NEW YORK, July 29 /PRNewswire-FirstCall/ -- Hudson Highland Group, Inc. (Nasdaq: HHGP), one of the world's leading providers of permanent recruitment, contract professionals and talent management solutions, today announced financial results for the second quarter ended June 30, 2009.

    2009 Second Quarter Summary

    --  Revenue of $173.8 million, a decrease of 42.6 percent from $303.1
        million for the second quarter of 2008, and an increase of $9.1
        million or 5.6 percent from the first quarter of 2009
    --  Gross margin of $64.9 million, or 37.3 percent of revenue, down 51.7
        percent from $134.4 million, or 44.3 percent of revenue for the same
        period last year, and an increase of $2.9 million or 4.6 percent from
        the first quarter of 2009
    --  Adjusted EBITDA* loss of $4.4 million, or 2.6 percent of revenue, down
        from adjusted EBITDA of positive $11.4 million for the second quarter
        of 2008, and an improvement from the adjusted EBITDA loss of $9.7
        million in the first quarter of 2009
    --  EBITDA* loss of $9.6 million, down from EBITDA of positive $10.4
        million for the same period in 2008
    --  Net loss from continuing operations of $15.5 million, or $0.59 per
        basic and diluted share, compared with net income from continuing
        operations of $1.9 million, or $0.07 per basic and diluted share, for
        the second quarter of 2008

    --  Net loss of $17.8 million, or $0.68 per basic and diluted share,
        compared with net income of $5.0 million, or $0.20 per basic and $0.19
        per diluted share, for the second quarter of 2008

*Adjusted EBITDA and EBITDA are defined in the segment tables at the end of this release.

"Despite an adverse economic environment in the second quarter, we were able to reduce our first quarter adjusted EBITDA loss by 54 percent due to aggressive cost management," said Jon Chait, Hudson Highland Group chairman and chief executive officer. "While we expect the environment to remain challenging, I believe that we have weathered the worst of the declines and there is evidence that market demand levels are beginning to stabilize."

"Our recent office restructuring actions and additional cost reductions are helping to position the company for a profitable future when the recovery takes hold," said Mary Jane Raymond, the company's executive vice president and chief financial officer. "We expect our adjusted EBITDA in the second half of 2009 to improve over the first half of the year, notwithstanding a possible seasonal decline in the third quarter. We expect cash trends to improve as well."

Restructuring Program

During the third quarter of 2009, the company expects to continue to streamline its operations in response to current economic conditions. Last quarter, the company increased the size of the 2009 restructuring plan to $11 - $16 million and expects to incur $1 - $4 million of restructuring charges during the third quarter of 2009. Second quarter restructuring expenses of $3.6 million were related to severance and lease terminations, primarily in Europe and North America.

Liquidity and Capital Resources

The company ended the second quarter of 2009 with $47.2 million in cash including $11.3 million currently borrowed under its amended credit facility, up from $46.3 million at the end of the first quarter of 2009. In addition, the company has excess availability under its amended credit facility of $6.7 million. The company received $11.6 million in April 2009 from Heidrick & Struggles for the final earn-out from the sale of Highland Partners in 2006.

Guidance

Despite recent signs of increasing stability, visibility remains low. As a result, the company will not provide formal guidance for the third quarter of 2009. The company will comment on current trends and its outlook for the third quarter on its second quarter earnings call.

Additional Information

Additional information about the company's quarterly results can be found in the shareholder letter and the second quarter earnings slides in the investor information section of the company's Web site at www.hudson.com.

Conference Call/Webcast

Hudson Highland Group will conduct a conference call Thursday, July 30, 2009 at 10:00 a.m. ET to discuss this announcement. Individuals wishing to participate can join the conference call by dialing 1-800-374-1532 followed by the participant passcode 19999263 at 9:50 a.m. ET. For those outside the United States, please call in on 1-706-634-5594 followed by the participant passcode 19999263. Hudson Highland Group's quarterly conference call can also be accessed online through Yahoo! Finance at www.yahoo.com and the investor information section of the company's Web site at www.hudson.com.

The archived call will be available for one week by dialing 1-800-642-1687 followed by the participant passcode 19999263. For those outside the United States, the call will be available on 1-706-645-9291 followed by the participant passcode 19999263.

About Hudson Highland Group

Hudson Highland Group, Inc. is a leading provider of permanent recruitment, contract professionals and talent management services worldwide. From single placements to total outsourced solutions, Hudson helps clients achieve greater organizational performance by assessing, recruiting, developing and engaging the best and brightest people for their businesses. The company employs nearly 2,500 professionals serving clients and candidates in more than 20 countries. More information is available at www.hudson.com.

Safe Harbor Statement

This press release contains statements that the company believes to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this press release, including those under the caption "Guidance" and other statements regarding the company's future financial condition, results of operations, business operations and business prospects, are forward-looking statements. Words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "predict," "believe" and similar words, expressions and variations of these words and expressions are intended to identify forward-looking statements. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These factors include, but are not limited to, the impact of global economic fluctuations including the current economic downturn; the ability of clients to terminate their relationship with the company at any time; risks in collecting our accounts receivable; implementation of the company's cost reduction initiatives effectively; the company's history of negative cash flows and operating losses may continue; the company's limited borrowing availability under our credit facility, which may negatively impact our liquidity; restrictions on the company's operating flexibility due to the terms of its credit facility; fluctuations in the company's operating results from quarter to quarter; risks relating to the company's international operations, including foreign currency fluctuations; risks related to our investment strategy; risks and financial impact associated with dispositions of underperforming or non-core assets; the company's heavy reliance on information systems and the impact of potentially losing or failing to develop technology; competition in the company's markets and the company's dependence on highly skilled professionals; the company's exposure to employment-related claims from both clients and employers and limits on related insurance coverage; the company's dependence on key management personnel; volatility of stock price; the impact of government regulations; restrictions imposed by blocking arrangements. Additional information concerning these and other factors is contained in the company's filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date of this letter. The company assumes no obligation, and expressly disclaims any obligation, to review or confirm analysts' expectations or estimates or to update any forward-looking statements, whether as a result of new information, future events or otherwise.

    Financial Tables Follow



                          HUDSON HIGHLAND GROUP, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
              (in thousands, except share and per share amounts)
                                  (unaudited)

                                     Three Months Ended   Six Months Ended
                                           June 30,           June 30,
                                           --------           --------
                                         2009      2008     2009      2008
                                         ----      ----     ----      ----

    Revenue                          $173,848  $303,128 $338,539  $596,159
    Direct costs                      108,964   168,725  211,651   338,579
                                      -------   -------  -------   -------
      Gross margin                     64,884   134,403  126,888   257,580
                                       ------   -------  -------   -------
    Operating expenses:
      Selling, general and
       administrative expenses         69,329   123,002  141,030   239,398
      Depreciation and amortization     2,840     3,537    6,628     7,362
      Business reorganization and
       integration expenses             3,562     1,024    9,401     2,216
      Goodwill and other impairment
       charges                          1,549         -    1,549         -
                                        -----       ---    -----       ---
        Total operating expenses       77,280   127,563  158,608   248,976
                                       ------   -------  -------   -------
      Operating (loss) income         (12,396)    6,840  (31,720)    8,604
    Other (expense) income:
      Interest, net                      (182)      204     (372)      558
      Other, net                           54     1,095      674     1,358
                                           --     -----      ---     -----
    (Loss) income from continuing
     operations before income taxes   (12,524)    8,139  (31,418)   10,520
    Provision (benefit) for income
     taxes                              2,975     6,281   (1,085)    8,060
                                        -----     -----   ------     -----
    (Loss) income from continuing
     operations                       (15,499)    1,858  (30,333)    2,460
    (Loss) income from discontinued
     operations, net of income taxes   (2,272)    3,098    7,003     3,860
                                       ------     -----    -----     -----
    Net (loss) income                $(17,771)   $4,956 $(23,330)   $6,320
                                     ========    ====== ========    ======
    Basic (loss) income per share:
    (Loss) income from continuing
     operations                        $(0.59)    $0.07   $(1.18)    $0.10
    (Loss) income from discontinued
     operations                         (0.09)     0.13     0.27      0.15
                                        -----      ----     ----      ----
    Net (loss) income                  $(0.68)    $0.20   $(0.91)    $0.25
                                       ======     =====   ======     =====

    Diluted (loss) income per share:
    (Loss) income from continuing
     operations                        $(0.59)    $0.07   $(1.18)    $0.10
    (Loss) income from discontinued
     operations                         (0.09)     0.12     0.27      0.15
                                        -----      ----     ----      ----
    Net (loss) income                  $(0.68)    $0.19   $(0.91)    $0.25
                                       ======     =====   ======     =====

    Weighted average shares outstanding:
    Basic                              26,311    24,984   25,744    25,135
    Diluted                            26,311    25,512   25,744    25,616



                           HUDSON HIGHLAND GROUP, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                     (in thousands, except per share amount)
                                   (unaudited)

                                                    June 30,   December 31,
                                                        2009           2008
                                                        ----           ----
                         ASSETS
    Current assets:
    Cash and cash equivalents                        $47,238        $49,209
    Accounts receivable, net                         104,794        127,169
    Prepaid and other                                 15,438         15,411
    Current assets from discontinued operations          831          2,360
                                                         ---          -----
      Total current assets                           168,301        194,149
    Intangibles, net                                     971          2,498
    Property and equipment, net                       21,128         24,379
    Other assets                                      13,152          9,927
      Total assets                                  $203,552       $230,953
                                                    ========       ========

          LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
    Accounts payable                                 $12,984        $15,693
    Accrued expenses and other current liabilities    60,716         76,447
    Short-term borrowings                             11,348          5,307
    Accrued business reorganization expenses           6,955          5,724
    Current liabilities from discontinued
     operations                                        1,185          1,410
                                                       -----          -----
      Total current liabilities                       93,188        104,581
    Other non-current liabilities                     19,157         16,904
    Accrued business reorganization expenses, non-
     current                                             819          1,476
                                                         ---          -----
      Total liabilities                              113,164        122,961
    Stockholders' equity:
    Preferred stock, $0.001 par value, 10,000
     shares authorized; none issued or outstanding         -              -
    Common stock, $0.001 par value, 100,000 shares
     authorized; issued 26,694 and 26,494 shares,
     respectively                                         27             26
    Additional paid-in capital                       445,123        450,739
    Accumulated deficit                             (386,235)      (362,905)
    Accumulated other comprehensive income-
     translation adjustments                          31,756         27,054
    Treasury stock, 107 and 1,140 shares,
     respectively, at cost                              (283)        (6,922)
                                                        ----         ------
      Total stockholders' equity                      90,388        107,992
                                                      ------        -------
      Total liabilities and stockholders' equity    $203,552       $230,953
                                                    ========       ========



                         HUDSON HIGHLAND GROUP, INC.
                               SEGMENT ANALYSIS
                                (in thousands)
                                 (unaudited)

    For The Three                           Hudson
     Months Ended     Hudson     Hudson      Asia
     June 30, 2009   Americas    Europe     Pacific  Corporate    Total
                    ---------   -------    --------  ---------    -----
    Revenue           $43,133    $68,187    $62,528         $-  $173,848
                      =======    =======    =======         ==  ========
    Gross margin      $10,512    $31,280    $23,092         $-   $64,884
                      -------    -------    -------         --   -------
    Adjusted
     EBITDA (1)         $(495)      $798       $444    $(5,192)  $(4,445)
    Business
     reorganization
     and
     integration
     expenses           1,124      2,328         96         14     3,562
    Goodwill and
     other
     impairment
     charges             (120)         -      1,669          -     1,549
                         ----        ---      -----        ---     -----
    EBITDA (1)         (1,499)    (1,530)    (1,321)    (5,206)   (9,556)
    Depreciation
     and
     amortization       1,048      1,017        745         30     2,840
                        -----      -----        ---         --     -----
    Operating
     (loss) income    $(2,547)   $(2,547)   $(2,066)   $(5,236) $(12,396)
                      =======    =======    =======    =======  ========

    For The Three                           Hudson
     Months Ended     Hudson     Hudson      Asia
     June 30, 2008   Americas    Europe     Pacific  Corporate    Total
                    ---------   -------    --------  ---------    -----
    Revenue           $71,507   $115,696   $115,925         $-  $303,128
                      =======   ========   ========         ==  ========
    Gross margin      $20,186    $63,326    $50,891         $-  $134,403
                      -------    -------    -------         --  --------
    Adjusted
     EBITDA (1)        $1,734     $9,870     $9,011    $(9,214)  $11,401
    Business
     reorganization
     and
     integration
     expenses             245        779          -          -     1,024
    Goodwill and
     other
     impairment
     charges                -          -          -          -         -
                          ---        ---        ---        ---       ---
    EBITDA (1)          1,489      9,091      9,011     (9,214)   10,377
    Depreciation
     and
     amortization       1,171      1,329        984         53     3,537
                        -----      -----        ---         --     -----
    Operating
     income (loss)       $318     $7,762     $8,027    $(9,267)   $6,840
                         ====     ======     ======    =======    ======

     (1) Non-GAAP earnings before interest, income taxes, special charges,
    other non-operating expense, and depreciation and amortization ("Adjusted
    EBITDA") and non-GAAP earnings before interest, income taxes, other non-
    operating expense, and depreciation and amortization ("EBITDA") are
    presented to provide additional information about the company's operations
    on a basis consistent with the measures which the company uses to manage
    its operations and evaluate its performance. Management also uses these
    measurements to evaluate capital needs and working capital requirements.
    Adjusted EBITDA and EBITDA should not be considered in isolation or as a
    substitute for operating income, cash flows from operating activities,
    and other income or cash flow statement data prepared in accordance with
    generally accepted accounting principles or as a measure of the company's
    profitability or liquidity. Furthermore, adjusted EBITDA and EBITDA as
    presented above may not be comparable with similarly titled measures
    reported by other companies.



                         HUDSON HIGHLAND GROUP, INC.
                               SEGMENT ANALYSIS
                                (in thousands)
                                 (unaudited)

    For The Six                             Hudson
     Months Ended     Hudson     Hudson      Asia
     June 30, 2009   Americas    Europe     Pacific  Corporate    Total
                    ---------   -------    --------  ---------    -----
    Revenue           $87,155   $134,116   $117,268         $-  $338,539
                      =======   ========   ========         ==  ========
    Gross margin      $21,482    $61,584    $43,822         $-  $126,888
                      -------    -------    -------         --  --------
    Adjusted
     EBITDA (1)       $(3,659)     $(282)     $(261)   $(9,940) $(14,142)
    Business
     reorganization
     and
     integration
     expenses           2,747      4,666      1,974         14     9,401
    Goodwill and
     other
     impairment
     charges             (120)         -      1,669          -     1,549
                         ----        ---      -----        ---     -----
    EBITDA (1)         (6,286)    (4,948)    (3,904)    (9,954)  (25,092)
    Depreciation
     and
     amortization       2,053      2,820      1,662         93     6,628
                        -----      -----      -----         --     -----
    Operating
     (loss) income    $(8,339)   $(7,768)   $(5,566)  $(10,047) $(31,720)
                      =======    =======    =======   ========  ========

    For The Six                             Hudson
     Months Ended     Hudson     Hudson      Asia
     June 30, 2008   Americas    Europe     Pacific  Corporate    Total
                    ---------   -------    --------  ---------    -----
    Revenue          $154,769   $226,028   $215,362         $-  $596,159
                     ========   ========   ========         ==  ========
    Gross margin      $42,940   $120,883    $93,757         $-  $257,580
                      -------   --------    -------         --  --------
    Adjusted
     EBITDA (1)        $2,959    $15,583    $14,783   $(15,143)  $18,182
    Business
     reorganization
     and
     integration
     expenses           1,705        416         95          -     2,216
    Goodwill and
     other
     impairment
     charges                -          -          -          -         -
                          ---        ---        ---        ---       ---
    EBITDA (1)          1,254     15,167     14,688    (15,143)   15,966
    Depreciation
     and
     amortization       2,344      2,972      1,940        106     7,362
                        -----      -----      -----        ---     -----
    Operating
     (loss) income    $(1,090)   $12,195    $12,748   $(15,249)   $8,604
                      =======    =======    =======   ========    ======

     (1) Non-GAAP earnings before interest, income taxes, special charges,
    other non-operating expense, and depreciation and amortization ("Adjusted
    EBITDA") and non-GAAP earnings before interest, income taxes, other non-
    operating expense, and depreciation and amortization ("EBITDA") are
    presented to provide additional information about the company's operations
    on a basis consistent with the measures which the company uses to manage
    its operations and evaluate its performance. Management also uses these
    measurements to evaluate capital needs and working capital requirements.
    Adjusted EBITDA and EBITDA should not be considered in isolation or as a
    substitute for operating income, cash flows from operating activities,
    and other income or cash flow statement data prepared in accordance with
    generally accepted accounting principles or as a measure of the company's
    profitability or liquidity. Furthermore, adjusted EBITDA and EBITDA as
    presented above may not be comparable with similarly titled measures
    reported by other companies.

Contact:
David F. Kirby Hudson Highland Group
212-351-7216
david.kirby@hudson.com

SOURCE Hudson Highland Group, Inc.

Web Site: http://www.hudson.com
(HHGP)