SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM to
COMMISSION FILE NUMBER: 000-50129
HUDSON HIGHLAND GROUP, INC.
(Exact name of registrant as specified in its charter)
| DELAWARE | 59-3547281 | |
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
622 Third Avenue, New York, New York 10017
(Address of principal executive offices) (Zip code)
(212) 351-7300
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Exchange Act). Yes x No ¨
Indicate the number of shares outstanding of each of the issuer’s class of common stock, as of the latest practicable date.
| Class |
Outstanding on April 30, 2005 | |
| Common Stock |
20,615,000 |
INDEX
PART I - FINANCIAL INFORMATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
| Three Months Ended March 31, |
||||||||
| 2005 |
2004 |
|||||||
| Revenue |
$ | 352,869 | $ | 289,804 | ||||
| Direct costs (Note 5) |
224,662 | 183,413 | ||||||
| Gross margin |
128,207 | 106,391 | ||||||
| Selling, general and administrative expenses |
124,899 | 117,596 | ||||||
| Depreciation and amortization |
4,857 | 5,079 | ||||||
| Business reorganization expenses |
529 | 60 | ||||||
| Merger and integration recoveries |
(43 | ) | (37 | ) | ||||
| Operating loss |
(2,035 | ) | (16,307 | ) | ||||
| Other expense: |
||||||||
| Other, net |
276 | 1,597 | ||||||
| Interest expense, net |
426 | 401 | ||||||
| Loss before provision for income taxes |
(2,737 | ) | (18,305 | ) | ||||
| Provision for income taxes |
1,400 | 403 | ||||||
| Net loss |
$ | (4,137 | ) | $ | (18,708 | ) | ||
| Basic and diluted loss per share: |
||||||||
| Net loss |
$ | (.20 | ) | $ | (1.09 | ) | ||
| Weighted average shares outstanding |
20,504,000 | 17,231,000 | ||||||
See accompanying notes to consolidated condensed financial statements.
- 3 -
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except share and per share amounts)
| March 31, 2005 |
December 31, 2004 |
|||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 12,316 | $ | 21,064 | ||||
| Accounts receivable, net |
222,804 | 197,582 | ||||||
| Prepaid and other |
14,142 | 14,187 | ||||||
| Total current assets |
249,262 | 232,833 | ||||||
| Property and equipment, net |
34,492 | 36,360 | ||||||
| Other assets |
6,335 | 6,081 | ||||||
| Intangibles, net |
5,896 | 6,104 | ||||||
| Total assets |
$ | 295,985 | $ | 281,378 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 28,754 | $ | 27,023 | ||||
| Accrued expenses and other current liabilities |
140,019 | 140,903 | ||||||
| Short-term borrowings and current portion of long-term debt |
23,354 | 4,066 | ||||||
| Accrued business reorganization expenses |
8,031 | 8,930 | ||||||
| Accrued merger and integration expenses |
1,751 | 1,872 | ||||||
| Total current liabilities |
201,909 | 182,794 | ||||||
| Accrued business reorganization expenses, non-current |
5,674 | 6,832 | ||||||
| Accrued merger and integration expenses, non-current |
2,843 | 3,329 | ||||||
| Other non-current liabilities |
2,564 | 2,648 | ||||||
| Long-term debt, less current portion |
2,367 | 2,041 | ||||||
| Total liabilities |
215,357 | 197,644 | ||||||
| Commitments and contingencies |
||||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, $0.001 par value, 10,000,000 shares authorized; none issued or outstanding |
— | — | ||||||
| Common stock, $0.001 par value, 100,000,000 shares authorized; issued 20,739,722 and 20,612,966 shares, respectively |
21 | 21 | ||||||
| Additional paid-in capital |
355,707 | 353,825 | ||||||
| Accumulated deficit |
(315,713 | ) | (311,576 | ) | ||||
| Accumulated other comprehensive income — translation adjustments |
40,843 | 41,694 | ||||||
| Treasury stock, 15,798 shares |
(230 | ) | (230 | ) | ||||
| Total stockholders’ equity |
80,628 | 83,734 | ||||||
| $ | 295,985 | $ | 281,378 | |||||
See accompanying notes to consolidated condensed financial statements.
- 4 -
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Three Months Ended March 31, |
||||||||
| 2005 |
2004 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | (4,137 | ) | $ | (18,708 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
4,857 | 5,079 | ||||||
| Provision for doubtful accounts |
830 | 18 | ||||||
| Provision for deferred income taxes |
923 | — | ||||||
| Restricted stock amortization |
245 | 283 | ||||||
| Net loss on disposal of assets |
— | 892 | ||||||
| Changes in assets and liabilities: |
||||||||
| Increase in accounts receivable |
(30,092 | ) | (13,399 | ) | ||||
| (Increase) decrease in other assets |
(1,478 | ) | 5,970 | |||||
| Increase in accounts payable, accrued expenses and other liabilities |
6,472 | 11,653 | ||||||
| Decrease in accrued business reorganization expenses |
(1,713 | ) | (6,198 | ) | ||||
| Decrease in accrued merger and integration expenses |
(513 | ) | (972 | ) | ||||
| Total adjustments |
(20,469 | ) | 3,326 | |||||
| Net cash (used in) operating activities |
(24,606 | ) | (15,382 | ) | ||||
| Cash flows from investing activities: |
||||||||
| Capital expenditures |
(2,139 | ) | (2,518 | ) | ||||
| Net cash (used in) investing activities |
(2,139 | ) | (2,518 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Borrowings under credit facility |
24,250 | 13,550 | ||||||
| Repayments under credit facility |
(5,250 | ) | (13,550 | ) | ||||
| Payments on short and long-term debt |
(802 | ) | (117 | ) | ||||
| Issuance of common stock – Long Term Incentive Plan option exercises |
74 | — | ||||||
| Proceeds from issuance of common stock |
— | 27,919 | ||||||
| Payments received from Monster |
— | 2,500 | ||||||
| Net cash provided by financing activities |
18,272 | 30,302 | ||||||
| Effect of exchange rates on cash and cash equivalents |
(275 | ) | (387 | ) | ||||
| Net (decrease) increase in cash and cash equivalents |
(8,748 | ) | 12,015 | |||||
| Cash and cash equivalents, beginning of period |
21,064 | 26,137 | ||||||
| Cash and cash equivalents, end of period |
$ | 12,316 | $ | 38,152 | ||||
| Supplemental disclosures of cash flow information: |
||||||||
| Cash paid during the period for: |
||||||||
| Interest |
$ | 330 | $ | 999 | ||||
| Taxes |
$ | 2,044 | $ | — | ||||
See accompanying notes to consolidated condensed financial statements.
- 5 -
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, except share amounts)
(unaudited)
| Common stock |
Additional paid-in capital |
Treasury stock |
Accumulated deficit |
Accumulated other comprehensive income (loss) |
Total |
|||||||||||||||||
| Balance January 1, 2005 |
$ | 21 | $ | 353,825 | $ | (230 | ) | $ | (311,576 | ) | $ | 41,694 | $ | 83,734 | ||||||||
| Net loss |
— | — | — | (4,137 | ) | — | (4,137 | ) | ||||||||||||||
| Other comprehensive loss, translation adjustments |
— | — | — | — | (851 | ) | (851 | ) | ||||||||||||||
| Issuance of shares for 401(k) plan |
— | 1,563 | — | — | — | 1,563 | ||||||||||||||||
| Issuance of shares from exercise of stock options |
— | 74 | — | — | — | 74 | ||||||||||||||||
| Restricted stock issuance and related compensation charge |
— | 245 | — | — | — | 245 | ||||||||||||||||
| Balance March 31, 2005 |
$ | 21 | $ | 355,707 | $ | (230 | ) | $ | (315,713 | ) | $ | 40,843 | $ | 80,628 | ||||||||
- 6 -
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
(unaudited)
NOTE 1 - INTERIM CONSOLIDATED CONDENSED QUARTERLY FINANCIAL STATEMENTS
These interim consolidated condensed quarterly financial statements have been prepared in accordance with the rules and regulations of the Securit