x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 59-3547281 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
Title of each class | Name of each exchange on which registered | |
Common Stock, $0.001 par value | The NASDAQ Stock Market LLC | |
Preferred Share Purchase Rights | The NASDAQ Stock Market LLC |
Large accelerated filer | o | Accelerated filer | o | |
Non-accelerated filer | o | Smaller reporting company | x | |
Emerging growth company | o |
Class | Outstanding on 1/31/2019 | |
Common Stock - $0.001 par value | 31,828,692 |
Table of Contents | ||
Page | ||
PART I | ||
ITEM 1. | ||
ITEM 1A. | ||
ITEM 1B. | ||
ITEM 2. | ||
ITEM 3. | ||
ITEM 4. | ||
PART II | ||
ITEM 5. | ||
ITEM 7. | ||
ITEM 7A. | ||
ITEM 8. | ||
ITEM 9. | ||
ITEM 9A. | ||
ITEM 9B. | ||
PART III | ||
ITEM 10. | ||
ITEM 11. | ||
ITEM 12. | ||
ITEM 13. | ||
ITEM 14. | ||
PART IV | ||
ITEM 15. | ||
Gross Profit | |||||||
$ in thousands | Amount | Percentage | |||||
Hudson Americas | $ | 11,726 | 27.9 | % | |||
Hudson Asia Pacific | 21,936 | 52.1 | % | ||||
Hudson Europe | 8,442 | 20.0 | % | ||||
Total | $ | 42,104 | 100.0 | % |
Gross Profit | |||||||
$ in thousands | Amount | Percentage | |||||
RPO Recruitment | $ | 39,997 | 95.0 | % | |||
RPO Contracting | 2,107 | 5.0 | % | ||||
Total | $ | 42,104 | 100.0 | % |
• | potential capital costs used for investment in the RPO Business, including potential costs to complete a reduction in support staff costs; |
• | the ability to achieve on a timely basis the anticipated cost savings as a result of the planned reduction in support staff; and |
• | the ability to maintain or generate the amount of cash required to operate the RPO Business. |
• | limitations on payments of dividends by our subsidiaries to us, which may restrict our ability to pay dividends to our shareholders; |
• | restrictions on our ability to make additional borrowings, or to consolidate, merge or otherwise fundamentally change our ownership; |
• | limitations on capital expenditures, investments, dispositions of assets, guarantees of indebtedness, permitted acquisitions and repurchases of stock; and |
• | limitations on certain intercompany payments of expenses, interest and dividends. |
• | claims of misconduct or negligence on the part of our employees; |
• | claims by our employees of discrimination or harassment directed at them, including claims relating to actions of our clients; |
• | claims related to the employment of illegal aliens or unlicensed personnel; |
• | claims for payment of workers' compensation and other similar claims; |
• | claims for violations of wage and hour requirements; |
• | claims for entitlement to employee benefits; |
• | claims of errors and omissions of our temporary employees; |
• | claims by taxing authorities related to our independent contractors and the risk that such contractors could be considered employees for tax purposes; |
• | claims by candidates that we place for wrongful termination or denial of employment; |
• | claims related to our non-compliance with data protection laws, which require the consent of a candidate to transfer resumes and other data; and |
• | claims by our clients relating to our employees' misuse of client proprietary information, misappropriation of funds, other misconduct, criminal activity or similar claims. |
• | create additional regulations that prohibit or restrict the types of employment services that we currently |
• | impose new or additional benefit requirements; |
• | require us to obtain additional licensing to provide recruitment services; |
• | impose new or additional restrictions on movements between countries; |
• | increase taxes, such as sales or value-added taxes, payable by the providers of recruitment services; |
• | increase the number of various tax and compliance audits relating to a variety of regulations, including wage and hour laws, unemployment taxes, workers' compensation, immigration, and income, value-added and sales taxes; or |
• | revise transfer pricing laws or successfully challenge our transfer prices, which may result in higher foreign taxes or tax liabilities or double taxation of our foreign operations. |
• | authorizing our Board of Directors to issue shares of our preferred stock in one or more series without further authorization of our stockholders; |
• | requiring that stockholders provide advance notice of any stockholder nomination of directors or any new business to be considered at any meeting of stockholders; and |
• | providing that vacancies on our Board of Directors will be filled by the remaining directors then in office. |
Name | Age | Title | ||
Jeffrey E. Eberwein | 48 | Chief Executive Officer | ||
Patrick Lyons | 55 | Chief Financial Officer and Chief Accounting Officer |
ITEM 5. | MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Market Price | ||||||||
High | Low | |||||||
2018 | ||||||||
Fourth quarter | $ | 1.67 | $ | 1.30 | ||||
Third quarter | $ | 1.84 | $ | 1.53 | ||||
Second quarter | $ | 2.00 | $ | 1.49 | ||||
First quarter | $ | 2.44 | $ | 1.81 | ||||
2017 | ||||||||
Fourth quarter | $ | 2.40 | $ | 1.29 | ||||
Third quarter | $ | 1.56 | $ | 1.26 | ||||
Second quarter | $ | 1.55 | $ | 1.05 | ||||
First quarter | $ | 1.50 | $ | 1.00 |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (a) | ||||||||||
October 1, 2018 - October 31, 2018 | 7,667 | $ | 1.49 | 7,667 | $ | 2,614,000 | ||||||||
November 1, 2018 - November 30, 2018 | 39,320 | 1.47 | 39,320 | $ | 2,556,000 | |||||||||
December 1, 2018 - December 31, 2018 | 95,621 | 1.41 | 95,621 | $ | 2,421,000 | |||||||||
Total | 142,608 | $ | 1.43 | 142,608 | $ | 2,421,000 |
(a) | On July 30, 2015, the Company announced that its Board of Directors authorized the repurchase of up to $10.0 million of the Company's common stock. The authorization does not expire. As of December 31, 2018, the Company had repurchased 3,784,213 shares for a total cost of approximately $7.6 million under this authorization. From time to time, the Company may enter into a Rule 10b5-1 trading plan for purposes of repurchasing common stock under this authorization. |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | Executive Overview |
• | Results of Operations |
• | Liquidity and Capital Resources |
• | Contingencies |
• | Critical Accounting Policies |
• | Recent Accounting Pronouncements |
• | Forward-Looking Statements |
• | Facilitating growth and development of the global RPO business through strategic investments in people, innovation and technology. |
• | Building and differentiating the Company's brand through its unique outsourcing solutions offerings. |
• | Improving the Company’s cost structure and efficiency of its support functions and infrastructure. |
• | Revenue was $66.9 million for the year ended December 31, 2018, compared to $59.6 million for 2017, an increase of $7.3 million, or 12.3%. |
◦ | On a constant currency basis, revenue increased $7.5 million, or 12.7%. RPO contracting revenue increased $5.1 million (up 31.0% compared to 2017) and RPO recruitment revenue increased $2.4 million (up 5.6% compared to 2017). |
• | Gross profit remained flat at $42.1 million for the year ended December 31, 2018, compared to 2017. |
◦ | On a constant currency basis, gross profit also remained relatively flat. RPO contacting gross profit increased $0.4 million or 24.2%, offset by a decrease in RPO recruitment gross profit of $0.3 million (down 0.8% compared to 2017). |
• | Selling, general and administrative expenses and other non-operating income (expense) ("SG&A and Non-Op") was $47.6 million for the year ended December 31, 2018, compared to $43.8 million for 2017, an increase of $3.8 million, or 8.6%. |
◦ | On a constant currency basis, SG&A and Non-Op increased $3.7 million, or 8.5%. SG&A and Non-Op, as a percentage of revenue, was 71.0% for the year ended December 31, 2018, compared to 73.8% for 2017. The increase was principally due to additional compensation expense for the Company's former Chief Executive Officer and two additional Executives (see Note 10). |
• | EBITDA loss was $5.4 million for the year ended December 31, 2018, compared to EBITDA loss of $1.6 million for 2017. On a constant currency basis, EBITDA decreased $3.7 million in 2018 compared to 2017. |
• | Net income was $7.9 million for the year ended December 31, 2018, compared to a net loss of $2.9 million for 2017. On a constant currency basis, net income increased $10.9 million in 2018 compared to 2017. |
Year Ended December 31, | ||||||||||||||||
2018 | 2017 | |||||||||||||||
As | As | Currency | Constant | |||||||||||||
$ in thousands | reported | reported | translation | currency | ||||||||||||
Revenue: | ||||||||||||||||
Hudson Americas | $ | 13,924 | $ | 16,196 | $ | 5 | $ | 16,201 | ||||||||
Hudson Asia Pacific | 36,946 | 29,767 | (744 | ) | 29,023 | |||||||||||
Hudson Europe | 16,062 | 13,652 | 534 | 14,186 | ||||||||||||
Total | $ | 66,932 | $ | 59,615 | $ | (205 | ) | $ | 59,410 | |||||||
Gross profit: | ||||||||||||||||
Hudson Americas | $ | 11,726 | $ | 14,419 | $ | 4 | $ | 14,423 | ||||||||
Hudson Asia Pacific | 21,936 | 19,391 | (395 | ) | 18,996 | |||||||||||
Hudson Europe | 8,442 | 8,250 | 340 | 8,590 | ||||||||||||
Total | $ | 42,104 | $ | 42,060 | $ | (51 | ) | $ | 42,009 | |||||||
SG&A and Non-Op (a): | ||||||||||||||||
Hudson Americas | $ | 11,305 | $ | 12,952 | $ | 22 | $ | 12,974 | ||||||||
Hudson Asia Pacific | 19,695 | 14,620 | (262 | ) | 14,358 | |||||||||||
Hudson Europe | 8,893 | 7,306 | 305 | 7,611 | ||||||||||||
Corporate | 7,660 | 8,897 | — | 8,897 | ||||||||||||
Total | $ | 47,553 | $ | 43,775 | $ | 65 | $ | 43,840 | ||||||||
Operating income (loss): | ||||||||||||||||
Hudson Americas | $ | 1,000 | $ | 1,818 | $ | (13 | ) | $ | 1,805 | |||||||
Hudson Asia Pacific | 3,103 | 5,137 | (137 | ) | 5,000 | |||||||||||
Hudson Europe | (93 | ) | 1,187 | 43 | 1,230 | |||||||||||
Corporate | (9,227 | ) | (9,951 | ) | — | (9,951 | ) | |||||||||
Total | $ | (5,217 | ) | $ | (1,809 | ) | $ | (107 | ) | $ | (1,916 | ) | ||||
Net income (loss), consolidated | $ | 7,867 | $ | (2,941 | ) | $ | (67 | ) | $ | (3,008 | ) | |||||
EBITDA (loss) from continuing operations(b): | ||||||||||||||||
Hudson Americas | $ | 440 | $ | 1,578 | $ | (16 | ) | $ | 1,562 | |||||||
Hudson Asia Pacific | 2,221 | 4,770 | (133 | ) | 4,637 | |||||||||||
Hudson Europe | (450 | ) | 923 | 12 | 935 | |||||||||||
Corporate | (7,660 | ) | (8,877 | ) | — | (8,877 | ) | |||||||||
Total | $ | (5,449 | ) | $ | (1,606 | ) | $ | (137 | ) | $ | (1,743 | ) |
(a) | SG&A and Non-Op is a measure that management uses to evaluate the segments’ expenses, which include the following captions on the Consolidated Statements of Operations: Salaries and related, Office and general, Marketing and promotion and other income (expense), net. Corporate management fees are included in the segments’ other income (expense). |
(b) | See EBITDA reconciliation in the following section. |
Year Ended December 31, | ||||||||
$ in thousands | 2018 | 2017 | ||||||
Net income (loss) | $ | 7,867 | $ | (2,941 | ) | |||
Adjustment for income (loss) from discontinued operations, net of income taxes | 13,133 | (97 | ) | |||||
Income (loss) from continuing operations | $ | (5,266 | ) | $ | (2,844 | ) | ||
Adjustments to income (loss) from continuing operations | ||||||||
Provision for (benefit from) income taxes | 99 | 869 | ||||||
Interest expense (income), net | (298 | ) | 8 | |||||
Depreciation and amortization | 16 | 361 | ||||||
Total adjustments from income (loss) from continuing operations to EBITDA (loss) | (183 | ) | 1,238 | |||||
EBITDA (loss) | $ | (5,449 | ) | $ | (1,606 | ) |
Year Ended December 31, | |||||||||||||||
2018 | 2017 | Change in amount | Change in % | ||||||||||||
$ in millions | As reported | As reported | |||||||||||||
Hudson Americas | |||||||||||||||
Revenue | $ | 13.9 | $ | 16.2 | $ | (2.3 | ) | (14.0 | )% |
Year Ended December 31, | |||||||||||||||
2018 | 2017 | Change in amount | Change in % | ||||||||||||
$ in millions | As reported | As reported | |||||||||||||
Hudson Americas | |||||||||||||||
Gross profit | $ | 11.7 | $ | 14.4 | $ | (2.7 | ) | (18.7 | )% | ||||||
Gross profit as a percentage of revenue | 84.2 | % | 89.0 | % | N/A | N/A |
Year Ended December 31, | |||||||||||||||
2018 | 2017 | Change in amount | Change in % | ||||||||||||
$ in millions | As reported | As reported | |||||||||||||
Hudson Americas | |||||||||||||||
SG&A and Non-Op | $ | 11.3 | $ | 13.0 | $ | (1.6 | ) | (12.7 | )% | ||||||
SG&A and Non-Op as a percentage of revenue | 81.2 | % | 80.0 | % | N/A | N/A |
Year Ended December 31, | |||||||||||||||
2018 | 2017 | Change in amount | Change in % | ||||||||||||
$ in millions | As reported | As reported | |||||||||||||
Hudson Americas | |||||||||||||||
Operating income (loss): | $ | 1.0 | $ | 1.8 | $ | (0.8 | ) | (45.0 | )% | ||||||
EBITDA (loss) | $ | 0.4 | $ | 1.6 | $ | (1.1 | ) | (72.1 | )% | ||||||
EBITDA as a percentage of revenue | 3.2 | % | 9.7 | % | N/A | N/A |
Year Ended December 31, | |||||||||||||||
2018 | 2017 | Change in amount | Change in % | ||||||||||||
$ in millions | As reported | Constant currency | |||||||||||||
Hudson Asia Pacific | |||||||||||||||
Revenue | $ | 36.9 | $ | 29.0 | $ | 7.9 | 27.3 | % |
Year Ended December 31, | |||||||||||||||
2018 | 2017 | Change in amount | Change in % | ||||||||||||
$ in millions | As reported | Constant currency | |||||||||||||
Hudson Asia Pacific | |||||||||||||||
Gross profit | $ | 21.9 | $ | 19.0 | $ | 2.9 | 15.5 | % | |||||||
Gross profit as a percentage of revenue | 59.4 | % | 65.5 | % | N/A | N/A |
Year Ended December 31, | |||||||||||||||
2018 | 2017 | Change in amount | Change in % | ||||||||||||
$ in millions | As reported | Constant currency | |||||||||||||
Hudson Asia Pacific | |||||||||||||||
SG&A and Non-Op | $ | 19.7 | $ | 14.4 | $ | 5.3 | 37.2 | % | |||||||
SG&A and Non-Op as a percentage of revenue | 53.3 | % | 49.5 | % | N/A | N/A |
Year Ended December 31, | |||||||||||||||
2018 | 2017 | Change in amount | Change in % | ||||||||||||
$ in millions | As reported | Constant currency | |||||||||||||
Hudson Asia Pacific | |||||||||||||||
Operating income (loss): | $ | 3.1 | $ | 5.0 | $ | (1.9 | ) | (37.9 | )% | ||||||
EBITDA (loss) | $ | 2.2 | $ | 4.6 | $ | (2.4 | ) | (52.1 | )% | ||||||
EBITDA as a percentage of revenue | 6.0 | % | 16.0 | % | N/A | N/A |
Year Ended December 31, | |||||||||||||||
2018 | 2017 | Change in amount | Change in % | ||||||||||||
$ in millions | As reported | Constant currency | |||||||||||||
Hudson Europe | |||||||||||||||
Revenue | $ | 16.1 | $ | 14.2 | $ | 1.9 | 13.2 | % |
Year Ended December 31, | |||||||||||||||
2018 | 2017 | Change in amount | Change in % | ||||||||||||
$ in millions | As reported | Constant currency | |||||||||||||
Hudson Europe | |||||||||||||||
Gross profit | $ | 8.4 | $ | 8.6 | $ | (0.1 | ) | (1.7 | )% | ||||||
Gross profit as a percentage of revenue | 52.6 | % | 60.6 | % | N/A | N/A |
Year Ended December 31, | |||||||||||||||
2018 | 2017 | Change in amount | Change in % | ||||||||||||
$ in millions | As reported | Constant currency | |||||||||||||
Hudson Europe | |||||||||||||||
SG&A and Non-Op | $ | 8.9 | $ | 7.6 | $ | 1.3 | 16.8 | % | |||||||
SG&A and Non-Op as a percentage of revenue | 55.4 | % | 53.7 | % | N/A | N/A |
Year Ended December 31, | ||||||||||||||
2018 | 2017 | Change in amount | Change in % | |||||||||||
$ in millions | As reported | Constant currency | ||||||||||||
Hudson Europe | ||||||||||||||
Operating income (loss): | $ | (0.1 | ) | $ | 1.2 | $ | (1.3 | ) | (a) | |||||
EBITDA (loss) | $ | (0.5 | ) | $ | 0.9 | $ | (1.4 | ) | (a) | |||||
EBITDA (loss) as a percentage of revenue | (2.8 | )% | 6.6 | % | N/A | N/A |
For The Year Ended December 31, | ||||||||
$ in millions | 2018 | 2017 | ||||||
Net cash provided by (used in) operating activities | $ | (15.5 | ) | $ | 2.2 | |||
Net cash provided by (used in) investing activities | 27.3 | (1.5 | ) | |||||
Net cash provided by (used in) financing activities | 7.2 | (2.5 | ) | |||||
Effect of exchange rates on cash, cash equivalents, and restricted cash | 0.1 | 1.3 | ||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | $ | 19.1 | $ | (0.5 | ) |
Year Ended December 31, | ||||||||
2018 | 2017 | |||||||
Revenue | $ | 66,932 | $ | 59,615 | ||||
Direct costs | 24,828 | 17,555 | ||||||
Gross profit | 42,104 | 42,060 | ||||||
Operating expenses: | ||||||||
Salaries and related | 36,975 | 35,040 | ||||||
Office and general | 9,673 | 7,967 | ||||||
Marketing and promotion | 657 | 610 | ||||||
Depreciation and amortization | 16 | 361 | ||||||
Business reorganization | — | (109 | ) | |||||
Total operating expenses | 47,321 | 43,869 | ||||||
Operating income (loss) | (5,217 | ) | (1,809 | ) | ||||
Non-operating income (expense): | ||||||||
Interest income (expense), net | 298 | (8 | ) | |||||
Other income (expense), net | (248 | ) | (158 | ) | ||||
Income (loss) from continuing operations before provision for income taxes | (5,167 | ) | (1,975 | ) | ||||
Provision for (benefit from) income taxes from continuing operations | 99 | 869 | ||||||
Income (loss) from continuing operations | (5,266 | ) | (2,844 | ) | ||||
Income (loss) from discontinued operations, net of income taxes | 13,133 | (97 | ) | |||||
Net income (loss) | $ | 7,867 | $ | (2,941 | ) | |||
Earnings (loss) per share: | ||||||||
Basic and diluted | ||||||||
Income (loss) from continuing operations | $ | (0.16 | ) | $ | (0.09 | ) | ||
Income (loss) from discontinued operations | 0.40 | — | ||||||
Net income (loss) | $ | 0.24 | $ | (0.09 | ) | |||
Weighted-average shares outstanding: | ||||||||
Basic | 32,847 | 32,106 | ||||||
Diluted | 32,847 | 32,106 |
Year Ended December 31, | ||||||||
2018 | 2017 | |||||||
Comprehensive income (loss): | ||||||||
Net income (loss) | $ | 7,867 | $ | (2,941 | ) | |||
Other comprehensive income (loss): | ||||||||
Foreign currency translation adjustment, net of income taxes | (458 | ) | 3,844 | |||||
Pension liability adjustment, net of income taxes | — | (66 | ) | |||||
Reclassification of currency translation adjustment included in income (loss) from discontinued operations, net of income taxes | (10,819 | ) | — | |||||
Reclassification of pension liability adjustment included in income (loss) from discontinued operation, net of income taxes | (38 | ) | — | |||||
Total other comprehensive income (loss), net of income taxes | (11,315 | ) | 3,778 | |||||
Comprehensive income (loss) | $ | (3,448 | ) | $ | 837 |
December 31, | |||||||
2018 | 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 40,562 | $ | 5,580 | |||
Accounts receivable, less allowance for doubtful accounts of $41 and $69, respectively | 9,893 | 11,545 | |||||
Prepaid and other | 671 | 388 | |||||
Current assets of discontinued operations | 941 | 79,530 | |||||
Total current assets | 52,067 | 97,043 | |||||
Property and equipment, net | 170 | 1 | |||||
Deferred tax assets, non-current | 583 | 324 | |||||
Restricted cash, non-current | 352 | 102 | |||||
Other assets | 7 | 269 | |||||
Non-current assets of discontinued operations | — | 13,901 | |||||
Total assets | $ | 53,179 | $ | 111,640 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 1,461 | $ | 1,193 | |||
Accrued expenses and other current liabilities | 8,984 | 7,259 | |||||
Current liabilities of discontinued operations | 115 | 51,952 | |||||
Total current liabilities | 10,560 | 60,404 | |||||
Income tax payable, non-current | 1,982 | 1,682 | |||||
Other non-current liabilities | 150 | 192 | |||||
Non-current liabilities of discontinued operations | — | 6,210 | |||||
Total liabilities | 12,692 | 68,488 | |||||
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; 36,135 and 34,959 shares issued; 31,905 and 31,159 shares outstanding, respectively | 36 | 34 | |||||
Additional paid-in capital | 485,095 | 483,558 | |||||
Accumulated deficit | (435,552 | ) | (443,419 | ) | |||
Accumulated other comprehensive income | (606 | ) | 10,709 | ||||
Treasury stock, 4,230 and 3,800 shares, respectively, at cost | (8,486 | ) | (7,730 | ) | |||
Total stockholders’ equity | 40,487 | 43,152 | |||||
Total liabilities and stockholders' equity | $ | 53,179 | $ | 111,640 |
Year Ended December 31, | |||||||
2018 | 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 7,867 | $ | (2,941 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | 696 | 2,748 | |||||
Goodwill impairment | — | 1,909 | |||||
Provision for (recovery of) doubtful accounts | 19 | 60 | |||||
Provision for (benefit from) deferred income taxes | (90 | ) | 339 | ||||
Stock-based compensation | 1,539 | 1,293 | |||||
Gain on sale of consolidated subsidiaries | (13,861 | ) | — | ||||
Changes in operating assets and liabilities, net of effect of dispositions: | |||||||
Decrease (increase) in accounts receivable | (6,311 | ) | (7,809 | ) | |||
Decrease (increase) in prepaid and other assets | (190 | ) | 1,165 | ||||
Increase (decrease) in accounts payable, accrued expenses and other liabilities | (4,680 | ) | 7,269 | ||||
Increase (decrease) in accrued business reorganization | (501 | ) | (1,830 | ) | |||
Net cash provided by (used in) operating activities | (15,512 | ) | 2,203 | ||||
Cash flows from investing activities: | |||||||
Capital expenditures | (465 | ) | (1,471 | ) | |||
Proceeds from sale of consolidated subsidiaries, net of cash and restricted cash sold | 27,792 | — | |||||
Net cash provided by (used in) investing activities | 27,327 | (1,471 | ) | ||||
Cash flows from financing activities: | |||||||
Borrowings under credit agreements | 59,647 | 179,642 | |||||
Repayments under credit agreements | (51,682 | ) | (181,204 | ) | |||
Repayment of capital lease obligations | (27 | ) | (93 | ) | |||
Purchases of treasury stock | (208 | ) | (858 | ) | |||
Purchase of restricted stock from employees | (548 | ) | (5 | ) | |||
Net cash provided by (used in) financing activities | 7,182 | (2,518 | ) | ||||
Effect of exchange rates on cash and cash equivalents and restricted cash | 57 | 1,281 | |||||
Net increase (decrease) in cash and cash equivalents and restricted cash | 19,054 | (505 | ) | ||||
Cash, cash equivalents, and restricted cash beginning of the period | 22,006 | 22,511 | |||||
Cash, cash equivalents, and restricted cash end of the period | $ | 41,060 | $ | 22,006 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash payments during the period for interest | $ | 92 | $ | 395 | |||
Cash received during the period for interest | $ | 300 | $ | 12 | |||
Cash payments during the period for income taxes, net of refunds | $ | 162 | $ | 2,009 |
Common stock | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive income (loss) | Treasury stock | Total | |||||||||||||||||||||||||
Shares | Value | Shares | Value | |||||||||||||||||||||||||||
Balance at December 31, 2016 | 34,910 | $ | 34 | $ | 482,265 | $ | (440,478 | ) | $ | 6,931 | 3,145 | $ | (6,867 | ) | $ | 41,885 | ||||||||||||||
Net income (loss) | — | — | — | (2,941 | ) | — | — | — | (2,941 | ) | ||||||||||||||||||||
Other comprehensive income (loss), translation adjustments | — | — | — | — | 3,844 | — | — | 3,844 | ||||||||||||||||||||||
Other comprehensive income (loss), pension liability adjustment | — | — | — | — | (66 | ) | — | — | (66 | ) | ||||||||||||||||||||
Purchase of treasury stock | — | — | — | — | — | 650 | (858 | ) | (858 | ) | ||||||||||||||||||||
Purchase of restricted stock from employees | — | — | — | — | — | 5 | (5 | ) | (5 | ) | ||||||||||||||||||||
Stock-based compensation and vesting of restricted stock units | 49 | — | 1,293 | — | — | — | — | 1,293 | ||||||||||||||||||||||
Balance at December 31, 2017 | 34,959 | $ | 34 | $ | 483,558 | $ | (443,419 | ) | $ | 10,709 | 3,800 | $ | (7,730 | ) | $ | 43,152 | ||||||||||||||
Net income (loss) | — | — | — | 7,867 | — | — | — | 7,867 | ||||||||||||||||||||||
Other comprehensive income (loss), translation adjustments | — | — | — | — | (458 | ) | — | — | (458 | ) | ||||||||||||||||||||
Other comprehensive income (loss), pension liability adjustment | — | — | — | — | (38 | ) | — | — | (38 | ) | ||||||||||||||||||||
Amount of cumulative translation adjustments reclassified to the statements of operations | — | — | — | — | (10,819 | ) | — | — | (10,819 | ) | ||||||||||||||||||||
Purchase of treasury stock | — | — | — | — | — | 145 | (208 | ) | (208 | ) | ||||||||||||||||||||
Purchase of restricted stock from employees | — | — | — | — | — | 285 | (548 | ) | (548 | ) | ||||||||||||||||||||
Stock-based compensation and vesting of restricted stock units | 1,176 | 2 | 1,537 | — | — | — | — | 1,539 | ||||||||||||||||||||||
Balance at December 31, 2018 | 36,135 | $ | 36 | $ | 485,095 | $ | (435,552 | ) | $ | (606 | ) | 4,230 | $ | (8,486 | ) | $ | 40,487 |
• | We maintain the direct contractual relationship with the client and are responsible for fulfilling the service promised to the client. |
• | We maintain control over our contractors while the services to the client are being performed, including our contractors' billing rates. |
Years | ||
Furniture and equipment | 3 - 8 | |
Capitalized software costs | 3 - 5 | |
Computer equipment | 3 - 5 |
Year Ended December 31, 2018 | |||||||||||
RPO Recruitment | RPO Contracting | Total | |||||||||
Revenue | $ | 45,236 | $ | 21,696 | $ | 66,932 | |||||
Direct costs (1) | 5,239 | 19,589 | 24,828 | ||||||||
Gross profit | $ | 39,997 | $ | 2,107 | $ | 42,104 | |||||
Year Ended December 31, 2017 | |||||||||||
RPO Recruitment | RPO Contracting | Total | |||||||||
Revenue | $ | 42,889 | $ | 16,726 | $ | 59,615 | |||||
Direct costs (1) | 2,556 | 14,999 | 17,555 | ||||||||
Gross profit | $ | 40,333 | $ | 1,727 | $ | 42,060 |
(1) | Direct costs include the direct staffing costs of salaries, payroll taxes, employee benefits, travel expenses, rent, and insurance costs for the Company’s contractors and reimbursed out-of-pocket expenses and other direct costs. The region where services are provided, the mix of RPO recruitment and RPO contracting, and the functional nature of the staffing services provided can affect gross profit. The salaries, commissions, payroll taxes and employee benefits related to recruitment professionals are included under the caption "Salaries and related" in the Condensed Consolidated Statements of Operations. |
Gross proceeds | $ | 38,960 | |
Add: purchase price adjustments | 176 | ||
Less: cash and restricted cash sold | (9,547 | ) | |
Less: transaction costs | (1,797 | ) | |
Net cash proceeds as presented in the statements of cash flows | $ | 27,792 |
December 31, 2018 | December 31, 2017 | |||||||
Cash | $ | — | $ | 15,460 | ||||
Accounts receivable | — | 60,333 | ||||||
Prepaid and other current assets | 941 | 3,737 | ||||||
Total current assets | 941 | 79,530 | ||||||
Property and equipment, net | — | 6,251 | ||||||
Deferred tax assets, non-current | — | 6,080 | ||||||
Other assets, non-current | — | 1,570 | ||||||
Total non-current assets | — | 13,901 | ||||||
Total assets | $ | 941 | $ | 93,431 | ||||
Accounts payable | $ | — | $ | 5,764 | ||||
Accrued expenses and other current liabilities | 115 | 39,108 | ||||||
Short-term borrowings | — | 7,080 | ||||||
Total current liabilities | 115 | 51,952 | ||||||
Total non-current liabilities | — | 6,210 | ||||||
Total liabilities | $ | 115 | $ | 58,162 |
Year Ended December 31, | |||||||
2018 | 2017 | ||||||
Revenue | $ | 108,463 | $ | 397,106 | |||
Direct costs | 69,800 | 252,430 | |||||
Gross profit | 38,663 | 144,676 | |||||
Operating expenses: | |||||||
Salaries and related | 29,032 | 107,611 | |||||
Office and general | 7,441 | 26,171 | |||||
Marketing and promotion | 914 | 3,691 | |||||
Depreciation and amortization | 680 | 2,387 | |||||
Goodwill impairment | — | 1,909 | |||||
Business reorganization | 50 | 842 | |||||
Operating income (loss) | 546 | 2,065 | |||||
Non-operating income (expense): | |||||||
Interest income (expense), net | (88 | ) | (394 | ) | |||
Other non-operating income (loss) | 216 | (352 | ) | ||||
Income (Loss) from discontinued operations before taxes and gain (loss) on sale | 674 | 1,319 | |||||
Gain (loss) from sale of discontinued operations | 13,861 | — | |||||
Income (loss) from discontinued operations before income taxes | 14,535 | 1,319 | |||||
Provision (benefit) for income taxes | 1,402 | 1,416 | |||||
Income (loss) from discontinued operations | $ | 13,133 | $ | (97 | ) |
Year Ended December 31, | |||||||
2018 | 2017 | ||||||
Depreciation and amortization | $ | 680 | $ | 2,387 | |||
Stock-based compensation expense | $ | 233 | $ | 249 | |||
Capital expenditures | $ | 284 | $ | 1,471 |
Year Ended December 31, 2018 | |||||||||||||||||||
Permanent Recruitment | Contracting | Talent Management | Other | Total | |||||||||||||||
Revenue | $ | 20,700 | $ | 76,615 | $ | 10,694 | $ | 454 | $ | 108,463 | |||||||||
Direct costs (1) | 190 | 67,980 | 1,225 | 405 | 69,800 | ||||||||||||||
Gross profit | $ | 20,510 | $ | 8,635 | $ | 9,469 | $ | 49 | $ | 38,663 | |||||||||
Year Ended December 31, 2017 | |||||||||||||||||||
Permanent Recruitment | Contracting | Talent Management | Other | Total | |||||||||||||||
Revenue | $ | 81,490 | $ | 275,375 | $ | 38,092 | $ | 2,149 | $ | 397,106 | |||||||||
Direct costs (1) | 359 | 243,244 | 6,687 | 2,140 | 252,430 | ||||||||||||||
Gross profit | $ | 81,131 | $ | 32,131 | $ | 31,405 | $ | 9 | $ | 144,676 |
(1) | Direct costs include the direct staffing costs of salaries, payroll taxes, employee benefits, travel expenses, and insurance costs for the Company’s contractors and reimbursed out-of-pocket expenses and other direct costs. Other than reimbursed out-of-pocket expenses, there are no other direct costs associated with the Permanent Recruitment and Other categories. Gross profit represents revenue less direct costs. The region where services are provided, the mix of contracting, and permanent recruitment, and the functional nature of the staffing services provided can affect gross profit. |
Vesting conditions | Number of Restricted Stock Units Granted | ||
Performance and service conditions (1) (2) | 220,000 | ||
Performance and service conditions (1) (3) | 207,353 | ||
Total shares of stock award granted | 427,353 |
(1) | The performance conditions with respect to restricted stock units may be satisfied as follows: |
(a) | For employees from the Americas, Asia Pacific, and Europe 70% of the restricted stock units may be earned on the basis of performance as measured by a "regional adjusted EBITDA," and 30% of the restricted stock units may be earned on the basis of performance as measured by a "group adjusted EBITDA"; and |
(b) | For employees from the Corporate office 50% of the restricted stock units may be earned on the basis of performance as measured by a "group adjusted EBITDA," and 50% of the restricted stock units may be earned on the basis of performance as measured by a "corporate costs" target. |
(2) | To the extent restricted stock units are earned on the basis of performance, such restricted stock units will vest on the basis of service as follows: |
(a) | 33% of the restricted stock units will vest on the first anniversary of the grant date; |
(b) | 33% of the restricted stock units will vest on the second anniversary of the grant date; and |
(c) | 34% of the restricted stock units will vest on the third anniversary of the grant date; provided that, in each case, the employee remains employed by the Company from the grant date through the applicable service vesting date. |
(3) | To the extent restricted stock units are earned on the basis of performance, such restricted stock units will vest on the basis of service as follows: |
(a) | 66.6% of the restricted stock units will vest on the latter of the first anniversary of the last day of the performance period or upon ceasing service to the Company; |
(b) | 16.7% of the restricted stock units will vest on the latter of the second anniversary of the last day of the performance period or upon ceasing service to the Company; |
(c) | 16.7% of the restricted stock units will vest on the latter of the third anniversary of the last day of the performance period or upon ceasing service to the Company; provided that, in each case, the employee remains employed by the Company from the grant date through the applicable service vesting date. |
For The Year Ended December 31, | |||||||
2018 | 2017 | ||||||
Restricted stock units | $ | 1,539 | $ | 1,293 | |||
Tax benefits recognized in jurisdictions where the Company has taxable income | $ | 15 | $ | 69 |
As of December 31, | ||||||||||||
2018 | 2017 | |||||||||||
Unrecognized Expense | Weighted Average Period in Years | Unrecognized Expense | Weighted Average Period in Years | |||||||||
Restricted stock units | $ | 294 | 1.69 | $ | 677 | 1.55 |
For The Year Ended December 31, | |||||||||||||
2018 | 2017 | ||||||||||||
Number of Options | Weighted Average Exercise Price per Share | Number of Options | Weighted Average Exercise Price per Share | ||||||||||
Options outstanding at January 1, | 100,000 | $ | 3.86 | 123,500 | $ | 6.16 | |||||||
Expired/forfeited | (50,000 | ) | 5.22 | (23,500 | ) | 15.97 | |||||||
Options outstanding at December 31, | 50,000 | $ | 2.49 | 100,000 | $ | 3.86 | |||||||
Options exercisable at December 31, | 50,000 | $ | 2.49 | 100,000 | $ | 3.86 |
As of December 31, | ||||||||||||
2018 | 2017 | |||||||||||
Remaining Contractual Term in Years | Aggregated Intrinsic Value | Remaining Contractual Term in Years | Aggregated Intrinsic Value | |||||||||
Stock options outstanding | 1.85 | $ | — | 1.85 | $ | — | ||||||
Stock options exercisable | 1.85 | $ | — | 1.85 | $ | — |
For The Year Ended December 31, | |||||||||||||
2018 | 2017 | ||||||||||||
Number of Shares of Restricted Stock Units | Weighted Average Grant-Date Fair Value | Number of Shares of Restricted Stock Units | Weighted Average Grant-Date Fair Value | ||||||||||
Unvested restricted stock units at January 1, | 1,088,933 | $ | 1.16 | 480,000 | $ | 2.79 | |||||||
Granted | 717,596 | 1.73 | 1,404,128 | 1.09 | |||||||||
Shares earned above target (a) | 244,855 | 1.00 | — | — | |||||||||
Vested | (1,465,640 | ) | 1.25 | (462,855 | ) | 1.47 | |||||||
Forfeited | (8,019 | ) | 1.00 | (332,340 | ) | 2.79 | |||||||
Unvested restricted stock units at December 31, | 577,725 | $ | 1.57 | 1,088,933 | $ | 1.16 |
(a) | The number of shares earned above target are based on the performance target established by the Compensation Committee at the initial grant date. |
For The Year Ended December 31, | ||||||||
2018 | 2017 | |||||||
Fair value of restricted stock units vested | $ | 2,792 | $ | 595 |
Year ended December 31, | ||||||||
2018 | 2017 | |||||||
Domestic | $ | (6,819 | ) | $ | (7,851 | ) | ||
Foreign | 1,652 | 5,876 | ||||||
Income (loss) from continuing operations before provision for income taxes | $ | (5,167 | ) | $ | (1,975 | ) |
Year ended December 31, | ||||||||
2018 | 2017 | |||||||
Current tax provision (benefit): | ||||||||
U.S. Federal | $ | — | $ | — | ||||
State and local | 20 | 19 | ||||||
Foreign | 627 | 106 | ||||||
Total current provision for (benefit from) income taxes | 647 | 125 | ||||||
Deferred tax provision (benefit): | ||||||||
U.S. Federal | (235 | ) | — | |||||
State and local | (67 | ) | — | |||||
Foreign | (246 | ) | 744 | |||||
Total deferred provision for (benefit from) income taxes | (548 | ) | 744 | |||||
Total provision for (benefit from) income taxes from continuing operations | $ | 99 | $ | 869 |
Year ended December 31, | ||||||||
2018 | 2017 | |||||||
Provision for (benefit from) continuing operations at Federal statutory rates | $ | (1,085 | ) | $ | (691 | ) | ||
State income taxes, net of Federal income tax effect | 15 | 13 | ||||||
Change in valuation allowance | 2,904 | (46,491 | ) | |||||
Taxes related to foreign income | 443 | 452 | ||||||
Effect of U.S. federal and state tax rate changes on deferred tax assets | (1,727 | ) | 46,189 | |||||
Nondeductible expenses | 573 | 62 | ||||||
Other federal and state deferred tax adjustments | (1,024 | ) | 1,335 | |||||
Provision for (benefit from) income taxes from continuing operations | $ | 99 | $ | 869 |
As of December 31, | ||||||||
2018 | 2017 | |||||||
Deferred tax assets (liabilities): | ||||||||
Allowance for doubtful accounts | $ | 25 | $ | 29 | ||||
Property and equipment | 19 | 800 | ||||||
Goodwill and intangibles | 670 | 1,614 | ||||||
Accrued compensation | 1,232 | 1,512 | ||||||
Accrued liabilities and other | 559 | 787 | ||||||
Tax loss carry-forwards | 197,564 | 89,534 | ||||||
Deferred tax assets (liabilities) gross, total | 200,069 | 94,276 | ||||||
Valuation allowance | (199,486 | ) | (93,952 | ) | ||||
Deferred tax assets (liabilities), net of valuation allowance, total | $ | 583 | $ | 324 |
As of December 31, | ||||||||
2018 | 2017 | |||||||
Gross unrecognized tax benefits excluding interest and penalties | $ | 1,574 | $ | 1,311 | ||||
Less: amount presented as a reduction to a deferred tax asset | 180 | 195 | ||||||
Unrecognized tax benefits, excluding interest and penalties | 1,394 | 1,116 | ||||||
Accrued interest and penalties | 588 | 566 | ||||||
Total unrecognized tax benefits that would impact the effective tax rate | $ | 1,982 | $ | 1,682 |
Balance at January 1, 2018 | $ | 1,311 | ||
Additions based on tax positions related to the current year | 360 | |||
Reductions for tax positions of prior years | (68 | ) | ||
Lapse of statute of limitations | (2 | ) | ||
Currency Translation | (27 | ) | ||
Balance at December 31, 2018 | $ | 1,574 |
Year ended December 31, | ||||||||
2018 | 2017 | |||||||
Expense for (benefit of) estimated interest and penalties related to unrecognized tax benefits | $ | 55 | $ | 49 |
Year | ||
Earliest tax years remain subject to examination by the relevant tax authorities: | ||
U.S. Federal | 2015 | |
Majority of U.S. state and local jurisdictions | 2014 | |
Australia | 2017 | |
Belgium | 2016 | |
Canada | 2014 | |
Netherlands | 2013 | |
Switzerland | 2014 | |
United Kingdom | 2017 | |
Jurisdictions in Asia | 2018 |
For The Year Ended December 31, | ||||||||
2018 | 2017 | |||||||
Earnings (loss) per share: | ||||||||
EPS - basic and diluted | ||||||||
Income (loss) from continuing operations | $ | (0.16 | ) | $ | (0.09 | ) | ||
Income (loss) from discontinued operations | 0.40 | — | ||||||
Net income (loss) | $ | 0.24 | $ | (0.09 | ) | |||
EPS numerator - basic and diluted: | ||||||||
Income (loss) from continuing operations | $ | (5,266 | ) | $ | (2,844 | ) | ||
Income (loss) from discontinued operations, net of income taxes | 13,133 | (97 | ) | |||||
Net income (loss) | $ | 7,867 | $ | (2,941 | ) | |||
EPS denominator (in thousands): | ||||||||
Weighted average common stock outstanding - basic | 32,847 | 32,106 | ||||||
Weighted average number of common stock outstanding - diluted | 32,847 | 32,106 |
For The Year Ended December 31, | ||||||
2018 | 2017 | |||||
Unvested restricted stock units | 577,725 | 1,088,933 | ||||
Stock options | 50,000 | 100,000 | ||||
Total | 627,725 | 1,188,933 |
As of December 31, | |||||||
2018 | 2017 | ||||||
Cash and cash equivalents of continuing operations | $ | 40,562 | $ | 5,580 | |||
Cash and cash equivalents of discontinuing operations | — | 15,460 | |||||
Restricted cash included in prepaid and other | 146 | 112 | |||||
Restricted cash, non-current | 352 | 102 | |||||
Restricted cash included in current assets of discontinued operations | — | 183 | |||||
Restricted cash included in non-current assets of discontinued operations | — | 569 | |||||
Total cash, cash equivalents, and restricted cash | $ | 41,060 | $ | 22,006 |
December 31, | ||||||||
2018 | 2017 | |||||||
Salaries, commissions and benefits | $ | 4,887 | $ | 5,226 | ||||
Severance | 1,374 | — | ||||||
Sales, use, transaction and income taxes | 708 | 101 | ||||||
Fees for professional services | 697 | 923 | ||||||
Deferred revenue | 56 | 237 | ||||||
Other accruals | 1,262 | 772 | ||||||
Total accrued expenses and other current liabilities | $ | 8,984 | $ | 7,259 |
2019 | $ | 251 | ||
$ | 251 |
December 31, | ||||||||
2018 | 2017 | |||||||
Foreign currency translation adjustments | $ | (606 | ) | $ | 10,671 | |||
Pension plan obligations | — | 38 | ||||||
Accumulated other comprehensive income (loss) | $ | (606 | ) | $ | 10,709 |
Hudson Americas | Hudson Asia Pacific | Hudson Europe | Corporate | Inter-segment elimination | Total | ||||||||||||||||||
For the Year Ended December 31, 2018 | |||||||||||||||||||||||
Revenue, from external customers | $ | 13,924 | $ | 36,946 | $ | 16,062 | $ | — | $ | — | $ | 66,932 | |||||||||||
Inter-segment revenue | 20 | — | — | — | (20 | ) | — | ||||||||||||||||
Total revenue | $ | 13,944 | $ | 36,946 | $ | 16,062 | $ | — | $ | (20 | ) | $ | 66,932 | ||||||||||
Gross profit, from external customers | $ | 11,726 | $ | 21,936 | $ | 8,442 | $ | — | $ | — | $ | 42,104 | |||||||||||
Inter-segment gross profit | 20 | (20 | ) | — | — | — | — | ||||||||||||||||
Total gross profit | $ | 11,746 | $ | 21,916 | $ | 8,442 | $ | — | $ | — | $ | 42,104 | |||||||||||
EBITDA (loss) (a) | $ | 440 | $ | 2,221 | $ | (450 | ) | $ | (7,660 | ) | $ | — | $ | (5,449 | ) | ||||||||
Depreciation and amortization | 4 | 3 | 9 | — | — | 16 | |||||||||||||||||
Interest income (expense), net | — | — | — | 298 | — | 298 | |||||||||||||||||
Intercompany interest income (expense), net | — | (317 | ) | — | 317 | — | — | ||||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 436 | $ | 1,901 | $ | (459 | ) | $ | (7,045 | ) | $ | — | $ | (5,167 | ) | ||||||||
Provision for (benefit from) income taxes | $ | (12 | ) | $ | 289 | $ | 22 | $ | (200 | ) | $ | — | $ | 99 | |||||||||
As of December 31, 2018 | |||||||||||||||||||||||
Accounts receivable, net | $ | 2,548 | $ | 4,644 | $ | 2,701 | $ | — | $ | — | $ | 9,893 | |||||||||||
Total assets | $ | 4,691 | $ | 10,118 | $ | 7,773 | $ | 29,656 | $ | — | $ | 52,238 |
Hudson Americas | Hudson Asia Pacific | Hudson Europe | Corporate | Inter-segment elimination | Total | ||||||||||||||||||
For the Year Ended December 31, 2017 | |||||||||||||||||||||||
Revenue, from external customers | $ | 16,196 | $ | 29,767 | $ | 13,652 | $ | — | $ | — | $ | 59,615 | |||||||||||
Inter-segment revenue | 47 | — | — | — | (47 | ) | — | ||||||||||||||||
Total revenue | $ | 16,243 | $ | 29,767 | $ | 13,652 | $ | — | $ | (47 | ) | $ | 59,615 | ||||||||||
Gross profit, from external customers | $ | 14,419 | $ | 19,391 | $ | 8,250 | $ | — | $ | — | $ | 42,060 | |||||||||||
Inter-segment gross profit | 29 | — | (28 | ) | — | (1 | ) | — | |||||||||||||||
Total gross profit | $ | 14,448 | $ | 19,391 | $ | 8,222 | $ | — | $ | (1 | ) | $ | 42,060 | ||||||||||
Business reorganization | $ | (82 | ) | $ | — | $ | (5 | ) | $ | (22 | ) | $ | — | $ | (109 | ) | |||||||
EBITDA (loss) (a) | $ | 1,578 | $ | 4,770 | $ | 923 | $ | (8,877 | ) | $ | — | $ | (1,606 | ) | |||||||||
Depreciation and amortization | 2 | — | — | 359 | — | 361 | |||||||||||||||||
Interest income (expense), net | — | — | — | (8 | ) | — | (8 | ) | |||||||||||||||
Intercompany interest income (expense), net | — | — | — | — | — | — | |||||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 1,576 | $ | 4,770 | $ | 923 | $ | (9,244 | ) | $ | — | $ | (1,975 | ) | |||||||||
Provision for (benefit from) income taxes | $ | 63 | $ | 356 | $ | 60 | $ | 390 | $ | — | $ | 869 | |||||||||||
As of December 31, 2017 | |||||||||||||||||||||||
Accounts receivable, net | $ | 3,112 | $ | 4,664 | $ | 3,769 | $ | — | $ | — | $ | 11,545 | |||||||||||
Total assets | $ | 5,892 | $ | 5,007 | $ | 5,150 | $ | 2,160 | $ | — | $ | 18,209 |
(a) | SEC Regulation S-K 229.10(e)1(ii)(A) defines EBITDA as earnings before interest, taxes, depreciation and amortization. EBITDA is presented to provide additional information to investors about the Company's operations on a basis consistent with the measures that the Company uses to manage its operations and evaluate its performance. Management also uses this measurement to evaluate working capital requirements. EBITDA should not be considered in isolation or as a substitute for operating income and net income prepared in accordance with U.S. GAAP or as a measure of the Company's profitability. |
Information by geographic region | United Kingdom | Australia | United States | Other | Total | ||||||||||||||
For the Year Ended December 31, 2018 | |||||||||||||||||||
Revenue (a) | $ | 15,690 | $ | 30,181 | $ | 12,949 | $ | 8,112 | $ | 66,932 | |||||||||
For the Year Ended December 31, 2017 | |||||||||||||||||||
Revenue (a) | $ | 11,222 | $ | 24,973 | $ | 15,405 | $ | 8,015 | $ | 59,615 | |||||||||
As of December 31, 2018 | |||||||||||||||||||
Net assets | $ | 3,086 | $ | 3,101 | $ | 28,595 | $ | 4,879 | $ | 39,661 | |||||||||
As of December 31, 2017 | |||||||||||||||||||
Net assets | $ | 2,496 | $ | 1,671 | $ | 1,605 | $ | 2,111 | $ | 7,883 |
(a) | Revenue by geographic region disclosed above is net of any inter-segment revenue and, therefore, represents only revenue from external customers according to the location of the operating subsidiary. |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
Number of shares to be issued upon exercise of outstanding options | Weighted average exercise price of outstanding options | Number of shares remaining available for future issuance under equity compensation plans (excluding shares reflected in Column A) | |||||||||
A | B | C | |||||||||
Equity Compensation Plans approved by stockholders: | |||||||||||
Long Term Incentive Plan | — | $ | — | — | |||||||
2009 Incentive Stock and Awards Plan | 50,000 | 2.49 | 1,097,334 | (1) | |||||||
Employee Stock Purchase Plan | — | — | 116,329 | (2) | |||||||
Total | 50,000 | $ | 2.49 | 1,213,663 |
(1) | Excludes 577,725 shares of unvested restricted common stock previously granted under the Hudson Global, Inc. Long Term Incentive Plan and 2009 Incentive Stock and Awards Plan. |
(2) | The Company suspended the Hudson Global, Inc. Employee Stock Purchase Plan effective January 1, 2009. |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES |
Page | ||
Reports of Independent Registered Public Accounting Firm | ||
Consolidated Statements of Operations For The Years Ended December 31, 2018 and 2017 | ||
Consolidated Statements of Comprehensive Income (Loss) For The Years Ended December 31, 2018 and 2017 | ||
Consolidated Balance Sheets As Of December 31, 2018 and 2017 | ||
Consolidated Statements of Cash Flows For The Years Ended December 31, 2018 and 2017 | ||
Consolidated Statement of Stockholders’ Equity For The Years Ended December 31, 2018 and 2017 | ||
Notes to Consolidated Financial Statements |
Exhibit Number | Exhibit Description | |
(2.1) | ||
(2.2) | ||
(2.3) | ||
(3.1) | ||
(3.2) | ||
(3.3) | ||
(3.4) | ||
(3.5) | ||
(4.1) |
(10.1)* | ||
(10.2)* | ||
(10.3)* | ||
(10.4)* | ||
(10.5)* | ||
(10.6)* | ||
(10.7)* | ||
(10.8)* | ||
(10.9)* | ||
(10.10)* | ||
(10.11)* | ||
(10.12)* | ||
(10.13)* | ||
(10.14)* | ||
(10.15)* | ||
(10.16)* | ||
(10.17)* | ||
(10.18)* | ||
(10.19)* |
(10.20)* | ||
(21) | ||
(23) | ||
(31.1) | ||
(31.2) | ||
(32.1) | ||
(32.2) | ||
(99.1) | Proxy Statement for the 2018 Annual Meeting of Stockholders [To be filed with the Securities and Exchange Commission under Regulation 14A within 120 days after December 31, 2018; except to the extent specifically incorporated by reference, the Proxy Statement for the 2018 Annual Meeting of Stockholders shall not be deemed to be filed with the Securities and Exchange Commission as part of this Annual Report on Form 10-K.] | |
(101) | The following materials from Hudson Global, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2018 are filed herewith, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Operations for the years ended December 31, 2018 and 2017, (ii) the Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2018 and 2017, (iii) the Consolidated Balance Sheets as of December 31, 2018 and 2017, (iv) the Consolidated Statements of Cash Flows for the years ended December 31, 2018 and 2017, (v) the Consolidated Statement of Stockholders’ Equity for the years ended December 31, 2018 and 2017, and (vi) Notes to Consolidated Financial Statements. | |
* | A management contract or compensatory plan or arrangement |
Balance at | Charged to | Balance at | ||||||||||||||
Beginning | Costs and | Deductions | End | |||||||||||||
(in thousands) | of Period | Expenses | Other | of Period | ||||||||||||
Year Ended December 31, 2018 | ||||||||||||||||
Allowance for Doubtful Accounts (1) | $ | 684 | (10 | ) | 633 | $ | 41 | |||||||||
Deferred tax assets-valuation allowance (1) | $ | 110,159 | $ | 89,327 | $ | — | $ | 199,486 | ||||||||
Year Ended December 31, 2017 | ||||||||||||||||
Allowance for Doubtful Accounts (1) | $ | 799 | 72 | 187 | $ | 684 | ||||||||||
Deferred tax assets-valuation allowance (1) | $ | 156,342 | $ | (46,183 | ) | $ | — | $ | 110,159 |
HUDSON GLOBAL, INC. | |||
(Registrant) | |||
By: | /s/ JEFFREY E. EBERWEIN | ||
Jeffrey E. Eberwein | |||
Chief Executive Officer | |||
(Principal Executive Officer) | |||
Date: | March 8, 2019 |
Signature | Title | Date | ||
/s/ JEFFREY E. EBERWEIN | Chief Executive Officer and Director (Principal Executive Officer) | March 8, 2019 | ||
Jeffrey E. Eberwein | ||||
/s/ PATRICK LYONS | Chief Financial Officer and Chief Accounting Officer (Principal Financial Officer and Principal Accounting Officer) | March 8, 2019 | ||
Patrick Lyons | ||||
/s/ ALAN L. BAZAAR | Director | March 8, 2019 | ||
Alan L. Bazaar | ||||
/s/ RICHARD K. COLEMAN, JR. | Director | March 8, 2019 | ||
Richard K. Coleman, Jr. | ||||
/s/ IAN V. NASH | Director | March 8, 2019 | ||
Ian V. Nash | ||||
/S/ CONNIA NELSON | Director | March 8, 2019 | ||
Connia Nelson | ||||
/S/ MIMI DRAKE | Director | March 8, 2019 | ||
Mimi Drake | ||||
Subsidiary | State or jurisdiction of incorporation | Percentage owned | |||
Hudson RPO (Aust) Pty Ltd | Australia | 100 | % | ||
Hudson Global Resources Belgium NV | Belgium | 100 | % | ||
James Botrie and Associates, Inc. | Canada | 100 | % | ||
Hudson Highland Group Holdings International, LLC | Delaware | 100 | % | ||
Hudson RPO (Hong Kong) Limited | Hong Kong | 100 | % | ||
Hudson Global Resources Jersey Limited | Jersey | 100 | % | ||
Hudson Europe BV | Netherlands | 100 | % | ||
Hudson RPO (NZ) Limited | New Zealand | 100 | % | ||
Hudson Global Resources Management, Inc. | Pennsylvania | 100 | % | ||
Hudson RPO (Singapore) Pte Limited | Singapore | 100 | % | ||
Hudson Global Resources Switzerland AG | Switzerland | 100 | % | ||
Hudson RPO Limited | United Kingdom | 100 | % | ||
Hudson RPO (Shanghai) Limited | China | 100 | % |
1. | I have reviewed this annual report on Form 10-K of Hudson Global, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Dated: | March 8, 2019 | /s/ JEFFREY E. EBERWEIN |
Jeffrey E. Eberwein | ||
Chief Executive Officer |
1. | I have reviewed this annual report on Form 10-K of Hudson Global, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function) |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Dated: | March 8, 2019 | /s/ PATRICK LYONS |
Patrick Lyons | ||
Chief Financial Officer and Chief Accounting Officer |
/s/ JEFFREY E. EBERWEIN | |
Jeffrey E. Eberwein | |
March 8, 2019 |
/s/ PATRICK LYONS | |
Patrick Lyons | |
March 8, 2019 |
Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Jan. 31, 2019 |
Jun. 30, 2018 |
|
Entity Registrant Name | Hudson Global, Inc. | ||
Entity Central Index Key | 0001210708 | ||
Trading Symbol | HSON | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Public Float | $ 49,947,000 | ||
Entity Common Stock, Shares Outstanding | 31,828,692 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Statement - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Net income (loss) | $ 7,867 | $ (2,941) |
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax | (458) | 3,844 |
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax | 0 | (66) |
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Reclassification Adjustment from AOCI, Realized upon Sale or Liquidation, Net of Tax | 10,819 | 0 |
Reclassification of pension liability adjustment included in income (loss) from discontinued operation, net of income taxes | (38) | 0 |
Other Comprehensive Income (Loss), Net of Tax | (11,315) | 3,778 |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent | $ (3,448) | $ 837 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Allowance for doubtful accounts | $ 41 | $ 69 |
Preferred stock, par value (per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value (per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, issued | 36,135,000 | 34,959,000 |
Common Stock, Shares, Outstanding | 31,905,000 | 31,159,000 |
Treasury stock, shares | 4,230,000 | 3,800,000 |
DESCRIPTION OF BUSINESS |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Description of Business [Abstract] | |
DESCRIPTION OF BUSINESS | DESCRIPTION OF BUSINESS Hudson Global, Inc. and its subsidiaries (the "Company") are comprised of the operations, assets and liabilities of the three Hudson regional businesses of Hudson Americas, Hudson Asia Pacific, and Hudson Europe ("Hudson regional businesses" or "Hudson"). The Company provides specialized professional-level recruitment and related talent solutions worldwide. The Company’s core service offerings include Permanent Recruitment, Contracting, Recruitment Process Outsourcing ("RPO") and Talent Management Solutions. On March 31, 2018 the Company completed the sale of its Recruitment and Talent Management ("RTM") businesses in three separate transactions and retained its RPO business (the "Sales Transaction"). The results of the RTM businesses are reported as discontinued operations for all periods presented in the statements of operations and consolidated balance sheet. For more information, see Note 4. As of December 31, 2018, the Company had approximately 350 employees operating directly in nine countries with three reportable geographic business segments: Hudson Americas, Hudson Asia Pacific, and Hudson Europe. The Company’s core service offering following the divestiture is RPO. The Company delivers RPO permanent recruitment and contracting outsourced recruitment solutions tailored to the individual needs of primarily mid-to-large-cap multinational companies. The Company's RPO delivery teams utilize state-of-the-art recruitment process methodologies and project management expertise in their flexible, turnkey solutions to meet clients' ongoing business needs. The Company's RPO services include complete recruitment outsourcing, project-based outsourcing, contingent workforce solutions, and recruitment consulting. Corporate expenses are reported separately from the reportable segments and pertain to certain functions, such as executive management, corporate governance, human resources, accounting, tax, marketing, information technology, and treasury. A portion of these expenses are attributed to the reportable segments for providing the above services to them and have been allocated to the segments as management service fees and are included in the segments’ non-operating other income (expense). |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended | ||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Unless otherwise stated, amounts are presented in United States of America ("U.S.") dollars and all amounts are in thousands, except for number of shares and per share amounts. Recently Adopted Accounting Standards On January 1, 2018, the Company adopted Accounting Standards Updates ("ASU") No. 2014-09, "Revenue from Contracts with Customers (Topic 606)" ("ASU 2014-09") and a series of related accounting standard updates designated to create improved revenue recognition and disclosure comparability in financial statements using the modified retrospective approach. Under this method, the guidance is applied only to the most current period presented in the financial statements. ASU 2014-09 outlines a single comprehensive revenue recognition model for revenue arising from contracts with customers and supersedes most of the previous revenue recognition guidance, including industry-specific guidance. Under ASU 2014-09, an entity recognizes revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. Our revenue recognition practices remained substantially unchanged as a result of adoption ASU 2014-09 and we did not have any significant changes in our business processes or systems. On January 1, 2018, we retroactively adopted ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the Financial Accounting Standards Board (the "FASB") Emerging Issues Task Force)." This ASU requires the statements of cash flows to present the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents are now included with cash and cash equivalents when reconciling the beginning of period and end of period amounts presented on the statements of cash flows. The retrospective application of this new accounting guidance resulted in a decrease of $223 in "Decrease (increase) in prepaid and other assets" in Net Cash used in Operating Activities, an increase of $1,189 in "Cash, Cash Equivalents, and Restricted Cash, beginning of the period," and an increase of $966 in "Cash, Cash Equivalents, and Restricted Cash, end of period" in our accompanying consolidated statements of cash flows for the year ended December 31, 2017 from what was previously presented in our Annual Report on Form 10-K for the year ended December 31, 2017. Principles of Consolidation The Consolidated Financial Statements include the accounts of the Company and all of its wholly-owned and majority-owned subsidiaries. All significant inter-company accounts and transactions between and among the Company and its subsidiaries have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the reported amounts of assets and liabilities, the disclosures about contingent assets and liabilities, and the reported amounts of revenue and expenses. Such estimates include the value of allowances for doubtful accounts, and the valuation of deferred tax assets. These estimates and assumptions are based on management's best estimates and judgment. Management evaluates the estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates. Concentration and Credit Risk The Company's revenue is comprised of the operations, assets, and liabilities of the three Hudson regional businesses of Hudson Americas, Hudson Asia Pacific, and Hudson Europe. For the years ended December 31, 2018 and 2017, the Company's top 25 clients generated over 90% of revenue and one client accounted for approximately 44% and 42% of revenue, respectively. As of December 31, 2018 and 2017, one client accounted for greater than 10% of accounts receivable. No other client accounted for greater than 10% of revenue or accounts receivable for such periods. Financial instruments, which potentially subject the Company to concentrations of credit risk, are primarily cash and accounts receivable. The Company performs continuing credit evaluations of its customers and does not require collateral. The Company has not experienced significant losses related to receivables. Revenue Recognition Revenue is measured according to Accounting Standards Codification ("ASC") 606, Revenue - Revenue from Contracts with Customers, and is recognized based on consideration specified in a contract with a client. We account for a contract when both parties to the contract have approved the contract, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. Revenues are recognized over time, using an output measure, as the control of the promised services is transferred to the client in an amount that reflects the consideration we expect to be entitled to in exchange for those services. The majority of our contracts are short-term in nature as they include termination clauses that allows either party to cancel within a short termination period, without cause. Revenue includes billable travel and other reimbursable costs and are reported net of sales or use taxes collected from clients and remitted to taxing authorities. We generally determine standalone selling prices based on the prices included in the client contracts, using expected cost plus profit, or other observable prices. The price as specified in our client contracts is generally considered the standalone selling price as it is an observable input that depicts the price as if sold to a similar client in similar circumstances. Certain client contracts have variable consideration, including usage based fees that increase the transaction price and volume rebates or other similar items that generally reduce the transaction price. We estimate variable consideration using the expected value method based on the terms of the client contract and historical evidence. These amounts may be constrained and are only included in revenue to the extent we do not expect a significant reversal when the uncertainty associated with the variable consideration is resolved. Our estimated amounts of variable consideration subject to constraints at period end are not material and we do not believe that there will be significant changes to our estimates. We record accounts receivable when our right to consideration becomes unconditional. Contract assets primarily relate to our rights to consideration for services provided that they are conditional on satisfaction of future performance obligations. A contract liability for deferred revenue is recorded when consideration is received, or is unconditionally due, from a client prior to transferring control of services to the client under the terms of a contract. Deferred revenue balances typically result from advance payments received from clients prior to transfer services. We do not have any material contract assets or liabilities as of and for the year ended December 31, 2018. Payment terms vary by client and the services offered. We consider payment terms that exceed one year to be extended payment terms. Substantially all of the Company's contracts include payment terms of 90 days or less and we do not extend payment terms beyond one year. We primarily record revenue on a gross basis as a principal in the Consolidated Statements of Operations based upon the following key factors:
RPO Recruitment. We provide complete recruitment outsourcing, project-based outsourcing, and recruitment consulting for clients' permanent staff hires. We recognize revenue for our RPO recruitment over time in an amount that reflects the consideration we expect to be entitled to and have an enforceable right to payment in exchange for our services. The client simultaneously receives and consumes the benefits of the services as they are provided. The transaction prices contains both fixed fee and variable usage based consideration. Variable usage based consideration is constrained by candidates accepting offers of permanent employment. We recognized revenue on the fixed fee as the performance obligations are satisfied and usage based fees as the constraint is lifted. We do not incur incremental costs to obtain our RPO recruitment contracts. The costs to fulfill these contracts are expensed as incurred. RPO Contracting. We provide RPO clients with a range of outsourced professional contract staffing services and managed service provider services offered sometimes on a standalone basis and sometimes as part of a blended total talent solution. We recognize revenue for our RPO contracting services over time as services are performed in an amount that reflects the consideration we expect to be entitled to and have an enforceable right to payment in exchange for our services, which is generally calculated as hours worked multiplied by the agreed-upon hourly bill rate. The client simultaneously receives and consumes the benefits of the services as they are provided. We do not incur incremental costs to obtain our RPO contracting contracts. The costs incurred to fulfill these contracts are expensed as incurred. Unsatisfied performance obligations. As a practical expedient, we do not disclose the value of unsatisfied performance obligations for (i) contracts with an expected original duration of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. Operating Expenses Salaries and related expenses include the salaries, commissions, payroll taxes and employee benefits related to recruitment professionals, executive level employees, administrative staff and other employees of the Company who are not temporary contractors. Office and general expenses include occupancy, equipment leasing and maintenance, utilities, travel expenses, professional fees and provision for doubtful accounts. The Company expenses the costs of advertising and legal costs as incurred. Stock-Based Compensation The Company applies the fair value recognition provisions of ASC 718, "Compensation - Stock Compensation." The Company determines the fair value as of the grant date. For awards with graded vesting conditions, the values of the awards are determined by valuing each tranche separately and expensing each tranche over the required service period. The service period is the period over which the related service is performed, which is generally the same as the vesting period. The Company accounts for forfeitures as they occur. During the years ended December 31, 2018 and 2017 the Company only granted restricted stock units. Income Taxes Earnings from the Company's global operations are subject to tax in various jurisdictions both within and outside the United States. The Company accounts for income taxes in accordance with ASC 740, "Income Taxes". This standard establishes financial accounting and reporting standards for the effects of income taxes that result from an enterprise's activities. It requires an asset and liability approach for financial accounting and reporting of income taxes. The calculation of net deferred tax assets assumes sufficient future earnings for the realization of such assets as well as the continued application of currently anticipated tax rates. Included in net deferred tax assets is a valuation allowance for deferred tax assets where management believes it is more likely than not that the deferred tax assets will not be realized in the relevant jurisdiction. If we determine that a deferred tax asset will not be realizable, an adjustment to the deferred tax asset will result in a reduction of earnings at that time. See Note 6 to the Consolidated Financial Statements for further information regarding deferred tax assets and valuation allowance. ASC 740-10-55-3, "Recognition and Measurement of Tax Positions - a Two Step Process," provides implementation guidance related to the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a two-step evaluation process for a tax position taken or expected to be taken in a tax return. The first step is recognition and the second is measurement. ASC 740 also provides guidance on derecognition, measurement, classification, disclosures, transition and accounting for interim periods. The Company provides tax reserves for U.S. Federal, state and local and international unrecognized tax benefits for all periods subject to audit. The development of reserves for these exposures requires judgments about tax issues, potential outcomes and timing, and is a subjective critical estimate. The Company assesses its tax positions and records tax benefits for all years subject to examination based upon management's evaluation of the facts, circumstances, and information available at the reporting dates. For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon settlement with a tax authority that has full knowledge of all relevant information. For those tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. Where applicable, associated interest and penalties have also been recognized as a component of income tax expense. Although the outcome related to these exposures is uncertain, in management's opinion, adequate provisions for income taxes have been made for estimable potential liabilities emanating from these exposures. In certain circumstances, the ultimate outcome for exposures and risks involve significant uncertainties which render them inestimable. If actual outcomes differ materially from these estimates, including those that cannot be quantified, they could have material impact on the Company's results of operations. During the fourth quarter of 2017, the Company reevaluated its position that all unremitted earnings of our foreign subsidiaries would be indefinitely reinvested and the Company has provided tax on these unremitted earnings taking into consideration all expected future events based on presently existing tax laws and rates. Earnings (Loss) Per Share Basic earnings (loss) per share ("EPS") is computed by dividing the Company’s net income (loss) by the weighted average number of shares outstanding during the period. When the effects are not anti-dilutive, diluted earnings (loss) per share is computed by dividing the Company’s net income (loss) by the weighted average number of shares outstanding and the impact of all dilutive potential common shares, primarily stock options "in-the-money" and unvested restricted stock. The dilutive impact of stock options and unvested restricted stock is determined by applying the "treasury stock" method. Performance-based restricted stock awards are included in the computation of diluted earnings per share only to the extent that the underlying performance conditions: (i) are satisfied prior to the end of the reporting period, or (ii) would be satisfied if the end of the reporting period were the end of the related performance period and the result would be dilutive under the treasury stock method. Stock awards subject to vesting or exercisability based on the achievement of market conditions are included in the computation of diluted earnings per share only when the market conditions are met. Income (loss) per share calculations for each quarter include the weighted average effect for the quarter; therefore, the sum of quarterly income (loss) per share amounts may not equal year-to-date income (loss) per share amounts, which reflect the weighted average effect on a year-to-date basis. Fair Value of Financial Instruments The carrying amounts reported in the Consolidated Balance Sheets for cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings approximate fair value because of the immediate or short-term maturity of these financial instruments. Cash and Cash Equivalents For financial statement presentation purposes, the Company considers all highly liquid investments having an original maturity of three months or less as cash equivalents. Accounts Receivable The Company's accounts receivable balances are composed of trade and unbilled receivables. The Company maintains an allowance for doubtful accounts and makes ongoing estimates as to the ability to collect on the various receivables. If the Company determines that the allowance for doubtful accounts is not adequate to cover estimated losses, an expense to provide for doubtful accounts is recorded in office and general expenses. If an account is determined to be uncollectible, it is written off against the allowance for doubtful accounts. Management's assessment and judgment are vital requirements in assessing the ultimate realization of these receivables, including the current credit-worthiness, financial stability and effect of market conditions on each customer. Property and Equipment Property and equipment are stated at cost. Depreciation is computed primarily using the straight line method over the following estimated useful lives:
Leasehold improvements are amortized over the shorter of their estimated useful lives or the lease term. The amortization periods of material leasehold improvements are estimated at the inception of the lease term. Capitalized Software Costs Capitalized software costs consist of costs to purchase and develop software for internal use. The Company capitalizes certain incurred software development costs in accordance with ASC 350-40, "Intangibles Goodwill and Other: Internal-Use Software." Costs incurred during the application-development stage for software purchased and further customized by outside vendors for the Company's use and software developed by a vendor for the Company's proprietary use have been capitalized. Costs incurred for the Company's own personnel who are directly associated with software development are capitalized as appropriate. Capitalized software costs are included in property and equipment. Impairment of Long-Lived Assets The Company periodically evaluates whether events or changes in circumstances have occurred that indicate long-lived assets may not be recoverable. When such circumstances are present, the Company assesses whether the carrying value will be recovered through the expected undiscounted future cash flows resulting from the use and eventual disposition of the long-lived asset. In the event the sum of the expected undiscounted future cash flows is less than the carrying value of the long-lived asset, an impairment loss equal to the excess of the long-lived asset's carrying value over its fair value is recorded. The fair values of long-lived assets are based on the Company's own judgments about the assumptions that market participants would use in pricing the asset or on observable market data, when available. Foreign Currency Translation The financial position and results of operations of the Company's international subsidiaries are determined using local currency as the functional currency. Assets and liabilities of these subsidiaries are translated at the exchange rate in effect at each year-end. Statements of Operations accounts are translated at the average rate of exchange prevailing during each period. Translation adjustments arising from the use of differing exchange rates from period to period are included in the accumulated other comprehensive income (loss) account in stockholders' equity, other than translation adjustments on short-term intercompany balances, which are included in other income (expense). Gains and losses resulting from other foreign currency transactions are included in other income (expense). Intercompany receivable balances of a long-term investment nature are considered part of the Company's permanent investment in a foreign jurisdiction and the gains or losses on these balances are reported in other comprehensive income. Comprehensive Income (Loss) Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. The Company's other comprehensive income (loss) is primarily comprised of foreign currency translation adjustments, which relate to investments that are permanent in nature, and changes in unrecognized pension and post-retirement benefit costs. Recent Accounting Standard Updates Not Yet Adopted In August 2018, the Financial Accounting Standards Board (the "FASB") issued ASU 2018-15,"Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,"requiring a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets. Capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. ASU 2018-15 is effective for the Company beginning in fiscal 2021. The Company is currently evaluating the impact of the adoption of ASU 2018-15 on its consolidated financial statements. In February 2018, the FASB issued ASU No. 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" ("ASU 2018-02"), which provides guidance on reclassification of certain stranded income tax effects in accumulated other comprehensive income resulting from the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), enacted on December 22, 2017. ASU No. 2018-02 allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the application of the Tax Act. Additionally, ASU No. 2018-02 requires financial statement preparers to disclose (1) a description of their accounting policy for releasing income tax effects from accumulated other comprehensive income, (2) whether they elect to reclassify the stranded income tax effects from the Tax Act, and (3) information about other income tax effects related to the application of the Tax Act that are reclassified from accumulated other comprehensive income to retained earnings, if any. The amendments in ASU 2018-02 are effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the impact on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)" ("ASU 2016-02"). This ASU requires a company to recognize lease assets and liabilities arising from operating leases in the statement of financial position. This ASU does not significantly change the previous lease guidance for how a lessee should recognize the recognition, measurement, and presentation of expenses and cash flows arising from a lease. Additionally, the criteria for classifying a finance lease versus an operating lease are substantially the same as the previous guidance. In July 2018, the FASB issued ASU No. 2018-11, "Leases (Topic 842): Targeted Improvements ("ASU 2018-11"). This ASU allows adoption of the standard as of the effective date without restating prior periods. The amendments in these ASUs are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. We have adopted this ASU on January 1, 2019 without restating prior periods. For short term leases we elect to not apply the recognition requirements and instead recognize the lease payments on a straight line basis over the lease term. We expect the adoption of ASU 2016-02 will result in the recognition of right-of-use assets and lease liabilities of less than $100 in our consolidated balance sheets and will not impact our consolidated statements of operations. |
REVENUE, DIRECT COSTS AND GROSS MARGIN |
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Revenue, Direct Costs and Gross Margin [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE, DIRECT COSTS AND GROSS MARGIN | The Company’s revenue, direct costs and gross profit were as follows:
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DISCONTINUED OPERATIONS |
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Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] | DISCONTINUED OPERATIONS On March 31, 2018, the Company completed the sale of its RTM Businesses in Belgium, Europe (excluding Belgium) and Asia Pacific in separate transactions to Value Plus NV, Morgan Philips Group S.A., and Apache Group Holdings Pty Limited, respectively. The gross proceeds from the sale were $38,960. In addition $17,626 of debt was assumed by the buyers. The following is a reconciliation of the gross proceeds to the net proceeds from the Sales Transaction as presented in the statements of cash flows for the year ended December 31, 2018.
The divestiture generated a pre-tax gain of $13,861 for the year ended December 31, 2018, which includes a benefit of $10,819 reclassification adjustment relating to the net foreign currency translation gains previously included in accumulated other comprehensive income. The pre-tax gain is subject to adjustment for various purchase price adjustments. The RTM businesses met the criteria for discontinued operations set forth in ASC 205 on March 31, 2018 subsequent to approval of the sale by our stockholders. The Company reclassified its discontinued operations for all periods presented and has excluded the results of its discontinued operations from continuing operations and from segment results for all periods presented. The carrying amounts of the classes of assets and liabilities from the RTM businesses included in discontinued operations were as follows:
Reported results for the discontinued operations by period were as follows:
Depreciation, capital expenditures, and significant operating and investment non cash items of the discontinued operations by period were as follows:
RTM Revenue Recognition The Company's RTM businesses delivered permanent recruitment, contracting, and talent management solutions to its clients. The contracts have a single performance obligations and we recognized revenue from these services over time in an amount that reflects the consideration expected to be entitled to in exchange for our services. We do not incur incremental costs to obtain these contracts. The costs to fulfill these contracts were expensed as incurred. See Note 2 for additional information on the Company's revenue recognition policies. Permanent recruitment revenue. We recognize permanent placement revenue when employment candidates accept offers of permanent employment. We have a substantial history of estimating the financial impact of permanent placement candidates who do not remain with its clients through the typically 90-day guarantee period. Fees to clients are generally calculated as a percentage of the new employee’s annual compensation. No fees for permanent placement services are charged to employment candidates. Temporary contracting revenue. We recognize temporary contracting revenue over time in the amount to which the Company has a right to invoice, when the services are rendered by the Company’s temporary employees which is generally calculated as hours worked multiplied by the agreed-upon hourly bill rate. The client simultaneously receives and consumes the benefits of the services as they are provided. We do not incur costs to obtain our temporary contracting contracts. The costs incurred to fulfill these contracts are expensed as incurred. Talent management revenue. Talent management services generally contain a single performance obligation satisfied over time. Revenue is recognized over time as the performance obligation is satisfied, because the services provided do not have any alternative use to the Company, and contracts generally include language giving the Company an enforceable right to payment for services provided to date. We measure revenue using an output method. Cost incurred represents work performed and thereby best depicts the transfer of control to the customer. Disaggregation of Revenue The following table presents our disaggregated revenues from discontinued operations by revenue source.
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STOCK-BASED COMPENSATION |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Equity Compensation Plans The Company maintains the Hudson Global, Inc. 2009 Incentive Stock and Awards Plan, as amended and restated on May 24, 2016 (the "ISAP"), pursuant to which it can issue equity-based compensation incentives to eligible participants. The ISAP permits the granting of stock options, restricted stock, and restricted stock units as well as other types of equity-based awards. The Compensation Committee of the Company’s Board of Directors (the "Compensation Committee") will establish such conditions as it deems appropriate on the granting or vesting of stock options, restricted stock, restricted stock units and other types of equity-based awards. As determined by the Compensation Committee, equity awards may also be subject to immediate vesting upon the occurrence of certain events following a change in control of the Company. The Company primarily grants restricted stock and restricted stock units to its employees. A restricted stock unit is equivalent to one share of the Company’s common stock and is payable only in common stock of the Company issued under the ISAP. The Compensation Committee administers the ISAP and may designate any of the following as a participant under the ISAP: any officer or other employee of the Company or its affiliates or individuals engaged to become an officer or employee, consultants or other independent contractors who provide services to the Company or its affiliates and non-employee directors of the Company. On May 24, 2016, the Company's stockholders approved an amendment and restatement of the ISAP to, among other things, increase the number of shares of the Company's common stock that are reserved for issuance by 2,400,000 shares. As of December 31, 2018, there were 1,097,334 shares of the Company’s common stock available for future issuance. All share issuances related to stock compensation plans are issued from the aforementioned stock available for future issuance under stockholder approved compensation plans. A summary of the quantity and vesting conditions for stock-based units granted to the Company's employees for the year ended December 31, 2018 was as follows:
The Company also maintains the Director Deferred Share Plan (the "Director Plan") pursuant to which it can issue restricted stock units to its non-employee directors. A restricted stock unit is equivalent to one share of the Company’s common stock and is payable only in common stock issued under the ISAP upon a director ceasing service as a member of the Board of Directors of the Company. The restricted stock units vest immediately upon grant and are credited to each of the non-employee director's retirement accounts under the Director Plan. Restricted stock units issued under the Director Plan contain the right to a dividend equivalent award in the form of additional restricted stock units. The dividend equivalent award is calculated using the same rate as the cash dividend paid on a share of the Company's common stock, and then divided by the closing price of the Company’s common stock on the date the dividend is paid to determine the number of additional restricted stock units to grant. Dividend equivalent awards have the same vesting terms as the underlying awards. During the year ended December 31, 2018, the Company granted 290,243 restricted stock units to its non-employee directors pursuant to the Director Plan. As of December 31, 2018, there were 1,164,027 deferred restricted stock units that had been issued to non-employee directors. For the years ended December 31, 2018 and 2017, the Company’s stock-based compensation expense related to restricted stock units, which are included in the accompanying Consolidated Statements of Operations, were as follows:
As of December 31, 2018 and 2017, unrecognized compensation expense and weighted average period over which the compensation expense is expected to be recognized relating to the unvested portion of the Company's restricted stock unit awards, based on the Company's historical valuation treatment, were as follows:
Stock Options Stock options granted by the Company generally expire between five and ten years after the date of grant and have an exercise price of at least 100% of the fair market value of the underlying share of common stock on the date of grant and generally vest ratably over a four-year period. Changes in the Company’s stock options for the years ended December 31, 2018 and 2017 were as follows:
The weighted average remaining contractual term and the aggregated intrinsic value for stock options outstanding and exercisable as of December 31, 2018 and 2017 were as follows:
Restricted Stock Units Changes in the Company’s restricted stock units arising from grants to certain employees and non-employee directors for the years ended December 31, 2018 and 2017 were as follows:
The total fair value of restricted stock units vested during the years ended December 31, 2018 and 2017 were as follows:
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES Income Tax Provision On December 22, 2017, the President of the United States signed into law the Tax Act. The legislation significantly changes U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The Company recognized the income tax effects of the Tax Act in its 2017 financial statements in accordance with Staff Accounting Bulletin No. 118 ("SAB 118"), which provides SEC staff guidance for the application of ASC Topic 740, Income Taxes, in the reporting period in which the Tax Act was signed into law and permits a measurement period not to exceed one year from the enactment date for companies to complete the required analysis and accounting. As permitted under SAB 118, the adjustments we recorded due to the Tax Act, including the remeasurement of deferred tax assets and liabilities and the transition tax, were based on reasonable estimates and were considered provisional. As of December 31, 2018, the one-time impact of the change in tax rate on our deferred tax assets and liabilities is complete. Additionally, we have completed our assessment of global intangible low taxed income ("GILTI") and have established a policy to account for this tax on a period basis beginning in January 1, 2018. We have also completed our analysis of the one-time transition tax and recorded the impact. As a result of the reduction in the U.S. federal tax rate from 35% to 21% under the Tax Act, the Company revalued its ending gross deferred tax assets at December 31, 2017 by $46,189 which was fully offset by a decrease in valuation allowance. Additionally, the Company recorded an amount of $0 tax payable with respect to the deemed mandatory repatriation of undistributed foreign earnings of foreign subsidiaries. On this basis, the net impact on tax expense provided in the Company’s consolidated financial statements for the years ended December 31, 2018 and 2017 related to the Tax Act is $0. The domestic and foreign components of income (loss) before income taxes from continuing operations were as follows:
The provision for (benefit from) income taxes from continuing operations were as follows:
Tax Rate Reconciliation The effective tax rates for the years ended December 31, 2018 and 2017 were negative 1.9% and negative 44.0%. These effective tax rates differ from the U.S. Federal statutory rate of 21% in 2018 and 35% in 2017 due to state income taxes, changes in valuation allowances in the U.S. and certain foreign jurisdictions which reduces or eliminates the effective tax rate on current year profits or losses, variations from the U.S. Federal statutory rate in foreign jurisdictions, taxes on repatriations of foreign profits, and non-deductible expenses. The effects of U.S. federal tax rate changes in 2017 and state tax rate changes in 2018 on deferred tax assets and other federal and deferred tax adjustments in 2018 and 2017 were offset by changes in valuation allowances and have no net impact on effective tax rates. The following is a reconciliation of the effective tax rate from continuing operations for the years ended December 31, 2018 and 2017 to the U.S. Federal statutory rate of 21% and 35%, respectively:
Deferred Taxes Assets (Liabilities) Deferred income taxes are provided for the tax effect of temporary differences between the financial reporting basis and the tax basis of assets and liabilities. Net deferred tax assets have been classified as non-current in the accompanying Consolidated Balance Sheets. Significant temporary differences at December 31, 2018 and 2017 were as follows:
During the fourth quarter 2017, the Company reevaluated its position that all unremitted earnings of its foreign subsidiaries would be indefinitely reinvested and the Company is now required to account for U.S. tax on these earnings. Future repatriations of previously unremitted foreign earnings are expected to either be exempt from U.S. taxation or offset by NOLs, therefore as of December 31, 2018 and December 31, 2017, no U.S. tax has been provided on unremitted foreign earnings. The Company has provided $47 and $30 of withholding tax with respect to unremitted foreign earnings, respectively at December 31, 2018 and December 31, 2017. Net Operating Losses ("NOLs"), Capital Losses, and Valuation Allowance At December 31, 2018, the Company had losses for U.S. Federal tax purposes of approximately $721,260 in total, made up of net U.S. Federal NOLs incurred through December 31, 2018 of $341,145 and U.S. Federal capital losses of $380,115 as a result of the Sales Transaction. The NOLs include approximately $16,584 of tax losses that were not absorbed by Monster Worldwide, Inc. ("Monster") on its consolidated U.S. Federal tax returns through the spin off of the Company on April 1, 2003. U.S. Federal NOLs incurred through December 31, 2017 expire at various dates through 2037 with $3,440 scheduled to expire during 2019. U.S. Federal NOLs incurred in 2018 may be carried forward indefinitely. U.S. Federal capital losses expire in five years during 2023. The Company's utilization of U.S. NOLs is subject to an annual limitation imposed by Section 382 of the Internal Revenue Code ("IRC"), which may limit our ability to utilize all of the existing NOLs before the expiration dates. Based upon IRC Section 382 studies prepared by the Company, Section 382 ownership changes have occurred that will result in $227,564 of the Company’s Federal NOLs generated through September 2006 and recognized built-in losses during the five year period after September 2006 being subject to IRC Section 382 limitations. As a result of IRC Section 382 limitations, $31,288 of the $227,564 NOLs that are limited are expected to expire prior to utilization specifically as a result of the IRC Section 382 cumulative annual limitations. As of December 31, 2018, certain international subsidiaries had NOLs for local tax purposes of $12,050. With the exception of $6,208 of NOLs with an indefinite carry forward period as of December 31, 2018, these losses will expire at various dates through 2035, with $0 scheduled to expire during 2019. The deferred tax recognized for NOLs are presented net of unrecognized tax benefits, where applicable. ASC 740-10-30-5 requires that a valuation allowance be established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. In making this assessment, management considers the level of historical taxable income, scheduled reversals of deferred tax liabilities, tax planning strategies, and projected future taxable income. The provision for income tax includes a net tax benefit of $43, resulting from changes in judgment regarding the realizability of deferred tax assets in future years. As of December 31, 2018, $197,558 of the valuation allowance relates to the deferred tax asset for NOLs, $194,740 of which is U.S. Federal and state, and $2,818 of which is foreign, that management has determined will more likely than not expire prior to realization. The remaining valuation allowance of $1,928 relates to deferred tax assets on U.S. and foreign temporary differences that management estimates will not be realized due to the Company's U.S. and foreign tax losses. The increase in valuation allowance for the year ended December 31, 2018 includes an increase relating to continuing operations of $3,158 and an increase relating to U.S. capital losses as a result of the Sales Transaction of $102,660. Uncertain Tax Positions As of December 31, 2018 and 2017, the Company's unrecognized tax benefits, including interest and penalties, which would lower the Company’s annual effective income tax rate if recognized in the future, were as follows:
The following table shows a reconciliation of the beginning and ending amounts of unrecognized tax benefits, exclusive of interest and penalties:
Estimated interest and penalties classified as part of the provision for income taxes in the Company’s Consolidated Statements of Operations for the years ended December 31, 2018 and 2017 were as follows:
Based on information available as of December 31, 2018, it is reasonably possible that the total amount of unrecognized tax benefits could decrease in the range of $0 to $200 over the next 12 months as a result of projected resolutions of global tax examinations and controversies and potential lapses of the applicable statutes of limitations. In many cases, the Company’s unrecognized tax benefits are related to tax years that remain subject to examination by the relevant tax authorities. Tax years with NOLs remain open until such losses expire or the statutes of limitations for those years when the NOLs are used or expire. As of December 31, 2018, the Company's open tax years remain subject to examination by the relevant tax authorities and currently under income tax examination were principally as follows:
The Company believes that its tax reserves are adequate for all years subject to examination above. |
EARNINGS (LOSS) PER SHARE |
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EARNINGS (LOSS) PER SHARE | EARNINGS (LOSS) PER SHARE A reconciliation of the numerators and denominators of the basic and diluted earnings (loss) per share calculations were as follows:
The weighted average number of shares outstanding used in the computation of diluted net income (loss) per share for the years ended December 31, 2018 and 2017 did not include the effect of the following potentially outstanding shares of common stock because the effect would have been anti-dilutive:
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RESTRICTED CASH |
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Restricted Cash and Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RESTRICTED CASH | RESTRICTED CASH A summary of the Company’s restricted cash included in the accompanying Consolidated Balance Sheets as of December 31, 2018 and 2017 was as follows:
Restricted cash under the caption "Prepaid and other" primarily includes a bank guarantee for licensing in Switzerland. Restricted cash under the caption "Other assets" primarily include deposits held under a collateral trust agreement, which supports the Company’s workers’ compensation policy. |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES |
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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES As of December 31, 2018 and 2017, the Company's accrued expenses and other current liabilities consisted of the following:
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COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Leases The Company leases facilities under operating leases that expire at various dates during 2019. Some of the operating leases provide for increasing rents over the term of the lease. Total rent expense under these leases is recognized ratably over the lease terms. As of December 31, 2018, future minimum lease commitments under non-cancelable operating leases, which will be expensed as primarily in office and general expenses, were as follows:
Rent and related expenses for operating leases of facilities and equipment recorded under the caption "Office and general" in the accompanying Consolidated Statements of Operations were $645 and $451 for the years ended December 31, 2018 and 2017, respectively. Commitments rentals based in currencies other than U.S. dollars were translated using exchange rates as of December 31, 2018. Consulting, Employment and Non-compete Agreements The Company has entered into various consulting, and employment agreements with certain key members of management. These agreements generally (i) are one year in length, (ii) contain restrictive covenants, (iii) under certain circumstances, provide for compensation and subject to providing the Company with a release, severance payments, and (iv) are automatically renewed annually unless either party gives sufficient notice of termination. Litigation and Complaints The Company is subject, from time to time, to various claims, lawsuits, contracts disputes and other complaints from, for example, clients, candidates, suppliers, landlords for leased properties, former and current employees, and regulators or tax authorities arising in the ordinary course of business. The Company routinely monitors claims such as these, and records provisions for losses when the claim becomes probable and the amount due is estimable. Although the outcome of these claims cannot be determined, the Company believes that the final resolution of these matters will not have a material adverse effect on the Company’s financial condition, results of operations or liquidity. For matters that have reached the threshold of probable and estimable, the Company has established reserves for legal, regulatory and other contingent liabilities. The Company’s reserves were $0 as of December 31, 2018 and 2017, respectively. Departure of Certain Employees As previously disclosed on July 6, 2018, the Company and David F. Kirby, the Company’s Senior Vice President, Treasury and Investor Relations, determined that Mr. Kirby would leave his positions with the Company effective July 27, 2018. In addition, the Company terminated the employment of its Corporate Counsel and Corporate Secretary effective June 29, 2018. As a result, during the year ended December 31, 2018 the Company recognized severance expense of $601 for the two corporate employees classified within salaries and related expense in the Company's Condensed Consolidated Statements of Operations. As previously disclosed, on April 1, 2018, Stephen A. Nolan gave notice to the Company's Board of his resignation as Chief Executive Officer and a director of the Company effective as of April 1, 2018. On April 1, 2018, following the resignation of Mr. Nolan, the Board appointed Jeffrey E. Eberwein, the Chairman of the Board, as Chief Executive Officer, and Richard K. Coleman, Jr., a director of the Company, as the Chairman of the Board. As a result, during the year ended December 31, 2018 the Company recognized additional compensation expense of $2,024 to its former Chief Executive Officer classified within salaries and related expense in the Company's Condensed Consolidated Statements of Operations. |
STOCKHOLDERS' EQUITY |
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Stockholders' Equity Attributable to Parent [Abstract] | |
Stockholders' Equity | STOCKHOLDERS' EQUITY On July 30, 2015, the Company announced that its Board of Directors authorized the repurchase of up to $10,000 of the Company's common stock. The Company intends to make purchases from time to time as market conditions warrant. This authorization does not expire. During the year ended December 31, 2018 and 2017, the Company had repurchased 144,808 and 650,278 shares in the open market for a total cost of $208 and $858, respectively. As of December 31, 2018 and 2017, under the July 30, 2015 authorization, the Company had repurchased 3,784,213 and 3,639,405 shares for a total cost of $7,579 and $7,370, respectively. |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |
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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss) Note [Text Block] | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Accumulated other comprehensive income (loss), net of tax, consisted of the following:
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SHELF REGISTRATION AND STOCKHOLDER RIGHTS PLAN |
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Shelf Registrations Disclosure [Abstract] | |
SHELF REGISTRATION AND STOCKHOLDER RIGHTS PLAN | SHELF REGISTRATION AND STOCKHOLDER RIGHTS PLAN Acquisition Shelf Registration Statement The Company has a shelf registration on file with the SEC to enable it to issue up to 1,350,000 shares of its common stock from time to time in connection with acquisitions of businesses, assets or securities of other companies, whether by purchase, merger or any other form of acquisition or business combination. If any shares are issued using this shelf registration, the Company will not receive any proceeds from these offerings other than the assets, businesses or securities acquired. As of December 31, 2018, all of the 1,350,000 shares were available for issuance. Stockholder Rights Plan On October 15, 2018, the Company’s Board declared a dividend to the Company’s stockholders of record as of the close of business on October 25, 2018 (the "Record Date"), for each outstanding share of the Company’s common stock, par value 0.001 per share ("Common Stock"), of one right (a "Right") to purchase one one-hundredth of a share of a new series of participating preferred stock of the Company. The terms of the Rights are set forth in the Rights Agreement, dated as of October 15, 2018 (the "Rights Agreement"), by and between the Company and Computershare Trust Company, N.A., as rights agent. The Board entered into the Rights Agreement in an effort to preserve the value of the Company’s NOLs and other tax benefits. The Company’s ability to utilize its NOLs may be substantially limited if the Company experiences an "ownership change" within the meaning of Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"). In general, an "ownership change" would occur if the percentage of the Company’s ownership by one or more "5-percent shareholders" (as defined in the Code) increases by more than 50 percent over the lowest percentage owned by such stockholders at any time during the prior three years. The Rights Agreement is designed to preserve the Company’s tax benefits by deterring transfers of Common Stock that could result in an "ownership change" under Section 382 of the Code. The Rights Agreement replaces the Company’s prior rights agreement designed to preserve the value of the Company’s NOLs, which was approved by stockholders in 2015 and expired in accordance with its terms in January 2018. The Company also has a provision in its Amended and Restated Certificate of Incorporation (the "Charter Provision") which generally prohibits transfers of its common stock that could result in an ownership change. The Company believes that in light of the significant amount of the NOLs, it is advisable to adopt the Rights Agreement in addition to the Charter Provision. In general terms, the Rights Agreement imposes a significant penalty upon any person or group that acquires beneficial ownership (as defined under the Rights Agreement) of 4.99% or more of the outstanding Common Stock without the prior approval of the Board (an "Acquiring Person"). Any Rights held by an Acquiring Person are void and may not be exercised. The Company intends to seek stockholder approval of the Rights Agreement at the Company’s 2019 annual meeting of stockholders. If the Rights become exercisable, each Right would allow its holder to purchase from the Company one one-hundredth of a share of the Company’s Series B Junior Participating Preferred Stock ("Series B Preferred Stock") for a purchase price of $3.50. Each fractional share of Series B Preferred Stock would give the stockholder approximately the same dividend, voting and liquidation rights as does one share of Common Stock. Prior to exercise, however, a Right does not give its holder any dividend, voting or liquidation rights. The Rights will not be exercisable until the earlier of (i) 10 days after a public announcement by the Company that a person or group has become an Acquiring Person; and (ii) 10 business days (or a later date determined by the Board) after a person or group begins a tender or an exchange offer that, if completed, would result in that person or group becoming an Acquiring Person. Until the date that the Rights become exercisable (the "Distribution Date"), Common Stock certificates will also evidence the Rights and will contain a notation to that effect. Any transfer of shares of Common Stock prior to the Distribution Date will constitute a transfer of the associated Rights. After the Distribution Date, the Rights will separate from the Common Stock and be evidenced by Right certificates, which the Company will mail to all holders of Rights that have not become void. After the Distribution Date, if a person or group already is or becomes an Acquiring Person, all holders of Rights, except the Acquiring Person, may exercise their Rights upon payment of the purchase price to purchase shares of Common Stock (or other securities or assets as determined by the Board) with a market value of two times the purchase price (a "Flip-in Event"). After the Distribution Date, if a Flip-in Event has already occurred and the Company is acquired in a merger or similar transaction, all holders of Rights, except the Acquiring Person, may exercise their Rights upon payment of the purchase price, to purchase shares of the acquiring or other appropriate entity with a market value of two times the purchase price of the Rights. Rights may be exercised to purchase Series B Preferred Stock only after the Distribution Date occurs and prior to the occurrence of a Flip-in Event as described above. A Distribution Date resulting from the commencement of a tender offer or an exchange offer as described in the second bullet point above could precede the occurrence of a Flip-in Event, in which case the Rights could be exercised to purchase Series B Preferred Stock. A Distribution Date resulting from any occurrence described in the first bullet point above would necessarily follow the occurrence of a Flip-in Event, in which case the Rights could be exercised to purchase shares of Common Stock (or other securities or assets) as described above. The Rights Agreement grants discretion to the Board to designate a person as an "Exempt Person" or to designate a transaction involving Common Stock as an "Exempt Transaction." An "Exempt Person" cannot become an Acquiring Person under the Rights Agreement. The Board can revoke an "Exempt Person" designation if it subsequently makes a contrary determination regarding whether a transaction by such person may jeopardize the availability of the Company’s tax benefits. The Rights will expire on the earliest of (i) October 15, 2021, the third anniversary of the date on which the Board authorized and declared a dividend of the Rights, or such earlier date as of which the Board determines that the Rights Agreement is no longer necessary for the preservation of the Company’s tax benefits, (ii) the time at which the Rights are redeemed, (iii) the time at which the Rights are exchanged, (iv) the effective time of the repeal of Section 382 of the Code if the Board determines that the Rights Agreement is no longer necessary for the preservation of the Company’s tax benefits, (v) the first day of a taxable year to which the Board determines that no NOLs or other tax benefits may be carried forward, and (vi) the day following the certification of the voting results of the Company’s 2019 annual meeting of stockholders, if stockholder ratification of the adoption of the Rights Agreement has not been obtained prior to that date. The Board may redeem all (but not less than all) of the Rights for a redemption price of $0.001 per Right at any time before the later of the Distribution Date and the date of the first public announcement or disclosure by the Company that a person or group has become an Acquiring Person. Once the Rights are redeemed, the right to exercise the Rights will terminate, and the only right of the holders of such Rights will be to receive the redemption price. The redemption price will be adjusted if the Company declares a stock split or issues a stock dividend on Common Stock. After the later of the Distribution Date and the date of the first public announcement by the Company that a person or group has become an Acquiring Person, but before an Acquiring Person owns 50% or more of the outstanding Common Stock, the Board may exchange each Right (other than Rights that have become void) for one share of Common Stock or an equivalent security. The Board may adjust the purchase price of the Series B Preferred Stock, the number of shares of Series B Preferred Stock issuable and the number of outstanding Rights to prevent dilution that may occur as a result of certain events, including, among others, a stock dividend, a stock split or a reclassification of the Series B Preferred Stock or Common Stock. No adjustments to the purchase price of less than one percent will be made. Before the time the Rights cease to be redeemable, the Board may amend or supplement the Rights Agreement without the consent of the holders of the Rights, except that no amendment may decrease the redemption price below $0.001 per Right. At any time thereafter, the Board may amend or supplement the Rights Agreement to cure an ambiguity, to alter time period provisions, to correct inconsistent provisions or to make any additional changes to the Rights Agreement, but only to the extent that those changes do not impair or adversely affect the interests of the holders of Rights and do not result in the Rights again becoming redeemable. The limitations on the Board’s ability to amend the Rights Agreement does not affect the Board’s power or ability to take any other action that is consistent with its fiduciary duties, including, without limitation, accelerating or extending the expiration date of the Rights, or making any amendment to the Rights Agreement that is permitted by the Rights Agreement or adopting a new rights agreement with such terms as the Board determines in its sole discretion to be appropriate. |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT AND GEOGRAPHIC DATA | SEGMENT AND GEOGRAPHIC DATA Segment Reporting The Company operates in three reportable segments: the Hudson regional businesses of Hudson Americas, Hudson Asia Pacific, and Hudson Europe. Corporate expenses are reported separately from the three reportable segments and pertain to certain functions, such as executive management, corporate governance, human resources, accounting, administration, tax and treasury, and have been allocated to the reportable segments to the extent which the costs are attributable to the reportable segments. Segment information is presented in accordance with ASC 280, "Segments Reporting." This standard is based on a management approach that requires segmentation based upon the Company’s internal organization and disclosure of revenue and certain expenses based upon internal accounting methods. The Company’s financial reporting systems present various data for management to run the business, including internal profit and loss statements prepared on a basis not consistent with U.S. GAAP. Accounts receivable are the only significant assets separated by segment for internal reporting purposes. The following information is presented net of discontinued operations. For more information see Note 4.
Geographic Data Reporting A summary of revenues for the years ended December 31, 2018 and 2017 and net assets by geographic area as of December 31, 2018 and 2017 from continuing operations were as follows:
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SUBSEQUENT EVENTS (Notes) |
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Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS On February 19, 2019 the Company's Board of Directors announced an approved tender offer to buy up to 3,150,000 shares of the Company's common stock, par value $0.001 per share, representing slightly less than 10% of total shares outstanding at December 31, 2018, at a price of $1.50 per share. The tender offer commenced on February 22, 2019 and expires on March 22, 2019. |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS |
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SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS HUDSON GLOBAL, INC. DECEMBER 31, 2018
(1) Includes amounts classified as discontinued operations on the consolidated balance sheet and related activity. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Basis of Presentation | Basis of Presentation The Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Unless otherwise stated, amounts are presented in United States of America ("U.S.") dollars and all amounts are in thousands, except for number of shares and per share amounts. |
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Recently Adopted Accounting Standards | Recently Adopted Accounting Standards On January 1, 2018, the Company adopted Accounting Standards Updates ("ASU") No. 2014-09, "Revenue from Contracts with Customers (Topic 606)" ("ASU 2014-09") and a series of related accounting standard updates designated to create improved revenue recognition and disclosure comparability in financial statements using the modified retrospective approach. Under this method, the guidance is applied only to the most current period presented in the financial statements. ASU 2014-09 outlines a single comprehensive revenue recognition model for revenue arising from contracts with customers and supersedes most of the previous revenue recognition guidance, including industry-specific guidance. Under ASU 2014-09, an entity recognizes revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. Our revenue recognition practices remained substantially unchanged as a result of adoption ASU 2014-09 and we did not have any significant changes in our business processes or systems. On January 1, 2018, we retroactively adopted ASU No. 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the Financial Accounting Standards Board (the "FASB") Emerging Issues Task Force)." This ASU requires the statements of cash flows to present the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents are now included with cash and cash equivalents when reconciling the beginning of period and end of period amounts presented on the statements of cash flows. The retrospective application of this new accounting guidance resulted in a decrease of $223 in "Decrease (increase) in prepaid and other assets" in Net Cash used in Operating Activities, an increase of $1,189 in "Cash, Cash Equivalents, and Restricted Cash, beginning of the period," and an increase of $966 in "Cash, Cash Equivalents, and Restricted Cash, end of period" in our accompanying consolidated statements of cash flows for the year ended December 31, 2017 from what was previously presented in our Annual Report on Form 10-K for the year ended December 31, 2017. Recent Accounting Standard Updates Not Yet Adopted In August 2018, the Financial Accounting Standards Board (the "FASB") issued ASU 2018-15,"Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,"requiring a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets. Capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. ASU 2018-15 is effective for the Company beginning in fiscal 2021. The Company is currently evaluating the impact of the adoption of ASU 2018-15 on its consolidated financial statements. In February 2018, the FASB issued ASU No. 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" ("ASU 2018-02"), which provides guidance on reclassification of certain stranded income tax effects in accumulated other comprehensive income resulting from the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), enacted on December 22, 2017. ASU No. 2018-02 allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the application of the Tax Act. Additionally, ASU No. 2018-02 requires financial statement preparers to disclose (1) a description of their accounting policy for releasing income tax effects from accumulated other comprehensive income, (2) whether they elect to reclassify the stranded income tax effects from the Tax Act, and (3) information about other income tax effects related to the application of the Tax Act that are reclassified from accumulated other comprehensive income to retained earnings, if any. The amendments in ASU 2018-02 are effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the impact on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)" ("ASU 2016-02"). This ASU requires a company to recognize lease assets and liabilities arising from operating leases in the statement of financial position. This ASU does not significantly change the previous lease guidance for how a lessee should recognize the recognition, measurement, and presentation of expenses and cash flows arising from a lease. Additionally, the criteria for classifying a finance lease versus an operating lease are substantially the same as the previous guidance. In July 2018, the FASB issued ASU No. 2018-11, "Leases (Topic 842): Targeted Improvements ("ASU 2018-11"). This ASU allows adoption of the standard as of the effective date without restating prior periods. The amendments in these ASUs are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. We have adopted this ASU on January 1, 2019 without restating prior periods. For short term leases we elect to not apply the recognition requirements and instead recognize the lease payments on a straight line basis over the lease term. We expect the adoption of ASU 2016-02 will result in the recognition of right-of-use assets and lease liabilities of less than $100 in our consolidated balance sheets and will not impact our consolidated statements of operations. |
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Principles of Consolidation | Principles of Consolidation The Consolidated Financial Statements include the accounts of the Company and all of its wholly-owned and majority-owned subsidiaries. All significant inter-company accounts and transactions between and among the Company and its subsidiaries have been eliminated in consolidation. |
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the reported amounts of assets and liabilities, the disclosures about contingent assets and liabilities, and the reported amounts of revenue and expenses. Such estimates include the value of allowances for doubtful accounts, and the valuation of deferred tax assets. These estimates and assumptions are based on management's best estimates and judgment. Management evaluates the estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from those estimates. |
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Nature of Business and Credit Risk | Concentration and Credit Risk The Company's revenue is comprised of the operations, assets, and liabilities of the three Hudson regional businesses of Hudson Americas, Hudson Asia Pacific, and Hudson Europe. For the years ended December 31, 2018 and 2017, the Company's top 25 clients generated over 90% of revenue and one client accounted for approximately 44% and 42% of revenue, respectively. As of December 31, 2018 and 2017, one client accounted for greater than 10% of accounts receivable. No other client accounted for greater than 10% of revenue or accounts receivable for such periods. Financial instruments, which potentially subject the Company to concentrations of credit risk, are primarily cash and accounts receivable. The Company performs continuing credit evaluations of its customers and does not require collateral. The Company has not experienced significant losses related to receivables. |
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Revenue Recognition | Revenue Recognition Revenue is measured according to Accounting Standards Codification ("ASC") 606, Revenue - Revenue from Contracts with Customers, and is recognized based on consideration specified in a contract with a client. We account for a contract when both parties to the contract have approved the contract, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. Revenues are recognized over time, using an output measure, as the control of the promised services is transferred to the client in an amount that reflects the consideration we expect to be entitled to in exchange for those services. The majority of our contracts are short-term in nature as they include termination clauses that allows either party to cancel within a short termination period, without cause. Revenue includes billable travel and other reimbursable costs and are reported net of sales or use taxes collected from clients and remitted to taxing authorities. We generally determine standalone selling prices based on the prices included in the client contracts, using expected cost plus profit, or other observable prices. The price as specified in our client contracts is generally considered the standalone selling price as it is an observable input that depicts the price as if sold to a similar client in similar circumstances. Certain client contracts have variable consideration, including usage based fees that increase the transaction price and volume rebates or other similar items that generally reduce the transaction price. We estimate variable consideration using the expected value method based on the terms of the client contract and historical evidence. These amounts may be constrained and are only included in revenue to the extent we do not expect a significant reversal when the uncertainty associated with the variable consideration is resolved. Our estimated amounts of variable consideration subject to constraints at period end are not material and we do not believe that there will be significant changes to our estimates. We record accounts receivable when our right to consideration becomes unconditional. Contract assets primarily relate to our rights to consideration for services provided that they are conditional on satisfaction of future performance obligations. A contract liability for deferred revenue is recorded when consideration is received, or is unconditionally due, from a client prior to transferring control of services to the client under the terms of a contract. Deferred revenue balances typically result from advance payments received from clients prior to transfer services. We do not have any material contract assets or liabilities as of and for the year ended December 31, 2018. Payment terms vary by client and the services offered. We consider payment terms that exceed one year to be extended payment terms. Substantially all of the Company's contracts include payment terms of 90 days or less and we do not extend payment terms beyond one year. We primarily record revenue on a gross basis as a principal in the Consolidated Statements of Operations based upon the following key factors:
RPO Recruitment. We provide complete recruitment outsourcing, project-based outsourcing, and recruitment consulting for clients' permanent staff hires. We recognize revenue for our RPO recruitment over time in an amount that reflects the consideration we expect to be entitled to and have an enforceable right to payment in exchange for our services. The client simultaneously receives and consumes the benefits of the services as they are provided. The transaction prices contains both fixed fee and variable usage based consideration. Variable usage based consideration is constrained by candidates accepting offers of permanent employment. We recognized revenue on the fixed fee as the performance obligations are satisfied and usage based fees as the constraint is lifted. We do not incur incremental costs to obtain our RPO recruitment contracts. The costs to fulfill these contracts are expensed as incurred. RPO Contracting. We provide RPO clients with a range of outsourced professional contract staffing services and managed service provider services offered sometimes on a standalone basis and sometimes as part of a blended total talent solution. We recognize revenue for our RPO contracting services over time as services are performed in an amount that reflects the consideration we expect to be entitled to and have an enforceable right to payment in exchange for our services, which is generally calculated as hours worked multiplied by the agreed-upon hourly bill rate. The client simultaneously receives and consumes the benefits of the services as they are provided. We do not incur incremental costs to obtain our RPO contracting contracts. The costs incurred to fulfill these contracts are expensed as incurred. Unsatisfied performance obligations. As a practical expedient, we do not disclose the value of unsatisfied performance obligations for (i) contracts with an expected original duration of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. |
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Operating Expenses | Operating Expenses Salaries and related expenses include the salaries, commissions, payroll taxes and employee benefits related to recruitment professionals, executive level employees, administrative staff and other employees of the Company who are not temporary contractors. Office and general expenses include occupancy, equipment leasing and maintenance, utilities, travel expenses, professional fees and provision for doubtful accounts. The Company expenses the costs of advertising and legal costs as incurred. |
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Stock-Based Compensation | Stock-Based Compensation The Company applies the fair value recognition provisions of ASC 718, "Compensation - Stock Compensation." The Company determines the fair value as of the grant date. For awards with graded vesting conditions, the values of the awards are determined by valuing each tranche separately and expensing each tranche over the required service period. The service period is the period over which the related service is performed, which is generally the same as the vesting period. The Company accounts for forfeitures as they occur. During the years ended December 31, 2018 and 2017 the Company only granted restricted stock units. |
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Income Taxes | Income Taxes Earnings from the Company's global operations are subject to tax in various jurisdictions both within and outside the United States. The Company accounts for income taxes in accordance with ASC 740, "Income Taxes". This standard establishes financial accounting and reporting standards for the effects of income taxes that result from an enterprise's activities. It requires an asset and liability approach for financial accounting and reporting of income taxes. The calculation of net deferred tax assets assumes sufficient future earnings for the realization of such assets as well as the continued application of currently anticipated tax rates. Included in net deferred tax assets is a valuation allowance for deferred tax assets where management believes it is more likely than not that the deferred tax assets will not be realized in the relevant jurisdiction. If we determine that a deferred tax asset will not be realizable, an adjustment to the deferred tax asset will result in a reduction of earnings at that time. See Note 6 to the Consolidated Financial Statements for further information regarding deferred tax assets and valuation allowance. ASC 740-10-55-3, "Recognition and Measurement of Tax Positions - a Two Step Process," provides implementation guidance related to the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a two-step evaluation process for a tax position taken or expected to be taken in a tax return. The first step is recognition and the second is measurement. ASC 740 also provides guidance on derecognition, measurement, classification, disclosures, transition and accounting for interim periods. The Company provides tax reserves for U.S. Federal, state and local and international unrecognized tax benefits for all periods subject to audit. The development of reserves for these exposures requires judgments about tax issues, potential outcomes and timing, and is a subjective critical estimate. The Company assesses its tax positions and records tax benefits for all years subject to examination based upon management's evaluation of the facts, circumstances, and information available at the reporting dates. For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon settlement with a tax authority that has full knowledge of all relevant information. For those tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. Where applicable, associated interest and penalties have also been recognized as a component of income tax expense. Although the outcome related to these exposures is uncertain, in management's opinion, adequate provisions for income taxes have been made for estimable potential liabilities emanating from these exposures. In certain circumstances, the ultimate outcome for exposures and risks involve significant uncertainties which render them inestimable. If actual outcomes differ materially from these estimates, including those that cannot be quantified, they could have material impact on the Company's results of operations. During the fourth quarter of 2017, the Company reevaluated its position that all unremitted earnings of our foreign subsidiaries would be indefinitely reinvested and the Company has provided tax on these unremitted earnings taking into consideration all expected future events based on presently existing tax laws and rates. |
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Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per share ("EPS") is computed by dividing the Company’s net income (loss) by the weighted average number of shares outstanding during the period. When the effects are not anti-dilutive, diluted earnings (loss) per share is computed by dividing the Company’s net income (loss) by the weighted average number of shares outstanding and the impact of all dilutive potential common shares, primarily stock options "in-the-money" and unvested restricted stock. The dilutive impact of stock options and unvested restricted stock is determined by applying the "treasury stock" method. Performance-based restricted stock awards are included in the computation of diluted earnings per share only to the extent that the underlying performance conditions: (i) are satisfied prior to the end of the reporting period, or (ii) would be satisfied if the end of the reporting period were the end of the related performance period and the result would be dilutive under the treasury stock method. Stock awards subject to vesting or exercisability based on the achievement of market conditions are included in the computation of diluted earnings per share only when the market conditions are met. Income (loss) per share calculations for each quarter include the weighted average effect for the quarter; therefore, the sum of quarterly income (loss) per share amounts may not equal year-to-date income (loss) per share amounts, which reflect the weighted average effect on a year-to-date basis. |
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Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts reported in the Consolidated Balance Sheets for cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings approximate fair value because of the immediate or short-term maturity of these financial instruments. |
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Cash and Cash Equivalents | Cash and Cash Equivalents For financial statement presentation purposes, the Company considers all highly liquid investments having an original maturity of three months or less as cash equivalents. |
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Accounts Receivable | Accounts Receivable The Company's accounts receivable balances are composed of trade and unbilled receivables. The Company maintains an allowance for doubtful accounts and makes ongoing estimates as to the ability to collect on the various receivables. If the Company determines that the allowance for doubtful accounts is not adequate to cover estimated losses, an expense to provide for doubtful accounts is recorded in office and general expenses. If an account is determined to be uncollectible, it is written off against the allowance for doubtful accounts. Management's assessment and judgment are vital requirements in assessing the ultimate realization of these receivables, including the current credit-worthiness, financial stability and effect of market conditions on each customer. |
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Property and Equipment | Property and Equipment Property and equipment are stated at cost. Depreciation is computed primarily using the straight line method over the following estimated useful lives:
Leasehold improvements are amortized over the shorter of their estimated useful lives or the lease term. The amortization periods of material leasehold improvements are estimated at the inception of the lease term. |
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Capitalized Software Costs | Capitalized Software Costs Capitalized software costs consist of costs to purchase and develop software for internal use. The Company capitalizes certain incurred software development costs in accordance with ASC 350-40, "Intangibles Goodwill and Other: Internal-Use Software." Costs incurred during the application-development stage for software purchased and further customized by outside vendors for the Company's use and software developed by a vendor for the Company's proprietary use have been capitalized. Costs incurred for the Company's own personnel who are directly associated with software development are capitalized as appropriate. Capitalized software costs are included in property and equipment. |
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Long-Lived Assets and Amortizable Intangibles | Impairment of Long-Lived Assets The Company periodically evaluates whether events or changes in circumstances have occurred that indicate long-lived assets may not be recoverable. When such circumstances are present, the Company assesses whether the carrying value will be recovered through the expected undiscounted future cash flows resulting from the use and eventual disposition of the long-lived asset. In the event the sum of the expected undiscounted future cash flows is less than the carrying value of the long-lived asset, an impairment loss equal to the excess of the long-lived asset's carrying value over its fair value is recorded. The fair values of long-lived assets are based on the Company's own judgments about the assumptions that market participants would use in pricing the asset or on observable market data, when available. |
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Foreign Currency Translation | Foreign Currency Translation The financial position and results of operations of the Company's international subsidiaries are determined using local currency as the functional currency. Assets and liabilities of these subsidiaries are translated at the exchange rate in effect at each year-end. Statements of Operations accounts are translated at the average rate of exchange prevailing during each period. Translation adjustments arising from the use of differing exchange rates from period to period are included in the accumulated other comprehensive income (loss) account in stockholders' equity, other than translation adjustments on short-term intercompany balances, which are included in other income (expense). Gains and losses resulting from other foreign currency transactions are included in other income (expense). Intercompany receivable balances of a long-term investment nature are considered part of the Company's permanent investment in a foreign jurisdiction and the gains or losses on these balances are reported in other comprehensive income. |
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Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. The Company's other comprehensive income (loss) is primarily comprised of foreign currency translation adjustments, which relate to investments that are permanent in nature, and changes in unrecognized pension and post-retirement benefit costs. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Dec. 31, 2018 | |||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||
Property, plant and equipment |
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REVENUE, DIRECT COSTS AND GROSS MARGIN (Tables) |
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue, Direct Costs and Gross Margin [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue, direct costs and gross margin | The Company’s revenue, direct costs and gross profit were as follows:
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DISCONTINUED OPERATIONS (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue From Discontinued Operations | The following is a reconciliation of the gross proceeds to the net proceeds from the Sales Transaction as presented in the statements of cash flows for the year ended December 31, 2018.
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Disposal Group, Including Discontinued Operations | The carrying amounts of the classes of assets and liabilities from the RTM businesses included in discontinued operations were as follows:
Reported results for the discontinued operations by period were as follows:
Depreciation, capital expenditures, and significant operating and investment non cash items of the discontinued operations by period were as follows:
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Reconciliation Of The Gross Proceeds To The Net Proceeds | The following table presents our disaggregated revenues from discontinued operations by revenue source.
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STOCK-BASED COMPENSATION (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quantity and vesting conditions for shares of restricted stock granted | A summary of the quantity and vesting conditions for stock-based units granted to the Company's employees for the year ended December 31, 2018 was as follows:
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Schedule of stock-based compensation expense | For the years ended December 31, 2018 and 2017, the Company’s stock-based compensation expense related to restricted stock units, which are included in the accompanying Consolidated Statements of Operations, were as follows:
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Schedule of unrecognized compensation cost, nonvested awards | As of December 31, 2018 and 2017, unrecognized compensation expense and weighted average period over which the compensation expense is expected to be recognized relating to the unvested portion of the Company's restricted stock unit awards, based on the Company's historical valuation treatment, were as follows:
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Changes in stock options | Changes in the Company’s stock options for the years ended December 31, 2018 and 2017 were as follows:
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Weighted average remaining contractual term and Instrinsic value of stock options | The weighted average remaining contractual term and the aggregated intrinsic value for stock options outstanding and exercisable as of December 31, 2018 and 2017 were as follows:
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Changes in restricted stock units | The total fair value of restricted stock units vested during the years ended December 31, 2018 and 2017 were as follows:
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Restricted stock units | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of share based compensation arrangements other than options fair value vested | Changes in the Company’s restricted stock units arising from grants to certain employees and non-employee directors for the years ended December 31, 2018 and 2017 were as follows:
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INCOME TAXES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of income before income tax, domestic and foreign | The domestic and foreign components of income (loss) before income taxes from continuing operations were as follows:
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Schedule of components of income tax expense (benefit) | The provision for (benefit from) income taxes from continuing operations were as follows:
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Schedule of effective income tax rate reconciliation | The following is a reconciliation of the effective tax rate from continuing operations for the years ended December 31, 2018 and 2017 to the U.S. Federal statutory rate of 21% and 35%, respectively:
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Schedule of deferred tax assets and liabilities | Deferred income taxes are provided for the tax effect of temporary differences between the financial reporting basis and the tax basis of assets and liabilities. Net deferred tax assets have been classified as non-current in the accompanying Consolidated Balance Sheets. Significant temporary differences at December 31, 2018 and 2017 were as follows:
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Summary of income tax contingencies | As of December 31, 2018 and 2017, the Company's unrecognized tax benefits, including interest and penalties, which would lower the Company’s annual effective income tax rate if recognized in the future, were as follows:
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Summary of income tax contingencies | The following table shows a reconciliation of the beginning and ending amounts of unrecognized tax benefits, exclusive of interest and penalties:
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Uncertain tax position interest and penalties | Estimated interest and penalties classified as part of the provision for income taxes in the Company’s Consolidated Statements of Operations for the years ended December 31, 2018 and 2017 were as follows:
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Open years subject to tax examination | As of December 31, 2018, the Company's open tax years remain subject to examination by the relevant tax authorities and currently under income tax examination were principally as follows:
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EARNINGS (LOSS) PER SHARE (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of earnings per share, basic and diluted | A reconciliation of the numerators and denominators of the basic and diluted earnings (loss) per share calculations were as follows:
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Schedule of antidilutive securities excluded from computation of earnings per share | The weighted average number of shares outstanding used in the computation of diluted net income (loss) per share for the years ended December 31, 2018 and 2017 did not include the effect of the following potentially outstanding shares of common stock because the effect would have been anti-dilutive:
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RESTRICTED CASH (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Cash and Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of restricted cash and cash equivalents | A summary of the Company’s restricted cash included in the accompanying Consolidated Balance Sheets as of December 31, 2018 and 2017 was as follows:
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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Payable and Accrued Liabilities | As of December 31, 2018 and 2017, the Company's accrued expenses and other current liabilities consisted of the following:
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COMMITMENTS AND CONTINGENCIES (Tables) |
12 Months Ended | ||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||
Schedule of future minimum rental payments for operating leases | As of December 31, 2018, future minimum lease commitments under non-cancelable operating leases, which will be expensed as primarily in office and general expenses, were as follows:
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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | Accumulated other comprehensive income (loss), net of tax, consisted of the following:
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SEGMENT AND GEOGRAPHIC DATA (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment reporting information | The Company operates in three reportable segments: the Hudson regional businesses of Hudson Americas, Hudson Asia Pacific, and Hudson Europe. Corporate expenses are reported separately from the three reportable segments and pertain to certain functions, such as executive management, corporate governance, human resources, accounting, administration, tax and treasury, and have been allocated to the reportable segments to the extent which the costs are attributable to the reportable segments. Segment information is presented in accordance with ASC 280, "Segments Reporting." This standard is based on a management approach that requires segmentation based upon the Company’s internal organization and disclosure of revenue and certain expenses based upon internal accounting methods. The Company’s financial reporting systems present various data for management to run the business, including internal profit and loss statements prepared on a basis not consistent with U.S. GAAP. Accounts receivable are the only significant assets separated by segment for internal reporting purposes. The following information is presented net of discontinued operations. For more information see Note 4.
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Revenue by geographic area | A summary of revenues for the years ended December 31, 2018 and 2017 and net assets by geographic area as of December 31, 2018 and 2017 from continuing operations were as follows:
|
DESCRIPTION OF BUSINESS (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018
employees
Country
segments
|
Dec. 31, 2018
employees
Country
Segment
|
|
Schedule of Segment Reporting Information By Segment, Gross Margin [Line Items] | ||
Number of countries in which entity operates | Country | 9 | 9 |
Number of reportable segments | 3 | 3 |
Minimum | ||
Schedule of Segment Reporting Information By Segment, Gross Margin [Line Items] | ||
Number of employees | employees | 350 | 350 |
REVENUE, DIRECT COSTS AND GROSS MARGIN (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Revenue Direct Costs And Gross Margin Line Items [Line Items] | ||
Revenue | $ 66,932 | $ 59,615 |
Direct costs | 24,828 | 17,555 |
Gross margin | 42,104 | 42,060 |
RPO Recruitment | ||
Revenue Direct Costs And Gross Margin Line Items [Line Items] | ||
Revenue | 45,236 | 42,889 |
Direct costs | 5,239 | 2,556 |
Gross margin | 39,997 | 40,333 |
RPO Contracting | ||
Revenue Direct Costs And Gross Margin Line Items [Line Items] | ||
Revenue | 21,696 | 16,726 |
Direct costs | 19,589 | 14,999 |
Gross margin | $ 2,107 | $ 1,727 |
DISCONTINUED OPERATIONS DISCONTINUED OPERATIONS - Reconciliation (Details) - RTM - Discontinued Operations $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Gross proceeds | $ 38,960 |
Add: purchase price adjustments | 176 |
Less: cash and restricted cash sold | (9,547) |
Less: transaction costs | (1,797) |
Net cash proceeds as presented in the statements of cash flows | $ 27,792 |
DISCONTINUED OPERATIONS DISCONTINUED OPERATIONS - Expenses (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Discontinued Operations and Disposal Groups [Abstract] | ||
Depreciation and amortization | $ 680 | $ 2,387 |
Stock-based compensation expense | 233 | 249 |
Capital expenditures | $ 284 | $ 1,471 |
INCOME TAXES Foreign and Domestic Income Before Tax (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Domestic | $ (6,819) | $ (7,851) |
Foreign | 1,652 | 5,876 |
Income (loss) from continuing operations before provision for income taxes | $ (5,167) | $ (1,975) |
INCOME TAXES Components Of Income Tax Expense Benefit (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Current tax provision (benefit): | ||
U.S. Federal | $ 0 | $ 0 |
State and local | 20 | 19 |
Foreign | 627 | 106 |
Total current provision for (benefit from) income taxes | 647 | 125 |
Deferred tax provision (benefit): | ||
U.S. Federal | (235) | 0 |
State and local | (67) | 0 |
Foreign | (246) | 744 |
Total deferred provision for (benefit from) income taxes | (548) | 744 |
Provision for (benefit from) income taxes from continuing operations | $ 99 | $ 869 |
INCOME TAXES Federal Statutory Income Tax Rate Reconciliation (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Provision for (benefit from) continuing operations at Federal statutory rates | $ (1,085) | $ (691) |
State income taxes, net of Federal income tax effect | 15 | 13 |
Change in valuation allowance | 2,904 | (46,491) |
Taxes related to foreign income | 443 | 452 |
Effect of U.S. federal and state tax rate changes on deferred tax assets | (1,727) | 46,189 |
Other federal and state deferred tax adjustments | 573 | 62 |
Effective Income Tax Rate Reconciliation, Other Adjustments, Amount | (1,024) | 1,335 |
Provision for (benefit from) income taxes from continuing operations | $ 99 | $ 869 |
INCOME TAXES Deferred Tax (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred tax assets (liabilities): | ||
Allowance for doubtful accounts | $ 25 | $ 29 |
Property and equipment | 19 | 800 |
Goodwill and intangibles | 670 | 1,614 |
Accrued compensation | 1,232 | 1,512 |
Accrued liabilities and other | 559 | 787 |
Tax loss carry-forwards | 197,564 | 89,534 |
Deferred tax assets (liabilities) gross, total | 200,069 | 94,276 |
Valuation allowance | (199,486) | (93,952) |
Deferred tax assets (liabilities), net of valuation allowance, total | $ 583 | $ 324 |
INCOME TAXES FIN 48 accruals (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Gross unrecognized tax benefits excluding interest and penalties | $ 1,574 | $ 1,311 |
Amount presented as a reduction to a deferred tax asset | 180 | 195 |
Unrecognized tax benefits, excluding interest and penalties | 1,394 | 1,116 |
Accrued interest and penalties | 588 | 566 |
Total unrecognized tax benefits that would impact the effective tax rate | $ 1,982 | $ 1,682 |
INCOME TAXES Summary of Income Tax Contingency (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Income Tax Disclosure [Abstract] | |
Unrecognized Tax Benefits, Decrease Resulting from Prior Period Tax Positions | $ 68 |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |
Balance at January 1, 2019 | 1,311 |
Additions based on tax positions related to the current year | 360 |
Lapse of statute of limitations | (2) |
Currency Translation | (27) |
Balance at December 31, 2018 | $ 1,574 |
INCOME TAXES Interest and Penalties (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | ||
Expense for (benefit of) estimated interest and penalties related to unrecognized tax benefits | $ 55 | $ 49 |
Minimum | ||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | ||
Decrease in Unrecognized Tax Benefits is Reasonably Possible | 0 | |
Maximum | ||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | ||
Decrease in Unrecognized Tax Benefits is Reasonably Possible | $ 200 |
EARNINGS (LOSS) PER SHARE (Computation of basic and diluted earnings (loss) per share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Earnings (loss) per share: | ||
Earnings (loss) per share from continuing operations, basic and diluted | $ (0.16) | $ (0.09) |
Earnings (loss) per share from discontinued operations, basic and diluted | 0.40 | 0.00 |
Earnings Per Share, Basic and Diluted | $ 0.24 | $ (0.09) |
EPS numerator - basic and diluted: | ||
Income (Loss) from Continuing Operations | $ (5,266) | $ (2,844) |
Income (Loss) from Discontinued Operations, Net of Taxes | 13,133 | (97) |
Net income (loss) | $ 7,867 | $ (2,941) |
EPS denominator (in thousands): | ||
Weighted-average common stock outstanding - basic (in shares) | 32,847 | 32,106 |
Weighted-average number of common stock outstanding - diluted (in shares) | 32,847 | 32,106 |
EARNINGS (LOSS) PER SHARE (Antidilutive securities excluded from the computation of earnings (loss) per share) (Details) - shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Common stock equivalents and outstanding stock options excluded from the calculation of diluted earnings (loss) per share (in thousands) | 627,725 | 1,188,933 |
Unvested restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Common stock equivalents and outstanding stock options excluded from the calculation of diluted earnings (loss) per share (in thousands) | 577,725 | 1,088,933 |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Common stock equivalents and outstanding stock options excluded from the calculation of diluted earnings (loss) per share (in thousands) | 50,000 | 100,000 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Payables and Accruals [Abstract] | ||
Salaries, commissions and benefits | $ 4,887 | $ 5,226 |
Severance | 1,374 | 0 |
Sales, use, transaction and income taxes | 708 | 101 |
Fees for professional services | 697 | 923 |
Deferred revenue | 56 | 237 |
Other accruals | 1,262 | 772 |
Total accrued expenses and other current liabilities | $ 8,984 | $ 7,259 |
COMMITMENTS AND CONTINGENCIES Operating Leases, Rent Expense, Minimum Rentals (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Commitments And Contingencies [Line Items] | ||
Lease Expiration Date | Dec. 31, 2019 | |
Operating Leases, Future Minimum Payments Due, Next Twelve Months | $ 251 | |
Total future minimum payments due | 251 | |
Office and general | ||
Commitments And Contingencies [Line Items] | ||
Operating leases, rent expense | $ 645 | $ 451 |
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Commitments And Contingencies [Line Items] | ||
Operating Leases, Future Minimum Payments Due, Next Twelve Months | $ 251 | |
Lease Expiration Date | Dec. 31, 2019 | |
Loss Contingency Accrual | $ 0 | |
Severance Costs | 601 | |
Operating Leases, Future Minimum Payments Due | $ 251 | |
Management [Member] | ||
Commitments And Contingencies [Line Items] | ||
Length Of Agreements With Consultants, Key Management, And Others | one year | |
Chief Executive Officer [Member] | ||
Commitments And Contingencies [Line Items] | ||
Salary and Wage, Officer, Excluding Cost of Good and Service Sold | $ 2,024 | |
Office and general | ||
Commitments And Contingencies [Line Items] | ||
Operating leases, rent expense | $ 645 | $ 451 |
STOCKHOLDERS' EQUITY (Details) - USD ($) $ in Thousands |
12 Months Ended | 29 Months Ended | 41 Months Ended | ||
---|---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2017 |
Dec. 31, 2018 |
Jul. 30, 2015 |
|
Stock Repurchase Program, Authorized Amount | $ 10,000 | ||||
Stock Repurchased During Period, Shares | 3,639,405 | 3,784,213 | |||
Payments for Repurchase of Common Stock | $ 208 | $ 858 | $ 7,370 | $ 7,579 | |
Open Market Repurchases [Member] | |||||
Stock Repurchased During Period, Shares | 144,808 | 650,278 | |||
Payments for Repurchase of Common Stock | $ 208 | $ 858 |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax | $ (606) | $ 10,671 |
Accumulated Other Comprehensive (Income) Loss, Defined Benefit Plan, after Tax | 0 | 38 |
Accumulated Other Comprehensive Income (Loss), Net of Tax | $ (606) | $ 10,709 |
SHELF REGISTRATION AND STOCKHOLDER RIGHTS PLAN (Details) - $ / shares |
12 Months Ended | |||
---|---|---|---|---|
Oct. 15, 2018 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Class of Stock [Line Items] | ||||
Rights | 1 | |||
Purchase price | $ 0.001 | $ 0.001 | $ 0.001 | |
Number of days after public announcement of acquiring person | 10 days | |||
Number of days after tender or exchange offer is completed by acquiring person | 10 days | |||
Number of securities called by each warrant or right | 0.01 | |||
Redemption price per share | $ 0.001 | |||
Series B Preferred Stock | ||||
Class of Stock [Line Items] | ||||
Purchase price | $ 3.50 | |||
Number of securities called by each warrant or right | 0.01 | |||
Acquisition Shelf Registration Statement | Common stock | ||||
Class of Stock [Line Items] | ||||
Shelf registration, maximum shares authorized | 1,350,000 | |||
Shelf registration, shares available for issuance | 1,350,000 | |||
Minimum | ||||
Class of Stock [Line Items] | ||||
Ownership percentage, common stock, without approval of board | 4.99% |
SUBSEQUENT EVENTS (Details) - Common stock - Subsequent Event $ / shares in Units, $ in Thousands |
Feb. 19, 2019
USD ($)
$ / shares
|
---|---|
Subsequent Event [Line Items] | |
Approved tender offer, amount | $ | $ 3,150,000 |
Approved tender offer, par value | $ 0 |
Approved tender offer, percentage of total shares outstanding | 10.00% |
Approved tender offer, per share | $ 1.50 |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS [Schedule] (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
SEC Schedule, 12-09, Allowance, Credit Loss [Member] | ||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Balance at Beginning of Period | $ 684 | $ 799 |
Additions Charged to Costs/Expenses (Recoveries) | (10) | 72 |
Deductions | 633 | 187 |
Balance at End of Period | 41 | 684 |
SEC Schedule, 12-09, Valuation Allowance, Deferred Tax Asset [Member] | ||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Balance at Beginning of Period | 110,159 | 156,342 |
Additions Charged to Costs/Expenses (Recoveries) | 89,327 | (46,183) |
Deductions | 0 | 0 |
Balance at End of Period | $ 199,486 | $ 110,159 |
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