2017 Q3 Form 10-Q Financial Statement

#000121070817000035 Filed on November 02, 2017

View on sec.gov

Income Statement

Concept 2017 Q3 2016 Q3
Revenue $17.02M $108.1M
YoY Change -84.27% -1.72%
Cost Of Revenue $4.728M $64.59M
YoY Change -92.68% -0.45%
Gross Profit $11.17M $43.54M
YoY Change -74.35% -3.55%
Gross Profit Margin 65.65% 40.27%
Selling, General & Admin $11.10M $43.34M
YoY Change -74.39% -4.87%
% of Gross Profit 99.37% 99.55%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $700.0K $800.0K
YoY Change -12.5% -15.79%
% of Gross Profit 6.27% 1.84%
Operating Expenses $11.20M $44.33M
YoY Change -74.73% -9.13%
Operating Profit -$1.000K -$786.0K
YoY Change -99.87% -79.46%
Interest Expense -$3.000K -$109.0K
YoY Change -97.25% 17.2%
% of Operating Profit
Other Income/Expense, Net -$19.00K -$295.0K
YoY Change -93.56% -221.9%
Pretax Income -$23.00K -$1.190M
YoY Change -98.07% -67.64%
Income Tax $459.0K $718.0K
% Of Pretax Income
Net Earnings -$848.0K -$1.873M
YoY Change -54.73% -10.12%
Net Earnings / Revenue -4.98% -1.73%
Basic Earnings Per Share
Diluted Earnings Per Share -$250.0K -$558.8K
COMMON SHARES
Basic Shares Outstanding 32.15M shares 33.57M shares
Diluted Shares Outstanding 32.15M shares 33.57M shares

Balance Sheet

Concept 2017 Q3 2016 Q3
SHORT-TERM ASSETS
Cash & Short-Term Investments $16.80M $17.40M
YoY Change -3.45% -52.2%
Cash & Equivalents $16.84M $17.40M
Short-Term Investments
Other Short-Term Assets $5.000M $4.900M
YoY Change 2.04% -32.88%
Inventory
Prepaid Expenses
Receivables $11.12M $64.93M
Other Receivables $0.00 $0.00
Total Short-Term Assets $93.12M $87.20M
YoY Change 6.79% -20.25%
LONG-TERM ASSETS
Property, Plant & Equipment $6.173M $7.276M
YoY Change -15.16% -6.8%
Goodwill $1.896M $1.886M
YoY Change 0.53% -4.7%
Intangibles
YoY Change
Long-Term Investments
YoY Change
Other Assets $3.814M $4.497M
YoY Change -15.19% 0.83%
Total Long-Term Assets -$74.48M $17.74M
YoY Change -519.81% -6.99%
TOTAL ASSETS
Total Short-Term Assets $93.12M $87.20M
Total Long-Term Assets -$74.48M $17.74M
Total Assets $18.65M $104.9M
YoY Change -82.23% -18.28%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $4.688M $3.970M
YoY Change 18.09% -12.19%
Accrued Expenses $43.60M $37.70M
YoY Change 15.65% -18.75%
Deferred Revenue
YoY Change
Short-Term Debt $8.206M $8.095M
YoY Change 1.37% 23708.82%
Long-Term Debt Due $100.0K $100.0K
YoY Change 0.0%
Total Short-Term Liabilities $56.63M $50.20M
YoY Change 12.81% -5.33%
LONG-TERM LIABILITIES
Long-Term Debt $100.0K $200.0K
YoY Change -50.0%
Other Long-Term Liabilities $4.004M $4.340M
YoY Change -7.74% -4.38%
Total Long-Term Liabilities $4.004M $4.340M
YoY Change -7.74% -4.38%
TOTAL LIABILITIES
Total Short-Term Liabilities $56.63M $50.20M
Total Long-Term Liabilities $4.004M $4.340M
Total Liabilities $65.03M $60.24M
YoY Change 7.95% -6.39%
SHAREHOLDERS EQUITY
Retained Earnings -$441.4M -$440.2M
YoY Change 0.28% 3.41%
Common Stock $483.2M $482.1M
YoY Change 0.23% 0.32%
Preferred Stock
YoY Change
Treasury Stock (at cost) $7.575M $6.657M
YoY Change 13.79% 568.37%
Treasury Stock Shares 3.694M shares 3.003M shares
Shareholders Equity $44.78M $44.70M
YoY Change
Total Liabilities & Shareholders Equity $109.8M $104.9M
YoY Change 4.64% -18.28%

Cashflow Statement

Concept 2017 Q3 2016 Q3
OPERATING ACTIVITIES
Net Income -$848.0K -$1.873M
YoY Change -54.73% -10.12%
Depreciation, Depletion And Amortization $700.0K $800.0K
YoY Change -12.5% -15.79%
Cash From Operating Activities $1.010M -$4.990M
YoY Change -120.24% -203.31%
INVESTING ACTIVITIES
Capital Expenditures -$250.0K -$630.0K
YoY Change -60.32% -40.0%
Acquisitions
YoY Change
Other Investing Activities $0.00 $10.00K
YoY Change -100.0%
Cash From Investing Activities -$250.0K -$620.0K
YoY Change -59.68% -40.95%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 930.0K -1.920M
YoY Change -148.44% 2.13%
NET CHANGE
Cash From Operating Activities 1.010M -4.990M
Cash From Investing Activities -250.0K -620.0K
Cash From Financing Activities 930.0K -1.920M
Net Change In Cash 1.690M -7.530M
YoY Change -122.44% -496.32%
FREE CASH FLOW
Cash From Operating Activities $1.010M -$4.990M
Capital Expenditures -$250.0K -$630.0K
Free Cash Flow $1.260M -$4.360M
YoY Change -128.9% -174.15%

Facts In Submission

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us-gaap Incremental Common Shares Attributable To Share Based Payment Arrangements
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P5Y
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us-gaap Weighted Average Number Of Diluted Shares Outstanding
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us-gaap Weighted Average Number Of Shares Outstanding Basic
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us-gaap Weighted Average Number Of Shares Outstanding Basic
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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%;padding-bottom:12px;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-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In May 2017, the Financial Accounting Standards Board (the "FASB") issued&#160;Accounting Standards Update ("ASU") No.&#160;2017-09,</font><font style="font-family:inherit;font-size:10pt;font-style:italic;"> "Compensation - Stock Compensation: Scope of Modification Accounting," </font><font style="font-family:inherit;font-size:10pt;">which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity will account for the effects of a modification unless the fair value of the modified award is the same as the original award, the vesting conditions of the modified award are the same as the original award and the classification of the modified award as an equity instrument or liability instrument is the same as the original award. ASU 2017-09 is effective for all annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the effect of this update but does not believe it will have a material impact on its financial statements and related disclosures.</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%;padding-bottom:12px;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In January 2017, the FASB issued ASU 2017-04, </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">"Intangibles-Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment." </font><font style="font-family:inherit;font-size:10pt;">ASU 2017-04 eliminates the previous two-step process that required identification of potential impairment and a separate measure of the actual impairment. The annual assessment of goodwill impairment will be determined by using the difference between the carrying amount and the fair value of the reporting unit. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, including interim periods within that reporting period.&#160;Early&#160;adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.&#160;The Company is currently evaluating the effect of this update but does not believe it will have a material impact on its consolidated financial statements.</font></div><div style="line-height:120%;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In November 2016, the FASB issued&#160;ASU No. 2016-18,&#160;&quot;</font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Statement of Cash Flows (Topic 230): Restricted Cash"&#160;("ASU 2016-18"),</font><font style="font-family:inherit;font-size:10pt;">&#160;which requires the inclusion of restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the effect of this update but does not believe it will have a material impact on its consolidated financial statements.</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;">In August 2016, the FASB issued ASU No. 2016-15,&#160;</font><font style="font-family:inherit;font-size:10pt;font-style:italic;">"Statement of Cash Flows (Topic 230)&#160;-&#160;Classification of Certain Cash Receipts and Cash Payments" ("ASU 2016-15"),</font><font style="font-family:inherit;font-size:10pt;"> which provides clarification on how companies present and classify certain cash receipts and cash payments in the statement of cash flows. ASU 2016-15 will be effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption is permitted. An entity that elects early adoption must adopt all of the amendments in the same period. The Company is currently evaluating the impact to its consolidated financial statements.</font></div><div style="line-height:120%;padding-top:12px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In February 2016, the FASB issued ASU No. 2016-02, </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">"Leases (Topic 842)" ("ASU 2016-02")</font><font style="font-family:inherit;font-size:10pt;">,&#160;which amends the existing standards for lease accounting. This new standard requires the recognition of lease assets and lease liabilities on the balance sheet and the disclosure of key information about leasing arrangements including the amounts, timing, and uncertainty of cash flows arising from leases. ASU 2016-02 will be effective for the Company on January 1, 2019 and will require modified retrospective application as of the beginning of the earliest year presented in the financial statements. Early adoption is permitted. The Company is currently evaluating the impact to its consolidated financial statements.</font></div><div style="line-height:120%;padding-top:12px;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In May 2014, the FASB issued ASU No. 2014-09,&#160;"Revenue from Contracts with Customers (Topic 606)."&#160;ASU 2014-09 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. ASU 2014-09 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 ASU 2014-09 to fiscal years beginning after December 15, 2017 and early adoption is permitted only for fiscal years beginning after December 15, 2016. In March, April and May 2016, the FASB issued ASU 2016-08 &#8220;Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),&#8221; ASU 2016-10 &#8220;Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing,&#8221; and ASU 2016-12 "Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients" which provide further clarifications to be considered when implementing ASU 2014-09. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. We are evaluating the impact of this ASU as it relates to our revenue streams, as well as certain associated expenses. In the third quarter we have made progress in evaluating the impact of this ASU. Based on our assessment (which has not yet been completed), we do not expect our adoption of the standard to have a material impact to our revenue and net income. During the fourth quarter of 2017, we will complete our assessment and implementation process prior to the adoption of ASU 2014-09 on January 1, 2018. We expect to adopt the guidance using the modified retrospective approach.</font></div><div style="line-height:120%;padding-top:12px;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
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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;">DESCRIPTION OF BUSINESS</font></div><div style="line-height:120%;padding-top:12px;text-indent:36px;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, Contracting, Recruitment Process Outsourcing ("RPO") and Talent Management Solutions.</font></div><div style="line-height:120%;padding-top:12px;text-indent:36px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company operates in </font><font style="font-family:inherit;font-size:10pt;">13</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;">17</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:36px;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%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company&#8217;s core service offerings include:</font></div><div style="line-height:120%;padding-top:12px;text-indent:36px;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:36px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;">Contracting:</font><font style="font-family:inherit;font-size:10pt;"> In 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:36px;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 permanent recruitment and 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:36px;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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