UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of Report (Date of earliest event reported): February 9, 2011
Hudson
Highland Group, Inc.
(Exact
name of registrant as specified in its charter)
Delaware
(State
or other jurisdiction of incorporation)
|
000-50129
|
59-3547281
|
|
|
(Commission
File Number)
|
(IRS
Employer Identification No.)
|
560
Lexington Avenue
New
York, NY 10022
(Address
of Principal Executive Offices)
Registrant’s
telephone number, including area code (212) 351-7300
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
|
Written communications pursuant
to Rule 425 under the Securities Act (16 CFR
230.425)
|
|
Soliciting material pursuant to
Rule 14a-12 under the Exchange Act (16 CFR
240.14a-12)
|
|
|
|
|
Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (16 CFR
240.14d-2(b))
|
|
|
|
|
Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (16 CFR
240.13e-4(c)
|
ITEM 2.02.
RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On
February 9, 2011, Hudson Highland Group, Inc. issued a press release announcing
its financial results for the three and twelve months ended December 31,
2010. A copy of such press release is furnished as Exhibit 99.1 to this Current
Report.
Also on
February 9, 2011, Hudson Highland Group, Inc. posted on its web site a Letter to
Shareholders, Employees and Friends, which discusses results for the three
months ended December 31, 2010. A copy of such letter is furnished as
Exhibit 99.2 to this Current Report.
Included
in each of these exhibits are references to “liquidity.” The company believes
that this non-GAAP measure provides investors useful information about its
combined available cash and borrowing capacity.
ITEM 9.01.
FINANCIAL STATEMENTS AND EXHIBITS.
(a)
Financial Statements.
None.
(b) Pro
Forma Financial Information.
None.
(c) Shell
Company Transactions
None.
(d)
Exhibits
|
99.1
|
Press Release of Hudson Highland
Group, Inc. issued on February 9,
2011.
|
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99.2
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Letter to Shareholders, Employees
and Friends issued on February 9, 2011 and posted to the Company’s
website.
|
2
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this Report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
HUDSON
HIGHLAND GROUP, INC.
(Registrant)
|
||
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By:
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/s/ Mary Jane
Raymond
|
|
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Mary
Jane Raymond
|
||
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Executive Vice President and
Chief
Financial
Officer
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||
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Dated:
February 9,
2011
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||
3
Hudson
Highland Group, Inc.
Current
Report on Form 8-K
Exhibit
Index
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Exhibit
Number
|
Description
|
|
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99.1
|
Press
Release of Hudson Highland Group, Inc. issued on February 9,
2011.
|
|
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99.2
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Letter
to Shareholders, Employees and Friends issued on February 9, 2011 and
posted to Company’s
website.
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Exhibit
99.1
|
For Immediate Release
|
Contact:
|
David
F. Kirby
|
||
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Hudson
Highland Group
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||||
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212-351-7216
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||||
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david.kirby@hudson.com
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Hudson
Highland Group Reports 2010
Fourth
Quarter and Full Year Financial Results
NEW YORK, NY – February 9, 2011 –
Hudson Highland Group, Inc. (Nasdaq: HHGP), one of the world’s leading
providers of permanent recruitment, contract professionals and talent management
solutions, today announced financial results for the fourth quarter and full
year ended December 31, 2010.
Hudson
delivered net income of $1.2 million, or $0.04 per basic and diluted share,
driven by strong revenue and gross margin growth, in the fourth quarter of
2010. The company achieved $219.1 million in revenue and $3.6 million
in EBITDA during that period. These results were driven by 40 percent
revenue growth in permanent recruitment and 17 percent revenue growth in
temporary contracting, compared with the prior year
quarter. Sequentially, revenue grew 9 percent and cash flow from
operations in the quarter was $5.7 million.
2010
Fourth Quarter Summary
|
|
·
|
Revenue
of $219.1 million, an increase of 20.0 percent over the fourth quarter of
2009, and an increase of 9.3 percent from the third quarter of
2010
|
|
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·
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Gross
margin of $82.9 million, or 37.9 percent of revenue, up 19.5 percent from
the same period last year, and an increase of 10.6 percent from the third
quarter of 2010
|
|
|
·
|
EBITDA* of
$3.6 million, or 1.6 percent of revenue, improved from an EBITDA loss of
$5.0 million for the fourth quarter of 2009, which included $5.9 million
of restructuring charges
|
|
|
·
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Net
income of $1.2 million, or $0.04 per basic and diluted share, compared
with net loss of $10.4 million, or $0.40 per basic and diluted share, for
the fourth quarter of 2009
|
2010
Full Year Summary
|
|
·
|
Revenue
of $794.5 million, an increase of 15.0 percent from $691.1 million for
2009
|
|
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·
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Gross
margin of $298.6 million, or 37.6 percent of revenue, up 14.6 percent from
$260.5 million, or 37.7 percent of revenue for prior
year
|
|
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·
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EBITDA* of
$6.5 million, or 0.8 percent of revenue, up from an EBITDA loss of $35.5
million for 2009
|
|
|
·
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Net
loss of $4.7 million, or $0.16 per basic and diluted share, compared with
net loss of $40.6 million, or $1.56 per basic and diluted share, for
2009
|
*
EBITDA is defined in the segment tables at the end of this release and includes
other non-operating income.
“Hudson
delivered its fourth consecutive quarter of increasing year-over-year revenue
and gross margin growth during the fourth quarter, led by continued strong
growth in permanent recruitment and a double-digit increase in temporary
contracting,” said Jon Chait, Hudson Highland Group’s chairman and chief
executive officer. “Sequential results were also outstanding,
indicating a strong trend going into 2011.”
“The
company achieved $5.7 million of positive cash flow from operations in the
fourth quarter and a greatly improved net cash position,” said Mary Jane
Raymond, the company’s executive vice president and chief financial
officer. “Despite a still-challenging macroeconomic environment, the
company delivered strengthening financial results in 2010.”
Regional
Results
Regional
results for the fourth quarter in constant currency were:
|
|
·
|
Europe
gross margin was up 20 percent, led by 30 percent growth in the U.K.,
compared with fourth quarter 2009. Sequentially, Europe gross
margin was up 12 percent compared with third quarter
2010.
|
|
|
·
|
Australia/New
Zealand (ANZ) gross margin was up 23 percent compared with fourth quarter
2009, led by an increase of 53 percent in permanent
recruitment. Sequentially, ANZ gross margin was seasonally down
4 percent compared with third quarter
2010.
|
|
|
·
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Asia
gross margin was up 26 percent compared with fourth quarter 2009 and up 6
percent compared with third quarter
2010.
|
|
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·
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North
America gross margin was up 5 percent compared with fourth quarter 2009
and up 16 percent compared with third quarter 2010, delivering positive
EBITDA for the second consecutive
quarter.
|
Liquidity
and Capital Resources
The
company ended the fourth quarter of 2010 with $73.4 million in liquidity,
composed of $29.5 million in cash and $43.9 million in availability under its
credit facilities. The company generated $5.7 million in cash flow
from operations during the quarter and reduced its outstanding borrowings by
$12.5 million from $13.9 million at the end of the third quarter to $1.3 million
at the end of the fourth quarter. Availability under the U.S., U.K.,
and Australian facilities at the end of the fourth quarter totaled $36.7
million, while availability under other local country facilities totaled $7.1
million.
Guidance
The
company currently expects first quarter 2011 revenue of $200 - $210 million and
EBITDA of $1 - $4 million at prevailing exchange rates. This compares
with revenue of $180.1 million and an EBITDA loss of $1.4 million in the first
quarter of 2010.
Additional
Information
Additional
information about the company’s quarterly results can be found in the
shareholder letter and the quarterly earnings slides in the investor information
section of the company’s Web site at www.hudson.com.
Conference
Call/Webcast
Hudson
Highland Group will conduct a conference call Thursday, February 10, 2011 at
9:00 a.m. ET to discuss this announcement. Individuals wishing to
listen can access the Web cast on the investor information section of the
company's Web site at www.hudson.com.
The
archived call will be available on the investor information section of the
company's Web site at www.hudson.com.
About
Hudson Highland Group
Hudson
Highland Group, Inc. is a leading provider of permanent recruitment, contract
professionals and talent management services worldwide. From single
placements to total outsourced solutions, Hudson helps clients achieve greater
organizational performance by assessing, recruiting, developing and engaging the
best and brightest people for their businesses. The company employs more
than 2,000 professionals serving clients and candidates in approximately 20
countries. More information is available at www.hudson.com.
Safe
Harbor Statement
This
press release contains statements that the company believes to be
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. All statements other than statements of
historical fact included in this press release, including statements regarding
the company’s future financial condition, results of operations, business
operations and business prospects, are forward-looking statements. Words such as
“anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “predict,”
“believe” and similar words, expressions and variations of these words and
expressions are intended to identify forward-looking statements. All
forward-looking statements are subject to important factors, risks,
uncertainties and assumptions, including industry and economic conditions’ that
could cause actual results to differ materially from those described in the
forward-looking statements. Such factors, risks, uncertainties and assumptions
include, but are not limited to, global economic fluctuations; risks related to
fluctuations in the company’s operating results from quarter to quarter; the
ability of clients to terminate their relationship with the company at any
time; competition in the company’s markets; risks associated with the
company’s investment strategy; risks related to international operations,
including foreign currency fluctuations; the company’s dependence on key
management personnel; the company’s ability to attract and retain highly skilled
professionals; risks in collecting the company’s accounts receivable; the
company’s history of negative cash flows and operating losses may
continue; restrictions on the company’s operating flexibility due to the
terms of its credit facility; implementation of the company’s cost
reduction initiatives effectively; the company’s heavy reliance on information
systems and the impact of potentially losing or failing to develop
technology; risks related to our dependence on uninterrupted service to
clients; the company’s exposure to employment-related claims from both
clients and employers and limits on related insurance coverage; volatility
of the company’s stock price; the impact of government regulations;
and restrictions imposed by blocking arrangements. Additional information
concerning these and other factors is contained in the company's filings with
the Securities and Exchange Commission. These forward-looking statements speak
only as of the date of this document. The company assumes no obligation, and
expressly disclaims any obligation, to update any forward-looking statements,
whether as a result of new information, future events or otherwise.
###
Financial
Tables Follow
HUDSON
HIGHLAND GROUP, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in
thousands, except share and per share amounts)
(unaudited)
|
Three Months Ended
|
Year Ended
|
|||||||||||||||
|
December 31,
|
December 31,
|
|||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
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Revenue
|
$ | 219,061 | $ | 182,504 | $ | 794,542 | $ | 691,149 | ||||||||
|
Direct
costs
|
136,137 | 113,129 | 495,969 | 430,696 | ||||||||||||
|
Gross
margin
|
82,924 | 69,375 | 298,573 | 260,453 | ||||||||||||
|
Operating
expenses:
|
||||||||||||||||
|
Selling,
general and administrative expenses
|
80,192 | 69,192 | 294,313 | 277,634 | ||||||||||||
|
Depreciation
and amortization
|
1,730 | 3,174 | 8,184 | 12,543 | ||||||||||||
|
Business
reorganization and integration expenses
|
988 | 5,900 | 1,694 | 18,180 | ||||||||||||
|
Goodwill
and other impairment charges
|
- | - | - | 1,549 | ||||||||||||
|
Total
operating expenses
|
82,910 | 78,266 | 304,191 | 309,906 | ||||||||||||
|
Operating
income (loss)
|
14 | (8,891 | ) | (5,618 | ) | (49,453 | ) | |||||||||
|
Other
income (expense):
|
||||||||||||||||
|
Interest,
net
|
(306 | ) | (225 | ) | (1,278 | ) | (694 | ) | ||||||||
|
Other,
net
|
1,812 | 669 | 4,500 | 1,444 | ||||||||||||
|
Fee
for early extinguishment of credit facility
|
- | - | (563 | ) | - | |||||||||||
|
Income
(loss) from continuing operations before provision for income
taxes
|
1,520 | (8,447 | ) | (2,959 | ) | (48,703 | ) | |||||||||
|
Provision
for (benefit from) income taxes
|
116 | (3,450 | ) | 1,482 | (5,750 | ) | ||||||||||
|
Income
(loss) from continuing operations
|
1,404 | (4,997 | ) | (4,441 | ) | (42,953 | ) | |||||||||
|
Income
(loss) from discontinued operations, net of income taxes
|
(213 | ) | (5,429 | ) | (244 | ) | 2,344 | |||||||||
|
Net
income (loss)
|
$ | 1,191 | $ | (10,426 | ) | $ | (4,685 | ) | $ | (40,609 | ) | |||||
|
Basic
earnings (loss) per share:
|
||||||||||||||||
|
Income
(loss) from continuing operations
|
$ | 0.04 | $ | (0.19 | ) | $ | (0.15 | ) | $ | (1.65 | ) | |||||
|
Income
(loss) from discontinued operations
|
(0.01 | ) | (0.21 | ) | (0.01 | ) | 0.09 | |||||||||
|
Net
income (loss)
|
$ | 0.04 | $ | (0.40 | ) | $ | (0.16 | ) | $ | (1.56 | ) | |||||
|
Diluted
earnings (loss) per share:
|
||||||||||||||||
|
Income
(loss) from continuing operations
|
$ | 0.04 | $ | (0.19 | ) | $ | (0.15 | ) | $ | (1.65 | ) | |||||
|
Income
(loss) from discontinued operations
|
(0.01 | ) | (0.21 | ) | (0.01 | ) | 0.09 | |||||||||
|
Net
loss
|
$ | 0.04 | $ | (0.40 | ) | $ | (0.16 | ) | $ | (1.56 | ) | |||||
|
Weighted
average shares outstanding:
|
||||||||||||||||
|
Basic
|
31,234 | 26,329 | 29,931 | 26,036 | ||||||||||||
|
Diluted
|
31,754 | 26,329 | 29,931 | 26,036 | ||||||||||||
HUDSON
HIGHLAND GROUP, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(in
thousands, except per share amounts)
(unaudited)
|
December 31,
|
||||||||
|
2010
|
2009
|
|||||||
|
ASSETS
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 29,523 | $ | 36,064 | ||||
|
Accounts
receivable, net
|
128,576 | 98,994 | ||||||
|
Prepaid
and other
|
13,988 | 13,308 | ||||||
|
Total
current assets
|
172,087 | 148,366 | ||||||
|
Property
and equipment, net
|
16,593 | 19,433 | ||||||
|
Other
assets
|
17,154 | 14,145 | ||||||
|
Total
assets
|
$ | 205,834 | $ | 181,944 | ||||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 14,812 | $ | 12,811 | ||||
|
Accrued
expenses and other current liabilities
|
74,990 | 54,103 | ||||||
|
Short-term
borrowings
|
1,339 | 10,456 | ||||||
|
Accrued
business reorganization expenses
|
2,619 | 8,784 | ||||||
|
Total
current liabilities
|
93,760 | 86,154 | ||||||
|
Other
non-current liabilities
|
10,493 | 11,115 | ||||||
|
Income
tax payable, non-current
|
8,303 | 8,415 | ||||||
|
Total
liabilities
|
112,556 | 105,684 | ||||||
|
Stockholders’
equity:
|
||||||||
|
Preferred
stock, $0.001 par value, 10,000 shares authorized; none issued or
outstanding
|
- | - | ||||||
|
Common
stock, $0.001 par value, 100,000 shares authorized; issued 32,181 and
26,836 shares, respectively
|
32 | 27 | ||||||
|
Additional
paid-in capital
|
466,582 | 445,541 | ||||||
|
Accumulated
deficit
|
(408,199 | ) | (403,514 | ) | ||||
|
Accumulated
other comprehensive income—translation adjustments
|
34,902 | 34,509 | ||||||
|
Treasury
stock, 9 and 114 shares, respectively, at cost
|
(39 | ) | (303 | ) | ||||
|
Total
stockholders’ equity
|
93,278 | 76,260 | ||||||
|
Total
liabilities and stockholders' equity
|
$ | 205,834 | $ | 181,944 | ||||
HUDSON
HIGHLAND GROUP, INC.
SEGMENT
ANALYSIS - QUARTER TO DATE
(in
thousands)
(unaudited)
|
For The Three Months Ended December 31, 2010
|
Hudson
Europe
|
Hudson ANZ
|
Hudson
Americas
|
Hudson Asia
|
Corporate
|
Total
|
||||||||||||||||||
|
Revenue,
from external customers
|
$ | 90,616 | $ | 74,338 | $ | 44,268 | $ | 9,839 | $ | - | $ | 219,061 | ||||||||||||
|
Gross
margin, from external customers
|
$ | 37,468 | $ | 25,231 | $ | 10,775 | $ | 9,450 | $ | - | $ | 82,924 | ||||||||||||
|
Business
reorganization and integration expenses (recovery)
|
$ | 865 | $ | 102 | $ | 21 | $ | - | $ | - | $ | 988 | ||||||||||||
|
Non-operating
expense (income), including corporate administration
charges
|
1,337 | 886 | (1,298 | ) | 243 | (2,980 | ) | (1,812 | ) | |||||||||||||||
|
EBITDA
(Loss) (1)
|
$ | 314 | $ | 1,254 | $ | 2,386 | $ | 1,524 | $ | (1,922 | ) | $ | 3,556 | |||||||||||
|
Depreciation
and amortization expenses
|
1,730 | |||||||||||||||||||||||
|
Interest
expense (income), net
|
306 | |||||||||||||||||||||||
|
Provision
for (benefit from) income taxes
|
116 | |||||||||||||||||||||||
|
Loss
(income) from discontinued operations, net of taxes
|
213 | |||||||||||||||||||||||
|
Net
income (loss)
|
$ | 1,191 | ||||||||||||||||||||||
|
For The Three Months Ended December 31, 2009
|
Hudson
Europe
|
Hudson ANZ
|
Hudson
Americas
|
Hudson Asia
|
Corporate
|
Total
|
||||||||||||||||||
|
Revenue,
from external customers
|
$ | 74,502 | $ | 61,494 | $ | 39,011 | $ | 7,497 | $ | - | $ | 182,504 | ||||||||||||
|
Gross
margin, from external customers
|
$ | 33,006 | $ | 18,970 | $ | 10,220 | $ | 7,179 | $ | - | $ | 69,375 | ||||||||||||
|
Business
reorganization and integration expenses (recovery)
|
$ | 3,135 | $ | 849 | $ | 1,794 | $ | - | $ | 122 | $ | 5,900 | ||||||||||||
|
Non-operating
expense (income), including corporate administration
charges
|
91 | 177 | (936 | ) | (22 | ) | 21 | (669 | ) | |||||||||||||||
|
EBITDA
(Loss) (1)
|
$ | (1,553 | ) | $ | (492 | ) | $ | (1,162 | ) | $ | 1,167 | $ | (3,008 | ) | $ | (5,048 | ) | |||||||
|
Depreciation
and amortization expenses
|
3,174 | |||||||||||||||||||||||
|
Interest
expense (income), net
|
225 | |||||||||||||||||||||||
|
Provision
for (benefit from) income taxes
|
(3,450 | ) | ||||||||||||||||||||||
|
Loss
(income) from discontinued operations, net of taxes
|
5,429 | |||||||||||||||||||||||
|
Net
income (loss)
|
$ | (10,426 | ) | |||||||||||||||||||||
|
For the Three Months Ended September 30, 2010
|
Hudson
Europe
|
Hudson ANZ
|
Hudson
Americas
|
Hudson Asia
|
Corporate
|
Total
|
||||||||||||||||||
|
Revenue,
from external customers
|
$ | 80,503 | $ | 72,974 | $ | 37,839 | $ | 9,078 | $ | - | $ | 200,394 | ||||||||||||
|
Gross
margin, from external customers
|
$ | 32,647 | $ | 24,259 | $ | 9,311 | $ | 8,774 | $ | - | $ | 74,991 | ||||||||||||
|
Business
reorganization and integration expenses (recovery)
|
$ | - | $ | - | $ | 41 | $ | - | $ | - | $ | 41 | ||||||||||||
|
Non-operating
expense (income), including corporate administration
charges
|
3,088 | 1,433 | (407 | ) | 478 | (5,213 | ) | (621 | ) | |||||||||||||||
|
EBITDA
(Loss) (1)
|
$ | (2,128 | ) | $ | 1,376 | $ | 532 | $ | 1,169 | $ | 244 | $ | 1,193 | |||||||||||
|
Depreciation
and amortization expenses
|
1,981 | |||||||||||||||||||||||
|
Interest
expense (income), net
|
497 | |||||||||||||||||||||||
|
Provision
for (benefit from) income taxes
|
599 | |||||||||||||||||||||||
|
Loss
(income) from discontinued operations, net of taxes
|
14 | |||||||||||||||||||||||
|
Net
income (loss)
|
$ | (1,898 | ) | |||||||||||||||||||||
|
For the Three Months Ended March 31, 2010
|
Hudson
Europe
|
Hudson ANZ
|
Hudson
Americas
|
Hudson Asia
|
Corporate
|
Total
|
||||||||||||||||||
|
Revenue,
from external customers
|
$ | 76,654 | $ | 56,822 | $ | 39,507 | $ | 7,135 | $ | - | $ | 180,118 | ||||||||||||
|
Gross
margin, from external customers
|
$ | 32,530 | $ | 17,776 | $ | 9,279 | $ | 6,836 | $ | - | $ | 66,421 | ||||||||||||
|
Business
reorganization and integration expenses (recovery)
|
$ | 87 | $ | (116 | ) | $ | 142 | $ | - | $ | - | $ | 113 | |||||||||||
|
Non-operating
expense (income), including corporate administration
charges
|
1,178 | 582 | (509 | ) | 188 | (2,097 | ) | (658 | ) | |||||||||||||||
|
EBITDA
(Loss) (1)
|
$ | 436 | $ | 249 | $ | (241 | ) | $ | 597 | $ | (2,408 | ) | $ | (1,367 | ) | |||||||||
|
Depreciation
and amortization expenses
|
2,287 | |||||||||||||||||||||||
|
Interest
expense (income), net
|
232 | |||||||||||||||||||||||
|
Provision
for (benefit from) income taxes
|
252 | |||||||||||||||||||||||
|
Loss
(income) from discontinued operations, net of taxes
|
69 | |||||||||||||||||||||||
|
Net
income (loss)
|
$ | (4,207 | ) | |||||||||||||||||||||
|
(1)
|
Non-GAAP
earnings before interest, income taxes, and depreciation and amortization
(“EBITDA”) are presented to provide additional information about the
company’s operations on a basis consistent with the measures which the
company uses to manage its operations and evaluate its performance.
Management also uses these measurements to evaluate capital needs and
working capital requirements. 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 the company’s profitability or liquidity. Furthermore, EBITDA as
presented above may not be comparable with similarly titled measures
reported by other companies.
|
HUDSON
HIGHLAND GROUP, INC.
SEGMENT
ANALYSIS - YEAR TO DATE
(in
thousands)
(unaudited)
|
For The Year Ended December 31, 2010
|
Hudson
Europe
|
Hudson ANZ
|
Hudson
Americas
|
Hudson Asia
|
Corporate
|
Total
|
||||||||||||||||||
|
Revenue,
from external customers
|
$ | 328,491 | $ | 269,383 | $ | 162,432 | $ | 34,236 | $ | - | $ | 794,542 | ||||||||||||
|
Gross
margin, from external customers
|
$ | 137,191 | $ | 88,989 | $ | 39,417 | $ | 32,976 | $ | - | $ | 298,573 | ||||||||||||
|
Business
reorganization and integration expenses (recovery)
|
$ | 1,402 | $ | (15 | ) | $ | 307 | $ | - | $ | - | $ | 1,694 | |||||||||||
|
Non-operating
expense (income), including corporate administration
charges
|
6,751 | 3,916 | (1,822 | ) | 947 | (13,729 | ) | (3,937 | ) | |||||||||||||||
|
EBITDA
(Loss) (1)
|
$ | 1,086 | $ | 4,248 | $ | 1,687 | $ | 4,599 | $ | (5,117 | ) | $ | 6,503 | |||||||||||
|
Depreciation
and amortization expenses
|
8,184 | |||||||||||||||||||||||
|
Interest
expense (income), net
|
1,278 | |||||||||||||||||||||||
|
Provision
for (benefit from) income taxes
|
1,482 | |||||||||||||||||||||||
|
Loss
(income) from discontinued operations, net of taxes
|
244 | |||||||||||||||||||||||
|
Net
income (loss)
|
$ | (4,685 | ) | |||||||||||||||||||||
|
For The Year Ended December 31, 2009
|
Hudson
Europe
|
Hudson ANZ
|
Hudson
Americas
|
Hudson Asia
|
Corporate
|
Total
|
||||||||||||||||||
|
Revenue,
from external customers
|
$ | 276,975 | $ | 227,169 | $ | 161,872 | $ | 25,133 | $ | - | $ | 691,149 | ||||||||||||
|
Gross
margin, from external customers
|
$ | 124,162 | $ | 71,689 | $ | 40,959 | $ | 23,643 | $ | - | $ | 260,453 | ||||||||||||
|
Goodwill
and other impairment (recovery)
|
$ | - | $ | - | $ | (120 | ) | $ | 1,669 | $ | - | $ | 1,549 | |||||||||||
|
Business
reorganization and integration expenses (recovery)
|
9,682 | 3,130 | 5,133 | 98 | 137 | 18,180 | ||||||||||||||||||
|
Non-operating
expense (income), including corporate administration
charges
|
1,528 | 94 | 769 | (173 | ) | (3,662 | ) | (1,444 | ) | |||||||||||||||
|
EBITDA
(Loss) (1)
|
$ | (9,787 | ) | $ | (274 | ) | $ | (11,349 | ) | $ | (551 | ) | $ | (13,505 | ) | $ | (35,466 | ) | ||||||
|
Depreciation
and amortization expenses
|
12,543 | |||||||||||||||||||||||
|
Interest
expense (income), net
|
694 | |||||||||||||||||||||||
|
Provision
for (benefit from) income taxes
|
(5,750 | ) | ||||||||||||||||||||||
|
Loss
(income) from discontinued operations, net of taxes
|
(2,344 | ) | ||||||||||||||||||||||
|
Net
income (loss)
|
$ | (40,609 | ) | |||||||||||||||||||||
|
(1)
|
Non-GAAP
earnings before interest, income taxes, and depreciation and amortization
(“EBITDA”) are presented to provide additional information about the
company’s operations on a basis consistent with the measures which the
company uses to manage its operations and evaluate its performance.
Management also uses these measurements to evaluate capital needs and
working capital requirements. 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 the company’s profitability or liquidity. Furthermore, EBITDA as
presented above may not be comparable with similarly titled measures
reported by other companies.
|
|
(2)
|
Prior
year revenue has been reclassed to conform to current year
presentation.
|
Reconciliation
For Constant Currency
(in
thousands)
(unaudited)
The
company operates on a global basis, with the majority of our gross margin
generated outside of the United States. Accordingly, fluctuations in foreign
currency exchange rates can affect our results of operations. Constant currency
information compares financial results between periods as if exchange rates had
remained constant period-over-period. The company currently defines the term
“constant currency” to mean that financial data for a previously reported period
are translated into U.S. dollars using the same foreign currency exchange rates
that were used to translate financial data for the current period.
In prior
periods the company reported constant currency by translating financial data for
the current reported period into U.S. dollars using the same foreign currency
exchange rates that were used to translate financial data for the previously
reported period. The company’s current definition of constant currency produces
similar results to the previous method with inconsequential differences and was
implemented to improve operating efficiencies. The impact to the variance
analysis of presenting constant currency results under the current definition
was a change of less than 2% for any single reportable segment’s revenues, gross
margin and SG&A.
Changes
in revenue, direct costs, gross margin, selling, general and administrative
expenses and operating (loss) income include the effect of changes in foreign
currency exchange rates. Variance analysis usually describes period-to-period
variances that are calculated using constant currency as a percentage. The
company’s management reviews and analyzes business results in constant currency
and believes these results better represent the company’s underlying business
trends.
The
company believes that these calculations are a useful measure, indicating the
actual change in operations. Earnings from subsidiaries are rarely repatriated
to the United States, and there are no significant gains or losses on foreign
currency transactions between subsidiaries. Therefore, changes in foreign
currency exchange rates generally impact only reported earnings and not the
company’s economic condition.
|
For The Three Months Ended December 31,
|
||||||||||||||||
|
2010
|
2009
|
|||||||||||||||
|
Currency
|
Constant
|
|||||||||||||||
|
As reported
|
As reported
|
translation
|
currency
|
|||||||||||||
|
Revenue:
|
||||||||||||||||
|
Hudson
Europe
|
$ | 90,616 | $ | 74,502 | $ | (3,717 | ) | $ | 70,785 | |||||||
|
Hudson
ANZ
|
74,338 | 61,494 | 5,121 | 66,615 | ||||||||||||
|
Hudson
Americas
|
44,268 | 39,011 | 12 | 39,023 | ||||||||||||
|
Hudson
Asia
|
9,839 | 7,497 | 315 | 7,812 | ||||||||||||
|
Total
|
219,061 | 182,504 | 1,731 | 184,235 | ||||||||||||
|
Direct
costs:
|
||||||||||||||||
|
Hudson
Europe
|
53,148 | 41,496 | (1,862 | ) | 39,634 | |||||||||||
|
Hudson
ANZ
|
49,107 | 42,524 | 3,516 | 46,040 | ||||||||||||
|
Hudson
Americas
|
33,493 | 28,791 | - | 28,791 | ||||||||||||
|
Hudson
Asia
|
389 | 318 | 15 | 333 | ||||||||||||
|
Total
|
136,137 | 113,129 | 1,669 | 114,798 | ||||||||||||
|
Gross
margin:
|
||||||||||||||||
|
Hudson
Europe
|
37,468 | 33,006 | (1,855 | ) | 31,151 | |||||||||||
|
Hudson
ANZ
|
25,231 | 18,970 | 1,605 | 20,575 | ||||||||||||
|
Hudson
Americas
|
10,775 | 10,220 | 12 | 10,232 | ||||||||||||
|
Hudson
Asia
|
9,450 | 7,179 | 300 | 7,479 | ||||||||||||
|
Total
|
$ | 82,924 | $ | 69,375 | $ | 62 | $ | 69,437 | ||||||||
|
Selling,
general and administrative (a):
|
||||||||||||||||
|
Hudson
Europe
|
$ | 35,632 | $ | 32,165 | $ | (1,726 | ) | $ | 30,439 | |||||||
|
Hudson
ANZ
|
23,622 | 19,250 | 1,587 | 20,837 | ||||||||||||
|
Hudson
Americas
|
9,905 | 11,833 | 11 | 11,844 | ||||||||||||
|
Hudson
Asia
|
7,824 | 6,210 | 239 | 6,449 | ||||||||||||
|
Corporate
|
4,937 | 2,908 | - | 2,908 | ||||||||||||
|
Total
|
$ | 81,920 | $ | 72,366 | $ | 111 | $ | 72,477 | ||||||||
|
(a)
|
Selling,
general and administrative expenses include depreciation and amortization
expenses.
|
Exhibit
99.2
To:
Shareholders, Employees and Friends
Hudson
Highland Group 2010 Fourth Quarter Financial Results
Hudson
delivered net income of $1.2 million, or $0.04 per basic and diluted share,
driven by strong revenue and gross margin growth, in the fourth quarter of
2010. The company achieved $219.1 million in revenue and $3.6 million
in EBITDA during that period. These results were driven by 40 percent
revenue growth in permanent recruitment and 17 percent revenue growth in
temporary contracting, compared with the prior year
quarter. Sequentially, revenue grew 9 percent and cash flow from
operations in the quarter was $5.7 million.
Market/Economic
Observations
The
recruitment industry has experienced a substantial recovery in 2010, led by
permanent recruitment. Despite persistently high unemployment rates in virtually
all of the world’s developed economies, permanent recruitment has boomed.
Certainly this phenomenon is evident in Hudson’s fourth quarter results and 2010
performance as a whole. Corporate chieftains have become more confident, balance
sheets have strengthened, and equity markets are increasingly bullish. In its
World Economic Outlook, published in late January, the IMF raised its projection
of global growth in 2011. All of these factors would indicate a
promising year in 2011 for the cyclical recruitment industry.
Nevertheless,
many clouds remain on the horizon. The world’s economies continue to face
unprecedented challenges in 2011 and beyond, with fiscal deficits, trade
imbalances, and lingering unemployment. In the U.S., which represents less than
15 percent of Hudson’s gross margin, debates over public spending, state budget
deficits and a soaring trade deficit all present hurdles that could slow or
derail the economic recovery. And as the U.S. goes, so goes the
world. Moreover, fiscal deficits are plaguing governments in many
parts of the developed world, particularly in the U.K. and continental Europe.
The probability of a widespread tightening of fiscal policy poses a significant
risk to global economic growth over the medium term.
Focusing
briefly on some important regional points, the U.K. remained Hudson’s strongest
market in the fourth quarter, despite its looming economic uncertainties,
posting a 30 percent constant currency increase in gross margin compared with
the prior year period. The U.K. coalition government adopted an “austerity”
budget effective during the fourth quarter, and its impact is just being felt.
Perhaps for that reason, and partially exacerbated by an unprecedented snowfall
during December, GDP in the fourth quarter declined 0.5 percent. It is unusual
for the recruitment industry, and Hudson in particular, to post such strong
results in a contracting economy.
GDP
growth in continental Europe was subdued in the fourth quarter. Our recruitment
business bucked the trend with 13 percent constant currency gross margin growth
compared with the prior year period. Our continental European business is
centered in Belgium, the Netherlands, and France, all of which have experienced
a slower recovery. Nevertheless, the fourth quarter exhibited strengthening
trends when compared with the first three quarters of 2010. While the investment
community is focused on the fiscal crisis in the peripheral European Union
countries, it has had little impact on Hudson. We are not present in Greece,
Italy or Portugal, and do not have a sizeable business in Ireland. Our business
in Spain, while small, has consistently produced positive adjusted EBITDA and
did so again in the fourth quarter.
Consolidated
Highlights
Our
company’s key trends improved in the fourth quarter. Sequentially, Hudson
rebounded strongly from the seasonally weak third quarter; most impressively in
Europe, with 12 percent sequential gross margin growth in constant currency,
outperforming many of our major competitors. Hudson’s permanent
recruitment business continued to excel with nearly 40 percent gross margin
growth; it was the largest driver of the fourth quarter results. Permanent
recruitment is our largest business, accounting for over 50 percent of our gross
margin, so strength in this service offering is very important.
Temporary
contracting delivered double-digit revenue growth in the fourth quarter, up 16
percent compared with the prior year period in constant currency. This service
offering represents approximately 35 percent of the company’s consolidated gross
margin dollars. Temporary contracting gross margin percentage was 17.3 percent,
down from 19.5 percent a year ago, and nearly flat to 17.4 percent in the third
quarter of 2010.
Our
talent management business, which includes assessment, development and
outplacement services, represented over 10 percent of Hudson’s gross margin in
the fourth quarter, and increased 5 percent in constant currency over the prior
year. During the downturn in 2009, when the other components of our business
were experiencing declines, our outplacement business excelled, as this business
typically runs countercyclical to the economy as a whole. The assessment and
development services component of talent management tends to contribute to
growth later in the economic recovery, so we expect to see greater demand as
this cycle matures.
On a
consolidated basis in constant currency, revenue and gross margin increased 19
percent compared with the prior year period. Our service diversification, with
nearly 50 percent of our gross margin composed of contracting and talent
management softens the effect of an uncharacteristically permanent
recruitment-driven recovery. However, as the recovery continues, and temporary
contracting and talent management accelerate, we expect our diversified service
offering to become increasingly advantageous.
Regional
Highlights
Europe
In the
fourth quarter of 2010, Hudson Europe’s gross margin increased 20 percent in
constant currency with strong contributions from the U.K. and the countries of
continental Europe. This represents the U.K. business’ fourth consecutive
quarter of year-over-year growth. On a sequential constant currency basis,
Hudson Europe’s gross margin increased 12 percent compared with the third
quarter, driven largely by a strong seasonal increase in continental Europe of
over 26 percent.
Our U.K.
business generated 30 percent gross margin growth on a constant currency basis,
with over 25 percent increases in both temporary contracting and permanent
recruitment. Our public sector business accounted for approximately 9 percent of
the U.K. business’ gross margin in the fourth quarter, down slightly from 10
percent in the third quarter of 2010. Declines in the public sector
from prior year were effectively offset by growth in the private sector,
particularly in financial services and other professional services.
Revenue,
gross margin and adjusted EBITDA growth was evident in virtually all countries
in continental Europe in the fourth quarter, indicating continuing economic
recovery in a region that has generally lagged the global recovery. Our
businesses in Belgium and France both produced strong local currency revenue
increases compared with the prior year due to accelerated growth in retained
permanent recruitment. Our Netherlands contracting business, Balance, has an
improving pipeline and reported 16 percent sequential revenue growth in the
fourth quarter, despite being down slightly from the prior year
period.
Hudson
Europe produced adjusted EBITDA of $2.5 million, compared with $1.7 million in
the prior year period. Europe’s adjusted EBITDA included approximately $1.5
million of adjustments, principally for severance and payroll
taxes.
|
Hudson Europe
|
Q4 2010
|
Q4 2009
|
||||||
|
(In
thousands)
|
||||||||
|
Gross
margin
|
$ | 37,468 | $ | 33,006 | ||||
|
SG&A
|
34,952 | 31,333 | ||||||
|
Adj. EBITDA
|
2,516 | 1,673 | ||||||
|
Reorganization
cost
|
865 | 3,135 | ||||||
|
Non-operating
expense, including
|
||||||||
|
corporate administrative
charges
|
1,337 | 91 | ||||||
|
EBITDA
|
314 | (1,553 | ) | |||||
Australia
and New Zealand
Hudson
ANZ generated a constant currency gross margin increase of 23 percent in the
fourth quarter. This represents the region’s highest level of gross margin
dollars and quarterly year-over-year growth in 2010. Results were driven
primarily by a 53 percent constant currency increase in permanent recruitment,
which represented nearly 60 percent of the region’s gross margin dollars.
Temporary contracting, which has been slower to recover, produced steady growth
in the fourth quarter while talent management declined from the prior year
period. The outplacement component of our talent management business is
countercyclical and benefitted ANZ’s results during the downturn. The assessment
and development services component tends to contribute to growth later in the
economic cycle. In the fourth quarter, ANZ benefitted from changes in exchange
rates.
ANZ
exhibited strength in nearly all geographies and practices, with particularly
strong growth in Accounting and Finance, Office Support, and the Technical and
Engineering practices. It is encouraging to see widespread growth across sectors
in the region, beyond those related to the mining sector. Queensland,
which recently suffered severe flooding, represented about 10 percent of gross
margin in ANZ. Sequentially, gross margin decreased 4 percent in constant
currency, displaying a minimal seasonal decline. Adjusted EBITDA was $2.2
million compared with $0.5 million in the prior year period.
|
Hudson ANZ
|
Q4 2010
|
Q4 2009
|
||||||
|
(In
thousands)
|
||||||||
|
Gross
margin
|
$ | 25,231 | $ | 18,970 | ||||
|
SG&A
|
22,989 | 18,436 | ||||||
|
Adj. EBITDA
|
2,242 | 534 | ||||||
|
Reorganization
cost
|
102 | 849 | ||||||
|
Non-operating
expense, including
|
||||||||
|
corporate administrative
charges
|
886 | 177 | ||||||
|
EBITDA
|
1,254 | (492 | ) | |||||
Asia
Our Asia
business continued to benefit from the improved economic conditions in the
region, generating its highest top line results of 2010 in the fourth quarter.
Gross margin in our Asia business grew 26 percent in constant currency compared
with the fourth quarter of 2009, largely from greater consultant productivity
and demand in the Industrial, Accounting and IT practices. All of our markets
produced solid fourth quarter results. Adjusted EBITDA in the fourth quarter was
$1.8 million, or about 18 percent of revenue, an improvement from $1.1 million,
or 15 percent of revenue in the prior year period.
|
Hudson Asia
|
Q4 2010
|
Q4 2009
|
||||||
|
(In
thousands)
|
||||||||
|
Gross
margin
|
$ | 9,450 | $ | 7,179 | ||||
|
SG&A
|
7,683 | 6,034 | ||||||
|
Adj. EBITDA
|
1,767 | 1,145 | ||||||
|
Reorganization
cost
|
- | - | ||||||
|
Non-operating
expense, including
|
||||||||
|
corporate administrative
charges
|
243 | (22 | ) | |||||
|
EBITDA
|
1,524 | 1,167 | ||||||
Americas
Hudson
Americas gross margin increased 5 percent compared with the prior year period,
representing its highest level of gross margin dollars in 2010 and its second
consecutive quarter of positive year-over-year growth. Improvements
were driven by our Legal practice, reporting higher average contractors on
billing against both the third quarter and the prior year period, as well as
continued growth in the IT practice. Sequentially, gross margin increased 16
percent from the third quarter, consistent with the typical seasonal pattern.
Temporary contracting gross margin percentage declined 250 basis points compared
with the prior year to 21.5 percent due to faster growth in Legal, a lower
margin practice.
Adjusted
EBITDA was $1.1 million, an increase of $1.4 million on a gross margin increase
of $0.5 million, both compared with the prior year period.
|
Hudson
Americas
|
Q4 2010
|
Q4 2009
|
||||||
|
(In
thousands)
|
||||||||
|
Gross
margin
|
$ | 10,775 | $ | 10,220 | ||||
|
SG&A
|
9,666 | 10,524 | ||||||
|
Adj. EBITDA
|
1,109 | (304 | ) | |||||
|
Reorganization
cost
|
21 | 1,794 | ||||||
|
Non-operating
expense, including
|
||||||||
|
corporate administrative
charges
|
(1,298 | ) | (936 | ) | ||||
|
EBITDA
|
2,386 | (1,162 | ) | |||||
Corporate
Corporate
expenses in the fourth quarter were $1.9 million after corporate allocations to
the regions, or $4.9 million before allocations, and were virtually flat on a
sequential basis. Approximately $1 million was attributable to costs related to
the SEC matter and various year-end compensation adjustments due to accelerating
gross margin growth. We do not expect this level of expense to continue in
2011.
Liquidity
and Capital Resources
The
company ended the fourth quarter of 2010 with $73.4 million in liquidity,
including $29.5 million in cash and $43.9 million in availability under its
credit facilities. The company generated $5.7 million in cash flow from
operations during the quarter and reduced its outstanding borrowings by $12.5
million from $13.9 million at the end of the third quarter to $1.3 million at
the end of the fourth quarter. Availability under the U.S., U.K., and Australian
facilities at the end of the fourth quarter totaled $36.7 million, while
availability under other local country facilities totaled $7.1
million.
Guidance
The
company currently expects first quarter 2011 revenue of $200 - $210 million and
EBITDA of $1 - $4 million at prevailing exchange rates. This compares
with revenue of $180.1 million and an EBITDA loss of $1.4 million in the first
quarter of 2010. The company will provide additional comments on our
2011 outlook on the earnings call.
Safe
Harbor Statement
This
press release contains statements that the company believes to be
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. All statements other than statements of
historical fact included in this press release, including statements regarding
the company’s future financial condition, results of operations, business
operations and business prospects, are forward-looking statements. Words such as
“anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “predict,”
“believe” and similar words, expressions and variations of these words and
expressions are intended to identify forward-looking statements. All
forward-looking statements are subject to important factors, risks,
uncertainties and assumptions, including industry and economic conditions’ that
could cause actual results to differ materially from those described in the
forward-looking statements. Such factors, risks, uncertainties and assumptions
include, but are not limited to, global economic fluctuations; risks related to
fluctuations in the company’s operating results from quarter to quarter; the
ability of clients to terminate their relationship with the company at any
time; competition in the company’s markets; risks associated with the
company’s investment strategy; risks related to international operations,
including foreign currency fluctuations; the company’s dependence on key
management personnel; the company’s ability to attract and retain highly skilled
professionals; risks in collecting the company’s accounts receivable; the
company’s history of negative cash flows and operating losses may
continue; restrictions on the company’s operating flexibility due to the
terms of its credit facility; implementation of the company’s cost
reduction initiatives effectively; the company’s heavy reliance on information
systems and the impact of potentially losing or failing to develop
technology; risks related to our dependence on uninterrupted service to
clients; the company’s exposure to employment-related claims from both
clients and employers and limits on related insurance coverage; volatility
of the company’s stock price; the impact of government regulations;
and restrictions imposed by blocking arrangements. Additional information
concerning these and other factors is contained in the company's filings with
the Securities and Exchange Commission. These forward-looking statements speak
only as of the date of this document. The company assumes no obligation, and
expressly disclaims any obligation, to update any forward-looking statements,
whether as a result of new information, future events or otherwise.
###
Financial
Tables Follow
SEGMENT
ANALYSIS - QUARTER TO DATE
(in
thousands)
(unaudited)
|
For
The Three Months Ended December 31, 2010
|
Hudson
Europe
|
Hudson ANZ
|
Hudson
Americas
|
Hudson Asia
|
Corporate
|
Total
|
||||||||||||||||||
|
Revenue, from external
customers
|
$ | 90,616 | $ | 74,338 | $ | 44,268 | $ | 9,839 | $ | - | $ | 219,061 | ||||||||||||
|
Gross
margin, from external customers
|
$ | 37,468 | $ | 25,231 | $ | 10,775 | $ | 9,450 | $ | - | $ | 82,924 | ||||||||||||
|
Business
reorganization and integration expenses (recovery)
|
$ | 865 | $ | 102 | $ | 21 | $ | - | $ | - | $ | 988 | ||||||||||||
|
Non-operating
expense (income), including corporate administration
charges
|
1,337 | 886 | (1,298 | ) | 243 | (2,980 | ) | (1,812 | ) | |||||||||||||||
|
EBITDA
(Loss) (1)
|
$ | 314 | $ | 1,254 | $ | 2,386 | $ | 1,524 | $ | (1,922 | ) | $ | 3,556 | |||||||||||
|
Depreciation
and amortization expenses
|
1,730 | |||||||||||||||||||||||
|
Interest
expense (income), net
|
306 | |||||||||||||||||||||||
|
Provision
for (benefit from) income taxes
|
116 | |||||||||||||||||||||||
|
Loss
(income) from discontinued operations, net of taxes
|
213 | |||||||||||||||||||||||
|
Net
income (loss)
|
$ | 1,191 | ||||||||||||||||||||||
|
For
The Three Months Ended December 31, 2009
|
Hudson
Europe
|
Hudson ANZ
|
Hudson
Americas
|
Hudson Asia
|
Corporate
|
Total
|
||||||||||||||||||
|
Revenue,
from external customers
|
$ | 74,502 | $ | 61,494 | $ | 39,011 | $ | 7,497 | $ | - | $ | 182,504 | ||||||||||||
|
Gross
margin, from external customers
|
$ | 33,006 | $ | 18,970 | $ | 10,220 | $ | 7,179 | $ | - | $ | 69,375 | ||||||||||||
|
Business
reorganization and integration expenses (recovery)
|
$ | 3,135 | $ | 849 | $ | 1,794 | $ | - | $ | 122 | $ | 5,900 | ||||||||||||
|
Non-operating
expense (income), including corporate administration
charges
|
91 | 177 | (936 | ) | (22 | ) | 21 | (669 | ) | |||||||||||||||
|
EBITDA
(Loss) (1)
|
$ | (1,553 | ) | $ | (492 | ) | $ | (1,162 | ) | $ | 1,167 | $ | (3,008 | ) | $ | (5,048 | ) | |||||||
|
Depreciation
and amortization expenses
|
3,174 | |||||||||||||||||||||||
|
Interest
expense (income), net
|
225 | |||||||||||||||||||||||
|
Provision
for (benefit from) income taxes
|
(3,450 | ) | ||||||||||||||||||||||
|
Loss
(income) from discontinued operations, net of taxes
|
5,429 | |||||||||||||||||||||||
|
Net
income (loss)
|
$ | (10,426 | ) | |||||||||||||||||||||
|
For
the Three Months Ended September 30, 2010
|
Hudson
Europe
|
Hudson ANZ
|
Hudson
Americas
|
Hudson Asia
|
Corporate
|
Total
|
||||||||||||||||||
|
Revenue,
from external customers
|
$ | 80,503 | $ | 72,974 | $ | 37,839 | $ | 9,078 | $ | - | $ | 200,394 | ||||||||||||
|
Gross
margin, from external customers
|
$ | 32,647 | $ | 24,259 | $ | 9,311 | $ | 8,774 | $ | - | $ | 74,991 | ||||||||||||
|
Business
reorganization and integration expenses (recovery)
|
$ | - | $ | - | $ | 41 | $ | - | $ | - | $ | 41 | ||||||||||||
|
Non-operating
expense (income), including corporate administration
charges
|
3,088 | 1,433 | (407 | ) | 478 | (5,213 | ) | (621 | ) | |||||||||||||||
|
EBITDA
(Loss) (1)
|
$ | (2,128 | ) | $ | 1,376 | $ | 532 | $ | 1,169 | $ | 244 | $ | 1,193 | |||||||||||
|
Depreciation
and amortization expenses
|
1,981 | |||||||||||||||||||||||
|
Interest
expense (income), net
|
497 | |||||||||||||||||||||||
|
Provision
for (benefit from) income taxes
|
599 | |||||||||||||||||||||||
|
Loss
(income) from discontinued operations, net of taxes
|
14 | |||||||||||||||||||||||
|
Net
income (loss)
|
$ | (1,898 | ) | |||||||||||||||||||||
|
For
the Three Months Ended March 31, 2010
|
Hudson
Europe
|
Hudson ANZ
|
Hudson
Americas
|
Hudson Asia
|
Corporate
|
Total
|
||||||||||||||||||
|
Revenue,
from external customers
|
$ | 76,654 | $ | 56,822 | $ | 39,507 | $ | 7,135 | $ | - | $ | 180,118 | ||||||||||||
|
Gross
margin, from external customers
|
$ | 32,530 | $ | 17,776 | $ | 9,279 | $ | 6,836 | $ | - | $ | 66,421 | ||||||||||||
|
Business
reorganization and integration expenses (recovery)
|
$ | 87 | $ | (116 | ) | $ | 142 | $ | - | $ | - | $ | 113 | |||||||||||
|
Non-operating
expense (income), including corporate administration
charges
|
1,178 | 582 | (509 | ) | 188 | (2,097 | ) | (658 | ) | |||||||||||||||
|
EBITDA
(Loss) (1)
|
$ | 436 | $ | 249 | $ | (241 | ) | $ | 597 | $ | (2,408 | ) | $ | (1,367 | ) | |||||||||
|
Depreciation
and amortization expenses
|
2,287 | |||||||||||||||||||||||
|
Interest
expense (income), net
|
232 | |||||||||||||||||||||||
|
Provision
for (benefit from) income taxes
|
252 | |||||||||||||||||||||||
|
Loss
(income) from discontinued operations, net of taxes
|
69 | |||||||||||||||||||||||
|
Net
income (loss)
|
$ | (4,207 | ) | |||||||||||||||||||||
|
(1)
|
Non-GAAP
earnings before interest, income taxes, and depreciation and amortization
(“EBITDA”) are presented to provide additional information about the
company’s operations on a basis consistent with the measures which the
company uses to manage its operations and evaluate its performance.
Management also uses these measurements to evaluate capital needs and
working capital requirements. 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 the company’s profitability or liquidity. Furthermore, EBITDA as
presented above may not be comparable with similarly titled measures
reported by other companies.
|
Reconciliation
For Constant Currency
(in
thousands)
(unaudited)
The
company operates on a global basis, with the majority of our gross margin
generated outside of the United States. Accordingly, fluctuations in foreign
currency exchange rates can affect our results of operations. Constant currency
information compares financial results between periods as if exchange rates had
remained constant period-over-period. The company currently defines the term
“constant currency” to mean that financial data for a previously reported period
are translated into U.S. dollars using the same foreign currency exchange rates
that were used to translate financial data for the current period.
In prior
periods the company reported constant currency by translating financial data for
the current reported period into U.S. dollars using the same foreign currency
exchange rates that were used to translate financial data for the previously
reported period. The company’s current definition of constant currency produces
similar results to the previous method with inconsequential differences and was
implemented to improve operating efficiencies. The impact to the variance
analysis of presenting constant currency results under the current definition
was a change of less than 2% for any single reportable segment’s revenues, gross
margin and SG&A.
Changes
in revenue, direct costs, gross margin, selling, general and administrative
expenses and operating (loss) income include the effect of changes in foreign
currency exchange rates. Variance analysis usually describes period-to-period
variances that are calculated using constant currency as a percentage. The
company’s management reviews and analyzes business results in constant currency
and believes these results better represent the company’s underlying business
trends.
The
company believes that these calculations are a useful measure, indicating the
actual change in operations. Earnings from subsidiaries are rarely repatriated
to the United States, and there are no significant gains or losses on foreign
currency transactions between subsidiaries. Therefore, changes in foreign
currency exchange rates generally impact only reported earnings and not the
company’s economic condition.
|
For The Three Months Ended December 31,
|
||||||||||||||||
|
2010
|
2009
|
|||||||||||||||
|
Currency
|
Constant
|
|||||||||||||||
|
As reported
|
As reported
|
Translation
|
Currency
|
|||||||||||||
|
Revenue:
|
||||||||||||||||
|
Hudson
Europe
|
$ | 90,616 | $ | 74,502 | $ | (3,717 | ) | $ | 70,785 | |||||||
|
Hudson
ANZ
|
74,338 | 61,494 | 5,121 | 66,615 | ||||||||||||
|
Hudson
Americas
|
44,268 | 39,011 | 12 | 39,023 | ||||||||||||
|
Hudson
Asia
|
9,839 | 7,497 | 315 | 7,812 | ||||||||||||
|
Total
|
219,061 | 182,504 | 1,731 | 184,235 | ||||||||||||
|
Direct
costs:
|
||||||||||||||||
|
Hudson
Europe
|
53,148 | 41,496 | (1,862 | ) | 39,634 | |||||||||||
|
Hudson
ANZ
|
49,107 | 42,524 | 3,516 | 46,040 | ||||||||||||
|
Hudson
Americas
|
33,493 | 28,791 | - | 28,791 | ||||||||||||
|
Hudson
Asia
|
389 | 318 | 15 | 333 | ||||||||||||
|
Total
|
136,137 | 113,129 | 1,669 | 114,798 | ||||||||||||
|
Gross
margin:
|
||||||||||||||||
|
Hudson
Europe
|
37,468 | 33,006 | (1,855 | ) | 31,151 | |||||||||||
|
Hudson
ANZ
|
25,231 | 18,970 | 1,605 | 20,575 | ||||||||||||
|
Hudson
Americas
|
10,775 | 10,220 | 12 | 10,232 | ||||||||||||
|
Hudson
Asia
|
9,450 | 7,179 | 300 | 7,479 | ||||||||||||
|
Total
|
$ | 82,924 | $ | 69,375 | $ | 62 | $ | 69,437 | ||||||||
|
Selling,
general and administrative (a):
|
||||||||||||||||
|
Hudson
Europe
|
$ | 35,632 | $ | 32,165 | $ | (1,726 | ) | $ | 30,439 | |||||||
|
Hudson
ANZ
|
23,622 | 19,250 | 1,587 | 20,837 | ||||||||||||
|
Hudson
Americas
|
9,905 | 11,833 | 11 | 11,844 | ||||||||||||
|
Hudson
Asia
|
7,824 | 6,210 | 239 | 6,449 | ||||||||||||
|
Corporate
|
4,937 | 2,908 | - | 2,908 | ||||||||||||
|
Total
|
$ | 81,920 | $ | 72,366 | $ | 111 | $ | 72,477 | ||||||||
(a)
Selling, general and administrative expenses include depreciation and
amortization expenses.