##### Table of Contents

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SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-Q





|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ---------------------------------------------------------------------------------------




For the quarterly period ended June 30, 2002





OR





| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ----------------------------------------------------------------------------------------




Commission file number 0-25107





Dice Inc.


(Exact name of Registrant as specified in its charter)





Delaware

13-3899472(State or other jurisdiction of

(I.R.S. Employer Identification No.)incorporation or organization)3 Park Avenue,

10016New York, New York

(including Zip Code)(Address of principal executive offices)





(212) 725-6550


(Registrants telephone number, including area code)





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  ̈





As of July 17, 2002,
the registrant had outstanding 10,954,026 shares of common stock, $.01 par value.





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##### Table of Contents

DICE INC.





TABLE OF CONTENTS





Page No.PART I.

FINANCIAL INFORMATIONItem 1.

Condensed Consolidated Financial Statements:Condensed Consolidated Balance Sheetsas of June 30, 2002 and December 31, 2001

3Condensed Consolidated Statements of Operationsfor the three and six month periods ended June 30, 2002 and 2001

4Condensed Consolidated Statements of Cash Flows for the six month periods ended June 30, 2002 and 2001

5Notes to Condensed Consolidated Financial Statements

6Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations

11Item 3.

Quantitative and Qualitative Disclosures About Market Risk

17PART II.

OTHER INFORMATIONItem 1.

Legal Proceedings

18Item 2.

Changes in Securities and Use of Proceeds

18Item 3.

Defaults Upon Senior Securities

18Item 4.

Submission of Matters to a Vote of Security Holders

18Item 5.

Other Information

19Item 6.

Exhibits and Reports on Form 8-K

19Signatures

20




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##### Table of Contents

PART IFINANCIAL INFORMATION





Item 1.    Condensed Consolidated Financial Statements





DICE INC.





CONDENSED CONSOLIDATED BALANCE SHEETS


(in thousands, except per share data)





June 30, 2002


December 31, 2001(unaudited)ASSETS:Current Assets:Cash and cash equivalents

$
9,654


$
20,225Marketable securities


3,046



4,608Accounts receivable, net of allowances of $697 and $1,253, respectively


2,106



2,708Prepaid expenses and other current assets


2,993



3,872Convertible notes repurchase option


2,821



Total current assets


20,620



31,413Fixed assets, net


9,225



9,993Intangible assets, net


3,895



5,222Goodwill


16,605



23,023Restricted cash


1,057



1,057Other assets, net


1,649



2,295Total assets

$
53,051


$
73,003LIABILITIES AND STOCKHOLDERS DEFICIT:Current liabilities:Accounts payable and accrued expenses

$
4,944


$
6,457Accrued interest


2,123



2,178Deferred revenue


5,260



5,506Amounts due under acquisition agreements






4,000Notes and leases payablecurrent portion


895



1,237Deferred gain on repurchase of notes, net


488



Total current liabilities


13,710



19,378Long term debt


69,434



71,200Leases payable


465



793Other liabilities


792



815Commitments and contingencies (Note 8)Stockholders deficit:Common stock, par value $.01; 75,000 authorized;10,898 and 10,659 issued, respectively


109



107Additional paid in capital


126,427



126,204Accumulated comprehensive other income (loss)


14



(4
)Treasury stock at cost, 5 and 9 shares, respectively


(200
)


(213
)Accumulated deficit


(157,700
)


(145,277
)Total stockholders deficit


(31,350
)


(19,183
)Total liabilities and stockholders deficit

$
53,051


$
73,003





The accompanying notes are an integral part of these condensed consolidated
financial statements.




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##### Table of Contents




DICE INC.





CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(unaudited, in thousands except per share data)





Three months ended June
30,


Six months ended June
30,2002


2001


2002


2001Revenues

$
8,422


$
15,522


$
17,507


$
32,622Cost of revenues


843



1,321



1,775



2,698Gross profit


7,579



14,201



15,732



29,924Operating expenses:Product development


501



1,294



1,127



2,668Sales and marketing


4,855



8,141



9,997



17,718General and administrative


2,010



2,742



4,252



5,376Depreciation


1,320



948



2,521



1,736Amortization


615



4,223



1,327



8,018Restructuring and one-time charges, net














270Total operating expenses


9,301



17,348



19,224



35,786Loss from operations


(1,722
)


(3,147
)


(3,492
)


(5,862
)Interest expense


(1,375
)


(1,598
)


(2,790
)


(3,164
)Interest and other income


75



388



276



973Net loss before cumulative effect of change in accounting principle


(3,022
)


(4,357
)


(6,006
)


(8,053
)Cumulative effect of change in accounting principle


(6,418
)






(6,418
)


Net loss

$
(9,440
)

$
(4,357
)

$
(12,424
)

$
(8,053
)Net loss per share before cumulative effect of change in accounting principle per share

$
(0.28
)

$
(0.42
)

$
(0.55
)

$
(0.77
)Cumulative effect of change in accounting principle per share


(0.59
)






(0.59
)


Basic and diluted net loss per share

$
(0.87
)

$
(0.42
)

$
(1.14
)

$
(0.77
)Weighted average shares of common stock outstanding


10,892



10,467



10,851



10,448








The accompanying notes are an
integral part of these condensed consolidated financial statements.




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DICE INC.





CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(unaudited, in thousands)





Six Months Ended June
30,2002


2001Cash flows used in operating activities:Net loss

$
(12,424
)

$
(8,053
)Adjustments to reconcile net loss to net cash used in operating activities:Impairment of goodwill (change in accounting principle)


6,418



Depreciation


2,521



1,736Amortization of intangible assets


1,327



8,018Amortization of deferred financing costs


243



277Provision for doubtful accounts


235



1,065Non-cash reversal of accrued restructuring charges






(268
)Charge related to issuance of restricted stock and stock options


105



82Changes in operating assets and liabilities:Accounts receivable


367



3,271Prepaid expenses and other assets


1,252



(1,341
)Accounts payable and accrued expenses


(1,472
)


(3,416
)Accrued interest


(55
)


Deferred revenue


(246
)


395Accrued restructuring charge


(42
)


(6,707
)Other, net


(70
)


(144
)Net cash used in operating activities


(1,841
)


(5,085
)Cash flows used in investing activities:Sale of investment securities


3,203



Purchase of investment securities


(1,599
)


Purchase of fixed assets


(1,754
)


(3,290
)Restricted cash






(500
)Net cash used in investing activities


(150
)


(3,790
)Cash flows used in financing activities:Proceeds from issuance of common stock, net


147



364Payments of obligations under acquisition agreements


(4,000
)


(5,310
)Purchase of convertible note repurchase option and related costs


(2,821
)


Payments of principal on capital leases and notes payable


(670
)


(1,082
)Payments for repurchase of convertible notes


(1,236
)


Reimbursements for capital leases payments






179Net cash used in financing activities


(8,580
)


(5,849
)Net change in cash and cash equivalents for the period


(10,571
)


(14,724
)Cash and cash equivalents, beginning of period


20,225



40,157Cash and cash equivalents, end of period

$
9,654


$
25,433








The accompanying notes are an
integral part of these condensed consolidated financial statements.




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##### Table of Contents

DICE INC.





NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(unaudited)





1.    The Company and Basis of Presentation





Dice Inc. (Dice or the Company), a Delaware corporation, provides online technology recruiting and career development services. Dice provides services to hire, train and retain technology professionals through
dice.com, an online job board for technology professionals, and through MeasureUp, a provider of test preparation products for technology-related professional certifications.





Through December 26, 2000, Dice also owned and operated an online advertising and subscription supported content business (the Content Business). The Content
Business of Dice provided information to information technology professionals. On December 26, 2000, Dice completed the sale of certain assets of the Content Business to INT Media Group, Inc. (INT Media). These assets primarily consisted
of websites, certain computer equipment, furniture and fixtures and leasehold improvements related to the operations of those websites. In addition, on December 26, 2000, Dice announced that it was exiting the remaining content businesses that were
not sold to INT Media, which primarily included its subscription based online reference library, ITKnowledge.com.





Dice has sustained net losses and negative cash flows from operations since its inception. Dices ability to meet its obligations in the ordinary course of business is dependent upon its ability to establish profitable
operations or raise additional financing through public or private equity financings, or other sources of financings to fund operations. Management believes that the Companys current cash position and future cash flows from operations will be
sufficient to fund the Companys operations for at least the next twelve months. However, there can be no assurances that the Company will achieve its planned results. If anticipated results are not achieved, management has the ability to delay
or reduce certain of its expenditures so as to not require additional financing, if such financing is not available on terms acceptable to the Company. However, a majority of the Companys costs are fixed in nature and, therefore, if demand for
the Companys services is lower than anticipated in the near term, that decrease in demand will lower the availability of funds to the Company to fund its operations.





The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States
of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information required by accounting principles generally accepted in the United States
of America for annual financial statements. In the opinion of management, all adjustments, consisting only of normal recurring accruals, considered necessary for a fair presentation have been included. The results for the interim periods presented
are not necessarily indicative of the results that may be expected for any future period. The following information should be read in conjunction with the financial statements and notes thereto included in Dices Annual Report on Form 10-K for
the year ended December 31, 2001.





Certain amounts from the prior period have been reclassified to conform to the
current period presentation.





2.    Use of Estimates





The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenues and expenses during
the reporting period. Actual results could differ from these estimates. Dices significant estimates include the useful lives and valuations of fixed assets, goodwill, certain intangible assets and the Convertible Notes Repurchase Option (see
note 5), the accounts receivable allowance for doubtful accounts and the income tax valuation allowance.




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3.    Deferred Purchase Obligations





Under terms of the acquisition agreement for D & L Online, Inc., which owned and operated the dice.com website and was acquired in
February 1999, the Company has earnout obligations to the sellers of D & L Online, Inc. based on the attainment of certain financial targets. Based on results achieved in 1999, 2000 and 2001, $4.0 million was paid in each of April 2000,
April 2001 and April 2002, comprised of $10.0 million in cash and $2.0 million in common stock in the aggregate, including $4.0 million paid in cash in April 2002.





Under the terms of the acquisition agreement for MeasureUp, Inc., which was acquired in February 2000, the Company has certain earnout obligations to the sellers of
MeasureUp, Inc. Based on results achieved by MeasureUp in 2000, the Company paid $1.2 million in cash to the sellers of MeasureUp in April 2001. The financial targets were not achieved in 2001 and, therefore, the Company did not have any earnout
obligations related to 2001. The Company may have remaining earnout obligations based on the achievement of certain financial targets during 2002 of up to an aggregate of $3.0 million that would be payable in 2003 in cash and/or common stock, at the
Companys option.





4.    Intangible Assets and Goodwill





In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard No. 142,
Goodwill and Other Intangible Assets (FAS 142), effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill and intangible assets deemed to have indefinite lives, are no longer amortized, but
are subject to annual impairment tests in accordance with FAS 142. Other intangible assets continue to be amortized over their useful lives.





The Company applied the FAS 142 rules in accounting for goodwill and other intangible assets in the first quarter of 2002. During the second quarter of 2002 the Company completed the first annual
impairment tests. As of January 1, 2002, the fair value of two of the Companys reporting units, MeasureUp and CCPrep, did not exceed the carrying value of these reporting units and an impairment was recorded of approximately $6.4 million as a
cumulative effect of change in accounting principle.





The following adjusts reported net loss and earnings per
share to exclude goodwill amortization:





Three Months Ended June 30, 2001


Six Months Ended June 30, 2001Reported net loss

$
(4,357
)

$
(8,053
)Less: goodwill amortization


3,319



6,208Adjusted net loss

$
(1,038
)

$
(1,845
)Reported basic and diluted net loss per share

$
(0.42
)

$
(0.77
)Less: goodwill amortization


0.32



0.59Adjusted basic and diluted net loss per share

$
(0.10
)

$
(0.18
)





Intangible assets, related to the D&L Online acquisition in
February 1999 under which Dice.com was acquired, consists of the following:








Customer List


Trade Name


TotalAs of June 30, 2002:Intangible assets

$
8,100


$
4,200


$
12,300Less: accumulated amortization


(5,535
)


(2,870
)


(8,405
)Intangible assets, net

$
2,565


$
1,330


$
3,895





Customer List


Trade Name


Non-Compete Covenant


TotalAs of December, 31, 2001:Intangible assets

$
8,100


$
4,200


$
3,500


$
15,800Less: accumulated amortization


(4,725
)


(2,450
)


(3,403
)


(10,578
)Intangible assets, net

$
3,375


$
1,750


$
97


$
5,222




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Amortization expense will be $2.6 million, $2.5 million and $0.2 million for the
years ended December 31, 2002, 2003 and 2004, respectively. Also, during the period ended March 31, 2002 the non-compete covenant became fully amortized and was written off.





5.    Long Term Debt and Convertible Notes Repurchase Option





On April 3, 2002 Dice announced that it has negotiated the right to repurchase $53.02 million face amount of its 7% convertible subordinated notes due January 2005 (the Convertible Notes) from three of its
largest noteholders, upon certain change of control events, at prices ranging from 70% to 110% of face value, plus accrued interest through the date of repurchase. The actual repurchase price will depend upon the amount received by the Company or
its stockholders as a result of a change of control event, increasing to the maximum as proceeds to stockholders increase. The Companys repurchase option expires on October 3, 2002, although it may be extended for an additional three months
under certain conditions.





In addition, the Company repurchased $1.76 million aggregate principal amount of the
Convertible Notes from one of the holders for $1.24 million cash, plus accrued interest. The recognition of a gain of $0.5 million, net of deferred financing costs write-off, on the early extinguishment of debt has been deferred until the option is
exercised or the option period expires and the amount of gain is determinable. If there is a change of control event these Convertible Notes are subject to the same terms as described above.





In consideration for entering into these agreements, the Company paid $1.9 million in the aggregate to three noteholders and incurred approximately $1.0 million in
transaction costs for professional fees related to these agreements. The Company has recorded this payment and related transaction costs as a deferred asset and has accounted for it as a derivative security. The fair market value of the derivative
security will be determined on a quarterly basis and will be marked to market. As of June 30, 2002, the Company determined that there has been no change in the value of the option. Factors that were considered included the likelihood of a change in
control transaction, the remaining period to consummate a transaction, the current stock price and the likelihood of a change of control transaction resulting in the ability of the Company to exercise the option and realize a gain from the
extinguishment of the Convertible Notes covered by the option agreements.





6.    Fair Value of Financial
Instruments





The fair value of the Companys Convertible Notes is estimated based on a quoted market
price of the Convertible Notes as of June 30, 2002. The carrying amount is $69.4 million and the fair value was approximately $30.55 million as of June 30, 2002.





7.    Stock Option Grants





On December 7, 2001, the
Compensation Committee approved, subject to stockholder approval, a one-time grant to Mr. Scot Melland, President and Chief Executive Officer of the Company, of additional stock options to purchase 350,000 shares of the Companys common stock
at $0.97 per share, the closing price of the Companys common stock on the day immediately preceding the date of grant (the December Grant). The options vest over a period of four years, with twenty-five percent (25%) vesting upon
the first anniversary of the grant and six and one-quarter percent (61/4%) vesting quarterly thereafter, and are
exercisable until the tenth anniversary of the date of grant. The December Grant was not made under the 1998 Plan, which limits the number of options that can be granted under it in any fiscal year to any employee to options for 600,000 shares of
common stock. As a part Mr. Mellands employment agreement with the Company, Mr. Melland was granted in April 2001 under the 1998 Plan options to purchase 600,000 shares of common stock, as well as additional options to purchase 97,391 shares
of common stock outside of the 1998 Plan, in each case at an exercise price of $2.43 per share, the closing price of the Companys common stock on the day immediately preceding the date of grant. Because the December Grant was made outside of
the 1998 Plan (and not as part of Mr. Mellands initial employment




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arrangement), the grant was made subject to obtaining stockholder approval of the grant and was submitted to a stockholder vote at the June 2002 Annual Meeting of Stockholders, at which time the
stockholders approved the grant.





As a result of this transaction the Company incurred a non-cash stock
compensation charge of $445,000 that will be recognized over the four year vesting term of the options through December 2005 and is retroactive to the grant date of December 7, 2001. The charge was calculated as the difference between the exercise
price at the time of the grant of $0.97 and the closing price of Dice common stock at the time the grant was approved of $2.24, multiplied by the number of options granted. A non-cash charge of $63,000 was recognized in the second quarter.





8.    Commitments and Contingencies





Litigation





On July 5, 2001,
Scott Wainner commenced an arbitration against the Company before the American Arbitration Association. Mr. Wainner asserts various claims under an Asset Purchase Agreement, dated July 13, 1999 between the Company and Mr. Wainner relating to the
purchase by the Company of certain websites. Mr. Wainner claims that he is entitled to certain additional payments under the Asset Purchase Agreement and also alleges that the Company has breached other obligations to him. In his demand for
arbitration, Mr. Wainner seeks damages in the amount of $2 million, plus interest and other amounts. The Company transferred the websites in question to INT Media Group, Inc. on December 26, 2000. The Company believes that it has meritorious
defenses to Mr. Wainners claims, and the Company intends to vigorously contest this proceeding. The hearings in the arbitration have been held and the parties have submitted post-hearing briefs. Due to the inherent uncertainties of
arbitration, the Company cannot predict the outcome of the proceeding with any certainty. An adverse outcome in the arbitration could have a material adverse effect on the Companys business.





On November 5, 2001, a class action lawsuit was filed in the United States District Court for the Southern District of New York against
the Company, certain of its present and former directors and former officers, and the underwriters of the Companys initial public offering and secondary offering (J.P. Morgan Securities, Inc., Bear Stearns & Co., Inc., Volpe Brown Whelan
& Co., LLC and Wit Capital Corporation). The complaint alleges, among other things, that the underwriters of the Companys initial public offering and secondary offering violated the securities laws by failing to disclose certain alleged
compensation arrangements (such as undisclosed commissions or stock stabilization practices) in the registration statements for the offerings. The Company and certain of its present and former directors and former officers are named in the
complaints pursuant to Section 11 of the Securities Act of 1933. Similar actions have been filed against more than 300 other issuers and their underwriters relating to offerings since 1998. The Company intends to defend the case vigorously. Due to
the inherent uncertainties of litigation, the Company cannot predict the outcome of this litigation with any certainty. An adverse outcome in this litigation could have a material adverse effect on the Companys business.





The Company is party to other claims and litigations that arise in the normal course of business. The Company believes that the
ultimate outcome of those other claims and litigation will not have a material effect on the Companys financial position or results of operations





Lease Obligations and Marketing Agreements





The Company
has long term obligations for operating leases (principally for its leased facilities in Urbandale, Iowa) which aggregate $13.8 million through 2011, of which $0.8 million is payable during the remainder of 2002; and obligations under capital leases
aggregating $1.4 million through 2004, including interest, of which $0.5 million is payable during the remainder of 2002. In addition, the Company has commitments under various marketing arrangements to pay an aggregate of $7.7 million through 2004,
of which approximately $2.7 million is payable during the remainder of 2002.




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9.    Comprehensive Loss





Comprehensive loss represents net loss plus the results of certain stockholders deficit changes not reflected in the Statements of
Operations. The components of comprehensive loss, net of tax, are as follows (in thousands):





Three Months EndedJune 30,


Six Months EndedJune 30,2002


2001


2002


2001(unaudited)


(unaudited)Net loss

$
(9,440
)

$
(4,357
)

$
(12,424
)

$
(8,053
)Unrealized appreciation (depreciation) of available-for-sale securities


51



(18
)


18



1Comprehensive loss

$
(9,389
)

$
(4,375
)

$
(12,406
)

$
(8,052
)




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Item 2.    
Managements Discussion and Analysis of Financial Condition and Results of Operations





The following discussion of the financial condition and results of operations of Dice should be read in conjunction with the Managements Discussion and Analysis of Financial Condition and Results of Operations and the
Consolidated Financial Statements and the Notes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2001. This quarterly report on Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties and actual results could differ materially from those
discussed in the forward-looking statements. All forward-looking statements included in this document are made as of the date hereof, based on information available to Dice as of the date thereof, and Dice assumes no obligation to update any
forward-looking statement or risk factors. For a discussion of risks related to our financial condition and business model, see Item 1 Risk Factors included in the Companys Annual Report on Form 10-K for the year ended December 31,
2001.





We (Dice or the Company) are an industry leader in online technology recruiting and
career development, providing direct employers, staffing companies and recruiting firms with access to a broad and unique talent pool of technology professionals. We offer online recruiting and career development services to both technology
professionals and the companies that depend on them through dice.com, a leading online technology job board, and through MeasureUp, a leading online provider of technology certification test preparation products.





We support organizations across industries by helping them hire, train and retain the technology talent needed to compete in todays
technology-intensive economy. Employers and recruiters of technology professionals pay for access to our online recruiting services to help them find the right technology employee or contractor. These services include recruitment advertising through
job postings on dice.com and access to our database of technology job seekers.





Technology job seekers use Dice to
help manage their careers by posting their resumes on dice.com, searching dice.coms database of permanent, contract and consulting technology job postings, and using our technology career resources, including MeasureUps technology
certification test preparation products.





The job postings available in our database, from both technology and
non-technology companies, include a wide variety of technology positions from programmers, software engineers and systems administrators to chief information and technology officers, as well as job postings for engineering and technical
professionals.





Through December 26, 2000, we owned and operated an online advertising and subscription-supported
content business (the Content Business). The Content Business provided a comprehensive set of information to information technology professionals serving each of the major vertical markets in the information technology industry,
including enterprise management, networking and telecommunications, software and Internet development, and hardware and systems.





On December 26, 2000, we completed the sale of certain assets of our Content Business, which primarily consisted of websites, certain computer equipment, and furniture, fixtures and leasehold improvements related to the operations of
those websites, to INT Media Group (formerly known as Internet.com Corporation) and announced that we were exiting our remaining content businesses which primarily included our subscription-based online reference library, ITKnowledge.com.





On June 13, 2001, we changed our name from EarthWeb Inc. to Dice Inc. As part of this process we changed the
ticker symbol under which our stock trades on the Nasdaq National Market from EWBX to DICE.





Results of Operations





Revenue.    Our paid
listing revenue is derived from the sale of technology job listings to recruiters and employers on the dice.com website. We train our customers on the use of the website and provide ongoing




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support to help them maximize their use via a telesales force and customer service team. The price for this service is generally based on the number of jobs a customer posts, the number of
locations to which dice.com provides access, and the number of users at each location.





We also generate revenue
through MeasureUp which provides online certification test preparation and related products and also offers instructor-led training classes. Technology professionals preparing for certification exams use these products at training centers or
individually online and attend our training classes. MeasureUp provides online practice exams to help prepare technology professionals for the actual certification exams.





Revenue for the three months ended June 30, 2002 decreased $7.1 million to $8.4 million from $15.5 million for the three months ended June 30, 2001. Paid listing
revenues decreased by $6.6 million to $7.4 million from $14.0 million due to a decline in the number of customers that was driven by an overall decrease in the demand for job postings. Certification test preparation and instructor-led training
class revenues decreased by $0.5 million to $1.0 million from $1.5 million due to an overall decrease in demand for these products and services. The decrease was partially offset by $0.16 million in incremental revenue (attributable to the second
half of 2001 and the first quarter of 2002) that was recorded after resolving a billing issue related to a certification preparation product licensing contract. For the three months ended June 30, 2002 and 2001 no single customer accounted for more
than 4% and 2% of revenue, respectively. The Company had no barter revenue for the three months ended June 30, 2002 and 2001.





Revenue for the six months ended June 30, 2002 decreased $15.1 million to $17.5 million from $32.6 million for the six months ended June 30, 2001. Paid listing revenues decreased by $14.0 million to $15.5 million from $29.5
million due to a decline in the number of customers that was driven by an overall decrease in the demand for job postings. Certification test preparation and instructor-led training class revenues decreased by $1.1 million to $2.0 million from $3.1
million due to an overall decrease in demand for these products and services. The decrease was partially offset by $0.16 million in incremental revenue (attributable to the second half of 2001 and the first quarter of 2002) that was recorded after
resolving a billing issue related to a certification preparation product licensing contract. For the six months ended June 30, 2002 and 2001 no single customer accounted for more than 3% and 2% of revenue, respectively. The Company had no barter
revenue for the six months ended June 30, 2002 and 2001.





Cost of
Revenues.    Dices cost of revenues consist primarily of employee salaries and related expenses for customer support personnel, system support and internet access costs related to the dice.com and MeasureUp websites and
to direct costs associated with training classes. Cost of revenues for the three months ended June 30, 2002 decreased $0.5 million to $0.8 million from $1.3 million for the three months ended June 30, 2001, and for the six months ended June 30, 2002
decreased $0.9 million to $1.8 million from $2.7 million for the six months ended June 30, 2001. These decreases were primarily caused by a reduction in the number of dice.com customer support personnel and as a direct result of the decrease in the
number of instructor-led training classes.





Product Development.    Dices product
development expenses consist primarily of employee salaries and related expenses, consulting fees and computer systems-related expenses required to improve or enhance existing service offerings. Product development expenses for the three months
ended June 30, 2002 decreased $0.8 million to $0.5 million from $1.3 million for the three months ended June 30, 2001, and for the six months ended June 30, 2002 decreased $1.6 million to $1.1 million from $2.7 million for the six months ended
June 30, 2001. These decreases were primarily caused by a reduction in personnel and lower costs of content and website development. In addition for the three and six month periods ended June 30, 2002 more salaries were capitalized as website
development costs than in the comparable periods in 2001 due to an increase in the amount of time allocated to these projects by Dices employees.




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Sales and Marketing.    Sales and marketing expenses
consist primarily of advertising programs, agency fees, employee salaries, commissions and related expenses of Dices sales force and marketing personnel. Sales and marketing expenses for the three months ended June 30, 2002 decreased $3.3
million to $4.8 million from $8.1 million for the three months ended June 30, 2001, and for the six months ended June 30, 2002 decreased $7.7 million to $10.0 million from $17.7 million for the six months ended June 30, 2001. These decreases were
primarily due to a reduction in the volume of advertising across all advertising mediums, the elimination of the use of an advertising agency, a reduction in sales force personnel and lower sales commissions due to lower sales volume. These
reductions were partially offset by costs associated with being the exclusive job listing provider for the CNET, ZDNet and Internet.com websites under agreements signed during 2001. Barter expense, related to advertising impressions, received as
partial consideration for the sale of the Content Business, was $0.2 million in each of the three month periods ended June 30, 2002 and 2001 and $0.4 million in each of the six month periods ended June 30, 2002 and 2001.





General and Administrative.    General and administrative expenses consist primarily of employee salaries and
related expenses for executive, administrative, and accounting personnel, provision for uncollectible accounts, facilities costs, insurance costs and professional fees. General and administrative expenses for the three months ended June 30, 2002
decreased $0.7 million to $2.0 million from $2.7 million for the three months ended June 30, 2001, and for the six months ended June 30, 2002 decreased $1.1 million to $4.3 million from $5.4 million for the six months ended June 30, 2001. These
decreases were primarily due to a decrease in bad debt expense as a result of the implementation of improved collection and credit policies and to the settlement of certain accrued liabilities at levels lower than were estimated. These decreases
were partially offset by an increase in legal fees and to an increase in insurance premiums, specifically in directors and officers liability coverage.





Depreciation.    Depreciation expense was $1.3 million and $0.9 million for the three months ended June 30, 2002 and 2001, respectively and was $2.5 million and $1.7 million
for the six months ended June 30, 2002 and 2001, respectively. These increases were due to an increase in capitalized website development costs and to additional hardware and software purchased during 2001 and 2002. In addition the Company recorded
a write-off of capitalized costs related to website development because these fixed assets will not be used and therefore have no future value.





Amortization.    Amortization of intangible assets for the three months ended June 30, 2002 decreased $3.6 million to $0.6 million from $4.2 million for the three months
ended June 30, 2001, and for the six months ended June 30, 2002 decreased $6.7 million to $1.3 million from $8.0 million for the six months ended June 30, 2001. This decrease was primarily due to implementation of the Financial Accounting Standard
No. 142, Goodwill and Other Intangible Assets (FAS 142). Under the new rules, goodwill and intangible assets deemed to have indefinite lives are no longer amortized, but are subject to annual impairment tests in accordance
with FAS 142. Other intangible assets continue to be amortized over their useful lives.





Cumulative Effect of
Change in Accounting Principle.    During the second quarter of 2002 the Company completed the first annual impairment test as required by FAS 142. As of January 1, 2002, the fair value of two of the Companys reporting
units, MeasureUp and CCPrep, did not exceed the carrying value of these reporting units and an impairment was recorded of approximately $6.4 million as a cumulative effect of change in accounting principle.





Restructuring and One Time Charges, net.    In January 2001, Jack D. Hidary, a Co-founder and President and
CEO, resigned these positions, effective January 26, 2001, and became Chairman of the Board of Directors of the Company. Murray Hidary, Co-founder and Executive Vice President of the Company, also resigned his position, effective January 26, 2001,
and continues to serve as a Director of the Company. In connection with these resignations, the Company recorded a charge of $1.0 million in the first quarter of 2001, which primarily consisted of salary continuation and related payments, and
medical and other benefits. These charges were offset by reductions of approximately $0.7 million in the accrued restructuring charges, recorded in December 2000, which primarily resulted from the cash collections of accounts receivable in excess
of, and the settlement of obligations at lower than, projected levels.




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Interest Expense.    Interest expense consists
primarily of interest on the $69.4 million principal amount, 7% convertible subordinated notes due January 25, 2005 (the Convertible Notes). Interest expense was $1.4 million and $1.6 million for the three months ended June 30, 2002
and June 30, 2001, respectively, and was $2.8 million and $3.2 million for the six months ended June 30, 2002 and June 30, 2001, respectively. The decreases in each period were primarily due to the repurchase of $8.8 million and $1.8 million in
principal amount of Convertible Notes in August 2001 and in April 2002, respectively.





Interest and Other
Income.    Interest and other income consists primarily of interest earned on cash and cash equivalents and marketable securities. Interest and other income for the three months ended June 30, 2002 decreased $0.3 million to
$0.1 million from $0.4 million for the three months ended June 30, 2001, and for the six months ended June 30, 2002 decreased $0.7 million to $0.3 million from $1.0 million for the six months ended June 30, 2001. These decreases are primarily
attributable to lower levels of cash and cash equivalents and marketable securities during the three and six months ended June 30, 2002 compared to the three and six months ended June 30, 2001 and to lower interest rates.





Income Taxes.    No provision for federal and state income taxes has been recorded as Dice has
incurred net losses through June 30, 2002. Given Dices limited operating history, losses incurred to date and the difficulty in accurately forecasting Dices future results, management does not believe that the realization of the related
deferred income tax assets meets the criteria required by generally accepted accounting principles and, accordingly, a full valuation allowance has been recorded.





Liquidity and Capital Resources





Dice historically has
satisfied its cash requirements primarily through offerings of common stock and convertible notes and through lease financings. We believe that the Companys current cash position and future cash flows from operations will be sufficient to fund
the Companys operations for at least the next twelve months. However, there can be no assurances that the Company will achieve its planned results. If anticipated results are not achieved, management has the ability to delay or reduce certain
of its expenditures so as to not require additional financing, if such financing is not available on terms acceptable to the Company. However, a majority of the Companys costs are fixed in nature and, therefore, if demand for the
Companys services is lower than anticipated in the near term, that decrease in demand will lower the availability of funds to the Company to fund its operations.





Dice will continue to evaluate possible acquisitions of, or investments in, business products and technologies that are complementary to those of the Company, which may
require the use of cash, or Dice may sell additional equity or debt securities or obtain credit facilities. The sale of additional securities could result in dilution to Dices stockholders.





As of June 30, 2002 the Company has outstanding $69.4 million of 7% Convertible Subordinated Notes due in January 2005. During 2001, the Company repurchased $8.8
million face value of the notes for $2.98 million in cash, plus accrued interest. In April 2002, the Company repurchased $1.76 million face value of the notes for $1.24 million in cash, plus accrued interest. The Company may consider further
repurchases of the notes prior to their maturity on terms that the Company deems favorable. Any further repurchases may require the use of cash or the Company may issue additional debt or equity securities. The issuance of additional securities
could result in dilution to the existing stockholders. The notes carry a coupon of 7% interest annually, currently totaling $4.9 million in annual interest payments, made semi-annually each January and July. A payment of $2.5 million was made
in January 2002 and, based on the principal amount of the notes outstanding as of June 30, 2002 of $69.4 million, a payment of $2.4 million is due in July 2002.





On April 3, 2002 Dice announced that it has negotiated the right to repurchase $53.02 million face amount of the Convertible Notes from three of its largest noteholders, upon certain change of control
events, at prices ranging from 70% to 110% of face value, plus accrued interest through the date of repurchase. The actual




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repurchase price will depend upon the amount received by the Company or its stockholders as a result of a change of control event, increasing to the maximum as proceeds to stockholders increase.
The Companys repurchase option expires on October 3, 2002, although it may be extended for an additional three months under certain conditions. In consideration for entering into these agreements, the Company paid $1.9 million in the aggregate
to these holders and incurred approximately $1.0 million in transactions costs for professional fees related to these agreements.





Dices common stock is quoted on the Nasdaq National Market. There are a number of continuing requirements that must be satisfied in order for a companys stock to remain eligible for quotation on the Nasdaq National
Market. These requirements include maintaining a minimum bid price of $3.00. On July 9, 2002, Dice received notification from Nasdaq that the Company had failed to be in compliance with this requirement over the previous 30 consecutive trading days
as required for continued listing on the Nasdaq National Market. To regain compliance with the listing requirements, Dices common stock must maintain a minimum bid price of $3.00 for ten consecutive trading days at anytime before October 7,
2002. Nasdaq has informed the Company that if it has not demonstrated compliance with this requirement prior to October 7, 2002 Nasdaq would provide the Company with notification of its intent to delist Dices common stock. At that time, the
Company would have the right to appeal NASDAQs decision to the Nasdaq Listing Qualifications Panel. The Company cannot give assurances that any appeal if made would be successful. Although management is exploring ways to regain compliance with
the continued listing requirements, the Company cannot give assurances that it will regain compliance in a timely fashion or at all. If the Company fails to satisfy the continued listing requirements of either the Nasdaq National Market or the
Nasdaq SmallCap Market, the Company anticipates that its common stock would be eligible to trade on the OTC Bulletin Board or in the pink sheets maintained by the National Quotation Bureau, Inc.





The delisting of the Companys common stock from Nasdaq could have a material adverse effect on the market price of, and the
liquidity of the trading market for, Dices common stock. Delisting could also reduce the ability of holders of Dices common stock to purchase or sell shares as quickly and as inexpensively as they have done historically. This lack of
liquidity would make it more difficult for the Company to raise capital in the future or use shares to make acquisitions. Each of these events could have a material adverse effect on Dices business, financial condition and operating results.





Substantially all of Dices cash, cash equivalents and marketable securities have been invested in a
diversified portfolio of debt instruments of United States government agencies and high quality money market instruments. The Company had cash and cash equivalents and investments in marketable securities totaling $12.7 million at June 30,
2002.





Net cash used in operating activities was $1.8 million for the six months ended June 30, 2002. Cash used in
operating activities was primarily an interest payment of $2.5 million on the Convertible Notes and payments of accrued liabilities and was partially offset by cash generated by operations.





Net cash used in investing activities for the six months ended June 30, 2002 of $0.2 million was attributable to purchases of fixed assets
of $1.8 million and investment securities of $1.6 million and was partially offset by $3.2 million of proceeds from the sale of marketable securities.





Net cash used in financing activities for the six months ended June 30, 2002 of $8.6 million was primarily attributable to payments of $4.0 million for obligations under acquisition agreements,
payments of $2.8 million related to the convertible notes repurchase options, including related costs, payments of $1.2 million for the repurchase of convertible notes and payments of $0.7 million on notes payable and capital leases.





Under terms of the acquisition agreement for D & L Online, Inc., which owned and operated the dice.com
website and was acquired in February 1999, the Company has earnout obligations to the sellers of D & L Online, Inc. based on the attainment of certain financial targets. Based on results achieved in 1999, 2000 and 2001, $4.0 million was
paid in each of April 2000, April 2001 and April 2002, comprised of $10.0 million in cash and $2.0 million in common stock in the aggregate, including $4.0 million paid in cash in April 2002.




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Based on results achieved by MeasureUp in 2000, the Company paid $1.2 million in
cash to the sellers of MeasureUp in April 2001. The financial targets were not achieved in 2001 and, therefore, the Company did not have any earnout obligations for 2001. The Company has remaining earnout obligations based on the achievement of
certain financial targets during 2002 of up to an aggregate of $3.0 million that would be payable in 2003 in cash and/or common stock, at the Companys option.





The Company has long term obligations for operating leases (principally for its leased facilities in Urbandale, Iowa) which aggregate $13.8 million through 2011, of which
$0.8 million is payable during the remainder of 2002; and obligations under capital leases aggregating $1.4 million through 2004, including interest, of which $0.5 million is payable during the remainder of 2002. In addition, the Company has
commitments under various marketing arrangements to pay an aggregate of $7.7 million through 2004, of which approximately $2.7 million is payable during the remainder of 2002.





Critical Accounting Policies





We have identified the
policies below as critical to our business operations and the understanding of our results of operations. The impact and any associated risks related to these policies on our business operations is discussed in Managements Discussion and
Analysis of Financial Condition and Results of Operations where such policies affect our reported and expected financial results. For a detailed discussion of the application of these and other accounting policies, see Notes to the Consolidated
Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2001. Note that our preparation of this quarterly report on Form 10-Q requires us to make estimates and assumptions that affect the reported amount of assets and
liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will not differ from those
estimates.





Long-lived Assets





The carrying amount of assets is reviewed on a regular basis for the existence of facts or circumstances, both internal and external, that suggest impairment. Dice
determines if the carrying amount of an asset is impaired based on anticipated undiscounted cash flows before interest and income taxes. In the event of impairment, a loss is recognized based on the amount by which the carrying amount exceeds the
fair value of the asset. Fair value is determined primarily using the anticipated cash flows before interest and income taxes, discounted at a rate commensurate with the risk involved.





Intangible assets, excluding goodwill, resulting from acquisitions of websites and other assets, are being amortized using the straight-line method over five years which
approximates the expected period of benefit.





Bad Debt





Dice maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required
payments. If the financial condition of Dices customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.





Goodwill





Goodwill is not
subject to amortization and is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired. The impairment test consists of a comparison of the fair value of goodwill with its
carrying amount. If the carrying amount of goodwill exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess. After an impairment loss is recognized, the adjusted carrying amount of goodwill is its new
accounting basis.




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Convertible Notes Repurchase Option





The fair market value of this derivative security will be determined on a quarterly basis and will be marked to market. Factors that are
considered in determining fair value include the likelihood of a change in control transaction, the remaining period to consummate a transaction, the current stock price and the likelihood of a change of control transaction resulting in the ability
of the Company to exercise the option and realize a gain from the extinguishment of the Convertible Notes covered by the option agreements.





Use of Estimates





The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the condensed consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Dices significant estimates include the
useful lives and valuations of fixed assets, goodwill, certain intangible assets and the Convertible Notes repurchase option, the accounts receivable allowance for doubtful accounts and the income tax valuation allowance.





Recent Accounting Pronouncements





In April 2002, the FASB issued Statement of Financial Accounting Standards No.145, Rescission of FASB Statements No. 4, 44, and 62, Amendment of FASB Statement No. 13, and Technical Corrections (FAS 145). In most
instances, FAS 145 will require gains and losses on extinguishments of debt to be classified as income or loss from continuing operations rather than as extraordinary items as previously required under FASB Statement No. 4, Reporting Gains and
Losses from Extinguishment of Debt (FAS 4). This provision of FAS 145 is effective for fiscal years beginning after May 15, 2002, with early application encouraged. Upon adoption, any gain or loss on extinguishment of debt previously
classified as an extraordinary item in prior periods presented that does not meet the criteria of Opinion 30 for such classification should be reclassified to conform to the provisions of FAS 145. Earlier application of the provisions of FAS 145
related to the rescission of FAS 4 is encouraged. The Company will adopt FAS 145 as in the third quarter of 2002.





Item
3.    
Quantitative and Qualitative Disclosures About Market Risk





Interest Rate Risk





The Companys exposure to market rate risk for changes in interest rates relates primarily to the
Companys investment portfolio and outstanding debt. The Company does not use derivative financial instruments in its investment portfolio. The Company mainly invests its excess cash in debt instruments of government agencies and high quality
corporate money market instruments. If market rates increase, the Company runs the risk that the related income from those holdings will be less than those that could be obtained from newer issues of similar securities, and that the fair market
value of these securities could decline in value.





At June 30, 2002 the Companys outstanding debt
approximated $69.4 million, all of which is fixed rate obligations. If market rates decline, the Company runs the risk that the related required payments on the fixed rate debt will exceed those that would be paid based on the current market rate.





Equity Price Risk





The Company has minimal investments in various equity securities. These investments, as of June 30, 2002, were considered available-for-sale, with the unrealized gains deferred as a component of
stockholders equity. The Company seeks preservation of capital and selectively considers investments in equity securities as part of its investment strategy.




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PART IIOTHER INFORMATION





Item 1.    
Legal Proceedings





On July 5, 2001, Scott Wainner commenced an arbitration against the
Company before the American Arbitration Association. Mr. Wainner asserts various claims under an Asset Purchase Agreement, dated July 13, 1999 between the Company and Mr. Wainner relating to the purchase by the Company of certain websites. Mr.
Wainner claims that he is entitled to certain additional payments under the Asset Purchase Agreement and also alleges that the Company has breached other obligations to him. In his demand for arbitration, Mr. Wainner seeks damages in the amount of
$2 million, plus interest and other amounts. The Company transferred the websites in question to INT Media Group, Inc. on December 26, 2000. The Company believes that it has meritorious defenses to Mr. Wainners claims, and the Company intends
to vigorously contest this proceeding. The hearings in the arbitration have been held and the parties have submitted post-hearing briefs. Due to the inherent uncertainties of arbitration, the Company cannot predict the outcome of the proceeding with
any certainty. An adverse outcome in the arbitration could have a material adverse effect on the Companys business.





On November 5, 2001, a class action lawsuit was filed in the United States District Court for the Southern District of New York against the Company, certain of its present and former directors and former officers, and the
underwriters of the Companys initial public offering and secondary offering (J.P. Morgan Securities, Inc., Bear Stearns & Co., Inc., Volpe Brown Whelan & Co., LLC and Wit Capital Corporation). The complaint alleges, among other things,
that the underwriters of the Companys initial public offering and secondary offering violated the securities laws by failing to disclose certain alleged compensation arrangements (such as undisclosed commissions or stock stabilization
practices) in the registration statements for the offerings. The Company and certain of its present and former directors and former officers are named in the complaints pursuant to Section 11 of the Securities Act of 1933. Similar actions have been
filed against more than 300 other issuers and their underwriters relating to offerings since 1998. The Company intends to defend the case vigorously. Due to the inherent uncertainties of litigation, the Company cannot predict the outcome of this
litigation with any certainty. An adverse outcome in this litigation could have a material adverse effect on the Companys business.





The Company is party to other claims and litigations that arise in the normal course of business. The Company believes that the ultimate outcome of those other claims and litigation will not have a material effect on the
Companys financial position or results of operations.





Item 2.    
Changes in Securities and Use of Proceeds





Not Applicable





Item 3.    
Defaults Upon Senior Securities





Not Applicable





Item 4.    
Submission of Matters to a Vote of Security Holders





On June 14, 2002, at the annual
meeting of stockholders for Dice, the following proposals were approved by the stockholders (with the results of the respective votes indicated in parentheses): (i) two directors, Peter A. Derow and Scot W. Melland, were re-elected (Peter A. Derow:
For9,885,694, Against67,097; Scot W. Melland: For9,885,694, Against67,097); (ii) a proposal to amend Dices Employee Stock Purchase Plan to increase the number of shares of the Companys common stock reserved for
issuance under the Plan by 500,000 shares was approved (For4,765,545, Against351,816, Abstain12,009); (iii) a proposal for a one-time grant to the Companys Chief Executive Officer of options to purchase 350,000 shares of the
Companys common stock was approved (For2,681,042, Against2,325,902, Abstain122,426); and (iv) a proposal for the ratification of the selection of Ernst & Young as the Companys independent auditors for the year ended
December 31, 2002 was approved (For9,936,118, Against12,513, Abstain4,160).




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We incorporate by reference our Proxy Statement on Schedule 14A, filed April 26,
2002 with the Securities and Exchange Commission under Section 14(a)-101.





Item 5.    
Other Information





Not Applicable





Item 6.    
Exhibits and Reports on Form 8-K





(a)  Exhibits





No Exhibits are filed as part of this Report.





(b)  Reports on Form 8-K





The Company filed a report on
Form 8-K on April 4, 2002 relating to the Companys announcement that (i) it had entered into agreements with three holders of its outstanding 7% Convertible Subordinated Notes due January 25, 2005 granting the Company an option to repurchase
notes from them, upon the occurrence of certain change of control events, as more fully set forth in the agreements, and (ii) it had retained UBS Warburg as its financial advisor to evaluate strategic alternatives for the Company.





The Company filed a report on Form 8-K on April 25, 2002 relating to the Companys announcement of its financial results
and certain other information for the first quarter of 2002.




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SIGNATURES





Pursuant to the requirements of section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, state of New York, on July 26, 2002.





DICE INC.By:

/S/    MICHAEL P.
DURNEYMichael P. Durney Senior Vice
President, Finance and Chief Financial Officer (Principal
Financial Officer)By:

/S/    DAVID L.
JONASSENDavid L. Jonassen Controller and
Chief Accounting Officer (Principal Accounting Officer)




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