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Monster Worldwide Reports Third Quarter 2012 Results And Announces Corporate Restructuring

Operating income before depreciation and amortization (“OIBDA”) is defined as net income or loss from operations before depreciation, amortization of intangible assets, amortization of stock-based compensation and non-cash costs incurred in connection with the Company’s restructuring program. The Company considers OIBDA to be an important indicator of its operational strength. This measure eliminates the effects of depreciation, amortization of intangible assets, amortization of stock-based compensation and non-cash restructuring costs from period to period, which the Company believes is useful to management and investors in evaluating its operating performance. OIBDA is a non-GAAP measure and may not be comparable to similarly titled measures reported by other companies.

Bookings represent the dollar value of contractual orders received in the relevant period.

Free cash flow is defined as cash flow from operating activities less capital expenditures. Free cash flow is considered a liquidity measure and provides useful information about the Company's ability to generate cash after investments in property and equipment. Free cash flow reflected herein is a non-GAAP measure and may not be comparable to similarly titled measures reported by other companies. Free cash flow does not reflect the total change in the Company's cash position for the period and should not be considered a substitute for such a measure.

Net cash and securities is defined as cash and cash equivalents plus short-term marketable securities, less total debt. Total available liquidity is defined as cash and cash equivalents, plus short-term marketable securities plus unused borrowings under our credit facilities. The Company considers net cash and securities and total available liquidity to be important measures of liquidity and indicators of its ability to meet its ongoing obligations. The Company also uses net cash and securities and total available liquidity, among other measures, in evaluating its choices for capital deployment. Net cash and securities and total available liquidity are presented herein as non-GAAP measures and may not be comparable to similarly titled measures used by other companies.
MONSTER WORLDWIDE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
       
 
Three Months Ended September 30, Nine Months Ended September 30,
2012 2011 2012 2011
 
Revenue $ 221,710   $ 248,580   $ 681,971   $ 761,241  
 
Salaries and related 100,837 121,602 317,117 379,833
Office and general 61,289 52,912 173,222 174,652
Marketing and promotion 44,712 42,911 148,517 150,582
Restructuring and other special charges 244 2,004 25,678 2,004
Recovery of restitution award from former executive   -     -     (5,350 )   -  
Total operating expenses   207,082     219,429     659,184     707,071  
 
Operating income 14,628 29,151 22,787 54,170
 
Interest and other, net   (1,530 )   (1,422 )   (4,172 )   (2,427 )
 
Income before income taxes and loss in equity interests 13,098 27,729 18,615 51,743
 
(Benefit from) provision for income taxes (26,162 ) 8,813 (39,122 ) 16,132
Loss in equity interests, net   (271 )   (368 )   (726 )   (996 )
 
Income from continuing operations 38,989 18,548 57,011 34,615
 
(Loss) income from discontinued operations, net of tax   (233,228 )   13,279     (242,706 )   8,276  
 
Net (loss) income $ (194,239 ) $ 31,827   $ (185,695 ) $ 42,891  
 
Basic (loss) earnings per share:
 
Income from continuing operations $ 0.35 $ 0.15 $ 0.50 $ 0.28
(Loss) income from discontinued operations, net of tax   (2.10 )   0.11     (2.14 )   0.07  
Basic (loss) earnings per share $ (1.75 ) $ 0.26   $ (1.64 ) $ 0.35  
 
Diluted (loss) earnings per share:
 
Income from continuing operations $ 0.35 $ 0.15 $ 0.50 $ 0.27
(Loss) income from discontinued operations, net of tax   (2.10 )   0.11     (2.14 )   0.07  
Diluted (loss) earnings per share $ (1.75 ) $ 0.26   $ (1.64 ) $ 0.34  
 
 
Weighted average shares outstanding:
 
Basic   111,239     122,991     113,460     122,212  
 
Diluted   112,212     123,972     114,622     124,338  
 
 
 
Operating income before depreciation, amortization, and non-cash restructuring:
 
Operating income $ 14,628 $ 29,151 $ 22,787 $ 54,170
Depreciation and amortization of intangibles 16,141 17,353 48,094 52,121
Amortization of stock-based compensation 5,711 8,788 21,274 33,805
Restructuring non-cash expenses   -     -     6,417     -  
 
Operating income before depreciation, amortization, and non-cash restructuring $ 36,480   $ 55,292   $ 98,572   $ 140,096  
 
MONSTER WORLDWIDE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
   
Nine Months Ended September 30,
2012 2011
Cash flows provided by operating activities:
Net (loss) income $ (185,695 ) $ 42,891  
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization 52,741 56,298
Provision for doubtful accounts 2,064 2,452
Non-cash compensation 21,582 34,431
Deferred income taxes (294 ) (6,562 )
Non-cash restructuring write-offs 6,417 -
Loss in equity interests, net 726 996
Gains on auction rate securities - (1,732 )
Reversal of uncertain tax positions (43,193 ) -
Impairment of goodwill 216,221 -
Changes in assets and liabilities, net of acquisitions:
Accounts receivable 13,341 47,696
Prepaid and other 11,109 (2,361 )
Deferred revenue (28,277 ) (24,931 )
Accounts payable, accrued liabilities and other   (30,904 )   (24,163 )
Total adjustments   221,533     82,124  
Net cash provided by operating activities   35,838     125,015  
 
Cash flows used for investing activities:
Capital expenditures (46,902 ) (45,433 )
Cash funded to equity investee (2,077 ) (2,559 )
Sales and maturities of marketable securities - 1,732
Dividends received from unconsolidated investee   728     443  
Net cash used for investing activities   (48,251 )   (45,817 )
 
Cash flows (used for) provided by financing activities:
Proceeds from borrowings on credit facilities 221,355 107,725
Payments on borrowings on credit facilities (271,802 ) (9,500 )
Proceeds from borrowings on term loan 100,000 -
Payments on borrowings on term loan (42,500 ) -
Repurchase of common stock (65,611 ) -
Tax withholdings related to net share settlements of restricted stock awards and units (8,030 ) (16,876 )
Proceeds from the exercise of employee stock options   23     23  
Net cash (used for) provided by financing activities   (66,565 )   81,372  
 
Effects of exchange rates on cash 3,764 (1,938 )
 
Net (decrease) increase in cash and cash equivalents (75,214 ) 158,632
Cash and cash equivalents, beginning of period   250,317     163,169  
Cash and cash equivalents, end of period $ 175,103   $ 321,801  
 
Free cash flow:
 
Net cash provided by operating activities $ 35,838 $ 125,015
Less: Capital expenditures   (46,902 )   (45,433 )
Free cash flow $ (11,064 ) $ 79,582  
 
MONSTER WORLDWIDE, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
   
Assets: September 30, 2012 December 31, 2011
 
Cash and cash equivalents $ 175,103 $ 250,317
Accounts receivable, net 315,058 343,546
Property and equipment, net 150,541 156,282
Goodwill and intangibles, net 913,793 1,184,122
Other assets 103,797 123,731
Assets of business held for sale   80,303   -
Total Assets $ 1,738,595 $ 2,057,998
 
Liabilities and Stockholders' Equity:
 
Accounts payable, accrued expenses and other current liabilities $ 170,700 $ 213,817
Deferred revenue 332,723 380,310
Current portion of long-term debt and borrowings on credit facility 14,191 188,836
Long-term income taxes payable 61,612 94,750
Long-term debt, less current portion 181,750 -
Other long-term liabilities 10,897 16,158
Liabilities of business held for sale   31,881   -
Total Liabilities $ 803,754 $ 893,871
 
Stockholders' Equity 934,841 1,164,127
     
Total Liabilities and Stockholders' Equity $ 1,738,595 $ 2,057,998
 
MONSTER WORLDWIDE, INC.
UNAUDITED NON-GAAP STATEMENTS OF OPERATIONS AND RECONCILIATIONS
(in thousands, except per share amounts)
               
Three Months Ended September 30, 2012 Three Months Ended September 30, 2011
As Reported

Non GAAP Adjustments

Consolidated Non GAAP
As Reported

Non GAAP Adjustments

Consolidated Non GAAP
 
Revenue $ 221,710 $ - $ 221,710 $ 248,580 $ - $ 248,580
 
Salaries and related 100,837 - 100,837 121,602 - 121,602
Office and general 61,289 (1,484 ) g 59,805 52,912 - 52,912
Marketing and promotion 44,712 - 44,712 42,911 - 42,911
Restructuring and other special charges   244     (244 ) e   -     2,004     (2,004 ) e   -  
Total operating expenses   207,082     (1,728 )   205,354     219,429     (2,004 )   217,425  
Operating income 14,628 1,728 16,356 29,151 2,004 31,155
Operating margin 6.6 % 7.4 % 11.7 % 12.5 %
 
Interest and other, net   (1,530 )   -     (1,530 )   (1,422 )   -     (1,422 )
 
Income before income taxes and loss in equity interests 13,098 1,728 14,826 27,729 2,004 29,733
 
(Benefit from) provision for income taxes (26,162 ) 31,169 i,j 5,007 8,813 671 j 9,484
Loss in equity interests, net   (271 )   -     (271 )   (368 )   -     (368 )
Income from continuing operations   38,989     (29,441 )   9,548     18,548     1,333     19,881  
 
(Loss) income from discontinued operations (233,228 ) 233,228 k - 13,279 (13,279 ) k -
           
Net (loss) income $ (194,239 ) $ 203,787   $ 9,548   $ 31,827   $ (11,946 ) $ 19,881  
 
Diluted (loss) earnings per share:*
Income from continuing operations $ 0.35 $ (0.26 ) $ 0.09 $ 0.15 $ 0.01 $ 0.16
(Loss) income from discontinued operations, net of tax   (2.10 )   2.10     -     0.11     (0.11 )   -  
Diluted (loss) earnings per share $ (1.75 ) $ 1.83   $ 0.09   $ 0.26   $ (0.10 ) $ 0.16  
 
Weighted average shares outstanding:
Basic 111,239 111,239 111,239 122,991 122,991 122,991
Diluted 112,212 112,212 112,212 123,972 123,972 123,972
 
 
Nine Months Ended September 30, 2012 Nine Months Ended September 30, 2011
As Reported

Non GAAP Adjustments

Consolidated Non GAAP
As Reported

Non GAAP Adjustments

Consolidated Non GAAP
 
Revenue $ 681,971 $ - $ 681,971 $ 761,241 2,658 a $ 763,899
 
Salaries and related 317,117 - 317,117 379,833 (1,178 ) b,c 378,655
Office and general 173,222 (3,313 ) g 169,909 174,652 (6,829 ) c,d 167,823
Marketing and promotion 148,517 - 148,517 150,582 - 150,582
Restructuring and other special charges 25,678 (25,678 ) e - 2,004 (2,004 ) e -
Recovery of restitution award from former executive   (5,350 )   5,350   f   -     -     -     -  
Total operating expenses   659,184     (23,641 )   635,543     707,071     (10,011 )   697,060  
Operating income 22,787 23,641 46,428 54,170 12,669 66,839
Operating margin 3.3 % 6.8 % 7.1 % 8.7 %
 
Interest and other, net   (4,172 )   -     (4,172 )   (2,427 )   (1,120 ) h   (3,547 )
 
Income before income taxes and loss in equity interests 18,615 23,641 42,256 51,743 11,549 63,292
 
(Benefit from) provision for income taxes (39,122 ) 52,993 i,j 13,871 16,132 4,029 j 20,161
Loss in equity interests, net   (726 )   -     (726 )   (996 )   -     (996 )
Income from continuing operations   57,011     (29,352 )   27,659     34,615     7,520     42,135  
 
Loss from discontinued operations (242,706 ) 242,706 k - 8,276 (8,276 ) k -
           
Net (loss) income $ (185,695 ) $ 213,354   $ 27,659   $ 42,891   $ (756 ) $ 42,135  
 
Diluted (loss) earnings per share:*
Income from continuing operations $ 0.50 $ (0.26 ) $ 0.24 $ 0.27 $ 0.06 $ 0.34
(Loss) income from discontinued operations, net of tax   (2.14 )   2.14     -     0.07     (0.07 )   -  
Diluted (loss) earnings per share $ (1.64 ) $ 1.88   $ 0.24   $ 0.34   $ (0.01 ) $ 0.34  
 
Weighted average shares outstanding:
Basic 113,460 113,460 113,460 122,212 122,212 122,212
Diluted 114,622 114,622 114,622 124,338 124,338 124,338
 
Note Regarding ProForma Adjustments:
The financial information included herein contains certain non-GAAP financial measures. This information is not intended to be used in place of the financial information prepared and presented in accordance with GAAP, nor is it intended to be considered in isolation. We believe that the above presentation of non-GAAP measures provide useful information to management and investors regarding certain core operating and business trends relating to our results of operations, exclusive of certain restructuring related and other special charges.
 
ProForma adjustments consist of the following:
 
a Deferred revenue fair value adjustment required under existing purchase accounting rules relating to the acquisition of the HotJobs Assets in Q3 2010.
 
b Severance charges primarily related to the reorganization of the product & technology groups on a global basis.
 
c Acquisition and integration related costs associated with the acquisition of the HotJobs Assets.
 

d Charges related to changes in sublet assumptions on previously exited facilities.
 
e Restructuring related charges pertaining to the strategic actions that the Company announced in January 2012 and charges related to the Company no longer engaging in the arbitrage lead generation business in 2011. These charges include costs related to the reduction in the Company’s workforce, fixed asset write-offs, costs relating to the consolidation of certain office facilities, and professional fees.
 
f Restitution award paid by a former executive to the United States government in connection with the Company's historical stock option practices.
 
g Costs directly associated with our previously announced review of strategic alternatives.
 
h Net realized gains on available for sale securities.
 
i Non-GAAP income tax adjustment includes the reversal of income tax reserves on uncertain tax positions during the quarter and a non-recurring tax benefit related to certain losses arising from the Company's restructuring program.
 
j Income tax adjustment is calculated using the effective tax rate of the reported period multiplied by the ProForma adjustment to income (loss) before income taxes and loss in equity interests.
 
k Represents the results of discontinued operations related to our decision to sell our Careers-China business. The sale is expected to be completed during the next 12 months.
 
*Earnings per share may not add in certain periods due to rounding.
 
MONSTER WORLDWIDE, INC.
UNAUDITED NON-GAAP OPERATING SEGMENT INFORMATION
(in thousands)
         
 
Three Months Ended September 30, 2012

Careers - North America

Careers - International

Internet Advertising & Fees

Corporate Expenses
Total
 
Revenue - GAAP $ 115,455 $ 87,451 $ 18,804 $ 221,710
Non GAAP Adjustments   -     -     -     -  
Revenue - Non GAAP $ 115,455   $ 87,451   $ 18,804   $ 221,710  
 
Operating income (loss) - GAAP $ 17,169 $ 4,124 $ 4,990 $ (11,655 ) $ 14,628
Non GAAP Adjustments   (116 )   570     9     1,265     1,728  
Operating income (loss) - Non GAAP $ 17,053   $ 4,694   $ 4,999   $ (10,390 ) $ 16,356  
 
OIBDA - GAAP $ 26,887 $ 10,552 $ 6,990 $ (7,949 ) $ 36,480
Non GAAP Adjustments   (116 )   570     9     1,265     1,728  
OIBDA - Non GAAP $ 26,771   $ 11,122   $ 6,999   $ (6,684 ) $ 38,208  
 
Operating margin - GAAP 14.9 % 4.7 % 26.5 % 6.6 %
Operating margin - Non GAAP 14.8 % 5.4 % 26.6 % 7.4 %
 
OIBDA margin - GAAP 23.3 % 12.1 % 37.2 % 16.5 %
OIBDA margin - Non GAAP 23.2 % 12.7 % 37.2 % 17.2 %
 
Three Months Ended September 30, 2011

Careers - North America

Careers - International

Internet Advertising & Fees

Corporate Expenses
Total
 
Revenue $ 123,160 $ 103,623 $ 21,797 $ 248,580
Non GAAP Adjustments   -     -     -     -  
Revenue - Non GAAP $ 123,160   $ 103,623   $ 21,797   $ 248,580  
 
Operating income (loss) - GAAP $ 21,434 $ 15,825 $ 395 $ (8,503 ) $ 29,151
Non GAAP Adjustments   -     323     1,681     -     2,004  
Operating income (loss) - Non GAAP $ 21,434   $ 16,148   $ 2,076   $ (8,503 ) $ 31,155  
 
OIBDA - GAAP $ 33,589 $ 24,374 $ 3,737 $ (6,408 ) $ 55,292
Non GAAP Adjustments   -     323     1,681     -     2,004  
OIBDA - Non GAAP $ 33,589   $ 24,697   $ 5,418   $ (6,408 ) $ 57,296  
 
Operating margin - GAAP 17.4 % 15.3 % 1.8 % 11.7 %
Operating margin - Non GAAP 17.4 % 15.6 % 9.5 % 12.5 %
 
OIBDA margin - GAAP 27.3 % 23.5 % 17.1 % 22.2 %
OIBDA margin - Non GAAP 27.3 % 23.8 % 24.9 % 23.0 %
 
Nine Months Ended September 30, 2012

Careers - North America

Careers - International

Internet Advertising & Fees

Corporate Expenses
Total
 
Revenue - GAAP $ 351,418 $ 272,825 $ 57,728 $ 681,971
Non GAAP Adjustments   -     -     -     -  
Revenue - Non GAAP $ 351,418   $ 272,825   $ 57,728   $ 681,971  
 
Operating income (loss) - GAAP $ 35,279 $ 6,407 $ 13,565 $ (32,464 ) $ 22,787
Non GAAP Adjustments   14,213     9,433     1,166     (1,171 )   23,641  
Operating income (loss) - Non GAAP $ 49,492   $ 15,840   $ 14,731   $ (33,635 ) $ 46,428  
 
OIBDA - GAAP $ 71,071 $ 28,149 $ 20,532 $ (21,180 ) $ 98,572
Non GAAP Adjustments   8,965     8,898     543     (1,184 )   17,222  
OIBDA - Non GAAP $ 80,036   $ 37,047   $ 21,075   $ (22,364 ) $ 115,794  
 
Operating margin - GAAP 10.0 % 2.3 % 23.5 % 3.3 %
Operating margin - Non GAAP 14.1 % 5.8 % 25.5 % 6.8 %
 
OIBDA margin - GAAP 20.2 % 10.3 % 35.6 % 14.5 %
OIBDA margin - Non GAAP 22.8 % 13.6 % 36.5 % 17.0 %
 
Nine Months Ended September 30, 2011

Careers - North America

Careers - International

Internet Advertising & Fees

Corporate Expenses
Total
 
Revenue $ 366,757 $ 305,918 $ 88,566 $ 761,241
Non GAAP Adjustments   2,658     -     -     2,658  
Revenue - Non GAAP $ 369,415   $ 305,918   $ 88,566   $ 763,899  
 
 
Operating income (loss) - GAAP $ 54,425 $ 38,082 $ 3,760 $ (42,097 ) $ 54,170
Non GAAP Adjustments   2,885     605     1,702     7,477     12,669  
Operating income (loss) - Non GAAP $ 57,310   $ 38,687   $ 5,462   $ (34,620 ) $ 66,839  
 
OIBDA - GAAP $ 92,460 $ 66,119 $ 14,643 $ (33,126 ) $ 140,096
Non GAAP Adjustments   2,885     605     1,702     7,477     12,669  
OIBDA - Non GAAP $ 95,345   $ 66,724   $ 16,345   $ (25,649 ) $ 152,765  
 
Operating margin - GAAP 14.8 % 12.4 % 4.2 % 7.1 %
Operating margin - Non GAAP 15.5 % 12.6 % 6.2 % 8.7 %
 
OIBDA margin - GAAP 25.2 % 21.6 % 16.5 % 18.4 %
OIBDA margin - Non GAAP 25.8 % 21.8 % 18.5 % 20.0 %
 

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