2015 Q3 Form 10-Q Financial Statement

#000121070815000029 Filed on October 30, 2015

View on sec.gov

Income Statement

Concept 2015 Q3 2014 Q3
Revenue $110.0M $149.3M
YoY Change -26.29% 7.17%
Cost Of Revenue $64.88M $93.59M
YoY Change -30.67% 5.4%
Gross Profit $45.15M $55.69M
YoY Change -18.93% 10.29%
Gross Profit Margin 41.03% 37.3%
Selling, General & Admin $45.57M $58.54M
YoY Change -22.16% 7.19%
% of Gross Profit 100.93% 105.12%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $950.0K $1.510M
YoY Change -37.09% -1.31%
% of Gross Profit 2.1% 2.71%
Operating Expenses $48.78M $60.80M
YoY Change -19.76% 11.33%
Operating Profit -$3.826M -$5.113M
YoY Change -25.17% -16.52%
Interest Expense -$93.00K -$192.0K
YoY Change -51.56% 31.51%
% of Operating Profit
Other Income/Expense, Net $242.0K $176.0K
YoY Change 37.5% -40.14%
Pretax Income -$3.677M -$5.129M
YoY Change -28.31% -14.19%
Income Tax -$1.648M -$558.0K
% Of Pretax Income
Net Earnings -$2.084M -$7.019M
YoY Change -70.31% 39.07%
Net Earnings / Revenue -1.89% -4.7%
Basic Earnings Per Share
Diluted Earnings Per Share -$600.0K -$2.121M
COMMON SHARES
Basic Shares Outstanding 34.69M shares 32.91M shares
Diluted Shares Outstanding 34.69M shares 32.91M shares

Balance Sheet

Concept 2015 Q3 2014 Q3
SHORT-TERM ASSETS
Cash & Short-Term Investments $36.40M $18.80M
YoY Change 93.62% -43.37%
Cash & Equivalents $36.36M $18.75M
Short-Term Investments
Other Short-Term Assets $7.300M $22.10M
YoY Change -66.97% 106.54%
Inventory
Prepaid Expenses
Receivables $65.72M $83.12M
Other Receivables $0.00 $0.00
Total Short-Term Assets $109.3M $123.9M
YoY Change -11.77% -12.87%
LONG-TERM ASSETS
Property, Plant & Equipment $7.807M $12.03M
YoY Change -35.11% -26.59%
Goodwill $1.979M $2.050M
YoY Change -3.46% -0.29%
Intangibles
YoY Change
Long-Term Investments
YoY Change
Other Assets $4.460M $4.927M
YoY Change -9.48% -14.92%
Total Long-Term Assets $19.07M $23.09M
YoY Change -17.4% -29.33%
TOTAL ASSETS
Total Short-Term Assets $109.3M $123.9M
Total Long-Term Assets $19.07M $23.09M
Total Assets $128.4M $147.0M
YoY Change -12.66% -15.94%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $4.521M $5.888M
YoY Change -23.22% -12.71%
Accrued Expenses $46.40M $54.80M
YoY Change -15.33% -16.46%
Deferred Revenue
YoY Change
Short-Term Debt $34.00K $8.217M
YoY Change -99.59%
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $53.02M $74.64M
YoY Change -28.97% 3.22%
LONG-TERM LIABILITIES
Long-Term Debt $0.00 $0.00
YoY Change
Other Long-Term Liabilities $4.539M $5.297M
YoY Change -14.31% -14.95%
Total Long-Term Liabilities $4.539M $5.297M
YoY Change -14.31% -14.95%
TOTAL LIABILITIES
Total Short-Term Liabilities $53.02M $74.64M
Total Long-Term Liabilities $4.539M $5.297M
Total Liabilities $64.35M $88.74M
YoY Change -27.48% -0.36%
SHAREHOLDERS EQUITY
Retained Earnings -$425.7M -$433.4M
YoY Change -1.78% 6.71%
Common Stock $480.6M $476.3M
YoY Change 0.9% 0.2%
Preferred Stock
YoY Change
Treasury Stock (at cost) $996.0K $456.0K
YoY Change 118.42% -46.54%
Treasury Stock Shares 83.00K shares 127.0K shares
Shareholders Equity $64.07M $58.29M
YoY Change
Total Liabilities & Shareholders Equity $128.4M $147.0M
YoY Change -12.66% -15.94%

Cashflow Statement

Concept 2015 Q3 2014 Q3
OPERATING ACTIVITIES
Net Income -$2.084M -$7.019M
YoY Change -70.31% 39.07%
Depreciation, Depletion And Amortization $950.0K $1.510M
YoY Change -37.09% -1.31%
Cash From Operating Activities $4.830M -$2.420M
YoY Change -299.59% -142.98%
INVESTING ACTIVITIES
Capital Expenditures -$1.050M -$1.540M
YoY Change -31.82% 105.33%
Acquisitions
YoY Change
Other Investing Activities $0.00
YoY Change
Cash From Investing Activities -$1.050M -$1.540M
YoY Change -31.82% 105.33%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -1.880M 5.710M
YoY Change -132.92% -804.94%
NET CHANGE
Cash From Operating Activities 4.830M -2.420M
Cash From Investing Activities -1.050M -1.540M
Cash From Financing Activities -1.880M 5.710M
Net Change In Cash 1.900M 1.750M
YoY Change 8.57% -57.0%
FREE CASH FLOW
Cash From Operating Activities $4.830M -$2.420M
Capital Expenditures -$1.050M -$1.540M
Free Cash Flow $5.880M -$880.0K
YoY Change -768.18% -113.79%

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us-gaap Description Of New Accounting Pronouncements Not Yet Adopted
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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS</font></div><div style="line-height:120%;text-align:left;text-indent:30px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;padding-bottom:6px;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In April 2015, the FASB issued Accounting Standards Update ("ASU") No. 2015-05, "Customer's Accounting for Fees Paid in a Cloud Computing Arrangement" ("ASU 2015-05"), which provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The new guidance does not change the accounting for a customer&#8217;s accounting for service contracts. ASU 2015-05 is effective for interim and annual reporting periods beginning after December 15, 2015. The Company does not believe the impact of its pending adoption of ASU 2015-05 on the Company's consolidated financial statements will be material.</font></div><div style="line-height:120%;padding-bottom:6px;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In April 2015, the FASB issued ASU No. 2015-03,&#160;"Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03"), which amends the current presentation of debt issuance costs in the financial statements. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, instead of as an asset. The amendments are to be applied retrospectively and are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015, but early adoption is permitted. The Company does not believe the impact of its pending adoption of ASU 2015-03 on the Company's consolidated financial statements will be material.</font></div><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In August 2014, the FASB issued ASU No. 2014-15, "Disclosure of Uncertainties about an Entity&#8217;s Ability to Continue as a Going Concern" ("ASU 2014-15"), to provide guidance on management&#8217;s responsibility to evaluate whether there is substantial doubt about a company&#8217;s ability to continue as a going concern within one year after the date that the financial statements are issued. ASU 2014-15 also provides guidance for related footnote disclosures. ASU 2014-15 is effective for the Company beginning on January 1, 2016 with early adoption permitted. The Company does not believe the impact of its pending adoption of ASU 2014-15 on the Company's consolidated financial statements will be material. </font></div><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In June 2014, the FASB issued ASU No. 2014-12, "Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period" ("ASU 2014-12"). ASU 2014-12 requires that a performance target that affects vesting and could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Accounting Standards Codification ("ASC") 718, "Compensation - Stock Compensation," as it relates to such awards. ASU 2014-12 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015 with early adoption permitted using either of two methods: (i) prospective to all awards granted or modified after the effective date or (ii) retrospective to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter, with the cumulative effect of applying ASU 2014-12 as an adjustment to the opening retained earnings balance as of the beginning of the earliest annual period presented in the financial statements. Accordingly, the standard is effective for the Company beginning on January 1, 2016. The Company does not believe the impact of its pending adoption of ASU 2014-12 on the Company's consolidated financial statements will be material. </font></div><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)." This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In July 2015, the FASB amended the effective date of this ASU to fiscal years beginning after December 15, 2017 and early adoption is permitted only for fiscal years beginning after December 15, 2016. Accordingly, we plan to adopt this ASU on January 1, 2018. Companies may use either a full retrospective or a modified retrospective approach to adopt this ASU. The Company is currently evaluating the impact that adopting ASU 2014-09 will have on the Company's financial condition, results of operations, and disclosures. </font></div><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In April 2014, the FASB issued ASU No. 2014-08, &#8220;Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity&#8221; (&#8220;ASU 2014-08&#8221;). ASU 2014-08 raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. ASU 2014-08 is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2014. Accordingly, the standard was effective for the Company beginning on January 1, 2015. The Company has adopted ASU 2014-08. In the second and third quarter of 2015, the Company divested and exited certain businesses. Under the new guidance, the exited businesses did not reach the thresholds required to qualify as discontinued operations and, as a result, the operations remain within the Company's continuing operations for all periods presented. </font></div><div style="line-height:120%;padding-bottom:6px;padding-top:6px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">There are no other recently issued accounting pronouncements that have had, or that the Company believes will have, a material impact on the Company's consolidated financial statements.</font></div></div>
us-gaap Nature Of Operations
NatureOfOperations
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">DESCRIPTION OF BUSINESS</font></div><div style="line-height:120%;padding-top:12px;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company is 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. The Company&#8217;s core service offerings include Permanent Recruitment, Temporary Contracting, Recruitment Process Outsourcing ("RPO") and Talent Management Solutions.</font></div><div style="line-height:120%;padding-top:12px;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company operates in </font><font style="font-family:inherit;font-size:10pt;">12</font><font style="font-family:inherit;font-size:10pt;"> countries with </font><font style="font-family:inherit;font-size:10pt;color:#000000;text-decoration:none;">three</font><font style="font-family:inherit;font-size:10pt;"> reportable geographic business segments: Hudson Americas, Hudson Asia Pacific, and Hudson Europe. See Note </font><font style="font-family:inherit;font-size:10pt;font-weight:normal;"><font style="font-family:inherit;font-size:10pt;font-weight:normal;">18</font></font><font style="font-family:inherit;font-size:10pt;"> for further details regarding the reportable segments. </font></div><div style="line-height:120%;padding-top:12px;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">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&#8217; non-operating other income (expense).</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company&#8217;s core service offerings include those services described below.</font></div><div style="line-height:120%;padding-top:12px;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Permanent Recruitment:</font><font style="font-family:inherit;font-size:10pt;"> Offered on both a retained and contingent basis, Hudson&#8217;s Permanent Recruitment services leverage its consultants, psychologists and other professionals in the development and delivery of its proprietary methods to identify, select and engage the best-fit talent for critical client roles.</font></div><div style="line-height:120%;padding-top:12px;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Temporary Contracting:</font><font style="font-family:inherit;font-size:10pt;"> In Temporary Contracting, Hudson provides a range of project management, interim management and professional contract staffing services. These services draw upon a combination of specialized recruiting and project management competencies to deliver a wide range of solutions. Hudson-employed professionals - either individually or as a team - are placed with client organizations for a defined period of time based on a client's specific business need.</font></div><div style="line-height:120%;padding-top:12px;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">RPO:</font><font style="font-family:inherit;font-size:10pt;"> Hudson RPO delivers both permanent recruitment and temporary contracting outsourced recruitment solutions tailored to the individual needs of primarily mid-to-large-cap multinational companies. Hudson RPO's 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. Hudson RPO services include complete recruitment outsourcing, project-based outsourcing, contingent workforce solutions and recruitment consulting.</font></div><div style="line-height:120%;padding-top:12px;text-align:justify;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Talent Management Solutions:</font><font style="font-family:inherit;font-size:10pt;"> Featuring embedded proprietary talent assessment and selection methodologies, Hudson&#8217;s Talent Management capability encompasses services such as talent assessment (utilizing a variety of competency, attitude and experiential testing), interview training, executive coaching, employee development and outplacement.</font></div></div>

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