NEW YORK, February 4 /PRNewswire/ --
Hudson Highland Group, Inc. (Nasdaq: HHGP), a leading provider of permanent recruitment, contract professionals and talent management services worldwide, today made several announcements.
Update on Fourth Quarter 2007
The company will report fourth quarter 2007 revenue of US$290.5 million and adjusted EBITDA of US$13.5 million from continuing operations.
The company's discontinued operations include the Netherlands Reintegration business it sold in December 2007 and the Energy and Engineering business it sold earlier today. For comparison purposes as set forth in Schedule 1 (attached), including the results of discontinued operations in the fourth quarter would have resulted in revenue of US$331.5 million, compared with guidance of US$325 - US$340 million, and adjusted EBITDA of US$14.3 million, compared with guidance of US$12 - US$14 million.
Share Repurchase Program
The company also announced today that its board of directors has authorized the repurchase of up to US$15 million of the company's common stock. The company intends to make purchases from time to time as market conditions warrant.
Restatement of Previously Issued Financial Statements
The company has determined, in consultation with its external auditors, that a portion of the 2006 and 2007 earn out payments in connection with a 2005 acquisition that the company originally recorded as purchase price, should instead be recorded as expense in the third and fourth quarters of 2006 and the first three quarters of 2007. A current period amount is recorded in the fourth quarter. This restatement is unrelated to the company's accounting matter in the third quarter of 2007. The amounts to be recorded as expense relate to a 2006 amendment to the original acquisition agreement. Schedule 2 (attached) sets forth the impact of this restatement on the company's financial statements for the applicable periods. The restatement does not affect the company's cash flows for those periods.
The company has filed a report on Form 8-K today with the Securities and Exchange Commission with respect to this matter. This summary is qualified in its entirety by reference to the detailed information contained in that report. The company will include the restated financial information for the applicable periods in a filing with the Securities and Exchange Commission prior to or in connection with the timely filing of the company's Form 10-K for the year ended December 31, 2007.
Q4 2007 Conference Call
As previously announced, management will conduct a live conference call to be broadcast simultaneously over the Internet to review the above announcements as well as the company's quarterly and full-year results, market trends and outlook at 9:00 AM ET on Thursday, February 7, 2008.
Individuals wishing to participate can join the conference call by dialing +1-800-374-1532 followed by the participant passcode 32241194 at 8:50 AM ET. For those outside the United States, please call in on +1-706-634-5594 followed by the participant passcode 32241194. Hudson Highland Group's conference call can also be accessed online through Yahoo! Finance at www.yahoo.com and the investor information section of the company's website 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 3,600 professionals serving clients and candidates in more than 20 countries. More information is available at www.hudson.com.
(All amounts in US dollars unless otherwise noted.) SCHEDULE 1 HUDSON HIGHLAND GROUP, INC. RECONCILIATION FOR DISCONTINUED OPERATIONS (in thousands) (unaudited) For the Quarter Ended December 31, 2007 Basis of Energy Reintegration Actual Guidance(1) (2) (3) Revenue $331,471 $38,456 $2,531 $290,484 Gross margin 135,492 4,415 1,093 129,984 Adjusted EBITDA (4) 14,334 982 (121) 13,473 Acquisition-related payments 837 - - 837 Business reorganization expenses (276) - - (276) (recoveries) Merger and integration expenses (recoveries) 8 - - 8 EBITDA (4) 13,765 982 (121) 12,904 Depreciation and amortization 3,590 20 38 3,532 Operating income $10,175 $962 $(159) $9,372 For the Quarter Ended December 31, 2006 Basis of Energy Reintegration Actual Guidance(1) (2) (3) Revenue $329,336 $38,104 $4,811 $286,421 Gross margin 125,976 5,061 2,849 118,066 Adjusted EBITDA (4) 14,835 1,826 1,232 11,777 Acquisition-related payments 858 - - 858 Business reorganization expenses (recoveries) 3,301 4 - 3,297 Merger and integration expenses (recoveries) 287 - - 287 EBITDA (4) 10,389 1,822 1,232 7,335 Depreciation and amortization 8,284 24 143 8,117 Operating income $2,105 $1,798 $1,089 $(782) (1) Basis of Guidance represents the sum of the GAAP reported results from continuing operations plus the individual financial statement components of the discontinued operations of (2) Energy and (3) Reintegration and is presented for purposes of depicting the basis on which the company set its fourth quarter 2007 guidance. (2) Energy is the asset sale of the company's Energy and Engineering business that was announced on February 4, 2008. (3) Reintegration is the sale of the Dutch Reintegration subsidiary, Hudson Human Capital Solutions B.V. that was announced on December 20, 2007. (4) Non-GAAP earnings before interest, income taxes, special charges, other non-operating expense, and depreciation and amortization ("Adjusted EBITDA") and non-GAAP earnings before interest, income taxes, other non-operating expense, 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. Adjusted EBITDA and 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 and EBITDA as presented above may not be comparable with similarly titled measures reported by other companies. Amortization for 2006 includes accelerated amortization expense related to changes in estimates and valuations.
SCHEDULE 2 HUDSON HIGHLAND GROUP, INC. EFFECT ON PREVIOUSLY-REPORTED FINANCIAL RESULTS (in thousands) (unaudited) Q3 2006 Q4 2006 Reported (1) Restated Reported (1) Restated Adjusted EBITDA(2) 12,122 12,122 15,561 15,561 Acquisition-related payments - 829 - 858 Business reorganization expenses 2,090 2,090 3,301 3,301 Merger and integration expenses 14 14 287 287 EBITDA(2) 10,018 9,189 11,973 11,115 Depreciation and amortization 3,868 3,868 8,291 8,291 Operating income 6,150 5,321 3,682 2,824 Other income (expense) 709 709 (598) (598) Interest income(expense) (661) (661) 173 173 Provision (benefit) for income tax taxes 2,218 2,218 (1,700) (1,700) Net income from continuing ops 3,980 3,151 4,957 4,099 Income from discontinued ops operations 346 346 18,746 18,746 Net income 4,326 3,497 23,703 22,845 Q1 2007 Q2 2007 Q3 2007 Reported Restated Reported Restated Reported Restated (1) (1) (1) Adjusted EBITDA (2) 6,814 6,814 13,204 13,204 11,768 11,768 Acquisition -related payments - 298 3,551 3,853 - 311 Business reorganization expenses 3,116 3,116 1,578 1,578 (56) (56) Merger and integration expenses - - (42) (42) (753) (753) EBITDA(2) 3,698 3,400 8,117 7,815 12,577 12,266 Depreciation and amortization 3,809 3,809 3,952 3,952 3,642 3,642 Operating income (111) (409) 4,165 3,863 8,935 8,624 Other income (expense) 2,600 2,600 (21) (21) 1,096 1,096 Interest income (expense) 222 222 435 435 (143) (143) Provision (benefit) for income tax 2,377 2,377 4,637 4,637 5,721 5,721 Net income from continuing ops 334 36 (58) (360) 4,167 3,856 Income from discontinued ops 19 19 (258) (258) (277) (277) Net income 353 55 (316) (618) 3,890 3,579 (1) Reported is defined as the financials as originally reported, not including the effects of subsequent discontinued operations, which include the Netherlands Reintegration business sold in December 2007 and the North American Energy and Engineering business sold in February 2008. (2) Non-GAAP earnings before interest, income taxes, special charges, other non-operating expense, and depreciation and amortization ("Adjusted EBITDA") and non-GAAP earnings before interest, income taxes, other non- operating expense, 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. Adjusted EBITDA and 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 and EBITDA as presented above may not be comparable with similarly titled measures reported by other companies. Amortization for 2006 includes accelerated amortization expense related to changes in estimates and valuations.
Web site: http://www.hudson.com
