e10vk
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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FOR THE FISCAL YEAR ENDED
DECEMBER 31,
2010
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OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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FOR THE TRANSITION PERIOD
FROM TO
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COMMISSION FILE NUMBER
001-34209
MONSTER WORLDWIDE,
INC.
(EXACT NAME OF REGISTRANT AS
SPECIFIED IN ITS CHARTER)
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DELAWARE
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13-3906555
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(STATE OR OTHER JURISDICTION
OF
INCORPORATION OR ORGANIZATION)
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(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
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622 Third Avenue, New York, New York 10017
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
(212) 351-7000
(REGISTRANTS TELEPHONE
NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE
ACT:
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, par value $.001 per share
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New York Stock Exchange
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SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE
ACT:
None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined under Rule 405 of the
Securities
Act. Yes þ No o
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Act. Yes o No þ
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 þ No o
Indicate by check whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such
files). Yes þ No o
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 registrants knowledge, in definitive proxy or
information statements incorporated by reference in
Part III of this
Form 10-K
or any amendment to this
Form 10-K. þ
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in Rule
12b-2 of the
Exchange Act. (Check one):
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Large
accelerated
filer þ
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller
reporting
company o
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(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange
Act). Yes o No þ
The aggregate market value of common stock held by
non-affiliates of the registrant was approximately
$1,485,702,994 as of June 30, 2010, the last business day
of the registrants second fiscal quarter of 2010.
As of January 20, 2011, there were 130,203,041 shares
of the registrants common stock outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions of the registrants definitive Proxy Statement to
be used in connection with its 2011 Annual Meeting of
Stockholders are incorporated by reference into Part III of
this report.
Special
Note About Forward-Looking Statements
We make forward-looking statements in this report and in other
reports and proxy statements that we file with the United States
Securities and Exchange Commission (SEC). Except for
historical information contained herein, the statements made in
this report constitute forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as
amended (the Securities Act), and Section 21E
of the Securities Exchange Act of 1934, as amended (the
Exchange Act). Such forward-looking statements
involve certain risks and uncertainties, including statements
regarding our strategic direction, prospects and future results.
Certain factors, including factors outside of our control, may
cause actual results to differ materially from those contained
in the forward-looking statements. These factors include, among
other things, the global economic and financial market
environment; our ability to maintain and enhance the value of
our brands, particularly Monster; competition; fluctuations in
our quarterly operating results; our ability to adapt to rapid
developments in technology; our ability to continue to develop
and enhance our information technology systems; concerns related
to our privacy policies and our compliance with applicable data
protection laws and regulations; intrusions on our systems;
interruptions, delays or failures in the provision of our
services; our vulnerability to intellectual property
infringement claims brought against us by others; our ability to
protect our proprietary rights and maintain our rights to use
key technologies of third parties; our ability to identify
future acquisition opportunities or partners and the risk that
future acquisitions or partnerships may not achieve the expected
benefits to us; our ability to manage future growth; risks
relating to our foreign operations; our ability to expand our
operations in international markets; our ability to attract and
retain talented employees, including senior management;
potential write-downs if our goodwill or amortizable intangible
assets become impaired; adverse determinations by domestic
and/or
international taxation authorities related to our estimated tax
liabilities; effects of anti-takeover provisions in our
organizational documents that could inhibit the acquisition of
Monster Worldwide by others; volatility in our stock price;
risks associated with government regulation; outcome of
litigation we may become involved in from time to time; and
other risks and uncertainties set forth from time to time in our
reports to the SEC, including under Item 1A. Risk
Factors of this report.
We undertake no obligation to publicly update or revise any
forward-looking statements to reflect events or circumstances
that may arise after the date of this report.
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PART I
Introduction
Monster Worldwide, Inc. (together with its consolidated
subsidiaries, the Company, Monster,
Monster Worldwide, we, our
or us), parent company of
Monster®,
the premier global online employment solution, strives to
inspire people to improve their lives. With a presence in
approximately 55 countries around the world, including key
markets in North America, Europe, Asia and Latin America,
Monster offers online recruiting solutions that we believe are
redefining the way employers and job seekers connect. Through
online media sites and services, Monster Worldwide delivers
highly targeted audiences to advertisers. The Company is a
member of the S&P 500 Index.
Our principal executive offices are located at 622 Third Avenue,
New York, New York 10017. Our telephone number is
(212) 351-7000
and our Internet address is
http://about-monster.com.
Our predecessor business was founded in 1967, and our current
company was incorporated in Delaware and became a public company
in 1996. We make all of our public filings with the SEC
available on our website, free of charge, under the caption
Investor Relations SEC Filings.
Included in these filings are our annual reports on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K
and amendments to those reports, which are available as soon as
reasonably practicable after we electronically file or furnish
such materials with the SEC pursuant to Section 13(a) or
15(d) of the Exchange Act.
Our
Strategy
Monster Worldwides long-term business strategy is designed
to capitalize on the numerous opportunities that exist in the
global online recruitment marketplace and related markets. Our
strategy calls for strategic investment in product, technology,
brand support and customer service to expand our global
leadership position in an effort to achieve long-term growth and
profitability and create shareholder value. In support of this
strategy, we are investing in our operations on a global basis
while controlling the growth of operating expenses.
Monsters focus is on the needs of its customers, both
employers and job seekers. We have created and introduced new
products and services to improve the seeker experience while
also developing deeper relationships with our employer
customers. Through innovative products and a rebuilt website, we
offer greater value to all job seekers who look to manage their
careers, even those seekers who are not actively engaged in a
job search. The improvements we have made to our product
offerings and services are designed to enhance seeker engagement
and increase job response rate. We believe that more active
seeker engagement will translate directly into higher quality
candidates for our employer customers. For employers, we have
introduced tools and features that allow them to more
efficiently and effectively attract and find the most relevant
candidates for their job openings.
Our investments in our technology platform have allowed us to
deliver these innovative products and services on time and on a
global basis. We have consolidated several technology systems
and have created a platform that is more secure, scalable and
redundant. Additionally, in 2008, we acquired Trovix Inc., a
business that provides career-related products and services that
utilize advanced search technology, focusing on key attributes
such as skills, work history and education. We recently launched
our Monster Power Resume
Search®
product to customers in North America, the United Kingdom
and France, which is our innovative and proprietary semantic
resume and job search database product based upon Trovix search
technology. Our Power Resume Search product is the first of
several new employer products we expect to launch from our
6Sense®
technology platform.
Our global sales structure allows us to sell and distribute our
products and services to large, medium and small businesses on a
local basis. Our objective is to offer existing customers
additional products while expanding our coverage to attract new
customers. Through our recent new product introduction and the
multiple alliances we share with other companies that serve the
human resources community, we have
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increased the number of products we now provide customers beyond
the core job postings and resume database offerings. In 2007, we
introduced the Career Ad Network, or CAN, the industrys
largest recruitment-focused online advertising network that now
reaches nearly 100 million internet users on a global
basis. CAN distributes our customers job advertisements
across a broad array of targeted websites and is an effective
way of expanding our customers pool of active and passive
seekers. We offer this innovative media product to customers in
North America and most major markets in Europe. Additionally, we
offer our customers application tracking services, diversity
resume database services and other ancillary services either
directly or through alliances to meet the changing needs of our
customers.
We service existing and potential customers through a field
sales force, telephone sales force and an online service, which
we refer to as our eCommerce channel, where the
customer can post jobs and access the resume database without
sales force involvement. We have integrated our field and
telesales forces in the United States and aligned our sales
resources regionally so we can operate more efficiently and
provide a high touch, consultative service to customers. We
believe that we are well positioned to effectively extend our
geographic sales coverage and increase the penetration of
existing customers.
In order to support our new product launch and our expanded
sales resources, we have invested in our customer service
capabilities on a global basis. We have in-sourced, centralized
and standardized our global call center operations to create a
customer focused, proactive value added model.
We are committed to expanding our share of the North America
online recruitment market. On August 24, 2010, pursuant to
an Asset Purchase Agreement dated as of February 3, 2010
between Monster and Yahoo! Inc. (Yahoo!), Monster
completed the acquisition of substantially all of the assets
exclusive to Yahoo! HotJobs (the HotJobs Assets)
from Yahoo! The purchase price for the HotJobs Assets was
$225.0 million. We acquired the HotJobs Assets, among other
objectives, to expand our business in the North American online
recruitment market.
Our growth strategy includes global geographic expansion. We
believe there is a large opportunity to extend our penetration
in existing markets in Europe, Asia and Latin America, in
addition to extending our presence beyond the markets we
currently serve. In October 2008, we completed the acquisition
of China HR.com Holdings Ltd. (together with its
subsidiaries, ChinaHR), a leading online recruiter,
serving employers and job seekers in major provinces in the
Peoples Republic of China. We believe there exists a
significant opportunity to expand our presence in the
Peoples Republic of China over time. In November 2008, the
Company acquired a 50% equity interest in a company that
provides online employment solutions in Australia. Additionally,
the Company launched a site in Brazil in 2010 which we believe
could result in significant growth in the future due to the size
of the Brazilian market.
We continue to actively and aggressively support the Monster
brand on a global scale through strategic investments in both
online and offline advertising and promotion. Our advertising
and promotion activities are designed to drive quality visitors
to Monster.com and our affiliated online properties. We have
centralized our media purchases and changed the timing of our
media buying to receive beneficial rates, resulting in greater
efficiencies for our marketing expenditures. Additionally, we
have entered into a traffic agreement with Yahoo!, which became
effective on August 24, 2010, whereby Monster became
Yahoo!s exclusive provider of career and job content on
the Yahoo! homepage in the United States and Canada.
We are also committed to entering adjacent markets. Our
acquisition in January 2008 of Affinity Labs Inc. has allowed us
to provide highly relevant content to our job seekers through a
portfolio of professional and vocational communities, which we
call Monster Communities. It also provides employers
access to a large,
hard-to-reach
pool of job candidates and allows us to expand our core product
more aggressively.
Our
Services
We operate in three reportable segments: Careers
North America, Careers International and Internet
Advertising & Fees. For the year ended
December 31, 2010, these operating segments represented
approximately 46%, 40% and 14% of our consolidated revenue,
respectively. During the second quarter of 2008, we discontinued
the operations of Tickle Inc., an online property within the
Internet Advertising & Fees segment,
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which no longer fit the Companys long term growth plans.
See Note 17 to our consolidated financial statements for
further discussion of our segment results.
Careers
(North America and International)
Monster is the premier global online employment solution,
striving to inspire people to improve their lives. Monster has a
presence in approximately 55 countries around the world. We
earned 42%, 42% and 45% of our total revenue outside of the
United States in the years ended December 31, 2010, 2009
and 2008, respectively. With a local presence in key markets in
North America, Europe, Asia and Latin America, Monster works by
connecting employers with quality job seekers at all levels and
by providing searchable jobs and career management resources
online. We have been able to build on Monsters brand and
create worldwide awareness by offering online recruiting
solutions that we believe are redefining the way employers and
job seekers connect. For the employer, our goal is to provide
the most effective solutions and easiest to use technology to
simplify the hiring process and deliver access to our community
of job seekers. For job seekers, our purpose is to improve their
careers by providing work-related content, services and advice.
Our services and solutions include searchable job postings,
resume database access, recruitment media solutions throughout
our network and other career-related content. Job seekers can
search our job postings and post their resumes on each of our
career websites. Employers and human resources companies pay to
post jobs, search our resume database, and utilize career site
hosting and other services such as recruitment media.
Monster has traditionally targeted the enterprise market, or
those businesses that we consider to be among the 1,500 largest
organizations globally. However, we are also focusing our
efforts on expanding our penetration into the
small-to-medium
sized businesses (SMBs), those businesses with
approximately 10 to 2,000 employees that operate primarily
in local and regional markets. We currently have alliances with
media and publishing companies, including approximately 1,000
newspapers, which extends our presence with local and regional
job seekers in various markets across the United States.
Internet
Advertising & Fees
Our Internet Advertising & Fees segment provides
consumers with content, services and useful offerings that help
them manage the development and direction of their current and
future careers, while providing employers, educators and
marketers with innovative and targeted media-driven solutions to
impact these consumers at critical moments in their lives. Our
network of online properties appeals to advertisers and other
third parties as these sites cost-effectively deliver certain
discrete demographic groups in a relevant and engaging online
environment. We believe that by strengthening our user
engagement, driving additional traffic and increasing usage of
our websites, we can increase the appeal to our customers and
reward them with a higher return on their marketing investment.
Our sites are constantly evolving to integrate new and
innovative features, in order to provide the relevant content
that connects with our users.
Revenue for the Internet Advertising & Fees segment is
derived primarily from three types of services: lead generation,
display advertising and products sold to consumers for a fee.
Lead generation is a highly scalable direct response business in
which marketers pay for connections to consumers whose
demographics and interests match the requirements of specific
business offerings. Our large database of users and ongoing
collection of numerous points of data allows us to provide our
clients with targeted and valuable leads. Display advertising
opportunities have been integrated across the Monster Worldwide
network of websites, allowing marketers to deliver targeted
online advertising messages via numerous sizes and formats of
creative units. Consumers come to Monsters websites for
information and advice on how to manage critical life
transitions, and this environment is typically seen by marketers
as desirable for the promotion of products and services as
consumers are actively looking for new ideas and solutions.
Premium content and services is the final service provided under
the Internet Advertising & Fees segment and allows
consumers to pay for access to information and tools that
provide greater support in the development of their educational
and career opportunities.
Our largest customer categories are employers, schools, and
consumer products and services. Employers use our media
solutions to attract job seekers to job postings and to help job
seekers better understand what it
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is like to work for a particular employer. Schools find our
advertising and lead generation services to be effective tools
in attracting students to investigate enrollment in higher
education programs. Marketers of a variety of consumer products
and services categories, including automotive,
telecommunications, apparel and entertainment, have come to us
to provide cost-effective and highly targeted solutions to
connect with specific consumer segments.
Sales and
Marketing
The Companys sales resources consist of field sales,
telesales, and a self service eCommerce channel. The Company has
also created a global account team to provide further support
for our customers who have global recruiting needs. Our sales
activities are geared towards large, medium and small companies
as well as government agencies, advertising agencies and
educational institutions. The field and telesales resources for
our Careers business in the United States are regionalized to
better serve our customers with a more high touch, consultative
approach, while providing greater efficiencies for developing
new business opportunities. We have specialty units within the
sales organization, dedicated to serving our vertical markets,
such as enterprise, SMBs, government, healthcare and staffing.
Our telesales staff is primarily responsible for telemarketing
and customer service for SMBs and is located in our offices
around the world. Our field sales staff focuses on both local
and national clients and is also dispersed throughout our
offices globally. Our eCommerce channel is available to all
customer groups and is currently most heavily used by smaller
employers. Our Internet Advertising & Fees sales force
is located throughout the United States and is focused on
cross-selling the products of each property within its network.
New sales representatives who join the sales force during the
year undergo a rigorous training program.
We use sponsorships and broad-based media, such as broadcast
television, the Internet, radio, and business, consumer and
trade publications, to market and promote the Monster brand. The
majority of our marketing and promotion expense is allocated to
our Careers North America and Careers
International segments.
Customers
Our customers are comprised of individuals, small and
medium-sized organizations, enterprise organizations, federal,
state and local government agencies and educational
institutions. No one customer accounts for more than 5% of our
total annual revenue.
Competition
The markets for our services and products are highly competitive
and are characterized by pressure to win new customers, expand
the market for our services and incorporate new capabilities and
technologies. We face competition from a number of sources.
These sources include other employment-related websites, general
classified advertising websites, professional networking and
social networking websites, traditional media companies
(primarily newspaper publishers), Internet portals, search
engines and general-interest websites such as blogs. The
barriers to entry into Internet businesses like ours are
relatively low. As a result, new competitors continuously arise.
Low-cost and free classified advertising websites are gaining
increased acceptance with employers. Professional networking
websites and social networking sites have also made significant
strides in attracting employers who in the past had focused on
traditional media and large job boards. Additionally, over the
past several years many niche career websites have been launched
targeted at specific industry verticals.
Many of our competitors or potential competitors have long
operating histories, and some have greater financial,
management, technological, development, sales, marketing and
other resources than we do. In addition, our ability to maintain
our existing clients and generate new clients depends to a
significant degree on the quality of our services, pricing and
reputation among our clients and potential clients.
Intellectual
Property
Our success and ability to compete are dependent in part on the
protection of our domain names, trademarks, trade names, service
marks, patents and other proprietary rights. We rely on
copyright laws to
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protect the original website content that we develop. In
addition, we rely on federal, state and foreign trademark laws
to provide additional protection for the identifying marks
appearing on and the design and appearance of our Internet
sites. A degree of uncertainty exists concerning the application
and enforcement of copyright and trademark laws to the Internet,
and there can be no assurance that existing laws will provide
adequate protection for our original content or the appearance
of our Internet sites. In addition, because copyright laws do
not prohibit independent development of similar content, there
can be no assurance that copyright laws will provide any
competitive advantage to us.
We also assert common law protection on certain names and marks
that we have used in connection with our business activities.
We rely on trade secret, copyright and patent laws to protect
the proprietary technologies that we have developed to manage
and improve our Internet sites and advertising services, but
there can be no assurance that such laws will provide sufficient
protection to us, that others will not develop technologies that
are similar or superior to ours, or that third parties will not
copy or otherwise obtain and use our technologies without
authorization. We have obtained patents and applied for several
other patents with respect to certain of our software systems,
methods and related technologies, but there can be no assurance
that any pending applications will be granted or that any
patents will not in the future be challenged, invalidated or
circumvented, or that the rights granted thereunder will provide
us with a competitive advantage. In addition, we rely on certain
technology licensed from third parties, and may be required to
license additional technology in the future, for use in managing
our Internet sites and providing related services to users and
advertising customers. Our ability to generate fees from
Internet commerce may also depend on data encryption and
authentication technologies that we may be required to license
from third parties. There can be no assurance that these
third-party technology licenses will be available or will
continue to be available to us on acceptable commercial terms or
at all. The inability to enter into and maintain any of these
technology licenses could significantly harm our business,
financial condition and operating results.
Policing unauthorized use of our proprietary technology and
other intellectual property rights could entail significant
expense and could be difficult or impossible, particularly given
the global nature of the Internet and the fact that the laws of
other countries may afford us little or no effective protection
of our intellectual property.
We have been named as defendants in two pending lawsuits
alleging that we have infringed on patents of third parties.
There can be no assurance that other third parties will not
assert against us claims of patent, copyright or trademark
infringement. We anticipate an increase in patent infringement
claims involving Internet-related technologies as the number of
products and competitors in this market grows and as related
patents are issued. Further, there can be no assurance that
third parties will not claim that we have misappropriated their
trade secrets, creative ideas or formats or otherwise infringed
their proprietary rights in connection with our Internet content
or technology. Any claims of infringement or misappropriation,
with or without merit, could be time consuming to defend, result
in costly litigation, divert management attention, and require
us to enter into costly royalty or licensing arrangements. If a
party claiming infringement is successful, we could be required
to pay substantial licensing fees or compensatory or punitive
damages, and we could be enjoined from using important
technologies or methods. If we are enjoined, it may not be
possible or commercially practical for us to develop or obtain
and implement substitute technologies or methods that are not
covered by the third partys intellectual property. Any of
these outcomes could significantly harm our business, financial
condition and operating results.
Employees
As of January 20, 2011, we employed approximately
5,850 people worldwide, an increase of 150 employees
over the prior year, primarily resulting from increased hiring
in the Asia Pacific region as well as the acquisition of the
HotJobs Assets, partially offset by decreased headcount in North
America (excluding the impact of the acquisition of the HotJobs
Assets) and Europe.
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Executive
Officers
As of January 27, 2011, our executive officers were as
follows:
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Name
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Age
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Position
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Salvatore Iannuzzi
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57
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Chairman of the Board of Directors, President and Chief
Executive Officer
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Timothy T. Yates
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63
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Executive Vice President, Director
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James M. Langrock
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45
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Executive Vice President and Chief Financial Officer
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Darko Dejanovic
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40
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Executive Vice President, Global Chief Information Officer and
Head of Product
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Lise Poulos
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Executive Vice President and Chief Administrative Officer
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Salvatore Iannuzzi has been Chairman of the Board of
Directors, President and Chief Executive Officer of the Company
since April 2007. Prior to joining the Company,
Mr. Iannuzzi served as President of Motorola, Inc.s
Enterprise Mobility business from January 2007 to April 2007.
Prior to that, Mr. Iannuzzi served as President and Chief
Executive Officer of Symbol Technologies, Inc.
(Symbol), a publicly traded company engaged in the
business of manufacturing and servicing products and systems
used in
end-to-end
enterprise mobility solutions, from January 2006 to January
2007, when Symbol was sold to Motorola, Inc. He previously
served as Symbols Interim President and Chief Executive
Officer and Chief Financial Officer from August 2005 to January
2006 and as Senior Vice President, Chief Administrative and
Control Officer from April 2005 to August 2005. He also served
as a director of Symbol from December 2003 to January 2007,
serving as the Non-Executive Chairman of the Board from December
2003 to April 2005. From August 2004 to April 2005,
Mr. Iannuzzi was a partner in Saguenay Capital, a boutique
investment firm. Prior thereto, from April 2000 to August 2004,
Mr. Iannuzzi served as Chief Administrative Officer of CIBC
World Markets. From 1982 to 2000, he held several senior
positions at Bankers Trust Company/Deutsche Bank, including
Senior Control Officer and Head of Corporate Compliance.
Timothy T. Yates has been our Executive Vice President
and a Director since June 2007. From June 2007 until January 27,
2011, Mr. Yates also served as our Chief Financial Officer.
Prior to joining the Company, Mr. Yates served as Senior
Vice President, Chief Financial Officer and a director of Symbol
from February 2006 to January 2007. From January 2007 to June
2007, he was a Senior Vice President of Motorola, Inc.s
Enterprise Mobility business responsible for Motorolas
integration of Symbol. From August 2005 to February 2006,
Mr. Yates served as an independent consultant to Symbol.
Prior to this, from October 2002 to November 2005,
Mr. Yates served as a partner and Chief Financial Officer
of Saguenay Capital, a boutique investment firm. Prior to that,
he served as a founding partner of Cove Harbor Partners, a
private investment and consulting firm, which he helped
establish in 1996. From 1971 through 1995, Mr. Yates held a
number of senior leadership roles at Bankers Trust New York
Corporation, including serving as Chief Financial and
Administrative Officer from 1990 through 1995.
James M. Langrock was appointed Executive Vice President
and Chief Financial Officer, effective as of January 27,
2011. From May 2008 until his recent promotion,
Mr. Langrock served as the Companys Senior Vice
President, Finance and Chief Accounting Officer. Prior to
joining the Company, Mr. Langrock was Vice President,
Finance of Motorola, Inc.s Enterprise Mobility business
from January 2007 to April 2008. From May 2005 to January 2007,
Mr. Langrock served as the Vice President, Chief Accounting
Officer and Corporate Controller at Symbol. From December 2003
to May 2005, Mr. Langrock was Symbols Vice
President Internal Audit. Before joining Symbol, he
served as Chief Financial Officer at Empress International,
Ltd., an importer and wholesale distributor, from May 2002 to
November 2003. From 1991 to April 2002, Mr. Langrock held a
variety of audit positions at Arthur Andersen LLP, including
Senior Manager in the Audit and Business Advisory Practice.
Darko Dejanovic has been Executive Vice President, Global
Chief Information Officer and Head of Product since November
2007. Previously, he had served as Executive Vice President and
Global Chief
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Information Officer since July 2007, and as Senior Vice
President and Global Chief Information Officer since April 2007.
Prior to joining the Company, Mr. Dejanovic served as
Senior Vice President and Chief Technology Officer for Tribune
Company, a publicly traded media company, from December 2004
until March 2007. During that same period,
Mr. Dejanovic also served as Vice President and Chief
Technology Officer of Tribune Publishing Company, a subsidiary
of the Tribune Company, a position he held since 2002. Before
joining the Tribune Company, Mr. Dejanovic had technology
leadership roles for the Education Management Group, a provider
of post-secondary education, and for the European Community
Monitor Mission, an international public policy organization.
Lise Poulos has been Executive Vice President and Chief
Administrative Officer since January 2008. Previously, she had
served as Executive Vice President since September 2007. Prior
to joining the Company, Ms. Poulos served as Senior Vice
President, Human Resources of Motorola, Inc.s Enterprise
Mobility business from January 2007 to July 2007. From 1997 to
January 2007, Ms. Poulos held various roles at Symbol,
including Senior Vice President, Human Resources and Corporate
Communications from August 2006 to January 2007, Vice President,
Human Resources from November 2005 to August 2006 and Director,
Human Resources from 2002 to November 2005. Prior to joining
Symbol, Ms. Poulos worked at a major energy company and in
the financial services industry
7
The
existing global economic and financial market environment has
had, and may continue to have, a negative affect on our business
and operations.
Because demand for our services is sensitive to changes in the
level of economic activity, our business has suffered during
economic downturns. Many companies hire fewer employees when
economic activity is slow. As a result, demand for our services
is reduced, which leads to lower sales. If the economy does not
fully recover or worsens, demand for our services and our sales
may be further reduced. In addition, lower demand for our
services may lead to lower prices for our services.
The volatility in global financial markets may also limit our
ability to access the capital markets at a time when we would
like, or need, to raise capital, which could have an impact on
our ability to react to changing economic and business
conditions. Accordingly, if the economy does not fully recover
or worsens, our business, results of operations and financial
condition could be materially and adversely affected.
We rely
on the value of our brands, particularly Monster, and the costs
of maintaining and enhancing our brand awareness are
increasing.
Our success depends on our brands and their value. Our business
would be harmed if we were unable to adequately protect our
brand names, particularly Monster. We believe that maintaining
and expanding the Monster brand is an important aspect of our
efforts to attract and expand our user and client base. We also
believe that the importance of brand recognition will increase
due to the growing number of Internet sites and the relatively
low barriers to entry. We have spent considerable money and
resources to date on the establishment and maintenance of the
Monster brand. We are devoting greater resources to advertising,
marketing and other brand-building efforts to preserve and
enhance consumer awareness of the Monster brand. Despite this,
we may not be able to successfully maintain or enhance consumer
awareness of the Monster brand and, even if we are successful in
our branding efforts, such efforts may not be cost-effective. If
we are unable to maintain or enhance consumer awareness of the
Monster brand in a cost-effective manner, our business,
operating results and financial condition may be harmed
significantly.
We also are susceptible to others imitating our products and
brands, particularly our Monster brand, and infringing on our
intellectual property rights. We may not be able to successfully
protect our intellectual property rights, upon which we are
dependent. While we believe we have strong trademark protection
in the Monster brand worldwide in the careers and recruitment
business, that protection does not extend fully to other
businesses. Other companies and organizations use the
Monster name, and more may do so in the future. This
use could adversely affect our brand recognition and reputation
if employers or job seekers confuse us with these other
organizations. In addition, the laws of foreign countries do not
necessarily protect intellectual property rights to the same
extent as the laws of the United States. Imitation of our
products or brands, particularly our Monster brand, or
infringement of our intellectual property rights could diminish
the value of our brands or otherwise reduce our revenues.
Our
markets are highly competitive.
The markets for our services are highly competitive. They are
characterized by pressures to:
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reduce prices;
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incorporate new capabilities and technologies; and
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accelerate hiring timelines.
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Furthermore, we face competition from a number of sources. These
sources include:
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other employment-related websites, including large national and
international competitors as well as niche career websites
targeted at specific industry verticals;
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general classified advertising websites, some of which offer a
low-cost or free alternative to our offerings;
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8
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professional networking and social networking websites;
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traditional media companies, including newspapers; and
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Internet portals, search engines and general-interest websites
such as blogs.
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Low-cost and free classified advertising websites are gaining
increased acceptance with employers. Professional networking
websites have also made significant strides in attracting
employers who in the past have focused on traditional media and
large job boards. Additionally, over the past several years many
niche career websites have been launched targeted at specific
industry verticals.
Many of our competitors, or potential competitors, have long
operating histories, and some may have greater financial
resources, management, technological development, sales,
marketing and other resources than we do. Some of our
competitors have more diversified businesses or may be owned by
entities engaged in other lines of business, allowing them to
operate their directly competitive operations at lower margins
than our operations. In addition, our ability to maintain our
existing clients and attract new clients depends to a large
degree on the quality of our services and our reputation among
our clients and potential clients.
Due to competition, we may experience reduced margins on our
products and services, loss of market share or diminished use of
our services by job seekers and our customers. If we are not
able to compete effectively with current or future competitors
as a result of these and other factors, our business, financial
condition and results of operations could be significantly
harmed.
We have no significant proprietary technology that would
preclude or inhibit competitors from entering the online
advertising market. Existing or future competitors may develop
or offer services and products that provide significant
performance, price, creative or other advantages over our
services. If we do not keep pace with product and technology
advances, there could be a material adverse effect on our
competitive position, revenue and prospects for growth. This
could significantly harm our business, financial condition and
operating results.
Our
operating results fluctuate from quarter to quarter.
Our quarterly operating results have fluctuated in the past and
may fluctuate in the future. These fluctuations are a result of
a variety of factors, including, but not limited to:
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the timing and amount of existing clients subscription
renewals;
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entering new markets;
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enhancements to existing services;
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the hiring cycles of employers;
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changes in general economic conditions, such as recessions, that
could, among other things, affect recruiting efforts generally
and online recruiting efforts in particular;
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the magnitude and timing of marketing initiatives;
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the maintenance and development of our strategic relationships;
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our ability to manage our anticipated growth and expansion;
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our ability to attract and retain customers;
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technical difficulties or system downtime affecting the Internet
generally or the operation of our products and services
specifically;
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enhancements to technology to safeguard against security
breaches; and
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the timing and integration of our acquisitions.
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9
We face
risks relating to developing technology, including the
Internet.
The market for Internet products and services is characterized
by rapid technological developments, frequent new product
introductions and evolving industry standards. The emerging
character of these products and services and their rapid
evolution will require continuous improvement in the
performance, features and reliability of our Internet content,
particularly in response to competitive offerings. We may not be
successful in responding quickly, cost effectively and
sufficiently to these developments. In addition, the widespread
adoption of new Internet technologies or standards could require
us to make substantial expenditures to modify or adapt our
websites and services. This could harm our business, financial
condition and operating results.
The online recruiting market continues to evolve. The adoption
of online recruiting and job seeking services, particularly
among those companies that have historically relied upon
traditional recruiting methods, requires the acceptance of a new
way of conducting business, exchanging information, advertising
and applying for jobs. Many of our potential customers,
particularly smaller companies, have not utilized the Internet
as a recruiting tool, and not all segments of the job-seeking
population use the Internet to look for jobs. Companies may not
continue to allocate portions of their budgets to Internet-based
recruiting and job seekers may not use online job seeking
methods. As a result, we may not be able to effectively compete
with traditional recruiting and job seeking methods. If
Internet-based recruiting does not remain widely accepted or if
we are not able to anticipate changes in the online recruiting
market, our business, financial condition and operating results
could be significantly harmed.
New Internet services or enhancements that we have offered or
may offer in the future may contain design flaws or other
defects that could require expensive modifications or result in
a loss of client confidence. Any disruption in Internet access
or in the Internet generally could significantly harm our
business, financial condition and operating results. Slower
response times or system failures may also result from straining
the capacity of our software, hardware or network
infrastructure. To the extent that we do not effectively address
any capacity constraints or system failures, our business,
results of operations and financial condition could be
significantly harmed.
Trends that could have a critical impact on our success include:
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rapidly changing technology in online recruiting;
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evolving industry standards relating to online recruiting;
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developments and changes relating to the Internet;
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evolving government regulations;
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competing products and services that offer increased
functionality;
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changes in employer and job seeker requirements; and
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customer privacy protection concerning transactions conducted
over the Internet.
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We rely
heavily on our information systems and if our access to this
technology is impaired, or we fail to further develop our
technology, our business could be significantly
harmed.
Our success depends in large part upon our ability to store,
retrieve, process and manage substantial amounts of information,
including our client and candidate databases. To achieve our
strategic objectives and to remain competitive, we must continue
to develop and enhance our information systems. Our future
success will depend on our ability to adapt to rapidly changing
technologies, to adapt our information systems to evolving
industry standards and to improve the performance and
reliability of our information systems. This may require the
acquisition of equipment and software and the development,
either internally or through independent consultants, of new
proprietary software. Our inability to design, develop,
implement and utilize, in a cost-effective manner, information
systems that provide the capabilities necessary for us to
compete effectively could significantly harm our business,
results of operations or financial condition.
10
Concerns
relating to our privacy policies and our compliance with
applicable data protection laws and regulations could damage our
reputation and deter current and potential customers, job
seekers and other Internet users from using our products and
services and subject us to fines.
Concerns about our practices with regard to the collection, use,
disclosure or security of personal information or other
privacy-related matters, even if unfounded, could damage our
reputation, which in turn could significantly harm our business,
financial condition and operating results.
While we strive to comply with all applicable data protection
laws and regulations, as well as our own posted privacy
policies, any failure or perceived failure to comply may result
in proceedings or actions against us by government entities or
others, which could potentially have an adverse effect on our
business. Moreover, failure or perceived failure to comply with
applicable laws, regulations, requirements or our policies
related to the collection, use, sharing or security of personal
information or other privacy-related matters could result in a
loss of confidence in us by customers, job seekers and other
Internet users and could expose us to fines and penalties and
could require us to expend significant sums in connection with
any failure or perceived failure, each of which could adversely
affect our business, financial condition and results of
operations. Laws related to data protection continue to evolve.
It is possible that certain jurisdictions may enact laws or
regulations that impact our ability to offer our products and
services
and/or
result in reduced traffic or contract terminations in those
jurisdictions, which could harm our business, financial
condition and results of operations.
Intrusions
on our systems could damage our business.
Despite our implementation of network security measures, our
servers are vulnerable to cyber attacks, computer viruses, worms
and other malicious software programs, physical and electronic
break-ins, sabotage and similar disruptions from unauthorized
tampering with our computer systems. Unauthorized access could
jeopardize the security of information stored in our systems
relating to our customers, job seekers and other website users,
and can lead to phishing schemes whereby
unauthorized persons pose as Monster representatives and seek to
obtain personal information from our customers and job seekers.
In addition, malware or viruses could jeopardize the security of
information stored or used in a users computer.
We have experienced these intrusions in the past. We may also
experience these intrusions in the future and may be required to
expend significant sums and resources to safeguard against them.
Moreover, negative publicity arising from any intrusion is
damaging to our reputation and may adversely impact traffic to
our sites. Accordingly, any intrusion could significantly harm
our business, financial condition and results of operations.
Interruptions,
delays or failures in the provision of our services could damage
our brand and harm our operating results.
Our systems are susceptible to outages and interruptions due to
fire, floods, power loss, telecommunications failures, terrorist
attacks and similar events. Our systems continuing and
uninterrupted performance is critical to our success. Customers,
job seekers and other website users may become dissatisfied by
any system failure that interrupts our ability to provide our
services to them, including failures affecting our ability to
serve web page requests without significant delay to the viewer.
Sustained or repeated system failures would reduce the
attractiveness of our solutions to customers, job seekers and
other Internet users and result in reduced traffic, contract
terminations, fee rebates and make goods, thereby reducing
revenue. Moreover, negative publicity arising from these types
of disruptions is damaging to our reputation and may adversely
impact traffic to our sites.
We do not have multiple site redundancy for all of our services
and some of our systems are not fully redundant in the event of
any such occurrence. In an effort to reduce the likelihood of a
geographical or other disaster impacting our business, we have
distributed, and intend to continue assessing the need to
distribute, our servers among additional data centers. Failure
to execute these changes properly or in a timely manner could
result in delays or interruptions to our service, which could
result in a loss of users and damage to our brand, and harm our
operating results. We may not carry sufficient business
interruption insurance to compensate us for losses that may
occur as a result of any events that cause interruptions in our
service.
11
We are
vulnerable to intellectual property infringement claims brought
against us by others.
Successful intellectual property infringement claims against us
could result in monetary liability or a material disruption in
the conduct of our business. We cannot be certain that our
products, content and brand names do not or will not infringe
valid patents, trademarks, copyrights or other intellectual
property rights held by third parties. We expect that
infringement claims in our markets will increase in number. We
may be subject to legal proceedings and claims from time to time
relating to the intellectual property of others in the ordinary
course of our business. If we were found to have infringed the
intellectual property rights of a third party, we could be
liable to that party for license fees, royalty payments, lost
profits or other damages, and the owner of the intellectual
property might be able to obtain injunctive relief to prevent us
from using the technology or software in the future. If the
amounts of these payments were significant or we were prevented
from incorporating certain technology or software into our
products, our business could be significantly harmed.
We may incur substantial expenses in defending against these
third party infringement claims, regardless of their merit. As a
result, due to the diversion of management time, the expense
required to defend against any claim and the potential liability
associated with any lawsuit, any significant litigation could
significantly harm our business, financial condition and results
of operations.
If we are
unable to protect our proprietary rights or maintain our rights
to use key technologies of third parties, our business may be
harmed.
A degree of uncertainty exists concerning the application and
enforcement of trademark, trade dress and copyright laws to the
Internet, and existing laws may not provide us adequate
protection for our original content or the appearance of our
Internet sites. In addition, because copyright laws do not
prohibit independent development of similar content, copyright
laws may not provide us with any competitive advantage. We have
obtained patents and applied for other patents with respect to
certain of our software systems, methods and related
technologies, but our pending applications may not be granted
and any patents issued to us may in the future be challenged,
invalidated or circumvented, and the rights granted under
patents may not provide us with a competitive advantage. We also
face risks associated with our trademarks, particularly
trademarks covering the Monster brand. Policing unauthorized use
of our proprietary technology and other intellectual property
rights could involve significant expense and could be difficult
or impossible, particularly given the global nature of the
Internet and the fact that the laws of certain other countries
may afford us little or no effective protection of our
intellectual property.
In addition, we rely on certain technology licensed from third
parties, and may be required to license additional technology in
the future for use in managing our Internet sites and providing
related services to users and advertising customers. Our ability
to generate fees from Internet commerce may also depend on data
encryption, authentication and other technologies that we may be
required to license from third parties. These third-party
technology licenses may not continue to be available to us on
acceptable commercial terms or at all. The inability to enter
into and maintain any of these technology licenses could
significantly harm our business, financial condition and
operating results.
We have
made strategic acquisitions and entered into alliances and joint
ventures in the past and intend to do so in the future. If we
are unable to find suitable acquisitions or partners or to
achieve expected benefits from such acquisitions or
partnerships, there could be a material adverse effect on our
business, growth rates and results of operations.
As part of our ongoing business strategy we engage in
discussions from time to time with third parties regarding, and
enter into agreements relating to, possible acquisitions,
strategic alliances and joint ventures. If we are unable to
identify future acquisition opportunities or reach agreements
with such third parties, there could be a material adverse
effect on our business, growth rates and results of operations.
12
Even if we are able to complete acquisitions or enter into
alliances and joint ventures that we believe will be successful,
such transactions, especially those involving companies like
ChinaHR, are inherently risky. Our acquisitions can be
accompanied by a number of risks, including:
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the difficulty of integrating the operations and personnel of
our acquired companies into our operations, including the
integration of the HotJobs Assets;
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the potential disruption of our ongoing business and distraction
of management;
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the difficulty of integrating acquired technology and rights
into our services and unanticipated expenses related to such
integration;
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the impairment of relationships with customers and partners of
the acquired companies or our customers and partners as a result
of the integration of acquired operations;
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the impairment of relationships with employees of the acquired
companies or our employees as a result of integration of new
management personnel;
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the difficulty of integrating the acquired companies
accounting, management information, human resources and other
administrative systems;
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in the case of foreign acquisitions, uncertainty regarding
foreign laws and regulations and difficulty integrating
operations and systems as a result of cultural, systems and
operational differences; and
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the impact of known potential liabilities or unknown liabilities
associated with the acquired companies.
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Our failure to be successful in addressing these risks or other
problems encountered in connection with our past or future
acquisitions could cause us to fail to realize the anticipated
benefits of our acquisitions, incur unanticipated liabilities
and significantly harm our business, financial condition and
results of operations generally.
We have
had and may face future difficulties managing growth.
Our business has grown rapidly, both internally and through
acquisitions. This expansion has resulted in substantial growth
in the number of our employees, and put a significant strain on
our management and operations. If our business continues to grow
rapidly, we expect it to result in increased responsibility for
management personnel, and incremental strain on our operations,
and financial and management systems. Our success under such
conditions will depend, to a significant extent, on the ability
of our executive officers and other members of senior management
to operate effectively both independently and as a group. If we
are not able to manage future growth, our business, financial
condition and operating results may be significantly harmed.
We face
risks relating to our foreign operations.
We have a presence in approximately 55 countries around the
world. We earned 42%, 42% and 45% of our total revenue outside
of the United States in the years ended December 31, 2010,
2009 and 2008, respectively. Such amounts are generally
collected in local currencies. In addition, we generally pay
operating expenses in local currencies. Therefore, we are at
risk for exchange rate fluctuations between such local
currencies and the United States dollar. Global foreign exchange
markets have been experiencing heightened volatility in recent
quarters and we cannot predict the direction or magnitude of
future currency fluctuations. A weakening of the currencies in
which we generate sales relative to the currencies in which our
costs are denominated may lower our results of operations.
We are also subject to taxation in foreign jurisdictions. In
addition, transactions between our foreign subsidiaries and us
may be subject to United States and foreign withholding taxes.
Applicable tax rates in foreign jurisdictions differ from those
of the United States, and change periodically. The extent, if
any, to which we will receive credit in the United States for
taxes we pay in foreign jurisdictions will depend upon the
application of limitations set forth in the Internal Revenue
Code of 1986, as well as the provisions of any tax treaties that
may exist between the United States and such foreign
jurisdictions.
13
Our current or future international operations might not succeed
or might fail to meet our expectations for a number of reasons,
including:
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general political uncertainty;
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difficulties in staffing and managing foreign operations;
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competition from local recruiting services;
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operational issues such as longer customer payment cycles and
greater difficulties in collecting accounts receivable;
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seasonal reductions in business activity;
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language and cultural differences;
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taxation issues;
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complex legal and regulatory requirements that may be uncertain
and may change; and
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issues relating to uncertainties of laws and enforcement
relating to the regulation and protection of intellectual
property.
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If we are forced to discontinue any of our international
operations, we could incur material costs to close down such
operations.
Also, we could be exposed to fines and penalties under
U.S. laws such as the Foreign Corrupt Practices Act and
local laws prohibiting corrupt payments to governmental
officials. Although we have implemented policies and procedures
designed to ensure compliance with these laws, we cannot be sure
that our employees, contractors or agents will not violate our
policies. Any such violations could materially damage our
reputation, our brand, our international expansion efforts, our
business and our operating results.
Our
future growth depends on our ability to expand operations in
international markets. We may have limited experience or we may
need to rely on business partners in these markets, and our
future growth will be materially adversely affected if we are
unsuccessful in our international expansion efforts.
We currently have a presence in approximately 55 countries
around the world. Our future growth will depend significantly on
our ability to expand Monster-branded product offerings in
additional international markets. As we expand into new
international markets, we will have only limited experience (if
any) in marketing and operating our products and services in
such markets. In other instances, including our CareerOne joint
venture with News Limited in Australia, we have had to rely, and
may have to continue to rely, on the efforts and abilities of
foreign business partners in such markets. Certain international
markets may be slower than domestic markets in adopting the
online career and commerce medium and as a result, our
operations in international markets may not develop at a rate
that supports our level of investment.
Our
business depends largely on our ability to attract and retain
talented employees, including senior management.
We are substantially dependent on the continued services of our
senior management, including those executive officers set forth
in the table on page 6 of this report. The loss of any of
these individuals could harm our business, financial condition
and results of operations. Our business is also dependent on our
ability to retain, hire and motivate talented, highly skilled
personnel. Experienced management and technical, marketing and
support personnel in our industry are in high demand, and
competition for their talents is intense. If we are less
successful in our recruiting efforts, or if we are unable to
retain key employees, our ability to develop and deliver
successful products and services may be adversely affected.
14
We may be
required to record a significant charge to earnings if our
goodwill or amortizable intangible assets become
impaired.
We are required under generally accepted accounting principles
to review our amortizable intangible assets for impairment when
events or changes in circumstances indicate the carrying value
may not be recoverable. Goodwill is required to be tested for
impairment at least annually. Factors that may be considered a
change in circumstances indicating that the carrying value of
our amortizable intangible assets may not be recoverable include
a decline in stock price and market capitalization, slower
growth rates in our industry or other materially adverse events.
We may be required to record a significant charge to earnings in
our financial statements during the period in which any
impairment of our goodwill or amortizable intangible assets is
determined. This may adversely impact our results of operations.
As of December 31, 2010, our goodwill and amortizable
intangible assets were $1,189.1 million, which represented
60% of total consolidated assets.
We
estimate tax liabilities, the final determination of which is
subject to review by domestic and international taxation
authorities.
We are subject to income taxes and other taxes in both the
United States and the foreign jurisdictions in which we
currently operate or have historically operated. We are also
subject to review and audit by both domestic and foreign
taxation authorities. The determination of our worldwide
provision for income taxes and current and deferred tax assets
and liabilities requires judgment and estimation. In the
ordinary course of our business, there are many transactions and
calculations where the ultimate tax determination is uncertain.
Although we believe our tax estimates are reasonable, the
ultimate tax outcome may materially differ from the tax amounts
recorded in our consolidated financial statements.
Effects
of anti-takeover provisions could inhibit the acquisition of
Monster Worldwide by others.
Some of the provisions of our certificate of incorporation,
bylaws and Delaware law could, together or separately:
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discourage potential acquisition proposals;
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delay or prevent a change in control; and/or
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limit the price that investors might be willing to pay in the
future for shares of our Common Stock.
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In particular, our Board of Directors may authorize the issuance
of up to 800,000 shares of Preferred Stock with rights and
privileges that might be senior to our Common Stock, without the
consent of the holders of the Common Stock. In addition, our
certificate of incorporation and bylaws provide, among other
things, for advance notice of stockholder proposals and director
nominations.
There is
volatility in our stock price.
The market for our Common Stock has, from time to time,
experienced extreme price and volume fluctuations. Factors such
as announcements of variations in our quarterly financial
results and fluctuations in revenue could cause the market price
of our Common Stock to fluctuate significantly. In addition, the
stock market in general, and the market prices for
Internet-related companies in particular, have experienced
volatility that often has been unrelated to the operating
performance of such companies. These broad market and industry
fluctuations may adversely affect the price of our stock,
regardless of our operating performance. Additionally,
volatility or a lack of positive performance in our stock price
may adversely affect our ability to retain key employees, many
of whom have been granted equity compensation.
The market price of our Common Stock can be influenced by
stockholders expectations about the ability of our
business to grow and to achieve certain profitability targets.
If our financial performance in a particular quarter does not
meet the expectations of our stockholders, it may adversely
affect their views concerning our growth potential and future
financial performance and, therefore, result in a drop in the
market price of our Common Stock. In addition, if the securities
analysts who regularly follow our Common Stock lower their
ratings of our Common Stock, the market price of our Common
Stock is likely to drop significantly.
15
We face
risks associated with government regulation.
The application of existing laws and regulations to our websites
relating to issues such as user privacy, security of data,
defamation, advertising, taxation, promotions, content
regulation, and intellectual property ownership and infringement
can be unclear. In addition, we will also be subject to new laws
and regulations directly applicable to our activities. Any
existing or new legislation applicable to us could expose us to
substantial liability, including significant expenses necessary
to comply with such laws and regulations, and dampen growth in
Internet usage.
The federal CAN-SPAM Act and state anti-spam laws impose certain
requirements on the use of
e-mail. The
implications of these laws have not been fully tested. Portions
of our business rely on
e-mail to
communicate with consumers on our behalf and for our clients. We
may face risk if our use of
e-mail is
found to violate the federal law or applicable state law.
We post our privacy policy and practices concerning the use and
disclosure of user data on our websites. Any failure by us to
comply with our posted privacy policy or other privacy-related
laws and regulations could result in proceedings which could
potentially harm our business, results of operations and
financial condition. In this regard, there are a large number of
legislative proposals before the United States Congress, various
state legislative bodies as well as various European Union
institutions, bodies and agencies regarding privacy issues
related to our business. It is not possible to predict whether
or when such legislation may be adopted, and certain proposals,
if adopted, could significantly harm our business, financial
condition and results of operations through a decrease in user
registrations and revenues. This could be caused by, among other
possible provisions, the required use of disclaimers or other
requirements before users can utilize our services.
Due to the global nature of the Internet, it is possible that
the governments of other states and foreign countries might
attempt to regulate its transmissions or prosecute us for
violations of their laws. We might unintentionally violate such
laws or such laws may be modified and new laws may be enacted in
the future. Any such developments (or developments stemming from
enactment or modification of other laws) may significantly harm
our business, operating results and financial condition.
Legal
proceedings may significantly harm our business.
From time to time, we may become involved in litigation or other
proceedings in the ordinary course of business. It is possible
that such litigation or proceedings may significantly harm our
future results of operations or financial condition due to
expenses we may incur to defend ourselves or the ramifications
of an adverse decision.
|
|
ITEM 1B.
|
UNRESOLVED
STAFF COMMENTS
|
None.
Our principal executive offices are located in New York, New
York, where we occupy approximately 52,000 square feet of
leased space. Our largest office space is located in Maynard,
Massachusetts, where we occupy approximately 247,000 square
feet of leased space. We also lease additional facilities in the
United States in: Bedford, Massachusetts; Boston,
Massachusetts; Chicago, Illinois; Cincinnati, Ohio; Dallas,
Texas; Denver, Colorado; Florence, South Carolina; Indianapolis,
Indiana; Laguna Hills, California; Los Angeles, California;
McLean, Virginia; Milwaukee, Wisconsin; Mountain View,
California; Raleigh, North Carolina; San Francisco,
California; Tempe, Arizona; Washington, D.C; and Cambridge,
Massachusetts. Our domestic properties are used generally by our
Careers North America and Internet
Advertising & Fees segments.
We also maintain leased facilities internationally in: Austria;
Belgium; Brazil; Canada; Czech Republic; France; Germany; Hong
Kong; Hungary; India; Ireland; Italy; Luxembourg; Malaysia;
Mexico; the Netherlands; Norway; the Peoples Republic of
China; Poland; the Republic of Korea; Russia; Singapore;
16
South Africa; Spain; Sweden; Switzerland; Turkey; United
Arab Emirates and the United Kingdom. Our international
properties are used generally by our Careers
International segment.
We also operate data centers in the United States, Europe and
Asia pursuant to various lease and
co-location
arrangements.
We consider our leased space to be adequate for the operation of
our business, and we do not foresee any difficulties in meeting
any future space requirements.
|
|
ITEM 3.
|
LEGAL
PROCEEDINGS
|
The Company is involved in various legal proceedings that are
incidental to the conduct of its business. Aside from the
matters discussed below, the Company is not involved in any
pending or threatened legal proceedings that it believes could
reasonably be expected to have a material adverse effect on its
financial condition or results of operations.
In May 2010, Site Update Solutions LLC filed suit against the
Company for allegedly infringing a patent relating to search
engine databases. The lawsuit, entitled Site Update Solutions
LLC v. Accor North America, Inc., et al. (Civil Action
No. 2:10-cv-151),
is pending in the United States District Court for the Eastern
District of Texas, and there are 34 other defendants named in
the plaintiffs original complaint. The plaintiff seeks
monetary damages, attorneys fees and other costs and
injunctive relief. The Court has entered a schedule in the case
which includes a final pre-trial conference set for March 2012.
The Company intends to vigorously defend this matter.
In December 2010, EIT Holdings LLP filed suit against the
Company and six other named defendants for allegedly infringing
a patent purporting to cover certain forms of
pop-up
advertising on websites. The lawsuit, entitled EIT Holdings
LLP v. Yelp!, Inc., et al. (Civil Action No. cv-10-5623),
is pending in the United States District Court for the Northern
District of California. The plaintiff seeks monetary damages,
pre- and post-judgment interest, and attorneys fees. The
Company intends to vigorously defend this matter.
|
|
ITEM 4.
|
[REMOVED
AND RESERVED]
|
PART II
|
|
ITEM 5.
|
MARKET
FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
|
Market
Information
Our Common Stock is listed on the New York Stock Exchange under
the symbol MWW.
As of January 20, 2011, the last reported sale price of our
Common Stock as reported by the New York Stock Exchange was
$21.53. The following table sets forth for the indicated periods
the high and low sales prices per share for our Common Stock on
the New York Stock Exchange.
|
|
|
|
|
|
|
|
|
2010
|
|
High
|
|
Low
|
|
First Quarter
|
|
$
|
19.10
|
|
|
$
|
12.82
|
|
Second Quarter
|
|
$
|
18.48
|
|
|
$
|
11.59
|
|
Third Quarter
|
|
$
|
14.19
|
|
|
$
|
10.01
|
|
Fourth Quarter
|
|
$
|
25.01
|
|
|
$
|
12.61
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
High
|
|
Low
|
|
First Quarter
|
|
$
|
12.73
|
|
|
$
|
5.95
|
|
Second Quarter
|
|
$
|
15.00
|
|
|
$
|
7.91
|
|
Third Quarter
|
|
$
|
19.28
|
|
|
$
|
9.47
|
|
Fourth Quarter
|
|
$
|
18.75
|
|
|
$
|
13.63
|
|
17
Holders
As of January 20, 2011, there were 3,042 stockholders of
record of our Common Stock, although we believe that there are a
significantly larger number of beneficial owners.
Dividends
We have never declared or paid any cash dividends on our stock,
and we do not anticipate paying cash dividends in the
foreseeable future. The payment of any future dividends, if any,
will be at the discretion of our Board and will depend upon,
among other things, future earnings, operations, capital
requirements, our general financial condition, contractual
restrictions and general business conditions. Our credit
agreement restricts, in certain circumstances, the payment of
dividends on our stock.
18
Stock
Performance Graph
The following performance graph and related information shall
not be deemed filed for the purposes of
Section 18 of the Exchange Act or otherwise subject to
liabilities under that Section and shall not be deemed to be
incorporated by reference into any filing of the Company under
the Securities Act or the Exchange Act.
The following graph compares the cumulative total return of the
Companys Common Stock during the period commencing
December 31, 2005 to December 31, 2010, with the
S&P 500 Index and the RDG Internet Composite Index. The
graph depicts the results of investing $100 in the
Companys Common Stock, the S&P 500 Index and the RDG
Internet Composite Index at closing prices on December 31,
2005 and assumes, with respect to the S&P 500 Index and the
RDG Internet Composite Index, that all dividends were
reinvested. The Company has never declared or paid any cash
dividends on its stock. Such returns are based on historical
results and are not intended to suggest future performance.
Comparison
of Five Year Cumulative Total Return
Among Monster Worldwide, Inc., The S&P 500 Index
and The RDG Internet Composite Index
Issuance
of Unregistered Securities
None.
Issuer
Purchases of Equity Securities
None.
19
|
|
ITEM 6.
|
SELECTED
FINANCIAL DATA
|
The following tables present selected financial data for the
five years ended December 31, 2010. See
Managements Discussion and Analysis of Financial
Condition and Results of Operations, found in
Item 7 of this report, for information regarding business
acquisitions, discontinued operations, critical accounting
policies and items affecting comparability of the amounts below.
STATEMENTS
OF OPERATIONS DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
(Dollars in thousands, except per share amounts)
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
Revenue
|
|
$
|
914,133
|
|
|
$
|
905,142
|
|
|
$
|
1,343,627
|
|
|
$
|
1,323,804
|
|
|
$
|
1,080,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and Related, Office & General and
Marketing & Promotion
|
|
|
945,540
|
|
|
|
895,281
|
|
|
|
1,110,375
|
|
|
|
1,082,274
|
|
|
|
846,109
|
|
(Reversal of) provision for legal settlements, net
|
|
|
|
|
|
|
(6,850
|
)
|
|
|
40,100
|
|
|
|
|
|
|
|
|
|
Restructuring and other special charges
|
|
|
|
|
|
|
16,105
|
|
|
|
16,407
|
|
|
|
16,597
|
|
|
|
|
|
Amortization of Intangibles
|
|
|
10,614
|
|
|
|
9,417
|
|
|
|
6,790
|
|
|
|
5,701
|
|
|
|
7,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
956,154
|
|
|
|
913,953
|
|
|
|
1,173,672
|
|
|
|
1,104,572
|
|
|
|
853,779
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
$
|
(42,021
|
)
|
|
$
|
(8,811
|
)
|
|
$
|
169,955
|
|
|
$
|
219,232
|
|
|
$
|
226,408
|
|
(Loss) income from continuing operations
|
|
$
|
(32,359
|
)
|
|
$
|
18,927
|
|
|
$
|
114,489
|
|
|
$
|
150,095
|
|
|
$
|
151,836
|
|
Net (loss) income
|
|
$
|
(32,359
|
)
|
|
$
|
18,927
|
|
|
$
|
124,793
|
|
|
$
|
146,399
|
|
|
$
|
37,137
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations
|
|
$
|
(0.27
|
)
|
|
$
|
0.16
|
|
|
$
|
0.95
|
|
|
$
|
1.17
|
|
|
$
|
1.19
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
|
|
|
|
|
|
|
|
0.09
|
|
|
|
(0.03
|
)
|
|
|
(0.90
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings per share*
|
|
$
|
(0.27
|
)
|
|
$
|
0.16
|
|
|
$
|
1.04
|
|
|
$
|
1.14
|
|
|
$
|
0.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss) earnings per share:*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations
|
|
$
|
(0.27
|
)
|
|
$
|
0.16
|
|
|
$
|
0.94
|
|
|
$
|
1.15
|
|
|
$
|
1.16
|
|
Income (loss) from discontinued operations, net of tax
|
|
|
|
|
|
|
|
|
|
|
0.09
|
|
|
|
(0.03
|
)
|
|
|
(0.87
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss) earnings per share*
|
|
$
|
(0.27
|
)
|
|
$
|
0.16
|
|
|
$
|
1.03
|
|
|
$
|
1.12
|
|
|
$
|
0.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Earnings per share may not add in certain periods due to
rounding. |
BALANCE
SHEET DATA(a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|
Total Current Assets
|
|
$
|
585,371
|
|
|
$
|
645,493
|
|
|
$
|
682,821
|
|
|
$
|
1,184,965
|
|
|
$
|
1,123,808
|
|
Total Current Liabilities
|
|
|
686,824
|
|
|
|
507,156
|
|
|
|
723,708
|
|
|
|
828,660
|
|
|
|
826,244
|
|
Total Assets
|
|
|
1,978,002
|
|
|
|
1,827,190
|
|
|
|
1,916,590
|
|
|
|
2,077,810
|
|
|
|
1,969,803
|
|
Long-Term Liabilities
|
|
|
162,528
|
|
|
|
186,870
|
|
|
|
145,609
|
|
|
|
132,649
|
|
|
|
33,874
|
|
Total Stockholders Equity
|
|
$
|
1,128,650
|
|
|
$
|
1,133,164
|
|
|
$
|
1,047,273
|
|
|
$
|
1,116,501
|
|
|
$
|
1,109,685
|
|
|
|
|
(a) |
|
Years 2006 through 2007 include assets and liabilities of
discontinued operations. |
20
|
|
ITEM 7.
|
MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
We make forward-looking statements in this report and in other
reports and proxy statements that we file with the SEC. Except
for historical information contained herein, the statements made
in this report constitute forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as
amended (the Securities Act), and Section 21E
of the Securities Exchange Act of 1934, as amended (the
Exchange Act). Such forward-looking statements
involve certain risks and uncertainties, including statements
regarding our strategic direction, prospects and future results.
Certain factors, including factors outside of our control, may
cause actual results to differ materially from those contained
in the forward-looking statements. These factors include, among
other things, the global economic and financial market
environment; our ability to maintain and enhance the value of
our brands, particularly Monster; competition; fluctuations in
our quarterly operating results; our ability to adapt to rapid
developments in technology; our ability to continue to develop
and enhance our information technology systems; concerns related
to our privacy policies and our compliance with applicable data
protection laws and regulations; intrusions on our systems;
interruptions, delays or failures in the provision of our
services; our vulnerability to intellectual property
infringement claims brought against us by others; our ability to
protect our proprietary rights and maintain our rights to use
key technologies of third parties; our ability to identify
future acquisition opportunities or partners and the risk that
future acquisitions or partnerships may not achieve the expected
benefits to us; our ability to manage future growth; our ability
to expand our operations in international markets; our ability
to attract and retain talented employees, including senior
management; potential write-downs if our goodwill or amortizable
intangible assets become impaired; adverse determinations by
domestic
and/or
international taxation authorities related to our estimated tax
liabilities; effects of anti-takeover provisions in our
organizational documents that could inhibit the acquisition of
Monster Worldwide by others; volatility in our stock price;
risks associated with government regulation; the outcome of
litigation we may become involved in from time to time; and
other risks and uncertainties set forth from time to time in our
reports and other filings made with the SEC, including under
Part I, Item 1A. Risk Factors, of
this report.
OVERVIEW
Business
Monster is the premier global online employment solution
provider, inspiring people to improve their lives, with a
presence in approximately 55 countries around the world. We have
built on Monsters brand and created worldwide awareness by
offering online recruiting solutions that we believe are
redefining the way employers and job seekers connect. For
employers, our goal is to provide the most effective solutions
and easiest to use technology to simplify the hiring process and
cost effectively deliver access to our community of job seekers.
For job seekers, our purpose is to help improve their careers by
providing work-related content, services and advice.
Our services and solutions include searchable job postings,
resume database access, recruitment media solutions throughout
our network and other career-related content. Job seekers can
search our job postings and post their resumes for free on each
of our career websites. Employers pay to post jobs, search our
resume database and access other career-related services.
Our investments in our technology platform have allowed us to
deliver these innovative products and services on time and on a
global basis. We have consolidated several technology systems
and have created a platform that is more secure, scalable and
redundant. Additionally, in 2008, we acquired Trovix Inc., a
business that provides career-related products and services that
utilize advanced search technology, focusing on key attributes
such as skills, work history and education. We recently launched
our Monster Power Resume
Search®
product to customers in North America, the United Kingdom
and France, which is our innovative and proprietary semantic
resume and job search database product based upon Trovix search
technology. Our Power Resume Search product is the first of
several new employer products we expect to launch from our
6Sense®
technology platform. In 2007, we introduced the Career Ad
Network, or CAN, the industrys largest recruitment-focused
online advertising network that now reaches nearly
100 million internet users on a global
21
basis. CAN distributes our customers job advertisements
across a broad array of targeted websites and is an effective
way of expanding our customers pool of active and passive
seekers. We offer this innovative media product to customers in
North America and most major markets in Europe.
Our strategy has been to grow our business both organically and
through strategic acquisitions and alliances in which the
perceived growth prospects fit our long-term strategic growth
plan. On August 24, 2010, the Company completed the
acquisition of the HotJobs Assets (as defined below), which we
believe will expand our market share in the North America online
recruitment market. We believe the long-term growth
opportunities overseas are significant and believe that we are
positioned to benefit from our expanded reach and increased
brand recognition around the world. We believe we are positioned
to benefit from the continued secular shift towards online
recruiting. In addition, through a balanced mix of investment,
strategic acquisitions and disciplined operating focus and
execution, we believe we can take advantage of this online
migration to significantly grow our international business over
the next several years.
We also operate a network of websites that connect companies to
highly targeted audiences at critical stages in their lives. Our
goal is to offer compelling online services for the users of
such websites through personalization, community features and
enhanced content. We believe there are significant opportunities
to monetize this web traffic through lead generation, display
advertising and other consumer related products. We believe that
these properties appeal to advertisers and other third parties
as they deliver certain discrete demographics entirely online.
Business
Combinations
During the period January 1, 2008 through December 31,
2010, we completed the following business combinations. Although
none of the following acquisitions was considered to be
significant, either individually or in the aggregate, they do
affect the comparability of results from period to period. The
acquisitions and the acquisition dates are as follows:
|
|
|
|
|
Acquired Business
|
|
Acquisition Date
|
|
Business Segment
|
|
JobBusan
|
|
December 31, 2010
|
|
Careers International
|
HotJobs Assets (as defined below)
|
|
August 24, 2010
|
|
Careers North America
|
CinCHouse LLC
|
|
July 28, 2009
|
|
Internet Advertising & Fees
|
China HR.com Holdings Ltd.
|
|
October 8, 2008
|
|
Careers International
|
Trovix Inc.
|
|
July 31, 2008
|
|
Careers North America
|
Affinity Labs Inc.
|
|
January 3, 2008
|
|
Internet Advertising & Fees
|
Acquisition
of the HotJobs Assets from Yahoo! Inc.
On August 24, 2010, pursuant to an Asset Purchase Agreement
dated as of February 3, 2010 by and between Monster and
Yahoo! Inc. (Yahoo!), Monster completed the
acquisition of substantially all of the assets exclusive to
Yahoo! HotJobs (the HotJobs Assets) from Yahoo! The
purchase price for the HotJobs Assets was $225.0 million.
We acquired the HotJobs Assets, among other objectives, to
expand our business in the North American online recruitment
market. The results of operations attributable to the HotJobs
Assets have been included in our consolidated financial
statements since August 24, 2010. Concurrent with the
closing of the acquisition, Monster and Yahoo! entered into a
three year commercial traffic agreement whereby Monster became
Yahoo!s exclusive provider of career and job content on
the Yahoo! homepage in the United States and Canada.
The Company funded the purchase of the HotJobs Assets with
available cash and proceeds from the Companys revolving
credit facility. In the year ended December 31, 2010, the
Company incurred $24.3 million of acquisition and
integration-related costs associated with the acquisition of the
HotJobs Assets, which were expensed as incurred and are included
in office and general expenses and salaries and related expenses
in the consolidated statement of operations. These costs
primarily relate to legal fees, professional fees and other
integration costs associated with the acquisition. We expect to
continue to incur significant integration-related costs in the
first quarter of 2011 relating to the acquisition of the HotJobs
Assets.
22
Restructuring
Program
We have recorded significant charges and accruals in connection
with our 2007 restructuring initiatives and prior business
reorganization programs. These accruals include estimates
pertaining to future lease obligations, employee separation
costs and the settlements of contractual obligations resulting
from our actions. These initiatives were implemented to reduce
the growth rate of operating expenses in certain areas and to
focus more of our resources on new product development and
innovation, enhanced technology, global advertising campaigns
and selective sales force expansion. Since the inception of the
2007 restructuring program, we incurred $49.1 million of
restructuring expenses. We completed all of the initiatives
relating to the 2007 restructuring program in the second quarter
of 2009, and no new charges will be incurred in the future
relating to this program.
Discontinued
Operations
During the second quarter of 2008, we decided to wind-down the
operations of Tickle, an online property within the Internet
Advertising & Fees segment, and have classified the
historical results of Tickle as a component of discontinued
operations. Our decision was based upon Tickles non-core
offerings, which no longer fit our long-term strategic growth
plans, and Tickles lack of profitability. Tickles
discontinued operations for the year ended December 31,
2008 included the write-down of $13.2 million of long-lived
assets, an income tax benefit of $29.8 million and a net
loss of $6.3 million from its operations. The income tax
benefit included $26.0 million of current tax benefits for
current period operating losses and tax losses incurred upon
Tickles discontinuance and $3.9 million of deferred
tax benefits for the reversal of deferred tax liabilities on
long-term assets.
The operations of our disposed businesses have been segregated
from continuing operations and reflected as discontinued
operations in the 2008 consolidated statement of operations as
follows:
|
|
|
|
|
(Dollars in thousands)
|
|
2008
|
|
|
Revenue
|
|
$
|
6,470
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(6,331
|
)
|
Income tax benefit
|
|
|
(2,501
|
)
|
|
|
|
|
|
Loss from discontinued operations, net of tax
|
|
|
(3,830
|
)
|
|
|
|
|
|
Pre-tax loss on Sale or disposal of discontinued operations
|
|
|
(13,201
|
)
|
Income tax benefit
|
|
|
(27,335
|
)
|
|
|
|
|
|
Gain on sale or disposal of business, net of tax
|
|
|
14,134
|
|
|
|
|
|
|
Income from discontinued operations, net of tax
|
|
$
|
10,304
|
|
|
|
|
|
|
The provision for income taxes reported in discontinued
operations differs from the tax benefit computed at our federal
statutory income tax rate primarily as a result of the loss in
investment for the year ended December 31, 2008.
Stock
Option Investigation
In the second quarter of 2008, the Company recorded a
$40.1 million provision for legal settlements, net,
relating to estimated settlements, costs and expenses arising
out of the legal actions regarding the Companys historical
stock option granting practices, which included approximately
$25.1 million for the settlement of the securities class
action regarding the Companys historical stock option
granting practices. In July 2008, the Company agreed to settle
the securities class action, subject to court approval. Court
approval was received in October 2008. Under the terms of the
settlement, the defendants paid $47.5 million to the class,
of which the Companys cost was approximately
$25.1 million, net of its insurance recovery and
contribution from another defendant. Also recorded in the
provision for legal settlements, net, in the second quarter of
2008 was approximately $15.0 million for estimated expenses
relating to the other outstanding litigation in connection with
the Companys historical stock option granting practices.
23
In May 2009, the Company agreed, without admitting or denying
wrongdoing, to pay a $2.5 million penalty to the SEC to
settle claims arising out of the SECs inquiry into the
Companys historical stock option granting practices.
In September 2009, the Company entered into a Memorandum of
Understanding with the plaintiffs in the last action pending
against the Company in connection with its historical stock
option granting practices (captioned as Taylor v. McKelvey,
et al., 06 CV 8322 (S.D.N.Y)(AKH) (the ERISA
Class Action)), and in November 2009, the Company
entered into a Class Action Settlement Agreement (the
Settlement Agreement) with the plaintiffs in the
ERISA Class Action. On February 9, 2010, the Court
granted final approval of the Settlement Agreement, pursuant to
which the ERISA Class Action was settled and dismissed with
prejudice for a payment of $4.3 million (a substantial
majority of which was paid by insurance and a contribution from
another defendant).
With the conclusion of the settlement of the ERISA
Class Action, all of the actions seeking recoveries from
the Company as an outgrowth of the Companys historical
stock option grant practices have been settled. As a result, in
the year ended December 31, 2009, the Company reversed a
previously recorded accrual of $6.9 million relating to
these matters.
Additionally, in 2009 and 2008, the Company recorded a net
benefit of $3.2 million (primarily relating to payments
from former associates) and a net charge of $4.4 million
(net of reimbursements of $12.4 million primarily from
former associates), respectively, of professional fees as a
direct result of the investigation into the Companys
historical stock option granting practices and related
accounting. These costs and reimbursements were recorded as a
component of office and general expenses and
primarily relate to professional services for legal, accounting
and tax guidance relating to litigation, the informal
investigation by the SEC, the investigation the United States
Attorney for the Southern District of New York and the
preparation and review of the Companys restated
consolidated financial statements.
RESULTS
OF OPERATIONS
Consolidated operating results as a percent of revenue for the
years ended December 31, 2010, 2009 and 2008 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Revenue
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and related
|
|
|
53.7
|
%
|
|
|
51.2
|
%
|
|
|
40.4
|
%
|
Office and general
|
|
|
26.6
|
%
|
|
|
25.6
|
%
|
|
|
21.0
|
%
|
Marketing and promotion
|
|
|
24.3
|
%
|
|
|
23.2
|
%
|
|
|
21.7
|
%
|
(Reversal of) provision for legal settlements, net
|
|
|
0.0
|
%
|
|
|
(0.8
|
)%
|
|
|
3.0
|
%
|
Restructuring and other special charges
|
|
|
0.0
|
%
|
|
|
1.8
|
%
|
|
|
1.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
104.6
|
%
|
|
|
101.0
|
%
|
|
|
87.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
|
(4.6
|
)%
|
|
|
(1.0
|
)%
|
|
|
12.6
|
%
|
Interest and other, net
|
|
|
(0.2
|
)%
|
|
|
(0.6
|
)%
|
|
|
1.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations before income taxes and
loss in equity interests
|
|
|
(4.8
|
)%
|
|
|
(1.6
|
)%
|
|
|
13.9
|
%
|
(Benefit from) provision for income taxes
|
|
|
(1.6
|
)%
|
|
|
(4.2
|
)%
|
|
|
4.8
|
%
|
Loss in equity interests, net
|
|
|
(0.3
|
)%
|
|
|
(0.5
|
)%
|
|
|
(0.6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations
|
|
|
(3.5
|
)%
|
|
|
2.1
|
%
|
|
|
8.5
|
%
|
Income from discontinued operations, net of tax
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
|
0.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
|
(3.5
|
)%
|
|
|
2.1
|
%
|
|
|
9.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24
The following presentation of our segment results is prepared
based on the criteria we use when evaluating the performance of
our business units.
The Year
Ended December 31, 2010 Compared to the Year Ended
December 31, 2009
Consolidated
Revenue, Operating Expenses and Operating Income
Consolidated revenue, operating expenses and operating loss for
the years ended December 31, 2010 and 2009 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
|
|
|
% Increase
|
|
(Dollars in thousands)
|
|
2010
|
|
|
% of Revenue
|
|
|
2009
|
|
|
% of Revenue
|
|
|
(Decrease)
|
|
|
(Decrease)
|
|
|
Revenue
|
|
$
|
914,133
|
|
|
|
100.0
|
%
|
|
$
|
905,142
|
|
|
|
100.0
|
%
|
|
$
|
8,991
|
|
|
|
1.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and related
|
|
|
490,791
|
|
|
|
53.7
|
%
|
|
|
463,749
|
|
|
|
51.2
|
%
|
|
|
27,042
|
|
|
|
5.8
|
%
|
Office and general
|
|
|
242,797
|
|
|
|
26.6
|
%
|
|
|
231,288
|
|
|
|
25.6
|
%
|
|
|
11,509
|
|
|
|
5.0
|
%
|
Marketing and promotion
|
|
|
222,566
|
|
|
|
24.3
|
%
|
|
|
209,661
|
|
|
|
23.2
|
%
|
|
|
12,905
|
|
|
|
6.2
|
%
|
Reversal of legal settlements, net
|
|
|
|
|
|
|
0.0
|
%
|
|
|
(6,850
|
)
|
|
|
(0.8
|
)%
|
|
|
6,850
|
|
|
|
(100.0
|
)%
|
Restructuring and other special charges
|
|
|
|
|
|
|
0.0
|
%
|
|
|
16,105
|
|
|
|
1.8
|
%
|
|
|
(16,105
|
)
|
|
|
(100.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
956,154
|
|
|
|
104.6
|
%
|
|
|
913,953
|
|
|
|
101.0
|
%
|
|
|
42,201
|
|
|
|
4.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
$
|
(42,021
|
)
|
|
|
(4.6
|
)%
|
|
$
|
(8,811
|
)
|
|
|
(1.0
|
)%
|
|
$
|
(33,210
|
)
|
|
|
376.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our consolidated revenue increased $9.0 million, or 1.0%,
in 2010 compared to 2009, which includes $1.2 million of
unfavorable foreign exchange impact and $19.0 million of
revenue attributable to the operations of the HotJobs Assets,
the acquisition which closed on August 24, 2010. Our
Careers North America segment experienced a
3.7% increase in revenue and our Careers
International segment experienced a 1.3% decrease in
revenue. The deferred revenue balance at the beginning of 2009
was $414.3 million, or $108.4 million higher than the
deferred revenue balance at the beginning of 2010 of
$305.9 million. As such, revenue recognized in the 2010 was
negatively impacted by the lower beginning deferred revenue
balance when compared to 2009. We are continuing to see
improvements in our global business activity, with 2010
generating increased bookings (which represent the value of
contractual orders received during the relevant period) of 23%
on a global basis compared to 2009. This increase in bookings
occurred in most sectors of the North American market
(particularly within our large enterprise, staffing,
e-commerce
and government customer sectors), most countries within Europe
(driven by strong bookings growth in Germany, France and
Sweden), as well as in our Asian markets (particularly in Korea,
India and China). We believe the increased bookings in these
areas are a result of the improvement in the global economy as
well as the improvements the Company has made in the customer
value proposition. The Company has continued to invest in
technology to diversify its product offerings and provide
customers a broad array of technology-based solutions for their
talent management strategy. For example, in the fourth quarter
of 2009, we launched our Power Resume Search product to
customers within North America, which is the first of several
new employer products we expect to launch from our 6Sense
technology platform. We believe the continued rollout of the
Power Resume Search product in 2010, which included the launch
in the United Kingdom in the first quarter of 2010 and France in
October 2010, will drive new customer sales in resume search and
some of our combined Career product packages. Our Internet
Advertising & Fees revenue remained relatively flat in
2010 compared to 2009.
Salary and related expenses increased $27.0 million, or
5.8%, in 2010 compared to 2009, which includes $0.3 million
of unfavorable foreign exchange impact, $1.4 million of
integration-related expenses associated with the acquisition of
the HotJobs Assets and $6.8 million of costs attributable
to the operations of the HotJobs Assets. This increase in
salaries and related expenses resulted primarily from increased
costs associated with the reintroduction of certain employee
incentive programs which were modified in 2009, increased
variable compensation costs for the Companys sales force
resulting from increased booking activity in 2010, and increased
stock-based compensation resulting from our broader equity and
incentive programs.
25
These increases were partially offset by decreased regular
salary costs in 2010, primarily associated with
North America where our targeted headcount reductions
generated decreased regular salary costs that more than offset
the incremental regular salary costs associated with the
acquisition of the HotJobs Assets, which occurred on
August 24, 2010.
Office and general expenses increased $11.5 million, or
5.0%, in 2010 compared to 2009, which included $0.4 million
of unfavorable foreign exchange impact, $22.9 million of
acquisition and integration-related expenses associated with the
acquisition of the HotJobs Assets and $3.5 million of costs
attributable to the operations of the HotJobs Assets. This
increase in office and general expenses resulted primarily from
increased legal, professional and other fees relating to
acquisition and integration-related costs associated with the
acquisition of the HotJobs Assets, partially offset by decreased
bad debt expense and decreased occupancy costs in 2010.
The Company does not allocate acquisition and
integration-related expenses to their reportable segments.
Accordingly, the $24.3 million of acquisition and
integration-related expenses incurred in 2010 associated with
the acquisition of the HotJobs Assets is recorded as a corporate
expense.
Marketing and promotion expenses increased $12.9 million,
or 6.2%, in 2010 compared to 2009, which includes
$0.2 million of unfavorable foreign exchange impact and
$11.4 million of costs attributable to the operations of
the HotJobs Assets. The increase in marketing and promotion
expenses resulted primarily from increased investment in the
second half of 2010 in our Careers International
segment, increased online media costs in our Internet
Advertising & Fees segment, primarily related to our
lead generation business, and increased costs within our
Careers North America segment primarily related to
the traffic agreement with Yahoo!, which became effective on
August 24, 2010, whereby the Company became Yahoo!s
exclusive provider of career and job content on the Yahoo!
homepage in the United States and Canada.
In the third quarter of 2009, the Company reversed a previously
recorded accrual of $6.9 million relating to settlement of
all actions seeking recoveries from the Company as an outgrowth
of the Companys historical stock option grant practices.
The 2007 restructuring program was completed in the second
quarter of 2009 and, accordingly, no restructuring charges were
recorded in 2010.
Our consolidated operating loss was $42.0 million in 2010
compared to an operating loss of $8.8 million in 2009, as a
result of the factors discussed above.
Careers
North America
The operating results of our Careers North America
segment for the years ended December 31, 2010 and 2009 are
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
|
|
|
% Increase
|
|
(Dollars in thousands)
|
|
2010
|
|
|
% of Revenue
|
|
|
2009
|
|
|
% of Revenue
|
|
|
(Decrease)
|
|
|
(Decrease)
|
|
|
Revenue
|
|
$
|
422,193
|
|
|
|
100.0
|
%
|
|
$
|
407,118
|
|
|
|
100.0
|
%
|
|
$
|
15,075
|
|
|
|
3.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and related
|
|
|
196,076
|
|
|
|
46.4
|
%
|
|
|
192,145
|
|
|
|
47.2
|
%
|
|
|
3,931
|
|
|
|
2.0
|
%
|
Office and general
|
|
|
84,442
|
|
|
|
20.0
|
%
|
|
|
93,408
|
|
|
|
22.9
|
%
|
|
|
(8,966
|
)
|
|
|
(9.6
|
)%
|
Marketing and promotion
|
|
|
93,892
|
|
|
|
22.2
|
%
|
|
|
98,137
|
|
|
|
24.1
|
%
|
|
|
(4,245
|
)
|
|
|
(4.3
|
)%
|
Restructuring and other special charges
|
|
|
|
|
|
|
0.0
|
%
|
|
|
3,758
|
|
|
|
0.9
|
%
|
|
|
(3,758
|
)
|
|
|
(100.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
374,410
|
|
|
|
88.7
|
%
|
|
|
387,448
|
|
|
|
95.2
|
%
|
|
|
(13,038
|
)
|
|
|
(3.4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
47,783
|
|
|
|
11.3
|
%
|
|
$
|
19,670
|
|
|
|
4.8
|
%
|
|
$
|
28,113
|
|
|
|
142.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue in our Careers North America segment
increased $15.1 million, or 3.7%, in 2010 compared to 2009,
which includes $1.9 million of favorable foreign exchange
impact and $19.0 million of revenue attributable to the
operations of the HotJobs Assets. Revenue recognized in 2010 was
negatively impacted by
26
the lower beginning deferred revenue balance when compared to
2009, which was more than offset by improvements in most
business sectors within North America. We are seeing strong
bookings growth in our large enterprise, staffing,
e-commerce
and government customer sectors. We believe the increased
bookings in these areas are a result of the improvement in the
economy in North America as well as the improvements the Company
has made in the customer value proposition. The Company has
continued to invest in technology to diversify its product
offerings and provide customers a broad array of
technology-based solutions for their talent management strategy.
For example, in the fourth quarter of 2009, we launched our
Power Resume Search product to customers within North America
and believe this new technology will continue to attract new
customers to Monster and drive future revenue in the form of
customers paying a premium price for the efficiency of filling
positions.
Salary and related expenses increased $3.9 million, or
2.0%, in 2010 compared to 2009, which includes $1.1 million
of unfavorable foreign exchange impact and $6.8 million of
expenses attributable to the operations of the HotJobs Assets.
The increase in salaries and related expense resulted primarily
from $8.3 million of increased variable compensation costs
for the Companys sales force resulting from increased
booking activity in 2010, $7.2 million of increased costs
associated with the reintroduction of certain employee incentive
programs which were modified in 2009 and $2.3 million of
increased stock-based compensation resulting from our broader
equity and incentive programs. These increases were partially
offset by decreased regular salary costs of $12.7 million,
primarily associated with our targeted headcount reductions
which generated decreased regular salary costs that more than
offset the incremental regular salary costs associated with the
acquisition of the HotJobs Assets, which occurred on
August 24, 2010.
Office and general expenses decreased by $9.0 million, or
9.6%, in 2010 compared to 2009, which includes $3.5 million
of expenses attributable to the operations of the HotJobs
Assets. This decrease in office and general expenses resulted
primarily from $4.6 million of decreased bad debt expense
in 2010, primarily associated with increased bad debt charges
recorded in 2009 relating to customers negatively impacted by
the global recession, as well as $4.9 million of decreased
depreciation expense in 2010 resulting from certain assets that
were abandoned and fully expensed in 2009. These decreases were
partially offset by a $2.8 million increase in intangible
amortization associated with the acquisition of the HotJobs
Assets and increased travel related expenses of
$1.4 million.
Marketing and promotion expenses decreased $4.2 million, or
4.3%, in 2010 compared to 2009, which includes $0.3 million
of unfavorable foreign exchange impact and $11.4 million of
expenses attributable to the operations of the HotJobs Assets.
The reduction in marketing and promotion expenses resulted
primarily from a more focused spending program in 2010, which
included significant reductions in all categories of marketing
and promotion, including the reduced number of Keep
America Working tour events, the decision not to renew
certain sponsorship agreements and the significant reduction in
offline marketing costs incurred in the first quarter of 2009 to
support the redesigned seeker website and employer product. This
was partially offset by increased costs in the second half of
2010 resulting from the traffic agreement the Company entered
into with Yahoo!, which became effective on August 24,
2010, whereby the Company became Yahoo!s exclusive
provider of career and job content on the Yahoo! homepage in the
United States and Canada.
The 2007 restructuring program was completed in the second
quarter of 2009 and, accordingly, no restructuring charges were
recorded in 2010.
Our Careers North America operating income was
$47.8 million in 2010 compared to $19.7 million in
2009, as a result of the factors discussed above.
27
Careers
International
The operating results of our Careers International
segment for the years ended December 31, 2010 and 2009 are
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
|
|
|
% Increase
|
|
(Dollars in thousands)
|
|
2010
|
|
|
% of Revenue
|
|
|
2009
|
|
|
% of Revenue
|
|
|
(Decrease)
|
|
|
(Decrease)
|
|
|
Revenue
|
|
$
|
360,798
|
|
|
|
100.0
|
%
|
|
$
|
365,478
|
|
|
|
100.0
|
%
|
|
$
|
(4,680
|
)
|
|
|
(1.3
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and related
|
|
|
211,002
|
|
|
|
58.5
|
%
|
|
|
194,633
|
|
|
|
53.3
|
%
|
|
|
16,369
|
|
|
|
8.4
|
%
|
Office and general
|
|
|
95,904
|
|
|
|
26.6
|
%
|
|
|
100,257
|
|
|
|
27.4
|
%
|
|
|
(4,353
|
)
|
|
|
(4.3
|
)%
|
Marketing and promotion
|
|
|
77,464
|
|
|
|
21.5
|
%
|
|
|
66,503
|
|
|
|
18.2
|
%
|
|
|
10,961
|
|
|
|
16.5
|
%
|
Restructuring and other special charges
|
|
|
|
|
|
|
0.0
|
%
|
|
|
10,368
|
|
|
|
2.8
|
%
|
|
|
(10,368
|
)
|
|
|
(100.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
384,370
|
|
|
|
106.5
|
%
|
|
|
371,761
|
|
|
|
101.7
|
%
|
|
|
12,609
|
|
|
|
3.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
$
|
(23,572
|
)
|
|
|
(6.5
|
)%
|
|
$
|
(6,283
|
)
|
|
|
(1.7
|
)%
|
|
$
|
(17,289
|
)
|
|
|
275.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue in our Careers International segment
decreased $4.7 million, or 1.3%, in 2010 compared to 2009,
which includes $3.1 million of unfavorable foreign exchange
impact, with revenue recognized in 2010 negatively impacted by
the lower beginning deferred revenue balance when compared to
2009. We are continuing to see improvements in our businesses
within Europe (driven by strong bookings growth in Germany,
France and Sweden), as well as in our Asian markets
(particularly in Korea, India and China). We believe the
increased bookings in these areas are a result of the
improvement in the global economy as well as the improvements
the Company has made in the customer value proposition. We
believe that the roll-out of Power Resume Search to certain
European countries in 2010, which included the launch in the
United Kingdom in the first quarter of 2010 and in France in
October 2010, will drive new customer sales in resume search and
some of our combined Career product packages.
Salary and related expenses increased $16.4 million, or
8.4%, in 2010 compared to 2009, which includes $0.9 million
of favorable foreign exchange impact. This increase in salaries
and related expenses resulted primarily from $7.9 million
of increased regular salary costs in 2010, primarily relating to
2009 including a benefit associated with a change in actuarial
assumptions related to a statutory pension plan,
$3.7 million of increased variable compensation costs for
the Companys sales force relating to increased bookings
activity in 2010, $2.6 million of increased stock-based
compensation resulting from our broader equity and incentive
programs and $2.0 million of increased costs associated
with the reintroduction of certain employee incentive programs
which were modified in 2009. These increases were partially
offset by decreased costs for temporary labor of
$1.6 million.
Office and general expenses decreased $4.4 million, or
4.3%, in 2010 compared to 2009, which includes $0.4 million
of unfavorable foreign exchange impact. This decrease in office
and general expenses resulted primarily from $2.9 million
of decreased bad debt expense, primarily associated with certain
bad debt charges recorded in 2009 relating to customers
negatively impacted by the global recession, decreased
amortization expense of $1.6 million, resulting from the
amortization period of certain intangible assets associated with
previous acquisitions in Europe ending in early 2010, and
decreased occupancy costs of $0.7 million. These decreases
were partially offset by increased support agreements of
$1.8 million, primarily relating to additional software
licenses in the Asia Pacific region, and increased legal costs
of $0.8 million.
Marketing and promotion expenses increased $11.0 million,
or 16.5%, in 2010 compared to 2009, which includes
$0.1 million of favorable foreign exchange impact. This
increase in marketing and promotion expenses in 2010 resulted
primarily from our continued expansion of our investments in the
Asia Pacific region, particularly in China, as well as increased
online marketing activities in Europe.
The 2007 restructuring program was completed in the second
quarter of 2009 and, accordingly, no restructuring charges were
recorded in 2010.
28
Our Careers International operating loss was
$23.6 million in 2010 compared to an operating loss of
$6.3 million in 2009, as a result of the factors discussed
above.
Internet
Advertising & Fees
The operating results of our Internet Advertising &
Fees segment for the years ended December 31, 2010 and 2009
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
|
|
|
% Increase
|
|
(Dollars in thousands)
|
|
2010
|
|
|
% of Revenue
|
|
|
2009
|
|
|
% of Revenue
|
|
|
(Decrease)
|
|
|
(Decrease)
|
|
|
Revenue
|
|
$
|
131,142
|
|
|
|
100.0
|
%
|
|
$
|
132,546
|
|
|
|
100.0
|
%
|
|
$
|
(1,404
|
)
|
|
|
(1.1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and related
|
|
|
50,420
|
|
|
|
38.4
|
%
|
|
|
46,093
|
|
|
|
34.8
|
%
|
|
|
4,327
|
|
|
|
9.4
|
%
|
Office and general
|
|
|
26,015
|
|
|
|
19.8
|
%
|
|
|
23,632
|
|
|
|
17.8
|
%
|
|
|
2,383
|
|
|
|
10.1
|
%
|
Marketing and promotion
|
|
|
50,483
|
|
|
|
38.5
|
%
|
|
|
44,091
|
|
|
|
33.3
|
%
|
|
|
6,392
|
|
|
|
14.5
|
%
|
Restructuring and other special charges
|
|
|
|
|
|
|
0.0
|
%
|
|
|
616
|
|
|
|
0.5
|
%
|
|
|
(616
|
)
|
|
|
(100.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
126,918
|
|
|
|
96.8
|
%
|
|
|
114,432
|
|
|
|
86.3
|
%
|
|
|
12,486
|
|
|
|
10.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
4,224
|
|
|
|
3.2
|
%
|
|
$
|
18,114
|
|
|
|
13.7
|
%
|
|
$
|
(13,890
|
)
|
|
|
(76.7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue in our Internet Advertising & Fees segment
decreased $1.4 million, or 1.1% in 2010 compared to 2009.
In 2010, we experienced a decrease in offline display
advertising revenues which was partially offset by an increase
in online display advertising. We continue to concentrate our
resources on revenues from lead generation and online display
advertising, innovation of new products and increased audience
reach.
Operating expenses increased $12.5 million, or 10.9%, in
2010 compared to 2009. This increase in operating expenses
primarily resulted from $6.4 million of increased marketing
and promotion costs, primarily associated with lead generation
business, $2.2 million of increased costs associated with
the reintroduction of certain employee incentive programs which
were modified in 2009, $1.5 million of additional
depreciation expense and $1.1 million of additional
stock-based compensation.
The 2007 restructuring program was complete in the second
quarter of 2009 and, accordingly, no restructuring charges were
recorded in 2010.
Our Internet Advertising & Fees operating income was
$4.2 million in 2010 compared to operating income of
$18.1 million in 2009, as a result of the factors discussed
above.
Interest
and Other, net
Interest and other, net for the fiscal years ended
December 31, 2010 and 2009 resulted in a net expense of
$1.9 million and $5.8 million, respectively. Interest
and other, net, primarily relates to interest expense on the
Companys outstanding debt, interest income associated with
the Companys various investments, foreign currency gains
or losses and gains or losses on the Companys auction rate
securities.
The decrease in interest and other, net, of $3.9 million
resulted primarily from a reversal of auction rate security
losses related to funds received in 2010 from RBC Capital
Markets Corporation (RBC) related to contingent
settlements, gains from security redemptions as well as a gain
on a sale of an investment in the fourth quarter of 2010. These
reductions in interest and other, net, were partially offset by
decreased interest income, associated with a decline in invested
balances and a decline in investment interest rates experienced
during 2010, higher credit facility borrowing costs, higher
unused fees, higher amortization costs associated with
capitalized deferred financing fees and foreign currency losses
in 2010 resulting mainly from losses on intercompany settlements
and hedging activity.
29
Income
Taxes
Income taxes for the years ended December 31, 2010 and 2009
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
2010
|
|
2009
|
|
$ Change
|
|
% Change
|
|
Loss before income taxes and loss in equity interests
|
|
$
|
(43,894
|
)
|
|
$
|
(14,639
|
)
|
|
$
|
(29,255
|
)
|
|
|
(199.8
|
)%
|
Income tax benefit
|
|
|
(14,405
|
)
|
|
|
(37,883
|
)
|
|
|
23,478
|
|
|
|
62.0
|
%
|
Effective tax rate
|
|
|
32.8
|
%
|
|
|
258.8
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
The provision for income taxes consists of provisions for
federal, state and foreign income taxes. The Company operates
globally with operations in various tax jurisdictions outside of
the United States. Accordingly, the effective income tax rate is
a composite rate reflecting the earnings in the various tax
jurisdictions and the applicable rates.
Our effective tax rates differ from the statutory rate due to
the impact of state and local income taxes, tax exempt interest
income, certain nondeductible expenses, foreign earnings taxed
at different tax rates, valuation allowances and the accrual of
interest on tax liabilities. Our future effective tax rates
could be adversely affected by earnings being lower than
anticipated in countries where we have lower statutory rates,
changes in the valuation of our deferred tax assets, or changes
in tax laws or interpretations thereof. In addition, our filed
tax returns are subject to the examination by the Internal
Revenue Service and other tax authorities. We regularly assess
the likelihood of adverse outcomes resulting from these
examinations to determine the adequacy of our provision for
income taxes. The Company is currently under examination in
several domestic and international tax jurisdictions. Presently,
no material adjustments have been proposed.
During 2010, the Company completed a tax examination in the
United Kingdom. The tax authorities reviewed the character of
certain intercompany loans as debt. The Company had previously
established an uncertain tax position in the amount of
$25.1 million for the tax benefits of accrued interest
expense on these loans by reducing recorded deferred tax assets.
Approximately $13.9 million of these benefits were
sustained in the examination. As a result of resolution of the
examination, the Company reversed the unrecognized tax benefits
but established a valuation allowance for the benefits sustained
due to uncertainty in their ultimate realization. Net of the
recorded valuation allowance, the reversal did not have an
effect on the effective tax rate.
The Company also recognized $1.4 million of previously
unrecognized tax benefits due to settlement of a U.S. state
tax examination, which on a net of tax basis impacted the
effective tax rate by $0.9 million. The Company also
reserved accrued interest and penalties related to unrecognized
tax benefits of $0.6 million, which on a net of tax basis
impacts the effective rate by $0.3 million. The total
benefit reflected in the effective tax rate due to recognition
of previously unrecognized benefits and reversals of interest
and penalties thereon was $1.2 million.
Due to the expiration of the statute of limitations in the third
and fourth quarter of 2009, the Company reversed
$38.8 million of accrued tax attributable to uncertain tax
positions of which $33.0 million impacts the Companys
effective tax rate. The Company also reversed accrued interest
and penalties related to uncertain tax positions of
$9.0 million, which on a net tax basis impacts the
effective rate by $5.7 million. The total benefit reflected
in the 2009 income tax provision due to the reversal of tax and
interest is $38.7 million.
The Company conducts business globally and as a result, the
Company or one or more subsidiaries is subject to
U.S. federal income taxes and files income tax returns in
various U.S. states and approximately 36 foreign
jurisdictions. In the normal course of business, the Company is
subject to tax examinations by taxing authorities including
major jurisdictions such as Germany, United Kingdom, China and
the United States as well as other countries in Europe and
the Asia Pacific region. The Company is generally no longer
subject to examinations with respect to returns that have been
filed for years prior to 2005 in Germany, 2007 in the United
Kingdom, 2007 in China and 2006 in the United States. Tax years
are generally considered closed from examinations when the
statute of limitations expires. The Company estimates that it is
reasonably possible that unrecorded tax benefits may be reduced
by as much as zero to $6.0 million in the next twelve
30
months due to expirations of statutes of limitations or
settlement of audits. The tax matters relate to allocation of
income among jurisdictions.
Loss
in Equity Interests, Net
Loss in equity interests, net, for the years ended
December 31, 2010 and 2009 was $2.9 million and
$4.3 million, respectively. The Companys equity
investments consist of a 50% equity interest in a company
located in Australia and a 25% investment in a company located
in Finland. This decreased loss in 2010 primarily related to our
Australian equity investment, which recorded a decreased loss
from operations in 2010.
Net
(Loss) Income
Our consolidated net loss was $32.4 million in 2010
compared to net income of $18.9 million in 2009, as a
result of the factors discussed above. The Companys
2009 net income was positively impacted by the above noted
tax benefit recorded in the third and fourth quarters of 2009
relating to the reversal of income tax reserves due to the
expiration of the statute of limitations on uncertain tax
positions.
Diluted
(Loss) Earnings Per Share
Diluted loss per share in 2010 was $0.27 compared to diluted
income per share of $0.16 in 2009. Diluted weighted average
shares outstanding for the years ended December 31, 2010
and 2009 was 120.6 million shares and 121.2 million
shares, respectively. For periods in which losses are presented,
dilutive earnings per share calculations do not differ from
basic earnings per share because the effects of any potential
common stock equivalents are anti-dilutive and therefore not
included in the calculation of dilutive earnings per share.
The Year
Ended December 31, 2009 Compared to the Year Ended
December 31, 2008
Consolidated
Revenue, Operating Expenses and Operating Income
Consolidated revenue, operating expenses and operating (loss)
income for the years ended December 31, 2009 and 2008 are
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
|
|
|
% Increase
|
|
(Dollars in thousands)
|
|
2009
|
|
|
% of Revenue
|
|
|
2008
|
|
|
% of Revenue
|
|
|
(Decrease)
|
|
|
(Decrease)
|
|
|
Revenue
|
|
$
|
905,142
|
|
|
|
100.0
|
%
|
|
$
|
1,343,627
|
|
|
|
100.0
|
%
|
|
$
|
(438,485
|
)
|
|
|
(32.6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and related
|
|
|
463,749
|
|
|
|
51.2
|
%
|
|
|
543,268
|
|
|
|
40.4
|
%
|
|
|
(79,519
|
)
|
|
|
(14.6
|
)%
|
Office and general
|
|
|
231,288
|
|
|
|
25.6
|
%
|
|
|
282,699
|
|
|
|
21.0
|
%
|
|
|
(51,411
|
)
|
|
|
(18.2
|
)%
|
Marketing and promotion
|
|
|
209,661
|
|
|
|
23.2
|
%
|
|
|
291,198
|
|
|
|
21.7
|
%
|
|
|
(81,537
|
)
|
|
|
(28.0
|
)%
|
(Reversal of) provision for legal settlements, net
|
|
|
(6,850
|
)
|
|
|
(0.8
|
)%
|
|
|
40,100
|
|
|
|
3.0
|
%
|
|
|
(46,950
|
)
|
|
|
(117.1
|
)%
|
Restructuring and other special charges
|
|
|
16,105
|
|
|
|
1.8
|
%
|
|
|
16,407
|
|
|
|
1.2
|
%
|
|
|
(302
|
)
|
|
|
(1.8
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
913,953
|
|
|
|
101.0
|
%
|
|
|
1,173,672
|
|
|
|
87.4
|
%
|
|
|
(259,719
|
)
|
|
|
(22.1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
$
|
(8,811
|
)
|
|
|
(1.0
|
)%
|
|
$
|
169,955
|
|
|
|
12.6
|
%
|
|
$
|
(178,766
|
)
|
|
|
(105.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our consolidated revenue decreased $438.5 million, or
32.6%, in 2009 compared to 2008, which includes
$42.5 million of negative foreign exchange impact relating
to the effect of the strengthening U.S. dollar in 2009.
Careers International experienced a 36.5% decrease
in revenue and Careers North America experienced a
36.2% decrease in revenue with both segments negatively impacted
by the global recession which reduced overall hiring demand and
forced our customers to reduce their job posting and resume
database usage. Internet Advertising & Fees revenue
increased $2.2 million, or 1.7% in 2009 compared to 2008.
31
Salary and related expenses decreased $79.5 million, or
14.6%, in 2009 compared to 2008. This reduction in salaries and
related expenses resulted primarily from lower variable
compensation due to reduced sales volume, decreased regular
salary due to global headcount reductions primarily in our
Careers International reportable segment, and the
benefit of certain cost reduction initiatives implemented in the
first quarter of 2009 that resulted in modifications to employee
incentive compensation programs, partially offset by an increase
in stock-based compensation resulting from our broader equity
and incentive programs. The stronger U.S. dollar favorably
impacted consolidated salary and related expenses by
approximately $21.0 million in 2009 compared to 2008.
Office and general expenses decreased $51.4 million, or
18.2%, in 2009 compared to 2008. This reduction in office and
general expenses in 2009 resulted primarily from a reduction in
consulting fees related to the investigation of our historical
stock option granting practices, lower travel and entertainment
expenses and reduced professional fees associated with
previously outsourced customer service functions. Included in
office and general expenses in 2009 is a net benefit of
$3.2 million for professional fees and expenses related to
the investigation of our historical stock option granting
practices, compared to a net charge of $4.4 million in
2008. These reductions and benefits were partially offset by
additional depreciation expense, primarily associated with
increased capitalized costs related to our newly designed
website and our continued commitment to funding investments in
our product, new technology and other assets, as well as
increased costs resulting from exiting certain facilities in the
third and fourth quarters of 2009. The stronger U.S. dollar
favorably impacted consolidated office and general expenses by
approximately $9.1 million in 2009 compared to 2008.
Marketing and promotion expenses decreased $81.5 million,
or 28.0%, in 2009 compared to 2008. This reduction in marketing
and promotion expenses is primarily the result of a more focused
and efficient spending program in 2009, which included
significant reductions in offline media and concentration on
effective and productive online media investments. The first
quarter of 2009 included incremental marketing costs associated
with supporting our newly redesigned seeker website and employer
product launched in January 2009 and the first quarter of 2008
included incremental marketing costs associated with our global
brand re-launch in January 2008. The stronger U.S. dollar
favorably impacted consolidated marketing and promotion expenses
by approximately $7.6 million in 2009 compared to 2008.
In the second quarter of 2008, the Company recorded a provision
for legal settlements (net of insurance reimbursements) of
$40.1 million related to the settlement of the class action
and related lawsuits relating to the Companys historical
stock option granting practices. With the conclusion of the
settlement of the ERISA class action, all of the actions seeking
recoveries from the Company as an outgrowth of the
Companys historical stock option granting practices have
been settled. In the third quarter of 2009, upon entering into a
Class Action Settlement Agreement with the plaintiffs in
the ERISA class action, the Company reversed a previously
recorded accrual of approximately $6.9 million relating to
litigation arising out of our historical stock option granting
practices. As a consequence of the settlement of such litigation
and settlement of the Companys claims against a former
member of senior management, we do not expect to continue to
incur significant professional or legal fees in connection with
matters relating to our historical stock option granting
practices.
Restructuring and other special charges decreased
$0.3 million in 2009 compared to 2008. The 2007
restructuring program was complete in the second quarter of
2009. Accordingly, all charges in 2009 relate to the six month
period ended June 30, 2009.
Our consolidated operating loss was $8.8 million in 2009,
compared to operating income of $170.0 million in 2008.
32
Careers
North America
The operating results of our Careers North America
segment for the years ended December 31, 2009 and 2008 are
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
|
|
|
% Increase
|
|
(Dollars in thousands)
|
|
2009
|
|
|
% of Revenue
|
|
|
2008
|
|
|
% of Revenue
|
|
|
(Decrease)
|
|
|
(Decrease)
|
|
|
Revenue
|
|
$
|
407,118
|
|
|
|
100.0
|
%
|
|
$
|
638,118
|
|
|
|
100.0
|
%
|
|
$
|
(231,000
|
)
|
|
|
(36.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and related
|
|
|
192,145
|
|
|
|
47.2
|
%
|
|
|
213,382
|
|
|
|
33.4
|
%
|
|
|
(21,237
|
)
|
|
|
(10.0
|
)%
|
Office and general
|
|
|
93,408
|
|
|
|
22.9
|
%
|
|
|
112,392
|
|
|
|
17.6
|
%
|
|
|
(18,984
|
)
|
|
|
(16.9
|
)%
|
Marketing and promotion
|
|
|
98,137
|
|
|
|
24.1
|
%
|
|
|
132,194
|
|
|
|
20.7
|
%
|
|
|
(34,057
|
)
|
|
|
(25.8
|
)%
|
Restructuring and other special charges
|
|
|
3,758
|
|
|
|
0.9
|
%
|
|
|
4,895
|
|
|
|
0.8
|
%
|
|
|
(1,137
|
)
|
|
|
(23.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
387,448
|
|
|
|
95.2
|
%
|
|
|
462,863
|
|
|
|
72.5
|
%
|
|
|
(75,415
|
)
|
|
|
(16.3
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
19,670
|
|
|
|
4.8
|
%
|
|
$
|
175,255
|
|
|
|
27.5
|
%
|
|
$
|
(155,585
|
)
|
|
|
(88.8
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue in our Careers North America segment
decreased $231.0 million, or 36.2%, in 2009 compared to
2008. The continued weakness in the U.S. economy reduced
overall hiring demand, which led our customers to reduce their
job posting and resume database usage.
Salary and related expenses decreased by $21.2 million, or
10.0%, in 2009 compared to 2008. This reduction in salaries and
related expenses resulted primarily from $22.2 million of
decreased variable compensation expense due to declining sales,
$10.9 million in lower incentive compensation as a result
of a modified incentive compensation structure in 2009 and
$4.3 million of decreased expenses related to a reduction
of temporary employees. These reductions were partially offset
by an increase in regular salary and related benefits of
$11.1 million, primarily as a result of in-sourcing
customer service functions and the targeted expansion of our
sales force, increased stock-based compensation expense of
$3.6 million resulting from our broader equity and
incentive programs, as well as an additional $3.6 million
of severance costs associated with our targeted headcount
reduction, which primarily occurred in the third quarter of 2009.
Office and general expenses decreased $19.0 million, or
16.9%, in 2009 compared to 2008. This reduction in office and
general expenses resulted primarily from $14.4 million in
decreased consulting fees, which resulted from our continued
effort to reduce operating expenses, $7.0 million in lower
travel related expenses and $3.8 million of lower
professional fees associated with previously outsourced customer
service functions, which beginning in 2009 are being performed
by our employees as part of our strategic decision to build a
world-class customer service center in Florence, South Carolina.
These decreases in expenses were partially offset by
$6.1 million of additional depreciation expense primarily
associated with increased capitalized costs related to the
rebuilding of our website and funding investment in our product,
new technology and other assets in order to sustain long-term
profitability.
Marketing and promotion expenses decreased $34.1 million,
or 25.8%, in 2009 compared to 2008. This reduction in marketing
and promotion expenses resulted primarily from a more focused
and efficient spending program in 2009, which included
significant reductions in offline media and concentration on
effective and productive online media investments. Partially
offsetting these reductions are additional costs incurred in
2009 relating to the Companys continuation of the
Keep America Working tour. The first quarter of 2009
included incremental marketing costs associated with supporting
our newly redesigned seeker website and employer product
launched in January 2009 and the first quarter of 2008 included
incremental marketing costs associated with our global brand
re-launch in January 2008.
Restructuring and other special charges decreased
$1.1 million in 2009 compared to the 2008, primarily
relating to decreased severance costs in 2009. The 2007
restructuring program was completed in the second quarter of
2009. Accordingly, all restructuring charges in 2009 relate to
the six month period ended June 30, 2009.
33
Our Careers North America segment had operating
income of $19.7 million in 2009, compared to operating
income of $175.3 million in 2008.
Careers
International
The operating results of our Careers International
segment for the years ended December 31, 2009 and 2008 are
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
|
|
|
% Increase
|
|
(Dollars in thousands)
|
|
2009
|
|
|
% of Revenue
|
|
|
2008
|
|
|
% of Revenue
|
|
|
(Decrease)
|
|
|
(Decrease)
|
|
|
Revenue
|
|
$
|
365,478
|
|
|
|
100.0
|
%
|
|
$
|
575,182
|
|
|
|
100.0
|
%
|
|
$
|
(209,704
|
)
|
|
|
(36.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and related
|
|
|
194,633
|
|
|
|
53.3
|
%
|
|
|
248,158
|
|
|
|
43.1
|
%
|
|
|
(53,525
|
)
|
|
|
(21.6
|
)%
|
Office and general
|
|
|
100,257
|
|
|
|
27.4
|
%
|
|
|
117,350
|
|
|
|
20.4
|
%
|
|
|
(17,093
|
)
|
|
|
(14.6
|
)%
|
Marketing and promotion
|
|
|
66,503
|
|
|
|
18.2
|
%
|
|
|
115,634
|
|
|
|
20.1
|
%
|
|
|
(49,131
|
)
|
|
|
(42.5
|
)%
|
Restructuring and other special charges
|
|
|
10,368
|
|
|
|
2.8
|
%
|
|
|
9,313
|
|
|
|
1.6
|
%
|
|
|
1,055
|
|
|
|
11.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
371,761
|
|
|
|
101.7
|
%
|
|
|
490,455
|
|
|
|
85.3
|
%
|
|
|
(118,694
|
)
|
|
|
(24.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
$
|
(6,283
|
)
|
|
|
(1.7
|
)%
|
|
$
|
84,727
|
|
|
|
14.7
|
%
|
|
$
|
(91,010
|
)
|
|
|
(107.4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our Careers International segment revenue decreased
$209.7 million, or 36.5%, in 2009 compared to 2008. Due to
the global economic recession, we experienced challenging
markets across most countries and geographic regions in Europe
and Asia, although we did experience stronger performance in
certain countries within Asia. Our Careers
International revenue accounted for 40.4% of consolidated
revenue in 2009, compared to 42.8% in 2008. The effect of the
strengthening U.S. dollar in 2009 contributed approximately
$40.4 million to the decrease in reported revenue, or 7.0%
out of the total percentage decline of 36.5%, compared to 2008.
The decrease in revenue was partially offset by increased
revenue from ChinaHR, which the Company acquired 100% ownership
of in the fourth quarter of 2008.
Salary and related expenses decreased by $53.5 million, or
21.6%, in 2009 compared to 2008. This reduction in salaries and
related expenses resulted primarily from $27.2 million of
decreased regular salary and benefit costs due to decreased
headcount in Europe, a benefit in 2009 resulting from a change
in actuarial assumptions related to a statutory pension plan,
$9.9 million in lower incentive compensation as a result of
a modified incentive compensation structure in 2009,
$8.5 million of lower variable compensation due to lower
sales and $7.1 million of decreased expenses related to
temporary employees, which results from our continued effort to
reduce operating expenses. These reductions in expenses were
partially offset by additional stock-based compensation expenses
of $2.8 million resulting from our broader equity and
incentive programs and increased expenses for ChinaHR, which the
Company acquired 100% ownership of in the fourth quarter of
2008. The stronger U.S. dollar favorably impacted salary
and related expenses by approximately $18.2 million in 2009
compared to 2008.
Office and general expenses decreased $17.1 million, or
14.6%, in 2009 compared to 2008. This reduction resulted
primarily from $9.5 million in lower travel related
expenses and $8.9 million in lower consulting fees. These
decreases in expenses were partially offset by $3.1 million
of increased facility costs primarily relating to the exit of
certain facilities in the third and fourth quarters of 2009,
$1.6 million of increased depreciation expense primarily
associated with the capitalized labor related to the rebuilding
of our website and our investments in our product, new
technology and other assets, and increased expenses for ChinaHR,
which the Company acquired 100% ownership of in the fourth
quarter of 2008. The stronger U.S. dollar favorably
impacted office and general expenses by approximately
$7.6 million in 2009 compared to 2008.
Marketing and promotion expenses decreased $49.1 million,
or 42.5%, in 2009 compared to 2008. This reduction in marketing
and promotion expenses resulted primarily from a more focused
and efficient spending program in 2009, which included
significant reductions in offline media and concentration on
effective and productive online media investments. These
reductions were partially offset by increased costs associated
with initiatives in Europe similar to the Keep America
Working tour in the United States as well as marketing
34
and promotion costs for ChinaHR, which the Company acquired 100%
ownership of in the fourth quarter of 2008. The first quarter of
2009 included incremental marketing costs associated with
supporting our newly rebuilt website and employer product
launched in January 2009, and the first quarter of 2008 included
incremental marketing costs associated with our global brand
re-launch in January 2008. The stronger U.S. dollar
favorably impacted marketing and promotion expenses by
approximately $7.1 million in 2009 compared to 2008.
Restructuring and other special charges increased
$1.1 million in 2009 compared to 2008, primarily relating
to increased severance costs. The 2007 restructuring program was
complete in the second quarter of 2009 and, accordingly, there
were no restructuring charges recorded in the third and fourth
quarters of 2009.
Our Careers International operating loss was
$6.3 million in 2009, compared to operating income of
$84.7 million in 2008.
Internet
Advertising & Fees
During the second quarter of 2008, we decided to wind-down the
operations of Tickle, an online property within the Internet
Advertising & Fees segment, and have classified the
results of Tickle as a discontinued operation. The operating
results of our Internet Advertising & Fees segment for
the years ended December 31, 2009 and 2008 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
|
|
|
% Increase
|
|
(Dollars in thousands)
|
|
2009
|
|
|
% of Revenue
|
|
|
2008
|
|
|
% of Revenue
|
|
|
(Decrease)
|
|
|
(Decrease)
|
|
|
Revenue
|
|
$
|
132,546
|
|
|
|
100.0
|
%
|
|
$
|
130,327
|
|
|
|
100.0
|
%
|
|
$
|
2,219
|
|
|
|
1.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and related
|
|
|
46,093
|
|
|
|
34.8
|
%
|
|
|
49,448
|
|
|
|
37.9
|
%
|
|
|
(3,355
|
)
|
|
|
(6.8
|
)%
|
Office and general
|
|
|
23,632
|
|
|
|
17.8
|
%
|
|
|
26,579
|
|
|
|
20.4
|
%
|
|
|
(2,947
|
)
|
|
|
(11.1
|
)%
|
Marketing and promotion
|
|
|
44,091
|
|
|
|
33.3
|
%
|
|
|
41,234
|
|
|
|
31.6
|
%
|
|
|
2,857
|
|
|
|
6.9
|
%
|
Restructuring and other special charges
|
|
|
616
|
|
|
|
0.5
|
%
|
|
|
1,400
|
|
|
|
1.1
|
%
|
|
|
(784
|
)
|
|
|
(56.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
114,432
|
|
|
|
86.3
|
%
|
|
|
118,661
|
|
|
|
91.0
|
%
|
|
|
(4,229
|
)
|
|
|
(3.6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
18,114
|
|
|
|
13.7
|
%
|
|
$
|
11,666
|
|
|
|
9.0
|
%
|
|
$
|
6,448
|
|
|
|
55.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue at our Internet Advertising & Fees segment
increased $2.2 million, or 1.7%, in 2009 compared to 2008.
The increase in revenue was primarily attributed to growth in
lead generation, principally associated with the education and
military recruiting sales channels, as well as increases in
display advertising relating to consumer and recruitment media.
These increases were partially offset by decreases in revenue
from certain one-time project-based revenue as well as
discontinued product offerings.
Operating expenses decreased $4.2 million in 2009, or 3.6%,
compared to 2008, primarily as the result of $3.9 million
of decreased incentive compensation, resulting from a modified
incentive compensation structure in 2009, $2.2 million of
decreased consulting fees in 2009 and $1.0 million of
decreased travel and entertainment, partially offset by
$2.9 million of increased marketing and promotion expenses
and $1.0 million of increased costs resulting from the
exiting of certain facilities in the third quarter of 2009.
Restructuring and other special charges decreased
$0.8 million in 2009 compared to 2008. The 2007
restructuring program was complete in the second quarter of 2009
and, accordingly, there were no restructuring charges recorded
in the third and fourth quarters of 2009.
Our Internet Advertising & Fees segment had operating
income of $18.1 million in 2009, compared to operating
income of $11.7 million in 2008.
Interest
and Other, net
Interest and other, net for the fiscal years ended
December 31, 2009 and 2008 resulted in a net expense of
$5.8 million and a net benefit of $17.3 million,
respectively. Interest and other, net primarily relates to
35
interest expense on the Companys outstanding debt,
interest income associated with the Companys various
investments, foreign currency gains or losses and realized and
unrealized gains and loss on the Companys available for
sale investments.
The decrease in interest and other, net of $23.1 million
resulted primarily from realized and unrealized losses in 2009
totaling $6.3 million relating to the Companys
auction rate securities, decreased interest income primarily
associated with the significant decline in investment interest
rates during 2009 and the Company having lower investment
balances, foreign currency gains in 2008 primarily resulting
from the settlement of intercompany balances with several
European subsidiaries, as well as increased interest expense in
2009 related to additional borrowings.
In November 2009, the Company entered into a legal settlement
with RBC Capital Markets Corporation (RBC)
pertaining to the auction rate securities the Company held with
RBC. As part of the settlement, the Company sold the auction
rate securities to RBC at a certain discount to their par value,
which resulted in the Company recording a realized loss of
$4.8 million in the fourth quarter of 2009. As a result of
the settlement with RBC, the Company no longer classifies losses
associated with the remaining auction rate securities as
temporary and recorded an unrealized loss of $1.5 million
in the fourth quarter of 2009 relating to this
other-than-temporary
impairment on the remaining auction rate securities.
Income
Taxes
Income taxes for the years ended December 31, 2009 and 2008
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
2009
|
|
2008
|
|
$ Change
|
|
% Change
|
|
(Loss) income from continuing operations before income taxes and
loss in equity interests
|
|
$
|
(14,639
|
)
|
|
$
|
187,238
|
|
|
$
|
(201,877
|
)
|
|
|
(107.8
|
)%
|
Income tax (benefit) provision
|
|
|
(37,883
|
)
|
|
|
64,910
|
|
|
|
(102,793
|
)
|
|
|
(158.4
|
)%
|
Effective tax rate
|
|
|
258.8
|
%
|
|
|
34.7
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
Our effective tax rates differ from the statutory rate due to
the impact of state and local income taxes, tax exempt interest
income, certain nondeductible expenses, foreign earnings taxed
at different tax rates, valuation allowances and accrual of
interest on accrued tax liabilities. Our future effective tax
rates could be adversely affected by earnings being lower than
anticipated in countries where we have lower statutory rates,
changes in the valuation of our deferred tax assets or
liabilities, or changes in tax laws or interpretations thereof.
In addition, our filed tax returns are subject to the
examination by the Internal Revenue Service and other tax
authorities. We regularly assess the likelihood of adverse
outcomes resulting from these examinations to determine the
adequacy of our provision for income taxes. The Company is
currently under examination in several domestic and
international tax jurisdictions. Presently, no material
adjustments have been proposed.
Due to the expiration of the statute of limitations in the third
and fourth quarter of 2009, the Company reversed
$38.8 million of accrued tax attributable to uncertain tax
positions of which $33.0 million impacts the Companys
effective tax rate. The Company also reversed accrued interest
and penalties related to uncertain tax positions of
$9.0 million, which on a net tax basis impacts the
effective rate by $5.7 million. The total benefit reflected
in the 2009 income tax provision due to the reversal of tax and
interest is $38.7 million.
Loss
in Equity Interests, Net
Loss in equity interests, net, for the years ended
December 31, 2009 and 2008 was $4.3 million and
$7.8 million, respectively. The reduction in the equity
loss of $3.5 million in 2009 primarily related to our
equity investment in ChinaHR. The Company began consolidating
ChinaHR on October 8, 2008 when the Company completed the
acquisition of their remaining ownership interest, resulting in
2008 being negatively impacted by the equity losses of ChinaHR.
The Companys additional equity investments consist of a
50% equity interest in a company located in Australia, which
occurred in the fourth quarter of 2008, and a 25% investment in
a company located in Finland.
36
Discontinued
Operations, Net of Tax
During 2008, the Company discontinued its Tickle subsidiary and
recorded a write-down of $13.2 million of long-lived
assets, an income tax benefit of $29.8 million and a net
pre-tax loss of $6.3 million from its operations. The 2007
loss on discontinued operations of $3.7 million, net of tax
was primarily related to $2.9 million for the operations of
Tickle and $0.8 million related to the disposed businesses
that collectively comprised the former Advertising &
Communications operating segment.
Net
Income
Our consolidated net income was $18.9 million in 2009
compared to net income of $124.8 million in 2008, as a
result of the factors discussed above. The Companys
2009 net income was positively impacted by a tax benefit
recorded in the third and fourth quarters of 2009 relating to
the reversal of income tax reserves due to the expiration of the
statute of limitations on uncertain tax positions.
Diluted
Earnings Per Share
Diluted earnings per share from continuing operations was $0.16
for the year ended December 31, 2009, compared to diluted
earnings per share from continuing operations of $0.94 for the
year ended December 31, 2008. The decrease was primarily a
result of lower operating income from Careers North
America and Careers International, partially offset
by a tax benefit recorded in the third and fourth quarters of
2009 relating to the reversal of income tax reserves due to the
expiration of the statute of limitations on uncertain tax
positions. Diluted weighted average shares outstanding was
121.2 million shares in 2009 and 2008.
Financial
Condition
The following table details our cash and cash equivalents and
marketable securities as of December 31, 2010 and 2009:
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
(Dollars in thousands)
|
|
2010
|
|
|
2009
|
|
|
Cash and cash equivalents
|
|
$
|
163,169
|
|
|
$
|
275,447
|
|
Marketable securities (current and non-current)
|
|
|
|
|
|
|
24,669
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents and marketable securities
|
|
$
|
163,169
|
|
|
$
|
300,116
|
|
|
|
|
|
|
|
|
|
|
Percentage of total assets
|
|
|
8.2
|
%
|
|
|
16.4
|
%
|
|
|
|
|
|
|
|
|
|
Cash
Flows
Consolidated cash flows for the fiscal year ended
December 31, 2010 and 2009 are as follows:
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
|
|
December 31,
|
(Dollars in thousands)
|
|
2010
|
|
2009
|
|
Net cash provided by operating activities
|
|
$
|
93,072
|
|
|
$
|
44,725
|
|
Net cash (used for) provided by investing activities
|
|
|
(261,260
|
)
|
|
|
7,879
|
|
Net cash provided by (used for) financing activities
|
|
|
60,573
|
|
|
|
(11,418
|
)
|
Effect of exchange rates on cash
|
|
|
(4,663
|
)
|
|
|
12,001
|
|
As of December 31, 2010, we had cash and cash equivalents
of $163.2 million, compared to cash, cash equivalents and
marketable securities of $300.1 million as of
December 31, 2009. The decrease of $136.9 million for
the year ended December 31, 2010 primarily resulted from
the acquisition of the HotJobs Assets in the amount of
$225.0 million and capital expenditures of
$57.1 million, partially offset by $93.1 million of
cash provided by operating activities. The payment to Yahoo! of
$225.0 million was funded
37
by utilizing existing cash of $135.0 million and the
remaining $90.0 million was funded from borrowings under
the revolving credit facility.
Cash provided by operating activities was $93.1 million for
the year ended December 31, 2010, an increase of
$48.3 million from $44.7 million of cash provided by
operating activities for the year ended December 31, 2009.
This increase in cash provided by operating activities resulted
primarily from increased cash flows provided by working capital
items in 2010 of $135.8 million, primarily resulting from
changes in deferred revenue, accounts payable and accrued
liabilities partially offset by accounts receivable. These
increases were partially offset by $87.5 million of reduced
cash flows provided by operating activities in 2010 due to a net
loss in 2010 of $32.4 million compared to net income in
2009 of $18.9 million, as well as reduced operating cash
flows provided by deferred income taxes in 2010 of
$29.1 million.
Cash used for investing activities was $261.3 million for
the year ended December 31 2010 compared to cash provided by
investing activities of $7.9 million for the year ended
December 31, 2009. This change is primarily a result of the
acquisition of the HotJobs Assets in the third quarter of 2010
for $225.0 million, partially offset by decreased cash
flows generated from the sale and maturity of marketable
securities in 2010 of $43.9 million.
Cash provided by financing activities was $60.6 million for
the year ended December 31, 2010 compared to cash used for
financing activities of $11.4 million for the year ended
December 31, 2009. This change is primarily a result of the
Company utilizing an additional $74.5 million of its credit
facility in 2010 primarily relating to the acquisition of the
HotJobs Assets.
Liquidity
and Capital Resources
Our principal capital requirements have been to fund
(i) working capital, (ii) marketing and development of
our Monster network, (iii) acquisitions, (iv) capital
expenditures and (v) share repurchases.
Historically, we have relied on funds provided by operating
activities, equity offerings, short and long-term borrowings and
seller-financed notes to meet our liquidity needs. We invest our
excess cash predominantly in bank time deposits and commercial
paper that matures within three months of its origination date.
Due to the turmoil in the financial markets, we have redeployed
our excess cash during 2009 and 2010 in conservative investment
vehicles such as money market funds that invest solely in
U.S. treasuries, top foreign sovereign regional, national
and supra-national bank debt obligations and bank deposits at
prime money center banks. We actively monitor the third-party
depository institutions that hold our cash and cash equivalents.
Our emphasis is primarily on safety of principal while
secondarily on maximizing yield on those funds. We can provide
no assurances that access to our invested cash and cash
equivalents will not be impacted by adverse conditions in the
financial markets.
At any point in time we have funds in our operating accounts and
customer accounts that are with third party financial
institutions. These balances in the United States may exceed the
Federal Deposit Insurance Corporation insurance limits. While we
monitor the cash balances in our operating accounts and adjust
the cash balances as appropriate, these cash balances could be
impacted if the underlying financial institutions fail or could
be subject to other adverse conditions in the financial markets.
We believe that our current cash and cash equivalents, revolving
credit facility and cash we anticipate generating from operating
activities will provide us with sufficient liquidity to satisfy
our working capital needs, capital expenditures and meet our
investment requirements and commitments through at least the
next twelve months. Our cash generated from operating activities
is subject to fluctuations in the global economy and overall
hiring demand.
Credit
Facility
Our borrowings under our credit facility increased in the fiscal
year ended December 31, 2010 to $124.5 million from
$50.0 million as of December 31, 2009.
38
In December 2007, the Company entered into a senior unsecured
revolving credit facility that provided for maximum borrowings
of $250.0 million. On August 31, 2009 (the
Amendment Closing Date), with the objective of
availing itself of the benefits of an improved credit market in
an ongoing unstable macroeconomic environment, the Company
amended certain terms and increased its borrowing capability
under its existing credit agreement (the Amended Credit
Agreement). The Amended Credit Agreement maintained the
Companys existing $250.0 million revolving credit
facility and provided for a new $50.0 million term loan
facility, for a total of $300.0 million in credit available
to the Company. The revolving credit facility and the term loan
facility each mature on December 21, 2012. The term loan is
subject to annual amortization of principal, with
$5.0 million payable on each anniversary of the Amendment
Closing Date and the remaining $35.0 million due at
maturity.
The Amended Credit Agreement provided for increases in the
interest rates applicable to borrowings and increases in certain
fees. Borrowings under the Amended Credit Agreement will bear
interest at a rate equal to (i) LIBOR plus a margin ranging
from 300 basis points to 400 basis points depending,
on the Companys ratio of consolidated funded debt to
trailing four-quarter consolidated earnings before interest,
taxes, depreciation and amortization (the Consolidated
Leverage Ratio) as defined in Amended Credit Agreement or
(ii) for Dollar-denominated loans only, and upon the
Companys election, the sum of (A) the highest of
(1) the credit facilitys administrative agents
prime rate, (2) the sum of 0.50% plus the overnight federal
funds rate on such day or (3) subject to certain
exceptions, the sum of 1.00% plus the
1-month
LIBOR rate, plus (B) a margin ranging from 200 basis
points to 300 basis points depending on the Companys
Consolidated Leverage Ratio. In addition, the Company will be
required to pay the following fees: (i) a fee on all
outstanding amounts of letters of credit at a rate per annum
ranging from 300 basis points to 400 basis points
(depending on the Companys Consolidated Leverage Ratio);
and (ii) a commitment fee on the unused portion of the
revolving credit facility at a rate per annum ranging from
50 basis points to 75 basis points (depending on the
Companys Consolidated Leverage Ratio). The Company is no
longer required to pay a utilization fee on outstanding loans
and letters of credit under any circumstances.
The Amended Credit Agreement also increased the maximum
permitted Consolidated Leverage Ratio to: (a) 3.50:1.00 for
the period beginning on August 31, 2009 and ending on
September 29, 2010; (b) 3.00:1.00 for the period
beginning on September 30, 2010 and ending on
September 29, 2011; and (c) 2.75:1.00 beginning on
September 30, 2011 and any time thereafter. The Company may
repay outstanding borrowings at any time during the term of the
credit facility without any prepayment penalty. The Amended
Credit Agreement contains covenants which restrict, among other
things, the ability of the Company to borrow, create liens, pay
dividends, repurchase its common stock, acquire businesses and
other investments, enter into new lines of business, dispose of
property, guarantee debts of others or, lend funds to affiliated
companies and contains requirements regarding the maintenance of
certain financial statement amounts and ratios, all as provided
in the Amended Credit Agreement. In January 2010, the Company
received a technical amendment to the permitted investments
section of the Amended Credit Agreement to accommodate the
particular legal structure of the acquisition of the HotJobs
Assets (see Note 3). As of December 31, 2010, the
Company was in full compliance with its covenants.
Additionally, on the Amendment Closing Date the Company entered
into the U.S. Pledge Agreement which along with subsequent
separate pledge agreements shall cause the Companys
obligations under the Amended Credit Agreement to be secured by
a pledge of: (a) all of the equity interests of the
Companys domestic subsidiaries (other than certain
specified inactive subsidiaries) and (b) 65% of the equity
interests of each first-tier material foreign subsidiary of the
Company.
In December 2010, the Company further amended its Amended Credit
Agreement to (i) allow acquisition-related fees associated
with the acquisition of the HotJobs Assets to be added back into
Consolidated EBITDA (as defined in the agreement, subject to
certain limitations) and (ii) to increase the amount of
secured indebtedness from $20.0 million to
$45.0 million.
At December 31, 2010, the utilized portion of this credit
facility was $45.0 million in borrowings on the term loan
facility, $79.5 million of borrowings on the revolving
credit facility, primarily relating to the funding of the
acquisition of the HotJobs Assets, and $1.3 million for
standby letters of credit. The portion of the
39
borrowings on the term loan that is due within one year, which
represents $5.0 million of the total borrowings, is
classified as short-term on the consolidated balance sheet as of
December 31, 2010 and the remaining borrowings on the term
loan of $40.0 million is classified as long-term. As of
December 31, 2010, $169.2 million was unused on the
Companys revolving credit facility, of which
$164.3 million is available to the Company to be used based
on the maximum Consolidated Leverage Ratio. At December 31,
2010, the one month US Dollar LIBOR rate, the credit
facilitys administrative agents prime rate, and the
overnight federal funds rate were 0.26%, 3.25% and 0.13%,
respectively. As of December 31, 2010, the Company used the
one month US Dollar LIBOR rate for the interest rate on
these borrowings with an interest rate of 4.01%.
Acquisition
of the HotJobs Assets from Yahoo! Inc.
On August 24, 2010, the Company completed the acquisition
of the HotJobs Assets for a purchase price of
$225.0 million. Concurrent with the closing of the
acquisition, Monster and Yahoo! entered into a three year
commercial traffic agreement whereby Monster became
Yahoo!s exclusive provider of career and job content on
the Yahoo! homepage in the United States and Canada. The Company
funded the purchase of the HotJobs Assets with available cash
and proceeds from the Companys revolving credit facility.
In the year ended December 31, 2010, the Company incurred
$24.3 million of acquisition and integration-related costs
associated with the acquisition of the HotJobs Assets, which
were expensed as incurred. These costs primarily relate to legal
fees, professional fees and other integration costs associated
with the acquisition. We expect to continue to incur significant
integration related-costs in the first quarter of 2011 relating
to the acquisition of the HotJobs Assets.
Income
Taxes
In 2010, we incurred tax losses and did not pay significant
taxes in the United States. We received tax refunds of
$13.8 million due to the carryback of 2009 tax losses. We
will carryover our 2010 loss forward to offset future tax
liabilities. We expect to continue to have taxable income in
certain foreign tax jurisdictions in which we pay taxes on a
quarterly basis.
Restructuring
Activities
We have recorded significant charges and accruals in connection
with our 2007 restructuring initiatives, prior business
reorganization plans and discontinued operations. These accruals
include estimates pertaining to future lease obligations,
employee separation costs and the settlements of contractual
obligations resulting from our actions. Although we do not
anticipate significant changes, the actual costs may differ from
these estimates. In the second quarter of 2009, the Company had
completed all of the initiatives relating to the 2007
restructuring program and no new charges will be incurred in the
future relating to this program.
Operating
Lease Obligations
We have recorded significant charges and accruals relating to
terminating certain operating lease obligations before the end
of their terms once the Company no longer derives economic
benefit from the lease. The liability is recognized and measured
at its fair value when we determine that the cease use date has
occurred and the fair value of the liability is determined based
on the remaining lease rentals due, reduced by estimated
sublease rental income that could be reasonably obtained for the
property. The estimate of subsequent sublease rental income may
change and require future changes to the fair value of the
liabilities for the lease obligations.
Share
Repurchase Plan.
As of December 31, 2010, we have no authorization to
purchase shares of our Common Stock under any share repurchase
plan.
40
Contractual
Obligations
The commitments as of December 31, 2010 related to our
continuing and discontinued operations are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment Due by Period
|
|
|
|
|
|
|
Less Than
|
|
|
|
|
|
|
|
|
More Than
|
|
Contractual Obligations (Dollars in thousands)
|
|
Total
|
|
|
1 Year
|
|
|
1-3 Years
|
|
|
3-5 Years
|
|
|
5 years
|
|
|
Operating Leases
|
|
$
|
251,697
|
|
|
$
|
41,419
|
|
|
$
|
76,110
|
|
|
$
|
61,560
|
|
|
$
|
72,608
|
|
Purchase commitments - advertising contracts
|
|
|
84,011
|
|
|
|
32,954
|
|
|
|
45,846
|
|
|
|
5,201
|
|
|
|
10
|
|
Long-term debt
|
|
|
124,500
|
|
|
|
84,500
|
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
Software Financing
|
|
|
13,029
|
|
|
|
4,236
|
|
|
|
8,147
|
|
|
|
646
|
|
|
|
|
|
Interest Payments
|
|
|
11,928
|
|
|
|
6,860
|
|
|
|
4,609
|
|
|
|
460
|
|
|
|
|
|
Other
|
|
|
4,387
|
|
|
|
3,187
|
|
|
|
1,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
489,552
|
|
|
$
|
173,156
|
|
|
$
|
175,912
|
|
|
$
|
67,867
|
|
|
$
|
72,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In addition to the cash commitments above, we also have
$95.4 million of long-term income taxes payable, for which
the timing of payment is not reasonably estimable, given the
many variables related to these liabilities. See Note 14 to
the consolidated financial statements for further discussion of
information related to long-term income taxes payable.
Fair
Value Measurement
The Company values its assets and liabilities using the methods
of fair value as described in ASC 820, Fair Value
Measurements and Disclosures. ASC 820 establishes a
three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. The three levels of fair value
hierarchy are described below:
Level 1 Quoted prices in active markets
for identical assets or liabilities.
Level 2 Quoted prices for similar
instruments in active markets, quoted prices for identical or
similar instruments in markets that are not active, and
model-based valuation techniques for which all significant
assumptions are observable in the market or can be corroborated
by observable market data for substantially the full term of the
assets or liabilities.
Level 3 Inputs that are generally
unobservable and typically reflect managements estimates
of assumptions that market participants would use in pricing the
asset or liability.
In determining fair value, the Company utilizes valuation
techniques that maximize the use of observable inputs and
minimize the use of unobservable inputs to the extent possible,
and considers counter-party credit risk in its assessment of
fair value. Observable or market inputs reflect market data
obtained from independent sources, while unobservable inputs
reflect the Companys assumptions based on the best
information available. There have been no transfers of assets or
liabilities between the fair value measurement classifications
in the year ended December 31, 2010.
41
The Company has certain assets and liabilities that are required
to be recorded at fair value on a recurring basis in accordance
with accounting principles generally accepted in the United
States. The following table summarizes those assets and
liabilities measured at fair value on a recurring basis as of
December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank time deposits
|
|
$
|
|
|
|
$
|
55,954
|
|
|
$
|
|
|
|
|
55,954
|
|
Commercial paper
|
|
|
|
|
|
|
47,675
|
|
|
|
|
|
|
|
47,675
|
|
Government bonds foreign
|
|
|
|
|
|
|
4,385
|
|
|
|
|
|
|
|
4,385
|
|
Foreign exchange contracts
|
|
|
|
|
|
|
666
|
|
|
|
|
|
|
|
666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
|
|
|
$
|
108,680
|
|
|
$
|
|
|
|
$
|
108,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease exit liabilities
|
|
$
|
|
|
|
$
|
|
|
|
$
|
13,913
|
|
|
$
|
13,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
$
|
|
|
|
$
|
|
|
|
$
|
13,913
|
|
|
$
|
13,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes those assets and liabilities
measured at fair value on a recurring basis as of
December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
$
|
91,246
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
91,246
|
|
Bank time deposits
|
|
|
|
|
|
|
37,474
|
|
|
|
|
|
|
|
37,474
|
|
Commercial paper
|
|
|
|
|
|
|
86,537
|
|
|
|
|
|
|
|
86,537
|
|
Government bonds foreign
|
|
|
|
|
|
|
11,795
|
|
|
|
|
|
|
|
11,795
|
|
Tax exempt auction rate securities (See Note 7)
|
|
|
|
|
|
|
|
|
|
|
23,560
|
|
|
|
23,560
|
|
UBS put option (See Note 7)
|
|
|
|
|
|
|
|
|
|
|
138
|
|
|
|
138
|
|
Foreign exchange contracts
|
|
|
|
|
|
|
77
|
|
|
|
|
|
|
|
77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
91,246
|
|
|
$
|
135,883
|
|
|
$
|
23,698
|
|
|
$
|
250,827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease exit liabilities
|
|
$
|
|
|
|
$
|
|
|
|
$
|
25,112
|
|
|
$
|
25,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
$
|
|
|
|
$
|
|
|
|
$
|
25,112
|
|
|
$
|
25,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The lease exit liabilities relate to vacated facilities
associated with previously discontinued operations and
realignment activities of the Company and are recorded in
accrued expenses and other current liabilities in the
consolidated balance sheet as of December 31, 2010. The
fair value of the Companys lease exit liabilities within
the Level 3 classification is based on a discounted cash
flow model applied over the remaining term of the leased
property.
The changes in the fair value of the Level 3 assets and
liabilities are as follows:
|
|
|
|
|
|
|
Tax Exempt
|
|
|
|
Auction Rate
|
|
|
|
Bonds
|
|
|
Balance, December 31, 2009
|
|
$
|
23,560
|
|
Redemptions
|
|
|
(24,718
|
)
|
Realized gain included in interest and other, net
|
|
|
1,158
|
|
|
|
|
|
|
Balance, December 31, 2010
|
|
$
|
|
|
|
|
|
|
|
42
|
|
|
|
|
|
|
UBS Put
|
|
|
|
Option
|
|
|
Balance, December 31, 2009
|
|
$
|
138
|
|
Expense, included in interest and other, net
|
|
|
(138
|
)
|
|
|
|
|
|
Balance, December 31, 2010
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease
|
|
|
|
Exit Liability
|
|
|
Balance, December 31, 2009
|
|
$
|
25,112
|
|
Expense
|
|
|
|
|
Cash Payments
|
|
|
(11,199
|
)
|
|
|
|
|
|
Balance, December 31, 2010
|
|
$
|
13,913
|
|
|
|
|
|
|
The carrying value for cash and cash equivalents, accounts
receivable, accounts payable, accrued expenses, deferred revenue
and other current liabilities approximate fair value because of
the immediate or short-term maturity of these financial
instruments. The Companys debt relates to borrowings under
its credit facility and term loan (see Note 11), which
approximates fair value due to market interest rates.
CRITICAL
ACCOUNTING ESTIMATES
Our consolidated financial statements are prepared in accordance
with accounting principles generally accepted in the United
States (GAAP). In connection with the preparation of
our financial statements, we are required to make assumptions
and estimates about future events, and apply judgments that
affect the reported amounts of assets, liabilities, revenue,
expenses and the related disclosures. We base our assumptions,
estimates and judgments on historical experience, current trends
and other factors that management believes to be relevant at the
time our consolidated financial statements are prepared. On a
regular basis, management reviews the accounting policies,
assumptions, estimates and judgments to ensure that our
financial statements are presented fairly and in accordance with
GAAP. However, because future events and their effects cannot be
determined with certainty, actual results could differ from our
assumptions and estimates, and such differences could be
material.
Our significant accounting policies are discussed in
Note 1, Basis of Presentation and Significant Accounting
Policies, of the Notes to Consolidated Financial Statements,
included in Item 8, Financial Statements and
Supplementary Data, of this Annual Report on
Form 10-K.
Management believes that the following accounting policies are
the most critical to aid in fully understanding and evaluating
our reported financial results, and they require
managements most difficult, subjective or complex
judgments, resulting from the need to make estimates about the
effect of matters that are inherently uncertain. Management has
reviewed these critical accounting estimates and related
disclosures with the Audit Committee of our Board of Directors.
Revenue
Recognition and Accounts Receivable
The Company recognizes revenue on agreements in accordance with
ASC 605, Revenue Recognition.
Careers North America and Careers
International. Our Careers North
America and Careers International segments primarily
earn revenue from the placement of job postings on the websites
within the Monster network, access to the Monster networks
online resume database and other career-related services. We
recognize revenue at the time that job postings are displayed on
the Monster network websites, based upon customer usage
patterns. Revenue earned from subscriptions to the Monster
networks resume database and other career-related services
are recognized over the length of the underlying subscriptions,
typically from two weeks to twelve months. Revenue associated
with multiple element contracts is allocated based on the
relative fair value of the services included in the contract.
Unearned revenues are reported on the balance sheet as deferred
revenue. We review accounts receivable for those that may
potentially be
43
uncollectible and any accounts receivable balances that are
determined to be uncollectible are included in our allowance for
doubtful accounts. After all attempts to collect a receivable
have failed, the receivable is written off against the allowance.
Internet Advertising & Fees. Our
Internet Advertising & Fees segment primarily earns
revenue from the display of advertisements on the Monster
network of websites, click-throughs on text based
links, leads provided to advertisers and subscriptions to
premium services. We recognize revenue for online advertising as
impressions are delivered. An impression
is delivered when an advertisement appears in pages viewed by
our users. We recognize revenue from the display of
click-throughs on text based links as click-throughs occur. A
click-through occurs when a user clicks on an advertisers
listing. Revenue from lead generation is recognized as leads are
delivered to advertisers. In addition, we recognize revenue for
certain subscription products ratably over the length of the
subscription. We review accounts receivable for those that may
potentially be uncollectible and any accounts receivable
balances that are determined to be uncollectible are included in
our allowance for doubtful accounts. After all attempts to
collect a receivable have failed, the receivable is written off
against the allowance.
Fair
Value Measurements
The carrying amounts reported in the consolidated balance sheets
for cash and cash equivalents, accounts receivable, accounts
payable and accrued expense and other current liabilities
approximate fair value because of the immediate or short-term
maturity of these financial instruments. Our debt consists of
borrowings under our credit facility, which approximates fair
value due to the variable nature of the interest rates which
approximates market.
Asset
Impairment
Business Combinations, Goodwill and Intangible
Assets. We account for business combinations in
accordance with ASC 805, Business Combinations. The
acquisition method of accounting requires that assets acquired
and liabilities assumed be recorded at their fair values on the
date of a business acquisition. Our consolidated financial
statements and results of operations reflect an acquired
business from the completion date of an acquisition.
The judgments that we make in determining the estimated fair
value assigned to each class of assets acquired and liabilities
assumed, as well as asset lives, can materially impact net
income in periods following a business combination. We generally
use either the income, cost or market approach to aid in our
conclusions of such fair values and asset lives. The income
approach presumes that the value of an asset can be estimated by
the net economic benefit to be received over the life of the
asset, discounted to present value. The cost approach presumes
that an investor would pay no more for an asset than its
replacement or reproduction cost. The market approach estimates
value based on what other participants in the market have paid
for reasonably similar assets. Although each valuation approach
is considered in valuing the assets acquired, the approach
ultimately selected is based on the characteristics of the asset
and the availability of information.
We evaluate our goodwill for impairment annually or more
frequently if indicators of potential impairment exist. The
first step of the impairment review process compares the fair
value of the reporting unit in which the goodwill resides to the
carrying value of that reporting unit. The second step of the
impairment review measures the amount of impairment loss, if
any, by comparing the implied fair value of the reporting unit
goodwill with its carrying amount. The determination of whether
or not goodwill has become impaired involves a significant level
of judgment in the assumptions underlying the approach used to
determine the value of our reporting units. Changes in our
strategy
and/or
market conditions could significantly impact these judgments and
require reductions to recorded amounts of intangible assets. As
of December 31, 2010, none of our reporting units with
significant goodwill was at risk of failing step one of the
goodwill impairment test.
Long-lived assets. We review long-lived assets
for impairment whenever events or changes in circumstances
indicate that the related carrying amounts may not be
recoverable. Determining whether an impairment has occurred
typically requires various estimates and assumptions, including
determining which cash flows are directly related to the
potentially impaired asset, the useful life over which cash
flows will occur, their amount
44
and the assets residual value, if any. In turn,
measurement of an impairment loss requires a determination of
fair value, which is based on the best information available. We
use internal discounted cash flows estimates, quoted market
prices when available and independent appraisals, as
appropriate, to determine fair value. We derive the required
cash flow estimates from our historical experience and our
internal business plans and apply an appropriate discount rate.
Income
Taxes
We utilize the liability method of accounting for income taxes
as set forth in ASC 740, Income Taxes. Under the
liability method, deferred taxes are determined based on the
temporary differences between the financial statement and tax
basis of assets and liabilities using tax rates expected to be
in effect during the years in which the basis differences
reverse. A valuation allowance is recorded when it is more
likely than not that some of the deferred tax assets will not be
realized. In determining the need for valuation allowances we
consider projected future taxable income and the availability of
tax planning strategies. When we determine that we are not able
to realize our recorded deferred tax assets, an increase in the
valuation allowance is recorded, decreasing earnings in the
period in which such determination is made.
We assess our income tax positions and record tax benefits for
all years subject to examination based upon our evaluation of
the facts, circumstances and information available at the
reporting date. For those tax positions where there is a greater
than 50% likelihood that a tax benefit will be sustained, we
have recorded the largest amount of tax benefit that may
potentially be realized upon ultimate settlement with a taxing
authority that has full knowledge of all relevant information.
For those income tax positions where there is a 50% or less
likelihood that a tax benefit will be sustained, no tax benefit
has been recognized in the financial statements.
Stock-Based
Compensation
We account for stock-based compensation in accordance with
ASC 718, Compensation Stock
Compensation. Under the fair value recognition provisions of
ASC 718, stock-based compensation cost is measured at the
grant date based on the fair value of the award and is
recognized as expense ratably over the requisite service period,
net of estimated forfeitures. We use the Black-Scholes
option-pricing model to determine the fair value of stock option
awards and measure non-vested stock awards using the fair market
value of our common stock on the date the award is approved. For
certain 2008 awards, which were market-based grants, we
estimated the fair value of the award utilizing a Monte Carlo
simulation model. We award stock options, non-vested stock,
market-based non-vested stock and performance-based non-vested
stock to employees, directors and executive officers.
Restructuring
and Other Operating Lease Obligations
We recognize a liability for costs to terminate an operating
lease obligation before the end of its term when we no longer
derive economic benefit from the lease. The liability is
recognized and measured at its fair value when we determine that
the cease use date has occurred and the fair value of the
liability is determined based on the remaining lease rentals
due, reduced by estimated sublease rental income that could be
reasonably obtained for the property. The estimate of subsequent
sublease rental income may change and require future changes to
the fair value of the liabilities for the lease obligations.
Recently
Issued Accounting Pronouncements
In October 2009, the FASB issued Accounting Standards Update
(ASU)
No. 2009-13,
Multiple-Deliverable Revenue Arrangements. The new
standard changes the requirements for establishing separate
units of accounting in a multiple element arrangement and
requires the allocation of arrangement consideration to each
deliverable based on the relative selling price. The selling
price for each deliverable is based on vendor-specific objective
evidence (VSOE) if available, third-party evidence
if VSOE is not available, or estimated selling price if neither
VSOE or third-party evidence is available. ASU
2009-13 is
effective for revenue arrangements entered into in fiscal years
beginning on or after June 15, 2010. The Company does not
45
expect that the provisions of the new guidance will have a
material effect on its consolidated financial statements.
In January 2010, the FASB issued ASU
No. 2010-06,
Improving Disclosures about Fair Value Measurements,
which requires additional disclosures about the amounts of and
reasons for significant transfers in and out of Level 1 and
Level 2 fair value measurements. This standard also
clarifies existing disclosure requirements related to the level
of disaggregation of fair value measurements for each class of
assets and liabilities and disclosures about inputs and
valuation techniques used to measure fair value for both
recurring and non-recurring Level 2 and Level 3
measurements. Since this new accounting standard only required
additional disclosure, the adoption of the standard in the first
quarter of 2010 did not impact the Companys consolidated
financial statements. Additionally, effective for interim and
annual periods beginning after December 15, 2010, this
standard will require additional disclosure and require an
entity to present disaggregated information about activity in
Level 3 fair value measurements on a gross basis, rather
than one net amount.
|
|
ITEM 7A.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Foreign
Exchange Risk
During 2010, revenue from our international operations accounted
for 42% of our consolidated revenue. Revenue and related
expenses generated from our international websites are generally
denominated in the functional currencies of the local countries.
Our primary foreign currencies are Euros, British Pounds, Czech
Korunas, Korean Won and Chinese Renminbi. The functional
currency of our subsidiaries that either operate or support
these websites is the same as the corresponding local currency.
The results of operations of, and certain of our intercompany
balances associated with, our internationally-focused websites
are exposed to foreign exchange rate fluctuations. Upon
consolidation, as exchange rates vary, revenue and other
operating results may differ materially from expectations, and
we may record significant gains or losses on the remeasurement
of intercompany balances. The effect of the strengthening
U.S. dollar in 2010 negatively impacted reported revenue by
approximately $1.2 million and negatively impacted reported
operating income by approximately $2.0 million, compared to
2009.
We have foreign exchange risk related to foreign-denominated
cash, cash equivalents and marketable securities (foreign
funds). Based on the balance of foreign funds at
December 31, 2010 of $146 million, an assumed 5%, 10%
and 20% negative currency movement would result in fair value
declines of $7.3 million, $14.6 million and
$29.1 million, respectively.
We use forward foreign exchange contracts as cash flow hedges to
offset risks related to certain foreign currency transactions.
These transactions primarily relate to non-functional currency
denominated inter-company funding loans, non-functional currency
denominated accounts receivable and non-functional currency
denominated accounts payable. We do not enter into derivative
financial instruments for trading purposes.
The financial statements of our
non-U.S. subsidiaries
are translated into U.S. dollars using current rates of
exchange, with gains or losses included in the cumulative
translation adjustment account, a component of
stockholders equity. During the year ended
December 31, 2010, our cumulative translation adjustment
account decreased $1.0 million, primarily attributable to
the foreign currency movements of the U.S. dollar against
the Euro, British Pound, Swedish Krona and Korean Won.
Interest
Rate Risk
Credit
Facility
As of December 31, 2010, our debt was comprised primarily
of borrowings under our credit facility. The interest rates
under our credit facility may be reset due to fluctuation in a
market-based index, such as the federal funds rate, the
1-month
LIBOR rate or the credit facilitys administrative
agents prime rate. Assuming the amount of borrowings
provided for under our credit facility was fully drawn during
2010, we would have had $295.0 million outstanding under
such facility, and a hypothetical 1.00% (100 basis-point) change
in the interest rate of our credit facility would have changed
our annual pre-tax earnings by approximately
46
$3.0 million for the year ended December 31, 2010.
Assuming the amount of borrowings under our credit facility was
equal to the amount of outstanding borrowings on
December 31, 2010, we would have had $125.8 million of
total usage and a hypothetical 1.00% (100 basis-point) change in
the interest rate of our credit facility would have changed our
pre-tax earnings by approximately $1.3 million for the year
ended December 31, 2010. We do not manage the interest rate
risk on our debt through the use of derivative instruments.
Investment
Portfolio
Our investment portfolio is comprised primarily of cash and cash
equivalents and investments in a variety of debt instruments of
high quality issuers, money market funds which invest in U.S
Treasuries, top sovereign, regional, national and supra-national
bank commercial paper, bank time deposits and government bonds
that mature within nine months of their origination date, as
well as auction rate securities. A hypothetical 1.00% (100
basis-point) change in interest rates applicable to our
investment portfolio balance as of December 31, 2010 would
have changed our annual pretax earnings by approximately
$1.4 million.
47
|
|
ITEM 8.
|
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
|
The following are the consolidated financial statements and
exhibits of Monster Worldwide, Inc. and its consolidated
subsidiaries, which are filed as part of this report.
MONSTER
WORLDWIDE, INC.
INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
Page No.
|
|
|
|
|
49
|
|
|
|
|
50
|
|
|
|
|
51
|
|
|
|
|
52
|
|
|
|
|
53
|
|
|
|
|
54
|
|
|
|
|
84
|
|
48
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Monster Worldwide, Inc.
New York, New York
We have audited the accompanying consolidated balance sheets of
Monster Worldwide, Inc. (the Company) as of
December 31, 2010 and 2009 and the related consolidated
statements of operations, stockholders equity, and cash
flows for each of the three years in the period ended
December 31, 2010. These financial statements are the
responsibility of the Companys management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). 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, 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 consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of Monster Worldwide, Inc. at December 31, 2010
and 2009, and the results of its operations and its cash flows
for each of the three years in the period ended
December 31, 2010, in conformity with accounting principles
generally accepted in the United States.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States),
Monster Worldwide, Inc.s internal control over financial
reporting as of December 31, 2010, based on criteria
established in Internal Control Integrated
Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) and our report
dated February 2, 2011 expressed an unqualified opinion
thereon.
/s/ BDO USA, LLP
New York, New York
February 2, 2011
49
MONSTER
WORLDWIDE, INC.
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
163,169
|
|
|
$
|
275,447
|
|
Marketable securities, current
|
|
|
|
|
|
|
9,259
|
|
Accounts receivable, net of allowance for doubtful accounts of
$5,420 and $12,660
|
|
|
346,751
|
|
|
|
287,698
|
|
Prepaid and other
|
|
|
75,451
|
|
|
|
73,089
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
585,371
|
|
|
|
645,493
|
|
|
|
|
|
|
|
|
|
|
Marketable securities, non-current
|
|
|
|
|
|
|
15,410
|
|
Goodwill
|
|
|
1,122,951
|
|
|
|
925,758
|
|
Property and equipment, net
|
|
|
150,147
|
|
|
|
143,727
|
|
Intangibles, net
|
|
|
66,184
|
|
|
|
43,863
|
|
Investment in unconsolidated affiliates
|
|
|
1,359
|
|
|
|
546
|
|
Other assets
|
|
|
51,990
|
|
|
|
52,393
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,978,002
|
|
|
$
|
1,827,190
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
36,569
|
|
|
$
|
32,066
|
|
Accrued expenses and other current liabilities
|
|
|
176,400
|
|
|
|
143,403
|
|
Deferred revenue
|
|
|
376,448
|
|
|
|
305,898
|
|
Current portion of long-term debt and borrowings on revolving
credit facility
|
|
|
84,500
|
|
|
|
5,010
|
|
Income taxes payable
|
|
|
12,907
|
|
|
|
20,779
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
686,824
|
|
|
|
507,156
|
|
|
|
|
|
|
|
|
|
|
Long-term income taxes payable
|
|
|
95,390
|
|
|
|
87,343
|
|
Deferred income taxes
|
|
|
17,186
|
|
|
|
51,499
|
|
Long-term debt, less current portion
|
|
|
40,000
|
|
|
|
45,000
|
|
Other long-term liabilities
|
|
|
9,952
|
|
|
|
3,028
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
849,352
|
|
|
|
694,026
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
Preferred stock, $.001 par value, authorized
800 shares; issued and outstanding: none
|
|
|
|
|
|
|
|
|
Common stock, $.001 par value, authorized
1,500,000 shares; issued: 135,834 and 134,380 shares,
respectively; outstanding: 121,113 and 119,659 shares,
respectively
|
|
|
136
|
|
|
|
134
|
|
Class B common stock, $.001 par value, authorized
39,000 shares; issued and outstanding: none
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
1,424,815
|
|
|
|
1,395,970
|
|
Accumulated deficit
|
|
|
(359,466
|
)
|
|
|
(327,107
|
)
|
Accumulated other comprehensive income
|
|
|
63,165
|
|
|
|
64,167
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
1,128,650
|
|
|
|
1,133,164
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
1,978,002
|
|
|
$
|
1,827,190
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
50
MONSTER
WORLDWIDE, INC.
(In
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Revenue
|
|
$
|
914,133
|
|
|
$
|
905,142
|
|
|
$
|
1,343,627
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and related
|
|
|
490,791
|
|
|
|
463,749
|
|
|
|
543,268
|
|
Office and general
|
|
|
242,797
|
|
|
|
231,288
|
|
|
|
282,699
|
|
Marketing and promotion
|
|
|
222,566
|
|
|
|
209,661
|
|
|
|
291,198
|
|
(Reversal of) provision for legal settlements, net
|
|
|
|
|
|
|
(6,850
|
)
|
|
|
40,100
|
|
Restructuring and other special charges
|
|
|
|
|
|
|
16,105
|
|
|
|
16,407
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
956,154
|
|
|
|
913,953
|
|
|
|
1,173,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
|
(42,021
|
)
|
|
|
(8,811
|
)
|
|
|
169,955
|
|
Interest (expense) income, net
|
|
|
(4,545
|
)
|
|
|
(1,431
|
)
|
|
|
14,315
|
|
Other income (expense) , net
|
|
|
2,672
|
|
|
|
(4,397
|
)
|
|
|
2,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other, net
|
|
|
(1,873
|
)
|
|
|
(5,828
|
)
|
|
|
17,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations before income taxes and
loss in equity interests
|
|
|
(43,894
|
)
|
|
|
(14,639
|
)
|
|
|
187,238
|
|
(Benefit from) provision for income taxes
|
|
|
(14,405
|
)
|
|
|
(37,883
|
)
|
|
|
64,910
|
|
Loss in equity interests, net
|
|
|
(2,870
|
)
|
|
|
(4,317
|
)
|
|
|
(7,839
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations
|
|
|
(32,359
|
)
|
|
|
18,927
|
|
|
|
114,489
|
|
Income from discontinued operations, net of tax
|
|
|
|
|
|
|
|
|
|
|
10,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(32,359
|
)
|
|
$
|
18,927
|
|
|
$
|
124,793
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations
|
|
$
|
(0.27
|
)
|
|
$
|
0.16
|
|
|
$
|
0.95
|
|
Income from discontinued operations, net of tax
|
|
|
|
|
|
|
|
|
|
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings per share
|
|
$
|
(0.27
|
)
|
|
$
|
0.16
|
|
|
$
|
1.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss) earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations
|
|
$
|
(0.27
|
)
|
|
$
|
0.16
|
|
|
$
|
0.94
|
|
Income from discontinued operations, net of tax
|
|
|
|
|
|
|
|
|
|
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss) earnings per share
|
|
$
|
(0.27
|
)
|
|
$
|
0.16
|
|
|
$
|
1.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
120,608
|
|
|
|
119,359
|
|
|
|
120,557
|
|
Diluted
|
|
|
120,608
|
|
|
|
121,170
|
|
|
|
121,167
|
|
See accompanying notes.
51
MONSTER
WORLDWIDE, INC.
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of
|
|
|
Stock and
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares of
|
|
|
Class B
|
|
|
Additional
|
|
|
|
|
|
Other
|
|
|
Total
|
|
|
|
Common
|
|
|
Common
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
Comprehensive
|
|
|
Stockholders
|
|
|
|
Stock
|
|
|
Stock
|
|
|
Capital
|
|
|
Deficit
|
|
|
Income (Loss)
|
|
|
Equity
|
|
|
Balance, January 1, 2008
|
|
|
128,280
|
|
|
|
4,762
|
|
|
|
1,468,941
|
|
|
|
(470,827
|
)
|
|
|
118,387
|
|
|
|
1,116,501
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
124,793
|
|
|
|
|
|
|
|
124,793
|
|
Net unrealized loss on investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,603
|
)
|
|
|
(1,603
|
)
|
Change in cumulative foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(90,983
|
)
|
|
|
(90,983
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
32,207
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of Class B Common Stock to Common Stock
|
|
|
4,762
|
|
|
|
(4,762
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of common stock
|
|
|
|
|
|
|
|
|
|
|
(126,809
|
)
|
|
|
|
|
|
|
|
|
|
|
(126,809
|
)
|
Tax withholdings related to net share settlements of restricted
stock awards and units
|
|
|
(59
|
)
|
|
|
|
|
|
|
(1,356
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,356
|
)
|
Issuance of common stock for stock option exercises
|
|
|
90
|
|
|
|
|
|
|
|
1,461
|
|
|
|
|
|
|
|
|
|
|
|
1,461
|
|
Tax provision for stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
(4,804
|
)
|
|
|
|
|
|
|
|
|
|
|
(4,804
|
)
|
Stock based compensation- restricted stock
|
|
|
254
|
|
|
|
|
|
|
|
29,202
|
|
|
|
|
|
|
|
|
|
|
|
29,202
|
|
Stock based compensation- stock options
|
|
|
|
|
|
|
|
|
|
|
651
|
|
|
|
|
|
|
|
|
|
|
|
651
|
|
Stock bonus award
|
|
|
8
|
|
|
|
|
|
|
|
220
|
|
|
|
|
|
|
|
|
|
|
|
220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2008
|
|
|
133,335
|
|
|
|
|
|
|
|
1,367,506
|
|
|
|
(346,034
|
)
|
|
|
25,801
|
|
|
|
1,047,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,927
|
|
|
|
|
|
|
|
18,927
|
|
Reversal of net unrealized loss on investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,603
|
|
|
|
1,603
|
|
Change in cumulative foreign currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,763
|
|
|
|
36,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
57,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax withholdings related to net share settlements of restricted
stock awards and units
|
|
|
(483
|
)
|
|
|
|
|
|
|
(4,571
|
)
|
|
|
|
|
|
|
|
|
|
|
(4,571
|
)
|
Issuance of common stock for stock option exercises
|
|
|
7
|
|
|
|
|
|
|
|
67
|
|
|
|
|
|
|
|
|
|
|
|
67
|
|
Tax provision for stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
(9,094
|
)
|
|
|
|
|
|
|
|
|
|
|
(9,094
|
)
|
Stock based compensation- restricted stock
|
|
|
1,182
|
|
|
|
|
|
|
|
39,306
|
|
|
|
|
|
|
|
|
|
|
|
39,306
|
|
Stock based compensation- stock options
|
|
|
|
|
|
|
|
|
|
|
615
|
|
|
|
|
|
|
|
|
|
|
|
615
|
|
Stock bonus award
|
|
|
339
|
|
|
|
|
|
|
|
2,275
|
|
|
|
|
|
|
|
|
|
|
|
2,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2009
|
|
|
134,380
|
|
|
|
|
|
|
$
|
1,396,104
|
|
|
$
|
(327,107
|
)
|
|
$
|
64,167
|
|
|
$
|
1,133,164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(32,359
|
)
|
|
|
|
|
|
|
(32,359
|
)
|
Change in cumulative foreign currency translation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,002
|
)
|
|
|
(1,002
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(33,361
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax withholdings related to net share settlements of restricted
stock awards and units
|
|
|
(869
|
)
|
|
|
|
|
|
|
(14,227
|
)
|
|
|
|
|
|
|
|
|
|
|
(14,227
|
)
|
Issuance of common stock for stock option exercises
|
|
|
29
|
|
|
|
|
|
|
|
300
|
|
|
|
|
|
|
|
|
|
|
|
300
|
|
Tax provision for stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
(4,417
|
)
|
|
|
|
|
|
|
|
|
|
|
(4,417
|
)
|
Stock based compensation- restricted stock
|
|
|
2,294
|
|
|
|
|
|
|
|
46,646
|
|
|
|
|
|
|
|
|
|
|
|
46,646
|
|
Stock based compensation- stock options
|
|
|
|
|
|
|
|
|
|
|
545
|
|
|
|
|
|
|
|
|
|
|
|
545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2010
|
|
|
135,834
|
|
|
|
|
|
|
$
|
1,424,951
|
|
|
$
|
(359,466
|
)
|
|
$
|
63,165
|
|
|
$
|
1,128,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
52
MONSTER
WORLDWIDE, INC.
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Cash flows provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(32,359
|
)
|
|
$
|
18,927
|
|
|
$
|
124,793
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net (loss) income to net cash provided
by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of tax
|
|
|
|
|
|
|
|
|
|
|
(10,304
|
)
|
Depreciation and amortization
|
|
|
67,096
|
|
|
|
68,533
|
|
|
|
58,020
|
|
(Reversal of) provision for legal settlements, net
|
|
|
|
|
|
|
(6,850
|
)
|
|
|
40,100
|
|
Provision for doubtful accounts
|
|
|
2,947
|
|
|
|
10,154
|
|
|
|
16,231
|
|
Non-cash compensation
|
|
|
47,191
|
|
|
|
39,921
|
|
|
|
29,853
|
|
Loss in equity interests, net
|
|
|
2,870
|
|
|
|
4,317
|
|
|
|
7,839
|
|
Non-cash restructuring write-offs, accelerated amortization and
loss on disposal of assets
|
|
|
255
|
|
|
|
4,779
|
|
|
|
3,933
|
|
Deferred income taxes
|
|
|
(27,890
|
)
|
|
|
1,189
|
|
|
|
7,430
|
|
(Gains) losses on auction rate securities
|
|
|
(2,415
|
)
|
|
|
4,181
|
|
|
|
|
|
Changes in assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(53,555
|
)
|
|
|
80,462
|
|
|
|
112,520
|
|
Prepaid and other
|
|
|
(16,490
|
)
|
|
|
(2,669
|
)
|
|
|
23,168
|
|
Deferred revenue
|
|
|
62,488
|
|
|
|
(111,634
|
)
|
|
|
(118,299
|
)
|
Payments for legal settlements, net
|
|
|
|
|
|
|
|
|
|
|
(29,887
|
)
|
Accounts payable, accrued liabilities and other
|
|
|
42,934
|
|
|
|
(66,585
|
)
|
|
|
(32,714
|
)
|
Net cash used for operating activities of discontinued operations
|
|
|
|
|
|
|
|
|
|
|
(6,849
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total adjustments
|
|
|
125,431
|
|
|
|
25,798
|
|
|
|
101,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
93,072
|
|
|
|
44,725
|
|
|
|
225,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows (used for) provided by investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(57,126
|
)
|
|
|
(48,677
|
)
|
|
|
(93,627
|
)
|
Payments for acquisitions and intangible assets, net of cash
acquired
|
|
|
(225,795
|
)
|
|
|
(300
|
)
|
|
|
(292,836
|
)
|
Purchase of marketable securities
|
|
|
|
|
|
|
(8,585
|
)
|
|
|
(183,932
|
)
|
Sales and maturities of marketable securities and other
|
|
|
27,089
|
|
|
|
70,977
|
|
|
|
539,286
|
|
Cash funded to equity investees
|
|
|
(5,648
|
)
|
|
|
(6,299
|
)
|
|
|
(6,402
|
)
|
Dividends received from unconsolidated investee
|
|
|
220
|
|
|
|
763
|
|
|
|
1,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used for) provided by investing activities
|
|
|
(261,260
|
)
|
|
|
7,879
|
|
|
|
(36,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows provided by (used for) financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from borrowings on revolving credit facility
|
|
|
90,000
|
|
|
|
199,203
|
|
|
|
251,971
|
|
Payments on borrowings on term loan and revolving credit facility
|
|
|
(15,500
|
)
|
|
|
(256,196
|
)
|
|
|
(197,893
|
)
|
Repurchase of common stock
|
|
|
|
|
|
|
|
|
|
|
(126,809
|
)
|
Tax withholdings related to net share settlements of restricted
stock awards and units
|
|
|
(14,227
|
)
|
|
|
(4,571
|
)
|
|
|
(1,356
|
)
|
Proceeds from the exercise of employee stock options
|
|
|
300
|
|
|
|
67
|
|
|
|
1,461
|
|
Excess tax benefits from equity compensation plans
|
|
|
|
|
|
|
79
|
|
|
|
1,003
|
|
Proceeds from borrowings on term loan
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
Payments on capitalized leases and other debt obligations
|
|
|
|
|
|
|
|
|
|
|
(171
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) financing activities
|
|
|
60,573
|
|
|
|
(11,418
|
)
|
|
|
(71,794
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effects of exchange rates on cash
|
|
|
(4,663
|
)
|
|
|
12,001
|
|
|
|
(25,024
|
)
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(112,278
|
)
|
|
|
53,187
|
|
|
|
92,516
|
|
Cash and cash equivalents, beginning of period
|
|
|
275,447
|
|
|
|
222,260
|
|
|
|
129,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of year
|
|
$
|
163,169
|
|
|
$
|
275,447
|
|
|
$
|
222,260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
53
MONSTER
WORLDWIDE, INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(Dollars
in thousands, except shares and per share amounts)
|
|
1.
|
BASIS OF
PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
|
The
Company
Monster Worldwide, Inc. (together with its consolidated
subsidiaries, (the Company) has continuing
operations that consist of three reportable segments:
Careers North America, Careers
International and Internet Advertising &
Fees. Revenue in the Companys Careers segments are
primarily earned from the placement of job postings on the
websites within the Monster network, access to the
Companys resume databases, recruitment media services and
other career-related services. Revenue in the Companys
Internet Advertising & Fees segment is primarily
earned from the display of advertisements on the Monster network
of websites, click-throughs on text based links and
leads provided to advertisers. The Companys Careers
segments provide online services to customers in a variety of
industries throughout North America, Europe and the Asia-Pacific
region, while Internet Advertising & Fees delivers
online services primarily in North America.
Basis
of Presentation
The consolidated financial statements include the accounts of
the Company and all of its wholly-owned and majority-owned
subsidiaries. Investments in which the Company does not have a
controlling interest or is not the primary beneficiary are
accounted for under the equity method. All significant
inter-company accounts and transactions have been eliminated in
consolidation.
Use of
Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
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 revenue and
expenses during the reporting period. These estimates include,
among others, allowances for doubtful accounts, fair value of
financial assets and liabilities, net realizable values on
long-lived assets and deferred tax assets and liabilities,
certain accrued expense accounts, deferred revenue, goodwill and
revenue recognition. Actual results could differ from those
estimates.
Revenue
Recognition
The Company recognizes revenue on agreements in accordance with
Financial Accounting Standards Boards (FASB)
Accounting Standards Codification (ASC) 605,
Revenue Recognition. Accordingly, the Company recognizes
revenue when persuasive evidence of an arrangement exists,
service has been rendered, the sales price is fixed or
determinable, and collection is probable. The Company recognizes
revenue as follows for each of its reportable segments:
Careers (North America and International). Our
Careers segments primarily earn revenue from the placement of
job postings on the websites within the Monster network, access
to the Monster networks online resume database and other
career-related services. We recognize revenue at the time that
job postings are displayed on the Monster network websites,
based upon customer usage patterns. Revenue earned from
subscriptions to the Monster networks resume database and
other career-related services are recognized over the length of
the underlying subscriptions, typically from two weeks to twelve
months. Revenue associated with multiple element contracts is
allocated based on the relative fair value of the services
included in the contract. Unearned revenues are reported on the
balance sheet as deferred revenue.
Internet Advertising & Fees. Our
Internet Advertising & Fees segment primarily earns
revenue from the display of advertisements on the Monster
network of websites, click-throughs on text based
links, leads provided to advertisers and subscriptions to
premium services. We recognize revenue for online advertising as
54
MONSTER
WORLDWIDE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
impressions are delivered. An impression
is delivered when an advertisement appears in pages viewed by
our users. We recognize revenue from the display of
click-throughs on text based links as
click-throughs occur. A click-through
occurs when a user clicks on an advertisers listing.
Revenue from lead generation is recognized as leads are
delivered to advertisers. In addition, we recognize revenue for
certain subscription products, ratably over the length of the
subscription. Unearned revenues are reported on the balance
sheet as deferred revenue.
Business
Combinations and Dispositions
We account for business combinations in accordance with
ASC 805, Business Combinations. The acquisition
method of accounting requires that assets acquired and
liabilities assumed be recorded at their fair values on the date
of a business acquisition. Our consolidated financial statements
and results of operations reflect an acquired business from the
completion date of an acquisition. For the period
January 1, 2008 through December 31, 2010, the Company
completed six business combinations (see Note 3 to the
consolidated financial statements).
The Company accounts for business dispositions in accordance
with ASC 360, Property, Plant and Equipment. ASC 360
requires the results of operations of business dispositions to
be segregated from continuing operations and reflected as
discontinued operations in current and prior periods. See
Note 10 to the financial statements for further discussion
of the Companys disposition transactions.
Marketing
and Promotion
Advertising production costs are recorded as expense the first
time an advertisement appears. Costs of communicating
advertising are recorded as expense as advertising space or
airtime is used. All other advertising costs are expensed as
incurred.
Fair
Value of Financial Instruments
The carrying amounts reported in the consolidated balance sheets
for cash and cash equivalents, accounts receivable, accounts
payable and accrued expense and other current liabilities
approximate fair value because of the immediate or short-term
maturity of these financial instruments. The Companys debt
consists of borrowings under our revolving credit facility and
term loan, which approximates fair value due to market interest
rates.
Concentrations
of Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk are primarily cash and cash
equivalents and accounts receivable. Cash and cash equivalents
are maintained with several financial institutions. Deposits
held with banks may exceed the amount of insurance provided on
such deposits. Generally these deposits may be redeemed upon
demand. The Company also invests in short-term commercial paper
rated P1 or better by Moodys or A1 or better by
Standard & Poors. The Company performs continuing
credit evaluations of its customers, maintains allowances for
potential credit losses and does not require collateral. The
Company makes judgments as to its ability to collect outstanding
receivables based primarily on managements evaluation of
the customers financial condition, past collection history
and overall aging of the receivables. Historically, such losses
have been within managements expectations. The Company has
not experienced significant losses related to receivables from
individual customers or groups of customers in any particular
industry or geographic area.
55
MONSTER
WORLDWIDE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Cash
and Cash Equivalents and Marketable Securities
Cash and cash equivalents, which primarily consist of bank time
deposits and commercial paper, are stated at cost, which
approximates fair value. For financial statement presentation
purposes, the Company considers all highly liquid investments
having original maturities of three months or less to be cash
equivalents. Outstanding checks in excess of account balances,
typically payroll and other contractual obligations disbursed on
or near the last day of a reporting period, are reported as
current liabilities in the accompanying consolidated balance
sheets.
As of December 31, 2010, the Company did not hold any
investments in auction rate securities. The Company held $25,050
(at par and cost value) of investments in auction rate
securities as of December 31, 2009 which were classified as
available-for-sale
investments and were reported at a fair value of $23,560. The
Company evaluates its investments periodically for possible
impairment and reviews factors such as the length of time and
extent to which fair value has been below cost basis and the
Companys ability and intent to hold the investment for a
period of time which may be sufficient for anticipated recovery
in market value. Marketable securities as of December 31,
2009 primarily consisted of auction rate bonds whose decline in
fair value were judged by the Company to be
other-than-temporary.
Accordingly, the Company recorded a charge of $1,490, reported
in interest and other, net in the consolidated statement of
operations for the fiscal year ended December 31, 2009 (see
Note 7).
Accounts
Receivable
The Companys accounts receivable primarily consist of
trade receivables. Management reviews accounts receivable on a
monthly basis to determine if any receivables will potentially
be uncollectible. The Company includes any accounts receivable
balances that are determined to be uncollectible in its
allowance for doubtful accounts. After all attempts to collect a
receivable have failed, the receivable is written off against
the allowance. Based on the information available, the Company
believes its allowance for doubtful accounts as of
December 31, 2010 and 2009 are adequate. However, actual
write-offs could exceed the recorded allowance. Activity in the
allowance for doubtful accounts is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
|
|
|
|
Write-Offs
|
|
Ending
|
Year Ended December 31,
|
|
Balance
|
|
Charged to Expense
|
|
and Other
|
|
Balance
|
|
2010
|
|
$
|
12,660
|
|
|
$
|
2,947
|
|
|
$
|
(10,187
|
)
|
|
$
|
5,420
|
|
2009
|
|
$
|
14,064
|
|
|
$
|
10,154
|
|
|
$
|
(11,558
|
)
|
|
$
|
12,660
|
|
2008
|
|
$
|
15,613
|
|
|
$
|
16,231
|
|
|
$
|
(17,780
|
)
|
|
$
|
14,064
|
|
Property
and Equipment
Computer and communications equipment, furniture and fixtures
and capitalized software costs are stated at cost and are
depreciated using the straight line method over the estimated
useful lives of the assets, generally three to ten years.
Leasehold improvements are stated at cost and amortized using
the straight-line method, over their estimated useful lives, or
the lease term, whichever is shorter.
Internal
Use Software and Website Development Costs
In accordance with
ASC 350-40,
Internal-Use Software, the Company capitalizes costs to
purchase or internally develop software for internal use, as
well as costs incurred to design, develop, test and implement
enhancements to its website. These costs are included in
property and equipment and the estimated useful life is five
years. Costs capitalized were $21,591, $26,194 and $39,732 for
the years ended December 31, 2010, 2009 and 2008,
respectively.
56
MONSTER
WORLDWIDE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Goodwill
and Intangible Assets
The Company evaluates its long-lived assets for impairment in
accordance with
ASC 350-20,
Goodwill. Goodwill is recorded when the purchase price
paid for an acquisition exceeds the estimated fair value of the
net identified tangible and intangible assets acquired. The
Company performs an annual review in the fourth quarter of each
year, or more frequently if indicators of potential impairment
exist, to determine if the carrying value of the recorded
goodwill is impaired.
The first step of the impairment review process compares the
fair value of the reporting unit in which the goodwill resides
to the carrying value of that reporting unit. The Company has
four reporting units: Careers North America,
Careers International, Careers China and
Internet Advertising and Fees. The second step of the impairment
review measures the amount of impairment loss, if any, by
comparing the implied fair value of the reporting unit goodwill
with its carrying amount. The determination of whether or not
goodwill has become impaired involves a significant level of
judgment in the assumptions underlying the approach used to
determine the value of our reporting units. Changes in our
strategy
and/or
market conditions could significantly impact these judgments and
require reductions to recorded amounts of intangible assets. As
of December 31, 2010, none of our reporting units with
material goodwill were at risk of failing step one of the
goodwill impairment test.
Other intangible assets primarily consist of the value of
customer relationships, trade names, resume databases,
trademarks and internet domains. Amortizable intangible assets
are primarily being amortized on a basis that approximates
economic use, over periods ranging from two to ten years.
Long-Lived
Assets
Long-lived assets, other than goodwill are evaluated for
impairment when events or changes in business circumstances
indicate that the carrying amount of the assets may not be fully
recoverable. An impairment loss would be recognized when
estimated undiscounted future cash flows expected to result from
the use of these assets and their eventual disposition are less
than their carrying amounts.
Intangible assets are primarily evaluated on an annual basis,
generally in conjunction with the Companys evaluation of
goodwill balances. Impairment, if any, is assessed by using
internally developed discounted cash flows estimates, quoted
market prices, when available, and independent appraisals to
determine fair value. The determination of whether or not
long-lived assets have become impaired involves a significant
level of judgment in the assumptions underlying the approach
used to determine the estimated future cash flows expected to
result from the use of those assets. Changes in the
Companys strategy, assumptions
and/or
market conditions could significantly impact these judgments and
require adjustments to recorded amounts of long-lived assets. As
of December 31, 2010, there were no impairment indicators
present.
Foreign
Currency Translation and Transactions
The financial position and results of operations of the
Companys foreign subsidiaries are determined using local
currency as the functional currency. Assets and liabilities of
these subsidiaries are translated at the exchange rate in effect
at each year-end. Income statement accounts are translated at
the average rate of exchange prevailing during the year.
Translation adjustments arising from the use of differing
exchange rates from period to period are included in other
comprehensive income, a component of stockholders equity.
Gains and losses resulting from other foreign currency
transactions, including forward foreign exchange contracts, are
included in other (expense) income, net.
Comprehensive income is defined to include all changes in equity
except those resulting from investments by owners and
distributions to owners. The Companys items of other
comprehensive income are foreign currency translation
adjustments, which relate to investments that are permanent in
nature, and unrealized gains and unrealized losses related to
the Companys
available-for-sale
securities, net of applicable income
57
MONSTER
WORLDWIDE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
taxes. To the extent that such amounts relate to investments
that are permanent in nature, no adjustments for income taxes
are made.
The Company uses forward foreign exchange contracts as cash flow
hedges to offset risks related to foreign currency transactions.
These transactions primarily relate to non-functional currency
denominated inter-company funding loans and non-functional
currency inter-company accounts receivable. As of
December 31, 2010 and 2009, the notional value of these
forward foreign exchange contracts was $62,902 and $21,864,
respectively, and the corresponding accumulated unrealized gain
was $666 and $77, respectively, which is included in other
(expense) income, net in the consolidated statement of
operations for the year ended December 31, 2010. The
Company does not trade derivative financial instruments for
speculative purposes.
Income
Taxes
The Company utilizes the liability method of accounting for
income taxes as set forth in ASC 740, Income Taxes.
Under the liability method, deferred taxes are determined
based on the temporary differences between the financial
statement and tax basis of assets and liabilities using tax
rates expected to be in effect during the years in which the
basis differences reverse. A valuation allowance is recorded
when it is more likely than not that some of the deferred tax
assets will not be realized. In determining the need for
valuation allowances we consider projected future taxable income
and the availability of tax planning strategies. When we
determine that we are not be able to realize our recorded
deferred tax assets, an increase in the valuation allowance is
recorded, decreasing earnings in the period in which such
determination is made.
We assess our income tax positions and record tax benefits for
all years subject to examination based upon our evaluation of
the facts, circumstances and information available at the
reporting date. For those tax positions where there is a greater
than 50% likelihood that a tax benefit will be sustained, we
have recorded the largest amount of tax benefit that may
potentially be realized upon ultimate settlement with a taxing
authority that has full knowledge of all relevant information.
For those income tax positions where there is less than 50%
likelihood that a tax benefit will be sustained, no tax benefit
has been recognized in the financial statements.
Stock-Based
Compensation
The Company accounts for stock-based compensation in accordance
with ASC 718, Compensation Stock
Compensation. Under the fair value recognition provisions of
ASC 718, stock-based compensation cost is measured at the
grant date based on the fair value of the award and is
recognized as expense ratably over the requisite service period,
net of estimated forfeitures. We use the Black-Scholes
option-pricing model to determine the fair-value of stock option
awards and measure non-vested stock awards using the fair market
value of our common stock on the date the award is approved. For
certain 2008 awards, which were market-based grants, we
estimated the fair value of the award utilizing a Monte Carlo
simulation model. We award stock options, non-vested stock,
market-based non-vested stock and performance-based non-vested
stock to employees, directors and executive officers.
Restructuring
and Other Special Charges
The Company has recorded significant charges and accruals in
connection with its 2007 restructuring initiatives and prior
business reorganization plans. These accruals include estimates
pertaining to future lease obligations, employee separation
costs and the settlements of contractual obligations resulting
from its actions. The Company completed all of the initiatives
relating to the 2007 restructuring program in the second quarter
of 2009 and no new charges will be incurred in the future
relating to this program.
58
MONSTER
WORLDWIDE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Operating
Lease Obligations
We recognize a liability for costs to terminate an operating
lease obligation before the end of its term if we no longer
derive economic benefit from the lease. The liability is
recognized and measured at its fair value when we determine that
the cease use date has occurred and the fair value of the
liability is determined based on the remaining lease rentals
due, reduced by estimated sublease rental income that could be
reasonably obtained for the property. The estimate of subsequent
sublease rental income may change and require future changes to
the fair value of the liabilities for the lease obligations.
Earnings
Per Share
Basic earnings per share is calculated using the Companys
weighted-average outstanding common shares. When the effects are
dilutive, diluted earnings per share is calculated using the
weighted-average outstanding common shares, participating
securities and the dilutive effect of all other stock-based
compensation awards as determined under the treasury stock
method. Certain stock options and stock issuable under employee
compensation plans were excluded from the computation of
earnings per share due to their anti-dilutive effect. A
reconciliation of shares used in calculating basic and diluted
earnings per share follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
(Thousands of shares)
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Basic weighted average shares outstanding
|
|
|
120,608
|
|
|
|
119,359
|
|
|
|
120,557
|
|
Effect of common stock equivalents stock options and
non-vested
stock under employee compensation plans
|
|
|
|
|
|
|
1,811
|
|
|
|
610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding
|
|
|
120,608
|
|
|
|
121,170
|
|
|
|
121,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average anti-dilutive common stock equivalents(1)
|
|
|
6,631
|
|
|
|
7,871
|
|
|
|
8,881
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
For periods in which losses are presented, dilutive earnings per
share calculations do not differ from basic earnings per share
because the effects of any potential common stock equivalents
are anti-dilutive and therefore not included in the calculation
of dilutive earnings per share. For the year ended
December 31, 2010, those potential shares totaled 2,108,
which are included in the weighted average anti-dilutive common
stock equivalents above, in addition to 4,523 of out of the
money anti-dilutive common stock equivalents. |
Professional
Fees and Expenses Related to the Stock Option
Investigation
In the second quarter of 2008, the Company recorded a $40,100
provision for legal settlements, net, relating to estimated
settlements, costs and expenses arising out of the legal actions
regarding the Companys historical stock option granting
practices, which included approximately $25,100 for the
settlement of the securities class action regarding the
Companys historical stock option granting practices. In
July 2008, the Company agreed to settle the securities class
action, subject to court approval. Court approval was received
in October 2008. Under the terms of the settlement, the
defendants paid $47,500 to the class, of which the
Companys cost was approximately $25,100, net of its
insurance recovery and contribution from another defendant. Also
recorded in the provision for legal settlements, net, in the
second quarter of 2008 was approximately $15,000 for estimated
expenses relating to the other outstanding litigation in
connection with the Companys historical stock option
granting practices.
In May 2009, the Company agreed, without admitting or denying
wrongdoing, to pay a $2,500 penalty to the SEC to settle claims
arising out of the SECs inquiry into the Companys
historical stock option granting practices.
59
MONSTER
WORLDWIDE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In September 2009, the Company entered into a Memorandum of
Understanding with the plaintiffs in the last action pending
against the Company in connection with its historical stock
option granting practices (captioned as Taylor v. McKelvey,
et al., 06 CV 8322 (S.D.N.Y)(AKH) (the ERISA
Class Action)), and in November 2009, the Company
entered into a Class Action Settlement Agreement (the
Settlement Agreement) with the plaintiffs in the
ERISA Class Action. On February 9, 2010, the Court
granted final approval to the Settlement Agreement, pursuant to
which the ERISA Class Action was settled and dismissed with
prejudice for a payment of $4,250 (a substantial majority of
which was paid by insurance and a contribution from another
defendant).
With the conclusion of the settlement of the ERISA
Class Action, all of the actions seeking recoveries from
the Company as an outgrowth of the Companys historical
stock option grant practices have been settled. As a result, in
the year ended December 31, 2009, the Company reversed a
previously recorded accrual of $6,850 relating to these matters.
Additionally, in 2009 and 2008, the Company recorded a net
benefit of $3,247 (primarily relating to payments from former
associates) and a net charge of $4,400 (net of reimbursements of
$12,400 primarily from former associates), respectively, of
professional fees as a direct result of the investigation into
the Companys historical stock option granting practices
and related accounting. These costs and reimbursements were
recorded as a component of office and general
expenses and primarily relate to professional services for
legal, accounting and tax guidance relating to litigation, the
informal investigation by the SEC, the investigation by the
United States Attorney for the Southern District of New York and
the preparation and review of the Companys restated
consolidated financial statements.
Recently
Issued Accounting Pronouncements
In October 2009, the FASB issued Accounting Standards Update
(ASU)
No. 2009-13,
Multiple-Deliverable Revenue Arrangements. The new
standard changes the requirements for establishing separate
units of accounting in a multiple element arrangement and
requires the allocation of arrangement consideration to each
deliverable based on the relative selling price. The selling
price for each deliverable is based on vendor-specific objective
evidence (VSOE) if available, third-party evidence
if VSOE is not available, or estimated selling price if neither
VSOE or third-party evidence is available. ASU
2009-13 is
effective for revenue arrangements entered into in fiscal years
beginning on or after June 15, 2010. The Company does not
expect that the provisions of the new guidance will have a
material effect on its consolidated financial statements.
In January 2010, the FASB issued ASU
No. 2010-06,
Improving Disclosures about Fair Value Measurements ,
which requires additional disclosures about the amounts of and
reasons for significant transfers in and out of Level 1 and
Level 2 fair value measurements. This standard also
clarifies existing disclosure requirements related to the level
of disaggregation of fair value measurements for each class of
assets and liabilities and disclosures about inputs and
valuation techniques used to measure fair value for both
recurring and non-recurring Level 2 and Level 3
measurements. Since this new accounting standard only required
additional disclosure, the adoption of the standard in the first
quarter of 2010 did not impact the Companys consolidated
financial statements. Additionally, effective for interim and
annual periods beginning after December 15, 2010, this
standard will require additional disclosure and require an
entity to present disaggregated information about activity in
Level 3 fair value measurements on a gross basis, rather
than one net amount.
|
|
2.
|
STOCK-BASED
COMPENSATION
|
Stock-based compensation cost is measured at the grant date
based on the fair value of the award and is recognized as
expense ratably over the requisite service period, which is
generally the vesting period, net of estimated forfeitures.
60
MONSTER
WORLDWIDE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The Company awards non-vested stock to employees, directors and
executive officers in the form of Restricted Stock Awards
(RSAs) and Restricted Stock Units
(RSUs), market-based RSAs and RSUs, stock options
and performance-based RSAs and RSUs. The Compensation Committee
of the Companys Board of Directors approves stock-based
compensation awards for all employees and executive officers of
the Company. The Corporate Governance and Nominating Committee
of the Companys Board of Directors approves stock-based
compensation awards for all non-employee directors of the
Company. The Company uses the fair-market value of the
Companys common stock on the date the award is approved to
measure fair value for service-based awards, a Monte Carlo
simulation model to determine both the fair value and requisite
service period of market-based awards and the Black-Scholes
option-pricing model to determine the fair value of stock option
awards. The Company does not capitalize stock-based compensation
costs. The Company presents as a financing activity in the
consolidated statement of cash flows the benefits of tax
deductions in excess of the tax-effected compensation of the
related stock-based awards for the options exercised and RSAs
and RSUs vested.
The Company recognized pre-tax compensation expense in the
consolidated statement of operations related to stock-based
compensation as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
Non-vested stock, included in salaries and related
|
|
$
|
46,646
|
|
|
$
|
39,306
|
|
|
$
|
28,040
|
|
Non-vested stock, included in restructuring and other special
charges
|
|
|
|
|
|
|
|
|
|
|
1,162
|
|
Stock options, included in salaries and related
|
|
|
545
|
|
|
|
615
|
|
|
|
651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
47,191
|
|
|
$
|
39,921
|
|
|
$
|
29,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain accrued bonuses were paid for in common stock and for
the years ended December 31, 2009 and 2008, the fair value
of the common stock was $2,275 and $220, respectively.
As of December 31, 2010, the Company has issued the
following types of equity awards under its 1999 Long Term
Incentive Plan and the 2008 Equity Incentive Plan (the Company
no longer issues new equity awards under the 1999 Long-Term
Incentive Plan).
Restricted
Stock
The Company, from time to time, enters into separate non-vested
share-based payment arrangements with employees, executives and
directors. The Company grants RSUs that are subject to continued
employment and vesting conditions, but do not have dividend or
voting rights. The Company also grants RSAs that are subject to
continued employment and vesting conditions and have voting
rights, but do not have dividend rights. Directors of the
Company receive automatic RSAs which are measured using the fair
market value of the Companys common stock on the date of
the grant. The Company also grants market-based RSAs and RSUs
that vest contingent on meeting certain stock price targets
within five years of the grant date. The Company also grants
performance-based RSAs and RSUs that vest contingent on meeting
specific financial results within a specified time period.
The fair value of RSAs and RSUs is recognized as expense ratably
over the requisite service period, net of estimated forfeitures.
Tax benefits recognized on the non-vested stock-based
compensation expenses were $13,076, $12,386, and $8,375 for
years ended December 31, 2010, 2009 and 2008, respectively.
2010 Restricted Stock. During 2010, the
Company granted RSAs of 1,732,000 shares and RSUs of
5,072,000 shares to approximately 3,900 employees,
executive officers and directors of the Company. The
61
MONSTER
WORLDWIDE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
RSAs and RSUs vest in various increments on the anniversaries of
the individual grant dates, through December 15, 2014,
subject to the recipients continued employment or service
through each applicable vesting date.
2009 Restricted Stock. During 2009, the
Company granted RSAs of 1,103,000 shares and RSUs of
2,993,000 shares to approximately 3,000 employees,
executive officers and directors of the Company. The RSAs and
RSUs vest in various increments on the anniversaries of the
individual grant dates through December 15, 2013, subject
to the recipients continued employment or service through
each applicable vesting date.
2008 Restricted Stock. During 2008, the
Company granted RSAs of 985,000 shares and RSUs of
2,927,000 shares to approximately 2,000 employees,
executive officers and directors of the Company. The RSAs and
RSUs vest in various increments on the anniversaries of the
individual grant dates through December 16, 2012, subject
to the recipients continued employment or service through
each applicable vesting date. The Company also granted
market-based RSAs of 50,000 shares and market-based RSUs of
1,095,000 shares that will vest contingent on meeting
certain stock price targets within five years of the grant date.
The market-based shares vest in three tranches of 33.3% each of
the award if, and when, certain stock price targets of $21.00,
$28.00 and $35.00 are achieved and maintained for 15 days
in a consecutive 30 day period and the tranches are being
amortized over their requisite service period of twenty one,
thirty and thirty seven month periods, respectively. In the
fourth quarter of 2010, 364,998 shares of market-based RSAs
and 16,666 of market-based RSUs vested due to the Companys
stock price being above $21.00 for 15 days in a consecutive
30 day period. The fair market value of the vested
market-based shares is $9,255.
As of December 31, 2010, there was approximately $119,667
of unrecognized compensation cost related to the RSUs, RSAs and
market-based awards that is expected to be recognized over a
period of 4.0 years. During the years ended
December 31, 2010, 2009 and 2008, the fair value of shares
vested was $36,954, $13,800 and $5,783 respectively.
The following table summarizes the activity for non-vested stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
December 31, 2009
|
|
|
December 31, 2008
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average Fair
|
|
|
|
|
|
Average Fair
|
|
|
|
|
|
Average Fair
|
|
|
|
|
|
|
Value at Grant
|
|
|
|
|
|
Value at
|
|
|
|
|
|
Value at Grant
|
|
(Thousands of shares)
|
|
Shares
|
|
|
Date
|
|
|
Shares
|
|
|
Grant Date
|
|
|
Shares
|
|
|
Date
|
|
|
Non-vested at beginning of period
|
|
|
7,744
|
|
|
$
|
15.62
|
|
|
|
5,612
|
|
|
$
|
24.57
|
|
|
|
1,671
|
|
|
$
|
39.67
|
|
Granted RSAs
|
|
|
1,732
|
|
|
|
14.78
|
|
|
|
1,103
|
|
|
|
6.93
|
|
|
|
1,035
|
|
|
|
26.95
|
|
Granted RSUs
|
|
|
5,072
|
|
|
|
14.32
|
|
|
|
2,993
|
|
|
|
7.93
|
|
|
|
4,022
|
|
|
|
20.51
|
|
Forfeited
|
|
|
(955
|
)
|
|
|
17.95
|
|
|
|
(782
|
)
|
|
|
20.04
|
|
|
|
(862
|
)
|
|
|
33.28
|
|
Vested
|
|
|
(2,294
|
)
|
|
|
17.16
|
|
|
|
(1,182
|
)
|
|
|
30.81
|
|
|
|
(254
|
)
|
|
|
41.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-vested at end of period
|
|
|
11,299
|
|
|
$
|
14.65
|
|
|
|
7,744
|
|
|
$
|
15.62
|
|
|
|
5,612
|
|
|
$
|
24.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
Options
The following were the weighted average assumptions used to
determine the fair value of stock options and have been
estimated at the date of grant using the Black-Scholes
option-pricing model (no stock options were granted in 2010 and
2009, therefore no weighted average assumptions are included in
this table):
|
|
|
|
|
|
|
2008
|
|
Risk-free interest rate
|
|
|
2.7
|
%
|
Volatility
|
|
|
40.9
|
%
|
Expected life (years)
|
|
|
3.7
|
|
62
MONSTER
WORLDWIDE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In 2008, the Company awarded options to purchase
137,980 shares of Common Stock to certain employees in
France. Under the terms of the awards, the grants vest 25%
annually over four years with the first 25% vesting commencing
on the first anniversary date of the award. As of
December 31, 2010, the unrecognized compensation expense
for stock options was $320 and is expected to be recognized over
a period of 1.2 years.
Also during 2008, the Company in accordance with the legal
settlement related to the stock option investigations, revalued
479,381 options held by former employees. Before the
revaluation, the average exercise price of the options was
$24.88 and after the revaluation the average exercise price was
$51.54.
The following table summarizes the activity of the
Companys employee stock options:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
December 31, 2009
|
|
|
December 31, 2008
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
(Thousands of shares)
|
|
Shares
|
|
|
Exercise Price
|
|
|
Shares
|
|
|
Exercise Price
|
|
|
Shares
|
|
|
Exercise Price
|
|
|
Outstanding at beginning of year
|
|
|
2,716
|
|
|
$
|
29.16
|
|
|
|
6,290
|
|
|
$
|
30.58
|
|
|
|
6,876
|
|
|
$
|
29.13
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
138
|
|
|
|
27.77
|
|
Exercised
|
|
|
(29
|
)
|
|
|
10.28
|
|
|
|
(7
|
)
|
|
|
9.81
|
|
|
|
(89
|
)
|
|
|
16.34
|
|
Forfeited/expired/cancelled
|
|
|
(552
|
)
|
|
|
33.74
|
|
|
|
(3,567
|
)
|
|
|
32.19
|
|
|
|
(635
|
)
|
|
|
35.83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at Year end
|
|
|
2,135
|
|
|
$
|
27.31
|
|
|
|
2,716
|
|
|
$
|
29.16
|
|
|
|
6,290
|
|
|
$
|
30.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at Year end
|
|
|
2,080
|
|
|
$
|
27.20
|
|
|
|
2,581
|
|
|
$
|
29.03
|
|
|
|
5,980
|
|
|
$
|
30.54
|
|
Aggregate intrinsic value of options exercised during the year
|
|
$
|
323
|
|
|
|
|
|
|
$
|
33
|
|
|
|
|
|
|
$
|
546
|
|
|
|
|
|
The aggregate intrinsic value is calculated as the difference
between the market price of the Companys common stock as
of the end of the period and the exercise price of the
underlying options. The weighted average grant date fair value
of options granted during 2008 was $9.48.
The following table summarizes information about the
Companys stock options outstanding as of December 31,
2010 (share amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding
|
|
|
Options Exercisable
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Average
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Aggregate
|
|
|
Remaining
|
|
|
|
|
|
Average
|
|
|
Aggregate
|
|
|
|
Number
|
|
|
Exercise
|
|
|
Intrinsic
|
|
|
Contractual
|
|
|
Number
|
|
|
Exercise
|
|
|
Intrinsic
|
|
Range of Exercise Prices
|
|
Outstanding
|
|
|
Price
|
|
|
Value
|
|
|
Life (Years)
|
|
|
Exercisable
|
|
|
Price
|
|
|
Value
|
|
|
$0.00 to $24.00
|
|
|
465
|
|
|
$
|
10.68
|
|
|
$
|
6,020
|
|
|
|
1.8
|
|
|
|
465
|
|
|
$
|
10.68
|
|
|
$
|
6,020
|
|
24.01 to 30.00
|
|
|
803
|
|
|
|
25.85
|
|
|
|
|
|
|
|
3.1
|
|
|
|
757
|
|
|
|
25.73
|
|
|
|
|
|
30.01 to 36.00
|
|
|
489
|
|
|
|
33.54
|
|
|
|
|
|
|
|
4.0
|
|
|
|
489
|
|
|
|
33.54
|
|
|
|
|
|
36.01 to 44.00
|
|
|
251
|
|
|
|
39.09
|
|
|
|
|
|
|
|
0.6
|
|
|
|
251
|
|
|
|
39.09
|
|
|
|
|
|
44.01 to 97.34
|
|
|
127
|
|
|
|
49.92
|
|
|
|
|
|
|
|
2.7
|
|
|
|
118
|
|
|
|
50.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,135
|
|
|
$
|
27.31
|
|
|
$
|
6,020
|
|
|
|
2.7
|
|
|
|
2,080
|
|
|
$
|
27.20
|
|
|
$
|
6,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63
MONSTER
WORLDWIDE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following table summarizes the Companys business
combinations completed from January 1, 2008 through
December 31, 2010. Although none of the following
acquisitions were considered to be a significant subsidiary,
either individually or in the aggregate, they do affect the
comparability of results from period to period. The acquisitions
are as follows:
|
|
|
|
|
Acquired Business
|
|
Acquisition Date
|
|
Business Segment
|
|
JobBusan
|
|
December 31, 2010
|
|
Careers International
|
HotJobs Assets
|
|
August 24, 2010
|
|
Careers North America
|
CinCHouse LLC
|
|
July 28, 2009
|
|
Internet Advertising & Fees
|
China HR.com Holdings Ltd.
|
|
October 8, 2008
|
|
Careers International
|
Trovix Inc.
|
|
July 31, 2008
|
|
Careers North America
|
Affinity Labs Inc.
|
|
January 3, 2008
|
|
Internet Advertising & Fees
|
JobBusan
Acquisition
On December 31, 2010, the Companys
Careers International segment purchased certain
assets of JobBusan, a business that provides online recruiting
in Busan, South Korea. Consideration for the acquisition was
$900, of which $795 was paid in cash in the fourth quarter of
2010, with the remaining consideration to be paid in the first
quarter of 2011.
Acquisition
of the HotJobs Assets
On August 24, 2010, pursuant to an Asset Purchase Agreement
dated as of February 3, 2010 between Monster and Yahoo!
Inc., Monster completed the acquisition of substantially all of
the assets exclusive to Yahoo! HotJobs (the HotJobs
Assets) from Yahoo! The purchase price for the HotJobs
Assets was $225,000. We acquired the HotJobs Assets, among other
objectives, to expand our business in the North American online
recruitment market. Accordingly, the business attributable to
the HotJobs Assets has been included in the Careers
North America segment and reporting unit. The results of
operations attributable to the HotJobs Assets have been included
in our consolidated financial statements since August 24,
2010. Concurrent with the closing of the acquisition, Monster
and Yahoo! entered into a three year commercial traffic
agreement whereby Monster became Yahoo!s exclusive
provider of career and job content on the Yahoo! homepage in the
United States and Canada.
The Company funded the acquisition of the HotJobs Assets with
available cash and proceeds from the Companys revolving
credit facility (see Note 11). The Company used the
acquisition method to account for the acquisition in accordance
with ASC 805, Business Combinations . Under the
acquisition method, the purchase price was allocated to, and we
have recognized the fair value of, the tangible and intangible
assets acquired and liabilities assumed. The excess of the
purchase price over the fair value of the net tangible and
identifiable intangible assets acquired have been recorded as
goodwill. In the year ended December 31, 2010, the Company
incurred $24,305 of acquisition and integration-related costs
associated with the acquisition of the HotJobs Assets, which
were expensed as incurred and are included in office and general
expenses and salaries and related expenses in the consolidated
statement of operations. These costs primarily relate to legal
fees, professional fees and other integration costs associated
with the acquisition. We expect to continue to incur significant
integration related costs in the first quarter of 2011 relating
to the acquisition of the HotJobs Assets.
The Company is responsible for determining the fair values of
the assets acquired and liabilities assumed in connection with
the acquisition of the HotJobs Assets. These fair values were
based on estimates as of August 24, 2010, the closing date
of the acquisition, and were based on a number of factors,
including
64
MONSTER
WORLDWIDE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
valuations from independent third parties. Identified intangible
assets acquired included existing customer relationships, a
resume database, trade names and a non-competition agreement. We
used variations of the income approach method to value the
intangible assets. Under this method, fair value is estimated
based upon the present value of cash flows that the applicable
asset is expected to generate. The valuation of the resume
database and the trade names were based on the
relief-from-royalty method and the existing customer
relationships were valued using the excess earnings method. The
royalty rates used in the relief from royalty method were based
on both a
return-on-asset
method and market comparable rates. Our estimates of fair value
and resulting allocation of purchase price are preliminary as of
December 31, 2010.
The following table summarizes our preliminary allocation of the
purchase consideration of the HotJobs Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
|
Amount
|
|
|
Useful Lives
|
|
|
Unbilled accounts receivable
|
|
$
|
12,543
|
|
|
|
|
|
Identifiable intangible assets:
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
|
11,900
|
|
|
|
3 years
|
|
Trade name
|
|
|
10,600
|
|
|
|
9 years
|
|
Resume database
|
|
|
10,000
|
|
|
|
3 years
|
|
Non-competition agreement
|
|
|
500
|
|
|
|
3 years
|
|
|
|
|
|
|
|
|
|
|
Total identifiable intangible assets
|
|
|
33,000
|
|
|
|
|
|
Deferred revenue
|
|
|
(12,919
|
)
|
|
|
|
|
All other net tangible assets (liabilities)
|
|
|
(52
|
)
|
|
|
|
|
Goodwill
|
|
|
192,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total purchase price
|
|
$
|
225,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Among the factors that contributed to the recognition of
goodwill in this transaction was the expansion of our market
share in the North America online recruitment market, increased
reach to both active and passive job seekers, the addition of an
assembled workforce and opportunities for future synergies. This
goodwill is deductible for tax purposes. The pro forma impact of
the acquisition of the HotJobs Assets is not material to the
Companys historical consolidated operating results and
therefore is not presented.
CinChouse
LLC Acquisition
On July 28, 2009, the Companys Internet
Advertising & Fees segment purchased CinCHouse LLC, a
business that provides a social networking site for women in the
military and military spouses. Consideration for the acquisition
was $600, of which $300 was paid in cash in the third quarter of
2009 with the remaining consideration to be paid in future
periods.
China
HR.com Holdings Ltd Acquisition
On October 8, 2008, the Companys Careers
International segment completed its acquisition of the remaining
55.6% ownership interest in ChinaHR not already owned by the
Company. ChinaHR is a leading recruitment website in the
Peoples Republic of China and provides online recruiting,
campus recruiting and other human resource solutions.
Consideration for the acquisition was approximately $166,641 in
cash, net of cash acquired. The Company recorded $243,247 of
goodwill, $16,456 of intangible assets, $4,568 of property and
equipment, $4,192 of receivables, $1,074 of other assets, $963
of deferred tax liability, net, $8,281 of deferred revenue,
$25,917 for transactional and acquired liabilities and $893 of
short-term credit facility debt. The Company also consolidated
its ChinaHR related assets of $41,588 in investment in
unconsolidated affiliates and $25,254 in notes and interest
receivable (recorded in Other Assets prior to consolidation of
65
MONSTER
WORLDWIDE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
ChinaHR) into the purchase accounting for ChinaHR. The goodwill
recorded in connection with the acquisition is not deductible
for tax purposes.
Trovix
Inc. Acquisition
On July 31, 2008, the Companys Careers
North America segment purchased Trovix Inc., a business that
provides career-related products and services that utilize
advanced search technology focusing on key attributes such as
skills, work history and education. Consideration for the
acquisition was approximately $64,290 in cash, net of cash
acquired. The Company recorded $55,482 of goodwill, $3,902 of
deferred tax assets, $1,421 of receivables, $6,475 of purchased
technology, $545 of property and equipment, $115 of other assets
and $3,650 for transactional and acquired liabilities. The
goodwill recorded in connection with the acquisition is not
deductible for tax purposes. The Company also placed $3,437 into
escrow related to future compensation for the former owners,
which was amortized as compensation expense over the service
period, which ended in 2010.
Affinity
Labs Inc. Acquisition
On January 3, 2008, the Companys Internet
Advertising & Fees segment purchased Affinity Labs
Inc., a business that operates a portfolio of professional and
vocational communities for people entering, advancing and
networking in certain occupations including law enforcement,
healthcare, education, government and technology. Consideration
for the acquisition was $61,567 in cash, net of cash acquired.
The Company recorded $56,259 of goodwill, $2,563 of deferred tax
assets, $1,251 of receivables, $2,500 of intangible assets, $183
of property and equipment, $22 of other assets and $1,211 of
liabilities. The goodwill recorded in connection with the
acquisition is not deductible for tax purposes.
The Company is not including pro forma financial information as
acquisitions completed during the years 2008 through 2010 were
not considered to be significant subsidiaries, either
individually or in the aggregate.
|
|
4.
|
GOODWILL
AND INTANGIBLE ASSETS
|
A summary of changes in goodwill by reportable segment are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Careers-North
|
|
|
Career-
|
|
|
Internet Advertising
|
|
|
|
|
|
|
America
|
|
|
International
|
|
|
and Fees
|
|
|
Total
|
|
|
January 1, 2009
|
|
$
|
403,230
|
|
|
$
|
338,225
|
|
|
$
|
153,091
|
|
|
$
|
894,546
|
|
Additions and adjustments
|
|
|
(1,280
|
)
|
|
|
5,886
|
|
|
|
(1,508
|
)
|
|
|
3,098
|
|
Currency translation
|
|
|
|
|
|
|
28,107
|
|
|
|
7
|
|
|
|
28,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009
|
|
$
|
401,950
|
|
|
$
|
372,218
|
|
|
$
|
151,590
|
|
|
$
|
925,758
|
|
Additions and adjustments
|
|
|
192,428
|
|
|
|
600
|
|
|
|
|
|
|
|
193,028
|
|
Currency translation
|
|
|
|
|
|
|
4,165
|
|
|
|
|
|
|
|
4,165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
$
|
594,378
|
|
|
$
|
376,983
|
|
|
$
|
151,590
|
|
|
$
|
1,122,951
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66
MONSTER
WORLDWIDE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The Companys intangible assets consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
December 31, 2009
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
Gross
|
|
|
|
|
|
|
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Amortization
|
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
Amortization
|
|
|
Period (Years)
|
|
|
Trademarks/Internet domains
|
|
$
|
13,777
|
|
|
$
|
|
|
|
$
|
13,777
|
|
|
$
|
|
|
|
|
Indefinite lived
|
|
Trade Names
|
|
|
10,600
|
|
|
|
393
|
|
|
|
|
|
|
|
|
|
|
|
9
|
|
Customer relationships
|
|
|
67,702
|
|
|
|
42,987
|
|
|
|
57,573
|
|
|
|
35,452
|
|
|
|
3
|
|
Resume Database
|
|
|
10,000
|
|
|
|
1,111
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
Acquired Technology
|
|
|
6,975
|
|
|
|
3,430
|
|
|
|
6,975
|
|
|
|
2,035
|
|
|
|
3 to 5
|
|
Non-compete agreements
|
|
|
4,719
|
|
|
|
1,739
|
|
|
|
4,499
|
|
|
|
1,684
|
|
|
|
2 to 6
|
|
Other
|
|
|
4,218
|
|
|
|
2,147
|
|
|
|
4,319
|
|
|
|
4,109
|
|
|
|
4 to 10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
117,991
|
|
|
$
|
51,807
|
|
|
$
|
87,143
|
|
|
$
|
43,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company recorded amortization expense of $10,614, $9,416,
and $6,790 relating to its intangible assets for the years ended
December 31, 2010, 2009 and 2008, respectively. Based on
the carrying value of identified intangible assets recorded as
of December 31, 2010, and assuming no subsequent impairment
of the underlying assets, the estimated annual amortization
expense is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
Estimated amortization expense
|
|
$
|
16,076
|
|
|
$
|
15,925
|
|
|
$
|
12,195
|
|
|
$
|
2,496
|
|
|
$
|
1,178
|
|
|
|
5.
|
PROPERTY
AND EQUIPMENT, NET
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
Capitalized software costs
|
|
$
|
218,478
|
|
|
$
|
190,454
|
|
Furniture and equipment
|
|
|
32,004
|
|
|
|
30,128
|
|
Leasehold improvements
|
|
|
40,624
|
|
|
|
31,803
|
|
Computer and communications equipment
|
|
|
192,412
|
|
|
|
173,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
483,518
|
|
|
|
426,105
|
|
Less: accumulated depreciation
|
|
|
333,371
|
|
|
|
282,378
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
$
|
150,147
|
|
|
$
|
143,727
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2010 and 2009, property and equipment
included equipment financed with capital leases with a cost of
$19,344 and $19,392, respectively, and accumulated depreciation
of $19,344 and $19,331, respectively.
Depreciation expense was $56,482, $59,117 and $51,230 for the
years ended December 31, 2010, 2009 and 2008, respectively.
|
|
6.
|
FAIR
VALUE MEASUREMENT
|
The Company values its assets and liabilities using the methods
of fair value as described in ASC 820, Fair Value
Measurements and Disclosures. ASC 820 establishes a
three-tier fair value hierarchy, which prioritizes the inputs
used in measuring fair value. The three levels of fair value
hierarchy are described below:
Level 1 Quoted prices in active markets
for identical assets or liabilities.
67
MONSTER
WORLDWIDE, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Level 2 Quoted prices for similar
instruments in active markets, quoted prices for identical or
similar instruments in markets that are not active, and
model-based valuation techniques for which all significant
assumptions are observable in the market or can be corroborated
by observable market data for substantially the full term of the
assets or liabilities.
Level 3 Inputs that are generally
unobservable and typically reflect managements estimates
of assumptions that market participants would use in pricing the
asset or liability.
In determining fair value, the Company utilizes valuation
techniques that maximize the use of observable inputs and
minimize the use of unobservable inputs to the extent possible,
and considers counter-party credit risk in its assessment of
fair value. Observable or market inputs reflect market data
obtained from independent sources, while unobservable inputs
reflect the Companys assumptions based on the best
information available. There have been no transfers of assets or
liabilities between the fair value measurement classifications
in the year ended December 31, 2010.
The Company has certain assets and liabilities that are required
to be recorded at fair value on a recurring basis in accordance
with accounting principles generally accepted in the United
States. The following table summarizes those assets and
liabilities measured at fair value on a recurring basis as of
December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank time deposits
|
|
$
|
|
|
|
$
|
55,954
|
|
|
$
|
|
|
|
|
55,954
|
|
Commercial paper
|
|
|
|
|
|
|
47,675
|
|
|
|
|
|
|
|
47,675
|
|
Government bonds foreign
|
|
|
|
|
|
|
4,385
|
|
|
|
|
|
|
|
4,385
|
|
Foreign exchange contracts
|
|
|
|
|
|
|
666
|
|
|
|
|
|
|
|
666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
|
|
|
$
|
108,680
|
|
|
$
|
|
|
|
$
|
108,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease exit liabilities
|
|
$
|
|
|
|
$
|
|
|
|
$
|
13,913
|
|
|
$
|
13,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
$
|
|
|
|
$
|
|
|
|
$
|
13,913
|
|
|
$
|
13,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes those assets and liabilities
measured at fair value on a recurring basis as of
December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
$
|
91,246
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
91,246
|
|
Bank time deposits
|
|
|
|
|
|
|
37,474
|
|
|
|
|
|
|
|
37,474
|
|
Commercial paper
|
|
|
|
|
|
|
86,537
|
|
|
|
|