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): May 7, 2003
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.)
622 Third Avenue
New York, NY 10017
(Address of Principal Executive Offices)
Registrant's telephone number, including area code (212) 351-7300
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements.
None.
(b) Pro Forma Financial Information.
None.
(c) Exhibits
99.1 Press Release of Hudson Highland Group, Inc. (the "Company")
issued on May 7, 2003 relating to its first quarter
earnings.
ITEM 9. REGULATION FD DISCLOSURE.
The following information is furnished under "Item 12. Results of
Operations and Financial Condition," in accordance with SEC Release No. 33-8216.
On May 7, 2003, the Company announced its financial results for the three
months ended March 31, 2003. A copy of the press release issued by the Company
relating thereto is furnished herewith as Exhibit 99.1.
Included in the press release issued by the Company and furnished herewith
as Exhibit 99.1 are certain non-GAAP financial measures. Historically, the
Company's business has grown through acquisitions. As a result of this growth,
the Company has incurred costs to integrate, restructure and reorganize both
existing and acquired businesses. The Company has historically presented certain
non-GAAP financial measures to exclude these types of costs. Management of the
Company believes such non-GAAP financial measures are useful to investors
assessing the financial condition and results of operations of the Company's
core business operations.
(All other items on this report are inapplicable.)
2
The following is a table of additional information related to the March
31, 2003 financial results.
HUDSON HIGHLAND GROUP, INC.
SEGMENT ANALYSIS
(in thousands)
(unaudited)
For the Three Months Ended March 31, 2003 Americas Europe Asia Pac. Corporate Total
-------- ------ --------- --------- -----
Hudson revenue $77,208 $84,932 $81,825 $243,965
Highland revenue 10,432 3,999 793 15,224
------- ------- ------- --------
Total revenue $87,640 $88,931 $82,618 $259,189
======= ======= ======= ========
Hudson gross margin $17,557 $37,637 $27,456 $ 82,650
Highland gross margin 10,432 3,699 751 14,882
------- ------- ------- --------
Total gross margin $27,989 $41,336 $28,207 $ 97,532
======= ======= ======= ========
Hudson adjusted EBITDA (1) $(2,190) $(8,079) $(1,067) $(11,336)
Highland adjusted EBITDA (1) (2,354) (2,402) (345) (5,101)
Corporate adjusted EBITDA (1) - - - $(4,964) (4,964)
------- ------- ------- ------- --------
Adjusted EBITDA (1) $(4,544) $(10,481) $(1,412) $(4,964) $(21,401)
======= ======== ======= ======= ========
For the Three Months Ended March 31, 2002
Hudson revenue $81,179 $84,821 $80,322 $246,322
Highland revenue 11,513 5,300 945 17,758
------- ------- ------- --------
Total revenue $92,692 $90,121 $81,267 $ 264,080
======= ======= ======= ========
Hudson gross margin $21,089 $41,219 $29,258 $ 91,566
Highland gross margin 11,513 5,300 945 17,758
------- ------- ------- --------
Total gross margin $32,602 $46,519 $30,203 $ 109,324
======= ======= ======= =========
Hudson adjusted EBITDA (1) $ 625 $(1,635) $ 4,077 $ 3,067
Highland adjusted EBITDA (1) (1,487) 38 132 (1,317)
Corporate adjusted EBITDA (1) - - - $(7,250) (7,250)
------- ------- ------- ------- --------
Adjusted EBITDA (1) $ (862) $(1,597) $ 4,209 $(7,250) $ (5,500)
======= ======= ======= ======= =========
(1) Non-GAAP earnings before interest, income taxes, special charges and depreciation and amortization ("Adjusted
EBITDA"), is presented to provide additional information about the Company's ability to meet its future debt service,
capital expenditures and working capital requirements and is one of the measures that determines its ability to borrow
under its credit facility. 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.
(All other items on this report are inapplicable.)
3
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/ RICHARD W. PEHLKE
-------------------------------------
Richard W. Pehlke
Executive Vice Presidant and Chief
Financial Officer
Dated: May 13, 2003
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 May 7, 2003
relating to its first quarter earnings.
4
Exhibit 99.1
Hudson Highland Group
Contact: At Hudson Highland Group
Richard W. Pehlke
Executive VP & CFO
212-351-7285
At FRB | Weber Shandwick
Joe Calabrese
212-445-8434
HUDSON HIGHLAND GROUP REPORTS 2003
FIRST QUARTER RESULTS
NEW YORK, NY - May 7, 2003 - Hudson Highland Group, Inc. (NASDAQ: HHGP), a
leading global professional staffing, HR consulting and executive search
enterprise, today announced revenues of $259.2 million and an operating loss of
$35.8 million for the first quarter ended March 31, 2003. Hudson Highland's net
loss for the first quarter of 2003 was $44.0 million or $5.25 per basic and
diluted share.
"We are very pleased with the completion of the spin-off from Monster Worldwide
and our successful debut as a publicly traded enterprise. During the quarter
much of our attention was devoted to the separation of the two companies. With
that completed, we will be able to focus our attention solely on our operating
business units and the marketplace," commented Jon Chait, Chairman and Chief
Executive Officer of Hudson Highland Group. "While our first quarter results
were in-line with our expectations, we continue to experience difficult economic
conditions in many of the markets in which we operate. Some markets exhibited
signs of stability but not an upturn."
-more-
First Quarter Summary
o Revenues of $259.2 million
o Gross margin of $97.5 million or 37.6%
o Adjusted operating EDITDA loss, excluding business reorganization charges,
special charges and merger and integration costs, of $21.4 million
o Successfully launched as an independent company
o Secured $50 million credit facility from Foothill Capital Corporation
o Opened 20 new offices and added 43 new consultants in North American
operations
Mr. Chait added, "Looking ahead, we are focused on building upon the significant
scale in our diversified global operations. We've invested for growth in our
North American staffing operations and are committed to increasing the
productivity in our operating segments. Importantly, we are moving along a path
to profitability even without any improvement in our major economies."
Historical Results
Historical results for 2002 relate to the company's businesses as they were
operated as a business unit of Monster Worldwide, Inc. (formerly TMP Worldwide
Inc.). On a historical basis for the first quarter ended March 31, 2002, Hudson
Highland reported revenues of $264.1 million and an operating loss of $15.3
million. The Company's net loss for the first quarter of 2002 was $308.0
million, or $36.94 per basic and diluted share. Net loss included a loss from
cumulative effect of accounting change for the write-off of $293.0 million of
impaired goodwill, excluding the accounting change net loss was $15.0 million or
$1.80 per basic and diluted share.
Conference Call / Webcast
Hudson Highland Group will conduct a conference call on Thursday May 8, 2003 at
10:00 am EDT to discuss this announcement. The conference call can be accessed
by dialing 1-800-616-7812 at least 5 minutes before scheduled start time. For
those outside the United States, please call in on 1-212-676-5291. The
conference call will also be broadcast live over the Internet and can be
accessed through CCBN at www.companyboardroom.com and the investor information
section of the company's website at www.hhgroup.com.
About Hudson Highland Group
Hudson Highland Group, Inc., delivers a full suite of professional staffing,
recruitment, HR consulting services worldwide and executive search. Spun off
from human capital solutions provider Monster Worldwide, Inc. on March 31, 2003,
the company consists of three divisions: TMP/Hudson Global Resources, TMP/Hudson
Human Resource Consulting and TMP/Highland Partners. The two enterprises of
TMP/Hudson Global Resources and TMP/Hudson Human Resource Consulting work
together to assess, recruit, develop and deploy professional staffing, project
management and consulting services. TMP/Hudson Global Resources provides a wide
range of midlevel search, professional staffing and consulting services. At the
top end of the recruitment services spectrum, TMP/Highland Partners recruits at
the CEO, COO, CIO, CFO and Board of Director level, as well as senior level
operations and staff positions. With an employee base of 4,000 covering 27
countries, Hudson Highland Group is dedicated to providing unparalleled service
and value to clients and consumers. More information about the company is
available at www.hhgroup.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 risks and uncertainties that could
cause actual results to differ materially from those described in the
forward-looking statements. These factors include, but are not limited to, the
company's ability to manage its growth; risks associated with expansion; the
company's reliance on information systems and technology; competition;
fluctuations in operating results; the impact of global economic fluctuations on
temporary contracting operations; the cyclical nature of the company's executive
search and mid-market professional staffing businesses; risks relating to
foreign operations, including foreign currency fluctuations; dependence on
highly skilled professionals; the impact of employees departing with existing
executive search clients; risks maintaining professional reputation and brand
name; restrictions imposed by blocking arrangements; exposure to
employment-related claims, legal liability and costs and limitations on
insurance coverage related thereto; dependence on key management personnel;
government regulations; the company's ability to successfully operate as an
independent company and the level of costs associated therewith; and the
company's ability to obtain financing on a stand-alone basis and restrictions on
the company's operating flexibility due to the terms of its credit facility.
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 press release. The
company assumes no obligation, and expressly disclaims any obligation, to update
any forward-looking statements.
HUDSON HIGHLAND GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended March 31,
----------------------------
2003 2002
---- ----
Revenue $ 259,189 $ 264,080
Direct costs 161,657 154,756
--------- ---------
Gross margin 97,532 109,324
Selling, general and administrative expenses 124,418 118,888
Business reorganization and other special expenses 7,961 -
Merger and integration expenses 975 5,740
--------- ---------
Operating loss (35,822) (15,304)
Other expenses:
Other (1,747) (442)
Interest, net (293) 28
--------- ---------
Loss before provision for income taxes and accounting change (37,862) (15,718)
Provision (benefit) for income taxes 6,149 (713)
--------- ---------
Loss before accounting change (44,011) (15,005)
Cumulative effect of accounting change - (293,000)
--------- ---------
Net loss $ (44,011) $(308,005)
========= =========
Basic and diluted loss per share:
Loss before accounting change $ (5.25) $ (1.80)
========= =========
Net loss $ (5.25) $ (36.94)
========= =========
Weighted average shares outstanding 8,383 8,339
========= =========
HUDSON HIGHLAND GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except per share amounts)
March 31, December 31,
2003 2002
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 40,000 $ 25,908
Trade accounts receivable, net 158,467 161,831
Due from Monster Worldwide, Inc. 13,530
-
Other current assets 21,716 28,177
-------- --------
Total current assets 233,713 215,916
Property and equipment, net 43,116 34,106
Intangibles, net 204,688 201,937
Other assets 14,805 15,145
-------- --------
$496,322 $467,104
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable $25,287 $ 28,305
Accrued expenses and other current liabilities 96,948 84,669
Accrued integration and restructuring costs 7,519
8,935
Accrued business reorganization costs 22,569 25,845
-------- --------
Total current liabilities 152,323 147,754
Other liabilities 2,318 2,776
-------- --------
Total liabilities 154,641 150,530
-------- --------
Commitments and Contingencies
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
and outstanding 8,383 and 0 shares, respectively 8 -
Additional paid-in capital 313,794 -
Accumulated other comprehensive loss:
Foreign currency translation adjustments 27,879 24,660
Total divisional equity - 291,914
-------- --------
Total stockholders' equity 341,681 316,574
-------- --------
$496,322 $467,104
======== ========
HUDSON HIGHLAND GROUP, INC.
SEGMENT ANALYSIS
(in thousands)
(unaudited)
For the Three Months Ended March 31, 2003 Americas Europe Asia Pac. Total
-------- ------ --------- -----
Hudson revenue $77,208 $84,932 $81,825 $243,965
Highland revenue 10,432 3,999 793 15,224
------- ------- ------- --------
Total revenue $87,640 $88,931 $82,618 $259,189
======= ======= ======= ========
Hudson gross margin $17,557 $37,637 $27,456 $82,650
Highland gross margin 10,432 3,699 751 14,882
------- ------- ------- --------
Total gross margin $27,989 $41,336 $28,207 $97,532
======= ======= ======= ========
For the Three Months Ended March 31, 2002
Hudson revenue $81,179 $84,821 $80,322 $246,322
Highland revenue 11,513 5,300 945 17,758
------- ------- ------- --------
Total revenue $92,692 $90,121 $81,267 $264,080
======= ======= ======= ========
Hudson gross margin $21,089 $41,219 $29,258 $ 91,566
Highland gross margin 11,513 5,300 945 17,758
------- ------- ------- --------
Total gross margin $32,602 $46,519 $30,203 $109,324
======= ======= ======= ========
HUDSON HIGHLAND GROUP, INC.
SCHEDULE OF ADJUSTED EBITDA
(in thousands)
(unaudited)
Three months ended
March 31, 2003 December 31, 2002 March 31, 2002
Operating income (loss) $(35,822) $(43,752) $(15,304)
Business reorganization, merger and integration charges 8,936 19,727 5,740
Depreciation and amortization 5,485 3,225 4,064
-------- -------- ---------
Adjusted EBITDA (1) $(21,401) $(20,800) $ (5,500)
======== ======== =========
(1) Non-GAAP earnings before interest, income taxes, special charges and
depreciation and amortization ("Adjusted EBITDA"), is presented to provide
additional information about the Company's ability to meet its future debt
service, capital expenditures and working capital requirements and is one of the
measures that determines its ability to borrow under its credit facility.
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.
