Hudson Highland Group Inc. Annual Report 2006

Plain-text annual report

2006 Annual Report From great people to great performance SM Hudson Asia Paciﬁ c | Europe | North America www.hudson.com 7 0 / 3 0 . 0 0 0 0 2 . A N C O R P O R AT E I N F O R M AT I O N O N T H E B A C K C O V E R : N I C O L A H A W K I N S I S H U D S O N Annual Meeting Common Stock The annual meeting of Hudson Highland Hudson Highland Group, Inc. common Group, Inc. will be held on Tuesday, stock is listed on the Nasdaq National May 1, 2007, at 8:00 a.m., local time, at Market under HHGP. the Hudson Highland Group, Inc. cor- porate headquarters, 560 Lexington Transfer Agent and Registrar Avenue (Lexington Avenue and 50th The Bank of New York Street), 5th Floor, New York, NY 10022. Shareholder Relations Dept. Shareholder Information Form 10-K for the year ended P.O. Box 11258 Church Street Station New York, NY 10286 December 31, 2006 (without exhibits), 800-524-4458 as ﬁ led with the Securities and Exchange www.stockbny.com Commission, accompanies this Hudson Highland Group report and, together with Independent Auditors this report, constitutes Hudson BDO Seidman, LLP Highland Group’s 2006 Annual Report 330 Madison Avenue to Shareholders. New York, NY 10017 Investor Information / Quarterly Reports Legal Counsel Foley & Lardner LLP For quarterly earnings reports, press 777 East Wisconsin Avenue releases and other investor information, Milwaukee, WI 53202 please visit our Web site at www.hhgroup.com or e-mail your Corporate Headquarters inquiries to investor.relations@ Hudson Highland Group, Inc. hhgroup.com. 560 Lexington Avenue, 5th Floor New York, NY 10022 212-351-7300 www.hhgroup.com Forward-Looking Statements This report contains statements that the company believes to be “forward-looking statements” with- in the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this report, including those under the caption “Guidance” and other statements regarding the company’s future ﬁ nancial condition, results of operations, busi- ness operations and business prospects, are forward-looking statements. Words such as “antici- pate,” “estimate,” “expect,” “project,” “intend,” “plan,” “predict,” “believe” and similar words, expres- sions 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 ﬂ uctuations on temporary con- tracting operations; the cyclical nature of the company’s mid-market professional stafﬁ ng business- es; the company’s ability to manage its growth; risks associated with expansion; risks and ﬁ nancial impact associated with disposition of non-strategic assets; the company’s reliance on information systems and technology; competition; ﬂ uctuations in operating results; risks relating to foreign op- erations, including foreign currency ﬂ uctuations; dependence on highly skilled professionals and key management personnel; risks maintaining professional reputation and brand name; restrictions im- posed by blocking arrangements; exposure to employment-related claims, and limits on insurance coverage related thereto; government regulations; restrictions on the company’s operating ﬂ exibility due to the terms of its credit facility; risks associated with the remediation work being performed on the company’s PeopleSoft system; and the company’s ability to maintain effective internal control over ﬁ nancial reporting. Additional information concerning these and other factors is contained in the company’s ﬁ lings with the Securities and Exchange Commission. These forward-looking state- ments speak only as of the date of this report. The company assumes no obligation, and expressly disclaims any obligation, to review or conﬁ rm analysts’ expectations or estimates or to update any forward-looking statements, whether as a result of new information, future events or otherwise. Design/Concept Pressley Jacobs: a design partnership/Chicago Writing Dovetail Communications/Chicago Photography Sandro/Chicago: cover, 11, 12; Chris Moyse/London: backcover, 3, 9, 17; Mick Ryan/Shanghai: 2, 3, 6; Ingvar Keene/Sydney: 1, 2, 14. Printing Active Graphics/Chicago O N T H E C O V E R : VICE PRESIDENT WESTINGHOUSE ACCOUNTS WESTINGHOUSE PROJECT MONROEVILLE PA UNITED STATES KNOWN FOR LEADERSHIP AND CALM D A N P L U N K E T T I S H U D S O N . Hudson client Westinghouse is one of the world’s leading original equipment manufacturers in the nuclear energy industry — and it relies on Hudson’s highly specialized expertise to supply and manage its professional and technical temporary contract workforce. With years of experience working with major OEMs and large nuclear power facilities, Hudson nuclear engineering specialists have the talent pool to get the job done. But Hudson does more than put the right people in the right positions. Dan’s team applied its solid industry knowledge to streamline and standardize global hiring and management processes. Automated time and expense entry, electronic invoicing and payment, and other advanced reporting features provide easy access to management information for increased efficiency and reduced administrative costs. PAUL SIMMS (L) CONSULTANT ACCOUNTING KRISTY VACHER CONSULTANT ACCOUNTING TIM MORDEN (R) CONSULTANT FINANCE & BANKING ASIA PACIFIC / MELBOURNE We’re a leading provider of specialized recruitment, contract professionals, talent management and outsourced solutions worldwide. Every one of our more than 3,600 employ- ees embodies the Hudson brand promise: From great people to great performance.SM We’re everywhere our clients do business. Our skills and capabilities are highly relevant to the challenges they face. We’re achievers who excel at helping clients attract, select, engage and develop talent — with a unique focus on driving business results. That’s Hudson. We’re Hudson. Every one of us. DAVID RHIND ELTON KELLY (L) CONSULTANT ACCOUNTING & FINANCE BONNIE WANG GENERAL COUNSEL NORTH AMERICA STEVE WATTON (R) CONSULTANT HUMAN RESOURCES NORTH AMERICA / CHICAGO ASIA PACIFIC / MELBOURNE RESEARCHER INDUSTRIAL ASIA PACIFIC / SHANGHAI LUKE ARCHER (L) DIRECTOR IT BANKING & FINANCIAL SERVICES GINO QU HARVEY SEALE (L) SENIOR IT TRAINING ADVISOR SARAH GREENSMITH (R) DIRECTOR IT RECRUITMENT SYSTEM ENGINEER CORPORATE LEARNING & DEVELOPMENT EUROPE / LONDON ASIA PACIFIC / SHANGHAI DARSHAN SINGH (R) ASSOCIATE CONSULTANT IT EUROPE / LONDON he year 2006 was one of resiliency for Hudson Highland Group. After a difﬁ cult start, the company re- covered in the second half of the year to deliver a 32 percent increase in EBITDA* over 2005. Consolidated results were T adversely impacted by the performance of Hudson Americas. Hudson Asia Paciﬁ c and Hudson Europe achieved improved Scottish industrial business (2005 revenue of $12 million) and our United Kingdom support business (2006 revenue of $10 million). None of these were bad businesses. In fact, several of them were very proﬁ table, but we concluded that we cannot be successful by trying to achieve excellence in such a wide range of service offerings. While we believe our core offerings possess strong growth potential in and of themselves, we continue to evaluate acquisi- ﬁ nancial results and increased proﬁ tability. We believe we are tion opportunities in key growth markets, seeking businesses better positioned entering 2007 to utilize further operating in our key practice areas with operators who can augment and leverage to expand our proﬁ tability. strengthen our existing management team. Along those lines, Our Strategy Since our inception, we have focused on build- ing our specialized professional recruitment, stafﬁ ng, project solutions and talent management businesses. We believe that this core mix has good growth potential for the next decade. early in 2007 we signed a deﬁ nitive agreement to acquire one of China’s leading IT recruitment ﬁ rms, Tony Keith Associates Ltd., solidifying Hudson’s leadership position in that fast- growth region of the world. While we remain focused on these segments, we will continue Our Financial Results Revenue from continuing operations to operate non-core activities in markets where they strategi- was $1.4 billion, an increase of less than one percent com- cally support the core business. pared with 2005. Gross margin from continuing operations Successfully building our business means building a value was $495 million, or 36.0 percent of revenue, an increase of proposition for clients and candidates that is unique and differ- 3.8 percent from $477 million, or 34.9 percent, for the prior entiated from our competition. Our talent management resourc- year. Growing the gross margin faster than revenue is part of es, particularly our broad suite of assessment tools, provide our strategy as we move out of lower-margin areas and replace Dear shareholders, employees, clients, prospective clients a our clients with a value proposition in recruitment that strikes with higher-margin business. the center of their target: better organizational performance. EBITDA is our primary measure of proﬁ tability and prog- Increasingly today, the candidate is becoming king, and the ress. EBITDA was $26.9 million, or 2.0 percent of revenue, an Hudson value proposition is equally attractive to candidates as increase of 32.5 percent from $20.3 million, or 1.5 percent of they are assured of an objective evaluation of their entire range revenue, for the prior year. EBITDA in 2006 included a $6.4 of skills and competencies, both tangible and intangible. Today’s million restructuring charge incurred to accelerate the reduc- biggest demand from client organizations is for “right ﬁ t” candi- tion of our expense base worldwide. The challenges in North dates, particularly in terms of intangible characteristics. As you America in 2006 inhibited our ability to increase the consoli- will see in the accompanying report, we can deliver this value in dated return on revenue at a faster rate. most of the developed world and many emerging markets. Income from continuing operations was $1.5 million, or Successfully building our business also requires a con- $0.06 per basic share and diluted share, compared with a tinued narrowing of our focus. We believe this will bring in- loss of $4.5 million, or ($0.20) per basic and diluted share, creased productivity, more effective investments and greater for last year. Net income was $22.1 million, or $0.90 per ability to leverage our expense base. In 2006 and early 2007, basic share and $0.88 per diluted share, compared with we exited non-core components of our global portfolio, in- net income of $0.2 million, or $0.01 per basic and diluted cluding Highland Partners (2005 revenue of $63 million), our share, for 2005. Net income in 2006 included $20.6 million of income from discontinued operations resulting from the sale of Highland Partners in October. Cash ﬂ ow from operations was $35.9 million compared with ($26.3) million in 2005. During 2006, we were cash ﬂ ow positive every quarter. Q1 Q 2 Q 3 Q4 Our Regional Results Hudson Europe improved EBITDA 0 $ 5 0 $10 0 $15 0 $ 2 0 0 $ 2 5 0 $ 3 0 0 $ 3 5 0 to 5.2 percent of revenue, up 59 percent from 3.2 percent revenue (in millions) in 2005, with strong performances by the United Kingdom, France, Balance (our Dutch contract project management busi- Q1 ness), Netherlands, Benelux, our Central & Eastern European operation and Spain. Hudson Asia Paciﬁ c reported EBITDA of 7.4 percent of revenue, up 9 percent from 6.8 percent, with sig- niﬁ cant improvement achieved in Australia and New Zealand, and continued high-growth, high-proﬁ t results from Asia. Even though North America’s overall performance was not strong, there were bright spots in Legal, Energy and Manage- ment Search. We made several management changes mid year, most importantly new leadership for the Financial Solutions and IT&T practices, and key functional support groups. The dili- Q 2 Q 3 Q4 Q1 Q 2 gent work of the North America team resulted in a proﬁ tability Q 3 rebound in the third and fourth quarters. This is a foundation Q4 that we expect to build upon in 2007. 0 $ 2 5 $ 5 0 $ 7 5 $10 0 $12 5 $15 0 gross margin (in millions) and candidates: We’re focused. 2006 2005 2004 2003 0 $ 2 0 $ 4 0 $ 6 0 $ 8 0 $10 0 revenue per employee (in thousands) Our Future We are maintaining a razor-sharp focus on im- proving proﬁ tability, driving toward our long-term goal of 7-10 percent EBITDA margins. The third and fourth quarters of 2006 2004 2006 2005 were the most proﬁ table EBITDA quarters in company history. We exited the year with a more efﬁ cient cost structure, strong positive cash ﬂ ow and no debt. Possibly most important, the Hudson brand and our leadership position are steadily grow- ing in markets around the world. We still have much to do, but expect to build upon this momentum in 2007 and beyond. Our - $ 2 5 - $ 2 0 - $15 - $10 - $ 5 $ 0 $ 5 $10 $15 operating income (in millions) 23% N O R T H A M E R I C A 33% A S I A PA C I F I C 44% E U R O P E great people, many of whom are proﬁ led in this report, will make gross margin by region the difference. Jon F. Chait Chairman and Chief Executive Ofﬁ cer Mary Jane Raymond Executive Vice President and Chief Financial Ofﬁ cer * EBITDA is earnings before interest, income taxes, other non-operating expense, depreciation and amortization. The reconciliation to operating income is included in Item 8 Financial Statements and Supplementary Data in the enclosed Form 10-K. CONSULTANT INDUSTRIAL CARRIER PROJECT SHANGHAI CHINA KNOWN FOR EFFICIENCY AND CREATIVITY Sabrina. We’re everywhere. At Hudson, we’ve built a business with specialized capabilities and local presence in virtually every major region of the world. That means no matter what our clients need in the talent arena, and no matter where in the world that need exists, chances are we have highly qualiﬁ ed people on the ground to meet it. S A B R I N A M A I S H U D S O N . When Carrier, a part of United Technologies Corporation, increased its joint venture ownership in China in 2001, the company identified a major recruitment need as part of its five-year strategic plan. Carrier enlisted Hudson’s China team to help. Key objectives included helping to build a strong core management team and a national sales force to expand Carrier’s presence across all parts of the country. Sabrina was a key contributor on the Hudson team — she worked closely with the Managing Director and HR Director at Carrier to recruit more than 60 sales people in smaller cities and towns across China. From there, the team has continued to conduct targeted searches to support the Carrier strategy. Today, Carrier is achieving its goals and the Hudson/Carrier partnership is strong. We have deep functional expertise across a wide range We are particularly strong at industry-speciﬁ c professional of industries. Hudson excels at deadline-intensive small- stafﬁ ng and recruitment, with in-house expertise that gives scale or high-volume recruitment and stafﬁ ng projects. Our us unique access to highly specialized technical talent pools. outsourcing solutions put Hudson professionals onsite to Hudson recruiters know their industries because many of reduce costs and increase client HR productivity. Hudson them came from successful careers there. We have the talent management solutions deliver customized strategies global network to meet permanent, contract or project hir- for attraction and development of top performers. Hudson ing needs in aerospace and defense; banking and ﬁ nancial Diversity & Inclusion solutions provide consulting, training and services; consumer products; energy; legal; information tech- recruiting to build workforce diversity. nology; manufacturing; pharmaceuticals and biotechnology; telecommunications; and more. We’re all over the world. With more than 100 ofﬁ ces in over 20 countries, Hudson has the reach and presence to serve employers worldwide. Full-time Hudson professionals — most of whom are nationals, not expatriates — in Europe, Asia and North America. People who know the subtleties of the local business climate and culture, well connected to the region’s highest-quality talent. Our presence is balanced across the Hudson global footprint — revenue contribution is roughly equal between the three regions. ROMANIA ROMANIA SINGAPORE SINGAPORE We’re Hudson. We’re passionate professionals who work together across functions and borders. We collaborate glob- SLOVAK REPUBLIC SLOVAK REPUBLIC ally, combining our worldwide reach and local insights to bring IN MORE THAN 2020 COUNTRIES WORLDWIDE: COUNTRIES WORLDWIDE: IN MORE THAN ARGENTINA ARGENTINA AUSTRALIA AUSTRALIA BELGIUM BELGIUM CANADA CANADA CHINA CHINA IRELAND IRELAND ITALY ITALY JAPAN JAPAN LUXEMBOURG LUXEMBOURG SPAIN SPAIN NETHERLANDS NETHERLANDS SWEDEN SWEDEN maximum value to each talent assignment. Clients who are CZECH REPUBLIC CZECH REPUBLIC NEW ZEALAND NEW ZEALAND UKRAINE UKRAINE pleased with our work in one region regularly enlist our help to DENMARK DENMARK FRANCE FRANCE HUNGARY HUNGARY NORWAY NORWAY POLAND POLAND UNITED KINGDOM UNITED KINGDOM UNITED STATES UNITED STATES achieve their objectives in others. We think that speaks more to our effectiveness than anything else. N I C O L A H A W K I N S I S H U D S O N . After the 9/11 disaster grounded external hiring, British Airways scaled down its in-house recruitment team signiﬁ cantly. But by 2003, the airline needed to recruit people: 600 cabin crew and 300 customer service agents. Hudson established a pool of onsite associates, administrators and reference- checkers to support the assignment. Today Hudson manages an associate pool for the client, covering five different campaigns, scaling it up or down to meet needs that can vary on a daily basis. In filling positions such as cabin crew, customer service agents and pilots, Hudson associates are highly effective at identifying focused competencies such as customer interface, emotional resilience, judgment and others. Nicola’s project management skills help make sure that British Airways has the associates it needs, when and where it needs them, every day. PROJECT MANAGER TALENT MANAGEMENT BRITISH AIRWAYS PROJECT LONDON UNITED KINGDOM KNOWN FOR DILIGENCE AND A SENSE OF HUMOR Nicola. We’re relevant. It’s a very big, highly competitive world, and it’s in a state of constant change. That means new challenges — and opportunities — are emerging and evolving every day. Hudson’s strengths align well with the direction the world is going. D A V I D H E S T I S H U D S O N . As a world-class pharmaceutical company, GlaxoSmithKline (GSK) is known for its strong product pipeline. But even more critical to its success is a strong pipeline of high-quality people. GSK needs both quality and quantity of candidates on an ongoing basis to fill a wide spectrum of positions in its Global Manufacturing and Supply operations, from production operators to analytical chemists, senior executives to operational excellence specialists. David works onsite with GSK’s HR department, managing Hudson involvement in key hiring functions — sourcing, screening, reference checks, job offers, Web site administration — and delivering measurable results. In just 16 months: a database of 36,000 applicants; 1,285 phone screens and 1,244 interviews completed; 349 positions filled. Pleased with Hudson’s work, GSK Canada recently expanded the relationship to include management of all aspects of the company’s recruitment function. Great talent is getting harder and harder to find. they’re exploring them. It’s just as challenging in emerg- Everyone in business knows it: There is no single success ing markets, where competition is increasingly intense to factor more critical than attracting, developing and, most im- attract qualiﬁ ed talent. portant, keeping talented people. Globalization is affecting more middle-market busi- Easier said than done. In mature markets like Europe, nesses. The globalization of business is accelerating. Asian Japan and the United States, the pool of qualiﬁ ed younger and European competitors are continuing to make inroads into professionals is shrinking while experienced knowledge North America; North American companies are continuing to workers are retiring at an increasing pace. Talented in- establish operations overseas. dividuals have more options than ever — including be- coming independent contractors and consultants — and DIRECTOR OF CLIENT SERVICE DELIVERY TALENT SOLUTIONS GLAXOSMITHKLINE PROJECT TORONTO CANADA KNOWN FOR RESULTS AND COLLABORATION David. PROJECT COORDINATOR DIVERSITY & INCLUSION ING PROJECT CHICAGO IL UNITED STATES KNOWN FOR PROBLEM SOLVING AND CANDOR Allison. The global economy is no longer the sole province of huge The marketplace isn’t the only dynamic environment in busi- multinational corporations. For more middle-market compa- ness. New regulatory compliance requirements can be instant nies than ever, pressure from foreign competition is turning game changers. The Sarbanes-Oxley Act is only the latest ex- global expansion into an imperative. Companies without a ample. What’s next? global strategy are seeing the need for one. For many, it’s no longer a question of growth or proﬁ tability. It’s rapidly becom- ing a question of survival. We’re Hudson. Accelerating globalization. A shrinking talent pool. An unpredictable marketplace and regulatory environ- ment. We have the recruiting and talent development capa- Market and compliance environments are more un- bilities, global network, deep functional expertise and industry predictable than ever, worldwide. The pace of change in insights to make us an ideal partner to help navigate a world of the marketplace has never been more rapid. Volatile interest complexity and change. rates can cause whole industries to decline. Customer de- mand can surge at a moment’s notice. The ability to quickly staff up — or down — to meet ﬂ uctuating conditions is a com- petitive advantage. A L L I S O N M I L L I N E R I S H U D S O N . As one of the world’s leading financial services companies, ING places a high priority on workforce diversity. Hudson’s diversity and inclusion specialists are innovating to help ING achieve its goals in the United States. Hudson’s solution: a series of Private Networking Receptions (PNRs) that build awareness of ING in the right circles and connect the company to high-caliber candidates. Held in carefully selected locations and venues, these events offer an intimate setting for talented individuals to network with industry leaders and peers. Allison is a key member of a Hudson team that manages every aspect of each event — invitee list development, communications, ING speaker support and candidate follow-up. GENERAL MANAGER MANAGED SERVICES (VICTORIA) 2006 MELBOURNE COMMONWEALTH GAMES PROJECT MELBOURNE AUSTRALIA KNOWN FOR INTEGRITY AND GRACE UNDER PRESSURE Deanne. We’re achievers. We represent much more than a top-ﬂ ight resource for ﬁ nding and hiring high-quality talent worldwide. Our focus is on achieving real, measurable, long-term results for our clients — by helping them unleash human potential to drive business performance. D E A N N E B A R B A R Y I S H U D S O N . Staffing the 2006 Melbourne Commonwealth Games was a study in challenge and complexity. A large and varied number of highly specialized positions. Immovable deadlines. Tightly defined budget. A high degree of public scrutiny. In short, no margin for error. Hudson was up to the challenge — Deanne led an onsite team that implemented a tailored, disciplined project management methodology, ensuring the highest quality talent, managing timeframes, mitigating risk and enabling the Games’ HR team to monitor progress in real time. The Hudson team recruited more than 1,000 roles between October 2003 and March 2006, from marketing people to procurement professionals; from competition managers to a group manager for ceremonies — on schedule, within budget, without a hitch. At Hudson, “solution” is not an empty word. Everyone its culture — in order to focus our work on measurably impact- says they deliver solutions. What does that mean, exactly? ing business results. We deliver great people, but that’s not what we mean by solutions. To us, a true solution addresses a bigger picture — and seeks to provide a bigger result — than simply ﬁ ll a posi- tion for the client. We do more than help clients ﬁ nd talent. We help them maximize its strategic value. That includes assessment and selection — tools and processes for building a deep, stra- tegically relevant knowledge of the existing workforce. Our We deliver people. Then we help clients make sure performance management services aim at helping clients de- they deliver results. We have built our entire practice on ﬁ ne, cultivate and reward attributes and behaviors critical to the principle that great human performance is always behind a successful business strategy. Hudson leadership develop- great business performance. Our ﬁ rst priority is to understand ment solutions link speciﬁ c skills with business goals and help the totality of a client’s business — its markets, its strategies, develop them. S E L E C T AT T R A C T E N G A G E Hudson diversity and inclusion experts offer a proven method- ology for building a diverse talent pipeline. Certiﬁ ed diversity consultants help client management teams deﬁ ne and priori- D E V E L O P tize key diversity objectives and initiatives in a comprehensive, achievable implementation plan, and then execute it. The Hudson Performance Continuum We’re Hudson. We practice what we preach. We strive to starts with putting the best talent do within our company exactly what we do for our clients and in the right job, and it continues with a focus on developing top performers. Simply put, we help each client build a high-performance workforce and candidates. By creating an environment where achievers are developed and rewarded, we attract achievers. By knowing our own talent pool, we provide a workplace where the most talented can advance. We’re dedicated to bringing our brand promise to life, both for our company and our clients: From achieve success through people. great people to great performance.SM C A R O L I N E V A N O V E R M E I R E I S H U D S O N . Rexam is a global leader in consumer packaging and the number-one beverage can maker in the world. In 2005, the company looked to Hudson to help develop a talent pipeline to grow and retain its highest-potential people. Caroline led the Hudson team in the design and implementation of an assess- ment center process. At the heart of the process, the team, together with Rexam, identiﬁ ed strategically aligned competencies for the key leadership groups, and designed two-day assessment centers based on Hudson’s well-re- searched and validated simulation exercises. Our team of assessors evaluated candidates from across Europe, Asia and the Americas. In addition to providing in-depth feedback sessions and written reports following the centers, the team gave candidates immediate feedback during the two days from which Rexam developed and implemented Personal Development Plans. Rexam continues to partner with Hudson to maintain a best-in-class talent management strategy. ASSOCIATE DIRECTOR TALENT MANAGEMENT REXAM PROJECT LONDON UNITED KINGDOM KNOWN FOR DEDICATION AND PASSION Caroline. We’re committed to our communities. Through employee volunteerism, corporate giving and responsible business practices, Hudson is committed to making a difference in the world. As a leader in global talent solutions, we apply our talent where it can have the greatest impact: in education and career enrichment. We volunteer our time and passion. Whether it’s our U.K. We invest through corporate giving. Each year, we spon- employees supporting the Prince’s Trust, an organization that sor important initiatives and programs within our focus areas, helps people in need, or our U.S. people participating in com- programs like the Global Summit of Women, which brings to- munity programs they’re passionate about, we seek to make gether women business owners, executives and government a difference through personal involvement. Hudson supports ofﬁ cials from around the world to advance the dialog around volunteerism through its Helping Hands program, which pro- women’s economic and entrepreneurial progress. We also vides employees a day’s paid leave each year to donate their allow for in-kind giving in response to natural disasters and time to the community. other instances of extreme need. As a member of BISI (Businesses Initiating Social Impact), a We run our business responsibly. Our hiring reﬂ ects the consortium of leading Australian companies, Hudson shares diversity of our communities. We conduct ourselves accord- the organization’s vision: to build the future by focusing on ing to a strict Code of Conduct to ensure the same high children and young people. Hudson staff participate in BISI standards of ethical behavior everywhere we do business. projects to help working families raise happy, healthy children, Five core Hudson values express the inextricable link between as well as other programs aimed at helping young people pre- our business and community interests: integrity, respect, pare for the transition from school to the working world. collaboration, empowerment and responsibility. Chairman’s Award Winners H U D S O N A S I A P A C I F I C P E T E R B O W E N Consumer Sector Melbourne, Australia A N D R E W C L A R K Onsite Account Management Melbourne, Australia D E A N DAV I D S O N General Manager Brisbane, Australia J O S E P H I N E G A R N I S S IT & Telecommunications Melbourne, Australia H E AT H E R H A I N E S Government Wellington, New Zealand PAT H A R T Government, Education & Health Sydney, Australia D E B H AW C R O F T Ofﬁ ce Manager Newcastle, Australia K E N H E AT H E R Trade & Industrial Adelaide, Australia N ATA L I E H E T E B RY IT & Telecommunications Singapore V I C K I N I E L S E N Career Management Adelaide, Australia K E N DA L L RYA N Commercial Pricing & Analysis Sydney, Australia D E R M O T S H E E H A N Commercial Pricing & Analysis Sydney, Australia DAW N TA N Human Resources Singapore M A R K T R A E G E R Career Management Adelaide, Australia K E V I N T R A I N O R Banking & Financial Services Tokyo, Japan A N T H O N Y W O O D WA R D Managed Services Melbourne, Australia M A R G A R E T YAO Finance & Banking Shanghai, China A M Y YAT E S General Manager Sydney, Australia G E K C H E N G Y E O IT & Telecommunications Singapore B A R B A R A Y E U N G Sales & Marketing Hong Kong, China H U D S O N E U R O P E S A N D R A B E AT T I E IT, HR, Project Delivery & Business Support Glasgow, Scotland F R E D B O S Work and Mobility Nijmegen, Netherlands You’re Hudson. I L S E C L A E S Senior Consultant R&S Hasselt, Belgium M A R T I N A C O O P E R Human Resources Glasgow, Scotland R O N E L D U P L E S S I S Interactive Marketing, Europe London, UK E S T H E R LOZ A N O Consultant FMCG Barcelona, Spain M I LO O ’ C O N N O R Legal London, UK E WA R Z A D KO W S K A Senior Consultant R&S Torun, Poland J O H N B R E N N E R Energy & Scientiﬁ c Hershey, US C H R I S B R E V I K Financial Solutions Denver, US D O N H AG G A R D Information Technology Tampa, US S T E V E N L E V I N E Legal New York, US S T E P H A N I E M A N G A N IT & Telecommunications Oakbrook, US D E N I S E R U S S O M A N N O Finance Pittsburgh, US M I C H A E L S C H O E VA A R T Knowledge Manager, Balance Amsterdam, Netherlands G A RY VA L E N T I N E Engineering, Aerospace & Defense Dallas, US B A R B A R A V I L L AG E Human Resources Pittsburgh, US C O R P O R A T E A R A H LO N G F O R D Corporate Human Resources New York, US R AC H A E L S T E D L Corporate Finance Milwaukee, US S I M O N S TA N D L E Y Human Resources Milton Keynes, UK P E T E S T O N E Marketing and Quality Director Paris, France A L E X Y U R C H E N KO Country Manager Kiev, Ukraine H U D S O N N . A M E R I C A M A R G A R E T B E N G T S O N Management Search Dallas, US L I S A B I O N D I Information Technology Pittsburgh, US B OA R D O F D I R E C T O R S Jon F. Chait Chairman and Chief Executive Ofﬁcer, Hudson Highland Group, Inc. (a) Robert B. Dubner Retired Management Consulting Partner, PricewaterhouseCoopers LLP (a)(b) John J. Haley President and Chief Executive Ofﬁcer, Watson Wyatt & Company (b)(c)(d) Jennifer Laing Associate Dean, External Relations, London Business School (c)(d) David G. Offensend Senior Vice President, Chief Financial and Administrative Ofﬁcer, The New York Public Library (a)(b)(c)(d) Richard Stolz Retired Global Relationship Partner, PricewaterhouseCoopers LLP (b) (a) 2007 Executive Committee (b) 2007 Audit Committee (c) 2007 Compensation Committee (d) 2007 Nominating and Governance Committee MANAG E M E NT A S I A Albert Kwong Chief Financial Ofﬁcer Sally Woo Human Resources Director China Angie Eagan General Mgr Hong Kong Gina McLellan Country Mgr Japan John Tucker General Mgr Singapore Mark Sparrow Country Mgr A U S T R A L I A / N E W Z E A L A N D Elaine Kloss Interim Chief Financial Ofﬁcer Matthew Warburton General Counsel and Company Secretary Tracy Noon Executive General Mgr, Human Resources Australia Karen Colfer Executive General Mgr, Service and Support Recruitment, Australia Cyrus D’Cruz Executive General Mgr, IT&T, Australia Kimberley Hubble Executive General Mgr, Sales, Talent Management and Managed Services Geoff Qurban Executive Coach New Zealand Marc Burrage Executive General Mgr Peter Harbidge Executive General Mgr E U R O P E Laurent Chen Chief Operating Ofﬁcer and Chief Information Ofﬁcer Andrew Nicholson Chief Financial Ofﬁcer Louise Marshall General Counsel O F F I C E R S & E X E C U T I V E M A N AG E M E N T O F F I C E R S Jon F. Chait Chairman and Chief Executive Ofﬁcer Mary Jane Raymond Executive Vice President and Chief Financial Ofﬁcer Margaretta R. Noonan Executive Vice President and Chief Administrative Ofﬁcer Donald E. Bielinski Senior Vice President and Chairman, Hudson Asia Paciﬁc B U S I N E S S D I V I S I O N S Asia Paciﬁc Donald E. Bielinski Chairman Asia Stefanie Cross-Wilson Interim Chief Executive Ofﬁcer Australia/New Zealand Helen Nugent Executive Chairman Gary Lazzarotto Managing Director Richard S. Gray Senior Vice President, Marketing and Communications Neil J. Funk Vice President, Internal Audit Elaine A. Kloss Vice President, Finance and Treasurer Ralph L. O’Hara Vice President and Global Controller Latham Williams Senior Vice President, Legal Affairs and Administration, Corporate Secretary Europe Christine Raynaud President and Chief Executive Ofﬁcer North America Jon F. Chait Interim President Marc Timmerman Executive Director, Talent Management Etienne Van Keer Executive Director, Research and Development Benelux Ivan de Witte Managing Director, Permanent Recruitment and Talent Management (Belgium/Netherlands/Luxemburg) Arjen Van Zuydam Managing Director, Professional Stafﬁng and Project Management (Balance—Netherlands) Max Schep Managing Director, Work & Mobility (Netherlands) Central Eastern Europe Frans Hoekman Managing Director Czech Republic Frans Hoekman Country Mgr Hungary Gábor Székely Country Mgr Poland Iwona Cekal Country Mgr Slovakia Ron Bastyr Country Mgr Ukraine Alex Yurchenko Country Mgr Romania (Franchise) Steve Moroz Country Mgr The Nordics Ann-Soﬁe Hoffman Managing Director Norway/Denmark (Franchises) Ola Lenes Country Mgr Sweden Ann-Soﬁe Hoffman Country Mgr Southern Europe Laurent Derivery Managing Director France Laurent Derivery Country Mgr Italy Leonardo Zaccheo Country Mgr Spain Montserrat Luquero-Herrero Country Mgr United Kingdom/Ireland Andy Rogerson Chief Executive Ofﬁcer England Guy Hayward Managing Director, Accounting & Finance and Financial Services Richard Baker Managing Director, Sales & Marketing and Supply Chain & Procurement Mark Carriban Managing Director, Legal and Human Resources Phil Clarke Managing Director, IT & Telecommunications Ireland Peter Cosgrove Country Mgr Scotland Karen Scott General Mgr N O R T H A M E R I C A Patrick Lyons Chief Financial Ofﬁcer Michael Whitmer Chief Information Ofﬁcer Peggy Buchenroth Senior Vice President, Human Resources David Rhind General Counsel Jennifer Bernhart Vice President, Marketing Michael Kelly Vice President, Real Estate Stefanie Cross-Wilson Co-President, Permanent Solutions Group Robert Morgan Co-President, Permanent Solutions Group Wayne Beaubian Executive Vice President, Financial Solutions Tim Bosse Executive Vice President, IT & Telecommunications Jim Botrie Executive Vice President, Management Search and Talent Solutions Troy Gregory Executive Vice President, Legal Resources Greg Lignelli Executive Vice President, Energy, Scientiﬁc and Managed Stafﬁng Michael Sievert Executive Vice President, Engineering, Aerospace & Defense C O R P O R AT E I N F O R M AT I O N O N T H E B A C K C O V E R : N I C O L A H A W K I N S I S H U D S O N Annual Meeting Common Stock The annual meeting of Hudson Highland Hudson Highland Group, Inc. common Group, Inc. will be held on Tuesday, stock is listed on the Nasdaq National May 1, 2007, at 8:00 a.m., local time, at Market under HHGP. the Hudson Highland Group, Inc. cor- porate headquarters, 560 Lexington Transfer Agent and Registrar Avenue (Lexington Avenue and 50th The Bank of New York Street), 5th Floor, New York, NY 10022. Shareholder Relations Dept. Shareholder Information Form 10-K for the year ended P.O. Box 11258 Church Street Station New York, NY 10286 December 31, 2006 (without exhibits), 800-524-4458 as ﬁ led with the Securities and Exchange www.stockbny.com Commission, accompanies this Hudson Highland Group report and, together with Independent Auditors this report, constitutes Hudson BDO Seidman, LLP Highland Group’s 2006 Annual Report 330 Madison Avenue to Shareholders. New York, NY 10017 Investor Information / Quarterly Reports Legal Counsel Foley & Lardner LLP For quarterly earnings reports, press 777 East Wisconsin Avenue releases and other investor information, Milwaukee, WI 53202 please visit our Web site at www.hhgroup.com or e-mail your Corporate Headquarters inquiries to investor.relations@ Hudson Highland Group, Inc. hhgroup.com. 560 Lexington Avenue, 5th Floor New York, NY 10022 212-351-7300 www.hhgroup.com Forward-Looking Statements This report contains statements that the company believes to be “forward-looking statements” with- in the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this report, including those under the caption “Guidance” and other statements regarding the company’s future ﬁ nancial condition, results of operations, busi- ness operations and business prospects, are forward-looking statements. Words such as “antici- pate,” “estimate,” “expect,” “project,” “intend,” “plan,” “predict,” “believe” and similar words, expres- sions 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 ﬂ uctuations on temporary con- tracting operations; the cyclical nature of the company’s mid-market professional stafﬁ ng business- es; the company’s ability to manage its growth; risks associated with expansion; risks and ﬁ nancial impact associated with disposition of non-strategic assets; the company’s reliance on information systems and technology; competition; ﬂ uctuations in operating results; risks relating to foreign op- erations, including foreign currency ﬂ uctuations; dependence on highly skilled professionals and key management personnel; risks maintaining professional reputation and brand name; restrictions im- posed by blocking arrangements; exposure to employment-related claims, and limits on insurance coverage related thereto; government regulations; restrictions on the company’s operating ﬂ exibility due to the terms of its credit facility; risks associated with the remediation work being performed on the company’s PeopleSoft system; and the company’s ability to maintain effective internal control over ﬁ nancial reporting. Additional information concerning these and other factors is contained in the company’s ﬁ lings with the Securities and Exchange Commission. These forward-looking state- ments speak only as of the date of this report. The company assumes no obligation, and expressly disclaims any obligation, to review or conﬁ rm analysts’ expectations or estimates or to update any forward-looking statements, whether as a result of new information, future events or otherwise. Design/Concept Pressley Jacobs: a design partnership/Chicago Writing Dovetail Communications/Chicago Photography Sandro/Chicago: cover, 11, 12; Chris Moyse/London: backcover, 3, 9, 17; Mick Ryan/Shanghai: 2, 3, 6; Ingvar Keene/Sydney: 1, 2, 14. Printing Active Graphics/Chicago O N T H E C O V E R : VICE PRESIDENT WESTINGHOUSE ACCOUNTS WESTINGHOUSE PROJECT MONROEVILLE PA UNITED STATES KNOWN FOR LEADERSHIP AND CALM D A N P L U N K E T T I S H U D S O N . Hudson client Westinghouse is one of the world’s leading original equipment manufacturers in the nuclear energy industry — and it relies on Hudson’s highly specialized expertise to supply and manage its professional and technical temporary contract workforce. With years of experience working with major OEMs and large nuclear power facilities, Hudson nuclear engineering specialists have the talent pool to get the job done. But Hudson does more than put the right people in the right positions. Dan’s team applied its solid industry knowledge to streamline and standardize global hiring and management processes. Automated time and expense entry, electronic invoicing and payment, and other advanced reporting features provide easy access to management information for increased efficiency and reduced administrative costs. 2006 Annual Report From great people to great performance SM Hudson Asia Paciﬁ c | Europe | North America www.hudson.com 7 0 / 3 0 . 0 0 0 0 2 . A N

Continue reading text version or see original annual report in PDF format above