NEW YORK, Nov. 3 /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 third quarter ended September 30, 2009.

2009 Third Quarter Summary

• Revenue of $169.6 million, a decrease of 37.0 percent from $269.2 million for the third quarter of 2008, and a decrease of $4.2 million or 2.4 percent from the second quarter of 2009
• Gross margin of $64.2 million, or 37.8 percent of revenue, down 43.0 percent from $112.7 million, or 41.9 percent of revenue for the same period last year, and a decrease of $0.7 million or 1.1 percent from the second quarter of 2009
• Adjusted EBITDA* loss of $3.2 million, or 1.9 percent of revenue, down from adjusted EBITDA of positive $6.6 million for the third quarter of 2008, and an improvement from the adjusted EBITDA loss of $4.4 million in the second quarter of 2009
• EBITDA(*) loss of $6.1 million, down from EBITDA of positive $3.8 million for the same period in 2008
• Net loss from continuing operations of $7.6 million, or $0.29 per basic and diluted share, compared with net income from continuing operations of $0.4 million, or $0.01 per basic and diluted share, for the third quarter of 2008
• Net loss of $6.9 million, or $0.26 per basic and diluted share, compared with net loss of $0.3 million, or $0.01 per basic and diluted share, for the third quarter of 2008

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

"Sequential improvement of adjusted EBITDA during the third quarter was encouraging," said Jon Chait, Hudson Highland Group's chairman and chief executive officer. "This achievement was counter to typical third quarter seasonal softness and resulted from the company's earlier restructuring actions and increased sequential demand in some markets. While we expect the environment to remain challenging, I expect we will continue to deliver improved sequential financial results for the fourth quarter of 2009 and into 2010."

"We continued to manage our cash well, ending the quarter with $44.5 million, as our Days Sales Outstanding decreased to 48 days," said Mary Jane Raymond, the company's executive vice president and chief financial officer. "We used $2.8 million of cash during the third quarter, of which $1.7 million was used for an earn-out payment on our Tony Keith acquisition in China and $0.9 million was a repayment on our credit facility. Cash flow from operations showed significant improvement from the first half of the year with a net use under $1 million."

Restructuring Program

During the fourth quarter of 2009, the company expects to continue to streamline its operations in response to current economic conditions. The company recently increased the size of its 2009 restructuring plan to $19 million and expects to incur $2 - $5 million of restructuring charges during the fourth quarter of 2009. Third quarter restructuring expenses of $2.9 million were related to severance and lease terminations, primarily in Europe.

Liquidity and Capital Resources

The company ended the third quarter of 2009 with $44.5 million in cash and $10.5 million currently borrowed under its primary credit facility, down from $47.2 million in cash at the end of the second quarter of 2009 with $11.3 million borrowed. In addition, the company has availability under its primary credit facility of $2.3 million, as well as an additional $3.8 million of availability under local country credit facilities, the majority of which became available subsequent to September 30, 2009. The company paid $1.7 million in July 2009 as part of its earn-out for the Tony Keith acquisition in China.

Guidance

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

Additional Information

Additional information about the company's quarterly results can be found in the shareholder letter and the third 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 Wednesday, November 4, 2009 at 9:00 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 36219796 at 8:50 a.m. ET. For those outside the United States, please call 1-706-634-5594 followed by the participant passcode 36219796. 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 two weeks by dialing 1-800-642-1687 followed by the participant passcode 36219796. For those outside the United States, the call will be available on 1-706-645-9291 followed by the participant passcode 36219796.

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 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; financial impact of audits by various taxing authorities; and 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         Nine Months
                                       Ended September     Ended September
                                             30,                 30,
                                        ----      ----      ----      ----
                                        2009      2008      2009      2008
                                        ----      ----      ----      ----
    Revenue                          $169,647  $269,239  $508,186  $865,398
    Direct costs                      105,457   156,544   317,108   495,123
                                      -------   -------   -------   -------
      Gross margin                     64,190   112,695   191,078   370,275
                                       ------   -------   -------   -------
    Operating expenses:
      Selling, general and
       administrative expenses         67,412   106,080   208,442   345,478
      Depreciation and amortization     2,741     3,913     9,369    11,274
      Business reorganization and
       integration expenses             2,878     2,817    12,279     5,033
      Goodwill and other impairment
       charges                              -         -     1,549         -
                                          ---       ---     -----       ---
        Total operating expenses       73,031   112,810   231,639   361,785
                                       ------   -------   -------   -------
      Operating (loss) income          (8,841)     (115)  (40,561)    8,490
    Other (expense) income :
      Interest, net                       (96)      337      (469)      895
      Other, net                           99       603       773     1,963
                                           --       ---       ---     -----
    (Loss) income from continuing
     operations before provision for
     income taxes                      (8,838)      825   (40,257)   11,348
    (Benefit) provision for income
     taxes                             (1,215)      464    (2,300)    8,524
                                       ----=--      ---    -=-----    -----
    (Loss) income from continuing
     operations                        (7,623)      361   (37,957)    2,824
    Income (loss) from discontinued
     operations, net of income taxes      770      (670)    7,773     3,187
                                          ---      --=--    -----     -----
    Net (loss) income                 $(6,853)    $(309) $(30,184)   $6,011
                                      ========    ====== =========   ======
    Basic earnings (loss) per share:
    (Loss) income from continuing
     operations                        $(0.29)    $0.01    $(1.46)    $0.11
    Income (loss) from discontinued
     operations                          0.03     (0.02)     0.30      0.13
                                         ----     ------     ----      ----
    Net (loss) income                  $(0.26)   $(0.01)   $(1.16)    $0.24
                                       =======   =======   =======    =====

    Diluted earnings (loss) per share:
    (Loss) income from continuing
     operations                        $(0.29)    $0.01    $(1.46)    $0.11
    Income (loss) from discontinued
     operations                          0.03     (0.02)     0.30      0.13
                                         ----     ------     ----      ----
    Net (loss) income                  $(0.26)   $(0.01)   $(1.16)    $0.24
                                       =======   =======   =======    =====

    Weighted average shares outstanding:
    Basic                              26,320    25,245    25,938    25,180
    Diluted                            26,320    25,630    25,938    25,550



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

                                                  September 30,   December 31,
                                                      2009           2008
                                                      ----           ----
                         ASSETS
    Current assets:
    Cash and cash equivalents                         $44,483        $49,209
    Accounts receivable, net                           96,994        127,169
    Prepaid and other                                  13,169         15,411
    Current assets from discontinued operations           314          2,360
                                                          ---          -----
      Total current assets                            154,960        194,149
    Intangibles, net                                    1,231          2,498
    Property and equipment, net                        19,306         24,379
    Other assets                                       15,767          9,927
      Total assets                                   $191,264       $230,953
                                                     ========       ========

          LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
    Accounts payable                                  $10,009        $15,693
    Accrued expenses and other current liabilities     57,523         76,447
    Short-term borrowings                              10,456          5,307
    Accrued business reorganization expenses            6,761          5,724
    Current liabilities from discontinued
     operations                                            72          1,410
                                                           --          -----
      Total current liabilities                        84,821        104,581
    Other non-current liabilities                      19,734         16,904
    Accrued business reorganization expenses,
     non-current                                          548          1,476
                                                          ---          -----
      Total liabilities                               105,103        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 26,764 and 26,494 shares,
     respectively                                          27             26
    Additional paid-in capital                        445,387        450,739
    Accumulated deficit                              (393,089)      (362,905)
    Accumulated other comprehensive income-
     translation adjustments                           34,128         27,054
    Treasury stock, 111 and 1,140 shares,
     respectively, at cost                               (292)        (6,922)
                                                         -----        -------
      Total stockholders' equity                       86,161        107,992
                                                       ------        -------
      Total liabilities and stockholders' equity     $191,264       $230,953
                                                     ========       ========



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

    For The Three
     Months Ended                            Hudson
     September 30,     Hudson     Hudson      Asia
     2009             Americas    Europe     Pacific Corporate    Total
                     ---------   -------    -------- ---------    -----
    Revenue            $35,705    $67,898    $66,044        $-  $169,647
                       =======    =======    =======        ==  ========
    Gross margin        $9,258    $29,571    $25,361        $-   $64,190
                        ------    -------    -------        --   -------
    Adjusted
     EBITDA (1)        $(1,625)       $30     $2,579   $(4,206)  $(3,222)
    Business
     reorganization
     and
     integration
     expenses              592      1,881        405         -     2,878
    Goodwill and
     other
     impairment
     charges                 -          -          -         -         -
                           ---        ---        ---       ---       ---
    EBITDA (1)          (2,217)    (1,851)     2,174    (4,206)   (6,100)
    Depreciation
     and
     amortization        1,047        911        739        44     2,741
                         -----        ---        ---        --     -----
    Operating
     (loss) income     $(3,264)   $(2,762)    $1,435   $(4,250)  $(8,841)
                       ========   ========    ======   ========  ========

    For The Three
     Months Ended                            Hudson
     September 30,     Hudson     Hudson      Asia
     2008             Americas    Europe     Pacific Corporate    Total
                     ---------   -------    -------- ---------    -----
    Revenue            $66,485    $98,301   $104,453        $-  $269,239
                       =======    =======   ========       ===  ========
    Gross margin       $17,967    $49,717    $45,011        $-  $112,695
                       -------    -------    -------       ---  --------
    Adjusted
     EBITDA (1)         $1,586     $3,403     $7,631   $(6,005)   $6,615
    Business
     reorganization
     and
     integration
     expenses              121        813      1,883         -     2,817
    Goodwill and
     other
     impairment
     charges                 -          -          -         -         -
                           ---        ---        ---       ---       ---
    EBITDA (1)           1,465      2,590      5,748    (6,005)    3,798
    Depreciation
     and
     amortization        1,175      1,495      1,190        53     3,913
                         -----      -----      -----        --     -----
    Operating
     income (loss)        $290     $1,095     $4,558   $(6,058)    $(115)
                          ====     ======     ======   ========    ======


      (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 Nine
     Months Ended                            Hudson
     September 30,     Hudson     Hudson      Asia
     2009             Americas    Europe     Pacific  Corporate    Total
                     ---------   -------    --------  ---------    -----
    Revenue           $122,861   $202,014   $183,311         $-  $508,186
                      ========   ========   ========        ===  ========
    Gross margin       $30,741    $91,155    $69,182         $-  $191,078
                       -------    -------    -------        ---  --------
    Adjusted
     EBITDA (1)        $(5,284)     $(253)    $2,318   $(14,145) $(17,364)
    Business
     reorganization
     and
     integration
     expenses            3,339      6,547      2,379         14    12,279
    Goodwill and
     other
     impairment
     charges              (120)         -      1,669          -     1,549
                          ----        ---      -----        ---     -----
    EBITDA (1)          (8,503)    (6,800)    (1,730)   (14,159)  (31,192)
    Depreciation
     and
     amortization        3,100      3,731      2,401        137     9,369
                         -----      -----      -----        ---     -----
    Operating
     (loss) income    $(11,603)  $(10,531)   $(4,131)  $(14,296) $(40,561)
                      =========  =========   ========  ========= =========

    For The Nine
     Months Ended                            Hudson
     September 30,     Hudson     Hudson      Asia
     2008             Americas    Europe     Pacific  Corporate    Total
                     ---------   -------    --------  ---------    -----
    Revenue           $221,254   $324,329   $319,815         $-  $865,398
                      ========   ========   ========        ===  ========
    Gross margin       $60,901   $170,603   $138,771         $-  $370,275
                       -------   --------   --------        ---  --------
    Adjusted
     EBITDA (1)         $4,544    $18,985    $22,413   $(21,145)  $24,797
    Business
     reorganization
     and
     integration
     expenses            1,826      1,229      1,978          -     5,033
    Goodwill and
     other
     impairment
     charges                 -          -          -          -         -
                           ---        ---        ---        ---       ---
    EBITDA (1)           2,718     17,756     20,435    (21,145)   19,764
    Depreciation
     and
     amortization        3,518      4,467      3,130        159    11,274
                         -----      -----      -----        ---    ------
    Operating
     (loss) income       $(800)   $13,289    $17,305   $(21,304)   $8,490
                         ======   =======    =======   =========   ======


      (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.

SOURCE Hudson Highland Group, Inc.

David F. Kirby of Hudson Highland Group, +1-212-351-7216, david.kirby@hudson.com