EX-99.2 4 dex992.htm UNAUDITED PRO FORMA FINANCIAL INFORMATION Unaudited Pro Forma Financial Information

Exhibit 99.2

HUDSON HIGHLAND GROUP, INC.

UNAUDITED PRO FORMA FINANCIAL INFORMATION

The unaudited pro forma financial information filed herewith as Exhibit 99.2 is incorporated herein by reference and reflects the unaudited pro forma consolidated condensed statements of operations of Hudson Highland Group, Inc. (the “Company”) for the nine months ended September 30, 2007 and the year ended December 31, 2006 and the unaudited pro forma condensed consolidated balance sheet of the Company as of September 30, 2007 reflecting the sale (the “Sale”) of the Company’s Netherlands work and mobility subsidiary, Hudson Human Capital Solutions B.V., (“HHCS”). The unaudited pro forma consolidated condensed statements of operations for the nine months ended September 30, 2007 and the year ended December 31, 2006 give effect to the Sale as if it occurred on January 1, 2006. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2007 gives effect to the Sale as if it occurred on September 30, 2007. The unaudited pro forma financial information is based on the historical financial statements of the Company after giving effect to the Sale and is not necessarily indicative of the financial position or results of operations of the Company that would have actually occurred had the Sale occurred as of January 1, 2006 or September 30, 2007. The unaudited pro forma consolidated condensed financial statements have been prepared based on preliminary estimates. In the opinion of management, all adjustments have been made that are necessary to present fairly the unaudited pro forma financial information. The unaudited pro forma financial information should be read in conjunction with the Company’s historical financial statements included in its Form 10-K for the year ended December 31, 2006 and Form 10-Q for the quarter and nine months ended September 30, 2007.

 

-1-


HUDSON HIGHLAND GROUP, INC.

PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(Unaudited)

 

     For the Nine Months Ended September 30, 2007  
     As Reported     Pro Forma
Adjustments (A)
    Pro Forma
Results
 

Revenue

   $ 1,007,134     $ (10,765 )   $ 996,369  

Direct costs

     610,003       (5,844 )     604,159  
                        

Gross margin

     397,131       (4,921 )     392,210  

Operating expenses:

      

Selling, general and administrative expenses

     366,208       (4,432 )     361,776  

Compensation on JMT acquisition

     3,551       —         3,551  

Depreciation and amortization

     11,396       (242 )     11,154  

Business reorganization expenses

     4,638       —         4,638  

Merger and integration recoveries

     (795 )     —         (795 )
                        

Operating income

     12,133       (247 )     11,886  

Other income (expense):

      

Other, net

     3,675       189       3,864  

Interest, net

     514       (12 )     502  
                        

Income from continuing operations before provision for income taxes

     16,322       (70 )     16,252  

Provision for income taxes

     12,478       —         12,478  
                        

Income from continuing operations

   $ 3,844     $ (70 )   $ 3,774  
                        

Basic and diluted per share:

      

Income from continuing operations

   $ 0.15       $ 0.15  
                  

Weighted average shares outstanding:

      

Basic

     25,205,000         25,205,000  

Diluted

     25,958,000         25,958,000  

The accompanying note is an integral part of this financial statement.


HUDSON HIGHLAND GROUP, INC.

PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(Unaudited)

 

     For the Year Ended December 31, 2006  
     As Reported     Pro Forma
Adjustments(A)
    Pro Forma
Results
 

Revenue

   $ 1,373,473     $ (18,674 )   $ 1,354,799  

Direct costs

     878,874       (9,753 )     869,121  
                        

Gross margin

     494,599       (8,921 )     485,678  

Operating expenses:

      

Selling, general and administrative expenses

     461,280       (7,355 )     453,925  

Depreciation and amortization

     20,372       (438 )     19,934  

Business reorganization expenses

     6,048       —         6,048  

Merger and integration expenses

     373       —         373  
                        

Operating income

     6,526       (1,128 )     5,398  

Other income (expense):

      

Other, net

     1,171       399       1,570  

Interest, net

     (1,641 )     7       (1,634 )
                        

Income from continuing operations before provision for income taxes

     6,056       (722 )     5,334  

Provision for income taxes

     4,544       (95 )     4,449  
                        

Income from continuing operations

   $ 1,512     $ (627 )   $ 885  
                        

Basic and diluted per share:

      

Income from continuing operations

   $ 0.06       $ 0.04  
                  

Weighted average shares outstanding:

      

Basic

     24,471,000         24,471,000  

Diluted

     25,239,000         25,239,000  

The accompanying note is an integral part of this financial statement.


HUDSON HIGHLAND GROUP, INC.

PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEETS

(in thousands)

(unaudited)

 

     As of September 30, 2007
     As
Reported
   Pro Forma
Adjustments(B)
    Pro Forma
Results
ASSETS        

Current assets:

       

Cash and cash equivalents

   $ 34,874    $ (2,585 )   $ 32,289

Accounts receivable, net

     233,105      (2,879 )   $ 230,226

Prepaid and other

     17,163      (332 )     16,831

Current assets of discontinued operations

     4,129      —         4,129
                     

Total current assets

     289,271      (5,796 )     283,475

Intangibles, net

     76,521      —         76,521

Property and equipment, net

     29,187      (343 )     28,844

Other assets

     8,147      (740 )     7,407

Non-current assets of discontinued operations

     8      —         8
                     

Total assets

   $ 403,134    $ (6,879 )   $ 396,255
                     
LIABILITIES AND STOCKHOLDERS’ EQUITY        

Current liabilities:

       

Accounts payable

   $ 32,116    $ (1,200 )   $ 30,916

Accrued expenses and other current liabilities

     131,408      (4,822 )     126,586

Short-term borrowings and current portion of long-term debt

     15,494      —         15,494

Accrued business reorganization expenses

     3,483      —         3,483

Accrued merger and integration expenses

     440      —         440

Current liabilities of discontinued operations

     539      —         539
                     

Total current liabilities

     183,480      (6,022 )     177,458

Other non-current liabilities

     20,205      —         20,205

Accrued business reorganization expenses, non-current

     3,763      —         3,763

Accrued merger and integration expenses, non-current

     398      —         398

Long-term debt, less current portion

     27      —         27
                     

Total liabilities

     207,873      (6,022 )     201,851
                     

Total stockholders’ equity

     195,261      (857 )     194,404
                     
   $ 403,134    $ (6,879 )   $ 396,255
                     

The accompanying note is an integral part of this financial statement.


HUDSON HIGHLAND GROUP, INC.

NOTE TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Pro Forma Adjustments

The accompanying unaudited pro forma consolidated condensed financial statements give effect to the following pro forma adjustments necessary to reflect the disposition and discontinuation of operations of the work and mobility business as outlined in the proceeding introduction as if the disposition occurred on January 1, 2006 in the unaudited pro forma consolidated condensed statements of operations and on September 30, 2007 in the unaudited pro forma consolidated condensed balance sheet.

 

  (A) Reduction of revenue and expenses are the result of the disposition of HHCS. These amounts do not consider an allocation of corporate overhead to HHCS and therefore, selling general and administrative expenses do not reflect any potential reductions in costs in response to this change in the Company. These amounts are expected to be immaterial.

 

  (B) Reduction of assets and liabilities are as a result of the disposition of HHCS and includes cash of $0.7 million from the proceeds, less other estimated payments and costs related to the disposition ($1.6 million).