Table of Contents
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2016
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM                      to                     
COMMISSION FILE NUMBER 001-34209
 
MONSTER WORLDWIDE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
 
 
 
DELAWARE
 
13-3906555
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
 
(I.R.S. EMPLOYER
IDENTIFICATION NO.)
 
 
133 Boston Post Road, Building 15, Weston, Massachusetts
 
02493
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
 
(ZIP CODE)
(978) 461-8000
(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    ý  Yes    ¨  No
Indicate by check mark 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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ý  Yes    ¨  No
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.
Large accelerated filer
 
ý
  
Accelerated filer
 
¨
 
 
 
 
Non-accelerated filer
 
¨  (Do not check if a smaller reporting company)
  
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    ý  No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
 
Outstanding as of
October 21, 2016
Common Stock
 
89,258,147

 

Table of Contents

MONSTER WORLDWIDE, INC.
TABLE OF CONTENTS

 
 
 
 
 
 
ITEM 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
ITEM 2.
 
 
 
 
 
 
 
 
 
 
 
ITEM 3.
 
 
 
ITEM 4.
 
 
 
 
 
ITEM 1.
 
 
 
ITEM 1A.
 
 
 
ITEM 2.
 
 
 
ITEM 3.
 
 
 
ITEM 4.
 
 
 
ITEM 5.
 
 
 
ITEM 6.
 
 

2

Table of Contents

PART I-FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MONSTER WORLDWIDE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands, except per share amounts)
(unaudited)
 
 Three months ended
September 30,

 Nine months ended
September 30,
 
2016

2015

2016

2015
Revenue
$
144,753


$
167,082


$
453,452


$
507,694

Salaries and related
79,518


79,787


235,984


254,500

Office and general
47,924


43,638


134,092


131,430

Marketing and promotion
28,287


30,044


91,195


91,091

Goodwill impairment
147,400

 

 
289,402

 

Impairment of other assets
34,835

 

 
38,235

 

Restructuring and other special charges


2,780




28,787

Total operating expenses
337,964


156,249


788,908


505,808

Operating (loss) income
(193,211
)

10,833


(335,456
)

1,886

Gain on partial sale of equity method investment






8,849

Interest and other, net
(3,195
)

(3,674
)

(9,601
)

(10,289
)
(Loss) income before income taxes and (loss) income in equity interests, net
(196,406
)

7,159


(345,057
)

446

Benefit from income taxes
(16,124
)

(2,361
)

(42,252
)

(14,487
)
(Loss) income in equity interests, net
(222
)

249


(13
)

321

(Loss) income from continuing operations
(180,504
)

9,769


(302,818
)

15,254

Income from discontinued operations, net of tax


2,163




6,005

Net (loss) income
(180,504
)

11,932


(302,818
)

21,259

Net income attributable to noncontrolling interest


1,512




3,712

Net (loss) income attributable to Monster Worldwide, Inc.
$
(180,504
)

$
10,420


$
(302,818
)

$
17,547

*Basic (loss) earnings per share attributable to Monster Worldwide, Inc.:







(Loss) income from continuing operations
$
(2.03
)

$
0.11


$
(3.41
)

$
0.17

Income from discontinued operations, net of tax


0.01




0.03

Basic (loss) earnings per share attributable to Monster Worldwide, Inc.
$
(2.03
)

$
0.12


$
(3.41
)

$
0.20

*Diluted (loss) earnings per share attributable to Monster Worldwide, Inc.:







(Loss) income from continuing operations
$
(2.03
)

$
0.10


$
(3.41
)

$
0.16

Income from discontinued operations, net of tax


0.01




0.02

Diluted (loss) earnings per share attributable to Monster Worldwide, Inc.
$
(2.03
)

$
0.11


$
(3.41
)

$
0.19

Weighted average shares outstanding:







Basic
88,932


90,340


88,846


89,853

Diluted
88,932


96,839


88,846


94,573

Net (loss) income
$
(180,504
)

$
11,932


$
(302,818
)

$
21,259

Other comprehensive income (loss):







Foreign currency translation adjustments, net
950


(4,925
)

32


(11,096
)
Comprehensive (loss) income
(179,554
)

7,007


(302,786
)

10,163

Comprehensive (loss) income attributable to noncontrolling interest


(1,701
)



421

Comprehensive (loss) income attributable to Monster Worldwide, Inc.
$
(179,554
)

$
8,708


$
(302,786
)

$
9,742

*(Loss) earnings per share may not add in certain periods due to rounding.
See accompanying notes.

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Table of Contents

MONSTER WORLDWIDE, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except par values)
 
September 30,
2016
 
December 31,
2015
 
(unaudited)
 

ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
91,890

 
$
167,915

Accounts receivable, net of allowance for doubtful accounts of $3,880 and $4,096, respectively
209,743

 
260,518

Prepaid and other
51,426

 
52,599

Total current assets
353,059

 
481,032

Goodwill
218,671

 
496,499

Property and equipment, net
76,814

 
110,143

Intangibles, net
21,198

 
27,874

Investment in unconsolidated affiliates
22,195

 
21,566

Long-term deferred tax asset
38,880

 
6,953

Other assets
8,610

 
10,865

Total assets
$
739,427

 
$
1,154,932

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable, accrued expenses and other
111,955

 
137,069

Deferred revenue
224,225

 
279,815

Current portion of long-term debt, net
11,314

 
9,773

Total current liabilities
347,494

 
426,657

Long-term income taxes payable
31,904

 
36,348

Long-term debt, net, less current portion
170,825

 
184,499

Other long-term liabilities
13,087

 
26,022

Total liabilities
563,310

 
673,526

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: 147,919 and 147,047 shares, respectively; outstanding: 89,103 and 89,297 shares, respectively
148

 
147

Class B common stock, $.001 par value, authorized 39,000 shares; issued and outstanding: none

 

Additional paid-in capital
2,026,803

 
2,026,268

Accumulated deficit
(1,083,366
)
 
(780,548
)
Accumulated other comprehensive income
1,958

 
1,926

Less: Treasury stock, at cost, 58,816 and 57,750 shares, respectively
(769,426
)
 
(766,387
)
Total stockholders' equity
176,117

 
481,406

Total liabilities and stockholders’ equity
$
739,427

 
$
1,154,932

See accompanying notes.

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Table of Contents

MONSTER WORLDWIDE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
 Nine months ended September 30,
 
2016

2015
Cash flows (used for) provided by operating activities:



Net (loss) income
$
(302,818
)

$
21,259

Adjustments to reconcile net (loss) income to net cash (used for) provided by operating activities:



  Depreciation and amortization
31,211


34,625

  Provision for doubtful accounts
1,349


1,239

  Stock-based compensation
3,488


11,471

  Loss (income) in equity interests, net
13


(321
)
  Non-cash restructuring charges


4,226

  Deferred income taxes
(41,389
)

1,487

  Goodwill impairment
289,402



  Gain on partial sale of equity method investment


(8,849
)
  Impairment of other assets
38,235



Changes in assets and liabilities, net of acquisitions:



Accounts receivable
48,067


40,238

Prepaid and other
9,684


9,779

Deferred revenue
(54,691
)

(39,117
)
Accounts payable, accrued liabilities and other
(33,053
)

(20,947
)
Total adjustments
292,316


33,831

Net cash (used for) provided by operating activities
(10,502
)

55,090

Cash flows used for investing activities:



Capital expenditures
(30,463
)

(21,604
)
Payment for acquisition, net of cash acquired
(12,511
)


Investment in kununu US, LLC
(3,000
)


Dividends received from equity investment and other
1,524


1,648

Cash received from partial sale of equity method investment


9,128

Capitalized patent defense costs


(2,305
)
Net cash used for investing activities
(44,450
)

(13,133
)
Cash flows used for financing activities:



Payments on borrowings on credit facilities


(32,100
)
Proceeds from borrowings on credit facilities


32,100

Payments on borrowings on term loan
(7,707
)

(13,750
)
Payments on convertible notes
(9,475
)


Fees paid on the issuance of debt and purchase of capped call and other
(524
)

(1,110
)
Repurchase of common stock
(3,039
)


Tax withholdings related to net share settlements of restricted stock awards and units
(950
)

(8,039
)
Distribution paid to minority shareholder


(10,018
)
Net cash used for financing activities
(21,695
)

(32,917
)
Effects of exchange rates on cash
622


(3,414
)
Net (decrease) increase in cash and cash equivalents
$
(76,025
)

$
5,626

Cash and cash equivalents from continuing operations, beginning of period
$
167,915


$
72,030

Cash and cash equivalents from discontinued operations, beginning of period


22,267

Cash and cash equivalents, beginning of period
$
167,915


$
94,297

Cash and cash equivalents from continuing operations, end of period
$
91,890


$
88,389

Cash and cash equivalents from discontinued operations, end of period


11,534

Cash and cash equivalents, end of period
$
91,890


$
99,923

Supplemental disclosures of cash flow information:
 
 
 
Cash paid for income taxes
$
2,740


$
613

Cash paid for interest
$
4,901


$
5,707

Cash flows provided by (used in) discontinued operations:





Net cash provided by operating activities
$


$
10,147

Net cash used for investing activities
$


$
(241
)
See accompanying notes.

5

Table of Contents

MONSTER WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
(unaudited)
1.    DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Description of Business
Monster Worldwide, Inc. (together with its consolidated subsidiaries, the “Company”, “Monster”, “Monster Worldwide”, “we”, “our”, or “us”) has operations that consist of two reportable segments: Careers-North America and Careers-International. Revenue in the Company’s segments is primarily earned from the placement of job advertisements on the websites within the Monster network, access to the Monster network of online resume and social profile databases, recruitment media services and other career-related services. The Company’s segments provide online services to customers in a variety of industries throughout North America, Europe, and the Asia-Pacific region.
Merger Agreement
On August 8, 2016, the Company, entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Randstad North America, Inc., a Delaware corporation (“Parent”), and Merlin Global Acquisition, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”). Pursuant to the terms of the Merger Agreement, on September 6, 2016, Merger Sub commenced a tender offer to purchase any and all of the issued and outstanding shares of common stock of the Company, par value $0.001 per share (each a “Share”), at a purchase price of $3.40 per Share (the “Offer Price”), payable to the holder thereof in cash, without interest and less any applicable withholding taxes (the “Offer”).
Following the consummation of the Offer, Merger Sub will merge with and into the Company (the “Merger”) in accordance with the Merger Agreement and under Section 251(h) of the General Corporation Law of the State of Delaware (the "DGCL"), and the Company will survive the Merger as a wholly-owned subsidiary of Parent. At the effective time of the Merger (the “Effective Time”), each Share that is not tendered and accepted pursuant to the Offer (other than Shares held by Parent, Merger Sub or the Company or their direct or indirect wholly-owned subsidiaries and Shares held by stockholders who are entitled to demand and who have properly and validly perfected their statutory rights of appraisal) will be converted into the right to receive an amount equal to the Offer Price (the “Merger Consideration”), payable to the holder thereof in cash, without interest and less any applicable withholding taxes.
The obligation of Merger Sub to purchase Shares tendered in the Offer is subject to customary closing conditions, including (i) that the number of Shares validly tendered and not properly withdrawn in accordance with the terms of the Offer, together with the Shares then-owned by Parent, Merger Sub or any of their respective wholly-owned Subsidiaries, equals at least one Share more than half of the sum of (without duplication) (A) all Shares then outstanding (including all outstanding Company Restricted Shares (as defined in the Merger Agreement)) plus (B) all Shares issuable to holders of the Company's 3.50% convertible senior notes due 2019 (the "Notes") from whom the Company has received duly completed notices of exercise, plus (C) all Shares issuable to holders of Company Stock Options (as defined in the Merger Agreement) and (ii) (A) the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and (B) the approval of the relevant authority pursuant to Council Regulation 139/2004 of the European Union. The obligations of Parent and Merger Sub to complete the Offer and the Merger are not subject to any financing condition.
On August 26, 2016, the Company was informed that the United States Federal Trade Commission granted early termination of the waiting period under the HSR Act, and on October 26, 2016, Randstad Holding nv, the ultimate parent of Parent and Merger Sub, received merger control clearance from the European Commission (the “EC”) for the proposed acquisition of the Company. The approval by the EC was the last regulatory approval required with respect to the Offer.
The Merger Agreement includes customary termination rights for both the Company and Parent including, among others, in connection with Superior Proposals (as defined in the Merger Agreement). Upon the termination of the Merger Agreement under certain specified circumstances, the Company will be required to pay Parent a termination fee of $9,000.

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Table of Contents

The Offer and withdrawal rights expired on October 28, 2016 at 12:00 midnight, New York City time. Broadridge Corporate Issuer Solutions, Inc., the depositary, has advised that a total of 45,973,527 Shares had been validly tendered into and not properly withdrawn from the Offer, representing approximately 51.5% of the Shares outstanding (including restricted shares and shares issuable to holders of stock options). In addition, notices of guaranteed delivery have been delivered for 3,708,393 Shares, representing approximately 4.15% of the outstanding Shares (including restricted shares and shares issuable to holders of stock options). The number of Shares validly tendered in accordance with the terms of the Offer and not properly withdrawn from the Offer satisfied the Minimum Tender Condition (as defined in the Merger Agreement). All conditions to the Offer having been satisfied or waived, Purchaser accepted for payment and will promptly pay for all such Shares validly tendered into and not properly withdrawn from the Offer.
As a result of its acceptance of the Shares tendered into the Offer, Merger Sub will acquire sufficient Shares to complete the Merger without the affirmative vote of the stockholders of the Company pursuant to Section 251(h) of the DGCL. At the Effective Time, each Share issued and outstanding immediately prior to the Effective Time and not tendered pursuant to the Offer (other than Shares held by Parent, Merger Sub or the Company or their direct of indirect wholly-owned subsidiaries or Shares held by stockholders who validly perfect their appraisal rights under Delaware law) will be automatically converted into the right to receive an amount in cash equal to the Offer Price, without interest and less any applicable withholding taxes.
Promptly following consummation of the Merger, all Shares will be delisted from the New York Stock Exchange and deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Merger Sub’s acquisition of the Shares tendered in the Offer results in a “change of control” under the Third Amended and Restated Credit Agreement, dated as of October 31, 2014, among the Company, Bank of America, N.A., in its capacity as administrative agent, and the lenders identified therein (the “Third Amended Credit Agreement”), which entitles the lenders holding more than 50% of the commitments under the Third Amended Credit Agreement to declare all amounts borrowed thereunder due and payable. The Company expects that, upon the consummation of the Merger, all indebtedness, liabilities and other obligations owing thereunder will be repaid by Parent on behalf of the Company, except for a standby letter of credit in the original face amount of approximately $88, which will remain outstanding and be secured by cash collateral.
The consummation of the Merger will constitute a “Fundamental Change” and a “Make-Whole Fundamental Change” under the Indenture dated as of October 22, 2014 (the “Indenture”), between the Company and Wilmington Trust, National Association, as trustee, with respect to the Notes. Following the consummation of the Merger, the Company expects Parent to cause the Company to, as required by the terms of the Indenture, launch a tender offer to purchase the Notes at their principal amount plus accrued and unpaid interest (the “Repurchase Right”). In connection with the Merger, holders of the Notes also have the right, in lieu of the Repurchase Right, to convert each $1,000 principal amount of their Notes for cash at the then-applicable conversion rate under the Indenture pursuant to the terms of a supplemental indenture, however this would result holders receiving less cash for their Notes than if they had instead exercised the Repurchase Right.
The Company incurred legal and other professional fees of $3,442 associated with the Merger during the three and nine months ended September 30, 2016.
Basis of Presentation
The consolidated interim financial statements included herein are unaudited and have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been omitted pursuant to such rules and regulations; however, the Company believes that the disclosures are adequate to make the information presented not misleading.
The consolidated interim 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, but has the ability to exert significant influence, are accounted for under the equity method of accounting. All inter-company accounts and transactions have been eliminated in consolidation. For the three and nine months ended September 30, 2015, the noncontrolling interest in our former South Korean subsidiary is recorded net of tax as Net income attributable to noncontrolling interest. In October 2015, the Company sold its remaining ownership position in its South Korean subsidiary. See Note 7 - Discontinued Operations.

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These statements reflect all normal recurring adjustments that, in the opinion of management, are necessary for fair presentation of the information contained herein. These consolidated interim financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. The Company adheres to the same accounting policies in preparing interim financial statements. As permitted under U.S. GAAP, interim accounting for certain expenses, including income taxes, are based on full year assumptions. Such amounts are expensed in full in the year incurred. For interim financial reporting purposes, income taxes are recorded based upon estimated annual income tax rates.
We have reclassified certain amounts previously reported in our financial statements to conform to the current presentation, including amounts related to discontinued operations. Unless noted otherwise, discussions in these notes pertain to our continuing operations.
2.    RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, which supersedes the revenue recognition guidance in Accounting Standard Codification (“ASC”) 605, Revenue Recognition. The new guidance clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and International Financial Reporting Standards. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes the most current revenue recognition guidance. In July 2015, the FASB approved a one-year deferral of the effective date of this ASU. With this deferral, the amended guidance is effective retrospectively for reporting periods (interim and annual) beginning after December 15, 2017. We are currently assessing the potential impact of this ASU on our consolidated financial position and results of operations.

In January 2016, the FASB issued ASU No. 2016-01, which revises the guidance in ASC 825-10, Recognition and Measurement of Financial Assets and Financial Liabilities, and provides guidance for the recognition, measurement, presentation, and disclosure of financial assets and liabilities. The guidance is effective for reporting periods (interim and annual) beginning after December 15, 2017, for public companies. We are currently assessing the potential impact of this ASU on our consolidated financial position and results of operations.

In February 2016, the FASB issued ASU No. 2016-02, which supersedes the lease accounting guidance in ASC 840, Leases. The new guidance which requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases with the exception of short-term leases. For lessees, leases will continue to be classified as either operating or finance leases in the income statement. Lessor accounting is similar to the current model but updated to align with certain changes to the lessee model. The guidance is effective for reporting periods (interim and annual) beginning after December 15, 2018, for public companies, with early adoption permitted. The new guidance must be adopted using a modified retrospective approach. We are currently assessing the potential impact of this ASU on our consolidated financial position and results of operations.

In March 2016, the FASB issued ASU No. 2016-09, which revises the guidance in ASC 718, Compensation - Stock Compensation, and will change how companies account for certain aspects of share-based payments to employees, including the income tax impact, classification on the statement of cash flows and forfeitures. The guidance is effective for reporting periods (interim and annual) beginning after December 15, 2017, for public companies. Early adoption is permitted. We are currently assessing the potential impact of this ASU on our consolidated financial position and results of operations.

In August 2016, the FASB issued ASU No. 2016-15, which revises the guidance in ASC 230, Statement of Cash Flows. The new guidance is intended to reduce the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows, and is effective for reporting periods (interim and annual) beginning after December 15, 2017, for public companies. We are currently assessing the potential impact of this ASU on our consolidated financial position and results of operations.
 
Recently Adopted Accounting Pronouncements
Effective January 1, 2016, the Company retrospectively adopted ASU No. 2015-03 and No. 2015-15 related to simplifying the presentation of debt issuance costs. The adoption of this new guidance resulted in a change to the presentation of deferred financing costs related to our credit facilities and 3.50% convertible senior notes due 2019 from an asset to a direct deduction from the corresponding debt liability, consistent with the presentation of debt discounts and premiums. Adoption did not impact the Company’s results of operations or cash flows for any period presented. See Note 15 - Long-Term Debt.


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Effective January 1, 2016, the Company adopted ASU No. 2015-05 which clarified how a customer in a cloud computing arrangement should determine whether the arrangement includes a software license. Under this new guidance, if a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The ASU did not change the customer's accounting treatment of service contracts. Previously, the Company was required to analogize to lease accounting guidance when determining the asset acquired in a software licensing arrangement. As permitted under the guidance, the Company adopted the new guidance prospectively to all new or materially modified arrangements entered into on or after the effective date. The adoption of this guidance did not impact the Company’s results of operations, financial position, or cash flows.
3.    EARNINGS PER SHARE ATTRIBUTABLE TO MONSTER WORLDWIDE, INC.
Basic earnings per share is calculated using the Company’s 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 diluted earnings per share due to their anti-dilutive effect.
A reconciliation of shares used in calculating basic and diluted (loss) earnings per share is as follows (shares in thousands):
 
Three months ended September 30,
 
Nine months ended September 30,
 
2016
 
2015
 
2016
 
2015
Basic weighted-average shares outstanding
88,932

 
90,340

 
88,846

 
89,853

Impact of stock options and non-vested stock under employee compensation plans(1)


627

 

 
1,006

Impact of 3.50% convertible senior notes due 2019(2)

 
5,872

 

 
3,714

Diluted weighted-average shares outstanding
88,932

 
96,839

 
88,846

 
94,573

Weighted-average anti-dilutive common stock equivalents
1,440

 
259

 
2,015

 
777

(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 three and nine months ended September 30, 2016, those potential shares totaled 617,286 and 694,023 related to non-vested stock under employee compensation plans, respectively, which are included in the weighted average anti-dilutive common stock equivalents above, in addition to 822,712 and 1,321,267 of out of the money anti-dilutive common stock equivalents, respectively.
(2)
On October 22, 2014, the Company consummated an offering of the Notes. Under the treasury stock method, the Notes will generally have a dilutive impact on earnings per share if the Company’s average stock price for the period exceeds approximately $5.33 per share of Monster’s common stock, the conversion price of the Notes. For the three and nine months ended September 30, 2016, the average stock price of Monster's common stock was $3.18 and $3.30, respectively, resulting in no potential dilutive impact for the three and nine months ended September 30, 2016. For the three and nine months ended September 30, 2015, the average stock price of Monster's common stock was $6.81 and $6.18, respectively, resulting in a potential dilutive impact of approximately 5,872,000 and 3,714,000 shares, respectively.
In connection with the pricing of the Notes, Monster entered into a capped call transaction which increases the effective conversion price of the Notes, and is designed to reduce potential dilution upon conversion of the Notes. Since the beneficial impact of the capped call is anti-dilutive, it is excluded from the calculation of earnings per share. See Note 15 - Long-Term Debt.
Share Repurchase Program
On October 27, 2015, the Board of Directors of the Company authorized a share repurchase program of up to $75,000 (the "Share Repurchase Program"). Under the Share Repurchase Program, shares of common stock may be purchased on the open market or through privately negotiated transactions from time-to-time through October 27, 2017. The timing and amount of purchases will be based on a percentage of future generated free cash flow, and can be adjusted periodically. The Share

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Repurchase Program does not obligate the Company to acquire any specific number of shares in any period, and may be modified, suspended, extended or discontinued at any time without prior notice. During the nine months ended September 30, 2016, the Company repurchased 1,066,451 shares for a total of $3,018, excluding commissions, at an average price of $2.83 per share. There were no share repurchases during the second and third quarters of 2016. Since the inception of this repurchase program, the Company repurchased 2,391,451 shares for a total of $11,008, excluding commissions, at an average price of $4.60 per share. The Company currently has $63,992 remaining under the Share Repurchase Program, subject to the following paragraph.
The Board of Directors of the Company has authorized the use of funds allocated to the Share Repurchase Program for the repurchase of the Notes. On March 22, 2016, the Company entered into a privately negotiated agreement to repurchase $10,000 in aggregate principal amount of the Notes for $9,475 in cash, plus accrued interest (See Note 15 - Long-Term Debt). After applying the funds utilized for such repurchase of the Notes to the amount remaining under the Share Repurchase Program, the Company currently has $54,517 available for future repurchases of shares of common stock under the Share Repurchase Program and/or future repurchases of the Notes.
4.    STOCK-BASED COMPENSATION
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, performance-based RSAs and RSUs and stock options. The Compensation Committee of the Company’s 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 Company’s 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 Company’s common stock on the date the award is approved to measure fair value for service-based and performance-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 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 vested RSAs and RSUs.

Compensation expense for stock option awards and service-based awards is recognized ratably over the requisite service period. For market-based awards, compensation expense is recognized over the requisite service period as derived using a Monte Carlo simulation model. If an award includes both a market and performance or service condition, the requisite service period is adjusted in the event the market condition is satisfied prior to the end of the derived service period. For performance-based awards, compensation expense is recognized based on the probability of achieving the performance conditions associated with the respective shares, as determined by management.
The Company recognized pre-tax compensation expense in the consolidated statements of operations related to stock-based compensation as follows, excluding discontinued operations:

 Three months ended September 30,
 
 Nine months ended September 30,

2016

2015
 
2016

2015
Non-vested stock, included in salaries and related
$
437


$
3,368

 
$
3,488


$
11,386


Performance-Based Awards - During the first nine months of 2016, the Company granted 2,773,663 RSUs, subject to the recipient's continued employment and certain specified performance-based conditions.
Service-Based Awards - During the first nine months of 2016, the Company granted an aggregate of 1,854,580 service-based RSUs. The RSUs vest in various increments on the anniversaries of the individual grant dates, with the majority vesting through June 8, 2020, subject to the recipient's continued employment or service through each applicable vesting date.

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There were no equity awards granted during the three months ended September 30, 2016.
The Company’s non-vested stock activity is as follows (shares in thousands):

 Nine months ended September 30,

2016

2015

 Shares

 Weighted Average Fair Value at Grant Date

 Shares

 Weighted Average Fair Value at Grant Date
Non-vested at beginning of period
4,571


$
4.95


8,554


$
4.85

Granted RSUs
4,628


$
3.12


1,314


$
5.03

Forfeited
(417
)

$
4.05


(1,003
)

$
4.90

Vested
(1,156
)

$
5.35


(4,136
)

$
4.92

Non-vested at end of period
7,626


$
3.83


4,729


$
4.82

As of September 30, 2016, the unrecognized compensation expense related to non-vested stock was $10,533 which is expected to be recognized over a weighted-average period of 1.7 years.
The Company’s stock option activity is as follows (shares in thousands):

 Nine months ended September 30,

2016

2015

 Shares

  Weighted Average Exercise Price

 Shares

  Weighted Average Exercise Price
Outstanding as of the beginning of the period
61


$
33.94


146


$
32.32

Exercised


$




$

Forfeited/expired/cancelled


$


(39
)

$
30.75

Outstanding at end of the period
61


$
33.94


107


$
32.89

Options exercisable at end of period
61


$
33.94


107


$
32.89

Aggregate intrinsic value of options exercised during the period
$




$



The Company has not granted any stock options subsequent to 2008 and all options were fully expensed prior to January 1, 2014.
On June 14, 2016, the Company issued 78,220 shares to a consultant in consideration for services under a consulting agreement entered into as part of a prior business combination. The securities were issued pursuant to the exemption contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
5.    BUSINESS COMBINATION
In the second quarter of 2016, the Company’s Careers-North America segment purchased Jobr, Inc., the leading mobile job discovery app. Consideration for the acquisition was $12,511 in cash, net of cash acquired, with $1,300 of the consideration in escrow and $3,011 of the consideration used to eliminate Jobr debt at the time of acquisition. The Company preliminarily recorded $10,845 of goodwill, $1,870 of purchased technology, $343 of other assets, and $557 of deferred tax and other liabilities related to the acquisition. The goodwill recorded is not expected to be deductible for tax purposes. Revenue and operating results of Jobr are not presented due to immateriality.

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6.    NONCONTROLLING INTEREST
In December 2013, the Company sold a 49.99% interest in JobKorea Ltd. (“JobKorea”), its then-wholly owned subsidiary in South Korea, to H&Q Korea for an aggregate purchase price of $90,000. Based on the terms of the agreement, Monster maintained a controlling interest in the subsidiary and, accordingly, continued to consolidate the results of JobKorea in its consolidated financial statements. In the fourth quarter of 2015, the Company sold its remaining 50.01% ownership position in JobKorea to H&Q Korea. See Note 7 - Discontinued Operations. The noncontrolling interest’s share of net income was $1,512 and $3,712 for the three and nine months ended September 30, 2015, respectively.
7.    DISCONTINUED OPERATIONS

In December 2013, H&Q Korea acquired 49.99% of JobKorea from Monster (see Note 6- Noncontrolling Interest). On September 28, 2015, the Company entered into an agreement to sell its 50.01% ownership position in JobKorea to H&Q Korea for KRW 101 billion, or approximately $85,000. The transaction closed on October 13, 2015 and is consistent with Monster's continued strategy of unlocking value and sharpening its focus on the Company's core online recruitment platform.

Operating results for JobKorea, which had previously been reported in the Careers-International segment, and included in the Company’s consolidated statement of operations, were reclassified as discontinued operations for all periods presented. Summarized results of our discontinued operations are as follows:
 
 Three months ended September 30,
 
 Nine months ended September 30,
 
2016
 
2015
 
2016
 
2015
Revenue
$

 
$
12,165

 
$

 
$
35,660




 


 


 


Income from discontinued operations, before tax
$

 
$
3,429

 
$

 
$
9,068

Income tax expense(1)

 
(1,266
)
 

 
(3,063
)
Income from discontinued operations, net of tax


2,163




6,005

Less: income from discontinued operations attributable to noncontrolling interest, net of tax


1,512




3,712

Income from discontinued operations attributable to Monster Worldwide, Inc., net of tax
$


$
651


$


$
2,293

(1)
Income tax expense related to the discontinued operation includes tax of JobKorea in addition to allocated corporate tax.
There were no assets or liabilities of discontinued operations as of September 30, 2016 or December 31, 2015.
8.    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.

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Level 3 - Inputs that are generally unobservable and typically reflect management’s 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 counterparty credit risk in its assessment of fair value. Observable or market inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s assumptions based on the best information available. There have been no transfers of assets or liabilities between the fair value measurement classifications during the nine months ended September 30, 2016.
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 September 30, 2016:

September 30, 2016

 Level 1

 Level 2

 Level 3

 Total
Assets:







Bank time deposits
$


$
25,148


$


$
25,148

U.S. and foreign government obligations

 
1,135

 

 
1,135

Foreign exchange contracts


13




13

Total Assets
$


$
26,296


$


$
26,296

Liabilities:







Foreign exchange contracts
$


$
6


$


$
6

Lease exit liabilities




7,908


7,908

Total Liabilities
$


$
6


$
7,908


$
7,914

The following table summarizes those assets and liabilities measured at fair value on a recurring basis as of December 31, 2015:

December 31, 2015

 Level 1

 Level 2

 Level 3

 Total
Assets:







Bank time deposits
$


$
33,791


$


$
33,791

Foreign exchange contracts


86




86

Total Assets
$


$
33,877


$


$
33,877

Liabilities:







Foreign exchange contracts
$


$
65


$


$
65

Lease exit liabilities




10,171


10,171

Total Liabilities
$


$
65


$
10,171


$
10,236

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 lease exit liabilities within the Level 3 tier relate to vacated facilities associated with previously discontinued operations, restructuring activities of the Company and consolidation of office facilities are recorded in accrued expenses and other current liabilities in the consolidated balance sheets. The liability is recognized and measured based on a discounted cash flow model when the cease use date has occurred. 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. In the third quarter of 2016, the Company entered into a sublease and vacated space in its New York, New York, location. In the first quarter of 2015, as part of its "Reallocate to Accelerate" program, the Company vacated space in its Bedford, Massachusetts location (see Note 11 - Restructuring and Other Special Charges).

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The changes in the fair value of the Level 3 liabilities are as follows:

Lease Exit Liability

Nine months ended September 30,

2016

2015
Balance, Beginning of Period
$
10,171


$
8,515

Expense
676


4,604

Cash payments and changes in fair value
(2,939
)

(3,470
)
Balance, End of Period
$
7,908


$
9,649

The carrying value for cash and cash equivalents, accounts receivable, accounts payable, certain accrued expenses and other current liabilities approximate fair value because of the immediate or short-term maturity of these financial instruments. The Company’s debt relates to its 3.50% convertible senior notes due 2019 and borrowings under its revolving credit facilities and term loan (see Note 15 - Long-Term Debt). Our borrowings under our credit facilities approximate fair value due to the debt bearing fluctuating market interest rates. The carrying amounts of the convertible senior notes approximate fair value giving effect for the term of those notes and the effective interest rates.
9.    CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME
The amounts recognized in accumulated other comprehensive income were as follows:

 Foreign Currency Translation Adjustments

Nine months ended September 30,

2016

2015
Beginning balance
$
1,926


$
9,245

Other comprehensive income (loss) before reclassifications
32


(7,805
)
Amounts reclassified from accumulated other comprehensive income



Net current period change in accumulated other comprehensive income
32


(7,805
)
Ending balance
$
1,958


$
1,440

10.    INVESTMENTS
Equity Method Investments
The Company accounts for investments through which it holds a noncontrolling interest and has the ability to exert significant influence using the equity method of accounting, recording its owned percentage of the investment’s net results of operations in (Loss) income in equity interests, net, in the Company’s consolidated statement of operations. Such losses reduce the carrying value of the Company’s investment and gains increase the carrying value of the Company’s investment. Dividends paid by the equity investee reduce the carrying amount of the Company’s investment.
(Loss) income in equity interests, net are as follows by equity investment:
 
 Three months ended September 30,
 
 Nine months ended September 30,
 
2016
 
2015
 
2016
 
2015
Alma Career Oy
$
406

 
$
249

 
$
1,206

 
$
720

kununu US, LLC
(628
)
 

 
(1,219
)
 

CareerOne Pty Ltd

 

 

 
(399
)
(Loss) income in equity interests, net
$
(222
)
 
$
249

 
$
(13
)
 
$
321


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Alma Career Oy
Prior to January 3, 2014, the Company had a 25% equity investment in a company located in Finland related to a business combination completed in 2001, with the remaining 75% held by Alma Media Corporation ("Alma Media"). Alma Media is a leading media company based in Finland, focused on digital services and publishing in Finland, the Nordic countries, the Baltics and Central Europe. Effective January 3, 2014, the Company expanded its relationship with Alma Media. Monster and Alma Media each contributed several additional entities and businesses into the then-existing joint venture and formed a significantly larger joint venture, Alma Career Oy, where Monster initially had an equity ownership of 15% with the opportunity to increase ownership up to 20%. The Company also contributed cash of $6,500. On October 1, 2015, the Company exercised this option and contributed cash of $2,369 to Alma Career Oy, resulting in a 16.7% equity investment in the entity. The Company accounts for this investment under the equity method of accounting due to its ability to exert significant influence over the financial and operating policies of Alma Career Oy, primarily through Monster's representation on the board of directors.
The Company received a dividend of $1,235 and $835 in the second quarter of 2016 and 2015, respectively, related to this investment. The carrying value of the investment was $20,996 and $18,955 as of September 30, 2016 and 2015, respectively, and is recorded on the consolidated balance sheet as a component of Investment in unconsolidated affiliates.
kununu US, LLC
In February 2016, the Company formed a joint venture with kununu GmbH, a subsidiary of XING AG. kununu GmbH is the European leader in providing employer transparency through ratings, reviews, and employer branding. Initially focused on the U.S. market, the purpose of the joint venture, kununu US, LLC ("Kununu"), is to test the delivery of content-rich employer reviews and ratings sourced from current and former employees and candidates. This information is designed to help better inform the consumers about the companies they might work for, and provides several new tools for employers to better manage their talent brands and engage prospective candidates, including sellable branding and brand management products.
The Company has a 50% ownership interest in Kununu and contributed cash of $3,000 to the joint venture in the first quarter of 2016. The joint venture represents a variable interest entity ("VIE") primarily due to the equity investment at risk not being sufficient to finance its activities without additional subordinated financial support. The Company is not considered the primary beneficiary primarily because the Company does not have the power to direct the activities that most significantly impact Kununu's economic performance. The Company's maximum loss exposure is limited to the committed capital. The Company accounts for this investment under the equity method of accounting due to its ability to exert significant influence over the financial and operating policies of Kununu, primarily through Monster's representation on the board of directors.
The carrying value of the investment was $1,199 as of September 30, 2016 and is recorded on the consolidated balance sheet as a component of Investment in unconsolidated affiliates.
In connection with the investment, the Company entered into a Cooperation Agreement with Kununu to provide sales services, support, and consulting for Kununu for an annual fee of $1,500. The annual fee is being recognized on a straight-line basis as reduction of salary and related expense, with approximately $500 and $1,000 recognized during the three and nine months ended September 30, 2016, respectively.
CareerOne Pty Ltd
In 2008, the Company acquired a 50% equity interest in a company located in Australia, CareerOne Pty Limited ("CareerOne"). During the first quarter of 2015, the Company expended an additional $451 for additional working capital requirements relating to CareerOne. On March 31, 2015, the Company sold the majority of its 50% equity interest in CareerOne in an arms-length transaction, leaving the Company with a 10% interest. Total cash received from the transaction was $9,128, and the sale resulted in the recognition of a pre-tax gain of $8,849 in the first quarter of 2015. As a result of the sale, the Company no longer has the ability to exert significant influence over CareerOne. Therefore, effective March 31, 2015, the remaining 10% interest retained by the Company is being accounted for under the cost method. See Note 16Income Taxes for discussion of the tax impact of the transaction.
11.    RESTRUCTURING AND OTHER SPECIAL CHARGES
Reallocate to Accelerate
On February 10, 2015, the Company committed to take a series of cost savings initiatives to reduce costs globally while continuing to support the Company’s strategy. The initiatives included a global workforce reduction of approximately 300 associates (excluding discontinued operations), lease exit costs, impairment of certain assets, and office and general expense

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controls. No charges related to these initiatives were recognized in the three and nine months ended September 30, 2016, and the Company does not expect to incur additional charges in future periods related to this program. The following table displays a roll forward of the restructuring and other special charges and related liability balances associated with the program:
 
 Accrual at December 31, 2015

 Cash Payments

 Accrual at September 30, 2016
Workforce reduction
$
4,309


$
(3,829
)

$
480

Consolidation of office facilities
4,767


(1,085
)

3,682

Other costs and professional fees
645


(284
)

361

Total
$
9,721


$
(5,198
)

$
4,523

12.    PROPERTY AND EQUIPMENT, NET
The Company’s property and equipment balances are as follows:

September 30,
2016

December 31,
2015
Capitalized software costs
$
165,162


$
178,146

Furniture and equipment
15,697


15,632

Leasehold improvements
36,310


35,846

Computer and communications equipment
151,098


152,563

 
368,267


382,187

Less: accumulated depreciation
291,453


272,044

Property and equipment, net
$
76,814


$
110,143

Depreciation expense was $10,160 and $29,068 for the three and nine months ended September 30, 2016, respectively. Depreciation expense was $10,416 and $31,684 for the three and nine months ended September 30, 2015, respectively.
Long-lived assets, other than goodwill and indefinite lived intangible assets, 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. As a result of recent operating results, and in connection with the completion of a formal goodwill impairment analysis during the third quarter of 2016, as described in Note 13 - Goodwill and Intangible Assets, the Company recognized a pre-tax impairment charge of $31,400 on capitalized software costs during the third quarter of 2016. This charge is included as a component of Impairment of other assets on the consolidated statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2016. On a net of tax basis, the charge was $18,997 for the three and nine months ended September 30, 2016, after recognizing a tax benefit of $12,403. See Note 16 – Income Taxes for discussion on the tax impact of the impairment charge. This charge does not impact our liquidity, cash flows from operations, future operations, or compliance with debt covenants.

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13.    GOODWILL AND INTANGIBLE ASSETS
Goodwill
A summary of changes in goodwill is as follows:
 
 Careers - North America
 
 Careers - International
 
 Total
Balance as of December 31, 2015:
 
 
 
 
 
Goodwill
$
774,765

 
$
310,184

 
$
1,084,949

Accumulated impairment losses
(325,800
)
 
(262,650
)
 
(588,450
)
Net goodwill as of December 31, 2015
448,965

 
47,534

 
496,499

Acquisition activity(1)
10,845

 

 
10,845

Impairment
(289,402
)
 

 
(289,402
)
Translation and other adjustments, net

 
729

 
729

Balance as of September 30, 2016:
 
 
 
 
 
Goodwill
785,610

 
310,913

 
1,096,523

Accumulated impairment losses
(615,202
)
 
(262,650
)
 
(877,852
)
Net goodwill as of September 30, 2016
$
170,408

 
$
48,263

 
$
218,671

(1) See Note 5 - Business Combination.
The Company tests the recorded amount of goodwill for recovery on an annual basis in the fourth quarter of each fiscal year, or more frequently when events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value. The Company has two reporting units which are equivalent to our two operating segments: Careers-North America and Careers-International.
In determining if goodwill is impaired, we estimate the fair value of the reporting unit and compare it to the carrying value of the assets and liabilities of that reporting unit. The Company determines the fair value of its reporting units using a weighting of fair values derived from the income approach and the market approach, depending on the availability of relevant market comparable information. Under the income approach, the Company calculates the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on management’s estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the business’s ability to execute on the projected cash flows. Under the market approach, the Company estimates the fair value based on market multiples of cash flows and earnings derived from comparable publicly-traded companies with similar operating and investment characteristics as the reporting unit and considering a reasonable control premium. The weighting of the fair value derived from the market approach differs for each reporting unit depending on the level of comparability of these publicly-traded companies to the reporting unit. Due to the inherent uncertainty involved in making these estimates, actual results could differ from those estimates.
As a corroborative source of information, the Company reconciles the estimated aggregate fair values of its reporting units within a reasonable range of its market capitalization, which includes an estimated control premium (an adjustment reflecting an estimated fair value on a control basis) to verify reasonableness of the fair value of its reporting units obtained using the aforementioned methods. The control premium is estimated based upon control premiums observed in comparable market transactions. As none of our reporting units are publicly-traded, individual reporting unit fair value determinations do not directly correlate to the Company’s stock price. We monitor changes in our share price to ensure our reconciled market capitalization continues to exceed or is not significantly below the carrying value of our net assets. In the event our market capitalization does decline below its book value, we consider the length and severity of the decline and the reason for the decline when assessing whether potential goodwill impairment exists. Further, if a reporting unit does not appear to be achieving it’s the projected growth plan used in determining its fair value, we will reevaluate the reporting unit for potential goodwill impairment based on revised projections, as available.


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Table of Contents

On August 8, 2016, the Company entered into a merger agreement that provides for the Company to be merged with a subsidiary of another company in a transaction in which the Company’s shareholders will receive $3.40 for each share of common stock of the Company, par value $0.001 per share, subject to customary closing conditions. See Note 1 - Description of Business and Basis of Presentation for further details.

During the second quarter of 2016, in consideration of the recent decline in the Company’s market capitalization, recent operating results, and the implications the agreed-upon sale price had on the valuation of goodwill, the Company recognized an estimated pre-tax impairment charge of $142,002 to the Careers-North America reporting unit. Due to the limited time period from the indication of the impairment to August 9, 2016, the filing date of the second quarter 2016 Form 10-Q, and the complexities involved in estimating the fair value of certain assets and liabilities, the Company had not finalized its impairment analysis prior to filing its Form 10-Q for the second quarter of 2016. The preliminary estimate represented the Company’s then-best estimate of the goodwill impairment loss to be incurred subject to the completion of a formal impairment analysis in accordance with ASC 350, Intangibles - Goodwill and Other, during the third quarter of 2016.

During the third quarter of 2016, with the assistance of a third party valuation firm, the Company completed a formal impairment analysis. The first step of the impairment evaluation process compares the fair value of our reporting units to their respective carrying values. The Careers-International reporting unit had a fair value that substantially exceeded its carrying value. The carrying value of the Careers-North America reporting unit exceeded its fair value and therefore, the Company was required to complete the second step of the impairment evaluation for that reporting unit.

The second step of the impairment evaluation calculates the implied fair value of the goodwill, which is then compared to the carrying value of goodwill. The implied fair value of goodwill is calculated by valuing all identifiable assets and liabilities of the reporting unit with potential impairment, as indicated in step one, at the hypothetical fair value, assuming the reporting unit had been acquired in a business combination. The excess fair value of the reporting unit over the fair value of its identifiable assets and liabilities is the implied fair value of goodwill. Based upon the calculation of the implied fair value of goodwill, it was determined that the carrying value of goodwill exceeded the implied fair value of goodwill for the Careers-North America reporting unit by an amount greater than the estimated impairment charge recognized during the second quarter of 2016. As a result, the Company recorded an additional pre-tax goodwill impairment charge of $147,400 during the third quarter of 2016, bringing the total pre-tax impairment charge to $289,402 recognized during the nine months ended September 30, 2016. On a net of tax basis, the charge was $119,232 and $234,097 for the three and nine months ended September 30, 2016, respectively, after recognizing a tax benefit of $28,168 and $55,305, respectively. See Note 16 – Income Taxes for discussion on the tax impact of the impairment charges. These charges do not impact our liquidity, cash flows from operations, future operations, or compliance with debt covenants.

In conjunction with the second step of the Company's goodwill impairment analysis, an impairment analysis was triggered on an amortizable trademark, resulting in a pre-tax impairment charge of $3,435 recognized during the three months ended September 30, 2016. In addition, an impairment analysis was triggered on capitalized software costs. See Note 12 - Property and Equipment, Net. These charges are recorded on the consolidated statements of operations and comprehensive income (loss) as a component of Impairment of other assets for the three and nine months ended September 30, 2016.
Indefinite-lived intangibles
Indefinite-lived intangible assets are primarily evaluated on an annual basis, generally in conjunction with the Company’s evaluation of goodwill balances, unless impairment indicators exist between annual impairment tests. In assessing fair value, we generally utilize a relief from royalty method. If the carrying value of the indefinite-lived intangible assets exceeds the fair value of the asset, the carrying value is written down to fair value in the period identified. During the second quarter of 2016, the Company performed an impairment analysis on two indefinite-lived intangible assets. The analysis resulted in the recognition of a pre-tax impairment charge of $3,400 during the second quarter. This charge is included as a component of Impairment of other assets on the consolidated statements of operations and comprehensive income (loss) for the nine months ended September 30, 2016.
14.    FINANCIAL DERIVATIVE INSTRUMENTS
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, non-functional currency inter-company accounts receivable, and significant non-functional currency denominated transactions with third parties.

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Table of Contents

The fair value position (recorded in interest and other, net, in the consolidated statements of operations and comprehensive income (loss)) of our derivatives are as follows:

September 30, 2016

 Component of

 Notional Amount

 Maturity
Dates

 Fair Value
 Designated as Hedges under ASC 815







None


$




$

 Not Designated as Hedges under ASC 815









Foreign currency exchange forwards
Prepaid and other

10,472


October 2016

13

Foreign currency exchange forwards
Accrued expenses and other current liabilities

5,686


October 2016

(6
)
Total Derivative Instruments


$
16,158




$
7

 
December 31, 2015
 
Component of

Notional
Amount

Maturity
Dates

Fair Value
Designated as Hedges under ASC 815
 

 

 

 
None


$




$

Not Designated as Hedges under ASC 815
 

 

 

 
Foreign currency exchange forwards
Prepaid and other

13,251


January 2016

86

Foreign currency exchange forwards
Accrued expenses and other current liabilities

14,044


January 2016

(65
)
Total Derivative Instruments


$
27,295




$
21

The changes in the fair value of our forward contracts are as follows:

  Location of Realized and Unrealized Net Gains (Losses) and Changes in the Fair Value of Forward Contracts

  Amount of Realized and Unrealized Net Gains (Losses) and Changes in the Fair Value of Forward Contracts


 

 Three months ended September 30,
 
 Nine months ended September 30,

 

2016

2015
 
2016

2015
Foreign currency exchange forwards
Interest and other, net

$
95


$
(321
)
 
$
(421
)

$
349

 
Discontinued operations



(170
)



(170
)
 


$
95


$
(491
)

$
(421
)

$
179

15.    LONG-TERM DEBT
Long-term debt, net of discounts and debt issuance costs where applicable, is summarized as follows:

September 30, 2016

 December 31, 2015
3.50% convertible senior notes due 2019
$
133,750


$
143,750

Term loan facility
63,722


71,431

Unamortized discount on convertible senior notes
(11,903
)
 
(15,932
)
Unamortized debt issuance costs
(3,430
)
 
(4,977
)

182,139


194,272

Less: current portion of long-term debt, net
11,314


9,773

Long-term debt, net, less current portion
$
170,825


$
184,499


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Table of Contents

3.50% Convertible Senior Notes Due 2019
On October 22, 2014, the Company consummated an offering of $143,750 aggregate principal amount of its 3.50% convertible senior notes due 2019 (the “Notes”), which includes $18,750 in aggregate principal amount of Notes sold pursuant to the over-allotment option that was previously granted to the initial purchasers of the Notes and exercised by the initial purchasers on October 21, 2014. The Company received net proceeds of $139,031 from the sale of the Notes, after deducting fees and expenses of $4,719. The Notes are unsecured, senior obligations of Monster, that bear interest at a rate of 3.50% per annum, payable in arrears on April 15 and October 15 of each year to holders of record at the close of business on the preceding April 1 and October 1, respectively. The Notes will mature on October 15, 2019, unless converted or repurchased in accordance with their terms prior to such date.
In connection with the offering of the Notes, Monster entered into capped call transactions with an affiliate of one of the initial purchasers. The Company used $16,531 of the net proceeds to pay for the cost of the capped call transactions, $82,500 to repay in full the term loan outstanding as of the date of issuance, and $40,000 to repay a portion of the loans outstanding under the revolving credit facility.
The conversion rate for the Notes is initially 187.7405 shares per one thousand dollar principal amount of the Notes, which is equivalent to an initial conversion price of approximately $5.33 per share of Monster’s common stock (“Common Stock”), and is subject to adjustment in certain circumstances. In June 2015, Monster received stockholder approval to issue upon conversion of the Notes more than 19.99% of the outstanding shares of Common Stock. As a result of this approval, Monster has the ability to settle conversions of the Notes by paying or delivering, as the case may be, cash, shares of Common Stock or a combination thereof, at its election. Monster will not have the right to redeem the Notes prior to maturity. The maximum number of shares of common stock the Notes are convertible into is approximately 25,000,000, and is subject to adjustment under certain circumstances.
The Notes will be convertible at the option of holders only under the following circumstances:
1.
Prior to the business day immediately preceding January 15, 2019, during any calendar quarter (and only during such calendar quarter), if the last reported sale price of Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
2.
Prior to the business day immediately preceding January 15, 2019, during the five business day period after any five consecutive trading day period (the “Measurement Period”) in which the trading price as defined in the Indenture per one thousand dollar principal amount of the Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of Common Stock and the conversion rate on each such trading day;
3.
Prior to the business day immediately preceding January 15, 2019, upon the occurrence of specified corporate events; or
4.
At any time on or after January 15, 2019 until the close of business on the second scheduled trading day immediately preceding the October 15, 2019 maturity date.
Further, holders may require the Company to purchase all or a portion of their Notes at a purchase price in cash equal to 100% of the principal amount at maturity of the Notes to be purchased, plus accrued and unpaid interest upon certain fundamental changes. See Note 1 - Description of Business and Basis of Presentation for information surrounding the impact of the merger agreement entered into by the Company on August 8, 2016 on the Notes.
In accordance with ASC 470-20, Debt with Conversion and Other Options, the Notes were separated into debt and equity components and assigned a fair value. The value assigned to the debt component was the estimated fair value, as of the issuance date, of similar debt without the conversion feature. The difference between the cash proceeds and this estimated fair value represents the value which was assigned to the equity component and was recorded as a debt discount. The debt discount is being amortized using the effective interest method from the date of issuance through the October 15, 2019 maturity date.
The initial debt component of the Notes was valued at $122,829, based on the contractual cash flows discounted at an appropriate market rate for non-convertible debt at the date of issuance. The carrying value of the permanent equity component reported in additional paid-in-capital was initially valued at $20,228, which is net of $693 of fees and expenses allocated to the equity component.

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Table of Contents

The capped call transactions are expected generally to reduce potential dilution to the Common Stock and/or offset cash payments Monster would have to make in excess of the principal amount of any converted Notes in the event that the market price per share of Common Stock, as measured under the terms of the capped call transaction, is greater than the strike price of the capped call transaction, which will initially correspond to the conversion price of the Notes and be subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the Notes. The cap price under the capped call transaction is initially $7.035 per share, and is subject to certain adjustments under the terms of the capped call transaction. The capped call transaction has been included as a net reduction to additional paid-in capital within stockholders’ equity in accordance with ASC 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity.

On March 22, 2016, the Company entered into a privately negotiated agreement to repurchase $10,000 in aggregate principal amount of the Notes for $9,475 in cash, plus accrued interest. The Board of Directors of the Company has authorized the Company to employ funds allocated to its stock repurchase program (see Note 3 - Earnings per Share Attributable to Monster Worldwide, Inc.) for the repurchase of the Notes. The transaction closed on March 28, 2016, and it was determined that the repurchase of the principal amount shall be accounted for as a debt extinguishment in accordance with ASC 470 - Debt. Following the derecognition of the associated debt discount and deferred financing fees, a loss on extinguishment of $37 was recorded during the first quarter of 2016. In connection with the repurchase, the Company unwound a portion of the capped call transactions entered into in connection with the issuance of the Notes. As a result of the unwind, the Company received $409 on March 31, 2016, which was recognized as an increase to additional paid-in-capital during the first quarter of 2016.

As of September 30, 2016, $133,750 in aggregate principal amount of the Notes was outstanding.
The consummation of the Merger will constitute a “Fundamental Change” and a “Make-Whole Fundamental Change” under the Indenture. Following the consummation of the Merger, the Company expects Parent to cause the Company to, as required by the terms of the Indenture, launch a tender offer to purchase the Notes at their principal amount plus accrued and unpaid interest (the “Repurchase Right”). In connection with the Merger, holders of the Notes also have the right, in lieu of the Repurchase Right, to convert each one thousand dollar principal amount of their Notes for cash at the then-applicable conversion rate under the Indenture pursuant to the terms of a supplemental indenture, however this would result in holders receiving less cash for their Notes than if they had instead exercised the Repurchase Right.
Credit Facilities
On March 22, 2012, the Company amended and restated its then-existing credit agreement in its entirety (the “Second Amended Credit Agreement”). The Second Amended Credit Agreement provided the Company with a $225,000 revolving credit facility and a $100,000 term loan facility, for a total of $325,000 in credit available to the Company. The obligations under the Second Amended Credit Agreement were set to mature on March 22, 2015. The Second Amended Credit Agreement did not qualify as a debt extinguishment in accordance with ASC 470 - Debt, and all financing fees incurred were deferred and were being amortized through March 2015.
On October 31, 2014, the Company amended and restated the Second Amended Credit Agreement (the “Third Amended Credit Agreement”). The Third Amended Credit Agreement provides the Company with a $100,000 revolving credit facility and $90,000 term loan facility, providing for a total of $190,000 in credit available to the Company. The borrowings under the Third Amended Credit Agreement were used to satisfy the obligations under the Second Amended Credit Agreement of $98,900 under the revolving credit facility. Each of the revolving credit facility and the term loan facility matures on October 31, 2017. On February 5, 2015, the Company entered into an amendment of the Third Amended Credit Agreement to provide the Company with flexibility in connection with its "Reallocate to Accelerate" initiatives. The amendment provided that up to $20,000 of costs and restructuring charges incurred during the fiscal year ended December 31, 2015 will be added back to Consolidated EBITDA, a defined term in the Third Amended Credit Agreement, which is a component of the Consolidated Leverage Ratio (as defined) and the Consolidated Fixed Charge Coverage Ratio (as defined).
The Third Amended Credit Agreement partially qualifies as a debt extinguishment in accordance with ASC 470 - Debt. Accordingly, the Company expensed $388 of financing fees classified as a debt extinguishment through interest & other, net during the fourth quarter of 2014. The remaining $3,080 of financing fees is being deferred and amortized through October 2017.
The Company is required to make quarterly amortization payments on the outstanding principal amount of the term loans, with $3,083 payable on each of December 31, 2016, March 31, 2017, June 30, 2017, and September 30, 2017, and the remaining balance of the term loan due at maturity.

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Table of Contents

Borrowings under the Third Amended Credit Agreement bear interest at a rate equal to either (i) the London Interbank Offered Rate (“LIBOR”) plus a margin ranging from 250 basis points to 325 basis points depending on the Consolidated Leverage Ratio as defined in the Third Amended Credit Agreement or upon the Company’s election (ii) the sum of (A) the highest of (1) the Agent’s prime rate, (2) the sum of 0.50% plus the overnight federal funds rate on such day or (3) LIBOR plus 1.0%, plus (B) a margin ranging from 150 basis points to 225 basis points depending on the Company’s 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 250 basis points to 325 basis points (depending on the Consolidated Leverage Ratio); and (ii) a commitment fee on the unused portion of the revolving credit facility at a rate per annum ranging from 35 basis points to 50 basis points (depending on the Consolidated Leverage Ratio).
The Third Amended Credit Agreement contains financial covenants requiring the Company to maintain: (i) a consolidated leverage ratio of no more than 2.75 to 1.00, as of the end of each fiscal quarter ending after the closing date through the fiscal quarter ending March 31, 2015, and 2.50 to 1.00, as of the end of the fiscal quarter ending June 30, 2015, and each fiscal quarter ending thereafter; and (ii) a consolidated Fixed Charge Coverage Ratio, as defined in the Third Amended Credit Agreement, of at least 1.50 to 1.00. The Third Amended Credit Agreement also contains various other negative covenants, including restrictions on incurring indebtedness, creating liens, mergers, dispositions of property, dividends and stock repurchases, acquisitions and other investments and entering into new lines of business. The Third Amended Credit Agreement also contains various affirmative covenants, including covenants relating to the delivery of financial statements and other financial information, maintenance of property, maintenance of insurance, maintenance of books and records, further assurances regarding collateral and compliance with environmental laws. The Third Amended Credit Agreement is secured by substantially all of the Company’s domestic assets, other than real estate and certain other excluded assets. As of September 30, 2016, the Company was in full compliance with its covenants.
At September 30, 2016, the utilized portion of this credit facility was $63,722 in borrowings on the term loan facility, no borrowings on the revolving credit facility, and $90 in outstanding letters of credit. The portion of the term loan that is due within one year is $12,333 and is classified as short-term in the consolidated balance sheet, net of deferred financing fees of $1,019. The remaining amount outstanding on the term loan is classified as long-term debt in the Company’s consolidated balance sheet. As of September 30, 2016, based on the calculation of the maximum consolidated leverage ratio, $99,910 of the Company’s revolving credit facility was available. At September 30, 2016, the one month BBA LIBOR rate, the agent’s prime rate, and the overnight federal funds rate were 0.53%, 3.50% and 0.29%, respectively. As of September 30, 2016, the Company used the one month BBA LIBOR rate for the interest rate on these borrowings with an interest rate of 3.27%.

Merger Sub’s acquisition of the Shares tendered in the Offer results in a “change of control” under the Third Amended Credit Agreement, which entitles the lenders holding more than 50% of the commitments under the Third Amended Credit Agreement to declare all amounts borrowed thereunder due and payable. The Company expects that, upon the consummation of the Merger, all indebtedness, liabilities and other obligations owing thereunder will be repaid by Parent on behalf of the Company, except for a standby letter of credit in the original face amount of approximately $88, which will remain outstanding and be secured by cash collateral.
16.    INCOME TAXES
The benefit from income taxes includes 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 geographic mix of earnings in various tax jurisdictions and the applicable rates. Our interim provision for income taxes is measured using an estimated annual effective tax rate, adjusted for discrete items that occur within the periods presented. The tax effect of discrete items is recorded in the quarter in which they occur. Our future effective tax rates could be adversely affected by earnings being lower than anticipated in countries with lower statutory rates, greater losses than anticipated in countries with lower statutory tax rates, increases in recorded valuation allowances of tax assets, or changes in tax laws or interpretations thereof. Our effective tax rate differs from the Federal United States statutory tax rate of 35% due to accrual of state taxes, non-deductible expenses, foreign earnings and losses taxed at different rates, accrual of interest on tax liabilities, and the effect of valuation allowances on deferred tax assets. We record valuation allowances primarily on tax benefits of losses arising in certain unprofitable countries in international markets and certain U.S. Foreign Tax credits.

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Table of Contents

The tax provision during the nine months ended September 30, 2016 was increased by approximately $3,452 of discrete items, consisting primarily of tax valuation allowances recorded on tax benefits of current year operating losses in certain foreign tax jurisdictions, deficiencies in tax benefits on stock based compensation, and accrued interest on unrecognized tax positions. In addition, during the nine months ended September 30, 2016, the Company recorded pre-tax charges for impairments of goodwill and other assets in the amounts $289,402 and $38,235, respectively. The Company recorded a deferred (non-cash) tax benefit of $55,305 with respect to the portion of impaired goodwill which is deductible for tax purposes, and a benefit of $14,491 related to the other asset impairment during the nine month period ended September 30, 2016. Of the goodwill impairment related tax benefits, $28,168 was recognized during the third quarter of 2016, with $27,137 recognized during the second quarter. Of the other asset impairment related tax benefits, $13,759 was recognized during the third quarter of 2016, with $732 recognized during the second quarter. Total tax benefits recognized during the nine months ended September 30, 2016 for these items was $69,796. See Note 13 - Goodwill and Intangible Assets for additional details.
During the three months ended September 30, 2016, the Company increased the tax provision by approximately $25,000 due to net increases to tax valuation allowances, primarily on the deferred tax assets in the United States for foreign tax credit carryovers. The pre-tax goodwill impairment charge of $147,400 recognized during the third quarter of 2016 gave rise to a deferred tax asset by reducing the financial statement basis in certain tax-amortizable goodwill below its net tax basis, resulting in significantly higher deferred tax assets to be considered for realization. After consideration of all available positive and negative evidence, the Company concluded an increase to the valuation allowance was necessary, resulting in the increase to the tax provision. Such evidence included recent operating history, updated business forecasts, reversals of taxable temporary differences and the Company's projected future taxable income. As of September 30, 2016, the Company's total net deferred tax asset was $40,117, comprised of $128,555 of net tax assets, net of a recorded valuation allowance of $88,438.
In addition, during the three months ended September 30, 2016, as a result of expirations of statutes of limitations, the Company recognized $3,443 of previously unrecognized tax benefits, and reversed an asset for recoverable foreign tax benefits of $2,379, resulting in a net tax benefit of $1,064 which impacted the effective tax rate. The Company also settled a tax examination and reversed previously accrued taxes and accrued interest of $703 and $1,268, respectively, which, net of deferred tax benefits, resulted in a net credit to the tax provision of $1,224. The total benefit reflected in the tax provision for the third quarter of 2016 due to recognition of previously unrecognized tax benefits and reversals of accrued interest thereon was $2,288. The tax matters concerned relate to the allocation of income among tax jurisdictions.
The tax provision during the nine months ended September 30, 2015 reflects a provision of $1,093 attributable to discrete items, consisting primarily of a net tax benefit of $4,034 due to a loss in our remaining investment in a joint venture in China, net of a tax provision due to a gain related to the partial sale of our equity interest in a company located in Australia (see Note 10 - Investments), a provision for increases to tax valuation allowances of $3,726 on tax benefits of current year losses incurred in certain foreign tax jurisdictions, and a provision of $1,401 for other discrete items. In addition, as a result of settlement of a tax examination during the first quarter of 2015, the Company recorded a tax benefit due to recognition of previously unrecognized tax positions of $10,424 which, net of deferred tax benefits and valuation allowances, impacted the effective rate by $6,776. The Company also reversed accrued interest and penalties on unrecognized tax positions of $12,607 which, on a net of tax basis, impacted the effective tax rate by $8,977. In the three months ended September 30, 2015, as a result of expirations of statutes of limitations, the Company recognized previously unrecognized tax benefits of $2,828, and reversed an asset for recoverable foreign tax benefits of $1,986, resulting in a net tax benefit of $842, which impacted the effective tax rate. The total benefit reflected in the tax provision in the nine months ended September 30, 2015 relating to recognition of previously unrecognized tax positions, and reversals of accrued interest and penalties thereon, was $16,595. The tax matters relate primarily to the allocation of income among tax jurisdictions.
The Company is currently under examination by several domestic and international tax authorities, including the United States Internal Revenue Service. Presently, no material adjustments have been proposed. Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. The gross recorded liability for uncertain tax positions (inclusive of estimated interest and penalties thereon) as of September 30, 2016 and December 31, 2015 is recorded on the Company’s consolidated balance sheets as long-term income taxes payable of $31,904 and $36,348, respectively. Interest and penalties related to underpayment of income taxes are classified as a component of income tax expense in the consolidated statements of operations and comprehensive income (loss). The Company estimates that it is reasonably possible that unrecorded tax benefits may be reduced by an amount ranging from $0 to $9,500 in the next twelve months due to expirations of statutes of limitations or settlement of tax examinations. The tax matters concerned relate to the allocation of income among jurisdictions and the amount of prior year tax loss carryovers.

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Table of Contents

17.    SEGMENT AND GEOGRAPHIC DATA
The Company conducts business in two reportable segments: Careers-North America and Careers-International. Corporate operating expenses are not allocated to the Company’s reportable segments. See Note 1 - Description of Business and Basis of Presentation for a description of our operating segments. The following tables present the Company’s operations by reportable segment and by geographic region:
 
 Three months ended September 30,
 
 Nine months ended September 30,
 
2016

2015
 
2016

2015
Revenue
 
 
 
 



Careers – North America
$
99,745


$
119,449

 
$
312,600


$
361,685

Careers – International
45,008


47,633

 
140,852


146,009

Revenue
$
144,753


$
167,082

 
$
453,452


$
507,694

Operating (Loss) Income
 
 
 
 



Careers – North America
$
(178,201
)

$
25,739

 
$
(294,601
)

$
64,324

Careers – International
(4,762
)

(8,581
)
 
(16,629
)

(34,464
)

(182,963
)

17,158

 
(311,230
)

29,860

Corporate expenses
(10,248
)

(6,325
)
 
(24,226
)

(27,974
)
Operating (Loss) Income
$
(193,211
)

$
10,833

 
$
(335,456
)

$
1,886

Depreciation and Amortization
 
 
 
 
 
 
 
Careers – North America
$
7,745


$
7,149

 
$
21,861


$
21,944

Careers – International
2,968


3,677

 
8,611


10,771


10,713


10,826

 
30,472


32,715

Corporate expenses
243


260

 
739


970

Depreciation and Amortization
$
10,956


$
11,086

 
$
31,211


$
33,685

Restructuring and Other Special Charges
 
 
 
 



Careers – North America
$


$
752

 
$


$
12,315

Careers – International


2,028

 


14,353

Corporate expenses



 


2,119

Restructuring and Other Special Charges
$


$
2,780

 
$


$
28,787

Goodwill and Other Asset Impairment



 



Careers – North America
$
182,235


$

 
$
327,637


$

Careers – International



 



Corporate expenses



 



Goodwill and Other Asset Impairment
$
182,235


$

 
$
327,637


$

Revenue by Geographic Region (a)
 
 
 
 



United States
$
97,209


$
116,328

 
$
304,596


$
350,804

International
47,544


50,754

 
148,856


156,890

Revenue
$
144,753


$
167,082

 
$
453,452


$
507,694

 
September 30,

December 31,
 
2016

2015
Long-lived Assets by Geographic Region (b)
 
 
 
United States
$
55,068


$
87,440

International
21,746


22,703

Total Long-Lived Assets
$
76,814


$
110,143

(a)
Revenue by geographic region is generally based on the location of the Company’s subsidiary.
(b)
Total long-lived assets include property and equipment, net.

24

Table of Contents

Due to the nature of the Company’s operations, a majority of its assets are utilized across all segments. In addition, segment assets are not reported to, or used by, the Chief Operating Decision Maker to allocate resources or assess performance of the Company’s segments. Accordingly, the Company has not disclosed asset information by segment.
18.    COMMITMENTS AND CONTINGENCIES
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.

On or about October 12, 2015, TalentBin, Inc., a subsidiary of the Company, was served with notice of a purported consumer class action for allegedly assembling, scoring and sharing candidate profiles in violation of the Fair Credit Reporting Act and the California Investigative Consumer Reporting Agencies Act (“ICRAA”). The lawsuit, entitled Eric Halvorson, et. al., individually and on behalf of all others similarly situated vs. TalentBin, Inc. (Case No. CGC 15 548270), was brought in the Superior Court of the State of California, County of San Francisco. On or about November 2015, the action was removed to the United States District Court, Northern District of California (Case No. 3:15-cv-05166). The Plaintiff seeks injunctive relief, monetary damages, pre- and post-judgment interest, statutory penalties of between one hundred and one thousand dollars per violation, punitive damages and other costs and attorney’s fees. On February 23, 2016, the ICRAA claims were dismissed voluntarily. Pursuant to a term sheet executed on or about August 9, 2016, a tentative settlement was reached to resolve all remaining claims subject to execution of a final settlement agreement and approval of the Court. The Company accrued $900 related to the settlement term sheet as of September 30, 2016.  

In July 2016, Guyzar LLC filed suit against the Company for allegedly infringing their Patent No. 5845070 relating to methods for the authentication and preservation of confidential information usable for completing transactions with an internet entity. The lawsuit, entitled Guyzar LLC vs. Monster Worldwide, Inc. (Civil Action No. 2:16-cv-00813) was brought in the United States District Court for the Eastern District of Texas. The Plaintiff sought injunctive relief, monetary damages, enhanced damages, pre and post judgment interest, attorney’s fees and other costs. On October 17, 2016, the parties entered into a settlement agreement whereby all claims would be voluntarily dismissed with prejudice.

In September 2016, three putative class actions were filed against the Company and its officers and directors. The first two, Litwin vs. Monster Worldwide, Inc., et. al., 16-cv-11844 and Dagut vs. Monster Worldwide, Inc., et. al., 16-cv-11852, were filed in the Federal District Court of Massachusetts. The third matter, Gordon vs. Giambastiani, et. al., CA No. 12746-VCG, was filed in the Delaware Chancery State Court. Each alleges material misstatements or omissions contained in the Company’s Schedule 14D-9 associated with Randstad North America, Inc.’s tender offer for the Company’s shares. The Gordon matter further alleges that the Company’s Board of Directors breached its fiduciary duties by, among other things, engaging in a flawed deal process and agreeing to an insufficient share price. The respective Plaintiffs in all three matters seek, among other things, an injunction against the consummation of the tender offer, or in the alternative, rescission, rescissionary and other damages, as well as various costs and fees including attorney’s fees. The Plaintiff in the Gordon case voluntarily withdrew Plaintiff's request for expedited discovery and has not moved for a preliminary injunction. In addition, the Plaintiff in the Dagut matter withdrew Plaintiff's motion for a preliminary injunction after the Company agreed to further amend its disclosures in its Schedule 14D-9 regarding the Company’s discretion to pay additional amounts to its financial advisor. The Company intends to vigorously defend these matters and is currently unable to estimate any potential losses.

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Table of Contents

Leases
The Company leases its facilities and a portion of its capital equipment under operating leases that expire at various dates. Some of the operating leases provide for increasing rents over the terms of the leases and total rent expense under these leases is recognized ratably over the initial renewal period of each lease. The following table presents future minimum lease commitments under non-cancelable operating leases and minimum rentals to be received under non-cancelable subleases at September 30, 2016, excluding discontinued operations:

 Operating Leases

 Estimated Sublease Income
2016
$
8,298


$
826

2017
29,053


3,537

2018
26,251


3,429

2019
22,782


3,266

2020
18,930


3,266

Thereafter
42,298


770


$
147,612


$
15,094

Other
In August 2016 and September 2016, the Company received letters from each of StoneKeyPartners (“StoneKey”) and Bank of America Merrill Lynch (“BAML”), respectively, asserting claims for advisory fees in connection with the proposed acquisition of the Company by Randstad North America, Inc. Both StoneKey’s and BAML’s claims rely upon engagement letters executed in connection with the Company’s 2012-2013 review of strategic alternatives, which was formally concluded in 2013. The Company disputes the claims asserted by both StoneKey and BAML, and accordingly, is unable to estimate any potential losses.

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Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Monster Worldwide, Inc.
New York, New York
We have reviewed the consolidated balance sheet of Monster Worldwide, Inc. (the “Company”) as of September 30, 2016, and the related consolidated statements of operations and comprehensive income (loss) for the three and nine-month periods ended September 30, 2016 and 2015, and cash flows for the nine-month periods ended September 30, 2016 and 2015 included in the accompanying Securities and Exchange Commission Form 10-Q for the period ended September 30, 2016. These interim financial statements are the responsibility of the Company’s management.
We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board, the consolidated balance sheet of Monster Worldwide, Inc. as of December 31, 2015, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated February 11, 2016 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2015 is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

 
 
/s/    BDO USA, LLP        
 
BDO USA, LLP
 
New York, New York
 
October 31, 2016
 

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ITEM 2. MANAGEMENT’S 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 Securities and Exchange Commission (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 and 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, uncertainties related to the acquisition of the Company by Randstad North America, Inc., including the timing of completion of the proposed transaction, the possibility that competing offers will be made and the satisfaction or waiver of the other conditions to the consummation of the proposed transaction, the potential impact of the announcement or consummation of the proposed transaction on relationships, including with employees, suppliers and customers; the global economic and financial market environment; competition; risks relating to our foreign operations; our ability to maintain and enhance the value of our brands, particularly Monster; risks related to our strategy; 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 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; risks associated with cuts in government spending; the risk that acquisitions or partnerships may not achieve the expected benefits to us; 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; risks associated with our convertible senior notes due 2019; 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 our Annual Report on Form 10-K for the year ended December 31, 2015.
Overview
Monster Worldwide, Inc. (together with its consolidated subsidiaries, the “Company,” “Monster,” “Monster Worldwide,” “we,” “our” or “us”) is a global leader in connecting people to jobs, wherever they are. Monster’s mission is to help people improve their lives with access to the right job opportunities, and to enable customers to be more successful in finding the best talent anywhere. Today, the Company offers services in more than 40 countries, providing some of the broadest, most sophisticated job seeking, career management, recruitment and talent management capabilities. Monster continues its pioneering work of transforming the recruitment industry with advanced technology using intelligent digital, social and mobile solutions, including our flagship website monster.com® and a vast array of products and services.
We earned 31% and 29% of our total revenue outside of North America for the quarters ended September 30, 2016 and 2015, respectively. With a local presence in key markets in North America, Europe, and Asia, Monster works by connecting employers with quality job seekers at all levels and by providing searchable jobs and career management resources online. 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 advertisements; resume database access; recruitment media solutions through our advertising network and partnerships; social job distribution on Twitter and Facebook; display advertising; lead generation; social profile aggregation; and other career-related content. Job seekers can search job advertisements and post their resumes for free on each of our career websites and mobile applications. Employers pay to: advertise available jobs and recruitment related services; search the Monster resume and social databases; and access other career-related services.
Monster operates in an industry and in markets that are continually evolving with the entrance of new competitors and the changing needs of seekers and employers. The Company adjusts its product offerings and makes new investments in its technology platform in order to meet the challenges presented by the market evolution.

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Merger Agreement
On August 8, 2016, the Company, entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Randstad North America, Inc., a Delaware corporation (“Parent”), and Merlin Global Acquisition, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”). Pursuant to the terms of the Merger Agreement, on September 6, 2016, Merger Sub commenced a tender offer to purchase any and all of the issued and outstanding shares of common stock of the Company, par value $0.001 per share (each a “Share”), at a purchase price of $3.40 per Share (the “Offer Price”), payable to the holder thereof in cash, without interest and less any applicable withholding taxes (the “Offer”).
Following the consummation of the Offer, Merger Sub will merge with and into the Company (the “Merger”) in accordance with the Merger Agreement and under Section 251(h) of the General Corporation Law of the State of Delaware (the "DGCL"), and the Company will survive the Merger as a wholly-owned subsidiary of Parent. At the effective time of the Merger (the “Effective Time”), each Share that is not tendered and accepted pursuant to the Offer (other than Shares held by Parent, Merger Sub or the Company or their direct or indirect wholly-owned subsidiaries and Shares held by stockholders who are entitled to demand and who have properly and validly perfected their statutory rights of appraisal) will be converted into the right to receive an amount equal to the Offer Price (the “Merger Consideration”), payable to the holder thereof in cash, without interest and less any applicable withholding taxes.
The obligation of Merger Sub to purchase Shares tendered in the Offer is subject to customary closing conditions, including (i) that the number of Shares validly tendered and not properly withdrawn in accordance with the terms of the Offer, together with the Shares then-owned by Parent, Merger Sub or any of their respective wholly-owned Subsidiaries, equals at least one Share more than half of the sum of (without duplication) (A) all Shares then outstanding (including all outstanding Company Restricted Shares (as defined in the Merger Agreement)) plus (B) all Shares issuable to holders of the Company's 3.50% convertible senior notes due 2019 (the "Notes") from whom the Company has received duly completed notices of exercise, plus (C) all Shares issuable to holders of Company Stock Options (as defined in the Merger Agreement) and (ii) (A) the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and (B) the approval of the relevant authority pursuant to Council Regulation 139/2004 of the European Union. The obligations of Parent and Merger Sub to complete the Offer and the Merger are not subject to any financing condition.
On August 26, 2016, the Company was informed that the United States Federal Trade Commission granted early termination of the waiting period under the HSR Act, and on October 26, 2016, Randstad Holding nv, the ultimate parent of Parent and Merger Sub, received merger control clearance from the European Commission (the “EC”) for the proposed acquisition of the Company. The approval by the EC was the last regulatory approval required with respect to the Offer.
The Merger Agreement includes customary termination rights for both the Company and Parent including, among others, in connection with Superior Proposals (as defined in the Merger Agreement). Upon the termination of the Merger Agreement under certain specified circumstances, the Company will be required to pay Parent a termination fee of $9.0 million.
The Offer and withdrawal rights expired on October 28, 2016 at 12:00 midnight, New York City time. Broadridge Corporate Issuer Solutions, Inc., the depositary, has advised that a total of 45,973,527 Shares had been validly tendered into and not properly withdrawn from the Offer, representing approximately 51.5% of the Shares outstanding (including restricted shares and shares issuable to holders of stock options). In addition, notices of guaranteed delivery have been delivered for 3,708,393 Shares, representing approximately 4.15% of the outstanding Shares (including restricted shares and shares issuable to holders of stock options). The number of Shares validly tendered in accordance with the terms of the Offer and not properly withdrawn from the Offer satisfied the Minimum Tender Condition (as defined in the Merger Agreement). All conditions to the Offer having been satisfied or waived, Purchaser accepted for payment and will promptly pay for all such Shares validly tendered into and not properly withdrawn from the Offer.

As a result of its acceptance of the Shares tendered into the Offer, Merger Sub will acquire sufficient Shares to complete the Merger without the affirmative vote of the stockholders of the Company pursuant to Section 251(h) of the DGCL. At the Effective Time, each Share issued and outstanding immediately prior to the Effective Time and not tendered pursuant to the Offer (other than Shares held by Parent, Merger Sub or the Company or their direct or indirect wholly-owned subsidiaries or Shares held by stockholders who validly perfect their appraisal rights under Delaware law) will be automatically converted into the right to receive an amount in cash equal to the Offer Price, without interest and less any applicable withholding taxes.

Promptly following consummation of the Merger, all Shares will be delisted from the New York Stock Exchange and deregistered under the Exchange Act.

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Merger Sub’s acquisition of the Shares tendered in the Offer has results in a “change of control” under the Third Amended Credit Agreement, which entitles the lenders holding more than 50% of the commitments under the Third Amended Credit Agreement to declare all amounts borrowed thereunder due and payable. The Company expects that, upon the consummation of the Merger, all indebtedness, liabilities and other obligations owing thereunder will be repaid by Parent on behalf of the Company, except for a standby letter of credit in the original face amount of approximately $88,000, which will remain outstanding and be secured by cash collateral.
The consummation of the Merger will constitute a “Fundamental Change” and a “Make-Whole Fundamental Change” under the Indenture, dated as of October 22, 2014 (the "Indenture"), between the Company and Wilmington Trust National Association, as trustee, with respect to the Notes. Following the consummation of the Merger, the Company expects Parent to, as required by the terms of the Indenture, cause the Company to launch a tender offer to purchase the Notes at their principal amount plus accrued and unpaid interest (the “Repurchase Right”). In connection with the Merger, holders of the Notes also have the right, in lieu of the Repurchase Right, to convert each $1,000 principal amount of their Notes for cash at the then-applicable conversion rate under the Indenture, pursuant to the terms of a supplemental indenture, however this would result in holders receiving less cash for their Notes than if they had instead exercised the Repurchase Right.

The Company incurred legal and other professional fees of $3.4 million associated with the Merger during the three and nine months ended September 30, 2016.
Constant Currency Presentation
Revenue from our international operations has historically represented, and we expect will continue to represent, a significant portion of our business. As a result, our revenue has been impacted, and we expect will continue to be impacted, by fluctuations in foreign currency exchange rates. In order to provide a framework for assessing how our consolidated and Careers-International operating results performed excluding the impact of foreign currency fluctuations, we additionally present the year-over-year percentage changes on a constant currency basis, which assumes no change in the exchange rate from the prior-year period. This constant currency is provided in addition to, and not as a substitute for, the year-over-year percentage changes on an as-reported basis.
RESULTS OF OPERATIONS
Consolidated operating results as a percentage of revenue are as follows (excluding discontinued operations):

 Three months ended September 30,
 
 Nine months ended September 30,

2016

2015
 
2016

2015
Revenue
100.0
 %

100.0
 %
 
100.0
 %

100.0
 %
Salaries and related
54.9
 %

47.8
 %
 
52.0
 %

50.1
 %
Office and general
33.1
 %

26.1
 %
 
29.6
 %

25.9
 %
Marketing and promotion
19.5
 %

18.0
 %
 
20.1
 %

17.9
 %
Goodwill impairment
101.8
 %
 
 %
 
63.8
 %
 
 %
Impairment of other assets
24.1
 %
 
 %
 
8.4
 %
 
 %
Restructuring and other special charges
 %

1.7
 %
 
 %

5.7
 %
Total operating expenses
233.5
 %

93.5
 %
 
174.0
 %

99.6
 %
Operating (loss) income
(133.5
)%

6.5
 %
 
(74.0
)%

0.4
 %
Gain on partial sale of equity method investment
 %

 %
 
 %

1.7
 %
Interest and other, net
(2.2
)%

(2.2
)%
 
(2.1
)%

(2.0
)%
(Loss) income before income taxes and (loss) income in equity interests, net
(135.7
)%

4.3
 %
 
(76.1
)%

0.1
 %
Benefit from income taxes
(11.1
)%

(1.4
)%
 
(9.3
)%

(2.9
)%
(Loss) income in equity interests, net
(0.2
)%

0.1
 %
 
 %

0.1
 %
(Loss) income from continuing operations
(124.7
)%

5.8
 %
 
(66.8
)%

3.0
 %

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The Three Months Ended September 30, 2016 Compared to the Three Months Ended September 30, 2015
Consolidated Revenue, Operating Expenses, Operating (Loss) Income, Cash EBITDA and Adjusted EBITDA
Consolidated revenue, operating expenses, operating (loss) income, Cash EBITDA and Adjusted EBITDA are as follows (excluding discontinued operations)(dollars in thousands):
 
 Three months ended September 30,
 
2016

 % of Revenue

2015

 % of Revenue

 Increase
(Decrease)

 % Increase
(Decrease)
Revenue
$
144,753


100.0
 %

$
167,082


100.0
%

$
(22,329
)

(13.4
)%
Salaries and related
79,518


54.9
 %

79,787


47.8
%

(269
)

(0.3
)%
Office and general
47,924


33.1
 %

43,638


26.1
%

4,286


9.8
 %
Marketing and promotion
28,287


19.5
 %

30,044


18.0
%

(1,757
)

(5.8
)%
Goodwill impairment
147,400


101.8
 %



%

147,400


na

Impairment of other assets
34,835

 
24.1
 %
 

 
%
 
34,835

 
na

Restructuring and other special charges

 
 %
 
2,780

 
1.7
%
 
(2,780
)
 
(100.0
)%
Total operating expenses
337,964


233.5
 %

156,249


93.5
%

181,715


116.3
 %
Operating (loss) income
$
(193,211
)

(133.5
)%

$
10,833


6.5
%

$
(204,044
)

1,883.5
 %
Cash EBITDA
$
417


0.3
 %

$
25,287


15.1
%

$
(24,870
)

(98.4
)%
Adjusted EBITDA
$
5,435


3.8
 %

$
28,067


16.8
%

$
(22,632
)

(80.6
)%
Our consolidated revenue decreased by $22.3 million (13.4%, 12.5% on a constant currency basis) in the third quarter of 2016 compared to the same period of 2015. Our Careers-North America segment experienced a decrease of $19.7 million (16.5%) primarily due to declines in the enterprise, mid market, e-commerce and newspaper channels. Our Careers-International segment decreased $2.6 million (5.5%, 2.4% on a constant currency basis).
Salaries and related expenses decreased $0.3 million (0.3%, increase of 1.1% on a constant currency basis) in the third quarter of 2016 compared to the same period of 2015. The increase in salaries and related expenses on a constant currency basis resulted from increased regular salary and other headcount related costs primarily related to a merit increase during 2016, partially offset by decreased stock based compensation.
Office and general expenses increased $4.3 million (9.8%, 11.5% on a constant currency basis) in the third quarter of 2016 compared to the same period of 2015. This increase in office and general expenses resulted primarily from $3.4 million of legal and other professional fees associated with the merger agreement entered into with a subsidiary of Randstad Holding nv. See Note 1 - Description of Business and Basis of Presentation in Notes to the Consolidated Financial Statements in Item I of this Form 10-Q for details. In addition, the Company recognized settlement charges of $0.9 million in connection with a settlement term sheet executed in the TalentBin litigation as detailed in Note 18 - Commitments and Contingencies in Notes to the Consolidated Financial Statements in Item I of this Form 10-Q.
Marketing and promotion expenses decreased $1.8 million (5.8%, 4.0% on a constant currency basis) in the third quarter of 2016 compared to the same period of 2015. During the third quarter, the Company was able to reduce marketing spend while driving quality traffic.

On August 8, 2016, the Company entered into a merger agreement that provides for the Company to be merged with a subsidiary of Randstad Holding nv in a transaction in which the Company’s shareholders will receive $3.40 for each share of common stock of the Company. In consideration of the recent decline in the Company’s market capitalization, recent operating results, and the implications the agreed-upon sales price had on the valuation of goodwill, the Company recognized an estimated pre-tax impairment charge of $142.0 million during the second quarter of 2016. During the third quarter of 2016, with the assistance of a third party valuation firm, the Company completed a formal goodwill impairment analysis in accordance with ASC 350, Intangibles - Goodwill and Other, resulting in an additional pre-tax goodwill impairment charge of $147.4 million recognized during the third quarter of 2016. The goodwill impairment analysis also triggered an impairment analysis on an amortizable trademark and capitalized software costs, resulting in a total impairment charge of $34.8 million related to these assets. All impairment charges were recognized in our Careers-North America segment. See Note 13 - Goodwill and Intangible Assets in Notes to the Consolidated Financial Statements in Item I of this Form 10-Q.

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We incurred $2.8 million of restructuring and other special charges in the third quarter of 2015, comprised mainly of severance costs as a result of our "Reallocate to Accelerate" program announced on February 10, 2015. No charges were incurred in 2016 relating to this program.
Our consolidated operating loss was $193.2 million in the third quarter of 2016, compared to operating income of $10.8 million in the third quarter of 2015, as a result of the factors discussed above.
Our consolidated Cash EBITDA and Adjusted EBITDA were $0.4 million and $5.4 million in the third quarter of 2016, respectively, compared to consolidated Cash EBITDA and Adjusted EBITDA of $25.3 million and $28.1 million in the same period of 2015, respectively, as a result of the factors discussed above. See Reconciliation of Non-GAAP Financial Measures to GAAP Measures following the discussion of our results of operations for definitions and a reconciliation from our loss from continuing operations to Cash EBITDA and Adjusted EBITDA.
Careers-North America
The operating results of our Careers-North America segment are as follows (dollars in thousands):
 
 Three months ended September 30,
 
2016

 % of Revenue

2015

 % of Revenue

 Increase
(Decrease)

 % Increase
(Decrease)
Revenue
$
99,745


100.0
 %

$
119,449


100.0
%

$
(19,704
)

(16.5
)%
Salaries and related
51,251


51.4
 %

50,564


42.3
%

687


1.4
 %
Office and general
27,656


27.7
 %

25,616


21.4
%

2,040


8.0
 %
Marketing and promotion
16,804


16.8
 %

16,778


14.0
%

26


0.2
 %
Goodwill impairment
147,400


147.8
 %



%

147,400


na

Impairment of other assets
34,835

 
34.9
 %
 

 
%
 
34,835

 
na

Restructuring and other special charges

 
 %
 
752

 
0.6
%
 
(752
)
 
(100.0
)%
Total operating expenses
277,946


278.7
 %

93,710


78.5
%

184,236


196.6
 %
Operating (loss) income
$
(178,201
)

(178.7
)%

$
25,739


21.5
%

$
(203,940
)

(792.3
)%
Our Careers-North America segment revenue decreased $19.7 million (16.5%) in the third quarter of 2016 compared to the same period of 2015. The decrease in the Careers-North America segment is primarily due to declines in the enterprise, mid-market, e-commerce and newspaper channels. Although we are gaining traction as a result of new product initiatives and our pay per click business, the continued pressure on our core product offerings has negatively impacted revenue in North America.
Salaries and related expenses increased $0.7 million (1.4%) in the third quarter of 2016 compared to the same period of 2015. This increase resulted from increased regular salary costs of $2.2 million primarily related to a merit increase in 2016, partially offset by decreased stock based compensation of $1.3 million.
Office and general expenses increased $2.0 million (8.0%) in the third quarter of 2016 compared to the same period of 2015. This increase in office and general expenses resulted primarily from $1.3 million of increased support costs.