company issued 23,990 shares
of Common Stock pursuant to option exercises for aggregate proceeds of
approximately $5,000.

      The securities issued in the foregoing transactions were (i) offered and
sold in reliance upon exemptions from Securities Act registration set forth in
Section 3(b) and 4(2) of the Securities Act, or any regulations promulgated
thereunder, or (ii) with respect to sales by an issuer upon the exercise of
options, sold in reliance upon an exemption from registration under Rule 701
of the Securities Act. No underwriters were involved in the foregoing sales of
securities.

USE OF PROCEEDS

     On May 17, 1999, the Company closed an initial public offering of
Common Stock (the "Offering"). The Registration Statement on Form S-1 (No.
333-73469) was declared effective by the Securities and Exchange Commission on
May 11, 1999 and the Company commenced the Offering on that date.

     After deducting the underwriting discounts and commissions and the
Offering expenses, the net proceeds to the Company from the Offering were
approximately $61.4 million.

     As of December 31, 1999, approximately (i) $1,400,000 of the net proceeds
of the Offering had been used to pay expenses incurred in connection with the
Offering, (ii) $2,300,000 of the net proceeds had been used to pay all of the
principal and accrued interest on a note payable to PNC Bank in connection with
a bridge loan and (iii) $2,000,000 of the net proceeds had been used to
purchase property and equipment. The remainder of the net proceeds of the
Offering have been invested in short-term, interest-bearing, investment grade
securities. The entire amount of the net proceeds has been allocated for
working capital and general corporate purposes. None of the proceed amounts
were paid directly or indirectly to any director, officer, or general partner
of the Company or its associates, persons owning 10 percent or more of any
class of equity Securities of the Company, or affiliate of the Company.





                                        9

<PAGE>   10

ITEM 6.  SELECTED FINANCIAL DATA

     The selected financial data set forth below are derived from, and are
qualified by reference to the audited Financial Statements of the Company and
the related notes thereto, and should be read in conjunction therewith and with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".

<TABLE>
<CAPTION>
                                         PERIOD FROM
                                         INCEPTION
                                      (NOVEMBER 1995)                   YEAR ENDED DECEMBER 31,
                                           THROUGH                      -----------------------
                                     DECEMBER 31, 1995     1996           1997            1998             1999
                                     -----------------     ----           ----            ----             ----
                                                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                   <C>              <C>             <C>             <C>             <C>
STATEMENT OF OPERATIONS
  DATA:
Revenue:
  Service fees ..................      $      --        $     94        $  1,263        $  6,648        $ 14,822
  Software license fees .........             --              44             662             358              86
                                        --------        --------        --------        --------        --------
    Total revenue ...............             --             138           1,925           7,006          14,908
Cost of revenue:
  Service fees ..................             --              30             197           1,629           6,664
  Software license fees .........             --               6             120              62              23
                                        --------        --------        --------        --------        --------
    Total cost of revenue .......             --              36             317           1,691           6,687
                                        --------        --------        --------        --------        --------
Gross profit ....................             --             102           1,608           5,315           8,221
                                        --------        --------        --------        --------        --------
Operating expenses:
  Product development ...........             --             521           1,310           2,293           2,307
  General and administrative ....             52             663           1,267           2,305           3,806
  Sales and marketing (excluding
    equity-based expense)........             --           1,330           6,452          12,735          25,458
  Equity-based expense ..........             --              --              --              --           2,710
                                        --------        --------        --------        --------        --------
    Total operating expenses ....             52           2,514           9,029          17,333          34,281
                                        --------        --------        --------        --------        --------
Income (loss) from operations ...            (52)         (2,412)         (7,421)        (12,018)        (26,060)
Net interest income (expense) ...             --              (4)            107              31           2,072
                                        --------        --------        --------        --------        --------
Net income (loss) ...............            (52)         (2,416)         (7,314)        (11,987)        (23,988)
                                        --------        --------        --------        --------        --------
Preferred stock dividend
  requirements ..................             --             (71)           (549)         (1,128)           (737)
                                        --------        --------        --------        --------        --------
Net income (loss) available to
  common stockholders ...........       $    (52)       $ (2,487)       $ (7,863)       $(13,115)       $(24,725)
                                        ========        ========        ========        ========        ========
Basic and diluted net income
  (loss) available per share ....       $  (0.01)       $  (0.48)       $  (1.80)       $  (2.92)       $  (1.48)
Shares used to compute basic and
  diluted net income (loss)
  available per share ...........          5,468           5,133           4,366           4,494          16,712
Unaudited pro forma basic and
  diluted net income (loss) per
  share .........................                                                       $  (0.87)       $  (1.14)
Shares used to compute unaudited
  pro forma basic and diluted net
  income (loss) per share .......                                                         13,850          20,991
</TABLE>

<TABLE>
<CAPTION>
                                                                       DECEMBER 31,
                                                                       ------------
                                                1995         1996          1997           1998           1999
                                            -----------   ----------    ----------     -----------    ---------
                                                                      (IN THOUSANDS)
<S>                                        <C>           <C>         <C>              <C>           <C>
BALANCE SHEET DATA (END OF PERIOD)
Cash and cash equivalents ............       $   454       $    82     $    1,909       $  2,709      $  63,589
Working capital (deficit) ............           454          (520)          (131)        (3,899)        60,277
Total assets .........................           475           371          3,589          6,042         72,528
Convertible redeemable preferred stock            --         2,135         10,700         18,931            ---
Stockholders' equity (deficit) .......           475        (2,440)        (9,752)       (21,520)        65,099
</TABLE>



                                       10

<PAGE>   11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

THE FOLLOWING DISCUSSION AND ANALYSIS OF THE COMPANY'S FINANCIAL CONDITION AND
RESULTS OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH "SELECTED FINANCIAL
DATA" AND THE COMPANY'S FINANCIAL STATEMENTS AND NOTES THERETO APPEARING
ELSEWHERE IN THIS ANNUAL REPORT. THIS DISCUSSION AND ANALYSIS CONTAINS
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS, UNCERTAINTIES AND ASSUMPTIONS.
THE COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE ANTICIPATED IN
THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE
SET FORTH UNDER "CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS" AND ELSEWHERE
IN THIS ANNUAL REPORT.

OVERVIEW

         CareerBuilder, Inc. ("CareerBuilder" or "the Company") provides
comprehensive online recruitment offerings for employers, major media companies
and job seekers. CareerBuilder was founded in November 1995 and has grown from 7
employees at June 30, 1996 to 179 employees at December 31, 1999. During the
period from inception in November 1995 to September 1996, CareerBuilder had
insignificant revenue and was primarily engaged in developing online recruiting
technology, specifically TeamBuilder Software and the CareerBuilder.com career
site. During July and August of 1996, CareerBuilder expanded its operations by
adding direct sales and marketing personnel. CareerBuilder's sales commenced in
September 1996. CareerBuilder began generating more significant revenue in the
fourth quarter of 1996 through the sale of perpetual licenses for TeamBuilder
Software and through customer service fees for monthly subscriptions. In May
1998, CareerBuilder launched the CareerBuilder Network by hosting the career
sites located on the Internet sites of interactive media companies.

         The Company completed its initial public offering of 5,075,000 shares
of Common Stock, including 675,000 shares from the exercise of the
underwriters' over-allotment option, at a price of $13.00 per share on May 17,
1999, and received net proceeds (after expenses of the offering) of
approximately $60 million. In addition, on May 4, 1999 CareerBuilder entered
into a service and distribution agreement with Microsoft. As part of this
transaction, CareerBuilder agreed to provide career sites for the Microsoft
Network. These career sites have become members of the CareerBuilder Network.
Microsoft purchased 1,372,817 shares of CareerBuilder's Common Stock for an
aggregate purchase price of approximately $17.8 million, or $13.00 per share.
In addition, for no additional cash consideration, CareerBuilder issued a
warrant to Microsoft representing the right to purchase 873,534 shares of
Common Stock with an exercise price of $13.00 per share. The warrant is
immediately exercisable in full. CareerBuilder recognized approximately $2.0
million of expense related to the Microsoft warrant in 1999 and expects to
recognize approximately $3.8 million of expense related to the warrant ratably
in 2000 and 2001, reflecting the term of the strategic agreement. The net
proceeds of approximately $77.8 million from both the initial public offering
and the Microsoft investment were added to the working capital of the Company.
The Company has invested such funds in short-term, interest bearing investment
grade obligations.

         CareerBuilder's revenue is derived principally from service fees and,
to a much lesser extent, license fees for TeamBuilder Software. In 1999, service
fees accounted for more than 99% of total revenue. Service fees include
subscription fees, advertising fees, recruiting services fees and individual
posting fees.

         Subscription Fees. Customers typically subscribe for three-, six- or
twelve- month subscriptions for multiple job postings. Customers may also
subscribe on an individual posting basis for a one month period. The
subscription fees are recognized ratably over the subscription period. For the
year ended December 31, 1999, approximately 94% of CareerBuilder revenue was
derived from multiple-month subscriptions and approximately 6% of CareerBuilder
revenue was derived from individual postings.

         Advertising Fees. CareerBuilder derives revenue from delivering banner
and other employment advertising on CareerBuilder.com, as well as selected
other sites in the CareerBuilder Network. Revenue from advertising is
recognized when the advertising impressions are delivered.

         Recruiting Services Fees. CareerBuilder provides recruiting services,
such as initial set up help and job posting assistance, to their customers.
Customers have the option of electing to receive recruiting service set-up
assistance for a modest fee. If additional recruiting services are elected,
such fees are generally recognized at the time the service is performed.

         Customers can post job advertisements on CareerBuilder.com as well as
the career sites of the members of the CareerBuilder Network. The members of the
CareerBuilder Network receive a portion of the subscription fee from customers
that choose to post job advertisements on their respective career sites. The
portion of the subscription fee paid to members of the CareerBuilder Network is
included in cost of revenue. In addition, CareerBuilder pays fees, including
advertising and marketing fees, to three current CareerBuilder Network members.

         CareerBuilder is party to a joint marketing and sales representative
agreement with Automatic Data Processing, Inc. ("ADP"). Pursuant to the joint
marketing and sales representative agreement, ADP receives a percentage of the
total monthly revenue received by CareerBuilder from orders procured by ADP.
This sales commission fee is included in CareerBuilder's cost of revenue and
ranges from 33% to 50%. The sales commission fee as a percentage of service fee
revenue varies based on the relative job posting activity of these customers
between CareerBuilder.com and the other sites on the CareerBuilder Network.
CareerBuilder recognizes all of the revenue derived from the ADP sales channel.
ADP is generally responsible for billing and collecting from these customers on
CareerBuilder's behalf. Revenue from orders procured by ADP accounted for
approximately 38% of CareerBuilder's total revenue for 1999.



                                       11

<PAGE>   12
        CareerBuilder's cost of revenue as a percentage of total revenue has
increased in 1999 relative to 1998. This increase primarily resulted from two
factors:

     -  an increase in sales commissions paid to ADP due to increased ADP
        revenue; and

     -  an increase in fees paid to members of the CareerBuilder Network due to
        network revenue growth.

         In connection with the execution of the joint marketing and sales
representative agreement and its amendment and the sale of shares of Series D
preferred stock to ADP, CareerBuilder issued a warrant to ADP, which vests in
three installments. The first installment of 380,000 shares vested at the
signing of the amendment. In addition, if and when ADP achieves specified
revenue milestones, CareerBuilder could incur additional equity-based expenses
that could be substantial. For more information regarding the ADP warrant and
these potential expenses, see "Certain Factors That May Affect Future Results -
We could be required to record significant expenses if ADP achieves revenue
goals." In addition to the ADP and Microsoft warrants, CareerBuilder also issued
two warrants representing the right to purchase up to an aggregate of 147,321
shares of Common Stock in connection with an agreement with NBC Multimedia,
Inc., an affiliate member of the CareerBuilder Network. CareerBuilder recognized
approximately $2.7 million of expense related to the ADP, NBC, and Microsoft
warrants in 1999 and expects to recognize approximately $5.5 million of expense
related to these warrants between 2000 and 2002, ratably, based on the duration
of these agreements.

         Under its service and distribution agreement with Microsoft,
CareerBuilder may be required to pay Microsoft up to $3.0 million in 2000 and up
to $1.8 million in 2001 if Microsoft achieves agreed upon web site traffic
goals. The Microsoft career site was launched in late September 1999 and as of
December 31, 1999, approximately $293,000 in fees due Microsoft had been
incurred and $78,000 had been paid.

         CareerBuilder has incurred substantial net losses in every fiscal
period since its inception in November 1995, and as of December 31, 1999 had an
accumulated deficit of $45.8 million. Such net losses and the accumulated
deficit resulted from CareerBuilder's significant costs incurred in developing
and marketing its online recruitment offerings, including establishing the
CareerBuilder Network.



                                       12

<PAGE>   13

1999 COMPARED TO 1998

REVENUE

         CareerBuilder total revenue increased 113%, from $7.0 million for 1998
to $14.9 million for 1999. The increase in total revenue was primarily due to an
increase in the number of customers subscribing to the CareerBuilder Network as
a result of increased direct and telesales efforts and increased marketing and
promotional activities, as well as an increase in the average revenue per
customer. Revenue for which ADP acted as sales agent comprised 11% of total
revenue for 1998 and 38% for 1999.



COST OF REVENUE

         Cost of revenue consists of commissions paid to ADP for its sales of
CareerBuilder's online recruitment offerings, fees paid to CareerBuilder Network
affiliates, and expense associated with the cost of hosting the career sites on
the CareerBuilder Network, including depreciation. Cost of revenue also includes
expenses associated with customer support and the delivery of professional
services. Cost of revenue increased 295% from $1.7 million for 1998 to $6.7
million for 1999 and as a percentage of total revenue increased from 24% for
1998 to 45% for 1999. These increases were primarily due to commissions paid to
ADP, fees paid to the members of the CareerBuilder Network, and expenses
associated with customer support and network operations, which included costs
associated with the expansion of customer service and recruiting services
provided by CareerBuilder for its customers, and expenses including
depreciation, associated with hosting the career sites on the CareerBuilder
Network. Prior to June 30, 1998, CareerBuilder did not pay any significant
sales commission fees to ADP or service fees to the CareerBuilder Network
affiliates. CareerBuilder anticipates that cost of revenue will continue to
increase in absolute dollars as revenues increase. Growth in cost of revenue as
a percentage of total revenue will be dependent on the growth of revenue from
ADP relative to total revenue and the growth in jobs posted on affiliate sites
in the CareerBuilder Network relative to those posted on CareerBuilder.com.

OPERATING EXPENSES

         Sales and Marketing. Sales and marketing expenses consist primarily of
salaries and related benefits for sales and marketing personnel, advertising and
promotional expenses, trade show expenses, advertising and marketing fees paid
to members of the CareerBuilder Network and depreciation expense on sales and
marketing related assets. Sales and marketing expenses increased 100% from $12.7
million for 1998 to $25.5 million for 1999. The increase in sales and marketing
expenses for 1999 was primarily due to an increase in costs related to the
development of CareerBuilder's marketing and branding campaigns, hiring
additional sales and marketing personnel, the establishment and growth of a
channel sales force that supports ADP's sales effort, and, to a lesser extent,
sales commissions associated with the increase in revenue. CareerBuilder also
incurred expenses for advertising fees to CareerBuilder Network affiliates in
1999 amounting to approximately $3.0 million compared to $872,000 in 1998.
CareerBuilder expects sales and marketing expenses to increase in 2000 in
absolute dollars but decrease as a percentage of total revenue as CareerBuilder
hires additional personnel, continues to promote its CareerBuilder.com brand and
adds affiliates to the CareerBuilder Network.

         Product Development. Product development expenses include expenses for
research, design and development of CareerBuilder's proprietary technology
incorporated in the CareerBuilder Network offerings, and expenses associated
with operating the CareerBuilder Network. Product development expenses were
unchanged from $2.3 million for 1998 and 1999. CareerBuilder believes that
continued investment in the CareerBuilder Network and its associated network
infrastructure is critical to attaining its strategic objectives, and as a
result, expects product development expenses in 2000 to increase in absolute
dollars but to decrease as a percentage of total revenue.

         General and Administrative. General and administrative expenses consist
primarily of compensation for administrative and executive staff, fees for
professional services, bad debt expense, depreciation expense for property and
equipment not associated with hosting career sites and general office expenses.
General and administrative expenses increased 65% from $2.3 million for the 1998
to $3.8 million for 1999. The increase in general and administrative expenses
was due primarily to the costs associated with developing the infrastructure
necessary for supporting a public company such as directors and officers
insurance, increased legal fees and an increase in administrative and executive
personnel. CareerBuilder expects general and administrative expenses to increase
in absolute dollars but decrease as a percentage of total revenue in 2000 as
CareerBuilder hires additional personnel and incurs additional costs related to
the growth of its business and with being a public company.





                                       13

<PAGE>   14

EQUITY-BASED EXPENSE

         Equity-based expense of $2.7 million for 1999 consists of expenses
related to the issuance of warrants to Microsoft in May 1999 and ADP and NBC in
March 1999. There was no equity based expense for 1998.

NET INTEREST INCOME (EXPENSE)

         Net interest income (expense) was approximately $31,000 for 1998 and
$2.1 million for 1999. Interest income was attributable to cash, cash
equivalents and short-term investments primarily attributable to the net
proceeds received by CareerBuilder from its initial public offering of Common
Stock and from the Microsoft investment in May 1999, net of interest expenses
primarily from CareerBuilder's lines of credit that were paid off in May and
June of 1999.

TAXES
         CareerBuilder has incurred significant operating losses for all periods
from its inception in November 1995 through December 31, 1999. CareerBuilder has
recorded a valuation allowance for 100% of its net deferred tax assets as the
future realization of the tax benefit is not sufficiently assured. Accordingly,
no income tax benefits have been recognized in any periods. Due to the Company's
recent initial public offering, a change in control under section 382 of the
Internal Revenue Code of 1986, as amended, has occurred. The change in control
has occurred, it will limit the amount of net operating loss that the Company
will be able to carry forward and potentially utilize.

1998 COMPARED TO 1997

REVENUE

         CareerBuilder's total revenue increased 264% from $1.9 million in 1997
to $7.0 million in 1998. The increase in total revenue was primarily due to an
increase in the number of customers subscribing to the CareerBuilder Network as
a result of increased direct and telesales efforts and increased marketing and
promotional activities. This increase was also attributable, in part, to the
fact that, during 1998, ADP began marketing CareerBuilder services to ADP's
customers. Revenue derived from ADP's efforts comprised 11% of total revenue in
1998.

COST OF REVENUE

         Cost of revenue consists of commissions paid to ADP for its sales of
CareerBuilder's online recruitment offerings, fees paid to CareerBuilder Network
affiliates, and expense associated with the cost of hosting the career sites on
the CareerBuilder Network, including depreciation. Cost of revenue also includes
expenses associated with customer support and the delivery of professional
services. Cost of revenue in absolute dollars increased 433% from $317,000 in
1997 to $1.7 million in 1998 and as a percentage of total revenue increased from
16% in 1997 to 24% in 1998. These increases were primarily due to commissions
paid to ADP, fees paid to the members of the CareerBuilder Network and expenses,
including depreciation, associated with hosting the career sites on the
CareerBuilder Network, offset in part by a decline in royalties paid to third
parties. In 1997, CareerBuilder did not pay any sales commission fees to ADP or
service fees to the CareerBuilder Network affiliates.

OPERATING EXPENSES

         Sales and Marketing. Sales and marketing expenses consist primarily of
salaries and related benefits for sales and marketing personnel, advertising and
promotional expenses, trade show expenses, advertising and marketing fees paid
to members of the CareerBuilder Network and depreciation expense. Sales and
marketing expenses increased 97% from $6.5 million in 1997 to $12.7 million in
1998. The increase in sales and marketing expenses was due primarily to an
increase in sales personnel, including the establishment of a telesales force
and a channel sales force that supports ADP's sales effort, costs related to the
continued development of CareerBuilder's marketing and branding campaigns, and,
to a lesser extent, commissions associated with higher revenue. CareerBuilder
also incurred expenses for advertising fees to CareerBuilder Network affiliates
in 1998 amounting to approximately $872,000. No advertising fees were paid to
members of the CareerBuilder Network in 1997.

         Product Development. Product development expenses include expenses for
research, design and development of CareerBuilder's proprietary technology
incorporated in the CareerBuilder Network, and expenses associated with the
operation of the CareerBuilder Network. Product development expenses increased
75% from $1.3 million in 1997 to $2.3 million in 1998. The increase in product
development expenses was due primarily to the establishment of the career sites
of the CareerBuilder Network and the substantial increase in the number of
customers utilizing the CareerBuilder Network.

         General and Administrative. General and administrative expenses consist
primarily of compensation for administrative and executive staff, fees for
professional services, bad debt expense, depreciation expense and general office
expenses. General and administrative



                                       14

<PAGE>   15

expenses increased 82% from $1.3 million in 1997 to $2.3 million in 1998. The
increase in general and administrative expenses was due primarily to the
increase in administrative and executive personnel.

NET INTEREST INCOME (EXPENSE)

     Net interest income (expense) was approximately $107,000 in 1997 and
$31,000 in 1998. Interest income was attributable to cash, cash equivalents and
short-term investments primarily attributable to the net proceeds received by
CareerBuilder from its private placement issuance of equity securities, net of
interest expenses primarily from CareerBuilder's revolving credit line.

TAXES

     CareerBuilder has incurred significant operating losses for all periods
from its inception in November 1995 through December 31, 1998. CareerBuilder has
recorded a valuation allowance for 100% of its net deferred tax assets as the
future realization of the tax benefit is not sufficiently assured.



LIQUIDITY AND CAPITAL RESOURCES

     Since its inception, CareerBuilder has financed its activities primarily
through proceeds from private placements of equity securities, and its initial
public offering, totaling approximately $107.7 million through December 31,
1999.

     Net cash used in operating activities was $5.8 million in 1997, $9.2
million in 1998 and $19.9 million in 1999. Net cash used in operating activities
resulted principally from net operating losses and increases in accounts
receivable, partially offset by increases in accounts payable and accrued
expenses.

     Net cash used in investing activities was $1.2 million in 1997, $1.1
million in 1998, and $4.7 million in 1999. Net cash used in investing activities
was primarily related to purchases of computer and network equipment, as well as
an increase in long term deposits of $1.6 million for a new building lease that
commenced on February 1, 2000. In March 2000, the Company was refunded the $1.6
million deposit plus interest and on February 8, 2000 the Company obtained a
$1.6 million letter of credit in favor of the lessor of the new building.

     Cash provided by financing activities was $8.8 million in 1997, $11.1
million in 1998 and $85.5 million for 1999. Net cash provided by financing
activities was primarily due to proceeds from its initial public offering and
private placements of equity securities. In addition, prior to June 1999,
CareerBuilder has utilized revolving credit lines secured by accounts receivable
and computer equipment to fund its operations, which the Company paid off with a
portion of the proceeds from its initial public offering and sale of Common
Stock to Microsoft.

     In December 1998, CareerBuilder entered into a $2.0 million revolving
credit facility and a $4.0 million bridge loan. The credit facility and the
bridge loan were secured by substantially all of the Company's assets, and bore
interest at a variable rate. Each of the credit facility and the bridge loan is
evidenced by a promissory note for the amount borrowed. The Company repaid both
the bridge loan and the revolving credit facility in June, 1999. The revolving
credit facility, including the remaining line of credit for $2,000,000 expired
on December 28, 1999; however, the revolving credit facility was renewed on
February 3, 2000 for 2 years.

     As of December 31, 1999, CareerBuilder had $63.6 million of cash and cash
equivalents.

     CareerBuilder anticipates it will spend up to $4.5 million for capital
equipment during 2000. CareerBuilder has also entered into agreements that
provide for CareerBuilder to pay advertising and marketing fees to three of its
current CareerBuilder Network affiliates of up to approximately $1.5 million in
2000. In addition, under its service and distribution agreement with Microsoft,
CareerBuilder may be required to pay to Microsoft up to $3.0 million in 2000 and
up to $1.8 million in 2001 if Microsoft achieves agreed upon web site traffic
goals. The Microsoft career site was launched in late September 1999;
CareerBuilder made payments to Microsoft of $78,000 in 1999.

     CareerBuilder believes its existing cash and cash equivalents will be
sufficient to meet its anticipated cash requirements for working capital and
capital expenditures for at least the next 12 months. Although CareerBuilder
currently believes that it has sufficient capital resources to meet its
anticipated working capital and capital expenditure requirements beyond the next
12 months, unanticipated events and opportunities may make it necessary for
CareerBuilder to return to the public markets, increase its current credit
facilities or establish new credit facilities or raise capital in private
transactions in order to meet its capital requirements.



                                       15

<PAGE>   16

================================================================================

YEAR  2000 DISCLOSURE

     The Company's business operations were not adversely affected by any year
2000 problems. All CareerBuilder products and services as well as critical
internal business systems were tested to ensure they were year 2000 compliant.
CareerBuilder does not presently anticipate any significant future costs related
to the year 2000 problem. The Company has developed and implemented contingency
backup plans for its internal and external systems, that the Company believes
should be adequate.  However, CareerBuilder believes that it is not possible to
determine with complete certainty that all year 2000 problems affecting the
Company have been identified or corrected. No assurances can be made that the
Company's backup plans would be adequate should an unexpected year 2000 problem
occur.



                                       16

<PAGE>   17

                 CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

WE ARE A YOUNG COMPANY SO WE HAVE ONLY A LIMITED OPERATING HISTORY WITH WHICH
YOU CAN EVALUATE OUR BUSINESS AND PROSPECTS

     We commenced operations in November of 1995, recorded our first revenue in
the third quarter of 1996 and introduced the first commercial version of
TeamBuilder Online in November 1997. Accordingly, we have only a limited
operating history with which you can evaluate our business and prospects. In
addition, our prospects must be considered in light of the uncertainties
encountered by companies in the early stages of development in new and rapidly
evolving markets, specifically the online recruitment market. Some of the
uncertainties we face include:

     -      our ability to attract and retain a larger number of employers to
            recruit online using the CareerBuilder Network instead of other
            online recruitment providers and traditional recruiting methods;

     -      our ability to attract a larger number of job seekers to the
            CareerBuilder.com flagship site and our interactive media company
            affiliates' ability to continue to attract potential job seekers
            to the other sites on the CareerBuilder Network; and

     -      our ability to maintain our current, and add new, online
            interactive media companies to the CareerBuilder Network.

     If we fail to manage these risks successfully, our business, results of
operations and financial condition will be materially and adversely affected.

WE HAVE A HISTORY OF LOSSES AND MAY NOT BE PROFITABLE IN THE FUTURE

     We have incurred substantial net losses in every fiscal period since we
began operations. For the year ended December 31, 1999, our net loss was $24.0
million. As of December 31, 1999, our accumulated deficit was approximately
$45.8 million. We are not certain when we will become profitable, if at all.
Even if we do achieve profitability, we may not sustain or increase
profitability on a quarterly or annual basis. Failure to achieve or maintain
profitability may materially and adversely affect the market price of our common
stock. We have generated relatively small amounts of revenue until recent fiscal
quarters, while increasing operating expenditures in all areas, particularly in
sales and marketing. If revenues grow more slowly than we anticipate, or if
operating expenses exceed our expectations or cannot be adjusted accordingly,
our business, results of operations and financial condition will be materially
and adversely affected.

OUR QUARTERLY RESULTS MAY FLUCTUATE, WHICH COULD CAUSE THE PRICE OF OUR COMMON
STOCK TO FALL

     Our quarterly revenue and results of operations are difficult to predict
and may fluctuate significantly from quarter to quarter. If our quarterly
revenue or results of operations fall below expectations of investors or public
market analysts, the price of our common stock could fall substantially. Our
quarterly revenue is difficult to predict and our results of operations may
fluctuate for several reasons, including:

     -      the online recruitment market is at an early stage of development
            and therefore it is difficult to predict customer demand for
            online recruitment offerings;

     -      ADP is our principal sales channel for customers with 100 to 1,000
            employees and represented approximately 38% of our total revenue
            for the year ended December 31, 1999; we have no control over
            ADP's selling efforts and these efforts will significantly affect
            our results of operations in any quarter;

     -      customers may choose to pay for our services on a per-job posting
            basis, instead of a multi-month subscription basis; to the extent
            a greater proportion of our revenue is attributable to customers
            who choose to pay on a per-job posting basis, our operating
            results may fluctuate to a greater extent from period to period;
            revenue attributable to customers who chose to pay on a per-job
            posting basis accounted for approximately 6% of our total revenue
            for the year ended December 31, 1999;

     -      our cost of revenue, and therefore our operating results, are
            affected by the allocation of our customers' job advertisements
            among the CareerBuilder.com site and the other sites on the
            CareerBuilder Network; and

     -      our cost of revenue is affected by the relative mix of sales between
            our sales force and sales made through ADP; for the twelve months
            ended December 31, 1999, we paid sales commissions to ADP of
            approximately $2.0 million. This represented 33% of revenue for the
            year ended December 31, 1999 received from customers for which ADP
            acted as sales agent.



                                       17

<PAGE>   18

     A significant percentage of our expenses, such as employee compensation and
rent, are relatively fixed. Moreover, our expense levels are based, in part, on
our expectations of future revenue. As a result, any shortfall in revenue in
relation to our expectations could cause significant changes in our results of
operations from quarter to quarter and could result in increased or continued
quarterly losses.

     Because of these factors, we believe that period to period comparisons of
our results of operations are not necessarily meaningful, and therefore you
should not rely on our quarterly revenue and results of operations to predict
our future performance.

OUR EARNINGS MAY FLUCTUATE SEASONALLY, WHICH MAY AFFECT OUR FINANCIAL RESULTS

     Because our online recruitment business model is new, we do not know if the
online recruitment market is subject to seasonal fluctuations. We believe that
revenue from print media, recruiting search firms and other traditional
recruiting services are generally lower in the months of August, November and
December because of reduced recruiting and job search activity during vacation
periods and holiday seasons. As the online recruitment market develops, we may
find that similar seasonal and cyclical patterns characterize online recruiting
or we may discover other seasonal patterns. In addition, we believe that we may
experience lower sales through our ADP sales channel from November through
January because of a year-end focus by ADP's sales force on ADP's core business,
which may adversely affect our revenue. If seasonal fluctuations develop in the
online recruitment market or as a result of ADP's selling efforts, our business,
results of operations and financial condition could be materially and adversely
affected.

OUR BUSINESS COULD BE ADVERSELY AFFECTED BY A RECESSION, WHICH MAY AFFECT OUR
FINANCIAL RESULTS

     Online recruitment is a new industry and we do not know how sensitive our
industry is to general economic conditions. Demand for online recruitment
offerings may be significantly and adversely affected by the level of economic
activity and employment in the United States and abroad. A recession could cause
employers to reduce or postpone their recruiting efforts generally, and their
online recruiting efforts in particular. Therefore, if a significant economic
downturn or recession occurs in the United States or abroad, our business,
results of operations and financial condition could be materially and adversely
affected.

WE ARE DEPENDENT ON ADP'S SALES FORCE FOR A SIGNIFICANT PORTION OF OUR REVENUE

     ADP is our principal sales channel for customers with between 100 and 1,000
employees. Sales of our offerings by ADP accounted for approximately 38% of our
total revenue for the year ended December 31, 1999. Our existing agreement with
ADP may be terminated by ADP at any time after January 2002 upon 120 days
notice. It is possible that ADP's sales force will not continue to market our
services beyond January 2002.

     ADP may not continue to market our services at the current levels even
during the remaining term of the agreement. Under our agreement, ADP is not
required to achieve specific revenue targets. ADP must meet revenue-based
milestones for installments under a warrant we issued to ADP to purchase shares
of our common stock to vest. Our agreement with ADP generally prohibits us from
entering into any reseller, distribution or similar agreement with any other
payroll or benefits administration provider. Moreover, under the terms of the
ADP agreement, if ADP determines that the CareerBuilder Network has material
inadequacies that reduce their ability to perform competitively in relation to
other online recruiting products, we must correct the deficiencies specified by
ADP. If we fail to correct those deficiencies, ADP is free to market alternative
online recruitment services, including those of our competitors, during the term
of our agreement. Even after the termination of our agreement with ADP, ADP will
continue to receive its share of recurring sales commission revenue derived from
customers originally identified by ADP in its capacity as a sales agent for as
long as these customers continue to receive any of our services for which orders
were procured by ADP.

     We may not be able to attract a sufficient number of employer customers
without the ADP sales channel. In addition, we may compete with ADP for sales of
our services to companies employing between 100 and 1,000 persons. It is
possible that we may not manage this channel conflict effectively and that our
relationship with ADP could be materially and adversely affected. If our
relationship with ADP is discontinued or damaged, or if the level of sales
through the ADP channel is lower than expected, our business, results of
operations and financial condition would be materially and adversely affected.



                                       18

<PAGE>   19

WE COULD BE REQUIRED TO RECORD SIGNIFICANT EXPENSES IF ADP ACHIEVES REVENUE
GOALS

     If ADP achieves specified revenue-based milestones, a warrant to purchase
shares of common stock will become exercisable to purchase up to 380,000 shares
of common stock commencing on each of March 31, 2001 and March 31, 2002 at an
exercise price of $5.00 per share. The revenue-based milestones are measured for
a specific time period by subtracting from total revenue received from customers
for which ADP has acted as sales agent, sales commissions paid to ADP. In order
for the minimum number of shares under the March 2001 installment of the warrant
to vest, revenue minus sales commission for the period from April 1, 2000
through March 31, 2001 must exceed $10.2 million, with $20.4 million required
for the maximum number of shares issuable under the installment to vest. In
order for the minimum number of shares under the March 2002 installment to vest,
revenue minus sales commission for the period from April 1, 2001 through March
31, 2002 must exceed $23.0 million, with $30.0 million required for the maximum
number of shares issuable under the installment to vest. These milestones are
not projections but are solely milestones ADP must achieve for their warrants to
vest. The ADP warrant contains provisions that increase the number of shares for
which the warrant is exercisable if we issue additional shares, particularly for
financing purposes. The maximum number of shares that are issuable upon exercise
of each remaining installment of the warrant is currently 516,824 shares based
on current antidilution calculations. These provisions are limited so that the
number of shares of common stock for which each of the installments of the
warrant may be exercisable is limited to a maximum of 568,506 shares.

     If and when it becomes probable that the net revenue we will receive from
ADP will reach the necessary level for either installment of the warrant to
vest, we would begin to record an expense reflecting the fair value of the
warrant, which will be determined in part based on the market price of the
common stock. We would begin to recognize this expense on the determination of
probability that the revenue targets would be achieved, continuing through the
actual vesting date. We would initially estimate the amount of the expense at
the time of the determination that achievement is probable, based in part on the
market price of the common stock at that time. At the time of actual vesting,
the fair value of the warrant would be re-measured and, if different from the
value used in initially estimating the expense, the difference would be
reflected as an additional charge or credit at that time. Accordingly, the
higher our stock price is at the time probability is determined, or the actual
vesting occurs, the more significant would be the expense we would be required
to record. That expense could be spread over multiple quarters or concentrated
in one quarter. If we are required to record significant expense, our results of
operations for that period could fall below the expectations of our investors or
public market analysts, which could cause the price of our common stock to fall
substantially.

THE INTERNET IS UNPROVEN AS A RECRUITING MEDIUM

     Our future is highly dependent on a significant increase in the use of the
Internet as a recruiting medium. The online recruitment market is new and
rapidly evolving, and we cannot yet gauge its effectiveness as compared to
traditional recruiting methods. As a result, demand and market acceptance of
online recruitment offerings are uncertain. Most of our current and potential
employer customers have little or no experience using the Internet for
recruiting purposes and have allocated only a limited portion of their
recruiting budgets to online recruiting. The adoption of online recruiting,
particularly by those entities that have historically relied upon traditional
methods of recruiting, requires the acceptance of a new way of conducting
business, exchanging information and advertising for jobs. Such customers may
find online recruiting to be less effective for meeting their hiring needs
relative to traditional methods of recruiting employees. We cannot assure you
that the online recruitment market will continue to emerge or become
sustainable. If the online recruitment market fails to develop or develops more
slowly than we expect, our business, results of operations and financial
condition would be materially and adversely affected.

OUR BUSINESS MODEL IS UNPROVEN

     We first recorded revenue in September 1996 from sales of TeamBuilder
Software. At that time, software sales were a significant component of our
revenue. Beginning in late 1997, we began offering online subscriptions by means
of TeamBuilder Online and software sales became a smaller component of our
revenue. In May 1998, we again evolved our business model when we introduced the
CareerBuilder Network, enabling our customers to advertise job openings across a
network of affiliate sites. Accordingly, our business model and profit potential
are unproven. To be successful, we must develop and market online recruitment
offerings that achieve broad market acceptance by employers, job seekers and
interactive media companies. In addition, CareerBuilder.com and the
CareerBuilder Network affiliate sites must generate sufficient job seeker
traffic with demographic characteristics attractive to our employer customers.

     It is possible that we will be required to further adapt our business model
in response to additional changes in the online recruitment market or if our
current business model is not successful. If we are not able to anticipate
changes in the online recruitment market or if our business model is not
successful, our business, financial condition and results of operations would be
materially and adversely affected.



                                       19

<PAGE>   20

WE MAY BE UNABLE TO CONTINUE TO BUILD AWARENESS OF THE "CAREERBUILDER.COM" BRAND
NAME

     We believe that continuing to build awareness of the "CareerBuilder.com"
brand name is critical to achieving widespread acceptance of our online
recruitment offerings. Brand recognition is a key differentiating factor among
providers of online recruitment offerings and we believe it could become more
important as competition in the online recruitment market increases. From
November 1995 to December 31, 1999, we have recorded approximately $46.0 million
in sales and marketing expenses. We may find it necessary to accelerate
expenditures on our sales and marketing efforts or otherwise increase our
financial commitment to creating and maintaining brand awareness among potential
customers. If we fail to successfully promote and maintain our brand or incur
significant expenses in promoting our brand, our business, results of operations
and financial condition could be materially and adversely affected.

WE MAY HAVE DIFFICULTY MAINTAINING AND EXPANDING THE CAREERBUILDER NETWORK

     We believe that a primary reason the CareerBuilder Network is valuable to
employers is that the websites of the premier interactive media companies who
have executed agreements with us for the development of career sites to be a
part of the CareerBuilder Network appeal to a variety of distinct Internet user
communities in strategic broad-based, vertical, geographic and diversity
categories. Our agreements with these CareerBuilder Network affiliate members
generally have one-year terms, subject to extension. Although we do not know of
any of our affiliate member's intent not to renew their current agreements,
affiliate members have declined to renew in the past and we cannot be sure that
in the future all affiliate agreements will be renewed. In addition, one of our
key business strategies is to expand the CareerBuilder Network by adding
additional interactive media affiliates targeting a variety of distinct online
audiences. If an affiliate member declines to renew its agreement with us and
withdraws from the CareerBuilder Network, and if we are unable to find a
suitable replacement for that affiliate member, or if we otherwise are not
successful in our efforts to expand the CareerBuilder Network, the
CareerBuilder Network may be less valuable to employers, and our business,
results of operations and financial condition could be materially and adversely
affected.

OUR PLANS FOR INTERNATIONAL EXPANSION MAY NOT SUCCEED

     Our strategy includes expansion into international markets through a
combination of partnerships, acquisitions and internal business expansion. Our
future international operations might not succeed for a number or reasons,
including:

     - difficulties in staffing and managing foreign operations;

     - competition from local and foreign-based recruitment services;

     - legal uncertainties inherent in transnational operations such as export
       and import regulations, tariffs and other trade barriers;

     - taxation issues;

     - unexpected changes in trading policies, regulatory requirements and
       exchange rates;

     - operational issues such as longer customer payment cycles and greater
       difficulties in collecting accounts receivable;

     - seasonal reductions in business activity;

     - language and cultural differences;

     - issues relating to uncertainties of laws and enforcement relating to the
       protection of intellectual property; and

     - general political and economic trends.

     Accordingly, we may not be able to successfully execute our business plan
in foreign markets. If revenue from international ventures is not adequate to
cover our investment in those ventures, our business, results of operations and
financial condition could be materially and adversely affected.

WE MAY HAVE DIFFICULTY IN IDENTIFYING AND COMPETING FOR ACQUISITION
OPPORTUNITIES

     Our business strategy includes the pursuit of strategic acquisitions. From
time to time, we have engaged in discussions with third parties concerning
potential acquisitions of product lines, technologies and businesses.



                                       20

<PAGE>   21

     In executing our acquisition strategy, we may be unable to identify
suitable acquisition candidates. In addition, we expect to face competition from
other providers of online recruitment solutions for acquisition candidates,
making it more difficult to acquire suitable companies on favorable terms.

PURSUING AND COMPLETING POTENTIAL ACQUISITIONS COULD DIVERT MANAGEMENT ATTENTION
AND FINANCIAL RESOURCES AND MAY NOT PRODUCE THE DESIRED BUSINESS RESULTS

     If we pursue any acquisition, our management could spend a significant
amount of time and effort in identifying, negotiating and completing the
acquisition. If we complete an acquisition, we may have to devote a significant
amount of time and management and financial resources to integrate the acquired
business with our existing business. To pay for an acquisition, we might use
capital stock, or cash, or a combination of both. Alternatively, we may borrow
money from a bank or other lender. If we use capital stock, our stockholders
will experience dilution. If we use cash or debt financing, our financial
liquidity will be reduced. In addition, from an accounting perspective, an
acquisition may involve non-recurring charges or involve amortization of
significant amounts of goodwill that could adversely affect our results of
operations.

     Despite the investment of these management and financial resources, an
acquisition may not produce the revenue, earnings or business synergies that we
anticipated, and an acquired service or technology may not perform as expected
for a variety of reasons, including:

     - difficulties in the assimilation of the operations, technologies,
       products and personnel of the acquired company;

     - risks of entering markets in which we have no or limited prior
       experience;

     - the applicability of rules and regulations that might restrict our
       ability to operate; and

     - the potential loss of key employees of the acquired company.

     Accordingly, our acquisition efforts may not succeed, and the time, capital
and management and other resources spent on an acquisition that failed to meet
our expectations could cause our business, results of operations and financial
condition to be materially and adversely affected.

WE ARE EXPERIENCING RAPID GROWTH, WHICH MAY STRAIN OUR RESOURCES

     Our rapid growth has sometimes strained, and may in the future strain, our
managerial and other resources. Our acquisition strategy and plans for
international expansion could further increase our growth and place additional
burdens on our resources. Our ability to manage growth will depend, in part, on
our ability to continue to enhance our operating, financial and management
information systems. Our personnel, systems, procedures and controls may not be
adequate to support our growth. If we are unable to manage growth effectively,
our business, results of operations and financial condition could be materially
and adversely affected.

IF WE LOSE THE SERVICES OF A NUMBER OF KEY EXECUTIVES, OUR BUSINESS COULD SUFFER

     Our future success depends upon the skills, experience and efforts of our
executive officers and key technical employees, in particular Robert J.
McGovern, our Chairman of the Board, President and Chief Executive Officer. Mr.
McGovern founded CareerBuilder in 1995 and has been instrumental in determining
our structure, direction and focus. None of our employees have employment
agreements with us. If we lose the services of Mr. McGovern or any of our other
executive officers or other key employees, our business, results of operations
and financial condition could be materially and adversely affected.

WE MAY NOT BE ABLE TO HIRE AND RETAIN HIGHLY SKILLED EMPLOYEES, WHICH COULD
AFFECT OUR ABILITY TO COMPETE EFFECTIVELY

     We depend upon the ability to attract, hire, train and retain highly
skilled technical, sales and marketing, and support personnel, particularly with
expertise in Internet solutions and online recruiting. Competition for qualified
personnel throughout our industry is intense. If we fail to attract, hire or
retain such personnel, our business, results of operations and financial
condition could be materially and adversely affected. We may experience
difficulty providing the proper level of service to our customers or incur
increased costs due to rising salary and benefit levels. In particular, we plan
to expand our sales and marketing and customer support organizations. Based on
our experience, it takes an average of four months for a new salesperson to
achieve targeted levels of productivity. If we are not successful in hiring
additional qualified salespeople or increasing the productivity of our existing
sales force, our business, results of operations and financial condition could
be materially and adversely affected.




                                       21

<PAGE>   22

WE MAY LOSE BUSINESS IF WE FAIL TO KEEP PACE WITH RAPIDLY CHANGING TECHNOLOGIES

     Our success is dependent on our ability to develop new and enhanced
software, services and related products to meet rapidly evolving requirements
for online recruitment software and solutions. Trends that could have a critical
impact on our success include:

     - rapidly changing technology in the area of online recruiting;

     - evolving industry standards, including both formal and de facto standards
       relating to online recruiting;

     - developments and changes relating to the Internet;

     - competing products and services that offer increased functionality; and

     - changes in employer and job seeker requirements.

     If we are unable to develop and introduce new products and services, or
enhancements to existing products and services, in a timely and successful
manner, our business, results of operations and financial condition could be
materially and adversely affected.

WE HAVE SIGNIFICANT COMPETITION FROM A VARIETY OF SOURCES

     We compete with companies, including recruiting search firms,
that offer a single database "job board" solution, such as Monster.com and
Hotjobs.com, as well as newspapers, magazines and other traditional media
companies that provide online job search services, such as CareerPath.com. We
also compete with large Internet information hubs, or portals, such as AOL.com.
We may experience competition from potential customers to the extent that they
develop their own online recruitment solutions internally. In addition, we
compete with traditional recruiting services, such as newspapers and employee
recruiting agencies, for a share of employers' total recruiting budgets. We
expect to face additional competition as other established and emerging
companies, including print media companies and employee recruiting agencies with
established brands, enter the online recruitment market.

     Many of our current and potential competitors have longer operating
histories, significantly greater financial, technical, marketing and other
resources, greater brand recognition and a larger installed customer base than
we do. In addition, current and potential competitors may make strategic
acquisitions or establish cooperative relationships to expand their offerings
and to offer more comprehensive solutions.

     We believe that there will be rapid business consolidation in
the online recruitment industry. Accordingly, competitors may rapidly acquire
significant market share. In addition, new technologies will likely increase the
competitive pressures that we face. The development of competing technologies by
market participants or the emergence of new industry standards may adversely
affect our competitive position. As a result of these and other factors, if we
are not able to compete effectively with current or future competitors, our
business, results of operations and financial condition could be materially and
adversely affected.

OUR COMPUTER SYSTEMS AND THE COMPUTER SYSTEMS OF OUR CAREERBUILDER NETWORK
AFFILIATES COULD FAIL OR OVERLOAD

     The success of our online recruitment offerings is highly dependent on the
efficient and uninterrupted operation of our computer and communications
hardware systems. Our communications hardware and other computer hardware
operations that maintain the CareerBuilder Network are located at Global
Center's facilities in Herndon, Virginia. Fire, floods, earthquakes, power loss,
telecommunications failures and similar events could damage or cause
interruptions in these systems. Computer viruses, electronic break-ins or other
similar disruptive problems could also adversely affect CareerBuilder.com or
other sites on the CareerBuilder Network. If our systems or the systems of any
of the Internet sites of the members of the CareerBuilder Network are affected
by any of these occurrences, our business, results of operations and financial
condition could be materially and adversely affected. Our insurance policies may
not cover, or if covered, may not adequately compensate us for, any losses that
may occur due to any failures or interruptions in our systems or the systems of
the Internet sites of the members of the CareerBuilder Network. We do not
presently have any secondary "off-site" systems or a formal disaster recovery
plan.

     In addition, CareerBuilder.com and the Internet sites of the other members
of the CareerBuilder Network must accommodate a high volume of traffic and
deliver frequently updated information. CareerBuilder.com and the Internet sites
of each of the members of the CareerBuilder Network have in the past and may in
the future experience slower response times or decreased traffic for a variety
of reasons. In addition, our users depend on Internet service providers and
other Internet site operators for access to CareerBuilder.com and the Internet
sites of the members of the CareerBuilder Network. Many of the Internet service
providers have experienced significant outages in the past, and could experience
outages, delays and other difficulties due to system failures unrelated



                                       22

<PAGE>   23

to our systems. If we experience any of these problems, our business, results of
operations and financial condition could be materially and adversely affected.

WE RELY ON TECHNOLOGY THAT IS OWNED BY THIRD PARTIES

     We license technology that is incorporated into our services and related
products from third parties. In light of the rapidly evolving nature of Internet
technology, we may increasingly need to rely on technology from other vendors.
Technology from others may not continue to be available to us on commercially
reasonable terms, if at all. The loss or inability to access such technology
could result in delays in our development and introduction of new services and
related products or enhancements until equivalent or replacement technology
could be accessed, if available, or developed internally, if feasible. If we
experience such delays, our business, results of operations and financial
condition could be materially and adversely affected.

OUR BUSINESS COULD BE ADVERSELY AFFECTED IF OUR SOFTWARE CONTAINS BUGS

     Our software products, including TeamBuilder Online and TeamBuilder
Software, could contain undetected errors or "bugs" that could adversely affect
their performance. Additionally, we regularly introduce new releases and
periodically introduce new versions of our software products. The occurrence of
errors in our current products or new products or enhancements could result in
loss of or delay in revenue, loss of market share, failure to achieve market
acceptance, diversion of development resources, injury to our reputation and
damage to our efforts to build brand awareness, any of which could cause our
business, results of operations and financial condition to be materially and
adversely affected.

OUR BUSINESS IS DEPENDENT ON THE DEVELOPMENT AND MAINTENANCE OF THE INTERNET
INFRASTRUCTURE

     Our success will depend, in large part, upon the development and
maintenance of the Internet infrastructure as a reliable network backbone with
the necessary speed, data capacity and security, and timely development of
enabling products, such as high speed modems, for providing reliable Internet
access and services. We cannot assure you that the Internet infrastructure will
continue to effectively support the demands placed on it as the Internet
continues to experience increased numbers of users, greater frequency of use or
increased bandwidth requirements of users. Even if the necessary infrastructure
or technologies are developed, we may have to spend considerable resources to
adapt our offerings accordingly. Furthermore, in the past, the Internet has
experienced a variety of outages and other delays. Any future outages or delays
could affect the Internet sites on which our customers' job advertisements are
posted and the willingness of employers and job seekers to use our online
recruitment offerings. If any of these events occur, our business, results of
operations and financial condition could be materially and adversely affected.

BREACHES OF INTERNET SECURITY COULD ADVERSELY AFFECT OUR BUSINESS

     The need to securely transmit confidential information over the Internet
has been a significant barrier to electronic commerce and communications over
the Internet. Any well-publicized compromise of security on the Internet could
deter more people from using the Internet or from using it to conduct
transactions that involve transmitting confidential information, such as a job
seeker's resume or an employer's hiring needs. We may be required to incur
significant costs to protect against the threat of security breaches to
CareerBuilder.com and the CareerBuilder Network or to alleviate problems caused
by such breaches. If any of these events occur, our business, results of
operations and financial condition could be materially and adversely affected.

WE MAY BE ADVERSELY AFFECTED BY GOVERNMENT REGULATIONS AND LEGAL UNCERTAINTIES
ASSOCIATED WITH THE INTERNET

     Laws and regulations directly applicable to Internet communications,
commerce and advertising are becoming more prevalent, but the legislative and
regulatory treatment of the Internet remains largely unsettled. The U.S.
Congress recently adopted Internet laws regarding copyrights, taxation and the
protection of children. In addition, a number of other legislative and
regulatory proposals under consideration by federal, state, local and foreign
governments could lead to additional laws and regulations affecting electronic
commerce transactions, online content, user privacy, taxation, access charges
and liability for third-party activities, among other things. For example, the
growth and development of the market for Internet commerce may prompt calls for
more stringent consumer protection laws, both in the United States and abroad,
that may impose additional burdens on companies conducting business over the
Internet.

     Although our transmissions originate from Virginia, the governments of
other states or foreign countries might attempt to regulate our transmissions or
levy sales or other taxes relating to our activities. The European Union
recently enacted its own privacy regulations that may result in limits on the
collection and use of user information. Courts in the U.S. and abroad may seek
to apply existing laws not explicitly relating to the Internet in ways that
could impact the Internet, and it may take years to determine whether and how
laws such as those governing intellectual property, privacy, libel and taxation
will affect the Internet and the online recruitment industry.



                                       23

<PAGE>   24

     Existing or future laws or regulations affecting the Internet and legal
uncertainties relating to the Internet could lessen the growth in use of the
Internet generally and decrease the acceptance of the Internet as a
communications, commercial and advertising medium, and could reduce the demand
for our services or increase our cost of doing business, all of which could
cause our business, financial condition and results of operations to be
materially and adversely affected.

WE MAY BE LIABLE FOR INFORMATION RETRIEVED FROM OR TRANSMITTED OVER THE INTERNET

     We may be sued for defamation, negligence, copyright or trademark
infringement, personal injury or other legal claims relating to information that
is published or made available on CareerBuilder.com and the other sites on the
CareerBuilder Network. These types of claims have been brought, sometimes
successfully, against online services in the past. We could also be sued for the
content that is accessible from CareerBuilder.com and the other CareerBuilder
Network sites through links to other Internet sites or through content and
materials that may be posted by members in chat rooms or bulletin boards. We
also offer email services, which may subject us to potential risks, such as
liabilities or claims resulting from unsolicited email or spamming, lost or
misdirected messages, security breaches, illegal or fraudulent use of email, or
interruptions or delays in email service. Our insurance does not specifically
provide for coverage of these types of claims and therefore may not adequately
protect us against these types of claims. In addition, we could incur
significant costs in investigating and defending such claims, even if we
ultimately are not found liable. If any of these events occur, our business,
results of operations and financial condition could be materially and adversely
affected.

OUR BUSINESS COULD BE ADVERSELY AFFECTED IF WE ARE UNABLE TO PROTECT OUR
PROPRIETARY TECHNOLOGY

     Our success depends to a significant degree upon the protection of our
proprietary technology, including that associated with the CareerBuilder
Network, Mega Job-Search and our Personal Search Agent. The unauthorized
reproduction or other misappropriation of our proprietary technology could
enable third parties to benefit from our technology without paying us for it. If
this were to occur, our business, results of operations and financial condition
could be materially and adversely affected.

     We rely upon a combination of patents, copyright, trade secret and
trademark laws and non-disclosure and other contractual arrangements to protect
our proprietary rights. The steps we have taken to protect our proprietary
rights, however, may not be adequate to deter misappropriation of proprietary
information. We may not be able to detect unauthorized use of our proprietary
information and take appropriate steps to enforce our intellectual property
rights. Moreover, the laws of other countries in which we may market our
services in the future may afford little or no effective protection of our
intellectual property.

     If we resort to legal proceedings to enforce our intellectual property
rights, the proceedings could be burdensome and expensive and could involve a
high degree of risk.

OTHERS COULD CLAIM THAT WE INFRINGE THEIR INTELLECTUAL PROPERTY

     Although we attempt to avoid infringing known proprietary rights of third
parties, we are subject to the risk of claims alleging infringement of third
party proprietary rights. If we were to discover that any element of our online
recruitment offerings violates third party proprietary rights, we might not be
able to obtain licenses on commercially reasonable terms to continue offering
our entire online recruitment offerings without substantial reengineering and
that any effort to undertake such reengineering might not be successful. In
addition, product development is inherently uncertain in a rapidly evolving
technological environment in which there may be numerous patent applications
pending, which are confidential when filed, with regard to similar technologies.

     Any claim of infringement could cause us to incur substantial costs
defending against the claim, even if the claim is invalid, and could distract
our management from our business. Furthermore, a party making such a claim could
secure a judgment that requires us to pay substantial damages. A judgment could
also include an injunction or other court order that could prevent us from
selling our products. If any of these events occurred, our business, results of
operations and financial condition could be materially and adversely affected.

IF WE ARE UNABLE TO OBTAIN ADDITIONAL CAPITAL AS NEEDED IN THE FUTURE, OUR
BUSINESS MAY BE ADVERSELY AFFECTED

     As of December 31, 1999, the Company had cash and cash equivalents of $63.6
million. We anticipate that our available cash resources will be sufficient to
meet our anticipated working capital and capital expenditure requirements for at
least the next 12 months. We may need to raise additional capital, however, to
fund more rapid expansion, both in the United States and internationally, to
develop new and to enhance existing services to respond to competitive
pressures, and to acquire complementary services, businesses or technologies. We
have raised capital through the issuance of equity securities four times since
January 1998. If we raise additional funds through further issuances of equity
or convertible debt securities, the percentage of ownership of our current
stockholders will be reduced and such securities may have rights, preferences
and privileges senior to those of our current stockholders. In addition, we may
not be able to obtain additional financing



                                       24

<PAGE>   25

on terms favorable to us, if at all. If adequate funds are not available or are
not available on terms favorable to us, our business, results of operations and
financial condition could be materially and adversely affected.

IT MAY BE DIFFICULT FOR A THIRD PARTY TO ACQUIRE OUR COMPANY, AND THIS COULD
DEPRESS OUR STOCK PRICE

     Delaware corporate law and our certificate of incorporation and by-laws
contain provisions that could have the effect of delaying, deferring or
preventing a change in control of CareerBuilder or our management. These
provisions could discourage proxy contests and make it more difficult for you
and other stockholders to elect directors and take other corporate actions.
These provisions could also limit the price that investors might be willing to
pay in the future for shares of our common stock. These provisions include:

     -  authorize the issuance of "blank check" preferred stock, which is
        preferred stock that can be created and issued by the Board of
        Directors without prior stockholder approval, with rights senior
        to those of common stock;

     -  provide for a staggered Board of Directors, so that it would take
        three successive annual meetings to replace all directors;

     -  prohibit stockholder action by written consent; and

     -  establish advance notice requirements for submitting nominations
        for election to the Board of Directors and for proposing matters
        that can be acted upon by stockholders at a meeting.



                                       25

<PAGE>   26

ITEM 7a.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company has no long term debt as of December 31, 1999. The Company
invests in money market funds and, under its current policies, the Company does
not use interest rate derivative instruments to manage its exposure to interest
rate changes.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The Company's financial statements together with the related notes and the
report of KPMG LLP, independent auditors, are set forth in the Index to the
Financial Statements at Item 14 and incorporated herein by this reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     NONE



                                       26

<PAGE>   27

PART III.

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The sections of the Company's Proxy Statement for the annual meeting of
stockholders to be held on May 11, 2000 entitled "Election of Directors",
"Nominees for Class I Director", "Incumbent Class II Director", "Incumbent Class
III Directors" and "Section 16 Beneficial Ownership Reporting Compliance" are
incorporated herein by reference.

ITEM 11.  EXECUTIVE COMPENSATION

     The sections of the Company's Proxy Statement for the annual meeting of
stockholders to be held on May 11, 2000 entitled "Executive Compensation",
"Stock Option Grants" and "Option Exercises and Year-end Option Values" are
incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The section of the Company's Proxy Statement for the annual meeting of
stockholders to be held on May 11, 2000 entitled "Beneficial Ownership of Common
Stock" is incorporated herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The section of the Company's 2000 Proxy Statement entitled "Certain
Relationships and Transactions" is incorporated herein by reference.

PART IV.

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1) THE FOLLOWING FINANCIAL STATEMENTS OF AND REPORT OF INDEPENDENT PUBLIC
       ACCOUNTANTS ARE INCLUDED IN ITEM 8 OF THIS FORM 10-K AND ARE ATTACHED
       HERETO AS PAGES F-1 THROUGH F-15.

       -      Report of KPMG LLP, Independent Auditors.

       -      Balance Sheets as of December 31, 1998 and 1999.

       -      Statements of Operations for the years ended December 31, 1997,
              1998 and 1999.

       -      Statements of Stockholders' Equity (Deficit) for the years ended
              December 31, 1997, 1998 and 1999.

       -      Statements of Cash Flows for the years ended December 31, 1997,
              1998 and 1999.

       -      Notes to Financial Statements.

(a)(2) THE FOLLOWING FINANCIAL STATEMENT SCHEDULE IS FILED AS PART OF THIS
       REPORT AND IS ATTACHED HERETO AS PAGES S-1 AND S-2

       -      Report of Independent Public Accountants on the Financial
              Statement Schedule.

       -      Schedule II - Valuation and Qualifying Acounts.

       All other schedules for which provision is made in the applicable
       accounting regulations of the Commission either have been included in the
       financial statements of CareerBuilder, Inc. or the notes thereto, are not
       required under the related instructions or are inapplicable, and
       therefore have been omitted.



                                       27

<PAGE>   28

(a)(3) THE FOLLOWING EXHIBITS ARE EITHER PROVIDED WITH THIS FORM 10-K OR ARE
       INCORPORATED HEREIN BY REFERENCE:

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
   EXHIBIT
     NO.            DESCRIPTION
   -------  ------------------------------------------------------------------------
<S>         <C>
    3.1*    Amended and Restated Certificate of Incorporation of the Registrant.
    3.2*    Amended and Restated Bylaws of the Registrant.
    4.1*    Specimen certificate for shares of Common Stock, $.001 par value per
            share, of the Registrant.
   10.1*    Stock Option Plan.
   10.2*    1999 Stock Incentive Plan.
   10.3*    1999 Non-Employee Director Stock Option Plan.
   10.4*    1999 Employee Stock Purchase Plan.
   10.5*    Third Amended and Restated Registration Rights Agreement, dated January
            26, 1999, by and among the Registrant and certain stockholders.
   10.6*    Amendment Agreement, dated March 5, 1999, between the Registrant
            and ADP, Inc.
   10.7*    ADP Joint Marketing/Sales Representative Agreement, dated January 23,
            1998, between the Registrant and ADP, Inc.
   10.8     Amended and Restated Common Stock Purchase Warrant, dated March 5,
            1999, issued to ADP, Inc., as amended on March 15, 2000.
   10.9     Loan Agreement, dated February 3, 2000, between the Registrant
            and PNC Bank, N.A.
  10.13*    Warrant Agreement, dated December 29, 1998, between the Registrant
            and PNC Bank, N.A.
  10.14*    Common Stock Purchase Warrant, dated May 4, 1999, issued to Microsoft
            Corporation.
  10.15*    Amendment Agreement, dated May 4, 1999, by and among the Registrant,
            Microsoft Corporation and certain stockholders.
  10.16     Lease, dated February 1, 2000, for Reston, VA.
   23.1     Consent of KPMG LLP.
     27     Financial Data Schedule.
</TABLE>

----------

*  Incorporated by reference to the Registrant's Registration Statement on Form
   S-1, as amended (File No. 333 - 73469)



                                       28
<PAGE>   29

(b)   REPORTS ON FORM 8-K.

      No reports on Form 8-K were filed in the quarter ended December 31, 1999.

(c)   FINANCIAL STATEMENT SCHEDULE.

      The following financial statement schedule is filed herewith:

      Schedule II - Valuation and Qualifying Accounts.

      Schedules not listed above have been omitted because they are inapplicable
      or the information required to be set forth therein is provided in the
      Consolidated Financial Statements of CareerBuilder, Inc. or notes thereto.



                                       29

<PAGE>   30
                          INDEPENDENT AUDITORS' REPORT


The Board of Directors
CareerBuilder, Inc.:


Under date of February 4, 2000, we reported on the balance sheets of
CareerBuilder, Inc. as of December 31, 1998 and 1999, and the related
statements of operations, stockholders' equity (deficit), and cash flows for
each of the years in the three-year period ended December 31, 1999, which are
included in this Annual Report on Form 10-K. In connection with our audits of
the aforementioned financial statements, we also audited the related financial
statement schedule. This financial statement schedule is the responsibility of
the Company's management. Our responsibility is to express an opinion on this
financial statement schedule based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.

                                                    /s/ KPMG LLP


McLean, Virginia
February 4, 2000


                                      S-1
<PAGE>   31

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------

                                     BALANCE AT                                                     BALANCE AT
           DESCRIPTION               BEGINNING       CHARGED TO       CHARGED TO     DEDUCTIONS        END OF
           -----------               OF PERIOD   COSTS AND EXPENSES     REVENUE      WRITE-OFFS       PERIOD
         (IN THOUSANDS)              ---------   ------------------ --------------   -----------     --------
----------------------------------------------------------------------------------------------------------------
<S>                                <C>             <C>             <C>             <C>           <C>
Allowance for Doubtful Accounts
and Sales Returns
----------------------------------------------------------------------------------------------------------------
   Year ended December 31, 1997      $    18         $    88          $  137          $  (205)      $     38
----------------------------------------------------------------------------------------------------------------
   Year ended December 31, 1998           38             591              62             (556)           135
----------------------------------------------------------------------------------------------------------------
   Year ended December 31, 1999          135             321           1,233           (1,267)           422
----------------------------------------------------------------------------------------------------------------
</TABLE>



                                      S-2

<PAGE>   32

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Form 10-K to be signed on its behalf by the
undersigned thereunto duly authorized.

<TABLE>
<S>                                         <C>
     Date:  March 27, 2000                   CAREERBUILDER, INC.

                                             By:  /s/ ROBERT J. MCGOVERN
                                                  --------------------------
                                                      Robert J. McGovern
                                                      Chairman, President and Chief Executive Officer

                                             By: /s/ JAMES A. THOLEN
                                                 ---------------------------
                                                     James A. Tholen
                                                     Senior Vice President and Chief Financial Officer
                                             (Principal Financial and Accounting Officer)
</TABLE>

      Pursuant to the requirements of the Securities Act of 1934, this Form 10-K
has been signed by the following persons in the capacities indicated on March
27, 2000.

<TABLE>
<CAPTION>
         NAME                                TITLE
         ----                                -----
<S>                                         <C>
     By: /s/  ROBERT J. MCGOVERN             Chairman, President and Chief Executive Officer
     ---------------------------
              Robert J. McGovern

     By: /s/  JAMES A. THOLEN                Senior Vice President, Chief Financial Officer, and Director
     ---------------------------
              James A. Tholen

     By: /s/  PETER BARRIS                   Director
     ---------------------
              Peter Barris

     By: /s/  GARY C. BUTLER                 Director
     -----------------------
              Gary C. Butler

     By: /s/  D. JARRET COLLINS              Director
     --------------------------
              D. Jarret Collins

     By: /s/  DAVID C. WETMORE               Director
     -------------------------
              David C. Wetmore
</TABLE>




                                       30
<PAGE>   33

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                           PAGE
                                                                                                           ----
<S>                                                                                                       <C>
INDEPENDENT AUDITORS' REPORT.............................................................................. F-2

BALANCE SHEETS AS OF DECEMBER 31, 1998 AND 1999........................................................... F-3

STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999............................. F-4

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999......... F-5

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999       ...................... F-6

NOTES TO FINANCIAL STATEMENTS............................................................................. F-7
</TABLE>



                                      F-1

<PAGE>   34

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
CareerBuilder, Inc.:

We have audited the accompanying balance sheets of CareerBuilder, Inc. (the
"Company") as of December 31, 1998 and 1999, and the related statements of
operations, stockholders' equity (deficit), and cash flows for each of the years
in the three-year period ended December 31, 1999. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CareerBuilder, Inc. as of
December 31, 1998 and 1999, and the results of its operations and its cash flows
for each of the years in the three-year period ended December 31, 1999 in
conformity with generally accepted accounting principles.

                                 /s/ KPMG LLP

McLean, Virginia
February 4, 2000



                                      F-2

<PAGE>   35

                               CAREERBUILDER, INC.

                                 BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                                     DECEMBER 31,
                                                                                            ------------------------------
                                                                                                 1998             1999
                                                                                            ------------------------------
                                    ASSETS
<S>                                                                                          <C>              <C>
Current assets:
     Cash and cash equivalents ........................................................       $   2,709        $  63,589
     Accounts receivable, net of allowance of $135 and $422,
         respectively .................................................................           1,581            3,029
      Prepaid Expenses ................................................................               -            1,040
     Other ............................................................................             442               48
                                                                                              ---------        ---------
          Total current assets ........................................................           4,732           67,706

Property and equipment, net of accumulated depreciation
  and amortization of $1,254 and $2,449,  respectively ................................           1,213            2,028
Deposits ..............................................................................               -            2,028
Other .................................................................................              97              766
                                                                                              ---------        ---------
          Total assets ................................................................       $   6,042        $  72,528
                                                                                              =========        =========

                    LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED STOCK
                             AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
     Accounts payable .................................................................       $   1,514        $   2,022
      Accrued payroll and related expenses ............................................             711            1,649
     Accrued expenses .................................................................             763            3,340
     Lines of credit ..................................................................           3,450                -
     Deferred revenue .................................................................           2,193              418
                                                                                              ---------        ---------
          Total current liabilities ...................................................           8,631            7,429
                                                                                              ---------        ---------
               Total  liabilities .....................................................           8,631            7,429
                                                                                              ---------        ---------
Convertible redeemable preferred stock ................................................          18,931                -
                                                                                              ---------        ---------
Commitments and contingencies
Stockholders' equity (deficit):
    Common stock, $.001 par value,
         60,000 shares authorized at December 31, 1999; 4,855
         and 23,691 shares issued and outstanding at
         December 31, 1998 and 1999,
          respectively ................................................................               5               24
     Additional paid-in capital .......................................................             244          110,832
     Accumulated deficit ..............................................................         (21,769)         (45,757)
                                                                                              ---------        ---------
          Total stockholders' equity (deficit) ........................................         (21,520)          65,099
                                                                                              ---------        ---------
           Total liabilities, convertible redeemable preferred stock, and stockholders'
               equity (deficit) .......................................................       $   6,042        $  72,528
                                                                                              =========        =========
</TABLE>

                See accompanying notes to financial statements.



                                      F-3

<PAGE>   36

                               CAREERBUILDER, INC.

                            STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                        YEAR ENDED DECEMBER 31,
                                                                        ----------------------
                                                                  1997           1998             1999
                                                                  ----           ----             ----
<S>                                                           <C>             <C>             <C>
Revenue:
  Service fees                                                 $  1,263        $  6,648        $ 14,822
  Software license fees                                             662             358              86
                                                               --------        --------        --------
    Total revenue                                                 1,925           7,006          14,908
                                                               ========        ========        ========

Cost of revenue:
  Service fees                                                      197           1,629           6,664
  Software license fees                                             120              62              23
                                                               --------        --------        --------
    Total cost of revenue                                           317           1,691           6,687
                                                               ========        ========        ========
Gross profit                                                      1,608           5,315           8,221
                                                               --------        --------        --------

Operating expenses:
  Product development                                             1,310           2,293           2,307
  General and administrative                                      1,267           2,305           3,806
  Sales and marketing (excluding equity-based
     expense below)                                               6,452          12,735          25,458
  Equity-based expense                                                -               -           2,710
                                                               --------        --------        --------
    Total operating expenses                                      9,029          17,333          34,281
                                                               --------        --------        --------
 Loss from operations                                            (7,421)        (12,018)        (26,060)
                                                               --------        --------        --------

Net interest income                                                 107              31           2,072
                                                               --------        --------        --------
Loss before income taxes                                         (7,314)        (11,987)        (23,988)
Income taxes                                                          -               -               -
                                                               --------        --------        --------
Net loss                                                         (7,314)        (11,987)        (23,988)
                                                               --------        --------        --------
Preferred stock dividend requirements                              (549)         (1,128)           (737)
                                                               --------        --------        --------
Net loss available to common stockholders                      $ (7,863)       $(13,115)       $(24,725)
                                                               ========        ========        ========

Basic and diluted net  loss per share                          $  (1.80)       $  (2.92)       $  (1.48)
Weighted average shares outstanding                               4,366           4,494          16,712

Unaudited pro forma basic and diluted net loss per share                       $  (0.87)       $  (1.14)
Weighted average shares used to compute unaudited
pro forma net loss per share                                                     13,850          20,991
</TABLE>

                See accompanying notes to financial statements.



                                      F-4

<PAGE>   37

                               CAREERBUILDER, INC.

                  STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                  YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                        COMMON STOCK            ADDITIONAL                       TOTAL
                                   -----------------------       PAID-IN     ACCUMULATED     STOCKHOLDERS'
                                   SHARES          AMOUNT        CAPITAL       DEFICIT      EQUITY (DEFICIT)
                                   ------          ------        -------       -------      ----------------
<S>                             <C>            <C>            <C>            <C>             <C>
Balances at December
  31, 1996 ..............          4,313       $      4       $     24       $ (2,468)       $ (2,440)
     Exercise of stock
       options ..........             58             --              2             --               2
     Net income
       (loss) ...........             --             --             --         (7,314)         (7,314)
                                --------       --------       --------       --------        --------
Balances at December
  31, 1997 ..............          4,371              4             26         (9,782)         (9,752)
     Conversion of
       Class A
       convertible
       redeemable
       preferred
       stock ............             55             --             18             --              18
     Conversion of
       Class B
       convertible
       redeemable
       preferred
       stock ............             80             --             61             --              61
     Exercise of stock
       options ..........            349              1             30             --              31
     Issuance of
       warrants .........             --             --            109             --             109
     Net income
       (loss) ...........             --             --             --        (11,987)        (11,987)
                                --------       --------       --------       --------        --------
Balances at December
  31, 1998 ..............          4,855              5            244        (21,769)        (21,520)
Microsoft investment ....          1,373              1         17,845                         17,846
Conversion of
      convertible
      redeemable
      preferred stock ...         11,856             12         29,905                         29,917
Initial  public offering,
      net of expenses ...          5,075              5         59,936                         59,941
     Exercise of stock
        options .........            532              1            192             --             193
     Equity-based
        expense ............          --             --          2,710             --           2,710
     Net income
        (loss) ..........             --             --             --        (23,988)        (23,988)
                                --------       --------       --------       --------        --------
Balances at December
31, 1999 ................         23,691       $     24       $110,832       $(45,757)       $ 65,099
                                ========       ========       ========       ========        ========
</TABLE>


                See accompanying notes to financial statements.



                                      F-5

<PAGE>   38

                               CAREERBUILDER, INC.

                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                         YEAR ENDED DECEMBER 31,
                                                                                         -----------------------
                                                                                  1997              1998           1999
                                                                                  ----              ----           ----
<S>                                                                             <C>             <C>             <C>
Cash flows used by operating activities:
  Net  loss                                                                      $ (7,314)       $(11,987)       $(23,988)
  Adjustments to reconcile net loss to net cash used by operating
       activities:
    Noncash items included in net income (loss):
      Depreciation and amortization                                                   334             871           1,195
      Allowance for doubtful accounts and sales returns                               225             653             287
      Equity-based expense                                                              -               -           2,710
    Increase in assets:
      Accounts receivable                                                            (739)         (1,649)         (1,735)
      Other operating assets                                                          (12)           (317)           (646)
    Increase (decrease) in liabilities:
      Accounts payable                                                                871             475             508
      Accrued expenses                                                                421             943           3,515
      Deferred revenue                                                                395           1,798          (1,775)
                                                                                 --------        --------        --------
        Net cash used by operating activities                                      (5,819)         (9,213)        (19,929)
                                                                                 --------        --------        --------
Cash flows used by investing activities:
  Purchases of property and equipment                                              (1,128)         (1,084)         (2,010)
  Increase in other assets                                                            (69)            (18)         (2,697)
                                                                                 --------        --------        --------
    Net cash used by investing activities                                          (1,197)         (1,102)         (4,707)
                                                                                 --------        --------        --------
Cash flows from financing activities:
  Proceeds from issuance of Class F convertible redeemable preferred stock          8,565           8,310          10,986
  Proceeds from initial public offering, net of expenses                                -               -          59,941
  Proceeds from investment from Microsoft                                               -               -          17,846
  Proceeds from exercise of stock options                                               2              31             193
  Advances on line of credit                                                          276           2,774             390
  Payoff of line of credit                                                              -               -          (3,840)
                                                                                 --------        --------        --------
    Net cash provided by financing activities                                       8,843          11,115          85,516
                                                                                 --------        --------        --------
Net change in cash and cash equivalents                                             1,827             800          60,880
Cash and cash equivalents, beginning of period                                         82           1,909           2,709
                                                                                 --------        --------        --------
Cash and cash equivalents, end of period                                         $  1,909        $  2,709        $ 63,589
                                                                                 ========        ========        ========
Supplemental cash flow information: Interest and income taxes paid:
         Interest paid                                                           $     37        $     98        $    355
         Taxes paid                                                                     -               -               -
</TABLE>

                See accompanying notes to financial statements.



                                      F-6

<PAGE>   39

                               CAREERBUILDER, INC.

                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 -- ORGANIZATION

     CareerBuilder, Inc. ("CareerBuilder" or the "Company") was established as
NetStart, Inc. on November 6, 1995, through incorporation in the State of
Delaware. In March 1998, the Company amended its articles of incorporation to
change its name to CareerBuilder, Inc. The Company is a provider of
comprehensive online recruitment offerings for employers and job seekers. The
Company's revenue is derived principally from service fees. Service fees include
subscription fees, which allow customers to post up to a specific number of job
advertisements per month on the career sites that constitute the CareerBuilder
Network, banner and other employment advertising fees and fees for recruiting
services provided by the Company. Software license fees are generated from sales
of TeamBuilder Software. The CareerBuilder Network consists of company-owned and
third party internet sites ("affiliates").

     The Company operates in a highly competitive environment and inherent in
the Company's business are various risks and uncertainties including its limited
operating history and unproven business model. The Company's success may depend
in part upon the emergence of the Internet as a communications medium,
prospective product and service development efforts, and the acceptance of the
Company's offerings by the marketplace. The Company expects to expand its
operations through continued capital investment. The Company is not currently
generating sufficient cash flows from operations to support its current
operating and capital requirements but believes that existing cash and cash
equivalents will be sufficient to fund operations for at least the next 12
months.

NOTE 2  -- BASIS OF PRESENTATION

     The financial statements include the accounts of CareerBuilder, Inc.
Certain amounts in the 1998 financial statements have been reclassified to
conform to the 1999 presentation.


NOTE 3 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) REVENUE RECOGNITION

     Service revenue consists of the sale of classified employment advertising
on Company-owned and affiliate websites and is recognized ratably over the
subscription period. Revenue from the sale of software is recorded upon shipment
of the product to the buyer, net of estimated returns.

     Deferred revenue represents amounts billed or payments received in advance
of the subscription period and is recognized as revenue ratably over the
subscription period.

     In December 1999,  the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements", ("SAB No. 101"). SAB No. 101 summarizes certain of the SEC staff's
views in applying generally accepted accounting principles to the recognition of
revenue in financial statements. The Company believes SAB No. 101 has had no
impact on the Company's reported earnings or financial position.

(b) COST OF REVENUE

     Cost of revenue includes both cost of service and cost of software license
fees. Cost of service fees includes costs associated with hosting the network,
including depreciation expense and commissions and fees paid to ADP, Inc.
("ADP") and other affiliates. Amounts incurred for affiliates and ADP
commissions were approximately $644,000 and $4.7 million for the years ended
December 31, 1998 and 1999, respectively. No such amounts were incurred in 1997.
Cost of software license fees consist of royalties paid to third parties for an
embedded database included in the software license.

(c) CASH EQUIVALENTS



                                       F-7

<PAGE>   40

     The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. As of December 31,
1999, cash equivalents consist of investments in a money market fund. The
carrying amounts reported in the balance sheets for cash and cash equivalents
approximate their fair value. Interest income on such investments was
approximately $144,000, $129,000 and $2,427,000 for the years ended December 31,
1997, 1998 and 1999, respectively.

(d) FAIR VALUE OF FINANCIAL INSTRUMENTS

     The carrying amounts of the Company's financial instruments, which include
cash equivalents, accounts receivable, accounts payable, accrued expenses, line
of credit and convertible redeemable preferred stock, approximate their fair
values as of December 31, 1998 and 1999.

(e) CONCENTRATION OF CREDIT RISK

     Financial instruments that potentially subject the Company to a
concentration of credit risk consist of accounts receivable. The Company extends
credit to its customers on an unsecured basis in the normal course of business.
The Company had a receivable from ADP, Inc. at December 31, 1999 representing
$1.2 million or 34% of trade receivables.
(See Note 7 - Related Party Transactions).

(f) EQUITY-BASED EXPENSE

      Equity-based expense represents the amortization of the fair market value
of warrants issued under marketing and sales representative agreements. The
warrants are amortized on straight-line basis over the life of the respective
agreements.

(g) PROPERTY AND EQUIPMENT

     Property and equipment are stated at cost. Depreciation is calculated using
the straight-line method over the estimated useful lives of the assets, which
range from two to five years. The costs of leasehold improvements are
capitalized and amortized using the straight-line method over the shorter of
their useful lives or the terms of the respective leases.

(h) PRODUCT DEVELOPMENT COSTS

     Product development costs include expenses incurred by the Company for
research, design and development of the Company's proprietary technology
incorporated in the TeamBuilder offerings and the CareerBuilder Network. Product
development costs are expensed as incurred. Software development costs are
required to be capitalized when a product's technological feasibility has been
established by completion of a working model of the product and ending when a
product is available for general release to customers. To date, completion of a
working model of the Company's products and general release have substantially
coincided. As a result, the Company has not capitalized significant software
development costs.

(i) STOCK-BASED COMPENSATION

     The Company accounts for employee stock-based compensation arrangements in
accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to Employees," and complies with the
disclosure provisions of Statement of Financial Accounting Standards ("SFAS")
No. 123, "Accounting for Stock-Based Compensation." Under APB No. 25,
compensation expense for employee stock options is based upon the difference, if
any, on the date of grant, between the fair value of the Company's Common stock
and the exercise price.

(j) INCOME TAXES

     The Company uses the asset and liability method of accounting for income
taxes. Under the asset and liability method, deferred tax assets and liabilities
are recognized for future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.



                                       F-8

<PAGE>   41

(k) NET INCOME (LOSS) PER SHARE

     The Company computes net income (loss) per share in accordance with SFAS
No. 128, "Earnings Per Share" and SEC Staff Accounting Bulletin No. 98 ("SAB
98"). Under the provisions of SFAS No. 128 and SAB 98, basic net income (loss)
per share is computed by dividing the net income (loss) available to common
stockholders for the period by the weighted average number of common shares
outstanding during the period. Diluted net income (loss) per share is computed
by dividing the net income (loss) for the period by the weighted average number
of common and dilutive common equivalent shares outstanding during the period.
The Company has presented historical basic and diluted net income (loss) per
share in accordance with SFAS No. 128. As the Company had a net loss in each of
the periods presented, basic and diluted net income (loss) per share is the
same. Pro forma basic and diluted net income (loss) per share has been
calculated assuming the conversion into common stock of all shares of preferred
stock outstanding at December 31, 1997 or the date of issuance, if later.

(l) USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from those estimates.

(m) ADVERTISING COSTS

      The Company expenses advertising costs as incurred.  Advertising costs
amounted to approximately $1,900,000, $3,560,000 and $9,349,000 for the years
ended December 31, 1997, 1998 and 1999, respectively.

(n) COMPREHENSIVE INCOME (LOSS)

     Effective January 1, 1998, the Company adopted the provisions of SFAS No.
130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards for
reporting comprehensive income (loss) and its components in financial
statements. Comprehensive income (loss), as defined, includes all changes in
equity (net assets) during a period from non-owner sources. To date, the Company
has not had any transactions that are required to be reported as other
comprehensive income (loss).

NOTE 4 -- PROPERTY AND EQUIPMENT

     Property and equipment consists of the following:

<TABLE>
<CAPTION>
                                                                                   DECEMBER 31,
                                                                                   ------------
                                                                                                         DEPRECIABLE
                                                                                1998         1999           LIVES
                                                                             ----------   ---------         -----
                                                                                 (IN THOUSANDS)
<S>                                                                          <C>         <C>            <C>
                 Computer equipment.......................................    $   1,774   $3,518           2 years
                 Furniture and equipment..................................          533      761          3-5 years

                                                                                                          Shorter of
                 Leasehold improvements...................................          160      198        useful life or
                                                                              ---------   ------         term of lease
                                                                                  2,467    4,477
                 Less: accumulated depreciation and amortization..........        1,254    2,449
                                                                              ---------   ------
                                                                              $   1,213   $2,028
                                                                              =========   ======
</TABLE>

     Depreciation and amortization expense for the years ended December 31,
1997, 1998 and 1999 was $334,000,  $871,000, and $1,195,000, respectively.


NOTE 5 -- LINES OF CREDIT

     As of December 31, 1999, all long term debt and lines of credit have been
paid in full. As of December 31, 1998, $3,450,000 was outstanding under the line
of credit agreements. The Company retained a line of credit for up to
$2,000,000, with the amount actually available for borrowing adjusted based upon
the Company's accounts receivable and property and equipment balances, that
expired on December 28, 1999. The Company renegotiated the terms of the line of
credit as of February 3, 2000 for a term of two years. The line of credit bears
interest at the bank's prime rate plus 1/2 %.



                                       F-9

<PAGE>   42

NOTE 6 --  STOCKHOLDERS' EQUITY (DEFICIT)

     The Company's Certificate of Incorporation, as amended, authorizes the
Company to issue 60,000,000 shares of common stock.

     Convertible redeemable preferred stock as of December 31, 1998 consisted of
the following:

<TABLE>
<CAPTION>
                                                 SHARES           LIQUIDATION       REDEMPTION
                               AUTHORIZED      OUTSTANDING          AMOUNT            AMOUNT
                               ----------      -----------          ------            ------
                                                     (IN THOUSANDS)
<S>                              <C>              <C>           <C>              <C>
               Class A....        1,563            1,508         $     565        $     481
               Class B....        2,151            2,071             1,847            1,574
               Class C....        3,189            3,189             5,202            4,567
               Class D....        2,046            2,046             7,862            7,279
               Class E....        1,024            1,024             5,203            5,030
</TABLE>

     On January 26, 1999, the Company issued 2,018,350 shares of Class F
Convertible Redeemable Preferred Stock to new and existing investors for
approximately $10,986,000. The Class F preferred stock automatically converted
into common stock upon the initial public offering.

     In May 1999, the Company issued 5,075,000 shares of the Company's Common
Stock to the public at $13 per share, generating net proceeds to the Company of
approximately $59.9 million. Concurrent with this transaction, all outstanding
shares of Convertible Redeemable Preferred Stock were converted into 11,856,295
shares of Common Stock.

NOTE  7-- RELATED PARTY TRANSACTIONS

     In January 1998, the Company entered into a sales agent agreement with ADP;
this agreement was amended in January 1999. ADP is related to the Company
through common stock ownership. ADP also has the right to appoint and nominate
one member of the Board of Directors, as long as ADP beneficially owns at least
2 percent of the outstanding common stock.

     Under the agreement, ADP sells the Company's classified employment
advertising services on a commission basis. Such commissions range from 33% to
50% of total revenues generated by ADP. Under the agreement, ADP performs all
billing and collections on behalf of the Company and remits amounts due to the
Company, net of its commissions. In connection with the agreement, ADP made a
prepayment of expected sales to the Company of $1,500,000. This amount was
deferred and reduced by amounts earned of $405,000 as of December 31, 1998; as
of June 1999 the prepayment was reduced to zero. In 1998 and 1999, commission
expense under the ADP agreement was approximately $328,000 and $2.0 million,
respectively. As of December 31, 1999, approximately $1.2 million was due from
ADP under this agreement and is included in accounts receivable.

     In May 1999, the Company entered into a strategic arrangement with
Microsoft Corporation. As part of its strategic arrangement, Microsoft invested
$17,846,621, or $13.00 per share, for 1,372,817 shares of the Company's Common
Stock. The Company also issued a warrant to Microsoft to purchase 873,534 shares
of Common Stock at an exercise price of $13.00 per share. The Company recognized
approximately $2.0 million of expense related to the warrant in 1999 and expects
to recognize approximately $3.8 million of expense related to these warrants
between 2000 and 2001, ratably, based on the duration of the agreement.

     Under its service and distribution agreement with Microsoft, CareerBuilder
may be required to pay Microsoft up to $3.0 million in 2000 and up to $1.8
million in 2001 if Microsoft achieves agreed upon web site traffic goals. The
Microsoft career site was launched in late September 1999 and as of December 31,
1999 $293,000 in fees due Microsoft had been incurred and $78,000 had been paid.

NOTE 8 -- STOCK COMPENSATION

(a)    EMPLOYEE STOCK PURCHASE PLAN

      CareerBuilder implemented an employee stock  purchase plan ("ESPP")
effective May 7, 1999. The plan allows employees to voluntarily purchase shares
of common stock from the Company in a series of one or more offerings during the
year through payroll deductions. Employees may purchase the stock at a 15%
discount from the lower of the closing price of Common Stock on the offering
commencement date or the last business day on which the offering terminated.
Each offering commencement date will begin



                                      F-10

<PAGE>   43
 a six month period except for the initial public offering period which was from
May 7, 1999 to December 31, 1999. The total number of shares under the ESPP plan
is limited to 3,300,000 shares of Common Stock less the sum of the number of
shares awarded or issued under the Company's 1999 Stock Incentive Plan and the
Company's 1999 Director Stock Option Plan. The plan is administered by the Board
of Directors. As of December 31, 1999, payroll deductions for the employee stock
purchase plan totaled $242,000.

     On January 3, 2000, the Company sold 35,997 shares of Common Stock to the
ESPP for a total of $197,000. The fair value of the employees' purchase rights
of ESPP shares is estimated using the Black-Scholes option pricing model with
the following weighted-average assumptions used for purchases in the year ended
December 31, 1999: dividend yield of 0 percent, volatility of 100%, risk free
interest rate of 6.45% and expected life of six months. The weighted-average
fair value of the purchase rights granted in 1999 was $5.47 per share. The pro
forma expense for the year ended December 31, 1999 is included below.

(B)    STOCK OPTIONS

     In March 1999, the Company adopted the 1999 Stock Incentive Plan, the 1999
Non-Employee Director Stock Option Plan and the 1999 Employee Stock Purchase
Plan. Additionally, the Company increased the number of shares available for
issuance under its stock option plans to 3,300,000.

     The Company has a stock option plan which provides for the granting of
options to directors and employees of the Company to purchase shares of its
common stock within prescribed periods. Prior to the Company's initial public
offering, options were granted at an exercise price equal to the estimated fair
value on the grant date, as determined by the Board of Directors. Subsequent to
the initial public offering, options were granted at the quoted market price on
the date of grant. The options generally vest over three or four years, with
one-third or one-fourth of the shares vesting on each of the first through third
and fourth anniversaries of the date of grant.

     The Company has elected to follow APB 25 and related interpretations in
accounting for its employee stock options rather than the alternative fair value
accounting method allowed by SFAS No. 123. APB 25 provides that compensation
expense relative to the Company's employee stock options is measured based upon
the intrinsic value of the stock option. SFAS No. 123 requires companies that
continue to follow APB 25 to provide a pro forma disclosure of the impact of
applying the fair value method of SFAS No. 123.

     Under APB 25, because the exercise price of the Company's employee stock
options equaled the fair value of the underlying stock on the date of grant, no
compensation expense has been recognized. Had compensation expense for the
Company's stock option plan and ESPP been determined based upon the fair value
methodology under SFAS No. 123, the Company's net loss would have increased to
these pro forma amounts:

<TABLE>
<CAPTION>
                                                                          YEAR ENDED DECEMBER 31,
                                                          ---------------------------------------------------
                                                                1997               1998              1999
                                                          -----------------  --------------    --------------
                                                                  (IN THOUSANDS, EXCEPT PER SHARE DATA)
 <S>                                                    <C>                <C>                <C>
 Net income (loss) available to common
   stockholders:
   As reported........................................    $   (7,863)       $   (13,115)       $   (24,725)
   Pro forma..........................................        (7,869)           (13,140)           (25,306)
 Basic and diluted net income (loss)
   per share:
   As reported........................................    $    (1.80)       $     (2.92)       $     (1.48)
   Pro forma..........................................         (1.80)             (2.92)             (1.51)
</TABLE>

     The fair value of these options was estimated at the date of grant using
the Black-Scholes option pricing model on the date of grant using the following
assumptions:

<TABLE>
<CAPTION>
                                           YEAR ENDED DECEMBER 31,
                                 --------------------------------------
                                     1997           1998         1999
                                 ------------   ------------   --------
<S>                                <C>             <C>          <C>
Risk-free interest rates......      6.0%            5.5%         6.5%
Expected lives (in years).....      5.0             4.0          4.0
Dividend yield................       --              --           --
Expected volatility...........       --              --          100%
</TABLE>

     The weighted-average fair value of stock options granted during 1997, 1998,
and 1999 was $0.07, $0.22, and $5.96 respectively.


                                      F-11
<PAGE>   44


     A summary of the Company's stock option activity is as follows:

<TABLE>
<CAPTION>

                                                        SHARES               WEIGHTED AVERAGE
                                                     UNDER OPTION             EXERCISE PRICE
                                                    ---------------           --------------
                                                    (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                 <C>                       <C>
               Balance, December 31, 1996.........              775            $        0.06
               Granted............................              585                     0.30
               Exercised..........................               58                     0.04
               Canceled...........................               14                     0.27
                                                    ---------------            -------------
               Balance, December 31, 1997.........            1,288                     0.17
               Granted............................              632                     1.26
               Exercised..........................              349                     0.09
               Canceled...........................               87                     0.40
                                                    ---------------            -------------
               Balance, December 31, 1998.........            1,484                     0.64
               Granted                                          890                     8.26
               Exercised                                        532                      .36
               Cancelled                                        361                     1.55
                                                    ---------------            -------------
               Balance, December 31, 1999.........            1,481            $        5.13
</TABLE>



                                      F-12

<PAGE>   45

     The following table summarizes information concerning currently outstanding
and exercisable options at December 31, 1999:

<TABLE>
<CAPTION>
                                                  OPTIONS OUTSTANDING                                    OPTIONS EXERCISABLE
                            ---------------------------------------------------------------   -----------------------------------
                                NUMBER             WEIGHTED-AVERAGE           WEIGHTED-              NUMBER           WEIGHTED-
            RANGE OF          OUTSTANDING              REMAINING               AVERAGE             EXERCISABLE         AVERAGE
         EXERCISE PRICES      AT 12/31/99          CONTRACTUAL LIFE        EXERCISE PRICE          AT 12/31/99     EXERCISE PRICE
      --------------------  --------------    ------------------------- -------------------   ------------------- ---------------
                                                    (IN THOUSANDS, EXCEPT YEARS AND PER SHARE DATA)
<S>                             <C>          <C>                          <C>                        <C>         <C>
      $0.04 -- $0.40......          336       7.4 years                    $  0.28                    105         $  0.31
      $1.25 -- $3.50......          304       8.7 years                       1.49                     20            2.10
      $5.63 -- $8.06......          581       9.7 years                       7.01                      4            6.00
      $8.75 -- $13.00.....          132       9.4 years                       9.40                     --              --
      $13.13 -- $16.50....          128       9.5 years                      13.58                     17           13.31
                            -----------       ---------                    -------                   ----         -------
                                  1,481       8.9 years                    $  5.13                    146         $  2.21
</TABLE>

(c) WARRANTS

     In connection with the ADP agreement (see note 7), the Company granted
warrants to purchase up to 1,140,000 shares of the Company's common stock at an
exercise price of $5.00 per share. The warrants contain anti-dilution
provisions, which increase the number of shares ratably in connection with
certain additional equity issuances by the Company. In connection with the
issuance of Class E convertible redeemable preferred stock in July 1998,
warrants in December 1998 and Class F convertible redeemable preferred stock in
January 1999, the number of shares purchasable under the warrants was increased
to 1,294,052.

     On March 5, 1999, the Company and ADP amended their joint marketing and
sales representative agreement, extending the initial term of the agreement
through January 2002. The Company amended and restated the warrant granted in
January 1998, and warrants to purchase 380,000 shares of common stock, at an
exercise price of $12.00 per share, were vested at that time. The estimated
value of the warrant at the vesting date of $1,699,000 is being recognized as
equity-based expense ratably over the extended term of the agreement, which is
thirty-seven months. Warrants for the second and third installments of up to
380,000 shares of common stock each will vest on March 31, 2001 and March 31,
2002, respectively, based on ADP achieving specified revenue-based milestones.
The revenue-based milestones are measured for a specific time period, by
subtracting from total revenue received from customers for which ADP has acted
as a sales agent, sales commissions paid to ADP. In order for the minimum number
of shares under the March 2001 installment of the warrant to vest, revenue minus
sales commissions for the period from April 1, 2000 through March 31, 2001 must
exceed $10.2 million, with $20.4 million required for the maximum number of
shares issuable under the installment to vest. In order for the minimum number
of shares under the March 2002 installment to vest, the milestone of revenue
minus sales commission for the period from April 1, 2001 through March 31, 2002
must exceed $23.0 million, with $30.0 million required for the maximum number of
shares issuable under the installment to vest. The exercise price for the second
and third installments is $5.00 per share. In the event that ADP does not meet
the specified sales levels, the associated warrants expire. If the Company
issues additional equity securities primarily for financing purposes, excluding
the shares of common stock sold in an underwritten public offering or through
the Company's stock option plan, the number of shares of common stock issuable
upon exercise of the warrant will increase for each of the second and third
installments.

     If and when it becomes probable that the net revenue the Company will
receive from ADP will reach the necessary level for either of the remaining
installments of the warrant to vest, the Company would begin to record an
expense reflecting the fair value of the warrants, which will be determined in
part based on the then current market price of the common stock. The Company
would begin to recognize this expense on the determination of probability that
the revenue targets would be achieved, continuing through the actual vesting
date. The Company would initially estimate the amount of the expense at the time
of the determination that achievement is probable, based in part on the market
price of the common stock at that time. At the time of actual vesting, the fair
value of the warrant would be remeasured and, if different from the value used
in initially estimating the expense, the difference would be reflected as an
additional charge or credit at that time.

      As of December 31, 1999, the Company believes it is not yet probable that
ADP will achieve the necessary sales level to earn the warrants to purchase the
additional 914,052 shares of common stock.

     On March 5, 1999, the Company entered into an agreement with NBC
Multimedia. Under this agreement, the Company will host the NBC Interactive
career sites for participating NBC affiliates and NBC.com. Under this agreement,
CareerBuilder granted warrants to purchase 93,750 shares of common stock at an
exercise price of $8.00 per share and 53,571 shares at an exercise price of
$14.00 per share. The warrants become exercisable in various amounts on the
first, second, and third anniversaries of the agreement and expire five years
from the date of grant. The estimated value of the warrants at the grant date of
$706,000 is being recognized as equity-based expense ratably over the term of
the agreement, which is two years. In addition, the Company is required to make
certain mandatory



                                      F-13

<PAGE>   46

minimum payments totaling $750,000 to NBC Interactive in 1999 and 2000. For the
year ended December 31, 1999, $312,500 has been recognized as sales and
marketing expense related to mandatory minimum payments.

     In May 1999, the Company entered into a strategic arrangement with
Microsoft Corporation. As part of its strategic arrangement, Microsoft invested
$17,846,621, or $13.00 per share, for 1,372,817 shares of the Company's common
stock. The Company also issued a warrant to Microsoft to purchase 873,534 shares
of Common Stock at an exercise price of $13.00 per share. The Company is
recognizing approximately $5.8 million of expense related to the warrant ratably
between 1999 and 2001, reflecting the term of the strategic agreement.

     In December 1998, the Company granted warrants to purchase 40,568 shares of
common stock at an exercise price of $4.93 per share as consideration for
obtaining a line of credit (see note 5). The warrants expire in ten years. The
estimated value of the warrants of approximately $109,000 was recorded as an
other asset with the offsetting amount recorded as additional paid-in capital.

NOTE 9 -- LEASES

     The Company is obligated under several noncancelable operating leases for
office space. The future minimum lease obligations under these noncancelable
operating leases as of December 31, 1999 are approximately as follows:

<TABLE>
<CAPTION>
                            YEAR ENDING DECEMBER 31,
                      ------------------------------------
                                                              (IN THOUSANDS)
<S>                                                           <C>
                      2000...............................          $1,665
                      2001...............................           1,781
                      2002...............................           1,670
                      2003...............................           1,669
                      2004...............................           1,719
                      Thereafter.........................           5,629
                                                               ----------
                                                                  $14,133
</TABLE>

     Rent expense under noncancelable operating leases was approximately
$279,000, $422,000 and $540,000 for years ended December 31, 1997, 1998 and
1999, respectively.

NOTE 10 -- COMMITMENTS AND CONTINGENCIES

(a) RETIREMENT AND HEALTH PLANS

     The Company sponsors a defined contribution retirement plan available to
substantially all employees. The Company's contributions under the Plan are
discretionary. There were no Company contributions made to the Plan during any
of the periods presented.

     The Company is self-insured for group health below certain specified
limits.

NOTE 11 -- INCOME TAXES  (KEN I CALLED GRACE LEO AND SHE IS WORKING ON THIS..)

     No provision for federal or state income taxes has been recorded as the
Company incurred net operating losses for all periods presented. As of December
31, 1999, the Company had net operating loss carryforwards available to offset
future taxable income of approximately $40,705,000, which expires through
2019. Further, as a result of certain capital transactions, the utilization of
the net operating loss generated prior to the date of such capital transactions
may be limited. The actual income tax benefit differed from the income tax
benefit which would be computed based upon the statutory federal tax rates as a
result of recording of a valuation allowance.

     Temporary differences that give rise to deferred tax assets and liabilities
at December 31, 1998 and 1999 are as follows:

<TABLE>
<CAPTION>
                                                                      1998         1999
                                                                  -----------   ---------
                                                                        (IN THOUSANDS)
<S>                                                              <C>           <C>
                Deferred tax assets:
                  Net operating loss carryforwards............     $    7,877  $   16,282
                  Accounts receivable.........................             54         168
                  Property and equipment......................            155         285
                  Accrued expenses............................            219         219
                  Deferred revenue............................            438         163
                  Equity Based Expenses.......................              0       1,084
                  Intangibles.................................              0           2
                  Charitable Contributions....................              0           2
                                                                   ----------  ----------
                          Total gross deferred tax assets.....          8,743      18,205
</TABLE>




                                      F-14

<PAGE>   47

<TABLE>
<S>                                                               <C>             <C>
                Less: valuation allowance.....................         (8,743)        (18,205)
                                                                   ----------      ----------
                          Net deferred tax assets.............     $       --      $       --
                                                                   ==========      ==========
</TABLE>

     The valuation allowance for deferred tax assets as of December 31, 1998 and
1999 was $8,743,000 and $18,205,000 respectively. The net change in the
valuation allowance for the years ended December 31, 1998 and 1999, was an
increase of $4,867,000, and $9,462,000 respectively. In assessing the
realizability of deferred tax assets, management considers whether it is more
likely than not that some portion or all of the deferred tax asset will be
realized. The ultimate realization of the deferred tax asset is dependent upon
the generation of future taxable income during the periods in which temporary
differences become deductible. Management considers scheduled reversals of
deferred tax liabilities, projected future taxable income, and tax planning
strategies that can be implemented by the Company in making this assessment.
Based upon the level of historical taxable income, scheduled reversal of
deferred tax liabilities, and projections of future taxable income over the
periods in which the temporary differences become deductible based on available
tax planning strategies, management presently believes that it is not more
likely than not that the Company will realize all of the benefits of these
deductible differences and , accordingly, has established a valuation allowance
against the deferred tax assets as of December 31, 1998 and 1999.

NOTE 12 -- BASIC AND DILUTED NET LOSS PER SHARE

     The Company computes net income (loss) per share in accordance SFAS No.128,
"Earnings Per Share", which requires certain disclosures relating to the
calculation of earnings (loss) per common share. The following is a
reconciliation of the numerators and denominators of the basic and diluted
earnings (loss) per common share computations for net income (loss).

<TABLE>
<CAPTION>
                                                                              YEAR ENDED DECEMBER 31,
                                                               ---------------------------------------------------
                                                                     1997              1998               1999
                                                               ----------------  ----------------   --------------
                                                                        (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                             <C>                <C>             <C>
                           Net income (loss)................      $   (7,314)       $   (11,987)    $   (23,988)
                           Preferred stock dividend
                             requirements...................            (549)            (1,128)           (737)
                                                                  ----------        -----------     -----------
                           Net income (loss)
                             available to common
                             stockholders...................      $   (7,863)       $   (13,115)    $   (24,725)
                                                                  ==========        ===========     ===========
                           Weighted average shares of
                             common stock
                             outstanding....................           4,366              4,494          16,712
                                                                  ==========        ===========          ======
                           Basic and diluted net
                             income (loss) available
                             per common share...............      $    (1.80)       $     (2.92)    $     (1.48)
                                                                  ==========        ===========     ===========
</TABLE>



                                      F-15