TMP WORLDWIDE INC, 424B1, 2000-01-28

TMP WORLDWIDE INC
424B1, 2000-01-28
ADVERTISING AGENCIES

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<PAGE>
Filed pursuant to Rule 424(b)(1)
Registration No. 333-93065

4,000,000 SHARES

[LOGO]

COMMON STOCK

-----------------

TMP Worldwide Inc. is offering 4,000,000 shares of its common stock.

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The common stock is listed on The Nasdaq National Market under the symbol
"TMPW." On January 27, 2000, the last sale price of the common stock was
$154.625 per share.

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INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 9.

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PRICE $154 5/8 A SHARE

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<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS COMPANY
---------------- ---------------- ----------------
<S> <C> <C> <C>
Per Share................................................... $154.625 $5.800 $148.825
Total....................................................... $618,500,000 $23,200,000 $595,300,000
</TABLE>

TMP Worldwide Inc. has granted the underwriters the right to purchase up to an
additional 600,000 shares of common stock to cover over-allotments.

THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT
APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Morgan Stanley & Co. Incorporated expects to deliver the shares of common stock
to purchasers on February 2, 2000.

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<TABLE>
<S> <C> <C>
JOINT BOOK-RUNNING MANAGERS CO-LEAD MANAGER

MORGAN STANLEY DEAN WITTER GOLDMAN, SACHS & CO. SALOMON SMITH BARNEY
</TABLE>

DEUTSCHE BANC ALEX. BROWN PAINEWEBBER INCORPORATED U.S. BANCORP PIPER JAFFRAY

January 27, 2000
<PAGE>
Photo Page

A collage of pictures of the Monster.com(SM) home pages (U.S. and international
versions) will appear on the inside front cover.

A collage of stills from our Monster Talent Market promotion will appear on the
inside back cover.

A collage of stills from Monster.com(SM)'s recent advertising campaign will
appear on the outside back cover.
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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<S> <C>
Prospectus Summary.................... 4
Special Note Regarding Forward-Looking
Information......................... 9
Risk Factors.......................... 9
Use of Proceeds....................... 17
Dividend Policy....................... 17
Price Range of Common Stock........... 17
Capitalization........................ 18
Selected Consolidated Financial
Information......................... 19
</TABLE>

<TABLE>
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 21
<CAPTION>
PAGE
--------
<S> <C>
Business.............................. 38
Material U.S. Federal Income Tax
Considerations for Non-U.S.
Holders............................. 49
Underwriters.......................... 52
Legal Matters......................... 54
Experts............................... 54
Where You Can Find More Information... 55
</TABLE>

You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
information different from that contained in this prospectus. We are offering to
sell, and seeking offers to buy, shares of common stock only in jurisdictions
where offers and sales are permitted. The information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of the
time of delivery of this prospectus or of any sale of the common stock.

3
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY SHOULD BE READ IN CONJUNCTION WITH THE OTHER INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. AS USED IN THIS
PROSPECTUS, "GROSS BILLINGS" REFERS TO BILLINGS FOR ADVERTISING PLACED ON THE
INTERNET, ON OUR CAREER WEB SITES, IN NEWSPAPERS AND IN TELEPHONE DIRECTORIES BY
OUR CLIENTS, AND ASSOCIATED FEES FOR RELATED SERVICES AND FEES FOR SEARCH AND
SELECTION AND TEMPORARY CONTRACTING SERVICES. WE EARN COMMISSIONS BASED ON A
PERCENTAGE OF THE BILLING FOR MEDIA ADVERTISING PURCHASED IN TRADITIONAL MEDIA
AS WELL AS ON THIRD PARTY WEB SITES AT A RATE ESTABLISHED BY THE RELATED
PUBLISHER AND ASSOCIATED FEES FOR RELATED SERVICES. AS A RESULT, THE TRENDS IN
OUR GROSS BILLINGS DIRECTLY AFFECT OUR COMMISSIONS AND FEES. ALL AMOUNTS
REFERRED TO BELOW REFLECT THE AMOUNTS DISCLOSED IN OUR SUPPLEMENTAL CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS AND OUR SUPPLEMENTAL CONSOLIDATED FINANCIAL
STATEMENTS INCLUDED IN OUR CURRENT REPORT ON FORM 8-K DATED DECEMBER 1, 1999.
"WE," "US" AND "OUR," WHEN USED IN THIS PROSPECTUS, REFER TO TMP WORLDWIDE INC.
EXCEPT AS OTHERWISE INDICATED, THE INFORMATION CONTAINED IN THIS PROSPECTUS DOES
NOT REFLECT THE EFFECTS OF A 2-FOR-1 STOCK SPLIT TO BE PAID ON FEBRUARY 29,
2000, TO STOCKHOLDERS OF RECORD AS OF THE CLOSE OF BUSINESS ON FEBRUARY 16,
2000.

OUR COMPANY

We have built Monster.com(SM) (http://www.monster.com) into the Internet's
leading career destination portal. We are also one of the world's largest
recruitment advertising agencies and one of the world's largest executive search
and selection firms. In addition to offering these career solutions, we are the
world's largest yellow page advertising agency. We have more than 31,000
clients, including over 90 of the Fortune 100 and over 450 of the Fortune 500
companies.

Job seekers look to manage their careers through us by posting their resumes
on Monster.com(SM), by searching Monster.com's(SM) database of over 265,000 paid
job postings, either directly or through the use of customized job search
agents, and by utilizing our extensive career resources. In addition, employers,
who are our clients, look to us to help them find the right employee, whether
they are searching for an entry level candidate or a CEO, which we refer to as
our "intern to CEO" strategy. We believe the Internet offers a substantial
opportunity for us to grow our revenue. We believe our growth will primarily
come from strengthening our leadership position in the online recruitment
market, which is estimated by Forrester Research to grow from $105 million in
1998 to $1.7 billion in 2003, with additional revenue growth opportunities from
the $8 billion executive search and selection market, the $13 billion global
recruitment advertising market, the $130 billion temporary contracting market
and the more than $100 billion which third parties estimate corporations spend
on unassisted recruiting activities. Our strategies to address this opportunity
are to:

- continue to promote the Monster.com(SM) brand through online and
traditional advertising and select alliances or affiliations

- leverage our more than 5,100 client service, marketing and creative
personnel to expand Monster.com(SM)

- continue to pursue strategic acquisitions

OUR SERVICES

MONSTER.COM(SM). Monster.com(SM) (http://www.monster.com), the flagship of
our Internet properties, is the nucleus of our intern to CEO strategy. In
November 1999:

- Neilson I/Pro reported that Monster.com(SM) attracted more than 9.7
million visitors who spent an average of over 14 minutes per visit

- Media Metrix reported that 4.2% of the U.S. Internet population visited
Monster.com(SM), reaching almost twice as many unique visitors as its
closest competitor, and that an average of 31.0 unique pages were viewed
by each visitor

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- Based on Media Metrix statistics, Monster.com(SM) reported a power ranking
of 130.2 (reach of 4.2 multiplied by average page views of 31.0), compared
to 26.7 for its closest competitor and 74.9 for its six closest
competitors combined

We believe that the power ranking is significant because, by taking into
account reach and page views, it indicates the products' recognition by and
usefulness to job seekers. As a result, through Monster.com(SM), our clients
have access to over 2.4 million unique resumes of which 1.6 million are active,
and our resume database is growing by an average of more than 6,000 resumes
daily. To attract job seekers to Monster.com(SM), we continue to refine and
refresh the site by introducing value-added features. For example, we have
5.3 million My Monster accounts, which allow our job seekers to manage their
careers online and 1.7 million job search agents, which allow our job seekers to
express their specific job preferences and receive e-mail notification of job
matches. We have also recently introduced Monster Talent Market, which allows
independent contractor professionals to offer their services to the highest
bidder. We believe our clients have recognized the value of online recruitment,
as evidenced by the more than 265,000 paid job postings currently on
Monster.com(SM).

Although Monster.com(SM) had 1.6 million more unique visitors than its
nearest competitor in November 1999, as reported by Media Metrix, we continually
look for ways to drive and retain site traffic. To that end, in December 1999,
we entered into a content and marketing agreement with America Online, Inc.
whereby, for the payment of $100 million over four years, Monster.com(SM) will
be the exclusive provider for four years in the United States and Canada of
career search services to 21 million AOL users across seven AOL brands: AOL, AOL
Canada, Compuserve, ICQ, AOL.com, Netscape and Digital City. We believe that
this agreement has the potential to drive a substantial amount of increased
traffic and new users to Monster.com-SM-. We also customize Monster.com(SM), in
both language and content, for other countries. Currently, local versions of
Monster.com(SM) operate in Canada, the United Kingdom, the Netherlands,
Australia, Belgium, France, Singapore and New Zealand. For the nine months ended
September 30, 1999, Monster.com(SM) generated approximately $66.9 million in
gross billings and $66.2 million in commissions and fees. Our total Internet
gross billings and Internet commissions and fees for this period were $93.7
million and $83.0 million, respectively, reflecting the inclusion of amounts
from Internet related services from our traditional recruitment and yellow page
advertising clients, as well as from searches for permanent employees and
temporary contracting services identified and screened through the Internet,
which were $8.5 million, $3.2 million, $4.0 million and $0.9 million,
respectively.

RECRUITMENT ADVERTISING. We prospect talent for our clients through
traditional recruiting programs that sell, market and brand employers to job
seekers searching for entry level positions to positions paying up to $100,000,
annually. We provide a broad range of recruitment advertising services
including:

- planning and producing advertising campaigns

- media research, planning and buying in both traditional media and on the
Internet

- planning and executing on-campus recruitment programs

SEARCH AND SELECTION. We offer an advanced and comprehensive range of
search and selection services aimed at identifying the appropriate professional
or executive from mid-level to CEO for our clients. Executive search identifies
senior executives who typically earn in excess of $250,000 annually, while
selection identifies mid-level professionals or executives, who typically earn
between $70,000 and $150,000, annually. We entered the executive search field in
1998 because recruitment and online advertising traditionally did not target the
senior executive candidate. Our specialized search and selection services
include:

- identification of candidates

- competency measurement

- assessment of candidate/company cultural fit

- transaction negotiation and closure

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<PAGE>
With the addition of our executive search services, we believe that we can now
accommodate all of our clients' employee recruitment needs. We also believe that
our search and selection services will help to broaden the universe of both job
seekers and employers who utilize Monster.com(SM).

YELLOW PAGE ADVERTISING. We develop yellow page marketing programs for
national accounts, which are clients who sell products or services in multiple
markets. The national segment of the U.S. yellow page advertising market was
approximately $1.9 billion in 1998. During the period of 1990 through 1998, the
market grew at a compound annual rate of approximately 6.2%. Yellow page
advertising is a complex process involving the creation of effective imagery and
message, and the development of media plans which evaluate approximately 7,000
yellow page directories, of which our larger accounts utilize over 2,000.
Coordinating the placement of advertisements in this number of directories
requires an extensive effort at the local level, and our yellow page sales,
marketing and customer service staff of approximately 850 people provides an
important competitive advantage in marketing and executing yellow page
advertising programs.

We take a proactive approach to yellow page advertising by undertaking
original research on the efficacy of the medium, and by working to quantify the
effectiveness of individual advertising campaigns. We also have a rigorous
quality assurance program designed to ensure client satisfaction. We believe
that this program has enabled us to maintain a yellow page client retention
rate, year to year, in excess of 90%.

For the year ended December 31, 1998 and the nine months ended
September 30, 1999, respectively, our gross billings were $1.7 billion and
$1.4 billion, total commissions and fees were $657.5 million and
$561.5 million, net income (loss) was $20.5 million and $(4.9) million and
EBITDA was $79.1 million and $32.6 million.

Our executive offices are located at 1633 Broadway, New York, New York
10019, our telephone number is (212) 977-4200 and our Internet address is
http://www.tmpw.com.

RECENT EVENTS

On January 11, 2000, we declared a 2-for-1 stock split, payable on
February 29, 2000, to stockholders of record as of the close of business on
February 16, 2000.

THE OFFERING

<TABLE>
<S> <C>
Common stock offered by TMP.................. 4,000,000(1)

Common stock to be outstanding after this
offering................................... 44,604,263 shares(1)

Use of proceeds.............................. Repayment of indebtedness and general
corporate purposes, including strategic
investments. See "Use of Proceeds."

Nasdaq National Market Symbol................ TMPW
</TABLE>

The number of shares of common stock to be outstanding after this offering
excludes 5,856,194 shares of common stock subject to outstanding stock options.
This number also assumes that the underwriters' over-allotment option to
purchase up to 600,000 shares will not be exercised. If the underwriters do
exercise this option in full there will be 45,204,263 shares of common stock
outstanding following this offering.

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(1) The number of shares offered and assumed to be outstanding after this
offering do not include the effects of the stock split discussed above.

6
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
------------------------------------ -----------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Commissions & fees.......................................... $ 399,039 $ 541,828 $ 657,486 $ 496,872 $ 561,481
---------- ---------- ---------- ---------- ----------
Operating expenses:
Salaries and related costs................................ 232,249 310,168 382,689 288,045 327,046
Office and general expenses............................... 115,191 152,824 190,204 136,639 173,053
Merger & integration costs................................ -- -- 22,412 9,577 46,262
Restructuring charges..................................... -- -- 3,543 -- 2,789
Amortization of intangibles............................... 4,732 6,866 10,185 7,394 8,564
Special compensation and special CEO bonus................ 52,019 1,500 1,250 1,125 --
---------- ---------- ---------- ---------- ----------
Total operating expenses.................................. 404,191 471,358 610,283 442,780 557,714
---------- ---------- ---------- ---------- ----------
Operating income (loss)................................... (5,152) 70,470 47,203 54,092 3,767
---------- ---------- ---------- ---------- ----------
Other expense:
Interest expense, net..................................... (14,358) (8,443) (9,828) (7,035) (6,272)
Other, net................................................ (370) 821 (2,042) (932) (851)
---------- ---------- ---------- ---------- ----------
Total other expense, net................................ (14,728) (7,622) (11,870) (7,967) (7,123)
---------- ---------- ---------- ---------- ----------
Income (loss) before provision for income taxes, minority
interests and equity in income (losses) of affiliates..... (19,880) 62,848 35,333 46,125 (3,356)
Provision for income taxes.................................. 11,058 20,565 14,367 16,637 1,154
---------- ---------- ---------- ---------- ----------
Income (loss) before minority interests and equity in income
(losses) of affiliates.................................... (30,938) 42,283 20,966 29,488 (4,510)
Minority interests.......................................... 1,017 296 28 (18) 107
Equity in income (losses) of affiliates..................... 114 (33) (396) (297) (300)
---------- ---------- ---------- ---------- ----------
Net income (loss)........................................... (31,841) 41,954 20,542 29,209 (4,917)
Preferred stock dividend and redemption premium............. (210) (123) -- -- --
---------- ---------- ---------- ---------- ----------
Net income (loss) applicable to common and Class B common
stockholders.............................................. $ (32,051) $ 41,831 $ 20,542 $ 29,209 $ (4,917)
========== ========== ========== ========== ==========
Net income (loss) per common and Class B common share:
Basic....................................................... $ (1.04) $ 1.15 $ 0.53 $ 0.75 $ (0.12)
========== ========== ========== ========== ==========
Diluted..................................................... $ (1.04) $ 1.13 $ 0.52 $ 0.73 $ (0.12)
========== ========== ========== ========== ==========
Weighted average shares outstanding:
Basic....................................................... 30,954 36,333 38,736 38,696 39,611
Diluted..................................................... 30,954 36,954 39,639 39,802 39,611
PRO FORMA EARNINGS (LOSS) INFORMATION(1):
Net income (loss) per common and Class B common share:
Basic..................................................... $ (0.52) $ 0.58 $ 0.27 $ 0.38 $ (0.06)
========== ========== ========== ========== ==========
Diluted................................................... $ (0.52) $ 0.57 $ 0.26 $ 0.37 $ (0.06)
========== ========== ========== ========== ==========
Weighted average shares outstanding:
Basic..................................................... 61,908 72,666 77,472 77,392 79,222
Diluted................................................... 61,908 73,908 79,278 79,604 79,222
</TABLE>

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(1) Reflects a 2-for-1 stock split declared by the Company on January 11, 2000,
payable on February 29, 2000, to stockholders of record as of the close of
business on February 16, 2000.

7
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<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
-------------------------
ACTUAL AS ADJUSTED(1)
-------- --------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Current assets.............................................. $529,878 $1,039,406
Current liabilities......................................... 505,869 505,869
Total assets................................................ 883,684 1,393,212
Long-term debt, less current portion........................ 101,198 16,426
Total stockholders' equity.................................. 260,045 854,345
</TABLE>

- ------------------------------

(1) Adjusted to give effect to our sale of 4,000,000 shares of common stock at
the public offering price of $154.625 per share and the application of the
net proceeds as described in "Use of Proceeds."

Number of employees......................................... 3,910 5,651 6,278 6,270 6,412
Number of offices........................................... 161 213 254 254 247
</TABLE>

8
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SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

This prospectus includes or incorporates forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. You can identify these forward-looking
statements by our use of the words "believes," "anticipates," "plans,"
"expects," "may," "will," "would," "intends," "estimates," and similar
expressions, whether in the negative or affirmative. We cannot guarantee that we
actually will achieve these plans, intentions or expectations. Actual results or
events could differ materially from the plans, intentions and expectations
disclosed in the forward-looking statements we make. We have included important
factors in the cautionary statements in this prospectus, particularly under the
heading "Risk Factors," that we believe could cause our actual results to differ
materially from the forward-looking statements that we make. The forward-looking
statements do not reflect the potential impact of any future acquisitions,
mergers or dispositions. We do not assume any obligation to update any
forward-looking statement we make.

RISK FACTORS

BEFORE YOU INVEST IN OUR COMMON STOCK, YOU SHOULD BE AWARE THAT THERE ARE
VARIOUS RISKS, INCLUDING THOSE DESCRIBED BELOW. YOU SHOULD CONSIDER CAREFULLY
THESE RISK FACTORS TOGETHER WITH ALL OF THE OTHER INFORMATION INCLUDED IN THIS
PROSPECTUS BEFORE YOU DECIDE TO PURCHASE SHARES OF OUR COMMON STOCK.

WE MAY NOT BE ABLE TO MANAGE OUR GROWTH

Our business has grown rapidly in recent periods. As an example, we
completed 80 mergers and acquisitions from January 1, 1996 through October 31,
1999. We entered the executive search field in 1998 and we believe that our
recent acquisition of LAI Worldwide, Inc. has made us one of the largest
executive search firms in the world. This growth of our business has placed a
significant strain on our management and operations. Our expansion has resulted,
and is expected in the future to result, in substantial growth in the number of
our employees. In addition, this growth is expected to result in increased
responsibility for both existing and new management personnel and incremental
strain on our existing operations, financial and management information systems.
Our success depends to a significant extent on the ability of our executive
officers and other members of senior management to operate effectively both
independently and as a group. If we are not able to manage existing or
anticipated growth, our business, financial condition and operating results will
be materially adversely affected.

OUR SUCCESS DEPENDS ON THE VALUE OF OUR BRANDS, PARTICULARLY MONSTER.COM(SM)

Our success depends on our brands and their value. Our business would be
adversely affected if we were unable to adequately protect our brand names
particularly Monster.com(SM). We are also susceptible to others imitating our
products, particularly Monster.com(SM), and infringing our intellectual property
rights. We may not be able to successfully protect our intellectual property
rights, upon which we are materially dependent. In addition, the laws of many
foreign countries do not protect intellectual property rights to the same extent
as the laws of the United States. Imitation of our products, particularly
Monster.com(SM), or infringement of our intellectual property rights could
diminish the value of our brands or otherwise adversely affect our revenues.

WE DEPEND ON TRADITIONAL MEDIA

A substantial portion of our total commissions and fees comes from designing
and placing recruitment advertisements in traditional media such as newspapers
and trade publications. This business constituted approximately 27.0% and 24.0%
of our total commissions and fees for the year ended December 31, 1998 and the
nine months ended September 30, 1999, respectively. We also receive a
substantial portion of our commissions and fees from placing advertising in
yellow page directories. This business constituted approximately 16.2% and 14.2%
of total commissions and fees for the year ended December 31, 1998 and the nine
months ended September 30, 1999, respectively. We cannot assure you that the
total commissions

9
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and fees we receive in the future will equal the total commissions and fees
which we have received in the past.

In addition, new media, like the Internet, may cause yellow page directories
and other forms of traditional media to become less desirable forms of
advertising media. If we are not able to generate Internet advertising fees to
offset any decrease in commissions from traditional media, our business,
financial condition and operating results will be materially adversely affected.

THE ACCEPTANCE AND EFFECTIVENESS OF INTERNET ADVERTISING IS UNPROVEN

Use of the Internet by consumers is at an early stage of development, and
market acceptance of the Internet as a medium for information, entertainment,
commerce and advertising remains subject to a high level of uncertainty. Most of
our clients have only limited experience with the Internet as an advertising
medium and have not devoted a significant portion of their advertising budgets
to Internet-based advertising in the past. There can be no assurance that
advertisers will allocate or continue to allocate portions of their budgets to
Internet-based advertising. If Internet-based advertising is not widely accepted
by our clients, our business, financial condition and operating results,
including our expected rate of commissions and fees growth, will be materially
adversely affected. Although we generated Internet gross billings of $56.7
million and commissions and fees of $50.2 million for the year ended December
31, 1998 and Internet gross billings of $93.7 million and commissions and fees
of $82.9 million for the nine months ended September 30, 1999, our Internet
gross billings and commissions and fees as a percentage of total commissions and
fees for the year ended December 31, 1998 and the nine months ended September
30, 1999 were 3.2% and 7.6% and 6.7% and 14.8%, respectively, and we cannot
assure you that we will generate substantial Internet-based commissions and fees
in the future.

WE FACE RISKS RELATING TO DEVELOPING TECHNOLOGY, INCLUDING THE INTERNET

The market for Internet products and services is characterized by rapid
technological developments, frequent new product introductions and evolving
industry standards. The emerging character of these products and services and
their rapid evolution will require our continuous improvement in performance,
features and reliability of our Internet content, particularly in response to
competitive offerings. We cannot assure you that we will be successful in
responding quickly, cost effectively and sufficiently to these developments. In
addition, the widespread adoption of new Internet technologies or standards
could require us to make substantial expenditures to modify or adapt our Web
sites and services. This could affect our business, financial condition and
operating results. New Internet services or enhancements which we have offered
or may offer in the future may contain design flaws or other defects that could
require expensive modifications or result in a loss of client confidence. Any
disruption in Internet access or in the Internet generally could have a material
adverse effect on our business, financial condition and operating results.

WE ARE VULNERABLE TO INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS BROUGHT AGAINST
US BY OTHERS

Successful intellectual property infringement claims against us could result
in monetary liability or a material disruption in the conduct of our business.
We cannot be certain that our products, content and brand names do not or will
not infringe valid patents, copyrights or other intellectual property rights
held by third parties. We expect that infringement claims in our markets will
increase in number as more participants enter the markets. We may be subject to
legal proceedings and claims from time to time relating to the intellectual
property of others in the ordinary course of our business. We may incur
substantial expenses in defending against these third party infringement claims,
regardless of their merit.

In April 1999, Monster Cable Products, Inc. commenced a civil action against
us claiming, among other things, trademark infringement for our use of the
Monster.com name. Although our trademark counsel believes the action to be
without merit, we are currently engaged in settlement discussions. There can be
no assurance, however, as to the ultimate disposition of this claim.

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POTENTIAL IMPACT OF THIRD-PARTY LITIGATION ON OUR AGREEMENT WITH AOL

On December 1, 1999, Monster.com entered into a content and marketing
agreement with AOL pursuant to which, for the payment of $100 million over four
years, Monster.com will be the exclusive provider for four years in the United
States and Canada of career search services to 21 million AOL users across seven
AOL brands: AOL, AOL Canada, Compuserve, ICQ, AOL.com, Netscape and Digital
City.

Subsequent to this date, Digital City, Inc. ("DCI"), a subsidiary of AOL,
sent notice of termination of an advertising agreement with HotJobs.com.,
pursuant to which HotJobs could purchase certain advertisements from DCI and
promote its content on DCI and other AOL properties (the "HotJobs Agreement").
By its terms, the HotJobs Agreement was to terminate on November 14, 2000.
HotJobs objected to the termination and on December 20, 1999, commenced a
lawsuit against DCI asking, among other things, that the Court compel DCI to
perform its obligations under the HotJobs Agreement and enjoin DCI from entering
into an exclusive agreement with any competitor of HotJobs. On December 30,
1999, HotJobs filed a motion for temporary and permanent injunction with the
Court seeking such relief, which we believe will be heard on January 31, 2000.
On January 7, 2000, Monster.com received an ex parte Order from a Massachusetts
state court to produce certain documents which Order was withdrawn after
Monster.com agreed to produce a limited number of documents. On January 14,
2000, DCI filed an initial pleading requesting that the lawsuit be dismissed. On
January 21, 2000, we were advised that DCI filed its papers in opposition to the
motion but that the Court directed the papers be filed under seal. On
January 27, 2000, redacted versions of DCI's memorandum of law in opposition to
the motion, and HotJobs' reply memorandum of law were made publicly available.
DCI in its papers asserts various defenses to HotJobs' motion. Although we can
give no assurance, we believe that the lawsuit will have no negative effect on
our rights to supply the career search services as specified in our agreement
with AOL.

COMPUTER VIRUSES MAY CAUSE OUR SYSTEMS TO INCUR DELAYS OR INTERRUPTIONS

Computer viruses may cause our systems to incur delays or other service
interruptions and could damage our reputation and have a material adverse effect
on our business, financial condition and operating results. The inadvertent
transmission of computer viruses could expose us to a material risk of loss or
litigation and possible liability. Moreover, if a computer virus affecting our
system is highly publicized, our reputation could be materially damaged and our
visitor traffic may decrease.

INTERNET USERS MAY NOT ACCEPT OUR INTERNET CONTENT

Our future growth depends in part on our ability to attract Internet users
who are valuable to our advertising clients. This in turn depends on our ability
to deliver original and compelling services to these Internet users. We cannot
assure you that our content will be attractive to enough Internet users to
generate material advertising commissions and fees. We also cannot assure you
that we will be able to anticipate, monitor and successfully respond to rapidly
changing consumer tastes and preferences to continue to attract a sufficient
number of Internet users to our Web sites.

Internet users can freely navigate and instantly switch among a large number
of Web sites, many of which offer original content. It is difficult for us to
distinguish our content and attract users. In addition, many other Web sites
offer very specific, highly targeted content. These sites could have greater
appeal than our sites to particular groups within our target audience.

WE FACE RISKS ASSOCIATED WITH OUR ACQUISITION STRATEGY

We expect our growth to continue, in part, by acquiring businesses. The
success of this strategy depends upon several factors, including:

- the continued availability of financing;

11
<PAGE>
- our ability to identify and acquire businesses on a cost-effective basis;

- our ability to integrate acquired personnel, operations, products and
technologies into our organization effectively; and

- our ability to retain and motivate key personnel and to retain the clients
of acquired firms.

We cannot assure you that financing for acquisitions will be available on
terms we find acceptable, or that we will be able to identify or consummate new
acquisitions, or manage and integrate our recent or future expansions
successfully. Any inability to do so would materially adversely affect our
business, financial condition and operating results. We also cannot assure you
that we will be able to sustain the rates of growth that we have experienced in
the past.

OUR MARKETS ARE HIGHLY COMPETITIVE

The markets for our services are highly competitive. They are characterized
by pressures to:

- reduce prices;

- incorporate new capabilities and technologies; and

- accelerate job completion schedules.

Furthermore, we face competition from a number of sources. These sources
include:

- national and regional advertising agencies;

- Internet portals;

- specialized and integrated marketing communication firms;

- traditional media companies;

- executive search firms; and

- search and selection firms.

In addition, many advertising agencies and publications have started either
to internally develop or acquire new media capabilities, including Internet. We
are also competing with established companies that provide integrated
specialized services like Web advertising services or Web site design, and are
technologically proficient. Many of our competitors or potential competitors
have long operating histories, and some may have greater financial, management,
technological development, sales, marketing and other resources than we do. In
addition, our ability to maintain our existing clients and attract new clients
depends to a large degree on the quality of our services and our reputation
among our clients and potential clients.

We have no significant proprietary technology that would preclude or inhibit
competitors from entering the online advertising, executive search, recruitment
advertising, or yellow page advertising markets. We cannot assure you that
existing or future competitors will not develop or offer services and products
which provide significant performance, price, creative or other advantages over
our services. This could have a material adverse effect on our business,
financial condition and operating results.

OUR OPERATING RESULTS FLUCTUATE FROM QUARTER TO QUARTER

Our quarterly operating results have fluctuated in the past and may
fluctuate in the future. These fluctuations are a result of a variety of
factors, including:

- the timing of acquisitions;

- the timing of yellow page directory closings, the largest number of which
currently occur in the third quarter; and

- the receipt of additional commissions, from yellow page publishers for
achieving a specified volume of advertising, which are typically reported
in the fourth quarter.

12
<PAGE>
Generally our quarterly commissions and fees earned from recruitment
advertising tend to be highest in the first quarter and lowest in the fourth
quarter. Additionally, recruitment advertising commissions and fees tend to be
more cyclical than yellow page commissions and fees. To the extent that a
significant percentage of our commissions and fees are derived from recruitment
advertising, our operating results may be subject to increased cyclicality.

EFFECT OF GLOBAL ECONOMIC FLUCTUATIONS

Demand for our services is significantly affected by the general level of
economic activity in the regions and industries in which we operate. When
economic activity slows, many companies hire fewer permanent employees.
Therefore, a significant economic downturn, especially in regions or industries
where our operations are heavily concentrated, could have a material adverse
effect on our business, financial condition and operating results. Further, we
may face increased pricing pressures during such periods. There can be no
assurance that during these periods our results of operations will not be
adversely affected.

WE DEPEND ON OUR CONSULTANTS

The success of our executive search business depends upon our ability to
attract and retain consultants who possess the skills and experience necessary
to fulfill our clients' executive search needs. Competition for qualified
consultants is intense. We believe that we have been able to attract and retain
highly qualified, effective consultants as a result of our reputation and our
performance-based compensation system. Consultants have the potential to earn
substantial bonuses based on the amount of revenue they generate by:

- obtaining executive search assignments;

- executing search assignments; and

- assisting other consultants to obtain or complete executive search
assignments.

Bonuses represent a significant proportion of consultants' total
compensation. Any diminution of our reputation could impair our ability to
retain existing or attract additional qualified consultants. Our inability to
attract and retain qualified consultants could have a material adverse effect on
our executive search business, financial condition and operating results.

OUR CONSULTANTS MAY DEPART WITH EXISTING EXECUTIVE SEARCH CLIENTS

The success of our executive search business depends upon the ability of our
consultants to develop and maintain strong, long-term relationships with
clients. Usually, one or two consultants have primary responsibility for a
client relationship. When a consultant leaves an executive search firm and joins
another, clients that have established relationships with the departing
consultant may move their business to the consultant's new employer. The loss of
one or more clients is more likely to occur if the departing consultant enjoys
widespread name recognition or has developed a reputation as a specialist in
executing searches in a specific industry or management function. Historically,
we have not experienced significant problems in this area. However, a failure to
retain our most effective consultants or maintain the quality of service to
which our clients are accustomed could have a material adverse effect on our
business, financial condition and operating results. Also, the ability of a
departing consultant to move business to his or her new employer could have a
material adverse effect on our business, financial condition and operating
results.

WE FACE RISKS MAINTAINING OUR PROFESSIONAL REPUTATION AND BRAND NAME

Our ability to secure new executive search engagements and hire qualified
professionals is highly dependent upon our overall reputation and brand name
recognition as well as the individual reputations of our professionals. We
obtain a majority of our new engagements from existing clients or from referrals
by existing clients. Therefore, the dissatisfaction of any client could have a
disproportionate, adverse impact

13
<PAGE>
on our ability to secure new engagements. Any factor that diminishes our
reputation or the reputation of any of our personnel could make it more
difficult for us to compete successfully for both new engagements and qualified
consultants. This could have an adverse effect on our executive search business,
financial condition and operating results.

WE FACE RESTRICTIONS IMPOSED BY BLOCKING ARRANGEMENTS

Either by agreement with clients or for marketing or client relationship
purposes, executive search firms frequently refrain, for a specified period of
time, from recruiting certain employees of a client, and possibly other entities
affiliated with such client, when conducting executive searches on behalf of
other clients. This is known as a "blocking" arrangement. Blocking arrangements
generally remain in effect for one or two years following completion of an
assignment. The actual duration and scope of any blocking arrangement, including
whether it covers all operations of a client and its affiliates or only certain
divisions of a client, generally depends on such factors as:

- the length of the client relationship;

- the frequency with which the executive search firm has been engaged to
perform executive searches for the client; and

- the number of assignments the executive search firm has generated or
expects to generate from the client.

Some of our executive search clients are recognized as industry leaders and/or
employ a significant number of qualified executives who are potential candidates
for other companies in that client's industry. Blocking arrangements with a
client of this nature, or the awareness by a client's competitors of such an
arrangement, may make it difficult for us to obtain executive search assignments
from, or to fulfill executive search assignments for, competitors while
employees of that client may not be solicited. As our client base grows,
particularly in our targeted business sectors, blocking arrangements
increasingly may impede our growth or ability to attract and serve new clients.
This could have an adverse effect on our executive search business, results of
operations and financial condition.

WE FACE RISKS RELATING TO OUR FOREIGN OPERATIONS

We conduct operations in various foreign countries, including Australia,
Belgium, Canada, France, Germany, Japan, the Netherlands, New Zealand,
Singapore, Spain and the United Kingdom. In 1998 and the nine months ended
September 30, 1999, approximately 44.0% and 46.0% of our total commissions and
fees were earned outside of the United States. Such amounts are collected in the
local currency. In addition, we generally pay operating expenses in the
corresponding local currency. Therefore, we are at risk for exchange rate
fluctuations between such local currencies and the dollar. We do not conduct any
significant hedging activities.

We are also subject to taxation in foreign jurisdictions. In addition,
transactions between us and our foreign subsidiaries may be subject to United
States and foreign withholding taxes. Applicable tax rates in foreign
jurisdictions differ from those of the United States, and change periodically.
The extent, if any, to which we will receive credit in the United States for
taxes we pay in foreign jurisdictions will depend upon the application of
limitations set forth in the Internal Revenue Code of 1986, as well as the
provisions of any tax treaties which may exist between the United States and
such foreign jurisdictions.

Other risks inherent in transacting foreign operations include changes in
applicable laws and regulatory requirements, tariffs and other trade barriers
and political instability.

WE DEPEND ON OUR KEY PERSONNEL

Our continued success will depend to a significant extent on our senior
management, including Andrew J. McKelvey, our Chairman of the Board and CEO. The
loss of the services of Mr. McKelvey or of

14
<PAGE>
one or more key employees could have a material adverse effect on our business,
financial condition and operating results. In addition, if one or more key
employees join a competitor or form a competing company, the resulting loss of
existing or potential clients could have a material adverse effect on our
business, financial condition and operating results. If we were to lose a key
employee, we cannot assure you that we would be able to prevent the unauthorized
disclosure or use of our procedures, practices, new product development or
client lists.

WE ARE CONTROLLED BY A PRINCIPAL STOCKHOLDER

Following completion of this offering, Andrew J. McKelvey will beneficially
own all of our outstanding Class B common stock and 10,886,564 shares of our
common stock, which together represent approximately 52.9% of the combined
voting power of all classes of our voting stock. Mr. McKelvey can direct the
election of all of the members of our board. He can also exercise a controlling
influence over our business and affairs. This includes any determinations with
respect to mergers or other business combinations, the acquisition or
disposition of our assets, whether or not we incur indebtedness, the issuance of
any additional common stock or other equity securities and the payment of
dividends with respect to common stock. Similarly, Mr. McKelvey may determine
matters submitted to a vote of our stockholders without the consent of our other
stockholders and he has the power to prevent a change of control.

EFFECTS OF ANTI-TAKEOVER PROVISIONS COULD INHIBIT OUR ACQUISITION

Some of the provisions of our certificate of incorporation, bylaws and
Delaware law could, together or separately:

- discourage potential acquisition proposals;

- delay or prevent a change in control; and

- limit the price that investors might be willing to pay in the future for
shares of our common stock.

In particular, our board of directors may issue up to 800,000 shares of
preferred stock with rights and privileges that might be senior to our common
stock, without the consent of the holders of the common stock. Our certificate
of incorporation and bylaws provide, among other things, for advance notice of
stockholder proposals and director nominations.

THERE MAY BE VOLATILITY IN OUR STOCK PRICE

The market for our common stock has, from time to time, experienced extreme
price and volume fluctuations. Factors such as announcements of variations in
our quarterly financial results and fluctuations in advertising commissions and
fees, including the percentage of our commissions and fees derived from
Internet-based services and products could cause the market price of our common
stock to fluctuate significantly. Further, due to the volatility of the stock
market generally, the price of our common stock could fluctuate for reasons
unrelated to our operating performance.

The market price of our common stock is based in large part on professional
securities analysts' expectations that our business will continue to grow and
that we will achieve certain levels of net income. If our financial performance
in a particular quarter does not meet the expectations of securities analysts,
this may adversely affect the views of those securities analysts concerning our
growth potential and future financial performance. If the securities analysts
who regularly follow our common stock lower their ratings of our common stock or
lower their projections for our future growth and financial performance, the
market price of our common stock is likely to drop significantly.

WE FACE RISKS ASSOCIATED WITH GOVERNMENT REGULATION

As an advertising agency which creates and places print and Internet
advertisements, we are subject to Sections 5 and 12 of the U.S. Federal Trade
Commission Act. These sections regulate advertising in all

15
<PAGE>
media, including the Internet, and require advertisers and advertising agencies
to have substantiation for advertising claims before disseminating
advertisements. The FTC Act prohibits the dissemination of false, deceptive,
misleading, and unfair advertising, and grants the Federal Trade Commission
enforcement powers to impose and seek civil penalties, consumer redress,
injunctive relief and other remedies upon advertisers and advertising agencies
which disseminate prohibited advertisements. Advertising agencies like us are
subject to liability under the FTC Act if the agency actively participated in
creating the advertisement, and knew or had reason to know that the advertising
was false or deceptive.

In the event that any advertising that we have created is found to be false,
deceptive or misleading, the FTC Act could potentially subject us to liability.
The fact that the FTC has recently brought several actions charging deceptive
advertising via the Internet, and is actively seeking new cases involving
advertising via the Internet, indicates that the FTC Act could pose a somewhat
higher risk of liability to the advertising distributed via the Internet. The
FTC has never brought any actions against us.

In addition, we cannot assure you that other current or new government laws
and regulations, or the application of existing laws and regulations will not:

- subject us to significant liabilities;

- significantly dampen growth in Internet usage;

- prevent us from offering certain Internet content or services; or

- otherwise have a material adverse effect on our business, financial
condition and operating results.

WE HAVE NEVER PAID DIVIDENDS

We currently intend to retain earnings, if any, to support our growth
strategy. We do not anticipate paying dividends on our stock in the foreseeable
future. In addition, payment of dividends on our stock is restricted by our
financing agreement.

16
<PAGE>
USE OF PROCEEDS

Our net proceeds from the sale of the 4,000,000 shares of common stock are
estimated to be $594.3 million, after deducting the underwriting discounts and
commissions and estimated offering expenses payable by us.

We will use approximately $100 million of the net proceeds to repay debt
held by our primary lender, which was approximately $110 million at
September 30, 1999, including $25 million which is reflected as a reduction of
accounts receivable. The interest rate on the debt is the higher of (a) the
prime rate or (b) the Federal Funds rate less 0.5% or (c) LIBOR plus a margin
determined by the ratio of debt to EBITDA. At September 30, 1999, this margin
was 0.75%. At September 30, 1999, we were paying interest at the rate of
approximately 6.15%, annually. Our financing agreement provides for borrowings
of up to $185 million at any time outstanding and expires November 5, 2003. In
addition, we plan to make strategic equity investments of approximately $50
million in Internet businesses which have synergies with our traditional
businesses and overseas businesses which have synergies with our current
Internet business. The remaining net proceeds will be used for general corporate
purposes, including working capital. Pending such uses, the net proceeds will be
invested in short term, interest bearing, investment grade securities.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our stock. We currently
anticipate that we will retain all future earnings to support our growth
strategy. Accordingly, we do not anticipate paying cash dividends on our stock
for the foreseeable future. Currently, our financing agreement restricts the
payment of dividends on our stock. The payment of any future dividends will be
at the discretion of our Board of Directors and will depend upon, among other
things, future earning, operations, capital requirements, our general financial
condition, contractual restrictions and general business conditions.

PRICE RANGE OF COMMON STOCK

Our common stock is quoted on the Nasdaq National Market under the ticker
symbol "TMPW." The following table sets forth for the periods indicated the high
and low reported closing sale prices per share for our common stock as reported
by Nasdaq.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 2000 HIGH LOW
- ---------------------------- -------- --------
<S> <C> <C>
First Quarter (through January 27, 2000)............... $173.00 $121.00

<CAPTION>
YEAR ENDED DECEMBER 31, 1999 HIGH LOW
- ---------------------------- -------- --------
First Quarter. $ 69.88 $ 39.00
<S> <C> <C>
Second Quarter......................................... 89.38 43.00
Third Quarter.......................................... 65.63 44.13
Fourth Quarter......................................... 160.31 50.00

<CAPTION>
YEAR ENDED DECEMBER 31, 1998 HIGH LOW
- ---------------------------- -------- --------
First Quarter. $ 32.62 $ 21.25
<S> <C> <C>
Second Quarter......................................... 34.88 25.50
Third Quarter.......................................... 38.88 27.88
Fourth Quarter......................................... 42.00 20.50
</TABLE>

There were approximately 1,400 stockholders of record of our common stock on
January 27, 2000. On January 27, 2000, the last reported sale price of our
common stock as reported by Nasdaq was $154.625.

17
<PAGE>
CAPITALIZATION

The following table sets forth our capitalization as of September 30, 1999,
(i) on a historical basis and (ii) on a historical basis, as adjusted, to give
effect to our sale of 4,000,000 shares of common stock at the public offering
price of $154.625 per share, assuming the underwriters' over-allotment option is
not exercised, and our application of the net proceeds. The table set forth
below should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations," and the consolidated
financial statements and notes thereto incorporated by reference in this
prospectus.

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999
-------------------------
AS
ACTUAL ADJUSTED
--------- ----------
(IN THOUSANDS)
<S> <C> <C>
Current portion of long-term debt........................... $ 8,898 $ 8,898
======== ========
Long-term debt, less current portion........................ $101,198 $ 16,426
-------- --------
Stockholders' equity:
Preferred stock, $.001 par value.
Authorized--800,000 shares; issued and outstanding--none
actual and as adjusted.................................. -- --
Common stock, $.001 par value.
Authorized--200,000,000 shares; issued and outstanding--
actual 37,788,761 and as adjusted 41,788,761............ 38 42
Class B common stock, $.001 par value.
Authorized--39,000,000 shares; issued and outstanding--
actual 2,381,000 and as adjusted 2,381,000.............. 2 2
Additional paid-in capital................................ 300,413 894,709
Other comprehensive loss.................................. (4,363) (4,363)
Deficit................................................... (36,045) (36,045)
-------- --------
Total stockholders' equity.............................. 260,045 854,345
-------- --------
Total capitalization................................ $361,243 $870,771
======== ========
</TABLE>

18
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following selected consolidated financial information with respect to
our financial position as of December 31, 1996, 1997 and 1998 and our results of
operations for each of the years ended December 31, 1996, 1997 and 1998 have
been derived from our audited consolidated financial statements which are
incorporated by reference in this prospectus. The selected consolidated
financial information with respect to the results of our operations for the nine
months ended September 30, 1998 and 1999 and with respect to our financial
position as of September 30, 1998 and 1999 have been derived from the unaudited
consolidated financial statements which, in the opinion of our management, have
been prepared on the same basis as the audited financial statements and include
all normal and recurring adjustments necessary for a fair presentation of the
information set forth therein. The results for the nine months ended
September 30, 1999 are not necessarily indicative of future results. The
selected consolidated financial information presented below should be read in
conjunction with our supplemental consolidated financial statements and our
supplemental consolidated condensed financial statements and notes thereto,
incorporated by reference in this prospectus, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this prospectus. The Other Data presented below has not been audited.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------ -----------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Commissions & fees.......................................... $ 399,039 $ 541,828 $ 657,486 $ 496,872 $ 561,481
---------- ---------- ---------- ---------- ----------
Operating expenses:
Salaries and related costs................................ 232,249 310,168 382,689 288,045 327,046
Office and general expenses............................... 115,191 152,824 190,204 136,639 173,053
Merger & integration costs................................ -- -- 22,412 9,577 46,262
Restructuring charges..................................... -- -- 3,543 -- 2,789
Amortization of intangibles............................... 4,732 6,866 10,185 7,394 8,564
Special compensation and special CEO bonus................ 52,019(1) 1,500 1,250 1,125 --
---------- ---------- ---------- ---------- ----------
Total operating expenses.................................. 404,191 471,358 610,283 442,780 557,714
---------- ---------- ---------- ---------- ----------
Operating income (loss)................................... (5,152) 70,470 47,203 54,092 3,767
---------- ---------- ---------- ---------- ----------
Other expense:
Interest expense, net..................................... (14,358) (8,443) (9,828) (7,035) (6,272)
Other, net................................................ (370) 821 (2,042) (932) (851)
---------- ---------- ---------- ---------- ----------
Total other expense, net................................ (14,728) (7,622) (11,870) (7,967) (7,123)
---------- ---------- ---------- ---------- ----------
Income (loss) before provision for income taxes, minority
interests and equity in income (losses) of affiliates..... (19,880) 62,848 35,333 46,125 (3,356)
Provision for income taxes.................................. 11,058 20,565 14,367 16,637 1,154
---------- ---------- ---------- ---------- ----------
Income (loss) before minority interests and equity in income
(losses) of affiliates.................................... (30,938) 42,283 20,966 29,488 (4,510)
Minority interests.......................................... 1,017 296 28 (18) 107
Equity in income (losses) of affiliates..................... 114 (33) (396) (297) (300)
---------- ---------- ---------- ---------- ----------
Net income (loss)........................................... (31,841) 41,954 20,542 29,209 (4,917)
Preferred stock dividend and redemption premium............. (210) (123) -- -- --
---------- ---------- ---------- ---------- ----------
Net income (loss) applicable to common and Class B common
stockholders.............................................. $ (32,051) $ 41,831 $ 20,542 $ 29,209 $ (4,917)
========== ========== ========== ========== ==========
Net income (loss) per common and Class B common share:
Basic....................................................... $ (1.04) $ 1.15 $ 0.53 $ 0.75 $ (0.12)
========== ========== ========== ========== ==========
Diluted..................................................... $ (1.04) $ 1.13 $ 0.52 $ 0.73 $ (0.12)
========== ========== ========== ========== ==========
Weighted average shares outstanding:
Basic....................................................... 30,954 36,333 38,736 38,696 39,611
Diluted..................................................... 30,954 36,954 39,639 39,802 39,611
</TABLE>

19
<PAGE>

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
------------------------------ -------------------
1996 1997 1998 1998 1999
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Current assets.............................................. $321,761 $444,144 $475,082 $522,240 $529,878
Current liabilities......................................... 320,038 414,278 431,443 447,827 505,869
Total assets................................................ 475,519 721,066 802,535 825,312 883,684
Long-term debt, less current portion........................ 78,151 130,011 123,106 133,745 101,198
Minority interests.......................................... 3,705 431 509 431 --
Total stockholders' equity.................................. 65,257 166,445 228,750 231,639 260,045
</TABLE>

- ------------------------------
(1) For 1996, special compensation of $52.0 million consists of a non-cash,
non-recurring charge that reflects the value of shares issued in connection
with the acquisition of the minority interests in our predecessors because
the stockholders had received such shares for nominal or no consideration
and, accordingly, were not considered to have made a substantive investment
for their shares. The value of such shares was based on the per share
initial public offering price of $14.00 for our common stock.

OTHER DATA:
Gross billings:
Internet................................................ $ 6,939 $ 20,553 $ 56,666 $ 36,077 $ 93,734
Recruitment advertising................................. 369,979 642,872 849,563 646,141 615,488
Search & selection...................................... 194,848 244,153 277,304 215,630 221,699
Temporary contacting.................................... 29,210 41,285 46,989 33,027 44,866
Yellow page advertising................................. 466,230 497,848 520,129 406,349 413,692
---------- ---------- ---------- ---------- ----------
Total gross billings...................................... $1,067,206 $1,446,711 $1,750,651 $1,337,224 $1,389,479
========== ========== ========== ========== ==========

Number of employees....................................... 3,910 5,651 6,278 6,270 6,412
Number of offices......................................... 161 213 254 254 247
</TABLE>

20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

OVERVIEW

A substantial part of our growth in recruitment advertising and yellow page
advertising has been achieved through acquisitions. For the period January 1,
1996 through September 30, 1999, we completed 58 acquisitions which were
accounted for under the purchase method and which had estimated annual gross
billings of approximately $662.7 million, based on annual gross billings for the
fiscal year immediately preceding the respective acquisition. Given the
significant number of acquisitions in each of the periods presented, the results
of operations from period to period may not necessarily be comparable. In
addition, for the period May 1, 1998 through October 31, 1999, we completed 20
mergers which were accounted for as poolings of interests.

Of the pooling of interests mergers, the seven completed prior to April 1,
1999 are Johnson, Smith & Knisely Inc. ("JSK"), TASA Holding AG ("TASA"),
Stackig, Inc. ("Stackig"), Recruitment Solutions Inc., Sunquest L.L.C. d.b.a.
The SMART Group and The Consulting Group (International) Limited ("TCG"), in
1998 (the "1998 Mergers"), and Morgan & Banks Limited ("M&B") in January 1999
(the "M&B Merger"). In connection with these mergers, we issued approximately
8.7 million shares of our common stock in exchange for all of the outstanding
common stock of these seven companies. From April 1, 1999 through June 30, 1999,
we completed pooling of interests mergers (the "Second Quarter 1999 Mergers"),
with six companies, Interquest, Pty. Limited ("Interquest"), LIDA
Advertising Inc. ("LIDA"), Maes & Lunau ("M&L"), IN2, Inc. ("IN2"), Lemming &
LeVan, Inc. ("L&L"), and Yellow Pages Unlimited, Inc. ("YPU"), (the "Second
Quarter 1999 Pooled Companies"). In connection with the Second Quarter 1999
Mergers we issued a total of approximately 0.9 million shares of our common
stock in exchange for all of the outstanding stock of the Second Quarter 1999
Pooled Companies. From July 1, 1999 through September 30, 1999, we completed
pooling of interests mergers (the "Third Quarter 1999 Mergers"),with the five
companies, Cameron-Newell Advertising, Inc. ("CNA"), Brook Street Bureau (QLD)
Pty Ltd ("Brook St."), LAI Worldwide, Inc. ("LAI"), Fox Advertising Inc. ("Fox")
and Lampen Group Limited ("Lampen") (the "Third Quarter 1999 Pooled Companies").
In connection with the Third Quarter 1999 Mergers we issued a total of
approximately 2.2 million shares of our common stock in exchange for all of the
outstanding stock of the Third Quarter 1999 Pooled Companies. Furthermore, from
October 1, 1999 through November 19, 1999, we completed mergers with the two
companies listed below (the "Fourth Quarter 1999 Pooled Companies"), which
provided for the exchange of all of the outstanding stock of such companies for
a total of 758,613 shares of our common stock and which were accounted for as
poolings of interests (the "Fourth Quarter 1999 Mergers").

<TABLE>
<CAPTION>
NATURE OF REGION OF NUMBER OF TMP
ENTITY OPERATIONS OPERATIONS ACQUISITION DATE SHARES ISSUED
- ------ ------------------ -------------------- ---------------- -------------
<S> <C> <C> <C> <C>
Highland Search Group
L.L.C.
("Highland")....... Search & selection North America October 21, 1999 699,333
TMC S.r.l. ("Amrop
Italy")............ Search & selection Continental Europe October 27, 1999 59,280
</TABLE>

Accordingly, the following discussion reflects the foregoing mergers which
were accounted for as poolings of interest.

Gross billings refer to billings for advertising placed on the Internet, in
newspapers and telephone directories by our clients, and associated fees for
related services, fees earned for search and selection and related services, and
net fees from temporary contracting services. Gross billings for recruitment
advertising and yellow page advertising are not included in our consolidated
financial statements, because they include a substantial amount of funds that
are collected from our clients but passed through to publishers

21
<PAGE>
for advertisements. However, the trends in gross billings in these businesses
directly impact the commissions and fees earned because, for recruitment and
yellow page advertising, we earn commissions based on a percentage of the media
advertising purchased at a rate established by the related publisher. We also
earn associated fees for related services. Publishers and third party Web sites
typically bill us for the advertising purchased on the website and we in turn
bill our clients for this amount. Generally, the payment terms with yellow page
clients require payment to us prior to the date payment is due to publishers.
The payment terms with recruitment advertising clients typically require payment
when payment is due to publishers. Historically, we have not experienced
substantial problems with unpaid accounts.

Commissions and fees related to our Internet business are derived from:

- job postings and access to the resume database and related services
delivered via the Internet, primarily our own Web site, Monster.com(SM),

- searches for permanent employees and temporary contracting services
conducted through the Internet,

- Internet advertising services provided to our yellow page clients and

- the providing of interactive advertising services and technologies, which
allow advertisers to measure and track sales, repeat traffic and other key
statistics to enable such advertisers to greatly reduce costs, while
driving only the most qualified users to their websites.

For recruitment advertising placements in the U.S., publisher commissions
historically average 15% of recruitment advertising gross billings. We also earn
fees from related services such as campaign development and design, retention
and referral programs, brochures and other collateral services, research and
other creative and administrative services. Outside of the U.S., where,
collectively, we derive the majority of our recruitment advertising commissions
and fees, our commission rates for recruitment advertising vary, historically
ranging from approximately 10% in Australia to 15% in Canada and the United
Kingdom.

Through our search and selection services, we identify and screen candidates
for hiring by clients based on criteria established by such clients. We entered
the executive search business in 1998 by acquiring JSK, the 12th largest
executive search firm in the U.S. according to Kennedy Publications, an official
ranking service for the search industry, TASA, an international executive search
firm, both of which were accounted for as poolings of interests, and five
regional European firms, including TCG, whose acquisition was accounted for as a
pooling of interests. In the first quarter of 1999 we merged with M&B, the
largest search and selection firm in Australia, in a pooling of interests
transaction and acquired two European search and selection firms (one with
operations in eastern Europe and one in Belgium). In the second quarter of 1999,
in pooling of interests transactions, we merged with three companies with
search and selection operations, M&L in the Netherlands, L&L in the United
States and Interquest in Australia. In the third quarter of 1999, in a pooling
of interests transaction, we merged with LAI, the 5th largest executive search
firm in the U.S. (according to Hunt-Scanlon Publishing, Inc., a publication that
follows the executive search industry). In the fourth quarter of 1999, in
pooling of interests transactions, we merged with Highland, based in the United
States, and Amrop Italy. We provide executive search services on a retained
basis whereby we are generally paid a contractually agreed-to fee. In addition,
we expanded our temporary contracting services in Australia, New Zealand and the
United Kingdom with the additions of Brook St. and Lampen, which also have
selection operations in those regions. In general, we bill our temporary
contracting clients for the cost of the temporary contract employees plus a
margin for providing the service. Commissions and fees for temporary contracting
however are reported in our financial statements after deducting the costs of
the temporary contractors.

We design and execute yellow page advertising programs, receiving an
effective commission rate from directory publishers which historically
approximated 20% of yellow page gross billings. However, due to reductions in
commission rates by the publishers and higher discounts granted by us to
clients, the rate has

22
<PAGE>
declined and for 1999 is approximately 19% and is expected to decline to
approximately 18% by the middle of 2000. In general, publishers consider orders
renewed unless formally canceled. In addition to base commissions, certain
yellow pages publishers pay increased commissions for volume placement by
advertising agencies. We typically recognize this additional commission, if any,
in the fourth quarter when it is certain that such commission has been earned.
The amounts reported in the fourth quarters of 1998, 1997 and 1996 were
$0.9 million, $2.2 million and $3.5 million, respectively.

Internet commissions and fees increased from $6.9 million in 1996 to
$50.2 million in 1998 reflecting an increase in the acceptance of our Internet
products by existing and new clients and the effect of increased sales and
marketing activities. Recruitment advertising commissions and fees increased
from $76.6 million in 1996 to $177.8 million in 1998 as a result of acquisitions
made from January 1, 1996 through December 31, 1998 and which are included in
our financial statements using the purchase method of accounting from their
respective dates of acquisition. Search and selection commissions and fees grew
from $185.4 million in 1996 to $276.1 million in 1998 primarily as a result of
increased demand for these services by new and existing clients. Temporary
contracting commissions and fees increased from $29.2 million in 1996 to
$47.0 million in 1998 reflecting a greater demand for executive and information
technology temporary contract personnel. Yellow page advertising commissions and
fees increased from $100.9 million in 1996 to $106.5 million in 1998, as a
result of acquisitions made from January 1, 1996 through December 31, 1998 and
which are included in the financial statements using the purchase method of
accounting. We are continuously monitoring the marketplace for opportunities to
expand our presence in recruitment advertising on the Internet, search and
selection, temporary contracting and yellow page advertising, and intend to
continue our acquisition strategy to supplement our internal growth and the
expansion of our businesses.

Based on our consolidated results for the years ended December 31, 1998,
1997 and 1996, 44%, 42%, and 40%, respectively, of our consolidated commissions
and fees were attributable to clients outside the U.S.

Our total operating expenses have increased significantly since 1996
primarily as a result of acquisitions and added expenses to support gross
billings growth for our Internet and recruitment businesses and marketing for
our Internet business.

Salaries and related costs increased $150.5 million to $382.7 million for
the year ended December 31, 1998 from $232.2 million for the year ended
December 31, 1996, a 64.8% increase, supporting a $683.4 million or a 64.0%
increase in gross billings over the same period. When measured as a percent of
gross billings, salaries and related costs for the year ended December 31, 1998
were 21.9%, up slightly from 21.8% for the comparable 1996 period. Salaries and
related costs include total payroll and associated benefits as well as payroll
taxes, sales commissions, recruitment fees and training costs.

Office and general expenses increased $75.0 million to $190.2 million for
the year ended December 31, 1998 from $115.2 million for the year ended
December 31, 1996, a 65.1% increase. This increase is due primarily to increased
costs needed to support the increased gross billings, the expansion of
recruitment and search and selection offices through acquisitions in the U.S.
and foreign markets, and expansion of our infrastructure and marketing costs to
promote the growth of our Internet business. When measured as a percent of gross
billings, office and general expenses for the year ended December 31, 1998 were
10.9%, a slight increase from 10.8% for the comparable 1996 period. This cost
category includes expenses for office operations, business promotion, market
research, advertising, professional fees and fees paid to our primary lending
institution for its services in the processing and collection of payments for
accounts receivable, gains or losses from the sale of operating assets, and
costs associated with legal settlements.

Merger and integration costs are expenses incurred in connection with
business combinations accounted for under the pooling of interests method of
accounting. In general, these costs are comprised of transaction costs (such as
advisory, legal and accounting fees, printing costs and costs incurred for the
subsequent registration of shares in connection with the transactions), stay
bonuses, costs to eliminate

23
<PAGE>
redundant facilities and personnel, costs to integrate operations of the pooled
entities and acceleration of benefits and separation pay in accordance with
pre-existing contractual change in control provisions.

For the year ended December 31, 1998, we expensed merger and integration
costs of $22.4 million in connection with the 1998 Mergers and the M&B Merger.
These costs consist of (1) $11.9 million of non-cash employee stay bonuses,
(2) $1.5 million of stay bonuses paid as cash to key personnel of the 1998
Pooled Companies and (3) $9.0 million of transaction related costs, including
legal, accounting and advisory fees and the costs incurred for the subsequent
registration of shares issued in the mergers.

For the nine months ended September 30, 1999, we expensed merger and
integration costs of $46.3 million compared with $9.6 million for the same
period in 1998 an increase of $36.7 million or 383.1%. These costs are related
to the 1998 Mergers, the M&B Merger, the Second Quarter 1999 Mergers, and the
Third Quarter 1999 Mergers. The increase of $36.7 million primarily resulted
from the pooling of interests transactions that occurred in the quarter ended
September 30, 1999 and the planned integration of such companies. The increase
is due to: (1) $4.8 million for separation pay and accelerated vesting of
employee stock and stock option grants, both in accordance with pre-existing
contractual change in control provisions, (2) $7.8 million more of transaction
related costs, which include legal, accounting, printing and advisory fees and
the costs incurred for the subsequent registration of shares issued in the
transactions and (3) $25.2 million of office integration costs, which include
the closing of excess leased facilities, the write-off of fixed assets which
will not be used in the future and a reserve for the effect, after reduction for
related compensation, of uncollectible search fees recorded as a result of a
loss of executive search consultants, partially offset by $4.4 million less for
employee stay bonuses paid with our shares and options to certain key personnel
of the merged companies. Approximately $18.5 million of the $46.3 million are
non-cash charges. The after tax effect of these charges on diluted earnings per
share is $(0.73) and $(0.16) for the nine months ended September 30, 1999 and
1998, respectively. We expect to incur additional integration costs in
connection with the Third Quarter 1999 Mergers in future periods. These costs
will be primarily related to severance and will be recorded when the associated
integration plans are finalized. Furthermore, we will incur merger and
integration costs associated with the Fourth Quarter 1999 Mergers, including
amortization of the cost of 160,120 shares of our common stock that were issued
as stay bonuses to certain key employees of Highland and that will vest one year
from the date of grant.

Restructuring costs for the year ended December 31, 1998 were $3.5 million
or, on an after tax basis, $(0.05) per diluted share. These charges relate to
LAI's plan to significantly curtail the operations of its London office, and
include the write-off of leasehold improvements and fixed assets, severance
benefits and costs for consolidation of facilities related to the restructuring.

Amortization of intangibles includes amortization of acquisition related
charges, including the costs in excess of fair market value of net assets of
business acquisitions accounted for under the purchase method and capitalized
costs for non-compete arrangements with the principals of acquired companies.
This acquisition related amortization was $10.2 million, $6.9 million and
$4.7 million for the years ended December 31, 1998, 1997 and 1996, respectively
and $8.6 million and $7.4 million for the nine months ended September 30, 1999
and 1998, respectively.

The special CEO bonus for the years ended December 31, 1998 and 1997 of
$1.3 million and $1.5 million reflects a non-cash charge, recorded in compliance
with Staff Accounting Bulletin No. 79 ("SAB 79"), for a bonus mandated by Andrew
J. McKelvey's employment contract, even though such bonus was irrevocably
waived. The contractual obligation to pay such bonus was eliminated as of
November 1998. The special compensation for the year ended December 31, 1996,
reflects a non-cash, non-recurring charge of approximately $52.0 million
resulting from the issuance of approximately 3.6 million shares of our common
stock to stockholders of our predecessor companies in exchange for their shares
in those companies. This charge was incurred because these stockholders had
received such shares for nominal or no consideration as employees or as
management of such companies and, accordingly, were not considered to have made
substantive investments for their shares.

24
<PAGE>
Net interest expense includes interest: (i) on loans made by our primary
lender under our financing agreement with such lender, (ii) to certain vendors,
(iii) on capitalized lease obligations, (iv) on net amounts payable to the
holders of seller financed notes and (v) on a term loan related to the purchase
of certain transportation equipment. In addition, 1996 net interest expense
includes a non-recurring charge of approximately $2.6 million to reflect, upon
exercise of the warrant issued in connection with our financing agreement, the
difference between the value of the stock issued at the initial public offering
price of $14.00 per share and the value recorded for the warrant when it was
originally issued.

RESULTS OF OPERATIONS

The following table sets forth our gross billings, commissions and fees,
commissions and fees as a percentage of gross billings, EBITDA and cash flow
information.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------ -----------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
GROSS BILLINGS:
Internet(1)........................ $ 6,939 $ 20,553 $ 56,666 $ 36,077 $ 93,734
Recruitment advertising............ 369,979 642,872 849,563 646,141 615,488
Search & selection................. 194,848 244,153 277,304 215,630 221,699
Temporary contracting(2)........... 29,210 41,285 46,989 33,027 44,866
Yellow page advertising............ 466,230 497,848 520,129 406,349 413,692
---------- ---------- ---------- ---------- ----------
Total billings..................... $1,067,206 $1,446,711 $1,750,651 $1,337,224 $1,389,479
========== ========== ========== ========== ==========
COMMISSIONS & FEES:
Internet(1)........................ $ 6,939 $ 19,470 $ 50,158 $ 32,688 $ 82,952
Recruitment advertising............ 76,601 134,291 177,774 133,858 134,928
Search & selection................. 185,406 242,841 276,110 214,765 219,213
Temporary contracting(2)........... 29,210 41,285 46,989 33,027 44,866
Yellow page advertising............ 100,883 103,941 106,455 82,534 79,522
---------- ---------- ---------- ---------- ----------
Total commissions & fees........... $ 399,039 $ 541,828 $ 657,486 $ 496,872 $ 561,481
========== ========== ========== ========== ==========
COMMISSIONS AND FEES AS A
PERCENTAGE OF GROSS BILLINGS:
Internet........................... 100.0% 94.7% 88.5% 90.6% 88.5%
Recruitment advertising............ 20.7 20.9 20.9 20.7 21.9
Search & selection................. 95.2 99.5 99.6 99.6 98.9
Temporary contracting.............. 100.0 100.0 100.0 100.0 100.0
Yellow page advertising............ 21.6 20.9 20.5 20.3 19.2
Total commissions & fees........... 37.4 37.5 37.6 37.2 40.4

EBITDA(3).......................... $ 7,755 $ 92,420 $ 79,075 $ 77,492 $ 32,591
Cash provided by operating
activities....................... 37,097 51,251 63,617 32,686 55,846
Cash used in investing
activities....................... (46,401) (89,726) (66,519) (79,985) (31,952)
Cash provided by (used in)
financing activities............. 13,368 65,524 20,093 32,680 (28,782)
Effect of exchange rate changes on
cash............................. (151) (298) (7) (56) (648)
</TABLE>

- ------------------------

(1) Represents fees earned in connection with recruitment advertising placed on
the Internet, primarily Monster.com(SM), searches for permanent employees
and temporary contracting services conducted through the Internet, Internet
services provided to yellow page clients and from providing interactive
advertising services and technologies.

(2) Amounts for temporary contracting are reported after deducting the costs of
the temporary contractors.

(3) Earnings before interest, income taxes, depreciation and amortization
("EBITDA") is presented to provide additional information about our ability
to meet our future debt service, capital expenditures

25
<PAGE>
and working capital requirements and is one of the measures which determines
our ability to borrow under our credit facility. EBITDA should not be
considered in isolation or as a substitute for operating income, cash flows
from operating activities and other income or cash flow statement data
prepared in accordance with generally accepted accounting principles or as a
measure of our profitability or liquidity.

EBITDA for the indicated periods is calculated as follows:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------ ----------------------
1996 1997 1998 1998 1999
-------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net income (loss)......................... $(31,841) $41,954 $20,542 $29,209 $(4,917)
Interest expense, net..................... 14,358 8,443 9,828 7,035 6,272
Income tax expense........................ 11,058 20,565 14,367 16,637 1,154
Depreciation and amortization............. 14,180 21,458 34,338 24,611 30,082
-------- ------- ------- ------- -------
EBITDA.................................... $ 7,755 $92,420 $79,075 $77,492 $32,591
======== ======= ======= ======= =======
</TABLE>

NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 1998

Gross billings for the nine months ended September 30, 1999 were
$1,389.5 million, a net increase of $52.3 million or 3.9% from $1,337.2 million
for the nine months ended September 30, 1998. Commissions and fees for the nine
months ended September 30, 1999 were $561.5 million, an increase of
$64.6 million or 13.0% from $496.9 million in the first nine months of 1998.
Internet commissions and fees for the nine months ended September 30, 1999 were
$83.0 million, an increase of 153.8% or $50.3 million as compared with
$32.7 million for the nine months ended September 30, 1998. This increase in
Internet commissions and fees is due to: (i) an increasing acceptance of our
Internet services and products from existing clients, new clients and Internet
users, (ii) the benefits of Monster.com(SM)'s marketing campaign,
(iii) increases in the services and content available on our Websites,
(iv) expansion into certain European markets and (v) price increases on certain
products. Recruitment commissions and fees were $134.9 million for the nine
months ended September 30, 1999 compared with $133.9 million for the nine months
ended September 30, 1998, an increase of $1.0 million or 0.8% due primarily to
lower discounts to clients and increased ancillary services in North America
offset, in part, by a loss of business in the Asia\Pacific Region which was
ameliorated by an increase in business in Europe. Search and selection
commissions and fees were $219.2 million, an increase of $4.4 million or 2.1%
from $214.8 million for the comparable nine months of 1998, due primarily to
acquisitions and growth in Continental Europe offset by a decline in executive
search due to a loss of consultants, as anticipated, at LAI and TASA, which
resulted from the merger and integration of these companies. Temporary
contracting commissions and fees were $44.9 million, up $11.9 million or 35.8%
from $33.0 million for the period ended September 30, 1998. Our temporary
contracting operations are primarily conducted in Australia and New Zealand. The
35.8% increase reflects an increase in the number of contractors placed,
particularly information technology personnel and executives, which have higher
margins than general and support staff. Yellow page commissions and fees were
$79.5 million for the nine months ended September 30, 1999, a decrease of
$3.0 million or 3.6% from $82.5 million in the first nine months of 1998
primarily due to increased discounts to clients and lower commissions paid by
publishers offset, in part by higher gross billings from internal growth and
acquisitions.

Operating expenses for the nine months ended September 30, 1999 were
$557.7 million compared with $442.8 million for the same period in 1998. The
increase of $114.9 million or 25.9% is due to an increase of $36.7 million in
merger and integration costs related to mergers accounted for as poolings of
interests, acquisitions accounted for as purchases, higher operating and
marketing costs to support our expanding Internet operations and $2.8 million in
restructuring expenses resulting from the closings of LAI's Hong Kong and London
offices.

26
<PAGE>
Salaries and related costs for the nine months ended September 30, 1999 were
$327.0 million or 58.2% of total commissions and fees, compared with
$288.0 million or 58.0% of total commissions and fees for the same period in
1998. The increase of $39.0 million or 13.5% is primarily due to increased staff
for Internet operations additions and acquisitions in search and selection.

Office and general expenses for the nine months ended September 30, 1999
were $173.1 million or 30.8% of total commissions and fees, compared with
$136.6 million or 27.5% of commissions and fees for the same period in 1998. The
increase of $36.5 million or 26.6% is primarily due to acquisitions and higher
costs for our Internet operations, partially offset by reductions in expenses
for the yellow page advertising and recruitment advertising businesses, due to
improved efficiencies. Included in the increase for Internet was $14.8 million
more in marketing costs for Monster.com(SM) and $13.8 million for search related
Internet services at LAIcompass and Highland. The higher ratio of 30.8% compared
to 27.5% is due primarily to marketing costs for search related Internet
services, a slight increase in costs at LAI and a decline in commissions and
fees.

Merger and integration costs for the nine months ended September 30, 1999
were $46.3 million compared with $9.6 million for the same period in 1998 an
increase of $36.7 million or 383.1%. This increase primarily resulted from the
pooling of interests transactions that occurred in the quarter ended
September 30, 1999 and the planned integration of such companies and is due to:
(1) $4.8 million for separation pay and accelerated vesting of employee stock
and stock option grants, both in accordance with pre-existing contractual change
in control provisions, (2) $7.8 million more of transaction related costs, which
include legal, accounting, printing and advisory fees and the costs incurred for
the subsequent registration of shares issued in the transactions and
(3) $25.2 million of office integration costs, which include the closing of
excess leased facilities, the write-off of fixed assets which will not be used
in the future and a reserve for the effect, after reduction for related
compensation, of uncollectible search fees recorded as a result of a loss of
executive search consultants, partially offset by $4.4 million less for employee
stay bonuses paid with our shares and options to certain key personnel of the
merged companies. Approximately $18.5 million of the $46.3 million are non-cash
charges. The after tax effect of these charges on diluted earnings per share is
$(0.73) and $(0.16) for the nine months ended September 30, 1999 and 1998,
respectively.

Restructuring charges for the nine months ended September 30, 1999 were
$2.8 million or, on an after tax basis, $(0.04) per diluted share. These charges
relate to LAI's closing of its London and Hong Kong offices, and include
$0.5 million for the write-off of leasehold improvements and fixed assets,
$1.3 million for severance benefits payable to 24 employees and $1.0 million for
consolidation of facilities related to the restructuring.

As a result of the above, operating income for the nine months ended
September 30, 1999 decreased $50.3 million or 91.7% to $3.8 million from
$54.1 million for the comparable period last year.

Net interest expense for the nine months ended September 30, 1999 was
$6.3 million, a decrease of $0.7 million or 10.8% from $7.0 million for the same
period in 1998, reflecting lower interest rates and borrowing costs resulting
from the amended and restated financing agreement entered into by the Company on
November 5, 1998, partially offset by increased borrowings.

Taxes on income for the nine months ended September 30, 1999 were
$1.2 million on a $2.7 million pretax loss, resulting in an effective tax rate
of (43.4)% compared with a tax expense of $16.6 million on a $46.1 million
pretax profit, resulting in an effective tax rate of 36.1% for the same period
last year. The negative effective tax rate for the 1999 period is caused by
expenses that are not tax deductible. Such expenses are primarily related to
merger costs from pooling of interests transactions and amortization of
intangible assets. For both periods the effective tax rate is benefited by
profits from Highland which were not taxed at the corporate level prior to our
merger.

27
<PAGE>
As a result of the above, the net loss applicable to common and Class B
common stockholders for the nine months ended September 30, 1999 was $(0.12) per
diluted share, a decrease of $0.85 per diluted share or 116.4% from the $0.73
per diluted share for the comparable 1998 period.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE YEAR ENDED DECEMBER 31, 1997

Gross billings for the year ended December 31, 1998 were $1,750.7 million, a
$304.0 million or 21.0% increase when compared to gross billings of
$1,446.7 million for the year ended December 31, 1997. This increase in gross
billings resulted primarily from acquisitions in recruitment advertising, growth
in our Internet business and growth in our temporary contracting business.

Total commissions and fees for the year ended December 31, 1998 were
$657.5 million, an increase of $115.7 million or 21.3% from $541.8 million for
the year ended December 31, 1997. Internet commissions and fees for the year
ended December 31, 1998 were $50.2 million, an increase of 157.6% or
$30.7 million from $19.5 million for the year ended December 31, 1997. The
increase in Internet commissions and fees is due to (i) an increasing acceptance
of our Internet services and products from existing clients and Internet users,
(ii) the benefits of Monster.com(SM)'s marketing campaign, (iii) increases in
the service and content available on our Websites, (iv) expansion into certain
European markets and (v) price increases on certain products. Recruitment
advertising commissions and fees were $177.8 million for the year ended
December 31, 1998 compared with $134.3 million for the year ended December 31,
1997, an increase of $43.5 million or 32.4%. This increase was primarily due to
acquisitions, which contributed approximately $25.1 million, and approximately
$21.4 million from increased client spending and new clients partially offset by
client losses and a decrease in foreign currency translation rates, which had a
negative effect of approximately $3.0 million. Search and selection commissions
and fees were $276.1 million compared with $242.8 million for the year ended
December 31, 1997, an increase of $33.3 million or 13.7%, due primarily to
acquisitions and increased business from existing clients and new clients.
Temporary contracting commissions and fees increased to $47.0 million from
$41.3 million, an increase of $5.7 million or 13.8%. This increase is primarily
due to a greater number of temporary contract workers placed during 1998 as
compared with the prior period, and reflects growth in the executive temporary
contracting business, and to a lesser extent growth for clerical and support
staff. Yellow page commissions and fees were $106.5 million for the year ended
December 31, 1998 compared with $103.9 million for the year ended December 31,
1997, an increase of 2.4% or $2.6 million due primarily to acquisitions.

Total operating expenses for the year ended December 31, 1998 were
$610.3 million, compared with $471.4 million for 1997. The increase of
$138.9 million or 29.5% is due primarily to acquisitions and internal growth,
together with the addition of $22.4 million for merger and integration costs
related to pooling of interests transactions and $3.5 million in restructuring
charges for the closing of LAI's London, England office.

Salaries and related costs for the year ended December 31, 1998 were
$382.7 million or 58.2% of total commissions and fees, compared with
$310.2 million or 57.2% of total commissions and fees for the same period in
1997, representing an increase of $72.5 million or 23.4%. This increase reflects
acquisitions in search and selection and recruitment advertising and growth in
Internet operations.

Office and general expenses increased $37.4 million to $190.2 million for
the year ended December 31, 1998, as compared with $152.8 million for the prior
period primarily due to acquisitions and added marketing and other expenses to
grow our Internet businesses. As a percent of total commissions and fees, office
and general expenses increased to 28.9% for the year ended December 31, 1998
from 28.2% for the year ended December 31, 1997.

Restructuring charges for the year ended December 31, 1998 were
$3.5 million or, on an after tax basis, $(0.05) per diluted share and relate to
LAI's plan to significantly curtail the operations of its international office
in London, England. These charges include $1.1 million for severance, and
$2.4 million for the write-off of leasehold improvements and other costs to
close these facilities.

28
<PAGE>
In connection with the 1998 Mergers and the M&B Merger, we expensed
merger and integration costs of $22.4 million for the year ended December 31,
1998, consisting of (1) $11.9 million of non-cash employee stay bonuses, which
included (a) $3.6 million for the amortization for our shares set aside for key
personnel of JSK and TCG, who must remain employees for a full year in order to
earn such shares and (b) $8.3 million for our shares to key personnel of TASA
and Stackig as employee stay bonuses, (2) $1.5 million of stay bonuses paid as
cash to key personnel of one of the companies merged in 1998 and
(3) $9.0 million of transaction related costs, including fees for legal,
accounting and advisory services and the costs incurred for the subsequent
registration of shares issued in the acquisitions. The after tax effect of this
charge is $16.7 million or $(0.43) per diluted share. (See Notes 1 and 5 to our
Supplemental Consolidated Financial Statements as of December 31, 1998 and 1997,
and for each of the three years in the period ended December 31, 1998
incorporated by reference in this prospectus.)

Amortization of intangibles was $10.2 million for the year ended
December 31, 1998 compared to $6.9 million for the year ended December 31, 1997.
The increase is due to our continued growth through acquisitions. As a
percentage of total commissions and fees, amortization of intangibles was 1.5%
and 1.3% for the year ended December 31, 1998 and 1997, respectively.

As a result of all of the above, operating income decreased $23.3 million to
$47.2 million for the year ended December 31, 1998 as compared with operating
income of $70.5 million for the year ended December 31, 1997 and, as a percent
of total commissions and fees, operating income decreased to 7.2% from 13.0%.

Net interest expense increased $1.4 million to $9.8 million for the year
ended December 31, 1998 as compared to $8.4 million for the year ended
December 31, 1997, reflecting a net increase in debt as a result of acquisitions
and capital expenditures. In addition, our effective interest rate was 10.8% for
the year ended December 31, 1998 compared with 10.4% for the year ended
December 31, 1997.

Taxes on income decreased $6.2 million to $14.4 million for the year ended
December 31, 1998 from $20.1 million for the year ended December 31, 1997
primarily due to lower pre-tax income. The effective tax rate for the year ended
December 31, 1998 was 40.7% compared with 32.7% for the year ended December 31,
1997. The higher effective rate in 1998 reflects the inability to deduct for
tax, certain costs associated with the 1998 Mergers and the M&B Merger.

For the year ended December 31, 1998, equity in losses of affiliates was
$396,000, reflecting losses at our minority owned real estate advertising
affiliate, as compared with a $33,000 loss for the same period in 1997. Minority
interests in consolidated earnings for the year ended December 31, 1998 were
$28,000 compared with $296,000 for the year ended December 31, 1997.

As a result of all of the above, the net income applicable to common and
Class B common stockholders was $20.5 million for the year ended December 31,
1998, or $0.52 per diluted share, compared with net income of $41.8 million, or
$1.13 per diluted share for the year ended December 31, 1997.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO THE YEAR ENDED DECEMBER 31, 1996

Gross billings for the year ended December 31, 1997 were $1,446.7 million, a
$379.5 million or 35.6% increase when compared to gross billings of
$1,067.2 million for the year ended December 31, 1996. The growth is primarily
due to acquisitions in recruitment advertising, rate increases in yellow page
advertising, increased clients and higher client spending for search and
selection, and a growing acceptance of our Internet products.

Total commissions and fees increased to $541.8 million for the year ended
December 31, 1997 from $399.0 million for the year ended December 31, 1996, an
increase of $142.8 million or 35.8%. This reflects increases, as compared to the
prior year period, in commissions and fees for (a) Internet of $12.5 million or
180.6%, (b) recruitment advertising of $57.6 million or 75.3%, (c) search and
selection of $57.4 million

29
<PAGE>
or 31.0%, (d) temporary contracting of $12.1 million or 41.3% and (e) yellow
page advertising of $3.1 million or 3.0%. Fees derived from Internet were
generated from job searches and recruitment advertising placed on the Internet,
primarily on our wholly owned Web sites Monster.com(SM) and occ.com, and
reflects the continued customer acceptance of our Internet products both from
our existing clients as well as new clients and price increases on certain
products. A substantial portion of the increase in commissions and fees for
recruitment advertising was due to acquisitions, including $15.5 million from
Austin Knight, acquired in August 1997, and the remainder was due to higher
client spending and new clients. The increase in commissions and fees for search
and selection was primarily due to the healthy economy and related employment
markets in the U.S. The increase in temporary contracting commissions and fees
is due to expansion of the temporary contracting market in Australia. The
increase in commissions and fees for yellow page advertising was due primarily
to increased rates by the yellow page publishers and an acquisition,
substantially offset by lower publisher incentives and the full year effect of
accounts lost and resigned in 1996.

Salaries and related costs increased $77.9 million to $310.2 million for the
year ended December 31, 1997 but as a percent of total commissions and fees,
salaries and related costs decreased to 57.2% for the year ended December 31,
1997 from 58.2% for the year ended December 31, 1996. This $77.9 million
increase was primarily due to additional staff required to service increased
recruitment advertising billings, increased sales staffing for Internet, and
generally higher salaries and related costs for search and selection operations.

Office and general expenses increased $37.6 million to $152.8 million for
the year ended December 31, 1997 as compared with $115.2 million for the prior
period. The increase was primarily due to growth across all lines of business.
However, as a percent of total commissions and fees, office and general expenses
decreased to 28.2% for the year ended December 31, 1997 from 28.9% for the year
ended December 31, 1996. This decrease was primarily due to (1) consolidation of
offices, which slowed the growth of office related expenses, (2) increased
growth in recruitment advertising commissions and fees combined with the
relatively fixed nature of some of these expenses and (3) increased temporary
contracting operations which have relatively stable office and general expenses.

Amortization of intangibles was $6.9 million for the year ended
December 31, 1997 compared to $4.7 million for the year ended December 31, 1996.
The increase is due to our continued growth through acquisitions. As a
percentage of total commissions and fees, amortization of intangibles was 1.3%
and 1.2%, respectively, for the years ended December 31, 1997 and 1996.

For 1996, special compensation of $52.0 million consists of a non-cash,
non-recurring charge that reflects the value of shares issued in connection with
the acquisition of the minority interests in our predecessors because the
stockholders had received such shares for nominal or no consideration and,
accordingly, were not considered to have made a substantive investment for their
shares. The value of such shares was based on the per share initial public
offering price of $14.00 for our common stock.

As a result of the above, operating income for the year ended December 31,
1997 increased $75.7 million to $70.5 million as compared with an operating loss
of $5.2 million for the year ended December 31, 1996 and as a percent of total
commissions and fees increased to 13.0% from (1.3)% for the year ended
December 31, 1996.

Net interest expense decreased $5.9 million to $8.4 million for the year
ended December 31, 1997 as compared to $14.3 million for the year ended
December 31, 1996. This decrease in interest expense is due primarily to the
repayment of a portion of the debt with the net cash proceeds of our initial
public and supplemental offerings. In addition, in 1996 there was a
$2.6 million non-cash, non-recurring charge to reflect, upon exercise of a
warrant issued in connection with our financing agreement, the value of the
stock issued at our initial public offering price of $14.00 per share and the
value recorded for the warrant when it was originally issued. Our effective
interest rate was 10.4% for the year ended December 31, 1997 compared with 15.8%
for the year ended December 31, 1996.

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<PAGE>
Taxes on income increased $9.5 million to $20.6 million for the year ended
December 31, 1997 from $11.1 million for the year ended December 31, 1996
primarily due to higher pre-tax income. The effective tax rate for the year
ended December 31, 1997 was 32.7% compared with (55.6)% for the year ended
December 31, 1996. The effective tax rate for 1997 was lower than the U.S.
Federal statutory rate of 34.0% primarily due to profits of pooled entities
taxed directly to owners, partially offset by nondeductible expenses of
approximately $2.9 million and state taxes of $1.1 million. The effective tax
rate for 1996 reflects the non-deductability of a non-cash special compensation
charge of $52.0 million, non-cash interest expense of $2.6 million and state
taxes of $0.4 million, as well as our inability to offset profits at certain
subsidiaries with losses incurred by others.

As a result of all of the above, the net income applicable to common and
Class B common stockholders was $41.8 million for the year ended December 31,
1997, or $1.13 per diluted share, compared with net loss of $32.1 million, or
$(1.04) per diluted share for the year ended December 31, 1996.

LIQUIDITY AND CAPITAL RESOURCES

Our principal capital requirements have been to fund (i) acquisitions,
(ii) working capital, (iii) capital expenditures and (iv) marketing and
development of our Internet business. Our working capital requirements are
generally higher in the quarters ending March 31 and June 30 during which
payments to the major yellow page directory publishers are at their highest
levels. We have met our liquidity needs over the last three years through
(a) funds provided by operating activities, (b) equity offerings, (c) long-term
borrowings, (d) capital leases and (e) vendor financing in 1996. In
December 1996, we completed our initial public offering of an aggregate of
4,147,408 shares of common stock at a purchase price of $14.00 per share in an
underwritten public offering managed by Morgan Stanley & Co. Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation and Ladenburg Thalmann &
Co. Inc. In the initial public offering, certain stockholders sold an additional
aggregate of 652,592 shares of common stock. The net proceeds that we received
from the initial public offering of $50.8 million were used to repay debt and,
in early 1997, to pay down accounts payable and to redeem preferred stock. In
September 1997, we completed a second public offering of an aggregate of
2,400,000 shares of common stock at a purchase price of $23.00 per share in an
underwritten public offering managed by Morgan Stanley & Co. Incorporated,
Goldman, Sachs & Co., BT Alex Brown Incorporated, Montgomery Securities and
Ladenburg Thalmann & Co. Inc. In addition, certain stockholders sold an
aggregate of 1,600,000 shares of common stock in such offering. Our net proceeds
from this offering of $63.4 million, including net repayment of borrowings of
$12.2 million paid to us by certain stockholders, were used to repay debt. In
1998, LAI received $41.4 million in net proceeds from its second public
offering. Such proceeds were used to support its international expansion,
support enhancements to its technology-based infrastructure, acquire two search
and selection companies and provide additional working capital.

Net cash provided by operating activities for the nine months ended
September 30, 1999 was $55.8 million compared with $32.7 million provided by
operating activities for the nine months ended September 30, 1998, an increase
of $23.1 million. This increase was primarily due to (a) the net increase in
funds from a $23.5 million greater increase in deferred revenue for the 1999
period over the 1998 period, related mostly to Internet operations, (b) an
$18.0 million increase in cash from work-in-process and prepaid and other
assets, (c) $6.2 million more from tax benefits from the exercise of employee
stock options, (d) a $3.8 million effect from inclusion of losses from companies
accounted for as poolings of interests, in both the current period and the
previous year, because of overlapping reporting periods and (e) a $0.3 million
net increase in the use of funds from increases in accounts receivable over
increases in accounts payable and accrued expenses for the 1999 period over the
1998 period, reduced by a $28.6 million decline in earnings after adjusting for
non-cash items. EBITDA was $32.6 million for the nine months ended
September 30, 1999, a decrease of $44.9 million or 57.9% from $77.5 million for
the nine months ended September 30, 1998. The decrease primarily reflects, for
the 1999 period, a $50.3 million

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<PAGE>
decrease in operating profits partially offset by $5.5 million more in
depreciation and amortization costs. As a percentage of commissions and fees,
EBITDA decreased to 5.8% for the nine months ended September 30, 1999 as
compared with 15.6% for the nine months ended September 30, 1998. The lower
percent reflects the increase in merger and integration and restructuring costs,
which were 8.7% and 1.9% of commissions and fees for the 1999 and 1998 periods,
respectively.

Our investing activities for the nine months ended September 30, 1999 used
cash of $32.0 million, which is $48.0 million less than the $80.0 million for
the nine months ended September 30, 1998. This decrease was primarily due to the
use in 1998 of $33.4 million more in investments by a pooled company and
$2.0 million more used for business acquisitions combined with $9.8 million
received from the sale of fixed assets, primarily our plane, in the 1999 period.

We estimate that our expenditures for computer equipment and software,
furniture and fixtures and leasehold improvements will be approximately
$30 million for the year ended 1999 and $60 million for the year ended 2000.

Our financing activities include borrowings and repayments under our bank
financing agreements and issuance of and payments against installment notes used
principally to finance acquisitions and equipment. Our financing activities for
the nine months ended September 30, 1999 used net cash of $28.8 million but
provided $32.7 million for the nine months ended September 30, 1998. The change
of $61.5 million resulted primarily from $41.4 million in proceeds from a common
stock offering by LAI in the 1998 period and net repayments in the 1999 period
of $29.9 million against credit facilities and capitalized lease obligations
compared with a net borrowing of $1.5 million in the prior year period, offset
in part by a $6.8 million increase in cash received from the exercise of
employee stock options and a $4.3 million decline in dividends paid by pooled
companies in the 1999 period from the 1998 period.

Net cash provided by operating activities for the years ended December 31,
1998, 1997 and 1996 was $63.6 million, $51.3 million and $37.1 million,
respectively. The increase in cash of $12.3 million from operating activities
for 1998 over 1997 was primarily due to an increase of $17.9 million in accounts
payable, accrued expenses and other current liabilities, a $12.9 million
increase in depreciation and amortization costs, $8.3 million for the
utilization of our common stock to pay bonuses, a decrease of $7.3 million in
accounts receivable and a $3.2 million increase in deferred revenue, partially
offset by decreases in net income of $21.4 million, $8.1 million in deferred
income taxes and $10.7 million in prepaid and other assets. In addition, in 1998
we paid approximately $13.6 million for restructuring. Such amount was applied
against a reserve set up during 1997 in connection with acquisitions accounted
for using the purchase method. This reserve was increased in 1998 by a
$3.5 million charge to earnings and by $10.1 million, with a corresponding
increase to intangible assets, and reduced by payments of $13.6 million, leaving
a restructuring reserve at December 31, 1998 of $16.7 million. (See Note 5 to
our Supplemental Consolidated Financial Statements as of December 31, 1998 and
1997, and for each of the three years in the period ended December 31, 1998
incorporated by reference in this prospectus.) The increase in cash from
operating activities for 1997 over 1996 was primarily due to increased net
income, after adding back the effect of non-cash charges in 1996, partially
offset by higher payments of accounts payable, including amounts to
substantially repay vendor financed payables.

EBITDA was $79.1 million for the year ended December 31, 1998, a decrease of
$13.3 million from $92.4 million for the year ended December 31, 1997. As a
percentage of total commissions and fees, EBITDA decreased to 12.0% for the year
ended December 31, 1998 from 17.1% for the year ended December 31, 1997. The
decrease resulted primarily from the $18.0 million charge for merger costs
($22.4 million less $4.4 million in amortization of deferred compensation),
which was 2.7% of total commissions and fees for the year ended December 31,
1998, offset, in part, by increased depreciation and amortization of
$12.9 million. For the year ended December 31, 1997, EBITDA was $92.4 million,
an increase of $84.6 million from $7.8 million for the year ended December 31,
1996. As a percent of total commissions & fees, EBITDA increased to 17.1% for
the year ended December 31, 1997 as compared to

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<PAGE>
1.9% for the year ended December 31, 1996 due to a higher operating profit. For
the year ended December 31, 1996, EBITDA was $7.8 million primarily due to the
$52.0 million non-cash special compensation charge.

Net cash used in investing activities for the years ended December 31, 1998,
1997 and 1996 was $66.5 million, $89.7 million and $46.4 million, respectively.
The $23.2 million decrease in 1998 as compared with 1997 was primarily due to
$34.1 million less in payments for acquisitions, reflecting the use of company
stock to make acquisitions of businesses, offset in part by $0.4 million more in
capital expenditures and during 1997 our receipt of a net $11.4 million from
Andrew J. McKelvey and certain other stockholders, who repaid borrowings with
funds received primarily from their sale of shares included with our second
public offering. Payments for businesses acquired using the purchase method of
accounting, excluding $5.5 million in our stock, were $32.8 million in 1998,
$66.9 million in 1997, of which $47.2 million was for Austin Knight, and
$31.3 million in 1996. Capital expenditures, primarily for computer equipment
and furniture and fixtures, were $31.9 million, $31.6 million and $15.4 million
for the years ended December 31, 1998, 1997 and 1996, respectively. In addition,
in 1997, we acquired certain transportation equipment and made capital
improvements for a total of $6.8 million, replacing the transportation equipment
sold during 1996 for $6.1 million, and simultaneously entered into a
$7.8 million financing agreement to fund the purchase and provide additional
operating funds. In December 1996, we sold certain transportation equipment for
$6.1 million receiving a note for $2.7 million and retained $1.2 million in
cash, after payment of related debt.

Our financing activities include equity offerings, borrowings and repayments
under our financing agreement and payments on (i) installment notes, principally
to finance acquisitions, and (ii) capital leases. In the fourth quarter of 1996,
we completed our initial public offering of 4,147,408 shares of common stock for
net proceeds of $50.8 million and in the third quarter of 1997, we completed our
second public offering of 2,400,000 shares of common stock for net proceeds of
$51.2 million. With a portion of the proceeds received from our initial public
offering, in January 1997, we redeemed all of the shares of the cumulative
preferred stock issued by a subsidiary, reported as a minority interest, and our
previously issued preferred stock for approximately $3.1 million and
$2.1 million, respectively. Such redemptions included approximately $100,000
each of premiums. Our financing activities provided net cash of $20.1 million,
$65.5 million and $13.4 million in 1998, 1997 and 1996, respectively. In
November, 1998 and 1997 we amended our financing agreement with our primary
lender to provide for borrowings, under a revolving credit facility, of a
minimum of $175 million. In May 1999 we increased this amount to $185 million.
This facility is used to finance our acquisitions and for working capital
requirements. As of December 31, 1998, there was $97.7 million outstanding and
approximately $77.3 million available under such facility. Our current interest
rate under the agreement is LIBOR plus 75 basis points. In addition, we had
secured lines of credit aggregating $49.0 million for LAI and our operations in
Australia, France, Belgium and the Netherlands of which approximately
$42.5 million was unused at December 31, 1998. Upon consummation of LAI's merger
with us, we eliminated LAI's $25.0 million line of credit. We believe we will be
able to fund our short-term cash needs through funds from operations, our credit
facilities in the United States, the United Kingdom, Canada and Australia and,
to a lesser extent, equipment leases. The borrowings are secured by a lien on
substantially all of our assets. In addition, the financing agreement contains
certain covenants which restrict, among other things, our ability to borrow, pay
dividends, acquire businesses, guarantee debts of others and lend funds to
affiliated companies and contains criteria on the maintenance of certain
financial statement amounts and ratios.

At September 30, 1999, we had a $185 million committed line of credit from
our primary lender pursuant to a revolving credit agreement expiring
November 5, 2003. Of such line, at September 30, 1999, approximately
$58.2 million was unused and accounts receivable as defined in the agreement is
sufficient to allow draw down of the entire amount. In addition, we have lines
of credit aggregating $20.6 million for our operations in Australia, New
Zealand, France, Belgium and the Netherlands of which approximately
$12.0 million was unused at September 30, 1999.

33
<PAGE>
Cash and cash equivalents at September 30, 1999 were $68.0 million, an
increase of $26.4 million from $41.6 million at September 30, 1998.

Part of our acquisition strategy is to pay, over time, a portion of the
purchase price of certain acquisitions through seller financed notes.
Accordingly, such notes are included in long-term debt, are generally payable
over five years and totaled approximately $13.8 million at December 31, 1998.

We intend to continue our acquisition strategy and marketing and promotion
of our Internet business through the use of operating profits, borrowings
against our long-term debt facility and seller financed notes. We believe that
our anticipated cash flow from operations, as well as the availability of funds
under our existing financing agreements and access to public equity and debt
markets, will provide us with liquidity to meet our current foreseeable cash
needs for at least the next year. However, if we determine that conditions are
favorable, we would consider additional corporate equity or debt transactions.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivatives and Hedging Activities" ("SFAS No. 133"), which
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities. SFAS
No. 133 is effective for all fiscal quarters of fiscal years beginning after
June 15, 2000. We do not expect the adoption of this statement to have a
significant impact on our results of operations, financial position or cash
flows.

YEAR 2000 ISSUE

Many currently installed computer systems and software products are coded to
accept or recognize only two digit entries in the date code field. These systems
and software products will need to accept four digit entries to distinguish 21st
century dates from 20th century dates. As a result, computer systems and/or
software used by many companies and governmental agencies may need to be
upgraded to comply with such Year 2000 requirements or risk system failure or
miscalculations causing disruptions of normal business activities.

STATE OF READINESS. Since early in 1999, we have been working to position
ourselves as Year 2000 ready before December 31, 1999. We have developed a
comprehensive plan to deal with the Year 2000 issue and have engaged internal
and external resources to focus on this effort. It has been an evolving plan as
we continued to acquire and integrate companies throughout 1999. The plan is
intended to achieve three basic objectives: to ensure that computer systems and
other equipment function in the same manner after December 31, 1999 as it did
before the century date change, to ensure that each business unit follows a
consistent approach for assessment renovation, and validation of all IT and
non-IT assets, and to track the status of all Year 2000 efforts. In addition to
our internal assets, we are assessing and monitoring the Year 2000 readiness of
our key vendors and service providers. We are also monitoring the readiness of
public infrastructure service providers such as power, communications, and
transportation providers.

Our Year 2000 task force has conducted an inventory of and has developed
testing procedures for all software and other systems that we believe might be
affected by Year 2000 issues. Since third parties developed and currently
support many of the systems used, a significant part of this effort will be to
ensure that these third-party systems are Year 2000 ready. Our plan is to
confirm this readiness by obtaining representations by these third parties that
their products' are year 2000 ready and through specific testing of these
systems. We have substantially completed this process as of the end of the third
quarter of 1999 and will fully complete this process by the end of the fourth
quarter. Until such testing is completed and such vendors and providers are
contacted, we will not be able to completely evaluate whether our systems will
need to be revised or replaced.

34
<PAGE>
COSTS. For 1999, we estimate that we incurred approximately $3.0 million,
globally, in connection with identifying, evaluating and addressing Year 2000
readiness issues. Most of these costs relate to time spent by employees and
consultants in making our systems Year 2000 ready. Such costs are not expected
to have a material adverse effect on our business, results of operations and
financial condition.

RISKS. While we are making every effort to address the Year 2000 issue,
there are inherent risks. We are not currently aware of any Year 2000 readiness
problems relating to our systems that would have a material adverse effect on
our business, results of operations and financial condition, without taking into
account our efforts to avoid or fix such problems. There can be no assurance
that we will not discover Year 2000 readiness problems in our systems and
equipment that will require substantial revision. In addition, there can be no
assurance that third-party software, hardware or services incorporated into our
material systems will not need to be revised or replaced, all of which could be
time-consuming and expensive. Our failure to fix or replace our internally
developed proprietary software or third-party software, hardware or services on
a timely basis could result in lost commissions and fees, increased operating
costs, the loss of customers and other business interruptions, any of which
could have a material adverse effect on our business, results of operations and
financial condition. Moreover, the failure to adequately address Year 2000
readiness issues in our internally developed proprietary software could result
in claims of mismanagement, misrepresentation or breach of contract and related
litigation, which could be costly and time-consuming to defend.

We are heavily dependent on a significant number of third party vendors to
provide both network services and equipment. A significant Year 2000 related
disruption of the network, services or equipment that third-party vendors
provide to us could cause our members and visitors to consider seeking alternate
providers or cause an unmanageable burden on our technical support, which in
turn could materially and adversely affect our business, financial condition and
results of operations.

In addition, we cannot assure you that governmental agencies, utility
companies, internet access companies, third party service providers and others
outside of our control will be Year 2000 ready. The failure by such entities to
be Year 2000 ready could result in a systemic failure beyond our control, such
as a prolonged Internet, telecommunications or electrical failure, which could
also prevent us from delivering our services to our customers, decrease the use
of the Internet or prevent users from accessing our websites which could have a
material adverse effect on our business, results of operations and financial
condition.

CONTINGENCY PLAN. Although we believe our systems are Year 2000 ready, we
have developed contingency plans for critical systems and equipment in the event
of a failure. The results of our Year 2000 simulation testing and the responses
received from third-party vendors and service providers have been taken into
account in determining the nature and extent to which our contingency plans will
be implemented. In addition, we have developed an event planning procedure to
monitor the function of our global operations before, during and after the
century date change.

FLUCTUATIONS OF QUARTERLY RESULTS

Our quarterly commissions and fees are affected by the timing of yellow page
directory closings which currently have a concentration in the third quarter.
Yellow page publishers may change the timing of directory publications which may
have an effect on our quarterly results. Our yellow page advertising results are
also affected by commissions earned for volume placements for the year, which
are typically reported in the fourth quarter. Our quarterly commissions and fees
for recruitment advertising are typically highest in the first quarter and
lowest in the fourth quarter. However, the cyclicality in the economy and our
clients' employment needs have an overriding impact on our quarterly results in
recruitment advertising, search and selection and temporary contracting. (See
Note 2 to our Supplemental Consolidated Financial Statements incorporated by
reference in this prospectus.)

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<PAGE>
The following table sets forth summary quarterly unaudited financial
information for the nine months ended September 30, 1999 and the years ended
December 31, 1998 and 1997:

<TABLE>
<CAPTION>
1999 QUARTERS
------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30,
--------- -------- -------------
(IN MILLIONS, EXCEPT SHARE AND PER
SHARE AMOUNTS)
<S> <C> <C> <C>
COMMISSIONS & FEES:
Internet.................................................... $ 20.5 $ 25.8 $ 36.7
Recruitment advertising..................................... 45.6 46.3 43.0
Search & selection.......................................... 66.3 70.2 82.7
Temporary contracting....................................... 12.8 16.6 15.5
Yellow page advertising..................................... 23.8 27.2 28.5
------ ------ ------
Total commissions & fees.................................... $169.0 $186.1 $206.4
====== ====== ======
Operating income (loss)..................................... $ (1.2) $ 7.4 $ (2.4)
Net income (loss) applicable to common and Class B common
stockholders.............................................. $ (2.3) $ 3.2 $ (5.8)
Net income (loss) per common and Class B common share:
Basic....................................................... $(0.06) $ 0.08 $(0.15)
Diluted..................................................... $(0.06) $ 0.08 $(0.15)
Weighted average shares outstanding (in thousands):
Basic....................................................... 39,323 39,876 39,992
Diluted..................................................... 39,323 41,596 39,992
</TABLE>

<TABLE>
<CAPTION>
1998 QUARTERS
---------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
--------- -------- ------------- ------------
(IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
COMMISSIONS & FEES:
Internet.......................................... $ 8.0 $ 11.0 $ 13.7 $ 17.5
Recruitment advertising........................... 45.8 45.7 42.3 43.9
Search & selection................................ 69.9 74.0 70.9 61.3
Temporary contracting............................. 5.6 13.6 13.8 14.0
Yellow page advertising........................... 23.3 27.1 32.1 23.9
------ ------ ------ ------
Total commissions & fees.......................... $152.6 $171.4 $172.8 $160.6
====== ====== ====== ======
Operating income (loss)........................... $ 17.2 $ 21.2 $ 15.7 $ (6.9)
Net income (loss) applicable to common and Class B
common stockholders............................. $ 9.7 $ 11.6 $ 7.9 $ (8.7)
Net income (loss) per common and Class B common
share:
Basic............................................. $ 0.25 $ 0.30 $ 0.20 $(0.22)
Diluted........................................... $ 0.24 $ 0.29 $ 0.20 $(0.22)
Weighted average shares outstanding (in
thousands):
Basic............................................. 38,421 38,748 38,811 38,857
Diluted........................................... 39,735 39,806 39,970 38,857
</TABLE>

36
<PAGE>

<TABLE>
<CAPTION>
1997 QUARTERS
---------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
--------- -------- ------------- ------------
(IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
COMMISSIONS & FEES:
Internet.......................................... $ 4.0 $ 4.7 $ 5.0 $ 5.8
Recruitment advertising........................... 27.7 30.8 35.4 40.4
Search & selection................................ 56.8 63.4 59.6 63.0
Temporary contracting............................. 5.3 24.2 5.8 6.0
Yellow page advertising........................... 21.9 25.1 30.6 26.3
------ ------ ------ ------
Total commissions & fees.......................... $115.7 $148.2 $136.4 $141.5
====== ====== ====== ======
Operating income.................................. $ 18.5 $ 19.4 $ 19.9 $ 12.7
Net income applicable to common and Class B common
stockholders.................................... $ 11.2 $ 11.9 $ 11.0 $ 7.7
Net income per common and Class B common share:
Basic............................................. $ 0.32 $ 0.33 $ 0.31 $ 0.20
Diluted........................................... $ 0.31 $ 0.33 $ 0.30 $ 0.20
Weighted average shares outstanding (in
thousands):
Basic............................................. 35,355 35,578 36,171 38,257
Diluted........................................... 35,798 36,204 36,847 38,896
</TABLE>

Earnings (loss) per share calculations for each quarter include the weighted
average effect for the quarter; therefore, the sum of the quarters may not equal
the full year earnings (loss) per share amount, which reflects the weighted
average effect on an annual basis. In addition, diluted earnings per share
calculations for each quarter include the effect of stock options and warrants,
when dilutive to the quarter.

37
<PAGE>
BUSINESS

We provide a comprehensive range of career services and solutions through
our flagship Internet property, Monster.com(SM), and through our recruitment
advertising and executive search and selection businesses. We are also the
world's largest yellow page advertising agency.

INDUSTRY OVERVIEW

INTERNET. The Internet is an increasingly significant global medium for
communications, content and commerce. Growth in Internet usage has been fueled
by a number of factors, including the availability of a growing number of useful
products and services, the large and growing installed base of personal
computers in the workplace and home, advances in the performance and speed of
personal computers and modems, improvements in network infrastructure, easier
and cheaper access to the Internet and increased awareness of the Internet among
businesses and consumers.

The increasing functionality, accessibility and overall usage of the
Internet and online services have made them an attractive commercial medium.
Thousands of companies have created corporate Web sites that feature information
about their product offerings and advertise employment opportunities. Through
the Web, Internet content providers are able to deliver timely, personalized
content in a manner not possible through traditional media. Internet content can
be continuously updated, distributed to a large number of consumers on a
real-time basis, and accessed by users at any time. Industry publications
indicate that the historical and projected adoption of online/Internet services
represents a faster rate of penetration than occurred with traditional media,
such as radio, broadcast television and cable television.

For job seekers, online recruiting can provide the ability to rapidly and
more easily build, update and distribute their resumes, conduct job searches and
gather information about employers. Online recruiting can also help to reduce
the time of a job search by permitting job seekers to define their specific job
needs and be contacted automatically when desired jobs become available. Online
recruiting is also proving to be attractive to employers because online job
advertisements can be accessed by job seekers anywhere in the world at anytime
and more cost effectively than print media. Forrester Research estimates that
online spending by employers for recruitment will grow from $105 million in 1998
to $1.7 billion in 2003.

THE RECRUITMENT ADVERTISING MARKET. Recruitment advertising consists
primarily of creating and placing recruitment advertisements in the classified
advertising sections of newspapers. While the recruitment advertising market has
historically been cyclical, during the period of 1990 through 1997, the U.S.
market grew at a compound annual rate of approximately 12%. Classified
readership by job seekers has remained constant over the last ten years and
approximately 85% of companies use newspapers to attract potential employees.
The services provided by recruitment advertising agencies can be complex and
range from the design and placement of classified advertisements to the creation
of comprehensive image campaigns which internationally "brand" a client as a
quality employer. Further, shortages of qualified employees in many industries,
particularly in the technology area, have increased the need for recruitment
advertising agencies to expand the breadth of their service offerings to effect
national and sometimes global recruitment campaigns. For the year ended
December 31, 1998, global spending (billings) in the recruitment classified
advertisement section of newspapers was approximately $13 billion. Agencies
which place recruitment classified advertising are paid commissions generally
equal to 15% of recruitment advertising placed in newspapers and earn fees for
providing additional recruitment services.

THE EXECUTIVE SEARCH AND SELECTION MARKET. The market for executive search
firms is generally separated into two broad categories: retained executive
search firms and contingency executive search firms. Retained executive search
firms service their clients' senior management needs by acting in an ongoing
client-consultant relationship to actively identify, evaluate, assess and
recommend to the client suitable candidates for senior level positions. Retained
search firms are generally engaged on an exclusive basis and paid a
contractually agreed-to fee. Contingency executive search firms typically do not
focus on the senior executives and are generally paid a percentage of the hired
candidate's salary only when a candidate is successfully placed with the client.
Contingency firms are generally not hired on an exclusive

38
<PAGE>
basis and do not focus on the assessment, evaluation or recommendation of a
candidate other than to determine if the candidate's resume qualifies him/her
for the position. We provide executive search services on a retained basis. We
also provide search services on a retained or a contingency basis to identify
for our clients the mid-level executive, those who earn from $70,000 to
$150,000, annually. We refer to this as selection.

THE TEMPORARY CONTRACTING MARKET. According to the Staffing Industry
Report, the United States temporary staffing industry grew from approximately
$29 billion in revenue in 1993 to approximately $62 billion in revenue in 1998.
In addition, third party sources estimate the worldwide temporary staffing
market at more than $130 billion. Our gross revenue for temporary contracting
was $258.4 million and $245.0 million for the year ended December 31, 1998 and
the nine months ended September 30, 1999, respectively. However, temporary
contracting commissions and fees reflect the net of gross revenue reduced by the
cost of the temporary contractors. The temporary staffing industry has
experienced significant growth in response to the changing work environment.
These changes are a result of increasing automation that has resulted and we
believe will continue to result in shorter technological cycles, and global
competitive pressures. Many employers responded to these challenges by turning
to temporary and contract personnel to keep personnel costs variable, achieve
maximum flexibility, outsource highly specialized skills, and avoid the negative
effect of layoffs. We believe fundamental changes in the employer-employee
relationship continue to occur, with employers developing increasingly stringent
criteria for permanent employees, while moving toward project-oriented temporary
and contract hiring.

THE YELLOW PAGE ADVERTISING MARKET. Yellow page directories have been
published in the U.S. since at least the 1890's and, traditionally, have been
published almost exclusively by telephone utilities. In the early 1980's, due in
part to telephone deregulation, independent companies began publishing an
increasing number of directories. Currently, approximately 7,000 yellow
page directories are published annually by 200 publishers and, in the U.S., many
cities with populations in excess of 80,000 are served by multiple directories.
The percentage of adults who use the yellow pages has remained relatively
constant over the last ten years at over 56%, and such readers consult the
yellow pages approximately two times weekly. Accordingly, yellow page
directories continue to be a highly effective advertising medium.

For the year ended December 31, 1998, total spending on yellow page
advertisements in the U.S. was $12.0 billion. Of this amount, approximately
$10.1 billion was spent by local accounts and approximately $1.9 billion was
spent by national accounts. As those terms are used in the yellow
page industry, "local" refers to an advertisement solicited by a yellow
page publisher's own sales staff and "national" refers to an advertisement that
is placed by an advertising agency and that meets certain criteria specified by
the publisher. Local accounts are typically merchants who primarily conduct
their business within the geographic area served by the publisher's directories.

The national account market consists of companies which sell products or
services in multiple markets and is the market in which we compete. Most
national accounts use independent advertising agencies to design and implement
their yellow page advertising programs to create a consistent brand image and
compelling message, to develop an effective media plan and to execute the
placement of the advertising at the local level. Agencies which place national
yellow page advertising are paid commissions by yellow page publishers. The
market has grown each year since 1981. During the period of 1990 through 1998,
the market has grown at a compound average rate of approximately 6.2%.

STRATEGY

Key elements of our strategy are to:

CONTINUE BRANDING MONSTER.COM(SM). We believe our superior content and
service as well as prior advertising campaigns have already branded
Monster.com(SM) (http://www.monster.com) as the leading career destination
portal on the Internet. Our goal is for job seekers to view Monster.com(SM) not
only as the leading career destination portal, but also as the premier tool with
which to manage their careers by posting their resumes and job search agents on
the site. To move to this next level of brand recognition and

39
<PAGE>
loyalty, we are working on a new advertising campaign which will commence during
the 2000 Super Bowl and will focus on building relationships with job seekers.

DIRECT AN INCREASING NUMBER OF JOB SEEKERS AND EMPLOYERS TO
MONSTER.COM(SM). We continuously look for ways to increase traffic to
Monster.com(SM). An example of this is our recent content and marketing
agreement with America Online, Inc. This agreement provides that for the payment
of $100 million over four years Monster.com(SM) will be the exclusive provider
of career search services in the United States and Canada for four years to
certain AOL properties, thereby driving additional traffic to Monster.com(SM).
In addition, our more than 5,100 client service, marketing and creative
personnel constantly promote the advantages of Monster.com(SM) as well as the
Internet generally. Our traditional recruitment advertising and executive search
and selection businesses have already contributed to Monster.com's(SM) job
postings and we believe will continue to drive an increasing number of job
postings to Monster.com(SM). In addition, our executive search and selection
consultants are driving more job seekers to Monster.com(SM) as a way to broaden
employers' recruitment options.

CONTINUE TO GROW OUR NON-INTERNET BUSINESSES. We plan to continue to grow
and enhance our recruitment advertising, executive search and selection and
yellow page advertising businesses through acquisitions and internal growth.
From January 1, 1996 through October 31, 1999, we completed 80 acquisitions. We
intend to pursue additional acquisitions and believe that the fragmented nature
of the recruitment advertising and the executive search businesses gives us the
opportunity to be a leader in the consolidation of these industries. We also
intend to selectively pursue acquisitions in the yellow page advertising
business.

OUR CAREER SOLUTIONS

MONSTER.COM(SM). Monster.com(SM) (http://www.monster.com), the flagship of
our Internet properties, is the nucleus of our intern to CEO strategy. For the
nine months ended September 30, 1999, gross billings and commissions and fees
were $66.9 million and $66.2 million, respectively, and our total Internet gross
billings and commissions and fees were $93.7 million and $83.0 million,
respectively.

Based on experience with our clients, we believe that only 20% to 30% of
open job positions are advertised using traditional print media. We also believe
that online solutions will significantly expand the recruitment advertising
market because of their global reach and continuous availability. Furthermore,
online advertising is extremely cost effective when compared to other
traditional recruitment methods such as print media. Our Internet recruitment
services have been actively marketed since May 1995 and Monster.com(SM) was one
of the first 1,000 commercial web sites out of more than 158,000,000 which
currently exist.

According to Nielson I/PRO, Monster.com(SM) had approximately 9.7 million
visits (the gross number of occasions on which a user looked up a site) in
November 1999 with the average length of each visit exceeding 14 minutes. Media
Metrix reported that for November 1999, 4.2% of the U.S. Internet population
visited Monster.com(SM), almost twice as many unique visitors as its closest
competitor. In addition, for this month, an average of 31.0 unique pages were
viewed by each visitor, resulting in a power ranking of 130.2 (reach of 4.2
multiplied by average page views of 31.0) compared to 26.7 for its closest
competitor and 74.9 for its six closest competitors combined. We believe that
the power ranking is significant because, by taking into account reach and page
views, it indicates the products usefulness and recognition.

Monster.com(SM) allows users to create their own personalized career
page--My Monster. Using My Monster, job seekers can store their resumes, cover
letters and job applications and create multiple Job Search Agents. They can
also track how many times their resume has been viewed by employers. My Monster
is at the center of the Monster.com(SM) job seeker experience, with over
5.3 million job seeker accounts as of December 30, 1999. Monster.com's(SM) Job
Search Agent continuously seeks to find the desired job for the job seeker. Job
seekers can sign up for this free service on the site by creating a simple
personal profile indicating the industry and location in which they want to work
and any job-specific

40
<PAGE>
keywords. The Job Search Agent then continually scans the entire Monster.com(SM)
job database for opportunities that match the requirements and delivers the
leads to job seekers' desktops--even while they are off-line. As of
December 30, 1999, Monster.com(SM) contained over 1.7 million Job Search Agent
profiles and its resume database currently contains over 2.4 million resumes of
which 1.6 million are active, and is growing by an average of more than 6,000
resumes daily. Job seekers post their resumes free of charge in a confidential
searchable access-restricted database. This database can be searched, using
keyword searches, by employers who pay for the service. Job seekers can search
Monster.com's(SM) database of employment opportunities by location, job
category, industry and/or keyword. Keyword searches allow a user to enter
specific keywords to match skills, job titles or other requirements. We have
also recently introduced Monster Talent Market which allows independent
contractor professionals to offer their services to the highest bidder.

As of December 30, 1999, Monster.com(SM) listed approximately 265,000 jobs
from clients such as Blockbuster Entertainment Inc., McDonald's, Adecco,
Procter & Gamble Co., and Dell Computer Corporation.

We also have developed private label applications of our interactive
products. For example, we adapted Monster.com(SM) technology to create a
database of jobs for Fidelity Investments which resides, through a hyper-link,
on the Fidelity home page. The search features have the look, feel and ease of
use associated with Monster.com(SM) while appearing to the user as a seamless
part of the Fidelity site. We intend to continue to market private label
products as a way to increase the size of our databases.

To attract the maximum amount of volume to our Web sites, we intend to
continue to develop additional value-added content, while developing strategic
alliances with other on-line content providers. For example, we recently entered
into a content and marketing arrangement with America Online, Inc., pursuant to
which Monster.com(SM) for the payment of $100 million will be the exclusive
provider of career search services in the United States and Canada for four
years to 21 million AOL members across seven AOL properties: AOL, AOL Canada,
Compuserve, ICQ, AOL.com, Netscape and Digital City. We believe that this
agreement has the potential to drive a substantial amount of increased traffic
and new users to Monster.com(SM).

In addition to the U.S., Monster.com(SM) has been customized, in language
and content, for Canada, the U.K., the Netherlands, Australia, Belgium, France,
Singapore and New Zealand.

RECRUITMENT ADVERTISING. We entered the recruitment advertising business in
1993 and have grown both through acquisitions and internally. For the year ended
December 31, 1998 and the nine months ended September 30, 1999, we had
recruitment advertising gross billings of $849.5 million and $615.5 million,
respectively, and recruitment advertising commissions and fees of $177.8 million
and $134.9 million, respectively. In addition to our worldwide offices, we
maintain relationships with unaffiliated agencies throughout the world to
further enhance our ability to reach qualified job candidates. As a full service
agency, we offer our clients comprehensive recruitment advertising services
including creation and placement of classified advertising, development of
employer image campaigns, creation of collateral materials such as recruiting
brochures and implementation of alternative recruitment programs such as job
fairs, employee referral programs and campus recruiting. We specialize in
designing recruitment advertising campaigns for clients in high growth
industries and in industries with high employee turnover rates. Further, we
believe that as employers find it more difficult to attract qualified employees,
they will increasingly seek out agencies that can implement national and, in
some cases, global recruitment strategies.

Our task in formulating and implementing a global recruitment advertising
program is to design the creative elements of the campaign and to select the
appropriate media and/or other recruitment methods. This is done in the context
of the client's staffing parameters which generally include skill requirements,
job location and advertising budget. In addition, while executing a given
campaign, we will often undertake basic research with respect to demographic
profiles of selected geographic areas to assist the client in developing an
appropriate overall strategy.

41
<PAGE>
We have historically found that the strongest recruitment advertising
campaigns "brand" the client's image, demonstrate the client's unique selling
points and stress the client's employee benefits and corporate culture.
Effectively differentiating one employer from another has become particularly
important in the technology and healthcare sectors where there is an acute
shortage of qualified job candidates. The success of the campaign may depend on
whether an organization is seen as sufficiently distinct from its competitors.

After completing the design of an advertisement's creative elements, we
develop an appropriate media plan. Typically, a variety of media is used,
including newspapers, trade journals, the Internet, billboards, direct mail,
radio and television. If we recommend use of newspapers, we may recommend
certain newspapers or editions of a particular newspaper which are targeted to a
specific demographic segment of the population. We may also recommend a variety
of advertisement sizes and vary the frequency with which an advertisement
appears.

After an advertisement is placed, we conduct extensive customer analysis to
assure satisfaction, including monitoring the effectiveness of the chosen media.
As an example, for a transportation client, we analyzed cost-per-response,
cost-per-application and cost-per-hire data for over a dozen media vehicles
running in approximately 30 markets in an effort to determine the return on
investment of each media vehicle. Our recruitment advertising division also
maintains a quality assurance program for its larger clients which involves
formal creative reviews by our clients as well as soliciting client feedback.

In the U.S., we receive commissions generally equal to 15% of recruitment
advertising gross billings. Outside of the U.S., where, collectively, we derive
the majority of our recruitment advertising commissions and fees, our commission
rates for recruitment advertising vary, ranging from approximately 10% in
Australia to 15% in Canada and the United Kingdom. In the U.S., we also earn
fees from value-added services such as design, research and other creative and
administrative services which resulted in aggregate commissions and fees equal
to approximately 21% and 22% of recruitment advertising gross billings for the
year ended December 31, 1998 and the nine months ended September 30, 1999
respectively.

SEARCH AND SELECTION. Traditionally, recruitment and online advertising did
not target the senior or mid-level executive. Therefore, in order to expand the
range of services we offer to our recruitment advertising clients, we entered
the executive search field. We currently have 55 executive search offices in 25
countries. We believe that our expansion into the executive search field will
enable us to attract and service new major clients because we can now market
ourselves as a full service firm that can accommodate all of our clients'
employment and recruitment advertising needs. For the nine months ended
September 30, 1999, search and selection gross billings and commissions and fees
were $221.7 million and $219.2 million, respectively.

Our retained executive search process typically targets senior level
executives (those earning over $250,000, annually) and includes the following
steps:

- a TMP executive search consultant interviews the client in order to
analyze the senior executive position that needs to be filled, the general
environment of the client's work place and the character and quality of
candidates that have successfully performed as an executive of the client;

- our consultant then prepares a written synopsis of the position to be
filled in order to attract a suitable, qualified, successful candidate;

- the synopsis is then forwarded to other recruiters in order to assist with
the search for a candidate that fits the criteria set forth in the
synopsis;

- a pool of suitable candidates is gathered and the consultants begin to
schedule interviews;

- the candidates are then interviewed and analyzed by the consultants on our
premises to determine if the candidate meets the requisite experience and
potential cultural fit outlined by the consultant and the client;

42
<PAGE>
- reports of the most suitable candidates are prepared by the consultant and
presented to the client, who then chooses the candidates to be met;

- the consultant then organizes a mutually convenient time and place for the
client to personally meet and interview such candidates;

- the consultant will follow up with the successful candidate to obtain any
supplemental information needed or requested by the client, including
references and other documentary materials; and

- the consultant then assists the client in structuring and negotiating the
final compensation package and other benefits for the hired executive
based on all relevant factors researched by the consultant, including
industry comparisons, the experience levels of the executive and future
trends.

Candidates for mid-level positions, the search for whom we term "selection,"
are normally attracted by classified advertising or chosen through a
computerized database file search, as opposed to the detailed search process
used for senior executives. We screen and interview applicants prior to
providing the client with a short list. Upon acceptance of the short list of
suitable candidates, the client then proceeds to interview the selected
candidates. The next steps in the process include reference checking,
negotiation of an offer, confirmation of acceptances and start date, and
performance follow-up at the end of one and three months.

For assignments involving mid-level executives, we have developed and are
introducing the Executive Resourcing process, which is designed to evaluate a
person's capacity to perform in a current or future role. It can be used for
internal and external candidates and is based on the premise that if the
requirements for an individual job are thoroughly understood, it is possible to
develop testing protocols which assess and predict a candidate's ability to
succeed in a specific position. Tools and exercises include aptitude testing,
job simulations, behavioral and situational interviews, leadership and team
exercises, group discussions, role plays and work sample tests. The goals of the
Executive Resourcing process are to put the right people in the right job,
boosting both individual job satisfaction and productivity.

TEMPORARY CONTRACTING. We provide temporary contract employees in
Australasia and the United Kingdom ranging from executives to clerical workers.
The demand for contract employee services was created by organizations' need for
flexible work forces with the types of skills required to meet their particular
circumstances in a changing market. For the nine months ended September 30, 1999
gross billings were $44.9 million, commissions and fees were $44.9 million and
revenue before deducting the costs of temporary contractors was $245.0 million.

We place qualified executives, professionals, clerical and trade labor in
temporary positions, or for specific short term projects. Contractors can be
used for emergency support or to complement the skills of a client's core,
permanent staff. Contracting can be linked to the permanent placement, with the
client employing a "try before you buy" strategy. The period for the contracting
assignment can vary from as little as one day to over 12 months.

In addition to the more general contracting assignments, we provide
executives on a contract basis with our Australian clients, whereby a specific
task is managed by us but staffed by contract executives.

INTERN TO CEO MIGRATION TO THE INTERNET. We believe that our growth in the
career solutions area will continue to come from our Internet properties through
our leadership position at Monster. com(SM), combined with additional online
growth opportunities from the recruitment advertising, search and selection and
temporary contracting markets and by capturing increasing shares of budgets
previously spent by corporations on unassisted recruiting activities. The
following table reflects the quarterly growth in our Internet commissions and
fees for our "intern to CEO" businesses, from the third quarter of fiscal 1995
through the third quarter of fiscal 1999.

43
<PAGE>
INTERN TO CEO
INTERNET COMMISSIONS AND FEES
(IN THOUSANDS)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

OUR YELLOW PAGE BUSINESS

We entered the yellow page business in 1967 and have grown to become the
largest yellow page advertising agency in the world based on yellow page gross
billings. For the nine months ended September 30, 1999 we had yellow page gross
billings and commissions and fees of $413.7 million and $79.5 million,
respectively.

CREATING AND PLACING YELLOW PAGE ADVERTISEMENTS. There are currently
approximately 7,000 yellow page directories in the U.S. Each has a separate
closing date for accepting advertisements and one or more of these closings
occur on every working day of the year. The steps involved in placing an
advertisement are numerous and can take as long as nine months.

The first step in the process is the formulation of the advertising
program's creative elements including illustrations, advertising copy, slogans
and other elements which are designed to attract a potential customer's
attention. To assess the effectiveness of a proposed campaign, we generally
undertake extensive research to determine which alternatives best reach the
client's target market. This research typically includes focus group testing and
the running of split-run advertisements. Focus group testing involves forming
groups of potential customers and gauging their reaction to a variety of
potential advertisements. Split-run testing measures the results of specific
campaigns by placing more than one version of an advertisement in various
editions of the same yellow page directory. By using multiple phone numbers and
various monitoring methods, we can then determine which advertisements generate
the most effective response.

After designing an advertising program, we create a media plan which targets
client's customer base in a cost-effective manner. We analyze targeted
directories to determine circulation, rate of usage and demographic profile. We
then recommend advertisements ranging from a full page to as little as a one
line listing. For some of our larger yellow page clients, advertisements are
placed in over 2,000 directories.

To ensure client satisfaction, we maintain an extensive quality control
program. Account teams have frequent in-person client contact as well as formal
annual creative reviews. We also solicit feedback

44
<PAGE>
through client interviews, written surveys and other methods consisting of focus
groups made up of yellow page users and yellow page user pollings. The principal
aims of this program are client retention and sales growth. We believe our focus
on customer service has enabled us to maintain our client retention rate, year
to year, in excess of 90%.

In addition to traditional advertising, we offer selected yellow page
clients a variety of value-added services ranging from managing the maintenance
and installation of telephone lines for branch locations to the staffing and
operation of fulfillment centers which respond to toll-free calls requesting
product brochures and other information. While beyond the typical scope of
services provided by an advertising agency, these ancillary services are
designed to further integrate us into client processes for the mutual benefit of
both parties.

CLIENTS. Our yellow page clients generally determine the content of their
advertising programs on a centralized basis. Placement of the advertising,
however, requires an extensive local selling and quality control effort because
many of our clients are franchisors or manufacturers who are dependent upon
franchisees or independent dealers for distribution. The participation of
franchisees and dealers in the yellow page program is discretionary and must be
solicited at the local level. As an example of the scale of this task, in 1998,
we visited or had contact with over 570,000 individual store locations.

We have a yellow page sales, marketing and customer service staff of
approximately 1,000 people to implement this local effort. We believe the size
and breadth of this staff, its local client relationships and its databases of
client branch locations, franchisors and dealers provide us with a strong
competitive advantage in executing the yellow page programs of existing clients.
We believe these resources are critical in marketing our services to potential
new clients and in marketing and executing our Internet-based service offerings.

SALES AND MARKETING

At December 1, 1999, we had approximately 5,100 employees focused on our
sales, marketing and customer service efforts worldwide. Our sales, marketing
and customer service staff is divided into two groups: (i) new business
generation (approximately 400 employees) and (ii) existing client relationship
maintenance and improvement (approximately 4,700 employees). Within each group,
we maintain separate sales and marketing staffs for our recruitment advertising
business, yellow page advertising business and Internet business. In addition to
specializing by product, each group is accountable for, and incentivized to,
cross sell our other products. Our Internet sales staff has targeted our
recruitment advertising and yellow page clients to capitalize on the
interactivity and additional services that our Internet products can cost
effectively provide to such clients. In addition to pursuing cross-selling
opportunities within our existing client base, each product sales force also
designs targeted selling campaigns for potential new clients. We assign a
marketing manager to our clients in order to work closely with the client to
develop and design the appropriate marketing and advertising campaign. Our
customer service representative works closely with the marketing manager and the
client to implement the marketing and advertising campaign, evaluate the
effectiveness of the campaign and monitor client satisfaction levels.

At December 1, 1999, we had 95 sales, marketing and customer service offices
located in the United States and 137 offices in the rest of the world. We also
maintained relationships with 7 international recruitment advertising agencies
throughout the world, further enhancing our ability to reach qualified job
candidates.

CLIENTS

At December 1, 1999, we had more than 31,000 clients, including more than 90
of the Fortune 100 companies and approximately 450 of the Fortune 500 companies.
Our clients include: The Home Depot, Inc., Ford Motor Company, CVS Corporation,
Hewlett-Packard Company, Sears, Roebuck and Co., The Allstate Corporation,
Sprint Corporation, United Parcel Service, Inc., Mobil Corporation, Merck & Co.,
Inc., MCI Worldcom, Inc., AT&T Corp., Motorola, Inc., GTE Corporation and Morgan

45
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Stanley Dean Witter & Co. No one client accounts for more than 5% of the
Company's total annual commissions and fees.

COMPETITION

The markets for our services and products are highly competitive and are
characterized by pressure to reduce prices, incorporate new capabilities and
technologies, and accelerate job completion schedules.

We face competition from a number of sources. These sources include national
and regional advertising agencies, media companies, as well as specialized and
integrated marketing communication firms. Many advertising agencies and media
companies have started to either internally develop or acquire new media
capabilities. New boutique businesses that provide integrated or specialized
services (such as advertising services or Web site design) and are
technologically proficient, especially in the new media arena, are also
competing with us. Many of our competitors or potential competitors have long
operating histories, and some have greater financial, management, technological,
development, sales, marketing and other resources than do we. In addition, our
ability to maintain our existing clients and generate new clients depends to a
significant degree on the quality of our services, pricing and our reputation
among our clients and potential clients.

We believe that our largest competitors in online recruiting are
Headhunter.net, Dice.com, HotJobs.com, CareerPath.com, CareerMosaic.com and
CareerBuilder.com although, as illustrated below, for the first eleven months of
1999, Monster.com(SM) attracted the greatest number of visitors (derived from
Media Metrix data) and in November 1999, Monster.com(SM) had the greatest power
ranking (reach multiplied by average page views per visitor):

MONTHLY VISITOR TRENDS*
JANUARY THROUGH NOVEMBER 1999
(IN THOUSANDS)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
CAREERBUILDER.COM CAREERMOSAIC.COM CAREERPATH.COM HEADHUNTER.NET HOTJOBS.COM MONSTER.COM
<S> <C> <C> <C> <C> <C> <C>
Jan 252 795 917 574 388 1779
Feb 275 882 1019 636 810 2322
Mar 256 965 1111 576 344 2067
Apr 282 753 861 481 258 1739
May 336 790 1052 599 436 2416
Jun 353 808 1585 777 669 2605
Jul 293 800 1115 810 760 2515
Aug 376 742 727 949 882 2457
Sep 326 584 734 1004 687 2582
Oct 471 607 891 1668 654 2757
Nov 546 653 1,104 914 568 2717
</TABLE>

* Source: Media Metrix.

46
<PAGE>
POWER RANKING FOR THE MONTH OF NOVEMBER 1999

<S> <C> <C> <C> <C>
AVERAGE
PAGES PER POWER
CAREER SITE REACH* VISITOR* RANKING
------------------------------- --- ---- -----
1. Monster.com 4.2 31.0 130.2
2. HeadHunter.net 1.4 19.1 26.7
3. Dice.com 0.4 30.6 12.2
4. HotJobs.com 0.9 13.3 12.0
5. CareerPath.com 1.7 7.0 11.9
6. CareerMosaic.com 1.0 7.2 7.2
7. CareerBuilder.com 0.8 6.1 4.9
* Source: Media Metrix.
</TABLE>

We believe that our three largest competitors in the recruitment advertising
segment are Bernard Hodes Advertising, Inc., a subsidiary of Omnicom, Nationwide
Advertising Service, Inc., controlled by the Gund Brothers, and JWT Specialized
Communications, a subsidiary of the WPP Group USA, Inc. We also compete with
hundreds of Internet content providers. We believe that our largest competitors
in the executive search segment are Korn/Ferry International, Heidrick &
Struggles International Inc., Spencer Stuart & Associates and Russell Reynolds
Associates, Inc.

INTELLECTUAL PROPERTY

Our success and ability to compete is dependent in part on the protection of
our original content for the Internet and on the goodwill associated with our
trademarks, trade names, service marks and other proprietary rights. We rely on
copyright laws to protect the original content that we develop for the Internet.
In addition, we rely on Federal trademark laws to provide additional protection
for the appearance of our Internet sites. A substantial amount of uncertainty
exists concerning the application of copyright laws to the Internet, and there
can be no assurance that existing laws will provide adequate protection for our
original content. In addition, because copyright laws do not prohibit
independent development of similar content, there can be no assurance that
copyright laws will provide any competitive advantage to us.

We also assert common law protection on certain names and marks that we have
used in connection with our business activities.

We rely on trade secret and copyright laws to protect the proprietary
technologies that we have developed to manage and improve our Internet sites and
advertising services, but there can be no assurance that such laws will provide
sufficient protection to us, that others will not develop technologies that are
similar or superior to ours, or that third parties will not copy or otherwise
obtain and use our technologies without authorization. We have filed patent
applications with respect to certain of our software systems, methods and
related technologies, but there can be no assurance that such applications will
be granted or that any future patents will not be challenged, invalidated or
circumvented, or that the rights granted thereunder will provide us with a
competitive advantage. In addition, we rely on certain technology licensed from
third parties, and may be required to license additional technology in the
future, for use in managing our Internet sites and providing related services to
users and advertising customers. Our ability to generate fees from Internet
commerce may also depend on data encryption and authentication technologies that
we may be required to license from third parties. There can be no assurance that
these third party technology licenses will be available or will continue to be
available to us on acceptable commercial terms or at all. The inability to enter
into and maintain any of these technology licenses could have a material adverse
effect on our business, financial condition and operating results.

Policing unauthorized use of our proprietary technology and other
intellectual property rights could entail significant expense and could be
difficult or impossible, particularly given the global nature of the Internet
and the fact that the laws of other countries may afford us little or no
effective protection of our intellectual property. In addition, there can be no
assurance that third parties will not bring claims of

47
<PAGE>
copyright or trademark infringement against us or claim that our use of certain
technologies violates a patent. We anticipate an increase in patent infringement
claims involving Internet-related technologies as the number of products and
competitors in this market grows and as related patents are issued. Further,
there can be no assurance that third parties will not claim that we have
misappropriated their creative ideas or formats or otherwise infringed upon
their proprietary rights in connection with our Internet content. Any claims of
infringement, with or without merit, could be time consuming to defend, result
in costly litigation, divert management attention, require us to enter into
costly royalty or licensing arrangements or prevent us from using important
technologies or methods, any of which could have a material adverse effect on
our business, financial condition or operating results.

GOVERNMENT REGULATION

As an advertising agency which creates and places print and Internet
advertisements, we are subject to Sections 5 and 12 of the Federal Trade
Commission Act (the "FTC Act") which regulate advertising in all media,
including the Internet, and require advertisers and advertising agencies to have
substantiation for advertising claims before disseminating advertisements. The
FTC Act prohibits the dissemination of false, deceptive, misleading, and unfair
advertising, and grants the Federal Trade Commission ("FTC") enforcement powers
to impose and seek civil penalties, consumer redress, injunctive relief and
other remedies upon advertisers and advertising agencies which disseminate
prohibited advertisements. Advertising agencies are subject to liability under
the FTC Act if the agency actively participated in creating the advertisement,
and knew or had reason to know that the advertising was false or deceptive.

In the event that any advertising created by us was found to be false,
deceptive or misleading, the FTC Act could potentially subject us to liability.
The fact that the FTC has recently brought several actions charging deceptive
advertising via the Internet, and is actively seeking new cases involving
advertising via the Internet, indicates that the FTC Act could pose a somewhat
higher risk of liability to the advertising distributed via the Internet. The
FTC has never brought any actions against us.

There can be no assurance that other current or new government laws and
regulations, or the application of existing laws and regulations, will not
subject us to significant liabilities, significantly dampen growth in Internet
usage, prevent us from offering certain Internet content or services or
otherwise cause a material adverse effect on our business, financial condition
or operating results.

LEGAL PROCEEDINGS

We are involved in various legal proceedings that are incidental to the
conduct of our business. We are not involved in any pending or threatened legal
proceedings which we believe could reasonably be expected to have a material
adverse effect on our financial condition or results of operations.

On February 19, 1998, a class action complaint was filed against TMP by
several former employees. Presently, the claims brought by the plaintiffs in the
complaint are that TMP misclassified the named plaintiffs and purported class
members as exempt from the overtime requirements of California wage and hour law
and failed to pay them overtime wages. Discovery has indicated the purported
class to include approximately 100 members. By Order of the Court dated
November 15, 1999, a class of current and former employees in five job
categories of the California recruitment offices was certified. At a mediation
session held on January 17, 2000, a settlement in principle was reached to end
the litigation in its entirety with no admission of liability by TMP. The
settlement must be submitted for court approval which is expected by March 31,
2000. In addition, please see "Risk Factors--We are vulnerable to intellectual
property infringement claims brought against us by others."

EMPLOYEES

At December 1, 1999, we employed approximately 6,400 people, of whom
approximately 3,300 were client services personnel, approximately 400 were sales
and marketing personnel, approximately 1,100 were search and selection personnel
and approximately 300 were creative and graphics personnel. The remainder of our
personnel are information systems, financial and administrative personnel. Our
employees are not represented by a labor union or a collective bargaining
agreement. We regard our employee relations as generally excellent.

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<PAGE>
MATERIAL U.S. FEDERAL INCOME TAX
CONSIDERATIONS FOR NON-U.S. HOLDERS

The following is a general discussion of the material U.S. federal income
and estate tax considerations with respect to the ownership and disposition of
common stock applicable to Non-U.S. Holders. In general, a "Non-U.S. Holder" is
any holder other than

- a citizen or resident of the United States

- a corporation created or organized in the United States or under the laws
of the United States or of any state

- an estate, the income of which is includible in gross income for U.S.
federal income tax purposes regardless of its source

- a trust if

-- a court within the United States is able to exercise primary
supervision over the administration of the trust, and

-- one or more U.S. persons have the authority to control all
substantial decisions of the trust

This discussion is based on current provisions of the Internal Revenue Code,
Treasury Regulations promulgated under the Internal Revenue Code, judicial
opinions, published positions of the Internal Revenue Service, and all other
applicable authorities, all of which are subject to change, possibly with
retroactive effect. This discussion does not address all aspects of income and
estate taxation or any aspects of state, local, or non U.S. taxes, nor does it
consider any specific facts or circumstances that may apply to a particular
Non-U.S. Holder that may be subject to special treatment under the U.S. federal
income tax laws, such as insurance companies, tax-exempt organizations,
financial institutions, brokers, dealers in securities, and U.S. expatriates.
ACCORDINGLY, PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS
REGARDING THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. INCOME AND OTHER TAX
CONSIDERATIONS OF ACQUIRING, HOLDING AND DISPOSING OF SHARES OF COMMON STOCK.

DIVIDENDS

In general, dividends paid to a Non-U.S. Holder will be subject to U.S.
withholding tax at a 30% rate of the gross amount, or a lower rate prescribed by
an applicable income tax treaty, unless the dividends are effectively connected
with a trade or business carried on by the Non-U.S. Holder within the United
States. Dividends effectively connected with such a U.S. trade or business
generally will not be subject to U.S. withholding tax if the Non-U.S. holder
files the required forms, including Internal Revenue Service Form 4224, or any
successor form, with the payor of the dividend, and generally will be subject to
U.S. federal income tax on a net income basis, in the same manner as if the
Non-U.S. Holder were a resident of the United States. A Non-U.S. Holder that is
a corporation may be subject to an additional branch profits tax at a rate of
30%, or such lower rate as may be specified by an applicable income tax treaty,
on the repatriation from the United States of its "effectively connected
earnings and profits," subject to adjustments. To determine the applicability of
a tax treaty providing for a lower rate of withholding under the currently
effective Treasury Regulations, the "Current Regulations", and published
Internal Revenue Service positions, dividends paid to an address in a foreign
country are presumed to be paid to a resident of that country absent knowledge
to the contrary. Under Treasury Regulations issued on October 6, 1997, the
"Final Regulations", and generally effective for payments made after
December 31, 2000, however, a Non-U.S. Holder, including, for some Non-U.S.
Holders that are entities, the owner or owners of such entities, will be
required to satisfy certification requirements in order to claim a reduced rate
of withholding under an applicable income tax treaty.

49
<PAGE>
GAIN OR SALE OR OTHER DISPOSITION OF COMMON STOCK

In general, a Non-U.S. Holder will not be subject to U.S. federal income tax
on any gain realized upon the sale or other disposition of the holder's shares
of common stock unless

- the gain is effectively connected with a trade or business carried on by
the Non-U.S. Holder within the United States, in which case the branch
profits tax discussed above may also apply if the Non-U.S. Holder is a
corporation

- the Non-U.S. Holder is an individual who holds shares of common stock as a
capital asset and is present in the United States for 183 days or more in
the taxable year of disposition and meets other tests

- the Non-U.S. Holder is subject to tax under the provisions of the Internal
Revenue Code regarding the taxation of U.S. expatriates, or

- we are or have been a U.S. real property-holding corporation for U.S.
federal income tax purposes, which we do not believe that we have been,
currently are, or will become, at any time within the shorter of the
five-year period preceding such disposition and such Non-U.S. Holder's
holding period

If we were or were to become a U.S. real property holding corporation at any
time during this period, gains realized upon a disposition of common stock by a
Non-U.S. Holder that did not directly or indirectly own more than 5% of the
common stock during this period generally would not be subject to U.S. federal
income tax, provided that common stock is "regularly traded on an established
securities market (within the meaning of Section 897(c)(3) of the Code)."

ESTATE TAX

Common stock owned or treated as owned by an individual who is not a citizen
or resident, as defined for U.S. federal estate tax purposes, of the United
States at the time of death will be includible in the individual's gross estate
for U.S. federal estate tax purposes, unless an applicable estate tax treaty
provided otherwise, and therefore may be subject to U.S. federal estate tax.

INFORMATION REPORTING, BACKUP WITHHOLDING AND OTHER REPORTING REQUIREMENTS

Generally, we must report annually to the Internal Revenue Service and to
each Non-U.S. Holder the amount of dividends paid to, and the tax withheld with
respect to, each Non-U.S. Holder. These reporting requirements apply regardless
of whether withholding was reduced or eliminated by an applicable tax treaty.
Copies of this information also may be made available under the provisions of a
specific treaty or agreement with the tax authorities in the country in which
the Non-U.S. Holder resides or is established.

Under the Current Regulations, U.S. backup withholding tax, which generally
is imposed at the rate of 31% on applicable payments to persons that fail to
furnish the information required under the U.S. information reporting
requirements, as well as information reporting requirements, other than those
discussed in the previous paragraph, generally will not apply to dividends paid
on common stock to a Non-U.S. Holder at an address outside the United States.
Backup withholding and information reporting generally will apply, however, to
dividends paid on shares of common stock to a Non-U.S. Holder at an address in
the United States if the holder fails to establish an exemption or to provide
other required information to the payor.

Under the Current Regulations, the payment of proceeds from the disposition
of common stock to or through a U.S. office of a broker will be subject to
information reporting and backup withholding, unless the beneficial owner, under
penalties of perjury, certifies, among other things, its status as a Non-U.S.
Holder or otherwise establishes an exemption. The payment of proceeds from the
disposition of common

50
<PAGE>
stock to or through a Non-U.S. office of a broker generally will not be subject
to backup withholding and information reporting, unless the payee is

- A U.S. person

- a "controlled foreign corporation" for U.S. federal income tax purposes,
or

- a foreign person 50% or more of whose gross income from a specified period
is effectively connected with a U.S. trade or business, information
reporting, but not backup withholding, will apply unless the broker has
documentary evidence in its files that the owner is a Non U.S. Holder and
other conditions are satisfied, or the beneficial owner otherwise
establishes an exemption, and the broker has no actual knowledge to the
contrary

Under the Final Regulations, generally effective for payments made after
December 31, 2000, the payment of dividends or the payment of proceeds from the
disposition of our common stock to a Non-U.S. Holder may be subject to
information reporting and backup withholding unless the recipient satisfies the
certification requirements of the Final Regulations or otherwise establishes an
exemption.

Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules from a payment to a non-U.S. Holder can be refunded or
credited against the Non-U.S. Holder's U.S. federal income tax liability, if
any, PROVIDED that the required information is furnished to the Internal Revenue
service in a timely manner.

THE FOREGOING DISCUSSION OF THESE U.S. FEDERAL INCOME TAX CONSIDERATIONS IS
NOT TAX ADVICE AND IS NOT BASED ON AN OPINION OF COUNSEL. ACCORDINGLY, EACH
PROSPECTIVE NON-U.S. HOLDER OF COMMON STOCK SHOULD CONSULT THAT HOLDER'S OWN TAX
ADVISER WITH RESPECT TO THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES
OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF COMMON STOCK.

51
<PAGE>
UNDERWRITERS

WITH RESPECT TO THE OFFERING OF SHARES IN THE UNITED STATES AND CANADA,
MORGAN STANLEY & CO. INCORPORATED AND GOLDMAN, SACHS & CO. ARE ACTING AS JOINT
BOOK-RUNNING MANAGERS AND SALOMON SMITH BARNEY INC. IS ACTING AS CO-LEAD
MANAGER. WITH RESPECT TO THE OFFERING OF SHARES OUTSIDE OF THE UNITED STATES AND
CANADA, MORGAN STANLEY & CO. INTERNATIONAL LIMITED AND GOLDMAN SACHS
INTERNATIONAL ARE ACTING AS JOINT BOOK-RUNNING MANAGERS AND SALOMON BROTHERS
INTERNATIONAL LIMITED IS ACTING AS CO-LEAD MANAGER.

Under the terms and subject to the conditions contained in the underwriting
agreement, dated the date of this prospectus, the U.S. underwriters named below,
for whom Morgan Stanley & Co., Incorporated, Goldman, Sachs & Co., Salomon Smith
Barney Inc., Deutsche Bank Securities Inc., Paine Webber Incorporated and U.S.
Bancorp Piper Jaffray Inc. are acting as U.S. representatives, and the
international underwriters named below for whom Morgan Stanley & Co.
International Limited, Goldman Sachs International, Salomon Brothers
International Limited, Deutsche Bank AG London, PaineWebber International (U.K.)
Ltd. and U.S. Bancorp Piper Jaffray Inc. are acting as international
representatives, have severally agreed to purchase, and we have agreed to sell
to them, the respective number of shares of common stock set forth opposite the
names of these underwriters below:

<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
- ----------------------------------------------------------------------------------------------- -----------------
<S> <C>
U.S. Underwriters:
Morgan Stanley & Co. Incorporated............................................................ 432,832
Goldman, Sachs & Co. ........................................................................ 432,832
Salomon Smith Barney Inc. ................................................................... 432,831
Deutsche Bank Securities Inc. ............................................................... 215,835
PaineWebber Incorporated..................................................................... 215,835
U.S. Bancorp Piper Jaffray Inc. ............................................................. 215,835
Banc of America Securities LLC............................................................... 114,000
Brean Murray & Co., Inc. .................................................................... 114,000
First Union Securities, Inc. ................................................................ 114,000
FleetBoston Robertson Stephens Inc. ......................................................... 114,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated........................................... 114,000
Needham & Company, Inc. ..................................................................... 114,000
Raymond James & Associates Inc. ............................................................. 114,000
The Robinson-Humphrey Company, LLC .......................................................... 114,000
C.E. Unterberg, Towbin ...................................................................... 114,000
Warburg Dillon Read LLC ..................................................................... 114,000
Wasserstein Perella Securities, Inc. ........................................................ 114,000
-----------
Subtotal................................................................................... 3,200,000
-----------
International Underwriters:
Morgan Stanley & Co. International Limited................................................... 177,932
Goldman Sachs International.................................................................. 177,932
Salomon Brothers International Limited....................................................... 177,931
Deutsche Bank AG London...................................................................... 88,735
PaineWebber International (U.K.) Ltd......................................................... 88,735
U.S. Bancorp Piper Jaffray Inc. ............................................................. 88,735
-----------
Subtotal................................................................................... 800,000
-----------
Total.................................................................................... 4,000,000
===========
</TABLE>

The U.S. underwriters and the international underwriters, and the U.S.
representatives and the international representatives, are collectively referred
to as the underwriters and the representatives,

52
<PAGE>
respectively. The underwriting agreement provides that the obligations of the
several underwriters to pay for and accept delivery of the shares of common
stock offered in this prospectus are subject to the approval of specified legal
matters by their counsel and to other conditions. The underwriters are obligated
to take and pay for all the shares of common stock offered hereby, except those
shares covered by the U.S. underwriters' over-allotment option described below,
if any shares are taken.

The underwriters initially propose to offer a portion of the shares of
common stock directly to the public at the public offering price set forth on
the cover page of this prospectus and a portion to some dealers at a price that
represents a concession not in excess of $3.48 per share under the public
offering price. Any underwriter may allow, and these dealers may reallow, a
concession not in excess of $0.10 per share to other underwriters or to other
dealers. After the initial offering of the shares of common stock, the offering
price and other selling terms may be varied by the representatives.

We have granted to the U.S. underwriters an option, exercisable for 30 days
from the date of this prospectus to purchase up to an aggregate of 600,000
additional shares at the public offering price set forth on the cover page of
this prospectus, less underwriting discounts and commissions. The U.S.
underwriters may exercise this option solely for the purpose of covering
over-allotments, if any, made in connection with the offering of the shares
offered in this prospectus. To the extent this option is exercised, each U.S.
underwriter will become obligated, subject to specified conditions, to purchase
about the same percentage of additional shares as the number set forth next to
the U.S. underwriter's name in the preceding table bears to the total number of
shares set forth next to the names of all U.S. underwriters in the preceding
table. If the U.S. underwriters' option is exercised in full, the total price to
the public for the offering would be $711,275,000, the total underwriting
discounts and commissions would be $26,680,000 and the total proceeds to TMP
Worldwide Inc. would be $684,595,000.

We and our directors and executive officers have agreed that, without the
prior written consent of Morgan Stanley & Co. Incorporated on behalf of the
underwriters, we will not, during the period ending 90 days after the date of
this prospectus:

- offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of common stock or any securities
convertible into exercisable or exchangeable for common stock or

- enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of common
stock, whether any of these transactions described above is to be settled
by delivery of common stock or any other securities, in cash or otherwise

The restrictions described in the preceding list do not apply in a number of
circumstances, including:

- the exchange of shares of Class B common stock for shares of common stock
under the terms of our certificate of incorporation

- the granting of options to officers, directors, employees or consultants,
PROVIDED that these options are not generally exercisable prior to the end
of the lock-up period

- the issuance by us of shares of common stock upon the exercise of options
or warrants or the conversion of securities outstanding on the date of the
underwriting agreement or as of the closing date of this offering, of
which the underwriters have been advised in writing

- the issuance of shares to acquire HW Group plc and the issuance of up to
2,500,000 shares of common stock in connection with other acquisitions

- the exercise of options granted pursuant to our stock option plans or

53
<PAGE>
- the sale or other transfer of any shares of common stock by the foregoing
persons to any associate, as this term is defined in Rule 12b-2 under the
Securities Exchange Act of 1934, if this person agrees to be bound by the
foregoing provisions.

In order to facilitate our offering of common stock, the underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price of
the common stock. Specifically, the underwriters may over-allot in connection
with the offering, creating a short position in common stock for their own
account. In addition, to cover over-allotments or to stabilize the price of the
common stock, the underwriters may bid for, and purchase, shares of common stock
in the open market. Finally, the underwriting syndicate may reclaim selling
concessions allowed to an underwriter or a dealer for distributing common stock
in the offering, if the syndicate repurchases previously distributed common
stock in transactions to cover syndicate short positions, in stabilization
transactions or otherwise. Any of these activities may stabilize or maintain the
market price of common stock above independent market levels. The underwriters
are not required to engage in these activities, and may end any of these
activities at any time. Prior to effectiveness of the Registration Statement,
one of the underwriters purchased 13,310 shares of common stock at a weighted
average price of $152.711.

Some of the underwriters engage in transactions with, and perform services
for, our company in the ordinary course of business and have engaged and may in
the future engage in commercial banking and investment banking transactions with
us, for which they receive customary compensation.

We have agreed with the underwriters to indemnify each other against some
liabilities relating to this offering, including liabilities under the
Securities Act of 1933.

LEGAL MATTERS

The validity of the shares of common stock we are offering will be passed
upon for us by Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, New York
10103. Certain legal matters in connection with this offering will be passed
upon for the underwriters by Davis Polk & Wardwell.

EXPERTS

The consolidated financial statements and schedules of TMP incorporated by
reference in this prospectus have been audited by BDO Seidman, LLP, independent
certified public accountants, to the extent and for the periods indicated in
their reports incorporated in this prospectus by reference, and are incorporated
in this prospectus in reliance upon such reports given upon the authority of
that firm as experts in accounting and auditing.

The consolidated balance sheets of Morgan & Banks Limited as of
December 31, 1998 and March 31, 1998 and 1997, the consolidated statements of
operations and stockholders' equity for the year ended December 31, 1998 and
each of the three years in the period ended March 31, 1998 and the statements of
cash flows for the nine months ended December 31, 1998 and the three years in
the period ended March 31, 1998, are incorporated by reference in this
prospectus in reliance on the report of Pannell Kerr Forster, independent
auditors, given upon the authority of that firm as experts in accounting and
auditing.

The consolidated audited financial statements and schedule of LAI Worldwide,
Inc. incorporated by reference in this prospectus and elsewhere in this
registration statement, have been audited by Arthur Andersen LLP, independent
certified public accountants, as indicated in their reports with respect thereto
and are incorporated by reference in reliance upon the authority of said firm as
experts in giving said reports.

Darby & Darby P.C., our special trademark counsel, has reviewed statements
concerning trademark matters contained in "Risk Factors--We are vulnerable to
intellectual property claims brought against us by others" and such statements
have been included upon the authority of such firm as experts in trademark law.

54
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from our website at http:// www.tmpw.com or at the SEC's website at
http://www.sec.gov.

The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and information that we file later with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings we will make with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934 until this offering is finished. This prospectus is part of a
registration statement we filed with the SEC (Registration No. 333-93065).

(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998.

(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1999, June 30, 1999 and September 30, 1999.

(c) The description of the Company's common stock contained in Item 1 of
the Company's Registration Statement on Form 8-A, dated October 16, 1996.

(d) The Company's Current Report on Form 8-K/A, dated January 11, 2000,
relating to a lawsuit filed by HotJobs.com against Digital City, Inc.

(e) The Company's Current Report on Form 8-K/A, dated January 4, 2000,
relating to the financial statements of Highland Search Group L.L.C. as of
September 30, 1999 and December 31, 1998 and for the nine months ended
September 30, 1999 and 1998 and for the year ended December 31, 1998 and the
unaudited pro forma financial statements relating to the merger between the
Company and Highland Search Group L.L.C.

(f) The Company's Current Report on Form 8-K, dated December 1, 1999,
which includes the supplemental consolidated condensed financial statements
and the supplemental consolidated financial statements relating to the
restatement of the Company's consolidated financial statements as of
September 30, 1999 and December 31, 1998 and 1997 and for the nine months
ended September 30, 1999 and 1998 and for each of the three years in the
period ended December 31, 1998 to reflect the mergers with Highland Search
Group L.L.C. on October 21, 1999 and TMC S.r.l. on October 27, 1999, which
are being accounted for as poolings of interests.

(g) The Company's Current Report on Form 8-K, dated October 21, 1999,
relating to the announcement of the acquisition of the Highland Search Group
L.L.C.

(h) Pages F-1 through F-22 and pages 48-53 of the Company's Registration
Statement on Form S-4, file No. 333-82531, filed July 9, 1999 relating to
the consolidated financial statements of LAI Worldwide, Inc. as of
February 28, 1999 and 1998 and for each of the three years in the period
ended February 28, 1999 and the unaudited pro forma condensed combined
financial statements relating to the merger with LAI Worldwide, Inc.

(i) The Company's Current Report on Form 8-K, dated March 5, 1999,
relating to a press release announcing the results of operations of the
Company for the year ended December 31, 1998, issued by the Company on
March 2, 1999.

(j) The Company's Current Report on Form 8-K, dated February 12, 1999,
relating to the financial statements of Morgan & Banks Limited as of
September 30, 1998 and March 31, 1998 and 1997, for the six months ended
September 30, 1998 and 1997 and for each of the three years in the

55
<PAGE>
period ended March 31, 1998 and the unaudited pro forma condensed combined
financial information relating to the acquisition of Morgan & Banks Limited.

(k) The Company's Current Report on Form 8-K, dated February 1, 1999,
relating to the announcement of the Morgan & Banks Limited acquisition and
the release of the results of the Company's operations for the one month and
ten months ended October 31, 1998.

You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:

TMP Worldwide Inc.
1633 Broadway, 33rd Floor, New York, New York 10019
Attention: Investor Relations
(Tel. No. (212) 977-4200)

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