Hudson Highland Group Updates Q4 2008 Guidance And Status Of Impairment Testing

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19th December 2008, 01:22am - Views: 1033

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Hudson Highland Group Updates Q4 2008 Guidance and Status of Impairment Testing

NEW YORK, Dec. 18 /PRNewswire-AsiaNet/ --

    Hudson Highland Group, Inc. (Nasdaq: HHGP), one of the world's leading

providers of permanent recruitment, contract professionals and talent

management solutions, today announced revised guidance for the fourth quarter

and an update on its annual impairment testing, both of which reflect the

impact of the global economic slowdown.

    Hudson's markets worldwide declined significantly during November.

Results for the month were below prior year in all regions: Asia Pacific,

Europe, and North America. The company experienced reduced demand in both

contract and permanent recruitment from October levels, with the largest

percentage drop coming from the permanent recruitment business.

    Given these trends, the company now expects its fourth quarter 2008

revenue to be between $200-$210 million at prevailing exchange rates,

compared with previous guidance of $205-$220 million. The company also

believes adjusted EBITDA could be as low as a loss of $6 million, compared

with previous adjusted EBITDA guidance of $2-$5 million. Adjusted EBITDA

excludes the impact of any restructuring, acquisitions, divestitures and


    Economic conditions in North America began to deteriorate in late 2007.

Hudson took a number of actions at the end of 2007 and through 2008 in all of

its markets that reduced its pre-tax expense base by $40 million on an

annualized basis, about half of which was realized during 2008 to offset

gross margin declines, and continues to assess options to align its

operations with the market while serving client and candidate needs. A number

of additional actions to reduce expenses are already underway, but the rapid

drop in permanent recruitment during November limited the company's ability

to mitigate the adjusted EBITDA decline in a few weeks. Hudson currently

expects that the benefit of these additional actions will begin to be

realized in the early part of 2009, in addition to the full annualized impact

of the 2008 actions. More detailed information regarding cost reduction

actions and the timing of benefits will be provided when the company

announces fourth quarter and full-year earnings results.

    These cost reduction actions are also important to the company's

liquidity position. As of yesterday, the company had net cash of

approximately $42 million. Every region is focused on cash management as part

of its response to the economic conditions.

    Hudson expected slowing economic conditions when it announced its third

quarter 2008 results and set guidance for the fourth quarter. However,

economic conditions during the quarter have been worse than anticipated with

greater contraction in North America and the European Union, and slower

growth rates in the emerging markets. The company expects weak global

conditions to persist throughout 2009, resulting in a reduction in demand for

its services. In addition, revenue has been affected by the strengthening

U.S. dollar against most currencies in 2008, and this condition may continue

in 2009.

    The company is also in the process of conducting its annual impairment

testing of goodwill, as well as other long-term assets. The process follows

Business Finance Hudson Highland Group, Inc. 2 image

the required accounting guidance and the analysis includes consideration of

factors such as deterioration in macro-economic conditions, their impact on

the company's markets and business performance and the decline in the market

price of the company's common stock. Based on this analysis, the company may

record in the fourth quarter of 2008 a non-cash impairment charge of between

$30-$75 million for goodwill and intangibles from its various acquisitions

since 2004, and possibly other long-term assets.

    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 3,300 professionals serving clients and

candidates in more than 20 countries. More information is available at

    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 those under the

caption "Guidance" and other 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

history of negative cash flows and operating losses may continue; the ability

of clients to terminate their relationship with the company at any time; the

impact of global economic fluctuations on temporary contracting operations;

risks and financial impact associated with acquisitions and dispositions of

non-core businesses; 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 and the company's dependence on highly

skilled professionals; fluctuations in the company's operating results from

quarter to quarter; risks relating to the company's international operations,

including foreign currency fluctuations; dependence on key management

personnel; restrictions imposed by blocking arrangements; exposure to

employment-related claims from both clients and employers and limits on

insurance coverage related thereto; government regulations; any impairment to

the carrying value of goodwill; restrictions on the company's operating

flexibility due to the terms of its credit facility; and the company's

ability to maintain effective internal control over financial reporting.

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

review or confirm analysts' expectations or estimates or to update any

forward-looking statements, whether as a result of new information, future

events or otherwise.

                     Contact:  David F. Kirby

                               Hudson Highland Group



    SOURCE Hudson Highland Group, Inc.

    CONTACT: David F. Kirby of the Hudson Highland Group, +1-212-351-7216, 

Business Finance Hudson Highland Group, Inc. 3 image

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