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 10, 2010
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 10, 2010, Hudson Highland Group, Inc. issued a press release announcing
its financial results for the three and twelve months ended December 31,
2009. A copy of such press release is furnished as Exhibit 99.1 to this Current
Report.
Also on
February 10, 2010, 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, 2009. A copy of such letter is furnished as
Exhibit 99.2 to this Current Report.
|
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 10,
2010.
|
|
99.2
|
|
Letter
to Shareholders, Employees and Friends issued on February 10, 2010 and
posted to 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)
|
|
|
By:
|
/s/ MARY JANE RAYMOND
|
|
Mary
Jane Raymond
|
|
|
Executive
Vice President and Chief
Financial
Officer
|
|
|
Dated:
February 10, 2010
|
|
3
Hudson
Highland Group, Inc.
Current
Report on Form 8-K
Exhibit
Index
|
Exhibit
Number |
|
Description
|
|
99.1
|
|
Press
Release of Hudson Highland Group, Inc. issued on February 10,
2010.
|
|
99.2
|
|
Letter
to Shareholders, Employees and Friends issued on February 10, 2010 and
posted to Company’s website.
|
Exhibit
99.1
|
For Immediate Release
|
Contact:
|
David
F. Kirby
|
|
Hudson
Highland Group
|
||
|
212-351-7216
|
||
|
david.kirby@hudson.com
|
Hudson
Highland Group Reports 2009
Fourth
Quarter and Full Year Financial Results
NEW YORK, NY – February 10, 2010 –
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 ended
December 31, 2009.
2009
Fourth Quarter Summary
|
|
·
|
Revenue
of $182.5 million, a decrease of 12.1 percent from $207.5 million for the
fourth quarter of 2008, and an increase of $12.9 million or 7.6 percent
from the third quarter of 2009
|
|
|
·
|
Gross
margin of $69.4 million, or 38.0 percent of revenue, down 18.1 percent
from $84.7 million, or 40.8 percent of revenue for the same period last
year, and an increase of $5.2 million or 8.0 percent from the third
quarter of 2009
|
|
|
·
|
Adjusted
EBITDA* of
$0.2 million, or 0.1 percent of revenue, improved from an adjusted EBITDA
loss of $2.6 million for the fourth quarter of 2008, and an improvement
from the adjusted EBITDA loss of $3.2 million in the third quarter of
2009
|
|
|
·
|
Net
loss from continuing operations of $5.0 million, or $0.19 per basic and
diluted share, compared with net loss from continuing operations of $75.9
million, including a $67.1 million non-cash impairment charge, or $3.02
per basic and diluted share, for the fourth quarter of
2008
|
|
|
·
|
Net loss of $10.4 million, or
$0.40 per basic and diluted share, compared with net loss of $80.3
million, or $3.20 per basic and diluted share, for the fourth quarter of
2008
|
*Adjusted
EBITDA is defined in the segment tables at the end of this
release.
2009
Full Year Summary
|
|
·
|
Revenue
of $691.1 million, a decrease of 36.0 percent from $1,079.1 million for
2008
|
|
|
·
|
Gross
margin of $260.5 million, or 37.7 percent of revenue, down 42.8 percent
from $455.0 million, or 42.2 percent of revenue for prior
year
|
|
|
·
|
Adjusted
EBITDA*
loss of $17.2 million, or 2.5 percent of revenue, down from positive
adjusted EBITDA of $22.2 million for
2008
|
|
|
·
|
Net
loss from continuing operations of $43.0 million, or $1.65 per basic and
diluted share, compared with net loss from continuing operations of $73.1
million, including a $67.1 million non-cash impairment charge, or $2.90
per basic and diluted share, for
2008
|
|
|
·
|
Net loss of $40.6 million, or
$1.56 per basic and diluted share, compared with net loss of $74.3
million, or $2.95 per basic and diluted share, for
2008
|
*Adjusted
EBITDA is defined in the segment tables at the end of this release.
“We made
sequential improvement during the fourth quarter in virtually all of our major
markets and business units, and I am further encouraged by some continuing
momentum into the first quarter of 2010,” said Jon Chait, Hudson Highland
Group’s chairman and chief executive officer. “Our people around the
world stepped up to make impressive contributions to our fourth
quarter.”
“We
achieved positive adjusted EBITDA for the fourth quarter by improving top-line
demand and continued cost management,” said Mary Jane Raymond, the company’s
executive vice president and chief financial officer. “We expect to make more
progress during the year, but note that historically the first quarter is
seasonally softer.”
Restructuring
Program
The
company completed its 2009 restructuring program during the fourth quarter of
2009. The program was initiated to streamline operations in response
to the economic conditions during 2009. Fourth quarter restructuring
expenses of $5.9 million were related to severance, lease terminations and
contract cancellations, primarily in Europe and the Americas. Total
restructuring expenses for the year were approximately $19.4 million, a portion
of which were classified as discontinued operations as a result of closing the
company’s Italy and Japan operations earlier in 2009.
Liquidity
and Capital Resources
At the
end of the fourth quarter of 2009, the company had $36.1 million in cash and
$10.5 million in borrowings under its primary credit facility, down from $44.5
million in cash and $10.5 million in borrowings at the end of the third quarter
of 2009. In addition, the company has availability under its primary credit
facility of $2.1 million, and an additional $8.1 million under local country
credit facilities, for a total of $10.2 million, some of which became available
subsequent to December 31, 2009.
Guidance
Despite
recent signs of recovery, visibility remains low. As a result, the
company will not provide formal guidance for the first quarter of 2010, other
than it expects significant progress in EBITDA compared with the prior year
quarter. The company will comment on current trends and its outlook for the
first quarter on its fourth quarter earnings call.
Additional
Information
Additional
information about the company’s quarterly results can be found in the
shareholder letter and the fourth quarter 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 11, 2010 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
approximately 2,000 professionals serving clients and candidates in more than 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, including the
global economic conditions prevailing during 2009; the ability of clients to
terminate their relationship with the company at any time; risks in
collecting the company’s accounts receivable; the company’s history of negative
cash flows and operating losses may continue; the company’s limited
borrowing availability under its credit facility, which may negatively impact
its liquidity; restrictions on the company’s operating flexibility due to the
terms of its credit facility; risks related to fluctuations in the company’s
operating results from quarter to quarter; risks related to international
operations, including foreign currency fluctuations; risks associated with the
company’s investment strategy; risks and financial impact associated with
dispositions of underperforming assets; 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; competition in the company’s markets; the company’s
exposure to employment-related claims from both clients and employers and limits
on related insurance coverage; the company’s dependence on key management
personnel; the company’s ability to attract and retain highly skilled
professionals; 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 December
31,
|
Year Ended December 31,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Revenue
(1)
|
$ | 182,504 | $ | 207,521 | $ | 691,149 | $ | 1,079,085 | ||||||||
|
Direct
costs (1)
|
113,129 | 122,810 | 430,696 | 624,099 | ||||||||||||
|
Gross
margin
|
69,375 | 84,711 | 260,453 | 454,986 | ||||||||||||
|
Operating
expenses:
|
||||||||||||||||
|
Selling,
general and administrative expenses
|
69,192 | 87,325 | 277,634 | 432,803 | ||||||||||||
|
Depreciation
and amortization
|
3,174 | 3,388 | 12,543 | 14,662 | ||||||||||||
|
Business
reorganization and integration expenses
|
5,900 | 6,184 | 18,180 | 11,217 | ||||||||||||
|
Goodwill
and other impairment charges
|
- | 67,087 | 1,549 | 67,087 | ||||||||||||
|
Total
operating expenses
|
78,266 | 163,984 | 309,906 | 525,769 | ||||||||||||
|
Operating
(loss) income
|
(8,891 | ) | (79,273 | ) | (49,453 | ) | (70,783 | ) | ||||||||
|
Other
income (expense):
|
||||||||||||||||
|
Interest,
net
|
(225 | ) | 204 | (694 | ) | 1,099 | ||||||||||
|
Other,
net
|
669 | 1,307 | 1,444 | 3,269 | ||||||||||||
|
Loss
from continuing operations before provision for income
taxes
|
(8,447 | ) | (77,762 | ) | (48,703 | ) | (66,415 | ) | ||||||||
|
(Benefit
from) provision for income taxes
|
(3,450 | ) | (1,843 | ) | (5,750 | ) | 6,681 | |||||||||
|
Loss
from continuing operations
|
(4,997 | ) | (75,919 | ) | (42,953 | ) | (73,096 | ) | ||||||||
|
(Loss)
income from discontinued operations, net of income taxes
|
(5,429 | ) | (4,411 | ) | 2,344 | (1,222 | ) | |||||||||
|
Net
loss
|
$ | (10,426 | ) | $ | (80,330 | ) | $ | (40,609 | ) | $ | (74,318 | ) | ||||
|
Basic
(loss) earnings per share:
|
||||||||||||||||
|
Loss
from continuing operations
|
$ | (0.19 | ) | $ | (3.02 | ) | $ | (1.65 | ) | $ | (2.90 | ) | ||||
|
(Loss)
income from discontinued operations
|
(0.21 | ) | (0.18 | ) | 0.09 | (0.05 | ) | |||||||||
|
Net
loss
|
$ | (0.40 | ) | $ | (3.20 | ) | $ | (1.56 | ) | $ | (2.95 | ) | ||||
|
Diluted
(loss) earnings per share:
|
||||||||||||||||
|
Loss
from continuing operations
|
$ | (0.19 | ) | $ | (3.02 | ) | $ | (1.65 | ) | $ | (2.90 | ) | ||||
|
(Loss)
income from discontinued operations
|
(0.21 | ) | (0.18 | ) | 0.09 | (0.05 | ) | |||||||||
|
Net
loss
|
$ | (0.40 | ) | $ | (3.20 | ) | $ | (1.56 | ) | $ | (2.95 | ) | ||||
|
Weighted
average shares outstanding:
|
||||||||||||||||
|
Basic
|
26,329 | 25,100 | 26,036 | 25,193 | ||||||||||||
|
Diluted
|
26,329 | 25,100 | 26,036 | 25,193 | ||||||||||||
|
(1)
|
Prior
year revenue has been reclassed to conform to current year
presentation.
|
HUDSON
HIGHLAND GROUP, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(in
thousands, except per share amounts)
(unaudited)
|
December 31,
|
December 31,
|
|||||||
|
2009
|
2008
|
|||||||
|
ASSETS
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 36,064 | $ | 49,209 | ||||
|
Accounts
receivable, net
|
98,994 | 127,169 | ||||||
|
Prepaid
and other
|
13,247 | 15,411 | ||||||
|
Current
assets from discontinued operations
|
61 | 2,360 | ||||||
|
Total
current assets
|
148,366 | 194,149 | ||||||
|
Intangibles,
net
|
503 | 2,498 | ||||||
|
Property
and equipment, net
|
19,433 | 24,379 | ||||||
|
Other
assets
|
13,642 | 9,927 | ||||||
|
Total
assets
|
$ | 181,944 | $ | 230,953 | ||||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 12,811 | $ | 15,693 | ||||
|
Accrued
expenses and other current liabilities
|
54,008 | 76,447 | ||||||
|
Short-term
borrowings
|
10,456 | 5,307 | ||||||
|
Accrued
business reorganization expenses
|
8,784 | 5,724 | ||||||
|
Current
liabilities from discontinued operations
|
95 | 1,410 | ||||||
|
Total
current liabilities
|
86,154 | 104,581 | ||||||
|
Other
non-current liabilities
|
19,183 | 16,904 | ||||||
|
Accrued
business reorganization expenses, non-current
|
347 | 1,476 | ||||||
|
Total
liabilities
|
105,684 | 122,961 | ||||||
|
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 26,836 and
26,494 shares, respectively
|
27 | 26 | ||||||
|
Additional
paid-in capital
|
445,541 | 450,739 | ||||||
|
Accumulated
deficit
|
(403,514 | ) | (362,905 | ) | ||||
|
Accumulated
other comprehensive income—translation adjustments
|
34,509 | 27,054 | ||||||
|
Treasury
stock, 114 and 1,140 shares, respectively, at cost
|
(303 | ) | (6,922 | ) | ||||
|
Total
stockholders’ equity
|
76,260 | 107,992 | ||||||
|
Total
liabilities and stockholders' equity
|
$ | 181,944 | $ | 230,953 | ||||
HUDSON
HIGHLAND GROUP, INC.
SEGMENT
ANALYSIS
(in
thousands)
(unaudited)
|
For the Three Months Ended December 31, 2009
|
Hudson
Americas
|
Hudson
Europe
|
Hudson Asia
Pacific
|
Corporate (2)
|
Total
|
|||||||||||||||
|
Revenue
|
$ | 39,011 | $ | 74,502 | $ | 68,991 | $ | - | $ | 182,504 | ||||||||||
|
Gross
margin
|
$ | 10,218 | $ | 33,007 | $ | 26,150 | $ | - | $ | 69,375 | ||||||||||
|
Adjusted
EBITDA (1)
|
$ | (304 | ) | $ | 1,674 | $ | 1,677 | $ | (2,864 | ) | $ | 183 | ||||||||
|
Business
reorganization and integration expenses
|
1,794 | 3,135 | 849 | 122 | 5,900 | |||||||||||||||
|
Goodwill
and other impairment charges
|
- | - | - | - | - | |||||||||||||||
|
Depreciation
and amortization
|
1,318 | 822 | 991 | 43 | 3,174 | |||||||||||||||
|
Non-operating
income (expense)
|
803 | 173 | (152 | ) | (155 | ) | 669 | |||||||||||||
|
Interest
income (expense)
|
(10 | ) | (34 | ) | 52 | (233 | ) | (225 | ) | |||||||||||
|
Provision
for (benefit from) income taxes
|
(3,763 | ) | (810 | ) | 1,123 | - | (3,450 | ) | ||||||||||||
|
Income
(loss) from discontinued operations, net of taxes
|
(274 | ) | (143 | ) | 14 | (5,026 | ) | (5,429 | ) | |||||||||||
|
Net
(loss) income
|
$ | 866 | $ | (1,477 | ) | $ | (1,372 | ) | $ | (8,443 | ) | $ | (10,426 | ) | ||||||
|
For the Three Months Ended December 31, 2008
|
Hudson
Americas
|
Hudson
Europe
|
Hudson Asia
Pacific
|
Corporate (2)
|
Total
|
|||||||||||||||
|
Revenue
(3)
|
$ | 52,394 | $ | 85,376 | $ | 69,751 | $ | - | $ | 207,521 | ||||||||||
|
Gross
margin
|
$ | 14,115 | $ | 42,001 | $ | 28,595 | $ | - | $ | 84,711 | ||||||||||
|
Adjusted
EBITDA (1)
|
$ | (546 | ) | $ | 3,973 | $ | 1,090 | $ | (7,131 | ) | $ | (2,614 | ) | |||||||
|
Business
reorganization and integration expenses
|
1,236 | 1,634 | 2,317 | 997 | 6,184 | |||||||||||||||
|
Goodwill
and other impairment charges
|
40,749 | 19,598 | 6,740 | - | 67,087 | |||||||||||||||
|
Depreciation
and amortization
|
1,112 | 1,315 | 896 | 65 | 3,388 | |||||||||||||||
|
Non-operating
income (expense)
|
(61 | ) | 1,414 | 282 | (328 | ) | 1,307 | |||||||||||||
|
Interest
income (expense)
|
(8 | ) | 148 | 174 | (110 | ) | 204 | |||||||||||||
|
Provision
for (benefit from) income taxes
|
(1,644 | ) | 474 | (673 | ) | - | (1,843 | ) | ||||||||||||
|
Income
(loss) from discontinued operations, net of taxes
|
(1,910 | ) | (119 | ) | (2,290 | ) | (92 | ) | (4,411 | ) | ||||||||||
|
Net
(loss) income
|
$ | (43,978 | ) | $ | (17,605 | ) | $ | (10,024 | ) | $ | (8,723 | ) | $ | (80,330 | ) | |||||
|
(1)
|
Non-GAAP
earnings before interest, income taxes, special charges, other
non-operating income, and depreciation and amortization (“Adjusted
EBITDA”) is 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. Adjusted 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,
adjusted EBITDA as presented above may not be comparable with similarly
titled measures reported by other
companies.
|
|
(2)
|
Highland
Partners was a reportable segment before disposal in 2006. The results
from Highland Partners are classified under Corporate for reporting
purposes.
|
|
(3)
|
Prior
year revenue has been reclassed to conform to current year
presentation.
|
HUDSON
HIGHLAND GROUP, INC.
SEGMENT
ANALYSIS
(in
thousands)
(unaudited)
|
For the Three Months Ended December 31, 2009
|
Hudson
Americas
|
Hudson
Europe
|
Hudson Asia
Pacific
|
Corporate (2)
|
Total
|
|||||||||||||||
|
Revenue
|
$ | 39,011 | $ | 74,502 | $ | 68,991 | $ | - | $ | 182,504 | ||||||||||
|
Gross
margin
|
$ | 10,218 | $ | 33,007 | $ | 26,150 | $ | - | $ | 69,375 | ||||||||||
|
Adjusted
EBITDA (1)
|
$ | (304 | ) | $ | 1,674 | $ | 1,677 | $ | (2,864 | ) | $ | 183 | ||||||||
|
Business
reorganization and integration expenses
|
1,794 | 3,135 | 849 | 122 | 5,900 | |||||||||||||||
|
Goodwill
and other impairment charges
|
- | - | - | - | - | |||||||||||||||
|
Depreciation
and amortization
|
1,318 | 822 | 991 | 43 | 3,174 | |||||||||||||||
|
Non-operating
income (expense)
|
803 | 173 | (152 | ) | (155 | ) | 669 | |||||||||||||
|
Interest
income (expense)
|
(10 | ) | (34 | ) | 52 | (233 | ) | (225 | ) | |||||||||||
|
Provision
for (benefit from) income taxes
|
(3,763 | ) | (810 | ) | 1,123 | - | (3,450 | ) | ||||||||||||
|
Income
(loss) from discontinued operations, net of taxes
|
(274 | ) | (143 | ) | 14 | (5,026 | ) | (5,429 | ) | |||||||||||
|
Net
(loss) income
|
$ | 866 | $ | (1,477 | ) | $ | (1,372 | ) | $ | (8,443 | ) | $ | (10,426 | ) | ||||||
|
For the Three Months Ended September 30, 2009
|
Hudson
Americas
|
Hudson
Europe
|
Hudson Asia
Pacific
|
Corporate (2)
|
Total
|
|||||||||||||||
|
Revenue
|
$ | 35,705 | $ | 67,898 | $ | 66,044 | $ | - | $ | 169,647 | ||||||||||
|
Gross
margin
|
$ | 9,258 | $ | 29,571 | $ | 25,361 | $ | - | $ | 64,190 | ||||||||||
|
Adjusted
EBITDA (1)
|
$ | (1,625 | ) | $ | 30 | $ | 2,579 | $ | (4,206 | ) | $ | (3,222 | ) | |||||||
|
Business
reorganization and integration expenses
|
592 | 1,881 | 405 | - | 2,878 | |||||||||||||||
|
Goodwill
and other impairment charges
|
- | - | - | - | - | |||||||||||||||
|
Depreciation
and amortization
|
1,047 | 911 | 739 | 44 | 2,741 | |||||||||||||||
|
Non-operating
income (expense)
|
34 | (302 | ) | 260 | 107 | 99 | ||||||||||||||
|
Interest
income (expense)
|
55 | 45 | 55 | (251 | ) | (96 | ) | |||||||||||||
|
Provision
for (benefit from) income taxes
|
314 | (1,172 | ) | (357 | ) | - | (1,215 | ) | ||||||||||||
|
Income
(loss) from discontinued operations, net of taxes
|
179 | 287 | 181 | 123 | 770 | |||||||||||||||
|
Net
(loss) income
|
$ | (3,310 | ) | $ | (1,560 | ) | $ | 2,288 | $ | (4,271 | ) | $ | (6,853 | ) | ||||||
|
(1)
|
Non-GAAP
earnings before interest, income taxes, special charges, other
non-operating income, and depreciation and amortization (“Adjusted
EBITDA”) is 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. Adjusted 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,
adjusted EBITDA as presented above may not be comparable with similarly
titled measures reported by other
companies.
|
|
(2)
|
Highland
Partners was a reportable segment before disposal in 2006. The results
from Highland Partners are classified under Corporate for reporting
purposes.
|
HUDSON
HIGHLAND GROUP, INC.
SEGMENT
ANALYSIS
(in
thousands)
(unaudited)
|
For the Year Ended December 31, 2009
|
Hudson
Americas
|
Hudson
Europe
|
Hudson Asia
Pacific
|
Corporate (2)
|
Total
|
|||||||||||||||
|
Revenue
|
$ | 161,872 | $ | 276,975 | $ | 252,302 | $ | - | $ | 691,149 | ||||||||||
|
Gross
margin
|
$ | 40,959 | $ | 124,162 | $ | 95,332 | $ | - | $ | 260,453 | ||||||||||
|
Adjusted
EBITDA (1)
|
$ | (5,569 | ) | $ | 1,422 | $ | 3,995 | $ | (17,029 | ) | $ | (17,181 | ) | |||||||
|
Business
reorganization and integration expenses
|
5,133 | 9,682 | 3,228 | 137 | 18,180 | |||||||||||||||
|
Goodwill
and other impairment charges
|
(120 | ) | - | 1,669 | - | 1,549 | ||||||||||||||
|
Depreciation
and amortization
|
4,417 | 4,553 | 3,392 | 181 | 12,543 | |||||||||||||||
|
Non-operating
income (expense)
|
909 | (503 | ) | 863 | 175 | 1,444 | ||||||||||||||
|
Interest
income (expense)
|
24 | 49 | 236 | (1,003 | ) | (694 | ) | |||||||||||||
|
Provision
for (benefit from) income taxes
|
(2,931 | ) | (2,690 | ) | (129 | ) | - | (5,750 | ) | |||||||||||
|
Income
(loss) from discontinued operations, net of taxes
|
237 | (1,606 | ) | (2,730 | ) | 6,443 | 2,344 | |||||||||||||
|
Net
(loss) income
|
$ | (10,898 | ) | $ | (12,183 | ) | $ | (5,796 | ) | $ | (11,732 | ) | $ | (40,609 | ) | |||||
|
For the Year Ended December 31, 2008
|
Hudson
Americas
|
Hudson
Europe
|
Hudson Asia
Pacific
|
Corporate (2)
|
Total
|
|||||||||||||||
|
Revenue
(3)
|
$ | 273,648 | $ | 415,871 | $ | 389,566 | $ | - | $ | 1,079,085 | ||||||||||
|
Gross
margin
|
$ | 75,016 | $ | 212,603 | $ | 167,367 | $ | - | $ | 454,986 | ||||||||||
|
Adjusted
EBITDA (1)
|
$ | 3,998 | $ | 22,958 | $ | 23,504 | $ | (28,277 | ) | $ | 22,183 | |||||||||
|
Business
reorganization and integration expenses
|
3,062 | 2,863 | 4,295 | 997 | 11,217 | |||||||||||||||
|
Goodwill
and other impairment charges
|
40,749 | 19,598 | 6,740 | - | 67,087 | |||||||||||||||
|
Depreciation
and amortization
|
4,630 | 5,781 | 4,027 | 224 | 14,662 | |||||||||||||||
|
Non-operating
income (expense)
|
(55 | ) | 2,834 | 614 | (124 | ) | 3,269 | |||||||||||||
|
Interest
income (expense)
|
458 | 333 | 867 | (559 | ) | 1,099 | ||||||||||||||
|
Provision
for (benefit from) income taxes
|
(332 | ) | 4,401 | 2,612 | - | 6,681 | ||||||||||||||
|
Income
(loss) from discontinued operations, net of taxes
|
(4,070 | ) | 2,616 | (3,811 | ) | 4,043 | (1,222 | ) | ||||||||||||
|
Net
(loss) income
|
$ | (47,778 | ) | $ | (3,902 | ) | $ | 3,500 | $ | (26,138 | ) | $ | (74,318 | ) | ||||||
|
(1)
|
Non-GAAP
earnings before interest, income taxes, special charges, other
non-operating income, and depreciation and amortization (“Adjusted
EBITDA”) is 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. Adjusted 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,
adjusted EBITDA as presented above may not be comparable with similarly
titled measures reported by other
companies.
|
|
(2)
|
Highland
Partners was a reportable segment before disposal in 2006. The results
from Highland Partners are classified under Corporate for reporting
purposes.
|
|
(3)
|
Prior
year revenue has been reclassed to conform to current year
presentation.
|
Exhibit
99.2
To:
Shareholders, Employees and Friends
Hudson
Highland Group 2009 Fourth Quarter Financial Results
Every
recession is different, as we have noted in previous shareholder letters. That
was never more apparent than with the current environment, in which a cyclical
downturn was exacerbated by a global financial crisis. Similarly,
every recovery is different. More importantly, recoveries frequently introduce
changes in the use of recruitment services. It is well understood
that historically, temporary contracting recovers first and permanent
recruitment lags the economic recovery. It is also well understood
that while there is a general trend towards the increased use of contract
workers in professional and managerial roles, it has not been strong enough to
offset the cyclical movements driven by economic circumstances.
The
economic recovery is taking shape in all of our major markets, although in
varying strengths and speeds. Normally, cyclical trends predominate in the early
stages of a recovery cycle, and it would be expected that temporary recruitment
would be recovering early. But we are already seeing the influence of
the broad general trends in current results. In many markets,
permanent recruitment hiring in professional and managerial roles is increasing
faster than we would have expected at this early stage of the
recovery. As has been frequently commented on, the developed
economies are suffering a severe “skills shortage.” This is a
particularly important factor in our business, since we are squarely in the
market most affected: the mid-level professional and managerial personnel that
drive the results of client companies.
We will
analyze our results on a year-over-year basis and on a sequential basis, as
sequential growth is an important indicator of the speed of recovery. The fourth
quarter is normally stronger than the third quarter in our business in the
Northern Hemisphere, as the third quarter is affected by summer
holidays. However, the opposite is true in Australia-New Zealand,
typically producing weaker fourth quarter results than those of the third
quarter due to the beginning of summer and year-end holidays. As you can see
from the financial tables attached, all of our business segments are turning
toward recovery. In some cases, our operations are matching the
improvements in the economy, while in others we are outperforming the expected
economic impact.
Is this
recovery sustainable? We believe so, although we think we will see
bumps along the way in the major economies as financial regulators grapple with
the final throes of the recession. It may not feel like a recovery in
every street in the world, or in every quarter, but when we look back on 2010,
we believe it will mark the first year of a recovery cycle.
Turning
to some important emerging regional trends, in the United Kingdom, revenue
increased sequentially by 6 percent, but importantly, permanent recruitment
increased by 3 percent sequentially. This sequential growth is particularly
noteworthy given the strong performance in permanent recruitment in the United
Kingdom in the third quarter. The overall sequential growth was led by strength
in London IT, Banking, and Legal.
Asia
again produced strong results in the quarter led by China, which showed a
sequential improvement from the third quarter of 2009 and was nearly flat to the
prior year period. Singapore was also a contributor to strong fourth quarter
results in Asia, as confidence appears to be growing and hiring needs are
exceeding the capabilities of internal staff. We expect continued strength in
Asia, as its economic recovery continues to outpace that of other developed
economies, although there remains some risk given potential changes in
governmental policies.
In the
fourth quarter, Australia and New Zealand’s permanent recruitment gross margin
was up 9 percent sequentially, which was contrary to the normal seasonal
trend. We are pleased to report that both Australia and New Zealand
produced a profit in adjusted EBITDA for the quarter. In addition, so far in
2010 it appears that the Australian recovery is continuing. This is
the result of a strengthening in the Australian economy and is also a reflection
of our positioning in the market relative to our competition.
In North
America, we saw the re-emergence of growth in our Legal business in the fourth
quarter. Compared to the prior year period, Legal remained down significantly as
2008 benefitted from a few large projects that did not repeat during 2009.
However, North America gross margin was up 10 percent sequentially from the
third quarter of 2009. Thus far in 2010, we have seen a continuation of the
fourth quarter upward trend in the Legal business.
Continental
Europe revenue improved 12 percent sequentially, and produced positive adjusted
EBITDA for the quarter. The consensus view among economists is that the European
economic recovery will lag that of many other developed economies around the
world. While this may be true, we believe that the impact on our
business will be slower growth in profitability, rather than a further
decline. Nevertheless, Europe was one of our most profitable regions
on an adjusted EBITDA basis in the fourth quarter and we expect it will be in
2010 as well.
On a
consolidated basis, fourth quarter adjusted EBITDA was a profit of $0.2 million,
an improvement from a loss of $2.6 million in the fourth quarter of 2008 and an
improvement over the third quarter of 2009 adjusted EBITDA loss of $3.2
million.
Regional
Highlights
Hudson
Americas
In the
fourth quarter of 2009, Hudson Americas revenue was $39 million, an increase of
9 percent sequentially over the third quarter with Legal gaining 11 percent,
offset by a 6 percent decline in IT and Financial Solutions. Gross margin
dollars were up 10 percent from the third quarter of 2009. A top-line
increase from the third to the fourth quarter is typical in North America. The
temporary contracting gross margin percentage was 24.1 percent, 90 basis points
higher than the third quarter and 50 basis points higher than in the fourth
quarter of 2008. Overall, gross margin percentage was 26.2 percent, down from
27.0 percent in the prior year period, but up 30 basis points from the third
quarter of 2009.
Adjusted
EBITDA was a loss of $0.3 million in the fourth quarter, representing a $1.3
million improvement from the third quarter of 2009 and an improvement of $0.2
million from the fourth quarter of 2008. Operating expenses declined 29 percent
from the prior year period, resulting from cost reduction actions taken last
year and continuing through the fourth quarter of 2009.
Europe
In the
fourth quarter of 2009, Hudson Europe revenue increased 9 percent sequentially
from the third quarter and gross margin increased 10 percent, driven by growth
in both the United Kingdom and continental Europe in nearly every line of
business. Permanent placement gross margin increased 4 percent from the prior
quarter of 2009 and contract gross margin dollars increased 2
percent.
In the
United Kingdom, revenue increased 6 percent sequentially from the third quarter,
with contract up 6 percent and permanent recruitment up 3 percent. Gross margin
improved 4 percent. In continental Europe, revenue and gross margin increased
sequentially by 12 percent and 14 percent, respectively. Top-line increases came
from France, Belgium and Spain, with stability in Balance’s contracting business
in the Netherlands. Continental Europe produced strong positive adjusted EBITDA
in the fourth quarter.
Adjusted
EBITDA in Europe in the fourth quarter was $1.7 million, down $2.3 million from
the fourth quarter of 2008, but ahead of about breakeven in the third quarter of
2009.
Hudson Asia
Pacific
In the
fourth quarter of 2009, Hudson Asia Pacific revenue and gross margin each
declined 3 percent from the third quarter, slightly better than the normal
seasonal pattern of a decline of about 5 percent. The difference was driven by
top-line growth in permanent recruitment in both Australia-New Zealand and
Asia.
In
Australia and New Zealand, revenue declined by 4 percent and gross margin was
down by 7 percent compared with the third quarter. Permanent placement gross
margin increased 9 percent from the third quarter, offset by declines in both
temporary contracting and the outplacement business in talent management. In
Asia, revenue was down 1 percent while gross margin increased 2 percent from the
prior-year quarter on a constant currency basis. Asia was up 8 percent
sequentially from the third quarter, with, improvement in China, while Singapore
and Hong Kong were about flat.
Asia
Pacific adjusted EBITDA was $1.7 million in the fourth quarter, up from $1.1
million in the prior year period but down from $2.6 million the third quarter of
2009. Australia and New Zealand was down versus the prior year period but still
positive and Asia delivered strong positive adjusted EBITDA in comparison to a
loss in the fourth quarter of 2008.
Corporate
Corporate
costs in the fourth quarter of 2009 were $2.9 million, a decrease of $4.2
million from the prior year period, and a decrease of $1.3 million from the
third quarter of 2009. The year-over-year reduction was driven primarily by
lower professional fees and lower compensation expenses.
Restructuring
Program
The
company completed its 2009 restructuring program during the fourth quarter of
2009. The program was initiated to streamline operations in response
to the economic conditions during 2009. Fourth quarter restructuring
expenses of $5.9 million were related to severance, lease terminations and
contract cancellations, primarily in Europe and the Americas. Total
restructuring expenses for the year were approximately $19.4 million, a portion
of which were classified in discontinued operations as a result of closing the
company’s Italy and Japan operations earlier in 2009.
Liquidity
and Capital Resources
At the
end of the fourth quarter of 2009, the company had $36.1 million in cash and
$10.5 million in borrowings under its primary credit facility, down from $44.5
million in cash and $10.5 million in borrowings at the end of the third quarter
of 2009. In addition, the company has availability under its primary credit
facility of $2.1 million, and an additional $8.1 million under local country
credit facilities, for a total of $10.2 million, some of which became available
subsequent to December 31, 2009.
Guidance
Despite
recent signs of recovery, visibility remains low. As a result, the
company will not provide formal guidance for the first quarter of 2010, other
than it expects significant progress in EBITDA compared with the prior year
quarter. The company will comment on current trends and its outlook for the
first quarter on its fourth quarter 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 letter, 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, including the
global economic conditions prevailing during 2009; the ability of clients to
terminate their relationship with the company at any time; risks in
collecting the company’s accounts receivable; the company’s history of negative
cash flows and operating losses may continue; the company’s limited
borrowing availability under its credit facility, which may negatively impact
its liquidity; restrictions on the company’s operating flexibility due to the
terms of its credit facility; risks related to fluctuations in the company’s
operating results from quarter to quarter; risks related to international
operations, including foreign currency fluctuations; risks associated with the
company’s investment strategy; risks and financial impact associated with
dispositions of underperforming assets; 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; competition in the company’s markets; the company’s
exposure to employment-related claims from both clients and employers and limits
on related insurance coverage; the company’s dependence on key management
personnel; the company’s ability to attract and retain highly skilled
professionals; 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.
SEGMENT
ANALYSIS
(in
thousands)
(unaudited)
|
For the Three Months Ended December 31, 2009
|
Hudson
Americas
|
Hudson
Europe
|
Hudson Asia
Pacific
|
Corporate (2)
|
Total
|
|||||||||||||||
|
Revenue
|
$ | 39,011 | $ | 74,502 | $ | 68,991 | $ | - | $ | 182,504 | ||||||||||
|
Gross
margin
|
$ | 10,218 | $ | 33,007 | $ | 26,150 | $ | - | $ | 69,375 | ||||||||||
|
Adjusted
EBITDA (1)
|
$ | (304 | ) | $ | 1,674 | $ | 1,677 | $ | (2,864 | ) | $ | 183 | ||||||||
|
Business
reorganization and integration expenses
|
1,794 | 3,135 | 849 | 122 | 5,900 | |||||||||||||||
|
Goodwill
and other impairment charges
|
- | - | - | - | - | |||||||||||||||
|
Depreciation
and amortization
|
1,318 | 822 | 991 | 43 | 3,174 | |||||||||||||||
|
Non-operating
income (expense)
|
803 | 173 | (152 | ) | (155 | ) | 669 | |||||||||||||
|
Interest
income (expense)
|
(10 | ) | (34 | ) | 52 | (233 | ) | (225 | ) | |||||||||||
|
Provision
for (benefit from) income taxes
|
(3,763 | ) | (810 | ) | 1,123 | - | (3,450 | ) | ||||||||||||
|
Income
(loss) from discontinued operations, net of taxes
|
(274 | ) | (143 | ) | 14 | (5,026 | ) | (5,429 | ) | |||||||||||
|
Net
(loss) income
|
$ | 866 | $ | (1,477 | ) | $ | (1,372 | ) | $ | (8,443 | ) | $ | (10,426 | ) | ||||||
|
For the Three Months Ended December 31, 2008
|
Hudson
Americas
|
Hudson
Europe
|
Hudson Asia
Pacific
|
Corporate (2)
|
Total
|
|||||||||||||||
|
Revenue
(3)
|
$ | 52,394 | $ | 85,376 | $ | 69,751 | $ | - | $ | 207,521 | ||||||||||
|
Gross
margin
|
$ | 14,115 | $ | 42,001 | $ | 28,595 | $ | - | $ | 84,711 | ||||||||||
|
Adjusted
EBITDA (1)
|
$ | (546 | ) | $ | 3,973 | $ | 1,090 | $ | (7,131 | ) | $ | (2,614 | ) | |||||||
|
Business
reorganization and integration expenses
|
1,236 | 1,634 | 2,317 | 997 | 6,184 | |||||||||||||||
|
Goodwill
and other impairment charges
|
40,749 | 19,598 | 6,740 | - | 67,087 | |||||||||||||||
|
Depreciation
and amortization
|
1,112 | 1,315 | 896 | 65 | 3,388 | |||||||||||||||
|
Non-operating
income (expense)
|
(61 | ) | 1,414 | 282 | (328 | ) | 1,307 | |||||||||||||
|
Interest
income (expense)
|
(8 | ) | 148 | 174 | (110 | ) | 204 | |||||||||||||
|
Provision
for (benefit from) income taxes
|
(1,644 | ) | 474 | (673 | ) | - | (1,843 | ) | ||||||||||||
|
Income
(loss) from discontinued operations, net of taxes
|
(1,910 | ) | (119 | ) | (2,290 | ) | (92 | ) | (4,411 | ) | ||||||||||
|
Net
(loss) income
|
$ | (43,978 | ) | $ | (17,605 | ) | $ | (10,024 | ) | $ | (8,723 | ) | $ | (80,330 | ) | |||||
|
(1)
|
Non-GAAP
earnings before interest, income taxes, special charges, other
non-operating income, and depreciation and amortization (“Adjusted
EBITDA”) is 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. Adjusted 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,
adjusted EBITDA as presented above may not be comparable with similarly
titled measures reported by other
companies.
|
|
(2)
|
Highland
Partners was a reportable segment before disposal in 2006. The results
from Highland Partners are classified under Corporate for reporting
purposes.
|
|
(3)
|
Prior
year revenue has been reclassed to conform to current year
presentation.
|
HUDSON
HIGHLAND GROUP, INC.
SEGMENT
ANALYSIS
(in
thousands)
(unaudited)
|
For the Three Months Ended December 31, 2009
|
Hudson
Americas
|
Hudson
Europe
|
Hudson Asia
Pacific
|
Corporate (2)
|
Total
|
|||||||||||||||
|
Revenue
|
$ | 39,011 | $ | 74,502 | $ | 68,991 | $ | - | $ | 182,504 | ||||||||||
|
Gross
margin
|
$ | 10,218 | $ | 33,007 | $ | 26,150 | $ | - | $ | 69,375 | ||||||||||
|
Adjusted
EBITDA (1)
|
$ | (304 | ) | $ | 1,674 | $ | 1,677 | $ | (2,864 | ) | $ | 183 | ||||||||
|
Business
reorganization and integration expenses
|
1,794 | 3,135 | 849 | 122 | 5,900 | |||||||||||||||
|
Goodwill
and other impairment charges
|
- | - | - | - | - | |||||||||||||||
|
Depreciation
and amortization
|
1,318 | 822 | 991 | 43 | 3,174 | |||||||||||||||
|
Non-operating
income (expense)
|
803 | 173 | (152 | ) | (155 | ) | 669 | |||||||||||||
|
Interest
income (expense)
|
(10 | ) | (34 | ) | 52 | (233 | ) | (225 | ) | |||||||||||
|
Provision
for (benefit from) income taxes
|
(3,763 | ) | (810 | ) | 1,123 | - | (3,450 | ) | ||||||||||||
|
Income
(loss) from discontinued operations, net of taxes
|
(274 | ) | (143 | ) | 14 | (5,026 | ) | (5,429 | ) | |||||||||||
|
Net
(loss) income
|
$ | 866 | $ | (1,477 | ) | $ | (1,372 | ) | $ | (8,443 | ) | $ | (10,426 | ) | ||||||
|
For the Three Months Ended September 30, 2009
|
Hudson
Americas
|
Hudson
Europe
|
Hudson Asia
Pacific
|
Corporate (2)
|
Total
|
|||||||||||||||
|
Revenue
|
$ | 35,705 | $ | 67,898 | $ | 66,044 | $ | - | $ | 169,647 | ||||||||||
|
Gross
margin
|
$ | 9,258 | $ | 29,571 | $ | 25,361 | $ | - | $ | 64,190 | ||||||||||
|
Adjusted
EBITDA (1)
|
$ | (1,625 | ) | $ | 30 | $ | 2,579 | $ | (4,206 | ) | $ | (3,222 | ) | |||||||
|
Business
reorganization and integration expenses
|
592 | 1,881 | 405 | - | 2,878 | |||||||||||||||
|
Goodwill
and other impairment charges
|
- | - | - | - | - | |||||||||||||||
|
Depreciation
and amortization
|
1,047 | 911 | 739 | 44 | 2,741 | |||||||||||||||
|
Non-operating
income (expense)
|
34 | (302 | ) | 260 | 107 | 99 | ||||||||||||||
|
Interest
income (expense)
|
55 | 45 | 55 | (251 | ) | (96 | ) | |||||||||||||
|
Provision
for (benefit from) income taxes
|
314 | (1,172 | ) | (357 | ) | - | (1,215 | ) | ||||||||||||
|
Income
(loss) from discontinued operations, net of taxes
|
179 | 287 | 181 | 123 | 770 | |||||||||||||||
|
Net
(loss) income
|
$ | (3,310 | ) | $ | (1,560 | ) | $ | 2,288 | $ | (4,271 | ) | $ | (6,853 | ) | ||||||
|
(1)
|
Non-GAAP
earnings before interest, income taxes, special charges, other
non-operating income, and depreciation and amortization (“Adjusted
EBITDA”) is 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. Adjusted 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,
adjusted EBITDA as presented above may not be comparable with similarly
titled measures reported by other
companies.
|
|
(2)
|
Highland
Partners was a reportable segment before disposal in 2006. The results
from Highland Partners are classified under Corporate for reporting
purposes.
|
Reconciliation
For Constant Currency
(in
thousands)
(unaudited)
The
company defines the term “constant currency” to mean that financial data for a
period are translated 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 uses constant currency to depict the current period results
at the exchange rates of the prior period. Changes in revenues, direct costs,
gross margin and selling, general and administrative expenses 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. The table below summarizes the impact of foreign
exchange adjustments on our operating results for the three months ended
December 31, 2009.
|
2009
|
2008
|
|||||||||||||||
|
As Reported
|
Currency
Translation |
Constant
Currency |
As Reported
|
|||||||||||||
|
Revenue:
|
||||||||||||||||
|
Hudson
Americas
|
$ | 39,011 | $ | (35 | ) | $ | 38,976 | $ | 52,394 | |||||||
|
Hudson
Europe
|
74,502 | (3,707 | ) | 70,795 | 85,376 | |||||||||||
|
Hudson
Asia Pacific
|
68,991 | (15,333 | ) | 53,658 | 69,751 | |||||||||||
|
Total
|
182,504 | (19,075 | ) | 163,429 | 207,521 | |||||||||||
|
Direct
costs:
|
||||||||||||||||
|
Hudson
Americas
|
28,793 | (1 | ) | 28,792 | 38,279 | |||||||||||
|
Hudson
Europe
|
41,495 | (1,464 | ) | 40,031 | 43,376 | |||||||||||
|
Hudson
Asia Pacific
|
42,841 | (10,437 | ) | 32,404 | 41,155 | |||||||||||
|
Total
|
113,129 | (11,902 | ) | 101,227 | 122,810 | |||||||||||
|
Gross
margin:
|
||||||||||||||||
|
Hudson
Americas
|
10,218 | (34 | ) | 10,184 | 14,115 | |||||||||||
|
Hudson
Europe
|
33,007 | (2,243 | ) | 30,764 | 42,000 | |||||||||||
|
Hudson
Asia Pacific
|
26,150 | (4,896 | ) | 21,254 | 28,596 | |||||||||||
|
Total
|
$ | 69,375 | $ | (7,173 | ) | $ | 62,202 | $ | 84,711 | |||||||
|
Selling,
general and administrative (1)
|
||||||||||||||||
|
Hudson
Americas
|
$ | 11,813 | $ | (37 | ) | $ | 11,776 | $ | 15,752 | |||||||
|
Hudson
Europe
|
32,166 | (2,079 | ) | 30,087 | 39,395 | |||||||||||
|
Hudson
Asia Pacific
|
25,460 | (4,871 | ) | 20,589 | 28,371 | |||||||||||
|
Corporate
|
2,927 | - | 2,927 | 7,195 | ||||||||||||
|
Total
|
$ | 72,366 | $ | (6,987 | ) | $ | 65,379 | $ | 90,713 | |||||||
(1)
Selling, general and administrative expenses include depreciation and
amortization expenses.