Hudson Highland Group Inc.
Annual Report 2015

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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D. C. 20549 FORM 10-KxANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2015oroTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934Commission file number: 000-50129 HUDSON GLOBAL, INC.(Exact name of registrant as specified in its charter) Delaware 59-3547281(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.) 1325 Avenue of the Americas, New York, NY 10019(Address of principal executive offices) (Zip Code)(212) 351-7300(Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act:Title of each class Name of each exchange on which registeredCommon Stock, $0.001 par value The NASDAQ Stock Market LLCPreferred Share Purchase Rights The NASDAQ Stock Market LLCIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15 (d) of the Securities Act. Yes o No xIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No oIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and postedpursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit to post such flies). Yes x No oIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant'sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “largeaccelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filero Accelerated filerxNon-accelerated filero Smaller reporting companyoIndicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No xThe aggregate market value of the voting common stock held by non-affiliates of the registrant was approximately $72,242,000 based on the closing price of the Common Stock onthe NASDAQ Global Select Market on June 30, 2015.Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.Class Outstanding on January 31, 2016Common Stock - $0.001 par value 35,475,048DOCUMENTS INCORPORATED BY REFERENCEPortions of the Proxy Statement for the 2016 Annual Meeting of Stockholders are incorporated by reference into Part III. Table of Contents PagePART IITEM 1.BUSINESS1ITEM 1A.RISK FACTORS3ITEM 1B.UNRESOLVED STAFF COMMENTS9ITEM 2.PROPERTIES10ITEM 3.LEGAL PROCEEDINGS10ITEM 4.MINE SAFETY DISCLOSURES10PART IIITEM 5.MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUERPURCHASES OF EQUITY SECURITIES12ITEM 6.SELECTED FINANCIAL DATA15ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS17ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK47ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA48ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES89ITEM 9A.CONTROLS AND PROCEDURES89PART IIIITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE90ITEM 11.EXECUTIVE COMPENSATION90ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSTOCKHOLDER MATTERS90ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE91ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES91PART IVITEM 15.EXHIBITS, FINANCIAL STATEMENTS SCHEDULES92 SIGNATURES98 EXHIBIT INDEX99 PART IITEM 1. BUSINESSHudson Global, Inc. (the “Company” or “Hudson”, “we”, “us” and “our”) provides highly specialized professional-level recruitment and related talentsolutions worldwide. Core service offerings include Permanent Recruitment, Temporary Contracting, Recruitment Process Outsourcing (“RPO”) and TalentManagement Solutions. Hudson has approximately 1,600 employees and operates in 12 countries with three reportable geographic business segments:Hudson Americas, Hudson Asia Pacific, and Hudson Europe.For the year ended December 31, 2015, the amounts and percentage of the Company’s total gross margin from the three reportable segments were asfollows: Gross Margin Amount PercentageHudson Americas $16,111 8.6%Hudson Asia Pacific 89,682 47.8%Hudson Europe 81,917 43.6%Total $187,710 100.0%The Company's core service offerings include those services described below:Permanent Recruitment: Offered on both a retained and contingent basis, Hudson's Permanent Recruitment services leverage the Company's 1,200consultants, supported by the Company's specialists in the delivery of its proprietary methods to identify, select and engage the best-fit talent for criticalclient roles.Temporary Contracting: In Temporary Contracting, Hudson provides a range of project management, interim management and professional contractstaffing services. These services draw upon a combination of specialized recruiting and project management competencies to deliver a wide range ofsolutions. Hudson-employed professionals - either individually or as a team - are placed with client organizations for a defined period of time based onspecific business need.RPO: Hudson RPO delivers both permanent recruitment and temporary contracting outsourced recruitment solutions tailored to the individual needs ofprimarily mid-to-large-cap multinational companies. Hudson RPO's delivery teams utilize state-of-the-art recruitment process methodologies and projectmanagement expertise in their flexible, turnkey solutions to meet clients' ongoing business needs. Hudson RPO services include complete recruitmentoutsourcing, project-based outsourcing, contingent workforce solutions and recruitment consulting.Talent Management Solutions: Featuring embedded proprietary talent assessment and selection methodologies, Hudson's Talent ManagementSolutions capability encompasses services such as talent assessment (utilizing a variety of competency, attitude and experiential testing), interview training,executive coaching, employee development and outplacement.On June 15, 2015, the Company completed the sale of substantially all of the assets (excluding working capital) of its Hudson Information Technology(US) business (the "US IT business") to Mastech, Inc. As a result, the Company no longer has an Americas' Information Technology temporary contractingpractice. The Company also completed the sale of its Netherlands business to InterBalanceGroup BV effective April 30, 2015. The results of both the US ITbusiness and Netherlands were included in the Company's continuing operations as they did not meet the criteria for discontinued operations under theFinancial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") No. 205, "Presentation of Financial Statements."On November 7, 2014, the Company completed the sale of substantially all of the assets and liabilities of its Legal eDiscovery business in the UnitedStates and United Kingdom. The Company no longer has operations in the Legal eDiscovery business. In addition, the Company ceased operations inSweden, which was included within the Hudson Europe segment during the third quarter of 2014. The Company concluded that the divestiture of its LegaleDiscovery business and the cessation of operations in Sweden meet the criteria for discontinued operations set forth in ASC No. 205, "Presentation ofFinancial Statements." The Company reclassified its discontinued operations for all periods presented and has excluded the results from continuingoperations and from segment results for all periods presented. - 1 - CLIENTSThe Company's clients include small to large-sized corporations and government agencies. For the year ended December 31, 2015, within revenue fromcontinuing operations, there was approximately 130 Hudson Americas clients (as compared to approximately 150 in 2014), 2,600 Hudson Asia Pacific clients(as compared to 2,300 in 2014) and 3,500 Hudson Europe clients (as compared to 3,400 in 2014).In 2015, the Company completed the sale of its US IT business and Netherlands operations, which consisted of approximately 90 clients and 150clients, respectively and were included in continuing operations. In 2014, the Company exited its Legal eDiscovery business in the U.S. and U.K. markets aswell as its operations in Sweden, which consisted of approximately 155 clients, 20 clients, and 70 clients, respectively and were included in discontinuedoperations.For the year ended December 31, 2015, no single client accounted for more than 10% of the Company's total revenue. As of December 31, 2015, nosingle client accounted for more than 10% of the Company's total outstanding accounts receivable.EMPLOYEESThe Company employs approximately 1,600 people worldwide. In most jurisdictions, the Company's employees are not represented by a labor union orcovered by a collective bargaining agreement. The Company regards its relationships with its employees as satisfactory.SALES AND MARKETINGThe majority of Hudson's employees include approximately 1,200 client-facing consultants who sell its portfolio of services to its existing client baseof approximately 6,300 companies and to prospective client organizations. The Company's consultant population has deep expertise in specific functionalareas and industry sectors, and provides broad-based recruitment and solution services based on the needs of the client on a regional and global basis.COMPETITIONThe markets for the Company's services and products are highly competitive. There are few barriers to entry, so new entrants occur frequently, resultingin considerable market fragmentation. Companies in this industry compete on a number of parameters, including degree and quality of candidate andposition knowledge, industry expertise, service quality, and efficiency in completing assignments. Typically, companies with greater strength in theseparameters garner higher margins.SEGMENT AND GEOGRAPHIC DATAFinancial information concerning the Company's reportable segments and geographic areas of operation is included in Note 19 of the Notes toConsolidated Financial Statements contained in Item 8 of this Form 10-K.AVAILABLE INFORMATIONWe maintain a website with the address www.hudson.com. We are not including the information contained on our website as part of, or incorporating itby reference into, this report. Through our website, we make available free of charge (other than an investor's own Internet access charges) our annual reportson Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to these reports in a timely manner after we provide them tothe Securities and Exchange Commission.- 2 - ITEM 1A. RISK FACTORSThe following risk factors and other information included in this Annual Report on Form 10-K should be carefully considered. The risks anduncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deemimmaterial also may impair our business operations. If any of the following risks occur, our business, financial condition, results of operations, and cash flowscould be materially adversely affected.Our operations will be affected by global economic fluctuations.Clients' demand for our services may fluctuate widely with changes in economic conditions in the markets in which we operate. Those conditionsinclude slower employment growth or reductions in employment, which directly impact our service offerings. We have limited flexibility to reduce expensesduring economic downturns due to some overhead costs that are fixed in the short-term. Furthermore, we may face increased pricing pressures during theseperiods. For example, in prior economic downturns, many employers in our operating regions reduced their overall workforce to reflect the slowing demandfor their products and services.We may not be able to successfully execute our strategic initiatives or meet our long-term financial goals.We have been engaged in strategic initiatives to refocus on our core business to maximize long-term stockholder value, to improve our cost structureand efficiency and to increase our selling efforts and developing new business. We cannot provide any assurance that we will be able to successfully executethese or other strategic initiatives or that we will be able to execute these initiatives on our expected timetable. We may not be successful in refocusing ourcore business and obtaining operational efficiencies or replacing revenues lost as a result of these strategic initiatives.Our operating results fluctuate from quarter to quarter; no single quarter is predictive of future periods' results.Our operating results fluctuate quarter to quarter primarily due to the vacation periods during the first quarter in the Asia Pacific region and the thirdquarter in the Americas and Europe regions. Demand for our services is typically lower during traditional national vacation periods when clients andcandidates are on vacation.Our revenue can vary because our clients can terminate their relationship with us at any time with limited or no penalty.We focus on providing professional mid-level personnel on a temporary assignment-by-assignment basis, which clients can generally terminate at anytime or reduce their level of use when compared to prior periods. Our professional recruitment business is also significantly affected by our clients' hiringneeds and their views of their future prospects. These factors can also affect our RPO business. Clients may, on very short notice, terminate, reduce orpostpone their recruiting assignments with us and, therefore, affect demand for our services. This could have a material adverse effect on our business,financial condition and results of operations.Our markets are highly competitive.The markets for our services are highly competitive. Our markets are characterized by pressures to provide high levels of service, incorporate newcapabilities and technologies, accelerate job completion schedules and reduce prices. Furthermore, we face competition from a number of sources. Thesesources include other executive search firms and professional search, staffing and consulting firms. Several of our competitors have greater financial andmarketing resources than we do. Due to competition, we may experience reduced margins on our services, loss of market share and our customers. If we arenot able to compete effectively with current or future competitors as a result of these and other factors, our business, financial condition and results ofoperations could be materially adversely affected.We have no significant proprietary technology that would preclude or inhibit competitors from entering the mid-level professional staffing markets. Wecannot provide assurance that existing or future competitors will not develop or offer services that provide significant performance, price, creative or otheradvantages over our services. In addition, we believe that, with continuing development and increased availability of information technology, the industriesin which we compete may attract new competitors. Specifically, the increased use of the Internet may attract technology-oriented companies to theprofessional staffing industry. We cannot provide assurance that we will be able to continue to compete effectively against existing or future competitors.Any of these events could have a material adverse effect on our business, financial condition and results of operations.- 3 - We have had periods of negative cash flows and operating losses that may recur in the future.We have experienced negative cash flows and reported operating and net losses in the past. For example, we had operating and net losses for the yearsended December 31, 2014 and 2013. We cannot provide any assurance that we will have positive cash flows or operating profitability in the future,particularly to the extent the global economy continues to recover slowly from the global economic downturn. If our revenue declines or if operatingexpenses exceed our expectations, we may not be profitable and may not generate positive operating cash flows.Our credit facilities restrict our operating flexibility.Our credit facilities contain various restrictions and covenants that restrict our operating flexibility including:•borrowings limited to eligible receivables;•lenders' ability to impose restrictions, such as payroll or other reserves;•limitations on payments of dividends by our subsidiaries to us, which may restrict our ability to pay dividends to our shareholders;•restrictions on our ability to make additional borrowings, or to consolidate, merge or otherwise fundamentally change our ownership;•limitations on capital expenditures, investments, dispositions of assets, guarantees of indebtedness, permitted acquisitions and repurchasesof stock; and•limitations on certain intercompany payments of expenses, interest and dividends. These restrictions and covenants could have adverse consequences for investors, including the consequences of our need to use a portion of our cashflow from operations for debt service, rather than for our operations, restrictions on our ability to incur additional debt financing for future working capital orcapital expenditures, a lesser ability for us to take advantage of significant business opportunities, such as acquisition opportunities, the potential need for usto undertake equity transactions which may dilute the ownership of existing investors, and our inability to react to market conditions by selling lesser-performing assets.In addition, a default, amendment or waiver to our credit facilities to avoid a default may result in higher rates of interest and could impact our ability toobtain additional borrowings. Finally, debt incurred under our credit facilities bears interest at variable rates. Any increase in interest expense could reducethe funds available for operations.Extensions of credit under our existing agreements are permitted based on a borrowing base, which is an agreed percentage of eligible accountsreceivable, less required reserves, applicable letters of credit and outstanding borrowings. If the amount or quality of our accounts receivable deteriorates,then our ability to borrow under these credit facilities will be directly affected. Furthermore, our receivables facilities with National Australia Bank Limitedand Bank of New Zealand do not have a stated maturity date and can be terminated by National Australia Bank Limited and Bank of New Zealand upon 90days' written notice. We cannot provide assurance that we will be able to borrow under these credit facilities if we need money to fund working capital orother needs.If sources of liquidity are not available or if we cannot generate sufficient cash flows from operations, then we may berequired to obtain additional sources of funds through additional operating improvements, capital markets transactions, asset sales or financing from thirdparties, or a combination thereof and, under certain conditions, such transactions could substantially dilute the ownership of existing stockholders. Wecannot provide assurance that the additional sources of funds will be available, or if available, would have reasonable terms.Our investment strategy subjects us to risks.From time to time, we make investments as part of our growth plans. Investments may not perform as expected because they are dependent on a varietyof factors, including our ability to effectively integrate new personnel and operations, our ability to sell new services, and our ability to retain existing orgain new clients. Furthermore, we may need to borrow more money from lenders or sell equity or debt securities to the public to finance future investmentsand the terms of these financings may be adverse to us.- 4 - We face risks related to our international operations.We conduct operations in 12 countries and face both translation and transaction risks related to foreign currency exchange. For the year endedDecember 31, 2015, approximately 91% of our gross margin was earned outside of the United States ("U.S."). Our financial results could be materiallyaffected by a number of factors particular to international operations. These include, but are not limited to, difficulties in staffing and managing internationaloperations, operational issues such as longer customer payment cycles and greater difficulties in collecting accounts receivable, changes in tax laws or otherregulatory requirements, issues relating to uncertainties of laws and enforcement relating to the regulation and protection of intellectual property, andcurrency fluctuation. If we are forced to discontinue any of our international operations, we could incur material costs to close down such operations.Regarding the foreign currency risk inherent in international operations, the results of our local operations are reported in the applicable foreigncurrencies and then translated into U.S. dollars at the applicable foreign currency exchange rates for inclusion in our financial statements. In addition, wegenerally pay operating expenses in the corresponding local currency. Because of devaluations and fluctuations in currency exchange rates or the impositionof limitations on conversion of foreign currencies into U.S. dollars, we are subject to currency translation exposure on the revenue and income of ouroperations in addition to economic exposure. Our consolidated U.S. dollar cash balance could be lower because a significant amount of cash is generatedoutside of the U.S. This risk could have a material adverse effect on our business, financial condition and results of operations.We depend on our key management personnel.Our success depends to a significant extent on our senior management team. The loss of the services of one or more key senior management teammember could have a material adverse effect on our business, financial condition and results of operations. In addition, if one or more key employees join acompetitor or form a competing company, the resulting loss of existing or potential clients could have a material adverse effect on our business, financialcondition and results of operations.Failure to attract and retain qualified personnel could negatively impact our business, financial condition and results of operations.Our success also depends upon our ability to attract and retain highly-skilled professionals who possess the skills and experience necessary to meet thestaffing requirements of our clients. We must continually evaluate and upgrade our base of available qualified personnel to keep pace with changing clientneeds and emerging technologies. Furthermore, a substantial number of our contractors during any given year may terminate their employment with us andaccept regular staff employment with our clients. Competition for qualified professionals with proven skills is intense, and demand for these individuals isexpected to remain strong for the foreseeable future. There can be no assurance that qualified personnel will continue to be available to us in sufficientnumbers. If we are unable to attract the necessary qualified personnel for our clients, it may have a negative impact on our business, financial condition andresults of operations.We face risks in collecting our accounts receivable.In virtually all of our businesses, we invoice customers after providing services, which creates accounts receivable. Delays or defaults in payments owedto us could have a significant adverse impact on our business, financial condition and results of operations. Factors that could cause a delay or defaultinclude, but are not limited to, global economic conditions, business failures, and turmoil in the financial and credit markets.In certain situations, we provide our services to clients under a contractual relationship with a third-party vendor manager, rather than directly to theclient. In those circumstances, the third-party vendor manager is typically responsible for aggregating billing information, collecting receivables from theclient and paying staffing suppliers once funds are received from the client. In the event that the client has paid the vendor manager for our services and weare unable to collect from the vendor manager, we may be exposed to financial losses.If we are unable to maintain costs at an acceptable level, our operations could be adversely impacted.Our ability to reduce costs in line with our revenues is important for the improvement of our profitability. Efforts to improve our efficiency could beaffected by several factors including turnover, client demands, market conditions, changes in laws, and availability of talent. If we fail to realize the expectedbenefits of these cost reduction initiatives, this could have an adverse effect on our financial condition and results of operations.- 5 - We rely on our information systems, and if we lose our information processing capabilities or fail to further develop our technology, our businesscould be adversely affected.Our success depends in large part upon our ability to store, retrieve, process, and manage substantial amounts of information, including our client andcandidate databases. To achieve our strategic objectives and to remain competitive, we must continue to develop and enhance our information systems. Thismay require the acquisition of equipment and software and the development, either internally or through independent consultants, of new proprietarysoftware. If we are unable to design, develop, implement and utilize, in a cost-effective manner, information systems that provide the capabilities necessaryfor us to compete effectively, or if we experience any interruption or loss of our information processing capabilities, for any reason, this could adversely affectour business, financial condition and results of operations.As we operate in an international environment, we are subject to greater cyber-security risks and incidents. We also use mobile devices, socialnetworking and other online activities to connect with our candidates, clients and business partners. While we have implemented measures to preventsecurity breaches and cyber incidents, our measures may not be effective and any security breaches or cyber incidents could adversely affect our business,financial condition and results of operations.Our business depends on uninterrupted service to clients.Our operations depend on our ability to protect our facilities, computer and telecommunication equipment and software systems against damage orinterruption from fire, power loss, cyber attacks, sabotage, telecommunications interruption, weather conditions, natural disasters and other similar events.Additionally, severe weather can cause our employees or contractors to miss work and interrupt delivery of our service, potentially resulting in a loss ofrevenue. While interruptions of these types that have occurred in the past have not caused material disruption, it is not possible to predict the type, severity orfrequency of interruptions in the future or their impact on our business.We may be exposed to employment-related claims, legal liability and costs from clients, employees and regulatory authorities that couldadversely affect our business, financial condition or results of operations, and our insurance coverage may not cover all of our potential liability.We are in the business of employing people and placing them in the workplaces of other businesses. Risks relating to these activities include:•claims of misconduct or negligence on the part of our employees;•claims by our employees of discrimination or harassment directed at them, including claims relating to actions of our clients;•claims related to the employment of illegal aliens or unlicensed personnel;•claims for payment of workers' compensation and other similar claims;•claims for violations of wage and hour requirements;•claims for entitlement to employee benefits;•claims of errors and omissions of our temporary employees;•claims by taxing authorities related to our independent contractors and the risk that such contractors could be considered employees for taxpurposes;•claims by candidates that we place for wrongful termination or denial of employment;•claims related to our non-compliance with data protection laws, which require the consent of a candidate to transfer resumes and other data;and•claims by our clients relating to our employees' misuse of client proprietary information, misappropriation of funds, other misconduct,criminal activity or similar claims.- 6 - We are exposed to potential claims with respect to the recruitment process. A client could assert a claim for matters such as breach of a blockingarrangement or recommending a candidate who subsequently proves to be unsuitable for the position filled. Similarly, a client could assert a claim fordeceptive trade practices on the grounds that we failed to disclose certain referral information about the candidate or misrepresented material informationabout the candidate. Further, the current employer of a candidate whom we place could file a claim against us alleging interference with an employmentcontract. In addition, a candidate could assert an action against us for failure to maintain the confidentiality of the candidate's employment search or foralleged discrimination or other violations of employment law by one of our clients.We may incur fines and other losses or negative publicity with respect to these problems. In addition, some or all of these claims may give rise tolitigation, which could be time-consuming to our management team, costly and could have a negative effect on our business. In some cases, we have agreedto indemnify our clients against some or all of these types of liabilities. We cannot assure that we will not experience these problems in the future, that ourinsurance will cover all claims, or that our insurance coverage will continue to be available at economically-feasible rates.It is possible that we may still incur liabilities associated with certain pre-spin off activities with Monster Worldwide, Inc. ("Monster"). Under the termsof our Distribution Agreement with Monster, these liabilities generally will continue to be retained by us. If these liabilities are significant, the retainedliabilities could have a material adverse effect on our business, financial condition and results of operations. However, in some circumstances, we may haveclaims against Monster, and we will make a determination on a case by case basis.Our ability to utilize net operating loss carry-forwards may be limited.The Company has U.S. net operating loss carry-forwards (“NOLs”) that expire through 2035. Section 382 of the U.S. Internal Revenue Code imposes anannual limitation on a corporation's ability to utilize NOLs if it experiences an “ownership change.” In general terms, an ownership change may result fromtransactions increasing the ownership of certain stockholders in the stock of a corporation by greater than 50% over a three-year period. The Company hasexperienced ownership changes in the past. Ownership changes in our stock, some of which are outside of our control, could result in a limitation in ourability to use our NOLs to offset future taxable income, could cause U.S. Federal income taxes to be paid earlier than otherwise would be paid if suchlimitation were not in effect and could cause such NOLs to expire unused, reducing or eliminating the benefit of such NOLs.There may be volatility in our stock price.The market price for our common stock has fluctuated in the past and could fluctuate substantially in the future. For example, during 2015, the marketprice of our common stock reported on the NASDAQ Global Select Market ranged from a high of $3.24 to a low of $1.98. Factors such as generalmacroeconomic conditions adverse to workforce expansion, the announcement of variations in our quarterly financial results or changes in our expectedfinancial results could cause the market price of our common stock to fluctuate significantly. Further, due to the volatility of the stock market generally, theprice of our common stock could fluctuate for reasons unrelated to our operating performance. Our future earnings could be reduced as a result of the imposition of licensing or tax requirements or new regulations that prohibit, or restrictcertain types of employment services we offer.In many jurisdictions in which we operate, the provision of temporary staffing is heavily regulated. For example, governmental regulations can restrictthe length of contracts of contract employees and the industries in which they may be used. In some countries, special taxes, fees or costs are imposed inconnection with the use of contract workers. The countries in which we operate may:•create additional regulations that prohibit or restrict the types of employment services that we currently provide;•impose new or additional benefit requirements;•require us to obtain additional licensing to provide staffing services;•impose new or additional visa restrictions on movements between countries;•increase taxes, such as sales or value-added taxes, payable by the providers of staffing services;- 7 - •increase the number of various tax and compliance audits relating to a variety of regulations, including wage and hour laws, unemploymenttaxes, workers' compensation, immigration, and income, value-added and sales taxes; or•revise transfer pricing laws or successfully challenge our transfer prices, which may result in higher foreign taxes or tax liabilities or doubletaxation of our foreign operations.Any future regulations that make it more difficult or expensive for us to continue to provide our staffing services may have a material adverse effect onour business, financial condition and results of operations.Provisions in our organizational documents and Delaware law will make it more difficult for someone to acquire control of us.Our certificate of incorporation and by-laws and the Delaware General Corporation Law contain several provisions that make it more difficult to acquirecontrol of us in a transaction not approved by our Board of Directors, including transactions in which stockholders might otherwise receive a premium fortheir shares over then current prices, and that may limit the ability of stockholders to approve transactions that they may deem to be in their best interests. Ourcertificate of incorporation and by-laws currently include provisions: •authorizing our Board of Directors to issue shares of our preferred stock in one or more series without further authorization of ourstockholders;•requiring that stockholders provide advance notice of any stockholder nomination of directors or any new business to be considered at anymeeting of stockholders; and•providing that vacancies on our Board of Directors will be filled by the remaining directors then in office. In addition, Section 203 of the Delaware General Corporation Law generally provides that a corporation may not engage in any business combinationwith any interested stockholder during the three-year period following the time that the stockholder becomes an interested stockholder, unless a majority ofthe directors then in office approve either the business combination or the transaction that results in the stockholder becoming an interested stockholder orspecified stockholder approval requirements are met.- 8 - In February 2005, our Board of Directors adopted a Rights Agreement between the Company and a rights agent (the "2005 Rights Agreement") anddeclared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of our common stock payable upon the close of business onFebruary 28, 2005 to the stockholders of record on that date. On January 15, 2015, our Board of Directors approved an amendment and restatement of the2005 Rights Agreement by adopting an Amended and Restated Rights Agreement (the "Rights Agreement") between the Company and a rights agent. TheBoard adopted the Rights Agreement in an effort to protect stockholder value by attempting to diminish the risk that the Company's ability to use its netoperating losses ("NOLs") to reduce potential future Federal income tax obligations may become substantially limited. Each Right entitles the registeredholder to purchase from us one one-hundredth (1/100th) of a share of our Series A Junior Participating Preferred Stock (“Preferred Shares”) at a price of $8.50per one one-hundredth of a Preferred Share, subject to adjustment. If any person becomes a 4.99% or more stockholder of the Company, then each Right(subject to certain limitations) will entitle its holder to purchase, at the Right's then current exercise price, a number of shares of common stock of theCompany or of the acquirer having a market value at the time of twice the Right's per share exercise price. The Company's Board of Directors may redeem theRights for $0.001 per Right at any time prior to the time when the Rights become exercisable. The Rights will expire on the earliest of (i) January 15, 2018,(ii) the time at which the Rights are redeemed as described above, (iii) the time at which the Rights are exchanged pursuant to the terms of the RightsAgreement, (iv) the repeal of Section 382 of the Internal Revenue Code if the Board determines that the Rights Agreement is no longer necessary for thepreservation of the Company’s NOLs, and (v) the beginning of a taxable year of the Company to which the Board determines that no NOLs may be carriedforward. The Rights may have certain anti-takeover effects. The Rights may cause substantial dilution to any person or group that attempts to acquire theCompany without the approval of the Board. As a result, the overall effect of the rights may be to render more difficult or discourage a merger, tender offer orother business combination involving the Company that is not supported by the Board. Proxy contests and any other actions of activist stockholders could have a negative effect on our business.The Company experienced a proxy contest from activist stockholders in connection with its 2014 annual meeting of stockholders. If further proxycontests or any other dissident stockholder activities ensue, then our business could be adversely affected because responding to proxy contests, litigationand other actions by dissident stockholders can be costly and time-consuming, disrupt our operations and divert the attention of management and ouremployees. In addition, perceived uncertainties as to our future direction may result in the loss of potential business opportunities and harm our ability toattract new investors and clients and to retain and attract experienced management and employees. Also, we may experience a significant increase in legalfees, administrative and associated costs incurred in connection with responding to a proxy contest or related action. These actions could also cause our stockprice to experience periods of volatility or stagnation.ITEM 1B. UNRESOLVED STAFF COMMENTSNone.- 9 - ITEM 2. PROPERTIESAll of the Company's operating offices are located in leased premises. Our principal executive office is located at 1325 Avenue of the Americas, NewYork, New York, 10019, where we occupy space under a lease expiring in December 2016 with approximately 8,000 aggregate square feet.Hudson Americas shares our principal executive office and maintains no other leased locations. Hudson Asia Pacific maintains 14 leased locations withapproximately 149,000 aggregate square feet. Hudson Europe maintains 18 leased locations with approximately 160,000 aggregate square feet. All leasedspace is considered to be adequate for the operation of its business, and no difficulties are foreseen in meeting any future space requirements.ITEM 3. LEGAL PROCEEDINGSThe Company is involved in various legal proceedings that are incidental to the conduct of its business. The Company is not involved in any pendingor threatened legal proceedings that it believes could reasonably be expected to have a material adverse effect on its financial condition or results ofoperations.ITEM 4. MINE SAFETY DISCLOSURESNot applicable.- 10 - EXECUTIVE OFFICERS OF THE REGISTRANTThe following table sets forth certain information, as of March 3, 2016, regarding the executive officers of Hudson Global, Inc.: Name Age TitleStephen A. Nolan 55 Chief Executive OfficerPatrick Lyons 52 Chief Financial Officer and Chief Accounting OfficerDavid F. Kirby 41 Senior Vice President, Treasury and Investor RelationsThe following biographies describe the business experience of our executive officers:Stephen A. Nolan has served as Chief Executive Officer since May 2015, with overall responsibility for the Company’s growth strategy, operationalexecution, and overall performance. Until August 2015, Mr. Nolan also served concurrently as Executive Vice President and Chief Financial Officer, aposition he held since joining the Company in May 2013. Mr. Nolan also served as the Company’s Controller from March 2014 to March 2015. Mr. Nolanhas more than 30 years of experience in accounting and finance, and has served as Chief Financial Officer for both Adecco Group North America and DHLGlobal Forwarding North America. From 2004 until 2012, Mr. Nolan served as Chief Financial Officer of Adecco Group North America, a staffing and humancapital division of Adecco SA, one of the world’s leading human resources service providers. During his tenure at Adecco, he helped drive strongperformance during a market downturn, spearheaded a major back office transformation and led the acquisition of MPS. Earlier in his career, he spent 15 yearswith Reckitt Benckiser, including two in the UK. Mr. Nolan is a Chartered Accountant and began his career as Audit Senior with PricewaterhouseCoopers inIreland.Patrick Lyons has served as Chief Financial Officer and Chief Accounting Officer since August 2015 with overall responsibility for the Company'sglobal accounting and finance functions. Prior to that, Mr. Lyons served as Vice President, Planning since 2010 and prior to that as Chief Financial Officer,Americas, since joining the Company in 2006. Having served for more than 25 years in professional services financial management and leadership roles, Mr.Lyons combines analytical rigor with hands-on execution focus, driving accountability and accuracy in financial reporting, cost control and profitability.Before joining the Company, Mr. Lyons held Chief Financial Officer roles at two staffing companies, Strategic Legal Resources and Adecco Staffing USA.Previously, Mr. Lyons worked for the TNT Group and Arthur Andersen where he qualified as a Chartered Accountant.David F. Kirby, has served as Senior Vice President, Treasury and Investor Relations since August 2015. Prior to that, Mr. Kirby served as VicePresident, Finance since 2011 and as Assistant Treasurer since 2008. Prior to that, Mr. Kirby served in a variety of roles in finance, treasury and investorrelations since joining the Company in 2001. Prior to joining the Company, Mr. Kirby held positions at TMP Worldwide, TransportEdge, and Merrill Lynch.Executive officers are elected by and serve at the discretion of the Board of Directors. There are no family relationships between any of our directors orexecutive officers.- 11 - PART IIITEM 5.MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIESMARKET FOR COMMON STOCKThe Company's common stock was listed for trading on the NASDAQ Global Select Market during 2015 under the symbol "HSON." On January 31,2016, there were approximately 423 holders of record of the Company's common stock.The following is a list by fiscal quarter of the market prices of the Company's common stock. Market Price High Low2015 Fourth quarter $2.98 $2.10Third quarter $3.24 $2.10Second quarter $3.10 $2.11First quarter $3.23 $1.982014 Fourth quarter $3.84 $2.69Third quarter $4.06 $3.49Second quarter $4.33 $3.33First quarter $4.17 $3.31DIVIDENDSWe historically have not declared or paid cash dividends on our common stock. In December 2015, our Board of Directors determined that we intend topay a regular, quarterly cash dividend on our common stock. Our Board of Directors declared a dividend of $0.05 per share to be issued following the releaseof the Company’s fourth quarter 2015 earnings results. On March 2, 2016, our Board of Directors determined that the first cash dividend, set at $0.05 pershare, will be paid on March 25, 2016 to shareholders of record as of March 15, 2016. However, the payment of any future cash dividends is at the discretionof the Board of Directors and will depend upon our financial condition, capital requirements, earnings and other factors deemed relevant by our Board ofDirectors. In addition, the terms of the credit agreements of our subsidiaries may restrict us from paying dividends and making other distributions to us thatwould provide us with cash to pay dividends to our shareholders.ISSUER PURCHASES OF EQUITY SECURITIESThe Company's purchases of its common stock during the fourth quarter of fiscal 2015 were as follows:Period Total Number ofShares Purchased Average PricePaid per Share Total Number ofShares Purchased as Part of PubliclyAnnounced Plansor Programs Approximate Dollar Value of Sharesthat May Yet BePurchased Underthe Plans or Programs (a)October 1, 2015 - October 31, 2015 61,275 $2.51 61,275 $9,134,000November 1, 2015 - November 30, 2015 64,249 $2.49 64,249 8,974,000December 1, 2015 - December 31, 2015 139,850 $2.58 139,850 8,614,000Total 265,374 $2.54 265,374 $8,614,000(a)On July 30, 2015, the Company announced that its Board of Directors authorized the repurchase of up to $10 million of the Company's common stock.The authorization does not expire. As of December 31, 2015, the Company had- 12 - repurchased 527,634 shares for a total cost of approximately $1.4 million under this authorization. From time to time, the Company may enter into aRule 10b5-1 trading plan for purposes of repurchasing common stock under this authorization.- 13 - The following information in this Item 5 of this Annual Report on Form 10-K is not deemed to be “soliciting material” or to be “filed” with the SEC orsubject to Regulation 14A or 14C under the Securities Exchange Act of 1934 or to the liabilities of Section 18 of the Securities Exchange Act of 1934, andwill not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to theextent we specifically incorporate it by reference into such a filing. PERFORMANCE INFORMATIONThe following graph compares on a cumulative basis changes since December 31, 2010 in (a) the total stockholder return on the Company's commonstock with (b) the total return on the Russell 2000 Index and (c) the total return on the companies in a peer group selected in good faith by the Company, ineach case assuming reinvestment of dividends. Such changes have been measured by dividing (x) the difference between the price per share at the end of andthe beginning of the measurement period by (y) the price per share at the beginning of the measurement period. The graph assumes $100 was invested onDecember 31, 2010 in the Company's common stock, the Russell 2000 Index and the peer group consisting of Resources Connection, Inc., Kelly Services,Inc., Kforce, Inc., and CDI Corporation. The returns of each component company in the peer group have been weighted based on each company's relativemarket capitalization on December 31, 2015. December 31, 2010 2011 2012 2013 2014 2015HSON $100.00 $82.16 $76.84 $68.95 $53.17 $50.09RUSSELL 2000 INDEX $100.00 $94.55 $108.38 $148.49 $153.73 $144.95PEER GROUP $100.00 $69.76 $84.08 $117.93 $120.72 $117.51- 14 - ITEM 6. SELECTED FINANCIAL DATAThe following table shows selected financial data of the Company that has been adjusted to reflect the classification of certain businesses asdiscontinued operations. The data has been derived from, and should be read together with, “Management's Discussion and Analysis of Financial Conditionand Results of Operations” and corresponding notes and the Consolidated Financial Statements included in Items 7 and 8 of this Form 10-K. Year Ended December 31, 2015 2014 2013 2012 2011 (dollars in thousands, except per share data)SUMMARY OF OPERATIONS (a): Revenue $463,197 $581,192 $562,572 $655,875 $780,927Gross margin $187,710 $222,845 $209,429 $257,793 $314,253Business reorganization and integration expense $5,828 $3,789 $5,440 $7,506 $720Operating income (loss) $3,241 $(17,486) $(27,152) $(10,094) $5,928 Income (loss) from continuing operations $1,607 $(15,786) $(30,211) $(7,222) $3,623Income (loss) from discontinued operations, net of income taxes $722 $2,592 $(184) $1,887 $7,286Net income (loss) $2,329 $(13,194) $(30,395) $(5,335) $10,909Basic income (loss) per share from continuing operations $0.05 $(0.48) $(0.93) $(0.22) $0.11Basic net income (loss) per share $0.07 $(0.40) $(0.94) $(0.17) $0.35Diluted income (loss) per share from continuing operations $0.05 $(0.48) $(0.93) $(0.22) $0.11Diluted net income (loss) per share $0.07 $(0.40) $(0.94) $(0.17) $0.34OTHER FINANCIAL DATA: Net cash provided by (used in) operating activities $(17,351) $(17,840) $2,513 $13,159 $13,396Net cash provided by (used in) investing activities $21,648 $16,731 $(2,557) $(8,272) $(6,584)Net cash provided by (used in) financing activities $644 $(1,256) $(497) $(4,274) $1,639BALANCE SHEET DATA: Current assets $106,143 $118,921 $134,323 $157,412 $181,923Total assets $124,949 $139,672 $158,829 $193,468 $216,546Current liabilities $51,591 $67,117 $69,818 $67,168 $90,515Total stockholders’ equity $61,180 $59,257 $74,385 $106,541 $107,357OTHER DATA: EBITDA (loss) (b) $6,820 $(11,725) $(20,471) $(3,788) $11,885(a)Effective June 14, 2015, the Company completed the sale of substantially all of the assets (excluding working capital) of its US IT business toMastech, Inc. The Company also completed the sale of its Netherlands business to InterBalanceGroup BV effective April 30, 2015. In addition,during 2015, the Company’s Board of Directors and Management approved the exit of operations in certain countries within Central and EasternEurope (Ukraine, Czech Republic, and Slovakia), Luxembourg and Ireland. As these actions did not meet the requirements for classification asdiscontinued operations, the operating results and gain (loss) on sale and exit of businesses are presented as components of income (loss) fromcontinuing operations. See Note 3 included in Item 8 of this Form 10-K for additional information.Effective November 9, 2014, the Company completed the sale of substantially all of the assets and certain liabilities of its Legal eDiscovery businessin the U.S and U.K. to Document Technologies, LLC and DTI of London Limited. In addition, the Company ceased its operations in Sweden withinthe Hudson Europe segment during the third quarter of 2014. The results of operations of the Legal eDiscovery business and the Company'soperations in Sweden have been reclassified to discontinued operations for all periods presented and has been excluded from continuing operationsin accordance with the provisions of ASC 205-20-45, “Reporting Discontinued Operations." See Note 4 included in Item 8 of this Form 10-K foradditional information.- 15 - (b)SEC Regulation S-K 229.10(e)1(ii)(A) defines EBITDA as earnings before interest, taxes, depreciation and amortization. EBITDA is presented toprovide additional information to investors about the Company's operations on a basis consistent with the measures that the Company uses tomanage its operations and evaluate its performance. Management also uses this measurement to evaluate working capital requirements. EBITDAshould not be considered in isolation or as a substitute for operating income and net income prepared in accordance with generally acceptedaccounting principles or as a measure of the Company's profitability. See Note 19 to the Consolidated Financial Statements for further EBITDAsegment and reconciliation information.- 16 - 1ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with theConsolidated Financial Statements and the notes thereto, included in Item 8 of this Form 10-K. This MD&A contains forward-looking statements. Please see“FORWARD-LOOKING STATEMENTS” for a discussion of the uncertainties, risks and assumptions associated with these statements. This MD&A also usesthe non-generally accepted accounting principle measure of earnings before interest, taxes, depreciation and amortization (“EBITDA”). See Note 19 to theConsolidated Financial Statements for EBITDA segment reconciliation information.This MD&A includes the following sections:•Executive Overview•Results of Operations•Liquidity and Capital Resources•Contingencies•Critical Accounting Policies•Recent Accounting Pronouncements•Forward-Looking StatementsExecutive OverviewThe Company has expertise in recruiting mid-level professional talent across all management disciplines in a wide range of industries. The Companymatches clients and candidates to address client needs on a part time, full time and interim basis. Part of that expertise is derived from research on hiringtrends and the Company's clients’ current successes and challenges with their staff. This research has helped enhance the Company's understanding about thenumber of new hires that do not meet its clients’ long-term goals, the reasons why, and the resulting costs to the Company's clients. With operations in 12countries and relationships with specialized professionals around the world, the Company brings a strong ability to match talent with opportunities byassessing, recruiting, developing and engaging the best and brightest people for the Company's clients. The Company combines broad geographic presence,world-class talent solutions and a tailored, consultative approach to help businesses and professionals achieve maximum performance. The Company's focusis to continually upgrade its service offerings, delivery capability and assessment tools to make candidates more successful in achieving its clients' businessrequirements.The Company’s proprietary frameworks, assessment tools and leadership development programs, coupled with its broad geographic footprint, haveallowed the Company to design and implement regional and global recruitment solutions that the Company believes greatly enhance the quality of itsclient's hiring.To accelerate the implementation of the Company's strategy, the Company has engaged in the following initiatives:•Investing in the core businesses and practices that present the greatest potential for profitable growth.•Improving further the Company’s cost structure and efficiency of its support functions and infrastructure.•Building and differentiating the Company's brand through its unique talent solutions offerings.Strategic ActionsDuring the year ended December 31, 2015, the Company continued to execute on strategic actions in its previously announced efforts to focus on itscore business lines and growth opportunities. These actions included:•In February 2015, the Company's management approved the exit of operations in certain countries within Central and Eastern Europe (Ukraine,Czech Republic and Slovakia). During the second quarter of 2015, the Company deemed the liquidation of those Central and Eastern Europebusinesses to be substantially complete. As such, under ASC 830, "Foreign Currency Matters," the Company transferred $1.2 million ofaccumulated foreign- 17 - currency translation gains from accumulated other comprehensive income to the statement of operations within gain on sale and exit ofbusinesses. See Note 3 to the Condensed Consolidated Financial Statements for additional information.•In March 2015, the Company's management approved the exit of operations in Luxembourg. During the third quarter of 2015, the Companydeemed the liquidation of its Luxembourg business to be substantially complete. As such, under ASC 830, "Foreign Currency Matters," theCompany transferred $0.1 million of accumulated foreign currency translation losses from accumulated other comprehensive income to thestatement of operations within gain on sale and exit of businesses. See Note 3 to the Condensed Consolidated Financial Statements foradditional information.•On May 7, 2015, the Company completed the sale of its Netherlands business to InterBalance Group B.V., effective April 30, 2015, in amanagement buyout for $9.0 million, including cash sold of $1.1 million. The Company recognized a gain on sale of $2.8 million, net ofclosing and other direct transaction costs, on the divestiture of the Netherlands business which included $2.8 million of non-cash accumulatedforeign currency translation losses. See Note 3 to the Condensed Consolidated Financial Statements for additional information.•On June 15, 2015, the Company completed the sale of its Hudson Information Technology (US) business (the "US IT business") for $17.0million in cash. The Company retained approximately $3.0 million in net working capital associated with the US IT business. The Companyrecognized a gain on sale of $15.9 million, net of closing and other direct transaction costs. See Note 3 to the Condensed ConsolidatedFinancial Statements for additional information.•In August 2015, the Company exited its operations in Ireland.•In the fourth quarter of 2015, the Company substantially completed the migration of the remaining Americas business to a new, lower-cost, ITplatform and shared service center and decommissioned the legacy support infrastructures.Discontinued OperationsEffective November 9, 2014, the Company completed the sale of substantially all of the assets and certain liabilities of its Legal eDiscovery business inthe U.S. and U.K. to Document Technologies, LLC and DTI of London Limited for $23.0 million in cash, and recorded a gain of $11.3 million in connectionwith the sale. The divestiture is a significant component of the Company’s previously announced efforts to focus on its core business lines and growthopportunities. In addition, the Company ceased its operations in Sweden within the Hudson Europe segment during the third quarter of 2014.The Company's divestiture of its Legal eDiscovery business and exit of operations in Sweden accounted for $0.7 million and $0.0 million of operatinglosses for the year ended December 31, 2015, respectively, which have been reclassified to discontinued operations for all periods presented and have beenexcluded from continuing operations and from segment results for all periods presented in accordance with the provisions of ASC 205-20-45 “ReportingDiscontinued Operations”. See Note 4 included in Item 8 of this Form 10-K for additional information.Current Market ConditionsEconomic conditions in most of the world's major markets remain mixed. Conditions in Europe have shown improvement with GDP growth in most ofthe major markets, as well as forecasted GDP growth for 2016. Australia faces a slow growth outlook for 2016, while the outlook for Asia is uncertain givenChina's slowing growth outlook. The Company closely monitors the economic environment and business climate in its markets and responds accordingly. Atthis time, the Company is unable to accurately predict the outcome of these events or changes in general economic conditions and their effect on the demandfor the Company's services.Financial PerformanceFor the year ended December 31, 2015, the Company grew its underlying and retained business in most markets. On a constant currency basis, for theyear ended December 31, 2015, revenue and gross margin declined by $50.0 million and $9.8 million, or 9.7% and 5.0%, respectively, compared to the sameperiod in 2014. A primary driver of the decrease was attributable to the current year divestitures of the Netherlands, US IT business, Luxembourg and Centraland Eastern Europe businesses. The following table reconciles the change in reported revenue and gross margin for the year ended December 31, 2015:- 18 - Year Ended December 31, 2015$ in millionsChange in Revenue on a ConstantCurrency Basis Change in Gross Margin on aConstant Currency BasisNetherlands divestiture$(26.3) $(5.7)US IT business divestiture(22.5) (5.9)Luxembourg divestiture(1.0) (0.9)Central and Eastern Europe divestitures(0.8) (0.7)Retained businesses increase0.6 3.4Reported change$(50.0) $(9.8)In addition to the impact of the divested businesses detailed above, on a constant currency basis, the Company's retained businesses experienced anoverall increase in revenue and gross margin for the year ended 2015, as compared to 2014. This was driven by increases in retained revenue and grossmargin in the Americas, Australia, China, Hong Kong, Belgium and Spain. The increases were partially offset by declines in retained revenue and grossmargin in the U.K., France and New Zealand due to continued softness in recruitment activities.The following is a summary of the highlights for the years ended December 31, 2015, 2014 and 2013. These should be considered in the context of theadditional disclosures in this MD&A.•Revenue was $463.2 million for the year ended December 31, 2015, compared to $581.2 million for 2014, a decrease of $118.0 million, or 20.3%.◦On a constant currency basis, the Company's revenue decreased $50.0 million, or 9.7%. Contracting revenue decreased $55.4 million(down 15.4% compared to the same period in 2014). The decrease in contracting revenue was partially offset by increases in permanentrecruitment revenue of $5.2 million (up 4.6% compared to 2014) and talent management revenue of $0.8 million (up 2.1% compared to2014).•Revenue was $581.2 million for the year ended December 31, 2014, compared to $562.6 million for 2013, an increase of $18.6 million, or 3.3%.◦On a constant currency basis, the Company's revenue increased $15.8 million, or 3.2%. Permanent recruitment revenue increased $12.8million (up 12.7% compared to the same period in 2013) and talent management revenue increased $4.4 million (up 13.7%compared to the same period in 2013). The increases were partially offset by a decline in contracting revenue of $1.0 million (down0.3% compared to 2013).•Gross margin was $187.7 million for the year ended December 31, 2015, compared to $222.8 million for 2014, a decrease of $35.1 million, or15.8%.◦On a constant currency basis, gross margin decreased $9.8 million, or 5.0%. Contracting gross margin decreased $12.9 million (down23.2% compared to 2014) and talent management gross margin decreased $1.1 million (down 3.7% compared to 2014). The decrease waspartially offset by an increase in permanent recruitment gross margin of $4.6 million (up 4.1% compared to 2014).Gross margin was $222.8 million for the year ended December 31, 2014, compared to $209.4 million for 2013, an increase of $13.4 million, or6.4%.◦On a constant currency basis, gross margin increased $13.2 million, or 7.1%. Permanent recruitment gross margin increased $12.7 million(up 12.8% compared to 2013) and talent management gross margin increased $3.1 million (up 11.5% compared to 2013). Theincrease was partially offset by a decrease in contracting gross margin of $2.4 million (down 4.2% compared to 2013).•Selling, general and administrative expenses and other non-operating income (expense) (“SG&A and Non-Op”) was $194.9 million for the yearended December 31, 2015, compared to $230.1 million for 2014, a decrease of $35.2 million, or 15.3%. ◦On a constant currency basis, SG&A and Non-Op decreased $10.3 million, or 5.0%. SG&A and Non-Op, as a percentage of revenue, was42.1% for the year ended December 31, 2015, compared to 40.0% for 2014.- 19 - SG&A and Non-Op were $230.1 million for the year ended December 31, 2014, compared to $223.1 million for 2013, an increase of $7.0 million,or 3.1%. ◦On a constant currency basis, SG&A and Non-Op increased $8.1 million, or 4.1%. SG&A and Non-Op, as a percentage of revenue, was40.0% for the year ended December 31, 2014, compared to 39.6% for 2013.•Business reorganization expenses were $5.8 million for the year ended December 31, 2015, compared to $3.8 million for 2014, an increase of $2.0million, or $2.4 million on a constant currency basis.Business reorganization expenses were $3.8 million for the year ended December 31, 2014, compared to $5.4 million for 2013, a decrease of $1.7million, or $1.3 million on a constant currency basis.•For the year ended December 31, 2015, the Company recorded $0.0 million of charges for impairment of long-lived assets as compared to $0.7million in 2014. See "Long-lived Assets and Goodwill" below for further detail.•EBITDA was $6.8 million for the year ended December 31, 2015, compared to EBITDA loss of $11.7 million for 2014. On a constant currencybasis, EBITDA increased $18.6 million in 2015 compared to 2014.EBITDA loss was $11.7 million for the year ended December 31, 2014, compared to EBITDA loss of $20.5 million for 2013. On a constantcurrency basis, EBITDA loss decreased $6.9 million in 2014 compared to 2013.•Net income was $2.3 million for the year ended December 31, 2015, compared to a net loss of $13.2 million for 2014. On a constant currencybasis, net income increased $14.8 million in 2015 compared to 2014.Net loss was $13.2 million for the year ended December 31, 2014, compared to a net loss of $30.4 million for 2013. On a constant currency basis,net loss decreased $14.2 million in 2014 compared to 2013.Long-lived Assets and GoodwillUnder Financial Accounting Standards Board ("FASB") Accounting Standard Codification (“ASC”) 360, “Property, Plant, and Equipment," theCompany is required to test a long-lived asset for impairment if circumstances indicate that its carrying value might exceed its current fair value.During the fourth quarter of 2015, the Company experienced continued declines in the operating results within certain markets. These events weredeemed to be triggering events that required the Company to perform an impairment assessment with respect to long-lived assets, primarily property andequipment. The Company's internal projections as of the fourth quarter of 2015 anticipate improvement in its operating performance in 2016. Theimpairment assessment indicated the Company's long-lived assets were not impaired.In addition to the Company's long-lived assets impairment testing, the Company's management also tested its goodwill for potential impairment. At theconclusion of its goodwill impairment testing, the Company estimated the fair value of its China reporting unit substantially exceeded its carrying value. Assuch, the Company determined that no impairment of goodwill had taken place.Although the Company currently anticipates improvement in its operating results for 2016, if general economic conditions in certain markets in whichthe Company operates remain weak, or if the Company’s performance does not improve, the Company may record impairment charges related to goodwilland other long-lived assets in the future.Constant CurrencyThe Company operates on a global basis, with the majority of its gross margin generated outside of the U.S. Accordingly, fluctuations in foreigncurrency exchange rates can affect our results of operations. For the discussion of reportable segment results of operations, the Company uses constantcurrency information. Constant currency compares financial results between periods as if exchange rates had remained constant period-over-period. TheCompany defines the term “constant currency” to mean that financial data for previously reported periods are translated into U.S. dollars using the sameforeign currency exchange rates that were used to translate financial data for the current period. The Company’s management reviews and analyzes businessresults in constant currency and believes these results better represent the Company’s underlying business trends.Changes in revenue, gross margin, SG&A and Non-Op, business reorganization expenses, operating income (loss), net income (loss) and EBITDA (loss)include the effect of changes in foreign currency exchange rates. The tables below summarize- 20 - the impact of foreign currency exchange rate adjustments on the Company’s operating results for the years ended December 31, 2015, 2014 and 2013. Year Ended December 31, 2015 2014 2013 As As Currency Constant As Currency Constant$ in thousands reported reported translation currency reported translation currencyRevenue: Hudson Americas $28,627 $50,146 $(104) $50,042 $51,857 $(195) $51,662Hudson Asia Pacific 219,391 246,873 (37,354) 209,519 232,748 (43,931) 188,817Hudson Europe 215,179 284,173 (30,548) 253,625 277,967 (21,096) 256,871Total $463,197 $581,192 $(68,006) $513,186 $562,572 $(65,222) $497,350Gross margin: Hudson Americas $16,111 $20,757 $(101) $20,656 $18,692 $(184) $18,508Hudson Asia Pacific 89,682 93,014 (11,717) 81,297 87,162 (14,094) 73,068Hudson Europe 81,917 109,074 (13,532) 95,542 103,575 (10,825) 92,750Total $187,710 $222,845 $(25,350) $197,495 $209,429 $(25,103) $184,326SG&A and Non-Op (a): Hudson Americas $17,590 $20,582 $(136) $20,446 $18,957 $(212) $18,745Hudson Asia Pacific 85,684 92,127 (11,216) 80,911 89,073 (14,077) 74,996Hudson Europe 83,617 108,613 (13,563) 95,050 108,564 (11,751) 96,813Corporate 8,008 8,797 (1) 8,796 6,530 (2) 6,528Total $194,899 $230,119 $(24,916) $205,203 $223,124 $(26,042) $197,082Business reorganization expenses: Hudson Americas $1,108 $94 $1 $95 $448 $— $448Hudson Asia Pacific 669 1,322 (181) 1,141 989 (184) 805Hudson Europe 2,883 1,407 (158) 1,249 3,214 (527) 2,687Corporate 1,168 966 — 966 789 — 789Total $5,828 $3,789 $(338) $3,451 $5,440 $(711) $4,729Operating income (loss): Hudson Americas $12,931 $870 $3 $873 $1,367 $(25) $1,342Hudson Asia Pacific 3,548 (3,013) 169 (2,844) (5,883) 840 (5,043)Hudson Europe 1,743 3,112 (456) 2,656 (5,251) 1,035 (4,216)Corporate (14,981) (18,455) — (18,455) (17,385) (3) (17,388)Total $3,241 $(17,486) $(284) $(17,770) $(27,152) $1,847 $(25,305)Net income (loss), consolidated $2,329 $(13,194) $704 $(12,490) $(30,395) $803 $(29,592)EBITDA (loss) from continuingoperations(b): Hudson Americas $13,354 $117 $33 $150 $(717) $29 $(688)Hudson Asia Pacific 2,851 (890) (295) (1,185) (3,227) 202 (3,025)Hudson Europe (207) (1,187) 190 (997) (9,197) 1,560 (7,637)Corporate (9,178) (9,765) — (9,765) (7,330) (4) (7,334)Total $6,820 $(11,725) $(72) $(11,797) $(20,471) $1,787 $(18,684) (a)SG&A and Non-Op is a measure that management uses to evaluate the segments’ expenses, which include the following captions on theConsolidated Statements of Operations : Selling, general and administrative expenses, and other income (expense), net. Corporate managementservice allocations are included in the segments’ other income (expense).(b)See EBITDA reconciliation in the following section.- 21 - Use of EBITDA (Non-GAAP measure)Management believes EBITDA is a meaningful indicator of the Company’s performance that provides useful information to investors regarding theCompany’s financial condition and results of operations. EBITDA is also considered by management as an indicator of operating performance and mostcomparable measure across the regions in which we operate. Management also uses this measurement to evaluate capital needs and working capitalrequirements. EBITDA should not be considered in isolation or as a substitute for operating income or net income prepared in accordance with generallyaccepted accounting principles in the U.S. (“GAAP”) or as a measure of the Company’s profitability. EBITDA is derived from net income (loss) adjusted forthe provision for (benefit from) income taxes, interest expense (income), and depreciation and amortization. The reconciliation of EBITDA to the most directly comparable GAAP financial measure is provided in the table below: Year Ended December 31,$ in thousands 2015 2014 2013Net income (loss) $2,329 $(13,194) $(30,395)Adjustment for income (loss) from discontinued operations, net of income taxes 722 2,592 (184)Income (loss) from continuing operations $1,607 $(15,786) $(30,211)Adjustments to income (loss) from continuing operations Provision for (benefit from) income taxes 646 (2,159) 3,264Interest expense, net 722 661 554Depreciation and amortization expense 3,845 5,559 5,922Total adjustments from income (loss) from continuing operations to EBITDA (loss) 5,213 4,061 9,740EBITDA (loss) $6,820 $(11,725) $(20,471) - 22 - Temporary Contracting DataThe following table sets forth the Company’s temporary contracting revenue, gross margin and gross margin as a percentage of revenue for the yearsended December 31, 2015, 2014 and 2013. Year Ended December 31, 2015 2014 2013$ in thousands As reported As reported Currencytranslation Constantcurrency As reported Currencytranslation ConstantcurrencyTEMPORARY CONTRACTING DATA (a): Temporary contracting revenue: Hudson Americas $15,562 $37,816 $— $37,816 $42,538 $— $42,538Hudson Asia Pacific 142,350 170,370 (28,413) 141,957 164,588 (33,827) 130,761Hudson Europe 147,141 199,920 (19,273) 180,647 200,052 (11,886) 188,166Total $305,053 $408,106 $(47,686) $360,420 $407,178 $(45,713) $361,465Temporary contracting gross margin: Hudson Americas $3,587 $8,738 $— $8,738 $9,715 $— $9,715Hudson Asia Pacific 18,098 21,412 (3,555) 17,857 23,359 (4,824) 18,535Hudson Europe 21,047 32,370 (3,345) 29,025 32,193 (2,394) 29,799Total $42,732 $62,520 $(6,900) $55,620 $65,267 $(7,218) $58,049Temporary contracting gross margin as a percent of temporary contracting revenue: Hudson Americas 23.05%23.11%N/A23.11% 22.84% N/A 22.84%Hudson Asia Pacific 12.71%12.57%N/A12.58% 14.19% N/A 14.17%Hudson Europe 14.30%16.19%N/A16.07% 16.09% N/A 15.84%Total 14.01%15.32%N/A15.43% 16.03% N/A 16.06% (a)Temporary contracting gross margin and gross margin as a percentage of revenue are shown to provide additional information regarding theCompany’s ability to manage its cost structure and to provide further comparability relative to the Company’s peers. Temporary contracting grossmargin is derived by deducting the direct costs of temporary contracting from temporary contracting revenue. The Company’s calculation of grossmargin may differ from those of other companies. See details in Results of Operations for further discussions of the changes in temporary contractrevenue and gross margin.- 23 - Results of Operations (Discussion of significant matters is presented below):Hudson Americas (reported currency) Revenue Year Ended December 31, 2015 2014 Change inamount Change in % 2013 Change inamount Change in %$ in millions As reported As reported As reported Hudson Americas Revenue $28.6 $50.1 $(21.5) (42.9)% $51.9 $(1.7) (3.3)% For the year ended December 31, 2015, contracting revenue decreased $22.3 million, or 58.8%, partially offset by an increase in permanent recruitmentrevenue of $0.8 million, or 6.2%, as compared to 2014. The decline in contracting revenue was directly attributable to the divestiture of the Company's US ITbusiness in June 2015.For the year ended December 31, 2014, contracting revenue decreased $4.7 million, or 11.1%, partially offset by an increase in permanent recruitmentrevenue of $3.0 million, or 32.3%, as compared to 2013. The decline in contracting revenue was in the IT practice due to lower client activities for two largecustomers. Substantially all of the increase in permanent recruitment revenue was attributable to growth in the Company's RPO practice through new clientsacquired in the past year as well as higher activity from the Company's existing clients.Gross margin Year Ended December 31, 2015 2014 Change inamount Change in % 2013 Change inamount Change in %$ in millions As reported As reported As reported Hudson Americas Gross margin $16.1 $20.8 $(4.6) (22.4)% $18.7 $2.1 11.0%Gross margin as a percentageof revenue 56.3% 41.4% N/A N/A 36.0% N/A N/AContracting gross margin as apercentage of contractingrevenue 23.0% 23.1% N/A N/A 22.8% N/A N/A For the year ended December 31, 2015, contracting gross margin decreased $5.2 million, or 58.9%, partially offset by an increase in permanentrecruitment gross margin of $0.5 million, or 4.5%, as compared to 2014. The changes in gross margin were attributable to the same factors as described abovefor revenue. Contracting gross margin, as a percentage of revenue, was 23.0% for the year ended December 31, 2015, as compared to 23.1% for 2014. Totalgross margin, as a percentage of revenue, increased to 56.3% for 2015, as compared to 41.4% for 2014, and was primarily due to the divestiture of theCompany's US IT business in June 2015 and growth in the RPO practice. During 2015, RPO gross margin increased $1.3 million, or 11.9%, as compared to2014.For the year ended December 31, 2014, permanent recruitment gross margin increased $3.0 million, or 33.8%, partially offset by a decrease in contractinggross margin of $1.0 million, or 10.1%, as compared to 2013. The changes in gross margin were attributable to the same factors as described above forrevenue. Contracting gross margin, as a percentage of revenue, was 23.1% for the year ended December 31, 2014, as compared to 22.8% for 2013. Total grossmargin, as a percentage of revenue, increased to 41.4% for 2014, as compared to 36.0% for 2013, and was primarily due to growth in permanent recruitmentactivities from the RPO practice.- 24 - Selling, general and administrative expenses and non-operating income (expense) (“SG&A and Non-Op”) Year Ended December 31, 2015 2014 Change inamount Change in % 2013 Change inamount Change in % $ in millions As reported As reported As reported Hudson Americas SG&A and Non-Op $17.6 $20.6 $(3.0) (14.5)% $19.0 $1.6 8.6%SG&A and Non-Op as apercentage of revenue 61.4% 41.0% N/A N/A 36.6% N/A N/A For the year ended December 31, 2015, SG&A and Non-Op decreased as compared to the same period in 2014 due to lower support costs and corporateexpenses allocated to the Americas business as a result of the Legal eDiscovery and US IT business divestitures. The decline was partially offset by aproportion of stranded administrative expenses being allocated to the discontinued Legal eDiscovery business in 2014 and change in control stock-basedcompensation expenses of $0.4 million for the year ended December 31, 2015. SG&A and Non-Op, as a percentage of revenue, was 61.4% for the year endedDecember 31, 2015, as compared to 41.0% for 2014 as the Company continued to eliminate stranded costs associated with the divestiture of the LegaleDiscovery and US IT businesses, a process that was substantially completed in the fourth quarter of 2015.For the year ended December 31, 2014, SG&A and Non-Op increased as compared to the same period in 2013 due to a lower proportion of administrativeexpenses being allocated to the discontinued Legal eDiscovery business. Excluding the impact of discontinued operations, for the year ended December 31,2014 SG&A and Non-Op decreased by approximately $2.6 million as compared to the same period in 2013, primarily from a reduction of support staff costs.SG&A and Non-Op, as a percentage of revenue, was 41.0% for the year ended December 31, 2014, as compared to 36.6% for 2013. The increase in SG&A andNon-Op, as a percentage of revenue, was due principally to a higher proportional administration costs.Business reorganization expensesFor the year ended December 31, 2015, business reorganization expenses were $1.1 million, as compared to $0.1 million and $0.4 million for 2014 and2013, respectively. Business reorganization expenses incurred in 2015 were primarily related to severance for support personnel associated with the sale ofthe US IT business, lease exit and contract cancellation costs. Business reorganization expenses incurred in 2014 and 2013 were attributable to therealignment of the sales force, exiting unprofitable lines of business, the reduction of support staff costs and lease exit costs.Operating Income and EBITDA Year Ended December 31, 2015 2014 Change inamount Change in % 2013 Change inamount Change in %$ in millions As reported As reported As reported Hudson Americas Operating income (loss): $12.9 $0.9 $12.1 (a) $1.4 $(0.5) (36.4)%EBITDA (loss) $13.4 $0.1 $13.2 (a) $(0.7) $0.8 (114.3)%EBITDA as a percentage ofrevenue 46.6% 0.2% N/A N/A (1.4)% N/A N/A(a) Information was not provided because the Company did not consider the change in percentage as a meaningful measure for the years in comparison.For the year ended December 31, 2015, EBITDA was $13.4 million, or 46.6% of revenue, as compared to EBITDA of $0.1 million, or 0.2% of revenue, for2014. The increase in EBITDA was principally due to the gain on sale of the US IT business of $15.9 million, partially offset by an increase in businessreorganization expenses, as compared to the same period in 2014. Operating income was $12.9 million for the year ended December 31, 2015, as compared to$0.9 million for 2014.For the year ended December 31, 2014, EBITDA was $0.1 million, or 0.2% of revenue, as compared to EBITDA loss of $0.7 million, or 1.4% of revenue,for 2013. The increase in EBITDA was principally due to a greater proportional increase in- 25 - RPO gross margin. Operating income was $0.9 million for the year ended December 31, 2014, as compared to $1.4 million for 2013.The difference between operating income and EBITDA (loss) for the years ended December 31, 2015, 2014 and 2013 was principally due to theinclusion of corporate management fees and depreciation in the determination of operating income.- 26 - Hudson Asia Pacific (constant currency)Revenue Year Ended December 31, 2015 2014 Change inamount Change in % 2013 Change inamount Change in %$ in millions Asreported Constantcurrency Constantcurrency Hudson Asia Pacific Revenue $219.4 $209.5 $9.9 4.7% $188.8 $20.7 11.0% For the year ended December 31, 2015, contracting revenue, permanent recruitment revenue and talent management revenue increased $0.4 million, $9.2million and $0.5 million, or 0.3%, 17.2% and 3.4%, respectively, as compared to 2014. In Australia, contracting revenue, permanent recruitment revenue andtalent management revenue increased $2.9 million, $3.1 million and $0.0 million, or 2.5%, 12.8% and 0.1%, respectively, as compared to 2014. The increasein Australia contracting revenue is primarily from the information technology practice partially offset by declines in RPO. The decline in RPO is due mainlyto the end of a large, high volume low margin RPO contracting project. In China, permanent recruitment revenue increased $4.9 million, or 25.0%, ascompared to 2014. The increase in China is primarily from the information technology, sales and marketing, accounting and finance recruitment practicesand RPO. In Hong Kong, permanent recruitment revenue increased $1.0 million, or 32.0%, as compared to 2014.For the year ended December 31, 2014, contracting revenue, permanent recruitment revenue and talent management revenue increased $11.2 million,$7.3 million and $2.8 million, or 8.6%, 15.9% and 26.4%, respectively, as compared to 2013. In Australia, contracting revenue, permanent recruitmentrevenue and talent management revenue increased $15.5 million, $3.1 million and $3.0 million, or 15.1%, 14.7% and 34.6%, respectively, as compared to2013. In China, permanent recruitment revenue increased $5.0 million, or 34.9%, as compared to 2013. The increase in China is primarily from theaccounting and finance, sales and marketing recruitment practices and RPO.Gross margin Year Ended December 31, 2015 2014 Change inamount Change in % 2013 Change inamount Change in % Asreported Constantcurrency Constantcurrency Hudson Asia Pacific Gross margin $89.7 $81.3 $8.4 10.3% $73.1 $8.2 11.3%Gross margin as a percentageof revenue 40.9% 38.8% N/A N/A 38.7% N/A N/AContracting gross margin as apercentage of contractingrevenue 12.7% 12.6% N/A N/A 14.2% N/A N/A For the year ended December 31, 2015, permanent recruitment and contracting gross margins increased $8.7 million and $0.2 million or 16.3% and1.3%, respectively, as compared to 2014. The increases were partially offset by a decline in talent management gross margin of $0.6 million, or 6.1%, ascompared to 2014. Australia and China accounted for the majority of the increase in gross margins, which increased by $2.6 million and $4.8 million,respectively, partially offset by declines in New Zealand.Gross margin as a percentage of revenue, was 40.9%, as compared to 38.8% for 2014. The increase in gross margin, as a percentage of revenue, resultedfrom increases in higher margin permanent recruitment revenue. The contracting gross margin, as a percentage of revenue, remained relatively flat at 12.7%,as compared to 2014. For the year ended December 31, 2014, permanent recruitment and talent management gross margins increased $7.3 million and $1.6 million, or 15.9%and 19.8%, respectively, as compared to 2013. The increases were partially offset by a decline in contracting gross margin of $0.7 million, or 3.7%, ascompared to 2013. Australia and China accounted for the majority of the increase in gross margins, which increased by $5.0 million and $5.0 million,respectively, partially offset by- 27 - declines in New Zealand and Singapore. Contracting gross margin, as a percentage of revenue, was 12.6%, as compared to 14.2% for 2013. The decline ingross margin as a percentage of revenue resulted from lower margin high-volume temporary contracting business from the RPO practice. Total gross margin,as a percentage of revenue, remained flat at 38.8%, as compared to 2013.SG&A and Non-Op Year Ended December 31, 2015 2014 Change inamount Change in % 2013 Change inamount Change in %$ in millions Asreported Constantcurrency Constantcurrency Hudson Asia Pacific SG&A and Non-Op $85.7 $80.9 $4.8 5.9% $75.0 $5.9 7.9%SG&A and Non-Op as apercentage of revenue 39.1% 38.6% N/A N/A 39.7% N/A N/A For the year ended December 31, 2015, SG&A and Non-Op increased $4.8 million, or 5.9%, as compared to the same period in 2014. The increase isprimarily due to higher headcount as a result of investment in additional fee earners in the region as well as the higher variable bonus and commissions onhigher gross margin.SG&A and Non-Op, as a percentage of revenue, was 39.1% for 2015, as compared to 38.6% for 2014. SG&A and Non-Op, as a percentage of revenue, forthe year ended December 31, 2015 was higher due to the change in control stock-based compensation expense of $0.6 million, as compared to the sameperiod in 2014. The increase was partially offset by savings associated with reorganization actions initiated in 2014.For the year ended December 31, 2014, SG&A and Non-Op increased $5.9 million, or 7.9%, as compared to 2013, primarily due to higher averageconsultant headcount (up 18%) as well as higher commission paid to consultants for higher gross margin. SG&A and Non-Op, as a percentage of revenue, was38.6% for 2014, as compared to 39.7% in 2013. The reductions in SG&A and Non-Op, as a percentage of revenue, were principally due to an increase inrevenue as well as cost savings from recent reorganization actions.Business reorganization expensesFor the year ended December 31, 2015, business reorganization expenses were $0.7 million, as compared to $1.1 million for 2014 and $0.8 million for2013. The business reorganization expenses incurred in the current year were primarily for lease exit costs in Australia and New Zealand. Businessreorganization expenses incurred in 2014 related to a change-in-estimate for office space optimization in Australia and employee termination costs forintegration of back-office support functions in Asia. Business reorganization expenses incurred in 2013 were primarily for employee termination benefitsrelated to the reduction of back-office support functions and lease exit costs to eliminate excess real estate. Operating Income and EBITDA Year Ended December 31, 2015 2014 Change inamount Change in % 2013 Change inamount Change in %$ in millions Asreported Constantcurrency Constantcurrency Hudson Asia Pacific Operating income (loss): $3.5 $(2.8) $6.4 (a) $(5.0) $2.2 (43.6)%EBITDA (loss) $2.9 $(1.2) $4.0 (a) $(3.0) $1.8 (60.8)%EBITDA as a percentage ofrevenue 1.3% (0.6)% N/A N/A (1.6)% N/A N/A(a) Information was not provided because the Company did not consider the change in percentage as a meaningful measure for the years in comparison.For the year ended December 31, 2015, EBITDA was $2.9 million, or 1.3% of revenue, as compared to EBITDA loss of $1.2 million, or 0.6% of revenue,for 2014. The increase in EBITDA for the year ended December 31, 2015 was principally due- 28 - to higher revenue. Operating income for the year ended December 31, 2015 was $3.5 million, as compared to operating loss of $2.8 million for 2014.For the year ended December 31, 2014, EBITDA loss was $1.2 million, or 0.6% of revenue, as compared to EBITDA loss of $3.0 million, or 1.6% ofrevenue, for 2013. The decrease in EBITDA loss for the year ended December 31, 2014 was principally due to higher revenue. Operating loss for the yearended December 31, 2014 was $2.8 million, as compared to operating loss of $5.0 million for 2013.The difference between operating income (loss) and EBITDA (loss) for the years ended December 31, 2015, 2014 and 2013 was principally due to theinclusion of corporate management fees and depreciation in the determination of operating income (loss).- 29 - Hudson Europe (constant currency)Revenue Year Ended December 31, 2015 2014 Change inamount Change in % 2013 Change inamount Change in %$ in millions Asreported Constantcurrency Constantcurrency Hudson Europe Revenue $215.2 $253.6 $(38.4) (15.2)% $256.9 $(3.2) (1.3)% For the year ended December 31, 2015, contracting revenue and permanent recruitment revenue decreased $33.5 million and $4.9 million, or 18.5% and10.1%, respectively, as compared to 2014, partially offset by an increase in talent management revenue of $0.4 million, or 1.5%, as compared to 2014. Thesale of the Netherlands business during 2015 was the primary driver of the decline in Europe, as total revenue of the Netherlands for the year ended December31, 2015 decreased $26.3 million, or 67.4%, as compared to 2014.In the U.K., revenue decreased $12.8 million, or 7.6%, as compared to 2014 due to declines in U.K. recruitment practice groups offset in part by RPO. Forthe year ended December 31, 2015, RPO revenue increased $1.4 million, or 12.3%, as compared to 2014 in the U.K.In Continental Europe, for the year ended December 31, 2015, total revenue decreased $25.6 million, or 29.8%, as compared to 2014. As noted above,the Netherlands was the primary driver of the decline as total revenue for the year ended December 31, 2015 decreased $26.3 million, or 67.4%, as comparedto 2014. The sale of the Netherlands business was effective April 30, 2015. For the year ended December 31, 2015, the decrease was also driven by a declinein France of $1.9 million, Central and Eastern Europe of $0.8 million, and Luxembourg of $1.0 million, offset by an increase in revenue in Belgium of $3.1million and Spain of $1.4 million, as compared to 2014.For the year ended December 31, 2014, contracting revenue decreased $7.5 million, or 4.0%, partially offset by increases in permanent recruitment andtalent management revenue of $2.4 million and $1.5 million, or 5.2% and 7.1%, respectively, as compared to 2013. The decline in contracting revenue wasprimarily from the U.K., which decreased $7.9 million, or 5.4%, as compared to 2013. The overall decrease in revenue in the U.K. resulted primarily fromdeclines in the banking & financial services sector.In Continental Europe, total revenue for the year ended December 31, 2014, increased $4.7 million, or 5.7%, as compared to 2013, primarily due toincreases in talent management and permanent recruitment revenue. Talent management and permanent recruitment revenue increased $2.2 million and $1.8million, or 11.9% and 9.5%, respectively. The growth in talent management revenue occurred primarily in Belgium from customers in the public sector andmanufacturing sector. The growth in permanent recruitment revenue occurred primarily in Belgium, led by practices in sales and marketing, engineering andindustrial and I.T., as well as in Spain, led by customers in the health sector.Gross margin Year Ended December 31, 2015 2014 Change inamount Change in % 2013 Change inamount Change in %$ in millions Asreported Constantcurrency Constantcurrency Hudson Europe Gross margin $81.9 $95.5 $(13.6) (14.3)% $92.8 $2.8 3.0%Gross margin as a percentageof revenue 38.1% 37.7% N/A N/A 36.1% N/A N/AContracting gross margin as apercentage of contractingrevenue 14.3% 16.1% N/A N/A 15.8% N/A N/A For the year ended December 31, 2015, contracting, permanent recruitment and talent management gross margins decreased $8.0 million, $4.8 millionand $0.5 million, or 27.5%, 10.2% and 2.3%, respectively, as compared to 2014. In the- 30 - U.K. and Continental Europe, total gross margin decreased $7.8 million and $5.9 million, or 16.2% and 12.3%, respectively, as compared to 2014. In theU.K., for the year ended December 31, 2015 contracting and permanent recruitment gross margins declined $2.4 million and $5.3 million, or 11.8% and20.3%, respectively, as compared to 2014. The decline in the U.K. was driven by both lower margins in temporary contracting as well as a reduction inhigher margin permanent recruitment revenue in the legal, IT, and accounting and finance practice groups.The majority of the gross margin decline in Continental Europe is a result of the sale of the Netherlands business effective April 30, 2015. In theNetherlands, total gross margin for the year ended December 31, 2015 decreased $5.7 million, or 67.6%, as compared to 2014. Also contributing to thedecrease in gross margin for the year ended December 31, 2015 were declines in France of $1.4 million, or 13.6%, as compared to 2014. The decline inFrance was largely driven by two large customers in the commodities sector. The declines were partially offset by an increase in Belgium and Spain grossmargin. In Belgium, total gross margin for the year ended December 31, 2015, increased $1.6 million, or 7.1%, as compared to the same period in 2014. InSpain, total gross margin for the year ended December 31, 2015, increased $1.4 million, or 39.6%, as compared to the same period in 2014.For the year ended year ended December 31, 2015, gross margin as a percentage of revenue, was 38.1%, as compared to 37.7%, for 2014. The increase ingross margin, as a percentage of revenue resulted from an increase in the relative mix of higher margin permanent recruitment revenue. The contracting grossmargin, as a percentage of revenue, was 14.3% as compared to 16.1%, for 2014. The decline is a result of weaker contracting margins in the U.K. and partialyear impact of selling the Netherlands contracting business, which earned a higher than average contracting gross margin.For the year ended December 31, 2014, permanent recruitment and talent management gross margins increased $2.3 million and $1.4 million, or 5.1%and 7.5%, respectively, as compared to 2013. In the U.K., permanent recruitment gross margins increased $0.8 million, or 3.0%, for the year ended December31, 2014, as compared to 2013.In Continental Europe, talent management and permanent recruitment gross margins increased $1.6 million and $1.5 million, or 9.7% and 7.9%,respectively, as compared to 2013. The increases in permanent recruitment and talent management gross margins were attributable to the same factors asdescribed above for revenue from Belgium and Spain. Contracting gross margin, as a percentage of revenue, remained consistent at 16.1% for the year endedDecember 31, 2014, as compared to 15.8% for 2013. Total gross margin, as a percentage of revenue, was 37.7% for the year ended December 31, 2014, ascompared to 36.1% for 2013. The improvement in total gross margin, as a percentage of revenue, was primarily related to a greater proportional increase inpermanent recruitment and talent management gross margins in 2014.SG&A and Non-Op Year Ended December 31, 2015 2014 Change inamount Change in % 2013 Change inamount Change in %$ in millions Asreported Constantcurrency Constantcurrency Hudson Europe SG&A and Non-Op $83.6 $95.1 $(11.4) (12.0)% $96.8 $(1.8) (1.8)%SG&A and Non-Op as apercentage of revenue 38.9% 37.5% N/A N/A 37.7% N/A N/A For the year ended December 31, 2015, SG&A and Non-Op decreased by $11.4 million, or 12.0%, as compared to 2014. SG&A and Non-Op, as apercentage of revenue, was 38.9% for 2015 and remained largely consistent as compared to 37.5% for 2014. The sale of the Netherlands business resulted in areduction in SG&A and Non-Op expenses for the year ended December 31, 2015 of $4.9 million, or 65.8%, as compared to 2014. In the U.K., lower grossmargin resulted in a reduction in employee compensation expense in the year ended December 31, 2015 as compared to the same period in 2014. In addition,actions taken to streamline business processes in 2014, including real estate, back office support functions and reduced corporate management fees, resultedin lower SG&A and Non-Op for the year ended December 31, 2015 as compared to the same periods in 2014. The increase in SG&A and Non-Op, as apercentage of revenue, for the year ended December 31, 2015 was higher due to a relatively larger decline in revenue and change in control stock-basedcompensation expense of $0.7 million, as compared to the same period in 2014.For the year ended December 31, 2014, SG&A and Non-Op decreased by $1.8 million, or 1.8%, as compared to 2013. The decrease primarily resultedfrom reduced real estate costs in Continental Europe as well as lower staff compensation costs.- 31 - SG&A and Non-Op, as a percentage of revenue, was 37.5% for 2014, and remained largely consistent as compared to 37.7% for 2013.Business reorganization expenses For the year ended December 31, 2015, business reorganization expenses were $2.9 million, as compared to $1.2 million and $2.7 million for the sameperiods in 2014 and 2013, respectively. Current year business reorganization expenses were primarily attributable to lease exit charges and employeetermination costs in the U.K., Central and Eastern Europe and Luxembourg. Business reorganization expenses in 2014 and 2013 were principallyattributable to employee termination costs primarily in Belgium, the Netherlands, France and the U.K.Operating Income and EBITDA Year Ended December 31, 2015 2014 Change inamount Change in % 2013 Change inamount Change in %$ in millions Asreported Constantcurrency Constantcurrency Hudson Europe Operating income (loss): $1.7 $2.7 $(0.9) (a) $(4.2) $6.9 (163.0)%EBITDA (loss) $(0.2) $(1.0) $0.8 (a) $(7.6) $6.6 (a)EBITDA (loss) as apercentage of revenue (0.1)% (0.4)% N/A N/A (3.0)% N/A N/A(a) Information was not provided because the Company did not consider the change in percentage as a meaningful measure for the years in comparison. For the year ended December 31, 2015, EBITDA loss was $0.2 million, or 0.1% of revenue, as compared to EBITDA loss of $1.0 million, or 0.4% ofrevenue, for 2014. The decrease in EBITDA loss for the year ended December 31, 2015 was principally due to the gain on sale of the Netherlands business of$2.8 million and lower SG&A and Non-Op expenses offset by lower gross margin. In addition, during year ended December 31, 2015 there were noimpairment charges, as compared to $0.3 million for 2014. Operating income was $1.7 million for the year ended December 31, 2015, as compared tooperating $2.7 million for 2014.For the year ended December 31, 2014, EBITDA loss was $1.0 million, or 0.4% of revenue, as compared to EBITDA loss of $7.6 million, or 3.0% ofrevenue, for 2013. The decrease in EBITDA loss for the year ended December 31, 2014 was principally due to higher gross margin and lower costs related toreorganization initiatives. Operating income was 2.7 million for the year ended December 31, 2014, as compared to operating loss of $4.2 million for 2013.The difference between operating income (loss) and EBITDA loss for the years ended December 31, 2015, 2014 and 2013 was principally due to theinclusion of corporate management fees and depreciation in the determination of operating income (loss).The following are discussed in reported currencyCorporate expenses, net of corporate management fee allocations For the year ended December 31, 2015, corporate expenses were $8.0 million as compared to $8.8 million for 2014, a decrease of $0.8 million, or 9.0%.The decrease for the year ended December 31, 2015 was due to savings associated with reorganization efforts launched in 2014, offset by $0.8 million ofstock-based compensation expense related to the change in control event and $0.7 million of CEO severance costs. Included in prior year wereapproximately $1.4 million of costs incurred for the proxy contest and organizational strategy review. Excluding these items, corporate expenses decreasedapproximately $0.9 million, or 11.7%, primarily due to savings associated with reorganization efforts launched in 2014 partially offset by lowerproportional corporate allocations to the regions.For the year ended December 31, 2014, corporate expenses were $8.8 million, as compared to $6.5 million for 2013, an increase of $2.3 million. Theincrease was principally due to costs incurred in 2014 in connection with the proxy contest for the Company's 2014 annual meeting of stockholders andorganizational strategy review of approximately $1.4 million, as well as higher support staff bonus costs. The increases were offset by reductions in supportstaff salary costs and discretionary expenses as a result of cost savings initiatives completed during 2014.- 32 - For the years ended December 31, 2015, 2014 and 2013, business reorganization expenses were $1.2 million, 1.0 million and $0.8 million, respectively,and primarily consisted of lease termination costs and employee termination benefits.Depreciation and Amortization ExpenseDepreciation and amortization expense was $3.8 million, $5.6 million and $5.9 million for the years ended December 31, 2015, 2014 and 2013,respectively.Interest ExpenseInterest expense remained consistent and was $0.7 million for the years ended December 31, 2015 and 2014, as compared $0.6 million for 2013.- 33 - Provision for (Benefit from) Income Taxes The provision for income taxes for the year ended December 31, 2015 was $0.6 million on $2.3 million of pre-tax income, as compared to a benefit forincome taxes of $2.2 million on $17.9 million of pre-tax loss for 2014. The effective tax rate for the year ended December 31, 2015 was 28.7%, as comparedto 12.0% for 2014. The change in the Company's effective tax rate for the year ended December 31, 2015 as compared to 2014 was primarily attributable toU.S. tax benefits recognized in 2014 with respect to intra-period allocations between continuing and discontinued operations and the gains on the sale or exitof businesses in 2015 which were tax-exempt. For the year ended December 31, 2015, the effective tax rate difference from the U.S. Federal statutory rate of35% was primarily attributable to changes in valuation allowances in the U.S. and certain foreign jurisdictions which reduces or eliminates the effective taxrate on current year profits or loss, variations from the U.S. Federal statutory rate in foreign jurisdictions, taxes on repatriations of foreign profits, and non-deductible expenses. The effect of state tax rate changes in 2015 on deferred tax assets was offset by an increase in valuation allowance and has no net impacton effective tax rate.The benefit from income taxes for the year ended December 31, 2014 was $2.2 million on $17.9 million of pre-tax loss, as compared to a provision fromincome taxes of $3.3 million on a $26.9 million pre-tax loss for 2013. The effective tax rate for the year ended December 31, 2014 was 12.0%, as compared tonegative 12.1% for 2013. The change in the Company's effective tax rate for the year ended December 31, 2014 as compared to 2013 was primarilyattributable to the Company's current year result and lesser expense for establishment of a valuation reserve for the Company's deferred tax assets in certainforeign jurisdictions. The effective tax rate differed from the U.S. Federal statutory rate of 35% primarily due to the inability to recognize tax benefits onlosses, state taxes, non-deductible expenses such as certain acquisition related payments, variations from the U.S. Federal statutory rate in foreignjurisdictions and taxes on repatriations of foreign profits.Income (Loss) from Discontinued OperationsIncome from discontinued operations was $0.7 million for the year ended December 31, 2015, as compared to $2.6 million for 2014 and a loss fromdiscontinued operations of $0.2 million in 2013.Net Income (Loss)Net income was $2.3 million for the year ended December 31, 2015, as compared to a loss of $13.2 million for 2014, an increase in net income of $15.5million. Basic and diluted income per share were both $0.07 for the year ended December 31, 2015, as compared to basic and diluted loss per share of $0.40for 2014.Net loss was $13.2 million for the year ended December 31, 2014, as compared to net loss of $30.4 million for 2013, a decrease in net loss of $17.2million. Basic and diluted loss per share were $0.40 for the year ended December 31, 2014, as compared to a loss of $0.94 for 2013. - 34 - Liquidity and Capital Resources As of December 31, 2015, cash and cash equivalents totaled $37.7 million, as compared to $34.0 million as of December 31, 2014 and $37.4 million asof December 31, 2013. The following table summarizes the cash flow activities for the years ended December 31, 2015, 2014 and 2013: For The Year Ended December 31,(In millions) 2015 2014 2013Net cash provided by (used in) operating activities $(17.4) $(17.8) $2.5Net cash provided by (used in) investing activities 21.6 16.7 (2.6)Net cash provided by (used in) financing activities 0.6 (1.3) (0.5)Effect of exchange rates on cash and cash equivalents (1.3) (1.0) (0.7)Net increase (decrease) in cash and cash equivalents $3.7 $(3.4) $(1.3) Cash Flows from Operating ActivitiesFor the year ended December 31, 2015, net cash used in operating activities was $17.4 million, as compared to net cash used in operating activities of$17.8 million in 2014, a decrease in net cash used in operating activities of $0.4 million. The change in net cash used in operating activities is principallydue to a decrease in working capital from the current year divestitures, fluctuations in foreign currency and the timing of cash receipts and payments tovendors and employees. Net cash used in operating activities from discontinued operations was $0.1 million for the year ended December 31, 2015, ascompared to cash used in operating activities from discontinued operation of $12.1 million in 2014.For the year ended December 31, 2014, net cash used in operating activities was $17.8 million, as compared to net cash provided by operating activitiesof $2.5 million in 2013, a decrease of net cash provided by operating activities of $20.3 million. The decrease in net cash provided by operating activitiesresulted principally from an increase in accounts receivable, partially offset by lower net loss in 2014. Net cash provided by operating activities fromdiscontinued operations was $12.1 million for the year ended December 31, 2014 as compared to net cash provided by operating activities from discontinuedoperations of $8.0 million in 2013.Cash Flows from Investing ActivitiesFor the year ended December 31, 2015, net cash provided by investing activities was $21.6 million, as compared to net cash provided by investingactivities of $16.7 million in 2014, an increase in net cash provided by investing activities of $4.9 million. The increase in net cash provided by investingactivities was principally related to the proceeds from sale of the US IT and Netherlands businesses in 2015 and a decline in capital expenditures, to $3.1million in 2015 from $5.3 million in 2014.For the year ended December 31, 2014, net cash provided by investing activities was $16.7 million, as compared to net cash used in investing activitiesof $2.6 million in 2013, an increase in net cash provided by investing activities of $19.3 million. The increase in net cash provided by investing activitieswas principally related to the proceeds from sale of the Legal eDiscovery business and was partially offset by an increase in capital expenditures, to $5.3million in 2014 from $2.6 million in 2013. The increase in capital expenditures was primarily due to landlord-funded leasehold improvements in connectionwith newly-leased properties and costs for upgrading the Company's website for mobile device interfaces.Cash Flows from Financing ActivitiesFor the year ended December 31, 2015, net cash provided by financing activities was $0.6 million, as compared to net cash used in financing activities of$1.3 million in 2014, an increase in net cash provided by financing activities of $1.9 million. The increase in net cash provided by financing activities wasprimarily attributable to lower repayments of the Company's credit facilities in 2015 as compared to 2014, offset by cash used to purchase treasury stock.For the year ended December 31, 2014, net cash used in financing activities was $1.3 million, as compared to $0.5 million for 2013, an increase of $0.8million. The increase in net cash used in financing activities was primarily attributable to net repayments of the Company's credit facilities in 2014 ascompared to 2013.- 35 - Credit AgreementsReceivables Finance Agreement with Lloyds Bank Commercial Finance Limited and Lloyds Bank PLCOn August 1, 2014, the Company’s U.K. subsidiary (“U.K. Borrower”) entered into a receivables finance agreement for an asset-based lending fundingfacility (the “Lloyds Agreement”) with Lloyds Bank PLC and Lloyds Bank Commercial Finance Limited (together, “Lloyds”). The Lloyds Agreementprovides the U.K. Borrower with the ability to borrow up to $22.1 million (£15.0 million). Extensions of credit are based on a percentage of the eligibleaccounts receivable less required reserves from the Company's U.K. operations. The initial term is two years with renewal periods every three monthsthereafter. Borrowings under this facility are secured by substantially all of the assets of the U.K. Borrower.The credit facility under the Lloyds Agreement contains two tranches. The first tranche is a revolving facility based on the billed temporary contractingand permanent recruitment activities in the U.K. operation ("Lloyds Tranche A"). The borrowing limit of Lloyds Tranche A is $17.7 million (£12.0 million)based on 83% of eligible billed temporary contracting and permanent recruitment receivables. The second tranche is a revolving facility that is based on theunbilled work-in-progress (as defined under the receivables finance agreement) activities in the Company's U.K. operations ("Lloyds Tranche B"). Theborrowing limit of Lloyds Tranche B is $4.4 million (£3.0 million) based on 75% of eligible work-in-progress from temporary contracting and 25% ofeligible work-in-progress from permanent recruitment activities. For both tranches, borrowings may be made with an interest rate based on a base rate asdetermined by Lloyds Bank PLC, based on the Bank of England base rate, plus 1.75%.The Lloyds Agreement contains various restrictions and covenants including (1) that true credit note dilution may not exceed 5%, measured at audit ona regular basis; (2) debt turn may not exceed 55 days over a three month rolling period; (3) dividends by the U.K. Borrower to the Company are restricted tothe value of post tax profits; and (4) at the end of each month, there must be a minimum excess availability of $2.9 million (£2.0 million).The details of the Lloyds Agreement as of December 31, 2015 were as follows:(In millions) December 31, 2015Borrowing capacity $7.2Less: outstanding borrowing —Additional borrowing availability $7.2Interest rates on outstanding borrowing 2.25%The Company was in compliance with all financial covenants under the Lloyds Agreement as of December 31, 2015.Loan and Security Agreement with Siena Lending Group LLCUpon the sale of the US IT business, the Company exercised its right to terminate its loan and security agreement with Siena Lending Group LLC("Siena"). The Company paid Siena a termination fee of $0.2 million recognized as a reduction to the gain on sale of US IT and $0.4 million of cash to securean outstanding letter of credit for a real estate lease. Siena will return the restricted cash to the Company once the outstanding letter of credit is returned toSiena.Facility Agreement with National Australia Bank LimitedOn October 30, 2015, Hudson Global Resources (Aust) Pty Limited (“Hudson Australia”) and Hudson Global Resources (NZ) Limited (“Hudson NewZealand”), both subsidiaries of Hudson Global, Inc., entered into a Finance Agreement, dated as of October 27, 2015 (the “Finance Agreement”), withNational Australia Bank Limited (“NAB”), a NAB Corporate Receivables Facility Agreement, dated as of October 27, 2015 (the “Australian ReceivablesAgreement”), with NAB and a BNZ Corporate Receivables Facility Agreement, dated as of October 27, 2015 (the “New Zealand Receivables Agreement”),with Bank of New Zealand (“BNZ”).The Finance Agreement provides a bank guarantee facility of up to $2.2 million (AUD3.0 million) for Hudson Australia and Hudson New Zealand. TheFinance Agreement matures and becomes due and payable on October 27, 2018. A fee equal to 1.5% per annum will be charged on each bank guaranteeissued under the Finance Agreement. The Finance Agreement bears a fee, payable semiannually in arrears, equal to 0.3% per annum of NAB’s commitmentunder the Finance Agreement.- 36 - The Australian Receivables Agreement provides a receivables facility of up to $18.2 million (AUD25.0 million) for Hudson Australia, which is based onan agreed percentage of eligible accounts receivable, and of which up to $2.9 million (AUD4.0 million) may be used to support the working capitalrequirements of operations in China, Hong Kong and Singapore. The Australian Receivables Agreement does not have a stated maturity date and can beterminated by Hudson Australia or NAB upon 90 days written notice. Borrowings under the Australian Receivables Agreement may be made with an interestrate based on a market rate plus a margin of 1.5% per annum. The Australian Receivable Agreement bears a fee, payable monthly in advance, equal to $5thousand (AUD6 thousand) per month.The New Zealand Receivables Agreement provides a receivables facility of up to $3.4 million (NZD5.0 million) for Hudson New Zealand, which isbased on an agreed percentage of eligible accounts receivable. The New Zealand Receivables Agreement does not have a stated maturity date and can beterminated by Hudson New Zealand or BNZ upon 90 days written notice. Borrowings under the New Zealand Receivables Agreement may be made with aninterest rate based on a market rate. The New Zealand Receivables Agreement bears a fee, payable monthly in advance, equal to $1 thousand (NZD1thousand) per month.The details of the NAB Finance Agreement as of December 31, 2015 were as follows: (In millions)December 31, 2015Finance Agreement: Borrowing capacity$2.2Less: outstanding borrowing—Additional borrowing availability$2.2Interest rates on outstanding borrowing2.10% Australian Receivables Agreement: Borrowing capacity$12.8Less: outstanding borrowing(2.4)Additional borrowing availability$10.4Interest rates on outstanding borrowing3.60% New Zealand Receivables Agreement: Borrowing capacity$1.7Less: outstanding borrowing—Additional borrowing availability$1.7Interest rates on outstanding borrowing4.88%Amounts owing under the Finance Agreement, the Australian Receivables Agreement and the New Zealand Receivables Agreement are secured bysubstantially all of the assets of Hudson Australia and Hudson New Zealand. Each of the Finance Agreement, the Australian Receivables Agreement and theNew Zealand Receivables Agreement contains various restrictions and covenants applicable to the Obligors, including: a requirement that the Obligorsmaintain (1) a minimum Fixed Charge Coverage Ratio (as defined in the NAB Facility Agreement) of 1.50x as of the last day of each calendar quarter; and (2)a minimum Receivables Ratio (as defined by the NAB Facility Agreement) of 1.20x.The Company was in compliance with all financial covenants under the NAB Facility Agreement as of December 31, 2015.Credit Agreement with Westpac Banking Corporation Upon entering into the Finance agreement with NAB on October 30, 2015, the Company exercised its right to terminate its credit agreement withWestPac Banking Corp ("Westpac"). As of December 31, 2015 the only remaining obligation under the Westpac credit agreement was $1.8 million offinancial guarantees. The outstanding financial guarantees will be transferred to the NAB Finance Agreement in 2016.- 37 - Other Credit AgreementsThe Company also has lending arrangements with local banks through its subsidiaries in Belgium and Singapore. As of December 31, 2015, theBelgium subsidiary had a $1.1 million (€1 million) overdraft facility. Borrowings under the Belgium lending arrangement may be made with an interest ratebased on the one month EURIBOR plus a margin, and was 2.75% as of December 31, 2015. The lending arrangement in Belgium has no expiration date andcan be terminated with a 15 day notice period. In Singapore, the Company’s subsidiary can borrow up to $0.1 million (SGD0.2 million) for working capitalpurposes. Interest on borrowings under this overdraft facility is based on the Singapore Prime Rate plus 1.75%, which was 6.00% on December 31, 2015. TheSingapore overdraft facility expires annually each August but can be renewed for one year periods at that time. There were no outstanding borrowings underBelgium and Singapore lending agreements as of December 31, 2015.The average monthly outstanding borrowings for the credit agreements above was $4.0 million for the year ended December 31, 2015. The weightedaverage interest rate on all outstanding borrowings for the year ended December 31, 2015 was 3.42%.The Company continues to use the aforementioned credit to support its ongoing global working capital requirements, capital expenditures and for othercorporate purposes and to support letters of credit. Letters of credit and bank guarantees are used primarily to support office leases. - 38 - Liquidity OutlookAs of December 31, 2015, the Company had cash and cash equivalents on hand of $37.7 million supplemented by additional borrowing availability of$20.5 million under the Lloyds Agreement, the NAB Facility Agreement and other lending arrangements in Belgium and Singapore. The Company believesthat it has sufficient liquidity to satisfy its needs through at least the next 12 months, based on the Company's total liquidity as of December 31, 2015. TheCompany's near-term cash requirements during 2016 are primarily related to funding operations, restructuring actions, investing in capital expenditures andpaying cash dividends. For 2016, the Company expects to make capital expenditures of approximately $2.0 million to $3.0 million and payments inconnection with current restructuring actions of approximately $3.0 million to $4.0 million. The Company is closely managing its capital spending and willperform capital additions where economically prudent, while continuing to invest strategically for future growth.As of December 31, 2015, $16.2 million of the Company's cash and cash equivalents noted above was held in the U.S. and the remainder was heldinternationally, primarily in the U.K. ($8.9 million), Belgium ($3.5 million), Mainland China ($2.7 million), Spain ($1.6 million), Hong Kong ($0.9 million),Australia ($0.7 million), and France ($0.6 million). The majority of the Company's offshore cash is available to it as a source of funds, net of any taxobligations or assessments. Unrepatriated cumulative earnings of certain foreign subsidiaries are considered to be invested indefinitely outside of the UnitedStates, except where the Company is able to repatriate these earnings to the United States without a material incremental tax provision. In managing its day-to-day liquidity and its capital structure, the Company does not rely on the unrepatriated earnings as a source of funds. The Company has not provided forU.S. Federal income or foreign withholding taxes on these undistributed foreign earnings because a distribution of these foreign earnings with materialincremental tax provision is unlikely to occur in the foreseeable future. It is not practicable to determine the amount of tax associated with such undistributedearnings.The Company believes that future external market conditions remain uncertain, particularly access to credit, rates of near-term projected economicgrowth and levels of unemployment in the markets in which the Company operates. Due to these uncertain external market conditions, the Company cannotprovide assurance that its actual cash requirements will not be greater in the future than those currently expected, especially if market conditions deterioratesubstantially. If sources of liquidity are not available or if the Company cannot generate sufficient cash flow from operations, the Company could be requiredto obtain additional sources of funds through additional operating improvements, capital market transactions, asset sales or financing from third parties, or acombination of those sources. The Company cannot provide assurance that these additional sources of funds will be available or, if available, would havereasonable terms.Off-Balance Sheet ArrangementsAs of December 31, 2015, the Company had no off-balance sheet arrangements. Contractual ObligationsThe Company has entered into various commitments that will affect its cash generation capabilities going forward. Specifically, it has entered into anumber of non-cancelable operating leases for facilities and equipment worldwide. Future contractual obligations as of December 31, 2015 were as follows(dollars in thousands) (commitments based in currencies other than U.S. dollars were translated using exchange rates as of December 31, 2015): Less than1 year 1 to 3 years 3 to 5 years More than5 years Contractual Obligation TotalOperating lease obligations $17,476 $25,867 $14,383 $2,584 $60,310Capital lease obligations 112 224 56 — 392Other purchase obligations 1,363 2,092 261 — 3,716Other long term liabilities (a) Other (b) 1,242 — — — 1,242Total $20,193 $28,183 $14,700 $2,584 $65,660a.The Company's non-current liabilities of $9.8 million in the Consolidated Balance Sheet as of December 31, 2015 are primarily comprised ofincome taxes, unrecognized tax benefits, deferred rent, and other various accruals. As the timing and/or amounts of any cash payment is uncertain,the related amounts have not been reflected in the table above. Reorganization expenses above included both continuing operations anddiscontinued operations initiatives. Future minimum lease commitments have not been offset by expected future minimum sublease rental income of$5.5- 39 - million, due in the future through 2020 under subleases with third parties. Commitments and sublease rentals based in currencies other than U.S.dollars were translated using exchange rates as of December 31, 2015.b.Represents remaining employee severance and related costs expected to be paid pursuant to the 2015 Exit Plan and Previous Plans. See Note 13included in Item 8 of this Form 10-K for additional information.- 40 - ContingenciesFrom time to time in the ordinary course of business, the Company is subject to compliance audits by U.S. federal, state, local and foreign governmentregulatory, tax and other authorities relating to a variety of regulations, including wage and hour laws, unemployment taxes, workers’ compensation,immigration, and income, value-added and sales taxes. The Company is also subject to, from time to time in the ordinary course of business, various claims,lawsuits and other complaints from, for example, clients, candidates, suppliers, landlords for both leased and subleased properties, former and currentemployees, and regulators or tax authorities. In addition, see Note 14 for a description of a dispute between the Company and its former Chairman and ChiefExecutive Officer for severance amounts owed under his employment agreement. Periodic events and management actions such as business reorganizationinitiatives can change the number and type of audits, claims, lawsuits, contract disputes or complaints asserted against the Company. Events can also changethe likelihood of assertion and the behavior of third parties to reach resolution regarding such matters.The economic conditions in the recent past have given rise to many news reports and bulletins from clients, tax authorities and other parties aboutchanges in their procedures for audits, payment, plans to challenge existing contracts and other such matters aimed at being more aggressive in the resolutionof such matters in their own favor. The Company believes that it has appropriate procedures in place for identifying and communicating any matters of thistype, whether asserted or likely to be asserted, and it evaluates its liabilities in light of the prevailing circumstances. Changes in the behavior of third partiescould cause the Company to change its view of the likelihood of a claim and what might constitute a trend. Employment laws vary in the markets in whichwe operate, and in some cases, employees and former employees have extended periods during which they may bring claims against the Company.For matters that have reached the threshold of probable and estimable, the Company has established reserves for legal, regulatory and other contingentliabilities. The Company’s reserves were $0.1 million and $0.4 million as of December 31, 2015 and 2014, respectively. Although the outcome of thesematters cannot be determined, the Company believes that none of the currently pending matters, individually or in the aggregate, will have a material adverseeffect on the Company’s financial condition, results of operations or liquidity.Critical Accounting Policies Our discussion and analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which havebeen prepared in accordance with GAAP. The preparation of financial statements in accordance with GAAP requires our management to make estimates andassumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. GAAPprovides the framework from which to make these estimates, assumptions and disclosures. We choose accounting policies within GAAP that our managementbelieves are appropriate to accurately and fairly report our operating results and financial position in a consistent manner. Our management regularly assessesthese policies in light of current and forecasted economic conditions. Our accounting policies are stated in Note 2 to our Consolidated Financial Statementsincluded in Item 8. We believe the following accounting policies are critical to understanding our results of operations and affect the more significantjudgments and estimates used in the preparation of our Consolidated Financial Statements that are inherently uncertain.Revenue RecognitionThe Company recognizes revenue for temporary services at the time services are provided and revenue is recorded on a time and materials basis.Temporary contracting revenue is reported on a gross basis when the Company acts as the principal in the transaction and is at risk for collection inaccordance with ASC 605-45, “Overall Considerations of Reporting Revenue Gross as a Principal versus Net as an Agent." The Company’s revenues arederived from its gross billings, which are based on (i) the payroll cost of its worksite employees; and (ii) a markup computed as a percentage of the payrollcost.The Company recognizes revenue for permanent placements based on the nature of the fee arrangement. Revenue generated when the Companypermanently places an individual with a client on a contingent basis is recorded at the time of acceptance of employment, net of an allowance for estimatedfee reversals. Revenue generated when the Company permanently places an individual with a client on a retained basis is recorded ratably over the periodservices are rendered, net of an allowance for estimated fee reversals.ASC 605-45-50-3 and ASC 605-45-50-4, “Taxes Collected from Customers and Remitted to Governmental Authorities,”provide that the presentation of taxes on either a gross basis (included in revenue and expense) or net basis (excluded from revenue) is an accounting policydecision. The Company collects various taxes assessed by governmental authorities and records these amounts on a net basis.- 41 - Accounts ReceivableThe Company's accounts receivable balances are composed of trade and unbilled receivables. The Company maintains an allowance for doubtfulaccounts and makes ongoing estimates as to the collectability of the various receivables. If the Company determines that the allowance for doubtful accountsis not adequate to cover estimated losses, an expense to provide for doubtful accounts is recorded in selling, general and administrative expenses. If anaccount is determined to be uncollectible, it is written off against the allowance for doubtful accounts. Management's assessment and judgment are vitalrequirements in assessing the ultimate realization of these receivables, including the current credit-worthiness, financial stability and effect of marketconditions on each customer.Income TaxesWe account for income taxes using the asset and liability method in accordance with ASC 740, “Income Taxes.” This standard establishes financialaccounting and reporting standards for the effects of income taxes that result from an enterprise's activities. It requires an asset and liability approach forfinancial accounting and reporting of income taxes.The calculation of net deferred tax assets assumes sufficient future earnings for the realization of such assets as well as the continued application ofcurrently anticipated tax rates. Included in net deferred tax assets is a valuation allowance for deferred tax assets where management believes it is more likelythan not that the deferred tax assets will not be realized in the relevant jurisdiction. If we determine that a deferred tax asset will not be realizable, anadjustment to the deferred tax asset will result in a reduction of earnings at that time. See Note 7 to the Consolidated Financial Statements for furtherinformation regarding deferred tax assets and valuation allowance.ASC 740-10-55-3, “Recognition and Measurement of Tax Positions - a Two Step Process,” provides implementation guidance related to the accountingfor uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a two-step evaluation process for a tax position taken orexpected to be taken in a tax return. The first step is recognition and the second is measurement. ASC 740 also provides guidance on derecognition,measurement, classification, disclosures, transition and accounting for interim periods. In addition, ASC 740-10-25-9 provides guidance on how to determinewhether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits.The Company's unrecognized tax benefits, if recognized in the future, would affect the annual effective income tax rate. See Note 7 to the ConsolidatedFinancial Statements for further information regarding unrecognized tax benefits. We elected to continue our historical practice of classifying applicableinterest and penalties as a component of the provision for income taxes.We provide tax reserves for Federal, state, local and international exposures relating to periods subject to audit. The development of reserves for theseexposures requires judgments about tax issues, potential outcomes and timing, and is a subjective critical estimate. We assess our tax positions and record taxbenefits for all years subject to examination based upon management's evaluation of the facts, circumstances and information available at the reporting dates.For those tax positions where it is more likely than not that a tax benefit will be sustained, we have recorded the largest amount of tax benefit with greaterthan 50% likelihood of being realized upon settlement with a tax authority that has full knowledge of all relevant information. For those tax positions whereit is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the Consolidated Financial Statements. Whereapplicable, associated interest and penalties have also been recognized. Although the outcome relating to these exposures are uncertain, we believe that ourreserves reflect the probable outcome of known tax contingencies. In certain circumstances, the ultimate outcome of exposures and risks involves significantuncertainties which render them inestimable. If actual outcomes differ materially from these estimates, including those that cannot be quantified, they couldhave a material impact on our results of operations.Unrepatriated cumulative earnings of certain foreign subsidiaries are considered to be invested indefinitely outside of the United States, except wherethe Company is able to repatriate these earnings to the United States without a material incremental tax provision. The Company has not provided for Federalincome or foreign withholding taxes on these undistributed foreign earnings because a distribution of these foreign earnings with a material incremental taxprovision is unlikely to occur in the foreseeable future. It is not practicable to determine the amount of tax associated with such undistributed earnings. Long-lived AssetsThe Company evaluates the recoverability of the carrying value of its long-lived assets, excluding goodwill, whenever- 42 - events or changes in circumstances indicate that the carrying value may not be recoverable. Under such circumstances, the Company assesses whether theprojected un-discounted cash flows of its businesses are sufficient to recover the existing unamortized cost of its long-lived assets. If the un-discountedprojected cash flows are not sufficient, the Company calculates the impairment amount by discounting the cash flows using its weighted average cost ofcapital. The amount of the impairment is written-off against earnings in the period in which the impairment has been determined in accordance with ASC360-10-35, “Impairment or Disposal of Long-Lived Assets.”GoodwillUnder ASC 350-20-35, “Intangibles-Goodwill and Other, Goodwill Subsequent Measurement," the Company is required to test goodwill andindefinite-lived intangible assets for impairment on an annual basis as of October 1, or more frequently if circumstances indicate that its carrying value mightexceed its current fair value.ASC 350-20-35 requires a two-step process to identify potential goodwill impairment and to measure the amount of the impairment loss to berecognized, if applicable. The first step of the goodwill impairment test, used to identify potential impairment, compares the fair value of a reporting unit withits carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, then goodwill of the reporting unit is not consideredimpaired and the second step of the impairment test is unnecessary. In contrast, if the carrying amount of a reporting unit exceeds its fair value, the secondstep of the goodwill impairment test shall be performed to measure the amount of impairment loss, if any.Step two of the impairment test, if necessary, consists of determining the implied fair value of each reporting unit’s goodwill. In calculating the impliedfair value of goodwill, the fair values of the reporting units are allocated to all of the other assets and liabilities of the reporting units based on their fairvalues. The excess of the fair value of each reporting unit over the amounts assigned to its other assets and liabilities is equal to the implied fair value of itsgoodwill. The goodwill impairment is measured as the excess of the carrying amount of goodwill over its implied fair value.To estimate the fair value of a reporting unit, the Company utilizes the income approach, a valuation technique which indicates the fair value of theinvested capital of a reporting unit based on the value of the cash flows that it is expected to generate in the future. The discounted cash flow method, anapplication of the income approach, estimates the future cash flows of the reporting unit and discounts these cash flows to their present value equivalents at arate of return that considers the relative risk of achieving the cash flows and the time value of money. These cash flows indicate the fair value of the investedcapital of the reporting unit on a marketable, controlling basis.Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates andassumptions include revenue growth rates, operating margins, corporate overhead allocations, cash flow adjustments related to capital expenditures, andworking capital investments and risk-adjusted discount rates used to calculate the present value of the projected future cash flows. We base our fair valueestimates on assumptions we believe to be reasonable.Stock-Based CompensationThe Company applies the fair value recognition provisions of ASC 718, "Compensation - Stock Compensation." The Company determines the fair valueas of the grant date. Determining the appropriate fair value model and calculating the fair value of stock compensation awards requires the input of certaincomplex and subjective assumptions, including the expected life of the stock compensation award and the Company’s Common Stock price volatility. Inaddition, determining the appropriate amount of associated periodic expense requires management to estimate the rate of employee forfeitures and thelikelihood of achievement of certain performance targets. The assumptions used in calculating the fair value of stock compensation awards and the associatedperiodic expense represent management’s best estimates, but these estimates involve inherent uncertainties and the application of judgment. As a result, iffactors change and the Company deems it necessary in the future to modify the assumptions it made or to use different assumptions, or if the quantity andnature of the Company’s stock-based compensation awards changes, then the amount of expense may need to be adjusted and future stock compensationexpense could be materially different from what has been recorded in the current period.- 43 - For awards with graded vesting conditions, the values of the awards are determined by valuing each tranche separately and expensing each tranche overthe required service period. The service period is the period over which the related service is performed, which is generally the same as the vesting period.The Company records stock-based compensation expense net of estimated forfeitures. The Company estimates its forfeiture rate based on historical data suchas stock option exercise activities and employee termination patterns. The Company analyzed its historical forfeiture rate, the remaining lives of unvestedawards and the amount of vested awards as a percentage of total awards outstanding. If the Company's actual forfeiture rate is materially different from itsestimate, or if the Company reevaluates the forfeiture rate in the future, the stock-based compensation expense could be significantly different from what wasrecorded in the current periods.- 44 - Recent Accounting PronouncementsIn November 2015, the FASB issued Accounting Standards Update ("ASU") No. 2015-17, "Balance Sheet Classification of Deferred Taxes" ("ASU2015-17"), which requires that deferred tax assets and liabilities be classified as noncurrent in a classified statement of financial position. The currentrequirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by theamendments in this update. It is intended that ASU 2015-17 will simplify the presentation of deferred income taxes. The ASU 2015-17 is effective forfinancial statements issued for annual periods beginning after December 15, 2015, but early adoption is permitted. The Company has elected to early adoptASU 2015-17 on a prospective basis for the annual period ended December 31, 2015. Prior periods were not retrospectively adjusted for the adoption of ASU2015-17.In April 2015, the FASB issued ASU No. 2015-05, "Customer's Accounting for Fees Paid in a Cloud Computing Arrangement" ("ASU 2015-05"), whichprovides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes asoftware license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. Ifa cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The new guidancedoes not change the accounting for a customer’s accounting for service contracts. ASU 2015-05 is effective for interim and annual reporting periodsbeginning after December 15, 2015. The Company does not believe the impact of its pending adoption of ASU 2015-05 on the Company's consolidatedfinancial statements will be material.In April 2015, the FASB issued ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03"), which amends the currentpresentation of debt issuance costs in the financial statements. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability bepresented 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. Theamendments 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 onthe Company's consolidated financial statements will be material.In August 2014, the FASB issued ASU No. 2014-15, "Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern" ("ASU2014-15"), to provide guidance on management’s responsibility to evaluate whether there is substantial doubt about a company’s ability to continue as agoing 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 itspending adoption of ASU 2014-15 on the Company's consolidated financial statements will be material.In June 2014, the FASB issued ASU No. 2014-12, "Accounting for Share-Based Payments When the Terms of an Award Provide That a PerformanceTarget Could Be Achieved after the Requisite Service Period" ("ASU 2014-12"). ASU 2014-12 requires that a performance target that affects vesting andcould be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in 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 theeffective date or (ii) retrospective to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in thefinancial statements and to all new or modified awards thereafter, with the cumulative effect of applying ASU 2014-12 as an adjustment to the openingretained earnings balance as of the beginning of the earliest annual period presented in the financial statements. Accordingly, the standard is effective for theCompany beginning on January 1, 2016. The Company does not believe the impact of its pending adoption of ASU 2014-12 on the Company's consolidatedfinancial statements will be material.In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)" ("ASU 2014-09"). This ASU is a comprehensivenew revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount thatreflects 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 assetsrecognized 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 afterDecember 15, 2017 and early adoption is permitted only for fiscal years beginning after December 15, 2016. Accordingly, we plan to adopt this ASU onJanuary 1, 2018. Companies may use either a full retrospective or a modified retrospective approach to adopt this ASU. The Company is currently evaluatingthe impact that adopting ASU 2014-09 will have on the Company's financial condition, results of operations, and disclosures.- 45 - In April 2014, the FASB issued ASU No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (“ASU 2014-08”). ASU 2014-08 raises the threshold fora disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meetthe definition of a discontinued operation. ASU 2014-08 is effective for fiscal years, and interim periods within those years, beginning on or after December15, 2014. Accordingly, the standard was effective for the Company beginning on January 1, 2015. The Company has adopted ASU 2014-08. In 2015, theCompany divested and exited certain businesses. Under the new guidance, the exited businesses did not reach the thresholds required to qualify asdiscontinued operations and, as a result, the operations remain within the Company's continuing operations for all periods presented.There have been no other new accounting pronouncements not yet effective that have significance, or potential significance, to the Company'sConsolidated Financial Statements.- 46 - FORWARD-LOOKING STATEMENTSThis Form 10-K contains statements that the Company believes to be “forward-looking statements” within the meaning of the Private SecuritiesLitigation Reform Act of 1995. All statements other than statements of historical fact included in this Form 10-K, including statements regarding theCompany’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 andexpressions are intended to identify forward-looking statements. All forward-looking statements are subject to important factors, risks, uncertainties andassumptions, including industry and economic conditions that could cause actual results to differ materially from those described in the forward-lookingstatements. Such factors, risks, uncertainties and assumptions include, but are not limited to, (1) global economic fluctuations, (2) the Company's ability tosuccessfully execute its strategic initiatives, (3) risks related to fluctuations in the Company’s operating results from quarter to quarter, (4) the ability ofclients to terminate their relationship with the Company at any time, (5) competition in the Company’s markets, (6) the negative cash flows and operatinglosses that the Company has experienced in recent periods and may experience from time to time in the future, (7) restrictions on the Company’s operatingflexibility due to the terms of its credit facilities, (8) risks associated with the Company’s investment strategy, (9) risks related to international operations,including foreign currency fluctuations, (10) the Company’s dependence on key management personnel, (11) the Company’s ability to attract and retainhighly-skilled professionals, (12) the Company’s ability to collect its accounts receivable, (13) the Company’s ability to achieve anticipated cost savingsthrough the Company’s cost reduction initiatives, (14) the Company’s heavy reliance on information systems and the impact of potentially losing or failingto develop technology, (15) risks related to providing uninterrupted service to clients, (16) the Company’s exposure to employment-related claims fromclients, employers and regulatory authorities and limits on related insurance coverage, (17) the Company’s ability to utilize net operating loss carry-forwards,(18) volatility of the Company’s stock price, and (19) the impact of government regulations. These forward-looking statements speak only as of the date ofthis Form 10-K. The Company assumes no obligation, and expressly disclaims any obligation, to update any forward-looking statements, whether as a resultof new information, future events or otherwise. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKThe Company conducts operations in various countries and faces both translation and transaction risks related to foreign currency exchange. For theyear ended December 31, 2015, the Company earned approximately 94% of its gross margin outside the United States (“U.S.”), and it collected payments inlocal currency and paid related operating expenses in such corresponding local currency. Revenues and expenses in foreign currencies translate into higheror lower revenues and expenses in U.S. dollars as the U.S. dollar weakens or strengthens against other currencies. Therefore, changes in exchange rates mayaffect our consolidated revenues and expenses (as expressed in U.S. dollars) from foreign operations.Amounts invested in our foreign operations are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. The resultingtranslation adjustments are recorded as a component of accumulated other comprehensive income in the stockholders’ equity section of the ConsolidatedBalance Sheets. The translation of the foreign currency into U.S. dollars is reflected as a component of stockholders’ equity and does not impact our reportednet income.As more fully described in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the Company has creditagreements with Lloyds Bank PLC and Lloyds Bank Commercial Finance Limited, National Australia Bank Limited and other credit agreements withlenders in Belgium and Singapore. The Company does not hedge the interest risk on borrowings under the credit agreements, and, accordingly, it is exposedto interest rate risk on the borrowings under such credit agreements. Based on our annual average borrowings, a 1% increase or decrease in interest rates onour borrowings would not have a material impact on our earnings.- 47 - ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATAManagement's Annual Report on Internal Control Over Financial ReportingThe management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term isdefined in Rules 13a-15(f) and 15(d)-15 (f) of the Securities Exchange Act of 1934. The Company's internal control over financial reporting is designed toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate.The Company's management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2015 using thecriteria set forth in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.Based on this assessment, the Company's management believes that, as of December 31, 2015, the Company's internal control over financial reporting waseffective based on those criteria.The Company's independent registered public accounting firm, KPMG LLP, has issued a report on the effectiveness of the Company's internal controlover financial reporting. That report is set forth immediately following the report of KPMG LLP on the financial statements included herein.- 48 - Report of Independent Registered Public Accounting FirmThe Board of Directors and StockholdersHudson Global, Inc.:We have audited the accompanying consolidated balance sheets of Hudson Global, Inc. and subsidiaries (Hudson Global, Inc.) as of December 31, 2015and 2014, and the related consolidated statements of operations, comprehensive income, cash flows, and stockholders’ equity for each of the years in thethree year period ended December 31, 2015. In connection with our audits of the consolidated financial statements, we also have audited the financialstatement schedules in Item 15(2). These consolidated financial statements and financial statement schedules are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Hudson Global,Inc. and subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the years in the three‑year periodended December 31, 2015, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedules,when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forththerein.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Hudson Global, Inc.’sinternal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued bythe Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 3, 2016 expressed an unqualified opinion onthe effectiveness of the Company’s internal control over financial reporting./s/ KPMG LLPNew York, New YorkMarch 3, 2016- 49 - Report of Independent Registered Public Accounting FirmThe Board of Directors and StockholdersHudson Global, Inc.:We have audited Hudson Global, Inc. and subsidiaries’ (Hudson Global, Inc.) internal control over financial reporting as of December 31, 2015, basedon criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the TreadwayCommission (COSO). Hudson Global, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for itsassessment of the effectiveness of internal control over financial reporting, included in the accompanying ”Management’s Annual Report on Internal ControlOver Financial Reporting.” Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in allmaterial respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weaknessexists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performingsuch other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’sinternal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of thecompany are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assuranceregarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on thefinancial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluationof effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate.In our opinion, Hudson Global, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015,based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the TreadwayCommission (COSO).We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balancesheets of Hudson Global, Inc. and subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensiveincome, cash flows, and stockholders’ equity for each of the years in the three-year period ended December 31, 2015, and our report dated March 3, 2016expressed an unqualified opinion on those consolidated financial statements./s/ KPMG LLPNew York, New YorkMarch 3, 2016- 50 - HUDSON GLOBAL, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share amounts) Year Ended December 31, 2015 2014 2013Revenue $463,197 $581,192 $562,572Direct costs 275,487 358,347 353,143Gross margin 187,710 222,845 209,429Operating expenses: Salaries and related 149,442 176,718 169,923Office and general 40,921 48,131 49,238Marketing and promotion 4,268 5,472 4,722Depreciation and amortization 3,845 5,559 5,922Business reorganization expenses 5,828 3,789 5,440Impairment of long-lived assets — 662 1,336Total operating expenses 204,304 240,331 236,581Gain (loss) on sale and exit of businesses 19,835 — —Operating income (loss) 3,241 (17,486) (27,152)Non-operating income (expense): Interest income (expense), net (722) (661) (554)Other income (expense), net (266) 202 759Income (loss) from continuing operations before provision for income taxes 2,253 (17,945) (26,947)Provision for (benefit from) income taxes from continuing operations 646 (2,159) 3,264Income (loss) from continuing operations 1,607 (15,786) (30,211)Income (loss) from discontinued operations, net of income taxes 722 2,592 (184)Net income (loss) $2,329 $(13,194) $(30,395)Earnings (loss) per share: Basic and diluted Income (loss) from continuing operations $0.05 $(0.48) $(0.93)Income (loss) from discontinued operations 0.02 0.08 (0.01)Net income (loss) $0.07 $(0.40) $(0.94)Weighted-average shares outstanding: Basic 33,869 32,843 32,493Diluted 34,084 32,843 32,493 See accompanying notes to consolidated financial statements.- 51 - HUDSON GLOBAL, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)(in thousands, except per share amounts) Year Ended December 31, 2015 2014 2013Comprehensive income (loss): Net income (loss) $2,329 $(13,194) $(30,395)Other comprehensive income (loss): Foreign currency translation adjustment, net of income taxes (3,326) (3,718) (3,623)Defined benefit pension plans - unrecognized net actuarial gain (loss) and prior servicecosts (credit), net of income taxes 5 158 260Total other comprehensive income (loss), net of income taxes (3,321) (3,560) (3,363)Comprehensive income (loss) $(992) $(16,754) $(33,758)See accompanying notes to consolidated financial statements.- 52 - HUDSON GLOBAL, INC.CONSOLIDATED BALANCE SHEETS(in thousands, except per share amounts) December 31, 2015 2014ASSETS Current assets: Cash and cash equivalents$37,663 $33,989Accounts receivable, less allowance for doubtful accounts of $860 and $986, respectively62,420 74,079Prepaid and other5,979 9,604Current assets of discontinued operations81 1,249Total current assets106,143 118,921Property and equipment, net7,928 9,840Deferred tax assets, non-current6,724 5,648Other assets4,154 5,263Total assets$124,949 $139,672LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable$5,184 $6,371Accrued expenses and other current liabilities40,344 54,065Short-term borrowings2,368 —Accrued business reorganization expenses2,252 3,169Current liabilities of discontinued operations1,443 3,512Total current liabilities51,591 67,117Deferred rent4,244 5,899Income tax payable, non-current2,279 2,397Other non-current liabilities5,655 5,002Total liabilities63,769 80,415Commitments and contingencies 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 35,260 and 33,671 shares, respectively34 34Additional paid-in capital480,816 476,689Accumulated deficit(428,287) (430,616)Accumulated other comprehensive income10,292 13,613Treasury stock, 646 and 129 shares, respectively, at cost(1,675) (463)Total stockholders’ equity61,180 59,257Total liabilities and stockholders' equity$124,949 $139,672 See accompanying notes to consolidated financial statements. - 53 - HUDSON GLOBAL, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands) Year Ended December 31, 2015 2014 2013Cash flows from operating activities: Net income (loss)$2,329 $(13,194) $(30,395)Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization3,845 5,835 6,406Impairment of long-lived assets— 1,129 1,336Provision for (recovery of) doubtful accounts178 97 (13)Provision for (benefit from) deferred income taxes189 (102) 3,140Stock-based compensation4,231 1,325 2,090Gain on sale and exit of businesses(21,245) (11,333) —Other, net194 354 562Changes in operating assets and liabilities, net of effect of dispositions: Decrease (increase) in accounts receivable(1,254) (7,117) 19,442Decrease (increase) in prepaid and other assets2,763 (1,731) 1,227Increase (decrease) in accounts payable, accrued expenses and other liabilities(7,902) 4,213 (2,100)Increase (decrease) in accrued business reorganization expenses(679) 2,684 818Net cash provided by (used in) operating activities(17,351) (17,840) 2,513Cash flows from investing activities: Capital expenditures(3,061) (5,346) (2,557)Proceeds from sale of consolidated subsidiary, net of cash sold7,894 — —Proceeds from sale of assets, net of disposal costs16,815 22,077 —Net cash provided by (used in) investing activities21,648 16,731 (2,557)Cash flows from financing activities: Borrowings under credit agreements147,429 133,030 17,314Repayments under credit agreements(144,994) (133,194) (16,856)Repayment of capital lease obligations(104) (500) (467)Payments for deferred financing costs(57) (454) —Purchases of treasury stock(1,386) — —Purchase of restricted stock from employees(244) (138) (488)Net cash provided by (used in) financing activities644 (1,256) (497)Effect of exchange rates on cash and cash equivalents(1,267) (1,024) (734)Net increase (decrease) in cash and cash equivalents3,674 (3,389) (1,275)Cash and cash equivalents, beginning of the period33,989 37,378 38,653Cash and cash equivalents, end of the period$37,663 $33,989 $37,378Supplemental disclosures of cash flow information: Cash payments during the period for interest$381 $442 $235Cash payments during the period for income taxes, net of refunds$89 $970 $1,047 See accompanying notes to consolidated financial statements. - 54 - HUDSON GLOBAL, INC.CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY(in thousands) Common stock Additionalpaid-incapital Accumulateddeficit Accumulated othercomprehensiveincome (loss) Treasurystock Total Shares Value Balance at January 1, 2013 33,021 $33 $473,372 $(387,027) $20,536 $(373) $106,541Net income (loss) — — — (30,395) — — (30,395)Other comprehensive income (loss), translationadjustments — — — — (3,623) — (3,623)Other comprehensive income (loss), pensionliability adjustment — — — — 260 — 260Purchase of restricted stock from employees (132) — — — — (488) (488)Issuance of shares for 401(k) plan contribution — — — — — — —Stock-based compensation 443 1 2,089 — — — 2,090Balance at December 31, 2013 33,332 $34 $475,461 $(417,422) $17,173 $(861) $74,385Net income (loss) — — — (13,194) — — (13,194)Other comprehensive income (loss), translationadjustments — — — — (3,718) — (3,718)Other comprehensive income (loss), pensionliability adjustment — — — — 158 — 158Purchase of restricted stock from employees (36) — — — — (129) (129)Issuance of shares for 401(k) plan contribution 118 — (97) — — 527 430Stock-based compensation 128 — 1,325 — — — 1,325Balance at December 31, 2014 33,542 $34 $476,689 $(430,616) $13,613 $(463) $59,257Net income (loss) — — — 2,329 — — 2,329Other comprehensive income (loss), translationadjustments — — — — (3,326) — (3,326) Other comprehensive income (loss), pensionliability adjustment — — — — 5 — 5Purchase of treasury stock (528) — — — — (1,386) (1,386)Purchase of restricted stock from employees (108) — — — — (244) (244)Issuance of shares for 401(k) plan contribution 116 — (104) — — 418 314Stock-based compensation 1,589 — 4,231 — — — 4,231Balance at December 31, 2015 34,611 $34 $480,816 $(428,287) $10,292 $(1,675) $61,180See accompanying notes to consolidated financial statements. - 55 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)NOTE 1 – DESCRIPTION OF BUSINESSHudson Global, Inc. and its subsidiaries (the “Company”) are comprised of the operations, assets and liabilities of the three Hudson regional businessesof Hudson Americas, Hudson Asia Pacific, and Hudson Europe (“Hudson regional businesses” or “Hudson”). The Company provides specializedprofessional-level recruitment and related talent solutions worldwide. The Company’s core service offerings include Permanent Recruitment, TemporaryContracting, Recruitment Process Outsourcing (“RPO”) and Talent Management Solutions. As of December 31, 2015, the Company had approximately 1,600employees operating in 12 countries with three reportable geographic business segments: Hudson Americas, Hudson Asia Pacific, and Hudson Europe.The Company’s core service offerings include those services described below.Permanent Recruitment: Offered on both a retained and contingent basis, Hudson’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 criticalclient roles.Temporary Contracting: In Temporary Contracting, Hudson provides a range of project management, interim management and professional contractstaffing services. These services draw upon a combination of specialized recruiting and project management competencies to deliver a wide range ofsolutions. Hudson-employed professionals - either individually or as a team - are placed with client organizations for a defined period of time based on aclient's specific business need.RPO: Hudson RPO delivers both permanent recruitment and temporary contracting outsourced recruitment solutions tailored to the individual needs ofprimarily mid-to-large-cap multinational companies. Hudson RPO's delivery teams utilize state-of-the-art recruitment process methodologies and projectmanagement expertise in their flexible, turnkey solutions to meet clients' ongoing business needs. Hudson RPO services include complete recruitmentoutsourcing, project-based outsourcing, contingent workforce solutions and recruitment consulting.Talent Management Solutions: Featuring embedded proprietary talent assessment and selection methodologies, Hudson’s Talent Managementcapability encompasses services such as talent assessment (utilizing a variety of competency, attitude and experiential testing), interview training, executivecoaching, employee development and outplacement.NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBasis of PresentationThe Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States ofAmerica (“GAAP”). Unless otherwise stated, amounts are presented in United States of America (“U.S.”) dollars and all amounts are in thousands, except fornumber of shares and per share amounts.Certain prior year amounts have been reclassified to conform to the current year presentation for discontinued operations. See Note 4 for further detailsregarding the discontinued operations reclassification.Principles of ConsolidationThe Consolidated Financial Statements include the accounts of the Company and all of its wholly-owned and majority-owned subsidiaries. Allsignificant inter-company accounts and transactions between and among the Company and its subsidiaries have been eliminated in consolidation.- 56 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)Use of EstimatesThe preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to makeestimates and assumptions about future events. These estimates and the underlying assumptions affect the reported amounts of assets and liabilities, thedisclosures about contingent assets and liabilities, and the reported amounts of revenue and expenses. Such estimates include the value of allowances fordoubtful accounts, insurance recovery receivable, goodwill, intangible assets, and other long-lived assets, legal reserve and provision, estimated self-insuredliabilities, assumptions used in the fair value of stock-based compensation and the valuation of deferred tax assets. These estimates and assumptions arebased on management's best estimates and judgment. Management evaluates the estimates and assumptions on an ongoing basis using historical experienceand other factors, including the current economic environment, which management believes to be reasonable under the circumstances. The Company adjustssuch estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual resultscould differ significantly from those estimates.Instability in the global credit markets, the instability in the geopolitical environment in many parts of the world and other factors may continue to putpressure on global economic conditions and may in turn impact the aforementioned estimates and assumptions.Nature of Business and Credit RiskThe Company's revenue is earned from professional placement services, mid-level employee professional staffing and temporary contracting servicesand human capital services. These services are provided to a large number of customers in many different industries. The Company operates throughout NorthAmerica, the United Kingdom ("U.K."), Continental Europe, Australia, New Zealand and Asia. During 2015, no single client accounted for more than 10% ofthe Company's total revenue. As of December 31, 2015, no single client accounted for more than 10% of the Company's outstanding accounts receivable.Financial instruments, which potentially subject the Company to concentrations of credit risk, are primarily cash and accounts receivable. TheCompany performs continuing credit evaluations of its customers and does not require collateral. The Company has not experienced significant losses relatedto receivables. Revenue RecognitionThe Company recognizes revenue for temporary services at the time services are provided and revenue is recorded on a time and materials basis.Temporary contracting revenue is reported on a gross basis when the Company acts as the principal in the transaction and is at risk for collection inaccordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic (“ASC”) 605-45, “Overall Considerations ofReporting Revenue Gross as a Principal versus Net as an Agent.” The Company's revenues are derived from its gross billings, which are based on (i) thepayroll cost of its worksite employees; and (ii) a markup computed as a percentage of the payroll cost.The Company recognizes revenue for permanent placements based on the nature of the fee arrangement. Revenue generated when the Companypermanently places an individual with a client on a contingent basis is recorded at the time of acceptance of employment, net of an allowance for estimatedfee reversals. Revenue generated when the Company permanently places an individual with a client on a retained basis is recorded ratably over the periodservices are rendered, net of an allowance for estimated fee reversals.ASC 605-45-50-3 and ASC 605-45-50-4, “Taxes Collected from Customers and Remitted to Governmental Authorities,” provide that the presentation oftaxes on either a gross basis (included in revenue and expense) or net basis (excluded from revenue) is an accounting policy decision. The Company collectsvarious taxes assessed by governmental authorities and records these amounts on a net basis.- 57 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)Operating ExpensesSalaries and related expenses include the salaries, commissions, payroll taxes and employee benefits related to recruitment professionals, executivelevel employees, administrative staff and other employees of the Company who are not temporary contractors. Office and general expenses includeoccupancy, equipment leasing and maintenance, utilities, travel expenses, professional fees and provision for doubtful accounts. The Company expenses thecosts of advertising and legal costs as incurred.Stock-Based CompensationThe Company applies the fair value recognition provisions of ASC 718, "Compensation - Stock Compensation." The Company determines the fair valueas of the grant date. For awards with graded vesting conditions, the values of the awards are determined by valuing each tranche separately and expensingeach tranche over the required service period. The service period is the period over which the related service is performed, which is generally the same as thevesting period. The Company records stock-based compensation expense net of estimated forfeitures. The Company estimates its forfeiture rate based onhistorical data such as stock option exercise activities and employee termination patterns. The Company analyzed its historical forfeiture rate, the remaininglives of unvested awards and the amount of vested awards as a percentage of total awards outstanding. If the Company's actual forfeiture rate is materiallydifferent from its estimate, or if the Company reevaluates the forfeiture rate in the future, the stock-based compensation expense could be significantlydifferent from what was recorded in the current periods.For stock options, the Black-Scholes option pricing model considers, among other factors, the expected volatility of the Company's stock price, risk-freeinterest rates, dividend rate and the expected life of the award. Expected volatilities are calculated based on the historical volatility of the Company'scommon stock. Volatility is determined using historical prices to estimate the expected future fluctuations in the Company's share price. The risk-free interestrate is based on the U.S. Treasury, the term of which is consistent with the expected term of the option. The dividend rate is assumed to be zero as theCompany has never paid dividends on its common stock.When the Company estimates the expected life of stock options, the Company determines its assumptions for the Black-Scholes option-pricing modelin accordance with ASC 718 and SAB No. 107. Significant assumptions used in the valuation of stock options include:•The expected term of stock options is estimated using the simplified method since the Company currently does not have sufficient stock optionexercise history.•The expected risk free interest rate is based on the U.S. Treasury constant maturity interest rate which term is consistent with the expected termof the stock options.•The expected volatility is based on the historic volatility.In December 2007, the Securities and Exchange Commission (“SEC”) staff issued Staff Accounting Bulletin ("SAB") No. 110, “Certain AssumptionsUsed In Valuation Methods - Expected Term". SAB No. 110 allows companies to continue to use the simplified method, as defined in SAB No. 107, toestimate the expected term of stock options under certain circumstances. The simplified method for estimating expected term uses the mid-point between thevesting term and the contractual term of the stock option. The Company has analyzed the circumstances in which the use of the simplified method is allowed.The Company has opted to use the simplified method for stock options the Company granted because management believes that the Company does not havesufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term.In accordance with ASC 718, the Company reflects the tax savings resulting from tax deductions in excess of income tax benefits as a financing cashflow in its Consolidated Statement of Cash Flows, when applicable.Income TaxesEarnings from the Company's global operations are subject to tax in various jurisdictions both within and outside the United States. The Companyaccounts for income taxes in accordance with ASC 740, “Income Taxes”. This standard establishes financial accounting and reporting standards for the effectsof income taxes that result from an enterprise's activities. It requires an asset and liability approach for financial accounting and reporting of income taxes.- 58 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)The calculation of net deferred tax assets assumes sufficient future earnings for the realization of such assets as well as the continued application ofcurrently anticipated tax rates. Included in net deferred tax assets is a valuation allowance for deferred tax assets where management believes it is more likelythan not that the deferred tax assets will not be realized in the relevant jurisdiction. If we determine that a deferred tax asset will not be realizable, anadjustment to the deferred tax asset will result in a reduction of earnings at that time. See Note 7 to the Consolidated Financial Statements for furtherinformation regarding deferred tax assets and valuation allowance.ASC 740-10-55-3, “Recognition and Measurement of Tax Positions - a Two Step Process,” provides implementation guidance related to the accountingfor uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a two-step evaluation process for a tax position taken orexpected to be taken in a tax return. The first step is recognition and the second is measurement. ASC 740 also provides guidance on derecognition,measurement, classification, disclosures, transition and accounting for interim periods. The Company provides tax reserves for U.S. Federal, state and localand international unrecognized tax benefits for all periods subject to audit. The development of reserves for these exposures requires judgments about taxissues, potential outcomes and timing, and is a subjective critical estimate. The Company assesses its tax positions and records tax benefits for all yearssubject to examination based upon management's evaluation of the facts, circumstances, and information available at the reporting dates. For those taxpositions where it is more likely than not that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit with a greater than50% likelihood of being realized upon settlement with a tax authority that has full knowledge of all relevant information. For those tax positions where it isnot more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. Where applicable, associatedinterest and penalties have also been recognized. Although the outcome related to these exposures is uncertain, in management's opinion, adequateprovisions for income taxes have been made for estimable potential liabilities emanating from these exposures. In certain circumstances, the ultimateoutcome for exposures and risks involve significant uncertainties which render them inestimable. If actual outcomes differ materially from these estimates,including those that cannot be quantified, they could have material impact on the Company's results of operations.U.S. Federal income and foreign withholding taxes have not been provided on the undistributed earnings of foreign subsidiaries. The Company intendsto reinvest these earnings in its foreign operations indefinitely, except where it is able to repatriate these earnings to the United States without a materialincremental tax provision. The determination and estimation of the future income tax consequences in all relevant taxing jurisdictions involves theapplication of highly complex tax laws in the countries involved, particularly in the United States, and is based on the tax profile of the Company in the yearof earnings repatriation. Accordingly, it is not practicable to determine the amount of tax associated with such undistributed earnings.Earnings (Loss) Per ShareBasic earnings (loss) per share (“EPS”) are computed by dividing the Company’s net income (loss) by the weighted average number of sharesoutstanding during the period. When the effects are not anti-dilutive, diluted earnings (loss) per share are computed by dividing the Company’s net income(loss) by the weighted average number of shares outstanding and the impact of all dilutive potential common shares, primarily stock options “in-the-money”and unvested restricted stock. The dilutive impact of stock options and unvested restricted stock is determined by applying the “treasury stock” method.Performance-based restricted stock awards are included in the computation of diluted earnings per share only to the extent that the underlying performanceconditions: (i) are satisfied prior to the end of the reporting period, or (ii) would be satisfied if the end of the reporting period were the end of the relatedperformance period and the result would be dilutive under the treasury stock method. Stock awards subject to vesting or exercisability based on theachievement of market conditions are included in the computation of diluted earnings per share only when the market conditions are met.Income (loss) per share calculations for each quarter include the weighted average effect for the quarter; therefore, the sum of quarterly income (loss) pershare amounts may not equal year-to-date income (loss) per share amounts, which reflect the weighted average effect on a year-to-date basis.Fair Value of Financial InstrumentsThe carrying amounts reported in the Consolidated Balance Sheets for cash and cash equivalents, accounts receivable, accounts payable and short-termborrowings approximate fair value because of the immediate or short-term maturity of these financial instruments.- 59 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)Cash and Cash EquivalentsFor financial statement presentation purposes, the Company considers all highly liquid investments having an original maturity of three months or lessas cash equivalents.Accounts ReceivableThe Company's accounts receivable balances are composed of trade and unbilled receivables. The Company maintains an allowance for doubtfulaccounts and makes ongoing estimates as to the ability to collect on the various receivables. If the Company determines that the allowance for doubtfulaccounts is not adequate to cover estimated losses, an expense to provide for doubtful accounts is recorded in office and general expenses. If an account isdetermined to be uncollectible, it is written off against the allowance for doubtful accounts. Management's assessment and judgment are vital requirements inassessing the ultimate realization of these receivables, including the current credit-worthiness, financial stability and effect of market conditions on eachcustomer.Property and EquipmentProperty and equipment are stated at cost. Depreciation is computed primarily using the straight line method over the following estimated useful lives: YearsFurniture and equipment 3 - 8Capitalized software costs 3 - 5Computer equipment 2 - 5Leasehold improvements are amortized over the shorter of their estimated useful lives or the lease term. The amortization periods of material leaseholdimprovements are estimated at the inception of the lease term.Capitalized Software CostsCapitalized software costs consist of costs to purchase and develop software for internal use. The Company capitalizes certain incurred softwaredevelopment costs in accordance with ASC 350-40, “Intangibles Goodwill and Other: Internal-Use Software.” Costs incurred during the application-development stage for software purchased and further customized by outside vendors for the Company's use and software developed by a vendor for theCompany's proprietary use have been capitalized. Costs incurred for the Company's own personnel who are directly associated with software development arecapitalized as appropriate. Capitalized software costs are included in property and equipment.Long-Lived AssetsThe Company evaluates the recoverability of the carrying value of its long-lived assets, excluding goodwill, whenever events or changes incircumstances indicate that the carrying value may not be recoverable. Under such circumstances, the Company assesses whether the projected undiscountedcash flows of its businesses are sufficient to recover the existing unamortized cost of its long-lived assets. If the undiscounted projected cash flows are notsufficient, the Company calculates the impairment amount by discounting the cash flows using its weighted average cost of capital. The amount of theimpairment is written-off against earnings in the period in which the impairment has been determined in accordance with ASC 360-10-35, “Impairment orDisposal of Long-Lived Assets.”GoodwillASC 350-20-35,“Intangibles-Goodwill and Other, Goodwill Subsequent Measurement,” requires that goodwill not be amortized but be tested forimpairment on an annual basis, or more frequently if circumstances warrant. The Company tests goodwill for impairment annually as of October 1, or morefrequently if circumstances indicate that its carrying value might exceed its current fair value. Per the provisions of ASC 350, the Company elects to firstperform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. In thequalitative assessment, the Company considers events and circumstances such as macroeconomic conditions, industry and- 60 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)market considerations, cost factors, overall financial performance and the trend of cash flows, other relevant company-specific events and the ''cushion''between a reporting unit's fair value and carrying amount in the recent fair value calculation. If it is concluded that it is more likely than not that the fairvalue of a reporting unit is less than its carrying value, it is necessary to perform the currently prescribed two-step goodwill impairment test. Otherwise, thetwo-step goodwill impairment test is not required.The first step of the goodwill impairment test, used to identify potential impairment, compares the fair value of a reporting unit with its carrying amount,including goodwill. The Company tests goodwill for impairment at the reporting unit level. A reporting unit is an operating segment or one level below anoperating segment (referred to as a component). A component of an operating segment is a reporting unit if the component constitutes a business for whichdiscrete financial information is available and segment management regularly reviews the operating results of that component. The Company's reportingunits are the components within the reportable segments identified in Note 19.If the fair value of a reporting unit exceeds its carrying amount, the second step of the impairment test is unnecessary. If the carrying amount of areporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. Step twocompares the implied fair value of the reporting unit's goodwill with the current carrying amount of that goodwill. If the carrying value of a reporting unit'sgoodwill exceeds its implied fair value, an impairment amount equal to the difference is recorded.- 61 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)Foreign Currency TranslationThe financial position and results of operations of the Company's international subsidiaries are determined using local currency as the functionalcurrency. Assets and liabilities of these subsidiaries are translated at the exchange rate in effect at each year-end. Statements of Operations accounts aretranslated at the average rate of exchange prevailing during each period. Translation adjustments arising from the use of differing exchange rates from periodto period are included in the accumulated other comprehensive income (loss) account in stockholders' equity, other than translation adjustments on short-term intercompany balances, which are included in other income (expense). Gains and losses resulting from other foreign currency transactions are includedin other income (expense). Intercompany receivable balances of a long-term investment nature are considered part of the Company's permanent investment ina foreign jurisdiction and the gains or losses on these balances are reported in other comprehensive income.Comprehensive Income (Loss)Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by owners and distributions to owners.The Company's other comprehensive income (loss) is primarily comprised of foreign currency translation adjustments, which relate to investments that arepermanent in nature, and changes in unrecognized pension and post-retirement benefit costs.NOTE 3 – DIVESTITURESHudson Information Technology (US) business (the "US IT business")On June 15, 2015, the Company completed the sale (the "US IT Business Sale") of substantially all of the assets (excluding working capital) of its USIT business to Mastech, Inc. (the "Purchaser"). The completion of the US IT Business Sale was effective June 14, 2015. The US IT Business Sale was pursuantto an Asset Purchase Agreement, dated as of May 8, 2015, by and among the Company, Hudson Global Resources Management, Inc., a wholly ownedsubsidiary of the Company, and the Purchaser. At the closing of the Sale, the Company received from the Purchaser pursuant to the Asset Purchase Agreementthe purchase price of $16,977 in cash. The US IT business pre-tax loss in accordance with ASC No. 205 "Reporting Discontinued Operations" ("ASC 205")for the year ended December 31, 2015 was $130 compared to a pre-tax profit of $2,167 and $1,195 for the same period in 2014 and 2013, respectively.On the US IT Business Sale, for the year ended December 31, 2015, the Company recognized a pre-tax gain of $15,918, net of closing and other directtransaction costs. Income tax on the gain of the US IT business sale was $11. For U.S. Federal income tax purposes, the gain is offset in full by net operatingloss carryforwards. For state and local income tax purposes, the gain is mostly offset by net operating loss carryforwards. As the divestiture did not meet therequirements for classification as discontinued operations, the gain on sale is presented as a component of income (loss) from operations.Netherlands businessOn May 7, 2015, the Company entered into a Share Purchase Agreement and completed the sale (the "Netherlands Business Sale") of its Netherlandsbusiness, to InterBalance Group B.V., effective April 30, 2015, in a management buyout for $9,029, which included cash retained of $1,135. As a result, forthe year ended December 31, 2015 the Company recognized a gain of $2,841 on the divestiture of the Netherlands Business Sale, which included $2,799 ofnon-cash accumulated foreign currency translation losses. Income tax on the gain was $0 because the gain is exempt from Netherlands tax. As the divestituredid not meet the requirements for classification as discontinued operations, the gain on sale is presented as a component of income (loss) from operations.The Netherlands pre-tax profit in accordance with ASC 205 for the years ended December 31, 2015, 2014 and 2013 was $373, $1,799 and $2,382,respectively.- 62 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)Exit of Businesses in Central and Eastern EuropeIn February 2015, the Company's Board of Directors approved the exit of operations in certain countries within Central and Eastern Europe (Ukraine,Czech Republic and Slovakia). During the second quarter of 2015, the Company deemed the liquidation of its Central and Eastern Europe businesses to besubstantially complete. In accordance with ASC 830, "Foreign Currency Matters," ("ASC 830") for the year ended December 31, 2015 the Companytransferred $1,208 of accumulated foreign currency translation gains from accumulated other comprehensive income to the statement of operations withingain on sale and exit of businesses.LuxembourgIn March 2015, the Company's management approved the exit of operations in Luxembourg. In the third quarter of 2015, the Company deemed theliquidation of its Luxembourg business to be substantially complete. In accordance with ASC 830, for the year ended December 31, 2015, the Companytransferred $132 of accumulated foreign currency translation losses from accumulated other comprehensive income to the statement of operations within gainon sale and exit of businesses.NOTE 4 – DISCONTINUED OPERATIONSEffective November 9, 2014, the Company completed the sale of substantially all of the assets and certain liabilities of its Legal eDiscovery business inthe U.S. and U.K. to Document Technologies, LLC and DTI of London Limited for $23,000 in cash, and recorded a gain of $11,333 in connection with thesale excluding customary working capital adjustments. Based on the terms of the asset purchase agreement, the Company had no significant continuinginvolvement in the operations of the Legal eDiscovery business after the disposal transaction. In addition, the Company ceased operations in Sweden, whichwere included within the Hudson Europe segment, during the third quarter of 2014.The Company concluded that the divestiture of the Legal eDiscovery business and the cessation of operations in Sweden met the criteria fordiscontinued operations set forth in ASC No. 205, "Presentation of Financial Statements." The Company reclassified its discontinued operations for allperiods presented and has excluded the results of its discontinued operations from continuing operations and from segment results for all periods presented.The carrying amounts of the major classes of assets and liabilities from the Legal eDiscovery business and Sweden operations included as part of thediscontinued operations were as follows: December 31, 2015 December 31, 2014 eDiscovery Sweden Total eDiscovery Sweden TotalTotal assets (a) $49 $32 $81 $1,156 $93 $1,249Total liabilities (b) $1,439 $4 $1,443 $3,297 $215 $3,512a.As of December 31, 2014, other assets from Legal eDiscovery consisted primarily of estimated customary working capital adjustments in connectionwith the sale of the Legal eDiscovery business.b.Total liabilities primarily consisted of restructuring liabilities for lease termination payments and severance.- 63 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)Reported results for the discontinued operations by period were as follows: For The Year Ended December 31, 2015 eDiscovery Sweden TotalRevenue $(1) $30 $29Gross margin (30) 30 —Reorganization expenses (a) 501 (29) 472Impairment charges — — —Operating income (loss), excluding gain (loss) from sale of business (731) 14 (717)Other non-operating income (loss), including interest (8) — (8)Gain (loss) from sale of discontinued operations 137 1,273 1,410Income (loss) from discontinued operations before income taxes (602) 1,287 685Provision (benefit) for income taxes (c) (37) — (37)Income (loss) from discontinued operations $(565) $1,287 $722 For The Year Ended December 31, 2014 eDiscovery Sweden TotalRevenue $54,620 $1,513 $56,133Gross margin 9,227 864 10,091Reorganization expenses 2,861 416 3,277Impairment charges (b) 467 — 467Operating income (loss), excluding gain (loss) from sale of business (5,491) (1,087) (6,578)Other non-operating income (loss), including interest (9) (33) (42)Gain (loss) from sale of discontinued operations 11,333 — 11,333Income (loss) from discontinued operations before income taxes 5,833 (1,120) 4,713Provision (benefit) for income taxes (c) 2,121 — 2,121Income (loss) from discontinued operations $3,712 $(1,120) $2,592 For The Year Ended December 31, 2013 eDiscovery Sweden TotalRevenue $94,738 $2,817 $97,555Gross margin 18,257 2,185 20,442Reorganization expenses 849 432 1,281Operating income (loss), excluding gain (loss) from sale of business 1,704 (1,312) 392Other non-operating income (loss), including interest (46) — (46)Gain (loss) from sale of discontinued operations — — —Income (loss) from discontinued operations before income taxes 1,658 (1,312) 346Provision (benefit) for income taxes (c) 530 — 530Income (loss) from discontinued operations $1,128 $(1,312) $(184)a.2015 reorganization activities from discontinued operations included lease termination payments for offices in the U.S. and the U.K.b.As a result of the divestiture of the Company's Legal eDiscovery business in the fourth quarter of 2014, the Company recorded impairment chargesrelated to assets no longer in use of $467 in the U.S. and U.K.- 64 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)c.Income tax expense is provided at the effective tax rate by taxing jurisdiction and differs from the U.S. statutory tax rate of 35% due to the inabilityof the Company to recognize tax benefits on losses in the U.S. and certain foreign jurisdictions, variations from the U.S. tax rate in foreignjurisdictions, non-deductible expenses and other miscellaneous taxes.NOTE 5 – REVENUE, DIRECT COSTS AND GROSS MARGIN The Company’s revenue, direct costs and gross margin were as follows: For The Year Ended December 31, 2015 TemporaryContracting PermanentRecruitment Other TotalRevenue$305,052 $118,934 $39,211 $463,197Direct costs (1)262,322 2,733 10,432 275,487Gross margin$42,730 $116,201 $28,779 $187,710 For The Year Ended December 31, 2014 TemporaryContracting PermanentRecruitment Other TotalRevenue$408,106 $126,686 $46,400 $581,192Direct costs (1)345,586 2,369 10,392 358,347Gross margin$62,520 $124,317 $36,008 $222,845 For The Year Ended December 31, 2013 TemporaryContracting PermanentRecruitment Other TotalRevenue$407,178 $113,301 $42,093 $562,572Direct costs (1)341,911 2,219 9,013 353,143Gross margin$65,267 $111,082 $33,080 $209,429(1)Direct costs include the direct staffing costs of salaries, payroll taxes, employee benefits, travel expenses and insurance costs for the Company’scontractors and reimbursed out-of-pocket expenses and other direct costs. Other than reimbursed out-of-pocket expenses, there are no other directcosts associated with the Permanent Recruitment and Other categories. Gross margin represents revenue less direct costs. The region where servicesare provided, the mix of contracting and permanent recruitment, and the functional nature of the staffing services provided can affect gross margin.- 65 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)NOTE 6 – STOCK-BASED COMPENSATIONEquity Compensation PlansThe Company maintains the Hudson Global, Inc. 2009 Incentive Stock and Awards Plan (the “ISAP”) pursuant to which it can issue equity-basedcompensation incentives to eligible participants. The ISAP permits the granting of stock options, restricted stock, and restricted stock units as well as othertypes of equity-based awards. The Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) will establish suchconditions as it deems appropriate on the granting or vesting of stock options or restricted stock. While the Company historically granted both stock optionsand restricted stock to its employees, since 2008 the Company has primarily granted restricted stock to its employees.The Compensation Committee administers the ISAP and may designate any of the following as a participant under the ISAP: any officer or otheremployee of the Company or its affiliates or individuals engaged to become an officer or employee, consultants or other independent contractors whoprovide services to the Company or its affiliates and non-employee directors of the Company. As of December 31, 2015, there were 792,326 shares of theCompany’s common stock available for future issuance.All share issuances related to stock compensation plans are issued from the aforementioned stock available for future issuance under stockholderapproved compensation plans.The Company’s stock plan agreements provided that a change in control of the Company will occur if, among other things, individuals who weredirectors as of the date of the agreement and any new director whose appointment or election was approved or recommended by a vote of at least two-thirds ofthe directors then in office who were either directors on the date of the agreement or whose appointment or election was previously so approved orrecommended (each, a “continuing director”) cease to constitute a majority of the Company’s directors. A change in control occurred as of the Company's2015 annual meeting of stockholders on June 15, 2015 under these agreements because continuing directors ceased to constitute a majority of the Company'sdirectors. As a result, certain equity awards vested resulting in an accelerated stock-based compensation expense of $2,541 for the year ended December 31,2015.A summary of the quantity and vesting conditions for stock-based awards granted to the Company's employees for the year ended December 31, 2015was as follows:Vesting conditions Number ofShares ofRestricted StockGranted Number ofRestricted StockUnits Granted TotalPerformance and service conditions (1) 590,100 105,400 695,500Vest 100% 18 months after the grant date with service conditions only 150,000 — 150,000Vest 100% 18 months after the grant date with market and service conditions (2) 350,000 — 350,000Vest 100% 9 months after the grant date with service conditions only 180,000 — 180,000Immediately vested 400 100 500Total shares of stock award granted 1,270,500 105,500 1,376,000(1)As a result of the June 15, 2015 change in control event all unvested grants of restricted stock and restricted stock units became fully vested.(2)At the end of the performance period, the restricted stock subject to market condition may vest, in whole or in part, based on the Company'smaximum 30-trading-day volume-weighted average common stock price during the period from May 18, 2015 to November 13, 2016 (the"Average Share Price") as compared to specified share price targets. If the Company's Average Share Price is less than $3.50, none of the restrictedstock shall vest. 25% of the restricted stock shall vest if the Company's Average Share Price equals $3.50. 50% of the restricted stock shall vest ifthe Company's Average Share Price equals $4.25. 75% percent of the restricted stock shall vest if the Company's Average Share Price equals $5.00.100% of the restricted stock shall vest if the Company's Average Share Price is- 66 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)greater than or equal to $6.00. For Average Share Price results between two share price targets, the percent of Restricted Stock vested shall bedetermined using linear interpolation. In accordance with the Company's policy on compensation for non-employee directors, in 2015 the Company granted to a non-employee director50,000 options to purchase shares of the Company’s common stock under the terms of the Hudson Global, Inc. 2009 Incentive Stock and Awards Plan, asamended and restated. The exercise price of the options is the fair market value of a share of common stock on the date of grant. Options have a term of fiveyears and become exercisable 50% immediately on the date of grant and 100% upon the first anniversary of the grant date (provided that if the Company’sBoard of Directors does not designate such individual as a director nominee for election as a director at the Company’s first annual meeting of stockholdersfollowing the grant date, then the remainder of such option that has not yet vested will immediately vest).The Company also maintains the Director Deferred Share Plan (the “Director Plan”) pursuant to which it can issue restricted stock units to its non-employee directors. A restricted stock unit is equivalent to one share of the Company’s common stock and is payable only in common stock issued under theISAP upon a director ceasing service as a member of the Board of Directors of the Company. The restricted stock units vest immediately upon grant and arecredited to each of the non-employee director's retirement accounts under the Director Plan. During the year ended December 31, 2015, the Company granted267,239 restricted stock units to its non-employee directors pursuant to the Director Plan.For the years ended December 31, 2015, 2014 and 2013, the Company’s stock-based compensation expense related to stock options, restricted stockand restricted stock units, which are included in the accompanying Consolidated Statements of Operations, were as follows: For The Year Ended December 31, 2015 2014 2013Stock options$23 $85 $354Restricted stock3,188 798 1,274Restricted stock units1,020 442 462Total$4,231 $1,325 $2,090Tax benefits recognized in jurisdictions where the Company has taxable income$362 $98 $130As of December 31, 2015 and 2014, unrecognized compensation expense and weighted average period over which the compensation expense isexpected to be recognized relating to the unvested portion of the Company's stock options, restricted stock, and restricted stock unit awards, in each case,based on the Company's historical valuation treatment, were as follows: As of December 31, 2015 2014 UnrecognizedExpense WeightedAverage Period inYears UnrecognizedExpense WeightedAverage Period inYearsStock options $17 0.85 $— 0.00Restricted stock $701 0.75 $1,561 1.32Restricted stock units $— 0.00 $239 1.26 - 67 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)Stock OptionsStock options granted by the Company generally expire between five and ten years after the date of grant and have an exercise price of at least 100% ofthe fair market value of the underlying share of common stock on the date of grant and generally vest ratably over a four-year period.The following were the weighted average assumptions used to determine the fair value of stock options granted by the Company and the details of optionactivity as of and for the respective periods: As of December 31, 2015 2014 2013Volatility 48.9% (a) (a)Risk free interest rate 1.1% (a) (a)Dividends $— (a) (a)Expected life (years) 2.75 (a) (a)Weighted average fair value of options granted during the period $0.81 (a) (a)(a)Stock option assumptions are not provided above because there were no options granted during the years ended December 31, 2014 and 2013.Changes in the Company’s stock options for the years ended December 31, 2015, 2014 and 2013 were as follows: For The Year Ended December 31, 2015 2014 2013 Number ofOptions WeightedAverageExercise Priceper Share Number ofOptions WeightedAverageExercise Priceper Share Number ofOptions WeightedAverageExercise Priceper ShareOptions outstanding at January 1,756,800 $8.78 800,350 $9.15 1,238,650 $11.21Granted50,000 2.49 — — — —Forfeited(485,000) 7.32 — — — —Expired(115,800) 13.35 (43,550) 15.50 (438,300) 14.99Options outstanding at December 31,206,000 $8.13 756,800 $8.78 800,350 $9.15Options exercisable at December 31,181,000 $8.91 756,800 $8.78 600,350 $10.47The cash proceeds from the exercise of stock options, associated income tax benefits, and total intrinsic value for stock options exercised based on theclosing price of the Company's common stock were nil for the years ended December 31, 2015, 2014 and 2013.The weighted average remaining contractual term and the aggregated intrinsic value for stock options outstanding and exercisable as of December 31,2015 and 2014 were as follows: As of December 31, 2015 2014 RemainingContractual Termin Years Aggregated IntrinsicValue RemainingContractual Termin Years Aggregated IntrinsicValueStock options outstanding 2.22 $22 4.04 $—Stock options exercisable 1.86 $11 4.04 $—- 68 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)Restricted StockChanges in the Company’s restricted stock for the years ended December 31, 2015, 2014 and 2013 were as follows: For The Year Ended December 31, 2015 2014 2013 Number ofShares ofRestrictedStock WeightedAverageGrant DateFair Value Number ofShares ofRestrictedStock WeightedAverageGrant DateFair Value Number ofShares ofRestrictedStock WeightedAverageGrant DateFair ValueUnvested restricted stock at January 1,803,999 $3.00 997,802 $3.00 1,028,916 $4.87Granted1,270,500 2.17 482,900 3.22 883,321 2.44Vested(1,204,798) 2.90 (182,251) 5.21 (406,158) 5.09Forfeited(189,701) 3.14 (494,452) 2.39 (508,277) 4.16Unvested restricted stock at December 31,680,000 $1.60 803,999 $3.00 997,802 $3.00The total fair value of restricted stock vested during the years ended December 31, 2015, 2014 and 2013 were as follows: For The Year Ended December 31, 2015 2014 2013Fair value of restricted stock vested $2,675 $669 $1,596Restricted Stock Units Changes in the Company’s restricted stock units arising from grants to certain employees and non-employee directors for the years ended December 31,2015, 2014 and 2013 were as follows: For The Year Ended December 31, 2015 2014 2013 Number ofShares ofRestrictedStock Unit WeightedAverageGrant-DateFair Value Number ofShares ofRestrictedStock Unit WeightedAverageGrant-DateFair Value Number ofShares ofRestrictedStock Unit WeightedAverageGrant-DateFair ValueUnvested restricted stock units at January 1,119,940 $3.57 115,869 $3.65 100,000 $5.18Granted372,739 2.47 175,759 3.40 175,860 2.90Vested(450,179) 2.70 (122,522) 3.86 (154,991) 3.81Forfeited(42,500) 3.21 (49,166) 2.42 (5,000) 2.42Unvested restricted stock units at December 31,— $— 119,940 $3.57 115,869 $3.65 The total fair value of restricted stock units vested during the years ended December 31, 2015, 2014 and 2013 were as follows: For The Year Ended December 31, 2015 2014 2013Fair value of restricted stock units vested $1,022 $436 $461Defined Contribution Plan and Employer-matching contributionsThe Company maintains the Hudson Global, Inc. 401(k) Savings Plan (the “401(k) plan”). The 401(k) plan allows eligible employees to contribute upto 15% of their earnings to the 401(k) plan. The Company has the discretion to match employees’ contributions up to 3% of the employees' earnings througha contribution of the Company’s common stock. Vesting of the- 69 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)Company’s contribution occurs over a five-year period. For the years ended December 31, 2015, 2014 and 2013, the Company’s expenses and contributionsto satisfy the prior years’ employer-matching liability for the 401(k) plan were as follows: For The Year Ended December 31,($ in thousands, except otherwise stated) 2015 2014 2013Expense recognized for the 401(k) plan $193 $385 $483Contributions to satisfy prior years' employer-matching liability Number of shares of the Company's common stock issued (in thousands) 116 118 —Market value per share of the Company's common stock on contribution date (in dollars) $2.71 $3.65 $—Non-cash contribution made for employer matching liability $314 $430 $—Additional cash contribution made for employer-matching liability — — 651Total contribution made for employer-matching liability $314 $430 $651 - 70 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)7 – INCOME TAXESIncome Tax ProvisionThe domestic and foreign components of income (loss) before income taxes from continuing operations were as follows: Year ended December 31, 2015 2014 2013Domestic $3,607 $(10,342) $(7,622)Foreign (1,354) (7,603) (19,325)Income (loss) from continuing operations before provision for income taxes $2,253 $(17,945) $(26,947)The provision for (benefit from) income taxes from continuing operations were as follows: Year ended December 31, 2015 2014 2013Current tax provision (benefit): U.S. Federal $— $(1,712) $(81)State and local 18 (550) 126Foreign 439 205 79Total current provision for (benefit from) income taxes 457 (2,057) 124Deferred tax provision (benefit): U.S. Federal — — —State and local — — —Foreign 189 (102) 3,140Total deferred provision for (benefit from) income taxes 189 (102) 3,140Total provision for (benefit from) income taxes from continuing operations $646 $(2,159) $3,264Tax Rate ReconciliationThe effective tax rates for the years ended December 31, 2015, 2014 and 2013 were 28.7%, 12.0% and negative 12.1%, respectively. These effective taxrates differ from the U.S. Federal statutory rate of 35% due to state income taxes, changes in valuation allowances in the U.S. and certain foreign jurisdictionswhich reduces or eliminates the effective tax rate on current year profits or losses, variations from the U.S. Federal statutory rate in foreign jurisdictions, taxeson repatriations of foreign profits, and non-deductible expenses. The effect of state tax rate changes in 2015 on deferred tax assets was offset by an increase invaluation allowance and has no net impact on effective tax rate.The following is a reconciliation of the effective tax rate from continuing operations for the years ended December 31, 2015, 2014 and 2013 to the U.S.Federal statutory rate of 35%:- 71 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts) Year ended December 31, 2015 2014 2013Provision for (benefit from) continuing operations at Federal statutory rate of 35% $787 $(6,281) $(9,431)State income taxes, net of Federal income tax effect 11 (357) (2)Change in valuation allowance 447 (3,427) 7,949Taxes related to foreign income 2,140 5,628 949Effect of state tax rate changes on deferred tax assets (6,834) — —Nondeductible expenses 1,375 2,446 2,524Others 2,720 (168) 1,275Provision for (benefit from) income taxes $646 $(2,159) $3,264Deferred Taxes Assets (Liabilities)Deferred income taxes are provided for the tax effect of temporary differences between the financial reporting basis and the tax basis of assets and liabilities.As of December 31, 2015 the Company adopted Accounting Standards Update ("ASU") No. 2015-17, "Balance Sheet Classification of Deferred Taxes" on aprospective basis, which required that deferred tax assets and liabilities be classified as noncurrent in a classified statement of financial position.Accordingly, net deferred tax assets as of December 31, 2015 have been classified as non-current and as of December 31, 2014 were classified in other currentassets and other assets in the accompanying Consolidated Balance Sheets. Significant temporary differences at December 31, 2015 and 2014 were as follows: As of December 31, 2015 2014Deferred tax assets (liabilities): Allowance for doubtful accounts $122 $124Property and equipment 321 2,152Goodwill and intangibles 5,381 7,825Accrued compensation 2,666 5,506Accrued liabilities and other 3,244 3,582Tax loss carry-forwards 154,028 146,644Deferred tax assets (liabilities) gross, total 165,762 165,833Valuation allowance (159,298) (158,851)Deferred tax assets (liabilities), net of valuation allowance, total $6,464 $6,982Net Operating Losses (“NOLs”) and Valuation AllowanceAt December 31, 2015, the Company had net NOLs for U.S. Federal tax purposes of approximately $314,463. This total includes approximately$16,584 of tax losses that were not absorbed by Monster Worldwide, Inc. ("Monster") on its consolidated U.S. Federal tax returns through the spin off of theCompany on April 1, 2003. NOLs expire at various dates through 2035. The NOL balance does not include a deduction in the amount of $5,222 attributableto stock options and restricted stock until such time as the Company recognizes the deferred tax asset associated with such deduction. The Company'sutilization of NOLs is subject to an annual limitation imposed by Section 382 of the Internal Revenue Code, which may limit our ability to utilize all of theexisting NOLs before the expiration dates. As of December 31, 2015, certain international subsidiaries had NOLs for local tax purposes of $100,978. With theexception of $95,908 of NOLs with an indefinite carry forward period as of December 31, 2015, these losses will expire at various dates through 2035, with$112 scheduled to expire during 2016. ASC 740-10-30-5 requires that a valuation allowance be established when it is more likely than not that all or a portion of a deferred tax asset will notbe realized. In making this assessment, management considers the level of historical taxable income, scheduled reversals of deferred tax liabilities, taxplanning strategies, and projected future taxable income. As of- 72 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)December 31, 2015, $150,832 of the valuation allowance relates to the deferred tax asset for NOLs, $125,785 of which is U.S. Federal and state, and $25,047of which is foreign, that management has determined will more likely than not expire prior to realization. The remaining valuation allowance of $8,466relates to deferred tax assets on U.S. and foreign temporary differences that management estimates will not be realized due to the Company's U.S. and foreigntax losses.Uncertain Tax Positions As of December 31, 2015 and 2014, the Company's unrecognized tax benefits, including interest and penalties, which would lower the Company’sannual effective income tax rate if recognized in the future, were as follows: As of December 31, 2015 2014Gross unrecognized tax benefits excluding interest and penalties $2,190 $2,634Less: amount presented as a reduction to a deferred tax asset 447 791Unrecognized tax benefits, excluding interest and penalties $1,743 $1,843Accrued interest and penalties 536 554Total unrecognized tax benefits that would impact the effective tax rate $2,279 $2,397The following table shows a reconciliation of the beginning and ending amounts of unrecognized tax benefits, exclusive of interest and penalties:Balance at January 1, 2015 $2,634Additions based on tax positions related to the current year 148Additions for tax positions of prior years —Reductions for tax positions of prior years —Settlements —Lapse of statute of limitations (385)Currency Translation (207)Balance at December 31, 2015 $2,190Estimated interest and penalties classified as part of the provision for income taxes in the Company’s Consolidated Statements of Operations for theyears ended December 31, 2015, 2014 and 2013 were as follows: Year ended December 31, 2015 2014 2013Expense for (benefit of) estimated interest and penalties related to unrecognized tax benefits $50 $(150) $108Based on information available as of December 31, 2015, it is reasonably possible that the total amount of unrecognized tax benefits could decrease inthe range of $200 to $400 over the next 12 months as a result of projected resolutions of global tax examinations and controversies and potential lapses ofthe applicable statutes of limitations.- 73 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)In many cases, the Company’s unrecognized tax benefits are related to tax years that remain subject to examination by the relevant tax authorities. Taxyears with NOLs remain open until such losses expire or the statutes of limitations for those years when the NOLs are used or expire. As of December 31,2015, the Company's open tax years remain subject to examination by the relevant tax authorities and currently under income tax examination wereprincipally as follows: YearEarliest tax years remain subject to examination by the relevant tax authorities: U.S. Federal 2012Other U.S. state and local jurisdictions 2011U.K. 2014Australia 2011Majority of other foreign jurisdictions 2010The Company believes that its tax reserves are adequate for all years subject to examination above.NOTE 8 – EARNINGS (LOSS) PER SHAREA reconciliation of the numerators and denominators of the basic and diluted earnings (loss) per share calculations were as follows: Year Ended December 31, 2015 2014 2013Earnings (loss) per share ("EPS"): EPS - basic and diluted Income (loss) from continuing operations $0.05 $(0.48) $(0.93)Income (loss) from discontinued operations 0.02 0.08 (0.01)Net income (loss) $0.07 $(0.40) $(0.94)EPS numerator - basic and diluted: Income (loss) from continuing operations $1,607 $(15,786) $(30,211)Income (loss) from discontinued operations, net of income taxes 722 2,592 (184)Net income (loss) $2,329 $(13,194) $(30,395)EPS denominator (in thousands): Weighted average common stock outstanding - basic 33,869 32,843 32,493Common stock equivalents: stock options and other stock-based awards (a) 215 — —Weighted average number of common stock outstanding - diluted 34,084 32,843 32,493(a)For the periods in which net losses are presented, the diluted weighted average number of shares of common stock outstanding did not differ fromthe basic weighted average number of shares of common stock outstanding because the effects of any potential common stock equivalents (seeNote 6 for further details on outstanding stock options, unvested restricted stock units and unvested restricted stock) were anti-dilutive andtherefore not included in the calculation of the denominator of dilutive earnings per share.- 74 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)The weighted average number of shares outstanding used in the computation of diluted net income (loss) per share for the years ended December 31,2015, 2014 and 2013 did not include the effect of the following potentially outstanding shares of common stock because the effect would have been anti-dilutive or market conditions have not been achieved: Year Ended December 31, 2015 2014 2013Unvested restricted stock 350,000 803,999 997,802Unvested restricted stock units — 119,940 115,869Stock options 206,000 756,800 800,350Total 556,000 1,680,739 1,914,021NOTE 9 – RESTRICTED CASHA summary of the Company’s restricted cash included in the accompanying Consolidated Balance Sheets as of December 31, 2015 and 2014 was asfollows: As of December 31, 2015 2014Included under the caption "Other assets": Collateral accounts$229 $618Rental deposits480 802Total amount under the caption "Other assets":$709 $1,420Included under the caption "Prepaid and other": Client guarantees$118 $52Other110 123Total amount under the caption "Prepaid and other"$228 $175Total restricted cash$937 $1,595Collateral accounts primarily include deposits held under a collateral trust agreement, which supports the Company’s workers’ compensation policy.The rental deposits with banks include amounts held as guarantees from subtenants in the U.K. Client guarantees were held in banks in Belgium as depositsfor various client projects. Other primarily includes bank guarantee for licensing in Switzerland.- 75 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)NOTE 10 – PROPERTY AND EQUIPMENT, NETAs of December 31, 2015 and 2014, property and equipment, net were as follows: As of December 31, 2015 2014Computer equipment$5,911 $8,806Furniture and equipment2,668 5,352Capitalized software costs17,946 25,228Leasehold and building improvements15,522 21,368 42,047 60,754Less: accumulated depreciation and amortization34,119 50,914Property and equipment, net$7,928 $9,840The Company had expenditures of approximately $513 and $1,006 for acquired property and equipment, mainly consisting of software development,fixtures, computer equipment and leasehold improvements, which had not been placed in service as of December 31, 2015 and 2014, respectively.Depreciation expense is not recorded for such assets until they are placed in service.Impairment of Long-Lived AssetsDuring the fourth quarter of 2015, the Company experienced continued declines in the operating results of certain markets. These events were deemedto be triggering events that required the Company to perform an impairment assessment with respect to long-lived assets, primarily property and equipment.With respect to these long-lived assets, the Company estimated future cash flows over their expected life, and determined whether, on an undiscounted basis,the expected cash flows exceeded their carrying value. When the assets' carrying amount exceeds their fair value, an impairment charge is recognized in theamount by which the carrying amount exceeds the fair value of the assets. The fair values of long-lived assets are based on the Company's own judgmentsabout the assumptions that market participants would use in pricing the asset and on observable market data, when available. These measurements areclassified as Level 3 within the fair value hierarchy. The impairment assessment indicated the Company's long-lived assets were not impaired.Non-Cash Capital ExpendituresThe Company has acquired certain computer equipment under capital lease agreements. The current portion of the capital lease obligations areincluded under the caption “Accrued expenses and other current liabilities” in the Consolidated Balance Sheets and the non-current portion of the capitallease obligations are included under the caption “Other non-current liabilities” in the Consolidated Balance Sheets as of December 31, 2015 and 2014. Asummary of the Company’s equipment acquired under capital lease agreements was as follows: As of December 31, 2015 2014Capital lease obligation, current$62 $77Capital lease obligation, non-current$229 $348The Company acquired $0 and $557 of property and equipment under capital lease agreements for the years ended December 31, 2015 and 2014,respectively. Capital expenditures for the year ended December 31, 2014 included $1,221 of landlord-funded tenant improvements for the Company's leasedproperties in Australia.- 76 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)NOTE 11 – GOODWILLThe following is a summary of the changes in the carrying value of the Company’s goodwill, which was included under the caption of Other Assets inthe accompanying Condensed Consolidated Balance Sheets, for the years ended December 31, 2015 and 2014. The goodwill is related to the Company’sacquisition of the businesses of Tong Zhi (Beijing) Consulting Service Ltd and Guangzhou Dong Li Consulting Service Ltd. Carrying Value 2015 2014Goodwill, January 1,$2,029 $2,078Currency translation(91) (49)Goodwill, December 31,$1,938 $2,029On October 1, 2015 and 2014, the Company applied ASU 2011-08, “Testing Goodwill for Impairment” and performed quantitative and qualitativeassessments, respectively, to determine whether it was more likely than not that the fair value of its China reporting unit was less than its carrying value. Atthe conclusion of its assessment, the Company determined the fair value of the reporting unit substantially exceeds its carrying value. As such, the Companydetermined that no impairment of goodwill had taken place. During the fourth quarter of 2015, the Company performed additional assessment with respect togoodwill and noted no negative triggering events. At the conclusion of its assessment, the Company determined that no impairment of goodwill existed in itsChina reporting unit as of December 31, 2015.NOTE 12 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIESAs of December 31, 2015 and 2014, the Company's accrued expenses and other current liabilities consisted of the following: December 31, 2015 2014Salaries, commissions and benefits $23,684 $34,390Sales, use and income taxes 6,096 8,492Fees for professional services 1,760 1,912Rent 1,218 1,519Deferred revenue 1,722 1,167Other accruals 5,864 6,585Total accrued expenses and other liabilities $40,344 $54,065NOTE 13 – BUSINESS REORGANIZATION EXPENSESThe Company initiated and executed certain strategic actions requiring business reorganization expenses ("2015 Exit Plan"). Business exit costsassociated with the 2015 Exit Plan primarily consisted of employee termination benefits, lease termination payments and costs for elimination of contractsfor certain discontinued services and locations.The Board previously approved other reorganization plans through 2014 (“Previous Plans”) to streamline the Company’s support operations andincluded actions to reduce support functions to match them to the scale of the business, to exit underutilized properties and to eliminate contracts for certaindiscontinued services. These actions resulted in costs for lease termination payments, employee termination benefits and contract cancellations.For the year ended December 31, 2015, restructuring charges associated with these initiatives primarily included employee separation costs for 63positions in Europe and the Americas and lease termination payments for rationalized offices in the U.S. and Europe under the 2015 Exit Plan and PreviousPlans.- 77 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)Business reorganization expenses from continuing operations for the years ended December 31, 2015, 2014 and 2013 for the 2015 Exit Plan and thePrevious Plans, collectively, were as follows: Year Ended December 31, 2015 2014 2013Business reorganization expenses from continuing operations Previous Plans $3,768 $3,789 $5,4402015 Plan 2,060 — —Total business reorganization expenses from continuing operations $5,828 $3,789 $5,440The following table contains amounts for Changes in Estimate, Additional Charges, and Payments related to prior restructuring plans that were incurredor recovered during the year ended December 31, 2015. The amounts for Changes in Estimate and Additional Charges are classified as businessreorganization expenses in the Company’s Consolidated Statements of Operations. Amounts in the “Payments” column represent primarily the cashpayments associated with the reorganization plans. Changes in the accrued business reorganization expenses for the year ended December 31, 2015 were asfollows: December 31, 2014 Changes inEstimate AdditionalCharges Payments December 31, 2015Lease termination payments$1,992 $790 $1,877 $(1,689) $2,970Employee termination benefits1,772 (48) 2,157 (2,695) 1,186Other associated costs— 147 905 (844) 208Total$3,764 $889 $4,939 $(5,228) $4,364 Lease Termination PaymentsThe business reorganization expenses incurred for lease termination for the years ended December 31, 2015, 2014 and 2013 by segment were asfollows:Lease termination payments for the year endedDecember 31, Hudson Hudson Hudson Americas Asia Pacific Europe Corporate Total2015 $503 $625 $1,358 $181 $2,6672014 $91 $771 $40 $— $9022013 $(22) $445 $713 $— $1,136- 78 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)Employee Termination BenefitsThe business reorganization expenses incurred for employee termination benefits for the years ended December 31, 2015, 2014 and 2013 by segmentwere as follows:Employee termination benefits for the year endedDecember 31, Hudson Hudson Hudson Americas Asia Pacific Europe Corporate Total2015 $350 $(2) $792 $969 $2,1092014 $3 $510 $1,285 $967 $2,7652013 $470 $505 $2,120 $790 $3,885Other Associated CostsOther associated business reorganization expenses incurred for contract cancellation costs and other professional fees for the years ended December 31,2015, 2014 and 2013 by segment were as follows:Other Associated Costs for the year endedDecember 31, Hudson Hudson Hudson Americas Asia Pacific Europe Corporate Total2015 $255 $47 $733 $17 $1,0522014 $— $40 $82 $— $1222013 $— $37 $381 $— $41814 – COMMITMENTS AND CONTINGENCIESLeasesThe Company leases facilities and equipment under operating leases that expire at various dates through 2027. Some of the operating leases provide forincreasing rents over the term of the lease. Total rent expense under these leases is recognized ratably over the lease terms. As of December 31, 2015, futureminimum lease commitments under non-cancelable operating leases, which will be expensed as primarily in office and general expenses, were as follows:2016 $17,4762017 13,7172018 12,1502019 8,9402020 5,443Thereafter 2,584 $60,310Rent and related expenses for operating leases of facilities and equipment recorded under the caption “Office and general” in the accompanyingConsolidated Statements of Operations were $11,091, $14,834, and $16,801 for the years ended December 31, 2015, 2014 and 2013, respectively. Futureminimum lease commitments have not been offset by expected future minimum sublease rental income of $5,506, due in the future through 2020 undersubleases with third parties. Commitments and sublease rentals based in currencies other than U.S. dollars were translated using exchange rates as ofDecember 31, 2015.- 79 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)Asset Retirement Obligations The Company has certain asset retirement obligations that are primarily the result of legal obligations for the removal of leasehold improvements andrestoration of premises to their original condition upon termination of leases. The current portion of asset retirement obligations are included under thecaption “Accrued expenses and other current liabilities” in the Consolidated Balance Sheets. The non-current portion of asset retirement obligations areincluded under the caption “Other non-current liabilities” in the Consolidated Balance Sheets. The Company’s asset retirement obligations that are includedin the Consolidated Balance Sheets as of December 31, 2015 and 2014 were as follows: As of December 31, 2015 2014Current portion of asset retirement obligations$142 $25Non-current portion of asset retirement obligations1,820 2,436Total asset retirement obligations$1,962 $2,461Consulting, Employment and Non-compete AgreementsThe Company has entered into various consulting, and employment agreements with certain key members of management. These agreements generally(i) are one year in length, (ii) contain restrictive covenants, (iii) under certain circumstances, provide for compensation and subject to providing the Companywith a release, severance payments, and (iv) are automatically renewed annually unless either party gives sufficient notice of termination.Litigation and Complaints The Company is subject, from time to time, to various claims, lawsuits, contracts disputes and other complaints from, for example, clients, candidates,suppliers, landlords for both leased and subleased properties, former and current employees, and regulators or tax authorities arising in the ordinary course ofbusiness. The Company routinely monitors claims such as these, and records provisions for losses when the claim becomes probable and the amount due isestimable. Although the outcome of these claims cannot be determined, the Company believes that the final resolution of these matters will not have amaterial adverse effect on the Company’s financial condition, results of operations or liquidity.For matters that have reached the threshold of probable and estimable, the Company has established reserves for legal, regulatory and other contingentliabilities. The Company’s reserves were $109 and $376 as of December 31, 2015 and 2014, respectively.Potential Costs Associated with TerminationThe Company has incurred compensation and benefits obligations to its former Chairman and Chief Executive Officer, Manuel Marquez, under hisemployment agreement in connection with the Company providing Mr. Marquez notice of non-renewal of his employment agreement, which is treated as atermination of his employment without cause. The Company has accrued $665 as of December 31, 2015 in connection with compensation and benefits Mr.Marquez is entitled to upon a termination without cause. Mr. Marquez does not agree with this treatment of compensation and benefits under his employmentagreement and, on August 13, 2015, filed an arbitration claim against the Company for additional amounts of up to approximately $2,000. The Companydoes not agree with Mr. Marquez’s interpretation of the employment agreement and intends to vigorously defend against such claim for additional amounts.- 80 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)NOTE 15 – CREDIT AGREEMENTSReceivables Finance Agreement with Lloyds Bank Commercial Finance Limited and Lloyds Bank PLCOn August 1, 2014, the Company’s U.K. subsidiary (“U.K. Borrower”) entered into a receivables finance agreement for an asset-based lending fundingfacility (the “Lloyds Agreement”) with Lloyds Bank PLC and Lloyds Bank Commercial Finance Limited (together, “Lloyds”). The Lloyds Agreementprovides the U.K. Borrower with the ability to borrow up to $22,104 (£15,000). Extensions of credit are based on a percentage of the eligible accountsreceivable less required reserves from the Company's U.K. operations. The initial term is two years with renewal periods every three months thereafter.Borrowings under this facility are secured by substantially all of the assets of the U.K. Borrower. The credit facility under the Lloyds Agreement contains twotranches. The first tranche is a revolving facility based on the billed temporary contracting and permanent recruitment activities in the U.K. operation("Lloyds Tranche A"). The borrowing limit of Lloyds Tranche A is $17,683 (£12,000) based on 83% of eligible billed temporary contracting and permanentrecruitment receivables. The second tranche is a revolving facility that is based on the unbilled work-in-progress (as defined under the receivables financeagreement) activities in the U.K. operation ("Lloyds Tranche B"). The borrowing limit of Lloyds Tranche B is $4,421 (£3,000) based on 75% of eligible work-in-progress from temporary contracting and 25% of eligible work-in-progress from the permanent recruitment. For both tranches, borrowings may be madewith an interest rate based on a base rate as determined by Lloyds Bank PLC, based on the Bank of England base rate, plus 1.75%.The Lloyds Agreement contains various restrictions and covenants including (1) that true credit note dilution may not exceed 5%, measured at audit ona regular basis; (2) debt turn may not exceed 55 days over a three month rolling period; (3) dividends by the U.K. Borrower to the Company are restricted tothe value of post tax profits; and (4) at the end of each month, there must be a minimum excess availability of $2,947 (£2,000).The details of the Lloyds Agreement as of December 31, 2015 were as follows: December 31, 2015Borrowing capacity $7,202Less: outstanding borrowing —Additional borrowing availability $7,202Interest rates on outstanding borrowing 2.25%The Company was in compliance with all financial covenants under the Lloyds Agreement as of December 31, 2015.Loan and Security Agreement with Siena Lending Group LLCUpon the sale of US IT business, the Company exercised its right to terminate its loan and security agreement with Siena Lending Group LLC ("Siena").The Company paid Siena a termination fee of $161 recognized as a reduction to the gain on sale of the US IT business and $417 of cash to secure anoutstanding letter of credit for a real estate lease. Siena will return the restricted cash to the Company once the outstanding letter of credit is returned to Siena.Facility Agreement with National Australia Bank LimitedOn October 30, 2015, Hudson Global Resources (Aust) Pty Limited (“Hudson Australia”) and Hudson Global Resources (NZ) Limited (“Hudson NewZealand”), both subsidiaries of Hudson Global, Inc., entered into a Finance Agreement, dated as of October 27, 2015 (the “Finance Agreement”), withNational Australia Bank Limited (“NAB”), a NAB Corporate Receivables Facility Agreement, dated as of October 27, 2015 (the “Australian ReceivablesAgreement”), with NAB and a BNZ Corporate Receivables Facility Agreement, dated as of October 27, 2015 (the “New Zealand Receivables Agreement”),with Bank of New Zealand (“BNZ”). - 81 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)The Finance Agreement provides a bank guarantee facility of up to $2,186 (AUD3,000) for Hudson Australia and Hudson New Zealand. The FinanceAgreement matures and becomes due and payable on October 27, 2018. A fee equal to 1.5% per annum will be charged on each bank guarantee issued underthe Finance Agreement. The Finance Agreement bears a fee, payable semiannually in arrears, equal to 0.3% per annum of NAB’s commitment under theFinance Agreement.The Australian Receivables Agreement provides a receivables facility of up to $18,218 (AUD25,000) for Hudson Australia, which is based on an agreedpercentage of eligible accounts receivable, and of which up to $2,915 (AUD4,000) may be used to support the working capital requirements of operations inChina, Hong Kong and Singapore. The Australian Receivables Agreement does not have a stated maturity date and can be terminated by Hudson Australia orNAB upon 90 days written notice. Borrowings under the Australian Receivables Agreement may be made with an interest rate based on a market rate plus amargin of 1.5% per annum. The Australian Receivable Agreement bears a fee, payable monthly in advance, equal to $5 (AUD6) per month.The New Zealand Receivables Agreement provides a receivables facility of up to $3,417 (NZD5,000) for Hudson New Zealand, which is based on anagreed percentage of eligible accounts receivable. The New Zealand Receivables Agreement does not have a stated maturity date and can be terminated byHudson New Zealand or BNZ upon 90 days written notice. Borrowings under the New Zealand Receivables Agreement may be made with an interest ratebased on a market rate. The New Zealand Receivables Agreement bears a fee, payable monthly in advance, equal to $1 (NZD1) per month.The details of the NAB Finance Agreement as of December 31, 2015 were as follows: December 31, 2015Finance Agreement: Borrowing capacity$2,186Less: outstanding borrowing—Additional borrowing availability$2,186Interest rates on outstanding borrowing2.10% Australian Receivables Agreement: Borrowing capacity$12,755Less: outstanding borrowing(2,368)Additional borrowing availability$10,387Interest rates on outstanding borrowing3.60% New Zealand Receivables Agreement: Borrowing capacity$1,688Less: outstanding borrowing—Additional borrowing availability$1,688Interest rates on outstanding borrowing4.88%Amounts owing under the Finance Agreement, the Australian Receivables Agreement and the New Zealand Receivables Agreement are secured bysubstantially all of the assets of Hudson Australia and Hudson New Zealand. Each of the Finance Agreement, the Australian Receivables Agreement and theNew Zealand Receivables Agreement contains various restrictions and covenants applicable to the Obligors, including: a requirement that the Obligorsmaintain (1) a minimum Fixed Charge Coverage Ratio (as defined in the NAB Facility Agreement) of 1.50x as of the last day of each calendar quarter; and (2)a minimum Receivables Ratio (as defined by the NAB Facility Agreement) of 1.20x.- 82 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)The Company was in compliance with all financial covenants under the NAB Facility Agreement as of December 31, 2015.Credit Agreement with Westpac Banking Corporation Upon entering into the Finance agreement with NAB on October 30, 2015, the Company exercised its right to terminate its credit agreement withWestPac Banking Corp ("Westpac"). As of December 31, 2015 the only remaining obligation under the Westpac credit agreement was $1,765 of financialguarantees. The outstanding financial guarantees will be transferred to the NAB Finance Agreement in 2016.Other Credit AgreementsThe Company also has lending arrangements with local banks through its subsidiaries in Belgium and Singapore. The Belgium subsidiary had a $1,086(€1,000) overdraft facility as of December 31, 2015. Borrowings under the Belgium lending arrangement may be made using an interest rate based on the onemonth EURIBOR plus a margin, and the interest rate under each of these arrangements was 2.75% as of December 31, 2015. The lending arrangement inBelgium has no expiration date and can be terminated with a 15-day notice period. In Singapore, the Company’s subsidiary can borrow up to $141 (SGD200)for working capital purposes. Interest on borrowings under this overdraft facility is based on the Singapore Prime Rate plus a margin of 1.75%, which was6.0% on December 31, 2015. The Singapore overdraft facility expires annually each August but can be renewed for one year periods at that time. Theoutstanding borrowings under the Belgium and Singapore lending agreements were $0 as of December 31, 2015.The average monthly outstanding borrowings for the credit agreements above was $3,989 for the year ended December 31, 2015. The weighted averageinterest rate on all outstanding borrowings for the year ended December 31, 2015 was 3.42%. The Company continues to use the aforementioned credit to support its ongoing global working capital requirements, capital expenditures and othercorporate purposes and to support letters of credit. Letters of credit and bank guarantees are used primarily to support office leases. NOTE 16 – STOCKHOLDERS' EQUITYOn July 30, 2015, the Company announced that its Board of Directors authorized the repurchase of up to $10,000 of the Company's common stock.The Company intends to make purchases from time to time as market conditions warrant. This authorization does not expire. Through December 31, 2015,the Company had repurchased 527,634 shares in the open market for a total cost of $1,386.NOTE 17 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)Accumulated other comprehensive income (loss), net of tax, consisted of the following: December 31, 2015 2014Foreign currency translation adjustments $10,159 $13,485Pension plan obligations 133 128Accumulated other comprehensive income (loss) $10,292 $13,613As a result of the sale of the Netherlands business and substantially complete liquidation of certain foreign owned entities, the net foreign currencytranslation loss transferred from accumulated other comprehensive income and included in determining net income (loss) was $450 for year endedDecember 31, 2015. No such adjustment was recorded in the prior year. See Note 3 and 4 regarding the substantially complete liquidation of certain foreignowned entities and the sale of the Netherlands business.For the years ended December 31, 2015 and 2014, the amounts of accumulated other comprehensive income (loss), which primarily pertained topension plan obligations, were $19 and $0, respectively, and reclassified to the Consolidated Statement of Operations under the caption "Salaries andrelated" expenses.- 83 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)NOTE 18 – SHELF REGISTRATION AND STOCKHOLDER RIGHTS PLANAcquisition Shelf Registration StatementThe Company has a shelf registration on file with the SEC to enable it to issue up to 1,350,000 shares of its common stock from time to time inconnection with acquisitions of businesses, assets or securities of other companies, whether by purchase, merger or any other form of acquisition or businesscombination. If any shares are issued using this shelf registration, the Company will not receive any proceeds from these offerings other than the assets,businesses or securities acquired. As of December 31, 2015, all of the 1,350,000 shares were available for issuance. Stockholder Rights PlanOn February 5, 2005, the Board adopted a Rights Agreement between the Company and a rights agent (the "2005 Rights Agreement") and declared adividend of one preferred share purchase right (a “Right”) for each outstanding share of common stock of the Company. The dividend was paid upon theclose of business on February 28, 2005 to the stockholders of record on that date. Each Right entitles the registered holder to purchase from the Company oneone-hundredth of a share of Series A Junior Participating Preferred Stock, par value $0.001 (“Preferred Shares”), of the Company, at a price of $8.50 per oneone-hundredth of a Preferred Share, subject to adjustment. On January 15, 2015, the Board approved an amendment and restatement of the 2005 RightsAgreement by adopting an Amended and Restated Rights Agreement (the “Rights Agreement”) between the Company and a rights agent. The Board adoptedthe Rights Agreement in an effort to protect stockholder value by attempting to diminish the risk that the Company’s ability to use its net operating losses(“NOLs”) to reduce potential future federal income tax obligations may become substantially limited. If any person becomes a 4.99% or more stockholder ofthe Company, then each Right (subject to certain limitations) will entitle its holder to purchase, at the Right's then current exercise price, a number of sharesof common stock of the Company or of the acquirer having a market value at the time of twice the Right's per share exercise price. The Company's Board ofDirectors may redeem the Rights for $0.001 per Right at any time prior to the time when the Rights become exercisable. The Rights will expire on the earliestof (i) January 15, 2018, (ii) the time at which the Rights are redeemed as described above, (iii) the time at which the Rights are exchanged as described in theRights Agreement, (iv) the repeal of Section 382 of the Internal Revenue Code if the Board determines that the Rights Agreement is no longer necessary forthe preservation of the Company’s NOLs, and (v) the beginning of a taxable year of the Company to which the Board determines that no NOLs may be carriedforward.- 84 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)NOTE 19 – SEGMENT AND GEOGRAPHIC DATASegment ReportingThe Company operates in three reportable segments: the Hudson regional businesses of Hudson Americas, Hudson Asia Pacific, and Hudson Europe.Corporate expenses are reported separately from the three reportable segments and pertain to certain functions, such as executive management, corporategovernance, marketing, human resources, accounting, administration, tax and treasury, and have been allocated to the reportable segments to the extentwhich the costs are attributable to the reportable segments. Segment information is presented in accordance with ASC 280, “Segments Reporting.” Thisstandard is based on a management approach that requires segmentation based upon the Company’s internal organization and disclosure of revenue andcertain expenses based upon internal accounting methods. The Company’s financial reporting systems present various data for management to run thebusiness, including internal profit and loss statements prepared on a basis not consistent with U.S. GAAP. Accounts receivable, net and long-lived assets arethe only significant assets separated by segment for internal reporting purposes. HudsonAmericas HudsonAsia Pacific HudsonEurope Corporate Inter-segmentelimination TotalFor the Year Ended December 31, 2015 Revenue, from external customers$28,627 $219,391 $215,179 $— $— $463,197Inter-segment revenue41 — 498 — (539) —Total revenue$28,668 $219,391 $215,677 $— $(539) $463,197Gross margin, from external customers$16,111 $89,682 $81,917 $— $— $187,710Inter-segment gross margin25 (477) 451 — 1 —Total gross margin$16,136 $89,205 $82,368 $— $1 $187,710Gain (loss) on sale and exit of businesses$15,918 $— $3,919 $— $— $19,837Business reorganization expenses (recovery)$1,108 $669 $2,883 $1,168 $— $5,828Impairment of long-lived assets$— $— $— $— $— $—EBITDA (loss) (a)$13,354 $2,851 $(207) $(9,178) $— $6,820Depreciation and amortization604 1,951 802 488 — 3,845Intercompany interest income (expense), net— — (526) 526 — —Interest income (expense), net(342) (276) (94) (10) — (722)Income (loss) from continuing operations before income taxes$12,408 $624 $(1,629) $(9,150) $— $2,253Provision for (benefit from) income taxes$58 $776 $(176) $(12) $— $646As of December 31, 2015 Accounts receivable, net$3,155 $29,824 $29,441 $— $— $62,420Long-lived assets, net of accumulated depreciation and amortization$36 $7,382 $1,859 $674 $— $9,951Total assets$7,766 $49,246 $53,557 $14,380 $— $124,949- 85 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts) HudsonAmericas HudsonAsia Pacific HudsonEurope Corporate Inter-segmentelimination TotalFor the Year Ended December 31, 2014 Revenue, from external customers$50,146 $246,873 $284,173 $— $— $581,192Inter-segment revenue60 — 198 — (258) —Total revenue$50,206 $246,873 $284,371 $— $(258) $581,192Gross margin, from external customers$20,757 $93,014 $109,074 $— $— $222,845Inter-segment gross margin35 (143) 108 — — —Total gross margin$20,792 $92,871 $109,182 $— $— $222,845Gain (loss) on sale and exit of businesses$— $— $— $— $— $—Business reorganization expenses (recovery)$94 $1,322 $1,407 $966 $— $3,789Impairment of long-lived assets$— $314 $348 $— $— $662EBITDA (loss) (a)$117 $(890) $(1,187) $(9,765) $— $(11,725)Depreciation and amortization485 3,287 1,247 540 — 5,559Intercompany interest income (expense), net— — (439) 439 — —Interest income (expense), net(90) (199) (37) (335) — (661)Income (loss) from continuing operations before income taxes$(458) $(4,376) $(2,910) $(10,201) $— $(17,945)Provision for (benefit from) income taxes(2,201) 11 35 (4) (2,159)As of December 31, 2014 Accounts receivable, net$6,695 $26,745 $40,639 $— $— $74,079Long-lived assets, net of accumulated depreciation and amortization$860 $8,227 $2,171 $584 $— $11,842Total assets$10,553 $54,141 $65,105 $9,873 $— $139,672 HudsonAmericas HudsonAsia Pacific HudsonEurope Corporate Inter-segmentelimination TotalFor the Year Ended December 31, 2013 Revenue, from external customers$51,857 $232,748 $277,967 $— $— $562,572Inter-segment revenue(2) — 107 — (105) —Total revenue$51,855 $232,748 $278,074 $— $(105) $562,572Gross margin, from external customers$18,692 $87,162 $103,575 $— $— $209,429Inter-segment gross margin(4) (71) 87 — (12) —Total gross margin$18,688 $87,091 $103,662 $— $(12) $209,429Gain (loss) on sale and exit of businesses$— $— $— $— $— $—Business reorganization expenses (recovery)$448 $989 $3,214 $789 $— $5,440Impairment of long-lived assets$— $257 $1,079 $— $— $1,336EBITDA (loss) (a)$(717) $(3,227) $(9,197) $(7,330) $— $(20,471)Depreciation and amortization494 3,192 1,592 644 — 5,922Intercompany interest income (expense), net— (1,254) (532) 1,784 2 —Interest income (expense), net16 (183) 27 (414) — (554)Income (loss) from continuing operations before income taxes$(1,195) $(7,856) $(11,294) $(6,604) $2 $(26,947)Provision for (benefit from) income taxes$61 $3,489 $(415) $129 $— $3,264As of December 31, 2013 Accounts receivable, net$5,923 $24,647 $45,897 $— $— $76,467Long-lived assets, net of accumulated depreciation and amortization$604 $9,179 $3,494 $763 $— $14,040Total assets$18,338 $55,234 $74,877 $10,380 $— $158,829- 86 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)(a)SEC Regulation S-K 229.10(e)1(ii)(A) defines EBITDA as earnings before interest, taxes, depreciation and amortization. EBITDA is presented toprovide additional information to investors about the Company's operations on a basis consistent with the measures that the Company uses tomanage its operations and evaluate its performance. Management also uses this measurement to evaluate working capital requirements. EBITDAshould not be considered in isolation or as a substitute for operating income and net income prepared in accordance with U.S. GAAP or as a measureof the Company's profitability.Geographic Data ReportingA summary of revenues for the years ended December 31, 2015, 2014 and 2013 and long-lived assets and net assets by geographic area as ofDecember 31, 2015, 2014 and 2013 were as follows: Information by geographic regionUnitedKingdom Australia UnitedStates ContinentalEurope OtherAsia Pacific OtherAmericas TotalFor the Year Ended December 31, 2015 Revenue (a)$154,931 $159,539 $27,965 $60,248 $59,852 $662 $463,197For the Year Ended December 31, 2014 Revenue (a)$181,155 $184,853 $49,375 $103,018 $62,020 $771 $581,192For the Year Ended December 31, 2013 Revenue (a)$180,084 $169,998 $50,859 $97,883 $62,750 $998 $562,572As of December 31, 2015 Long-lived assets, net (b)$1,707 $4,115 $718 $144 $3,267 $— $9,951Net assets$17,371 $9,920 $13,467 $7,176 $13,261 $(15) $61,180As of December 31, 2014 Long-lived assets, net (b)$1,834 $5,404 $1,429 $330 $2,822 $23 $11,842Net assets$18,894 $13,913 $7,255 $9,366 $9,772 $57 $59,257As of December 31, 2013 Long-lived assets, net (b)$2,891 $5,838 $1,337 $594 $3,341 $39 $14,040Net assets$21,479 $18,938 $15,819 $7,169 $10,791 $189 $74,385 (a)Revenue by geographic region disclosed above is net of any inter-segment revenue and, therefore, represents only revenue from external customersaccording to the location of the operating subsidiary.(b)Comprised of property and equipment and goodwill, net of accumulated depreciation and amortization. Corporate assets are included in the UnitedStates.- 87 - IndexHUDSON GLOBAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except share and per share amounts)NOTE 20 – SELECTED QUARTERLY FINANCIAL DATA (unaudited) For The Year Ended December 31, 2015 Firstquarter Second quarter Thirdquarter Fourth quarterRevenue $124,317 $122,743 $110,028 $106,109Gross margin $47,904 $50,222 $45,145 $44,439Operating income (loss) $(6,716) $13,643 $(3,826) $140Income (loss) from continuing operations $(6,654) $12,774 $(2,029) $(2,484)Income (loss) from discontinued operations $(184) $1,103 $(55) $(142)Net income (loss) $(6,838) $13,877 $(2,084) $(2,626)Basic and diluted earnings (loss) per share from continuingoperations $(0.20) $0.38 $(0.06) $(0.07)Basic and diluted earnings (loss) per share from discontinuedoperations $(0.01) $0.03 $— $—Basic and diluted earnings (loss) per share $(0.21) $0.41 $(0.06) $(0.08)Basic weighted average shares outstanding (in thousands) 33,053 33,525 34,687 34,274Diluted weighted average shares outstanding (in thousands) 33,053 34,007 34,687 34,274Common stock equivalents and outstanding stock options excludedfrom the calculation of diluted earnings (loss) per share (inthousands) 1,903 979 1,124 886 For The Year Ended December 31, 2014 Firstquarter Second quarter Thirdquarter Fourth quarterRevenue $144,167 $151,070 $149,278 $136,677Gross margin $54,029 $59,871 $55,687 $53,258Operating income (loss) $(3,374) $(2,865) $(5,113) $(6,134)Income (loss) from continuing operations $(4,112) $(3,565) $(4,570) $(3,539)Income (loss) from discontinued operations $(432) $(809) $(2,449) $6,282Net income (loss) $(4,544) $(4,374) $(7,019) $2,743Basic and diluted earnings (loss) per share from continuingoperations $(0.13) $(0.11) $(0.14) $(0.11)Basic and diluted earnings (loss) per share from discontinuedoperations $(0.01) $(0.02) $(0.07) $0.19Basic and diluted earnings (loss) per share $(0.14) $(0.13) $(0.21) $0.08Basic and diluted weighted average shares outstanding (inthousands) 32,641 32,752 32,910 32,995Common stock equivalents and outstanding stock options excludedfrom the calculation of diluted earnings (loss) per share (inthousands) 1,274 1,207 1,176 1,681Earnings (loss) per share calculations for each quarter include the weighted average effect for the quarter; therefore, the sum of quarterly earnings (loss)per share amounts may not equal year-to-date earnings (loss) per share amounts, which reflect the weighted average effect on a year-to-date basis. - 88 - ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURESNone.ITEM 9A. CONTROLS AND PROCEDURESDisclosure Controls and Procedures The Company’s management, with the participation of the Company’s Chief Executive Officer and its Chief Financial Officer, has conducted anevaluation of the design and operation of the Company’s disclosure controls and procedures, as such term is defined under Rule 13a-15(e) under theSecurities Exchange Act of 1934, as amended. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concludedthat the Company’s disclosure controls and procedures were effective as of December 31, 2015.Management's Annual Report on Internal Control Over Financial ReportingThe report of management required under this Item 9A is contained in Item 8 of this Annual Report on Form 10-K under the caption “Management'sAnnual Report on Internal Control Over Financial Reporting.”Report of Independent Registered Public Accounting FirmThe audit report required under this Item 9A is contained in Item 8 of this Annual Report on Form 10-K under the caption “Report of IndependentRegistered Public Accounting Firm.”Changes in Internal Control Over Financial Reporting There were no changes in the Company’s internal control over financial reporting that occurred during the three months ended December 31, 2015 thathave materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.ITEM 9B. OTHER INFORMATIONNone. - 89 - PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe information included under the captions “Proposal 1: Election of Directors,” “Board of Directors and Corporate Governance” and “Section 16(a)Beneficial Ownership Reporting Compliance” in the Company's definitive proxy statement, which is expected to be filed pursuant to Regulation 14A within120 days following the end of the fiscal year covered by this report (the “Proxy Statement”), is hereby incorporated by reference. The information required byItem 10 with respect to our Executive Officers is included in Part I of this Annual Report on Form 10-K.We have adopted a Code of Business Conduct and Ethics that applies to all of our employees and a Code of Ethics for the Chief Executive Officer andthe Senior Financial and Accounting Officers. We have posted a copy of the Code of Business Conduct and Ethics and the Code of Ethics on our website atwww.hudson.com. The Code of Business Conduct and Ethics and the Code of Ethics are also available in print to any stockholder who requests them inwriting from the Corporate Secretary at 1325 Avenue of the Americas, 12th Floor, New York, New York 10019. We intend to satisfy the disclosurerequirements under Item 5.05 of Form 8-K regarding amendments to, or waivers from, our Code of Ethics by posting such information on our website atwww.hudson.com. We are not including the information contained on our website as part of, or incorporating it by reference into, this report.ITEM 11. EXECUTIVE COMPENSATIONThe information required in Item 11 is incorporated by reference to the information in the Proxy Statement under the captions “DirectorCompensation,” “Compensation Discussion and Analysis,” “Compensation Committee Report,” “Executive Compensation” and “Compensation Policiesand Practices and Risk.”ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERSThe information required in Item 12 is incorporated by reference to the information in the Proxy Statement under the caption “Principal Stockholders.”Equity Compensation Plan InformationThe following table presents information on the Company's equity compensation plans as of December 31, 2015. Number of shares to beissued uponexercise ofoutstandingoptions Weighted averageexerciseprice of outstandingoptions Number of sharesremaining availablefor future issuanceunder equity compensation plans(excluding sharesreflected inColumn A) A B C Equity Compensation Plans approved by stockholders: Long Term Incentive Plan 156,000 $9.94 —(1)2009 Incentive Stock and Awards Plan 50,000 2.49 792,326(1)Employee Stock Purchase Plan — — 116,329(2)Total 206,000 $8.13 908,655 (1)Excludes 680,000 shares of unvested restricted common stock previously issued under the Hudson Global, Inc. Long Term Incentive Planand 2009 Incentive Stock and Awards Plan.(2)The Company suspended the Hudson Global, Inc. Employee Stock Purchase Plan effective January 1, 2009.- 90 - ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEThe information required in Item 13 is incorporated by reference to the information in the Proxy Statement under the captions “Board of Directors andCorporate Governance-Independent Directors” and “Board of Directors and Corporate Governance-Policies and Procedures Regarding Related PersonTransactions.”ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICESThe information required in Item 14 is incorporated by reference to the information in the Proxy Statement under the caption “Ratification of theAppointment of KPMG LLP as Independent Registered Public Accounting Firm.”- 91 - PART IVITEM 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES1. Financial statements - The following financial statements and the reports of independent registered public accounting firm are contained in Item 8. Page Reports of Independent Registered Public Accounting Firm 49Consolidated Statements of Operations For The Years Ended December 31, 2015, 2014 and 2013 51Consolidated Statements of Comprehensive Income (Loss) For The Years Ended December 31, 2015, 2014 and 2013 52Consolidated Balance Sheets As Of December 31, 2015 and 2014 53Consolidated Statements of Cash Flows For The Years Ended December 31, 2015, 2014 and 2013 54Consolidated Statement of Stockholders’ Equity For The Years Ended December 31, 2015, 2014 and 2013 55Notes to Consolidated Financial Statements 562. Financial statement schedulesSchedule I - Condensed financial information of the registrantSchedule II - Valuation and qualifying accounts and reservesAll other schedules are omitted since the required information is not present, or is not present in amounts sufficient to require submission of theschedule, or because the information required is included in the consolidated financial statements and the notes thereto.3. Exhibits - The exhibits listed in the accompanying index to exhibits are filed as part of this Annual Report on Form 10-K. - 92 - SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANTHUDSON GLOBAL, INC.CONDENSED STATEMENTS OF OPERATIONS (PARENT COMPANY ONLY)(in thousands) Year Ended December 31, 2015 2014 2013Operating expenses: Selling, general and administrative expenses $13,327 $16,948 $15,953Depreciation and amortization 488 541 645Business reorganization expenses 1,168 967 790Operating loss (14,983) (18,456) (17,388)Other income (expense): Interest, net 516 103 105Corporate costs allocation and other, net 5,318 8,150 9,412Income (loss) from parent before provision for income taxes (9,149) (10,203) (7,871)Provision for (benefit from) income taxes for parent company (12) (4) 2Equity in earnings (losses) of subsidiaries, net of income taxes 11,466 (2,995) (22,522)Net income (loss) $2,329 $(13,194) $(30,395) See notes to condensed financial statements.- 93 - HUDSON GLOBAL, INC.CONDENSED BALANCE SHEETS (PARENT COMPANY ONLY)(in thousands) December 31, 2015 2014ASSETS Current assets: Cash and cash equivalents $13,025 $7,006Prepaid and other 196 1,366Total current assets 13,221 8,372Property and equipment, net 674 584Investment in and advances to/from subsidiaries 50,770 54,785Other assets 485 917Total assets $65,150 $64,658 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable, accrued expenses and other current liabilities $3,494 $4,937Total current liabilities 3,494 4,937Other non-current liabilities 476 464Total liabilities 3,970 5,401Stockholders’ equity 61,180 59,257Total liabilities and stockholders' equity $65,150 $64,658 See notes to condensed financial statements.- 94 - HUDSON GLOBAL, INC.CONDENSED STATEMENTS OF CASH FLOWS (PARENT COMPANY ONLY)(in thousands) For the Years Ended December 31, 2015 2014 2013Cash flows from operating activities: Net income (loss) $2,329 $(13,194) $(30,395)Adjustments to reconcile net income (loss) to net cash provided by (used in) operatingactivities: Dividends received from subsidiaries 7,468 — 2,341Non-cash (income) losses from subsidiaries, net of taxes (11,466) 2,995 22,522Depreciation and amortization 488 541 645Stock-based compensation 637 405 953Other, net — 248 368Changes in operating assets and liabilities: (Increase) decrease in prepaid and other assets 1,921 (744) 144(Increase) decrease in due from subsidiaries 14,503 11,910 10,409Increase (decrease) in accounts payable, accrued expenses and other liabilities (1,269) 837 (1,597)Increase (decrease) in accrued business reorganization expenses (120) 793 134Net cash provided by (used in) operating activities 14,491 3,791 5,524Cash flows from investing activities: Capital expenditures (897) — (368)Advances to and investments in subsidiaries, net (5,945) (4,126) (6,673)Net cash provided by (used in) investing activities (6,842) (4,126) (7,041)Cash flows from financing activities: Borrowings under credit facility — 22,081 514Repayments under credit facility — (22,081) (514)Purchase of treasury stock (1,386) — —Purchase of restricted stock from employees (244) (129) (488)Net cash provided by (used in) financing activities (1,630) (129) (488)Net increase (decrease) in cash and cash equivalents 6,019 (464) (2,005)Cash and cash equivalents, beginning of the period 7,006 7,470 9,475Cash and cash equivalents, end of the period $13,025 $7,006 $7,470 See notes to condensed financial statements.- 95 - HUDSON GLOBAL, INC.NOTES TO CONDENSED FINANCIAL STATEMENTS(in thousands)NOTE 1 - BASIS OF PRESENTATIONHudson Global, Inc. (the “Parent Company”) is a holding company that conducts substantially all of its business through its subsidiaries. As specifiedin certain of its subsidiaries' credit agreements in the U.K., Australia and New Zealand, there are restrictions on the Parent Company's ability to obtain fundsfrom certain of its subsidiaries through dividends, intercompany expenses or interest (refer to Note 15, “Credit Agreements”, to the Company's ConsolidatedFinancial Statements). As of December 31, 2015, the Company was in a stockholders' equity position of $61,180, and approximately $24,226 constitutedrestricted net assets as defined in Rule 4-08(e)(3) of Regulation S-X. The restricted net assets of the Company's subsidiaries exceeded 25% of the consolidatednet assets of the Company and its subsidiaries, thus requiring this Schedule I, “Condensed Financial Information of the Registrant.” Accordingly, the resultsof operations and cash flows for the years ended December 31, 2015, 2014 and 2013, and the balance sheets as of December 31, 2015 and 2014 have beenpresented on a “Parent-only” basis. In these statements, the Company's investments in its consolidated subsidiaries are presented under the equity method ofaccounting. The Parent-only financial statements should be read in conjunction with the Company's audited Consolidated Financial Statements includedelsewhere herein.NOTE 2 - DIVIDENDS RECEIVEDThe Company received dividends of $7,468, $0 and $2,341 in 2015, 2014 and 2013, respectively, from its consolidated subsidiaries.NOTE 3 - CREDIT AGREEMENTSSeveral of the Company's subsidiaries have credit agreements with lenders. Borrowings under the credit agreements are based on an agreed percentageof eligible accounts receivable. Refer to Note 15, “Credit Agreements” to the Company's Consolidated Financial Statements for further details.- 96 - SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS(IN THOUSANDS)Column A Column B Column C Column D Column E Additions Balance at Charged to Balance at Beginning Costs/Expenses Deductions EndDescriptions of Period (Recoveries) Other of Period2013 Allowance for Doubtful Accounts $1,174 (13) 53 $1,108Deferred tax assets-valuation allowance $154,329 8,225 276 $162,2782014 Allowance for Doubtful Accounts $1,108 97 219 $986Deferred tax assets-valuation allowance $162,278 243 3,670 $158,8512015 Allowance for Doubtful Accounts $986 178 304 $860Deferred tax assets-valuation allowance $158,851 3,488 3,041 $159,298- 97 - SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed onits behalf by the undersigned, thereunto duly authorized. HUDSON GLOBAL, INC. (Registrant) By:/s/ STEPHEN A. NOLAN Stephen A. Nolan Chief Executive Officer (Principal Executive Officer) Date:March 3, 2016 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theRegistrant and in the capacities and on the dates indicated.Signature Title Date /s/ STEPHEN A. NOLAN Chief Executive Officer and Director(Principal Executive Officer) March 3, 2016Stephen A. Nolan /s/ PATRICK LYONS Chief Financial Officer and Chief AccountingOfficer(Principal Financial Officer and PrincipalAccounting Officer) March 3, 2016Patrick Lyons /s/ JEFFREY E. EBERWEIN Chairman March 3, 2016Jeffrey E. Eberwein /s/ ALAN L. BAZAAR Director March 3, 2016Alan L. Bazaar /s/ RICHARD K. COLEMAN, JR. Director March 3, 2016Richard K. Coleman, Jr. /s/ IAN V. NASH Director March 3, 2016Ian V. Nash - 98 - HUDSON GLOBAL, INC.FORM 10-KEXHIBIT INDEXExhibitNumber Exhibit Description(2.1) Purchase and Sale Agreement, dated as of November 7, 2014, by and among Document Technologies, LLC, DTI of London Limited,Hudson Global, Inc., Hudson Global Resources Management, Inc. and Hudson Global Resources Limited (incorporated by reference toExhibit 2.1 to Hudson Global, Inc.'s Current Report on Form 8-K dated November 13, 2014 (File No. 0-50129)).(2.2) Asset Purchase Agreement, dated as of May 8, 2015, by and among Hudson Global, Inc., Hudson Global Resources Management, Inc. andMastech, Inc. (incorporated by reference to Exhibit 2.1 to Hudson Global, Inc.'s Current Report on Form 8-K dated May 8, 2015 (File No. 0-50129)).(3.1) Amended and Restated Certificate of Incorporation of Hudson Global, Inc. (incorporated by reference to Exhibit 3.2 to Hudson Global,Inc.'s Current Report on Form 8-K dated June 15, 2015 (File No. 0-50129)).(3.2) Certificate of Designations of the Board of Directors Establishing the Series and Fixing the Relative Rights and Preferences of Series AJunior Participating Preferred Stock (incorporated by reference to Exhibit 3.1 to Hudson Global, Inc.'s Current Report on Form 8-K datedFebruary 2, 2005 (File No. 0-50129)).(3.3) Amended and Restated By-laws of Hudson Global, Inc. (incorporated by reference to Exhibit 3.4 to Hudson Global, Inc.'s Current Reporton Form 8-K dated June 15, 2015 (File No. 0-50129)).(4.1) Amended and Restated Rights Agreement, dated as of January 15, 2015, between Hudson Global, Inc. and Computershare Inc., successorrights agent to The Bank of New York (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form 8-A/A of HudsonGlobal, Inc. dated January 27, 2015 (File No. 0-50129)).(4.2) Receivables Finance Agreement, dated August 1, 2014, between Lloyds Bank Commercial Finance and Hudson Global Resources Limited(incorporated by reference to Exhibit 4.1 to Hudson Global, Inc.'s Current Report on Form 8-K dated August 1, 2014 (File No. 0-50129)).(4.3) Finance Agreement, dated as of October 27, 2015, among Hudson Global Resources (Aust) Pty Limited, Hudson Global Resources (NZ)Limited, and National Australia Bank Limited (incorporated by reference to Exhibit 4.1 to Hudson Global, Inc.'s Current Report on Form 8-K dated October 30, 2015 (File No. 0-50129)).(4.4) NAB Corporate Receivables Facility Agreement, dated as of October 27, 2015, among Hudson Global Resources (Aust) Pty Limited,Hudson Global Resources (NZ) Limited, and National Australia Bank Limited (incorporated by reference to Exhibit 4.2 to Hudson Global,Inc.'s Current Report on Form 8-K dated October 30, 2015 (File No. 0-50129)).(4.5) BNZ Corporate Receivables Facility Agreement, dated as of October 27, 2015, among Hudson Global Resources (NZ) Limited, HudsonGlobal Resources (Aust) Pty Limited, and Bank of New Zealand (incorporated by reference to Exhibit 4.3 to Hudson Global, Inc.'s CurrentReport on Form 8-K dated October 30, 2015 (File No. 0-50129)).(10.1)* Hudson Global, Inc. Long Term Incentive Plan, as amended through October 29, 2007 (incorporated by reference to Exhibit 10.1 toHudson Global, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2007 (File No. 0-50129)).(10.2)* Form of Hudson Global, Inc. Long Term Incentive Plan Stock Option Agreement (Employees) (incorporated by reference to Exhibit 10.4 toHudson Global, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 (File No. 0-50129)).(10.3)* Form of Hudson Global, Inc. Long Term Incentive Plan Stock Option Agreement (Directors) (incorporated by reference to Exhibit 10.1 toHudson Global, Inc. Current Report on Form 8-K dated May 11, 2006 (File No. 0-50129)).(10.4)* Hudson Global, Inc. 2009 Incentive Stock and Awards Plan, as Amended and Restated (incorporated by reference to Exhibit A to theCompany's definitive proxy statement filed with the Securities Exchange Commission on Schedule 14A on March 16, 2012 (File No. 0-50129)).(10.5)* Form of Hudson Global, Inc. 2009 Incentive Stock and Awards Plan Stock Option Agreement (New Non-Employee Directors) (incorporatedby reference to Exhibit 10.1 to Hudson Global, Inc.'s Current Report on Form 8-K dated October 2, 2015 (File No. 0-50129)).(10.6)* Form of Hudson Global, Inc. 2009 Incentive Stock and Awards Plan Restricted Stock Award Agreement for EBITDA and gross margingrowth performance vesting awards made prior to April 26, 2012 (incorporated by reference to Exhibit 10.1 to Hudson Global, Inc.'sCurrent Report on Form 8-K dated February 11, 2010 (File No. 0-50129)).- 99 - HUDSON GLOBAL, INC.FORM 10-KEXHIBIT INDEX(10.7)* Form of Hudson Global, Inc. 2009 Incentive Stock and Awards Plan Restricted Stock Award Agreement for EBITDA and gross margingrowth performance vesting awards made on or after April 26, 2012 (incorporated by reference to Exhibit 4.5 to Hudson Global, Inc.'sRegistration Statement on Form S-8 dated August 1, 2012 (Reg. No. 333-182973)).(10.8)* Form of Hudson Global, Inc. 2009 Incentive Stock and Awards Plan Restricted Stock Unit Award Agreement (incorporated by reference toExhibit 10.6 to Hudson Global, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 (File No. 0-50129)).(10.9)* Form of Hudson Global, Inc. 2009 Incentive Stock and Awards Plan Restricted Stock Award Agreement for aggregated regional EBITDAand corporate costs vesting awards (incorporated by reference to Exhibit 10.1 to Hudson Global, Inc.'s Current Report on Form 8-K datedJanuary 22, 2015 (File No. 0-50129)).(10.10)* Form of Hudson Global, Inc. 2009 Incentive Stock and Awards Plan Restricted Stock Award Agreement (Executive Officers and GlobalLeadership Team) for awards made on or after November 6, 2015.(10.11)* CEO Employment Agreement, dated as of March 7, 2011, between Hudson Global, Inc. and Manuel Marquez Dorsch (incorporated byreference to Exhibit 10.1 to Hudson Global, Inc.'s Current Report on Form 8-K dated March 7, 2011 (File No. 0-50129)).(10.12)* Amendment to Employment Agreement, dated as of March 23, 2011, between Hudson Global, Inc. and Manuel Marquez Dorsch(incorporated by reference to Exhibit 10.1 to Hudson Global, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011(File No. 0-50129)).(10.13)* Summary of Hudson Global, Inc. Compensation for Non-employee Members of the Board of Directors.(10.14)* Hudson Global, Inc. Amended and Restated Director Deferred Share Plan (incorporated by reference to Exhibit 10.4 to Hudson Global,Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 (File No. 0-50129)).(10.15)* Executive Employment Agreement, dated as of May 18, 2015, between Hudson Global, Inc. and Stephen A. Nolan (incorporated byreference to Exhibit 10.1 to Hudson Global, Inc.'s Current Report on Form 8-K dated May 18, 2015 (File No. 0-50129)).(10.16)* Restricted Stock Award Agreement, dated as of May 18, 2015, between Hudson Global, Inc. and Stephen A. Nolan (incorporated byreference to Exhibit 10.2 to Hudson Global, Inc.'s Current Report on Form 8-K dated May 18, 2015 (File No. 0-50129)).(10.17)* Promotion Letter Agreement, dated as of August 7, 2015, between Hudson Global, Inc. and Patrick Lyons (incorporated by reference toExhibit 10.1 to Hudson Global, Inc.'s Current Report on Form 8-K dated August 7, 2015 (File No. 0-50129)).(10.18) Promotion Letter Agreement, dated as of August 6, 2015, between Hudson Global, Inc. and David F. Kirby.(10.19)* Executive Agreement, dated as of October 2, 2015, between Hudson Global, Inc. and Neil J. Funk (incorporated by reference to Exhibit10.1 to Hudson Global, Inc.'s Current Report on Form 8-K dated October 1, 2015 (File No. 0-50129)).(21) Subsidiaries of Hudson Global, Inc.(23) Consent of KPMG LLP.(31.1) Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.(31.2) Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.(32.1) Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350.(32.2) Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350.(99.1) Proxy Statement for the 2016 Annual Meeting of Stockholders [To be filed with the Securities and Exchange Commission underRegulation 14A within 120 days after December 31, 2015; except to the extent specifically incorporated by reference, the Proxy Statementfor the 2015 Annual Meeting of Stockholders shall not be deemed to be filed with the Securities and Exchange Commission as part of thisAnnual Report on Form 10-K.](101) The following materials from Hudson Global, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2015 are filed herewith,formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Operations for the years ended December31, 2015, 2014 and 2013, (ii) the Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2015, 2014and 2013, (iii) the Consolidated Balance Sheets as of December 31, 2015 and 2014, (iv) the Consolidated Statements of Cash Flows for theyears ended December 31, 2015, 2014 and 2013, (v) the Consolidated Statement of Stockholders’ Equity for the years ended December 31,2015, 2014 and 2013, and (vi) Notes to Consolidated Financial Statements.* A management contract or compensatory plan or arrangement- 100 - Exhibit 10.10HUDSON GLOBAL, INC.RESTRICTED STOCK AWARD AGREEMENTRESTRICTED STOCK AWARD AGREEMENT (the “Agreement”) made as of the [DAY] of [MONTH],[YEAR] and effective as of the seventh calendar day following the date of the [QUARTER] [YEAR] earnings release of theCompany (the “Grant Date”), by and between HUDSON GLOBAL, INC., a Delaware corporation (the “Company”) and [NAME](the “Grantee”).W I T N E S S E T H:WHEREAS, pursuant to the Hudson Global, Inc. 2009 Incentive Stock and Awards Plan (the “Plan”), the Companydesires to grant to the Grantee and the Grantee desires to accept an award of shares of common stock, $.001 par value, of the Company(the “Common Stock”) upon the terms and conditions set forth in this Agreement.NOW, THEREFORE, the parties hereto agree as follows:1.Award. Subject to the terms and conditions set forth herein, the Company hereby awards the Grantee on theGrant Date [NUMBER OF SHARES] shares of Common Stock (the “Restricted Stock”).2. Restrictions; Vesting. Except as otherwise provided herein, the Restricted Stock may not be sold, transferred,pledged, encumbered, assigned or otherwise alienated or hypothecated, if at all, until such shares of Restricted Stock have vested uponsatisfaction of the service vesting conditions set forth below.[VESTING CONDITIONS]The Grantee shall forfeit the shares of Restricted Stock that do not vest pursuant to the preceding provisions. As used inthis Agreement, the term “Affiliate” means an affiliate of the Company within the meaning of Rule 405 under the Securities Act of1933, as amended.3. Evidence of Restricted Stock. The shares of Restricted Stock awarded under this Agreement initially will beevidenced by book entries on the Company’s stock transfer records. If and when the shares of Restricted Stock vest pursuant toSection 2, 5 or 8 and the restrictions imposed by Section 2 terminate, the Company will deliver to the Grantee one or more stockcertificates for the appropriate number of shares, free of any restrictions imposed under this Agreement.4. Tax Withholding. Notwithstanding anything herein to the contrary, certificates for shares of Restricted Stock thathave vested shall not be delivered to the Grantee unless and until the Grantee has delivered to the Executive Vice President, HumanResources of the Company (or such other executive officer of the Company performing a similar function), at its corporateheadquarters in New York, New York, cash payment, if any, deemed necessary by the Company to enable it to satisfy any federal,foreign or other tax withholding obligations with respect1 to the shares of Restricted Stock that have vested (the “Tax Amount”) (unless other arrangements acceptable to the Company in its solediscretion have been made). Notwithstanding anything herein to the contrary, in the event that a Grantee has not satisfied theconditions outlined in the immediately preceding sentence within twenty (20) days after the shares of Restricted Stock have vested, theCompany may (but shall not be required to), in its sole discretion, at any time by notice to the Grantee, choose to satisfy the conditionsoutlined in the immediately preceding sentence by unilaterally revoking the Grantee’s right to receive that number of shares ofRestricted Stock that have vested with an aggregate value equal to 150% of the Tax Amount. For purposes of the preceding sentence,each share of Restricted Stock shall be deemed to have a value equal to the average closing price of a share of the Common Stock onthe Nasdaq Global Market (or such other U.S. exchange or market on which the Common Stock is then primarily traded) on the five(5) trading days up to and including the date of vesting. The Company may from time to time change (or provide alternatives to) themethod of tax withholding on the Restricted Stock granted hereunder by notice to the Grantee, it being understood that from and aftersuch notice the Grantee will be bound by the method (or alternatives) specified in any such notice. The Company (in its sole andabsolute discretion) may permit all or part of the Tax Amount to be paid with shares of Common Stock owned by the Grantee, or ininstallments (together with interest) evidenced by the Grantee’s secured promissory note.5. Termination of Employment. If the Grantee’s employment or service with the Company or its Affiliates isterminated for any reason other than death, including but not limited to by reason of disability, then the shares of Restricted Stock thathave not yet become fully vested in accordance with Section 2 will automatically be forfeited by the Grantee (or the Grantee’ssuccessors) and any book entry with respect thereto will be canceled. If the Grantee’s employment terminates by reason of theGrantee’s death, then the shares of Restricted Stock that have not yet become fully vested as a result of a service vesting conditioncontained in Section 2 not being satisfied will automatically become fully vested and the restrictions imposed upon the Restricted Stockby Section 2 will be immediately deemed to have lapsed.6. Voting Rights; Dividends and Other Distributions.(a) While the Restricted Stock is subject to restrictions under Section 2 and prior to any forfeiture thereof, the Granteemay exercise full voting rights for the Restricted Stock registered in his name.(b) While the Restricted Stock is subject to the restrictions under Section 2 and prior to any forfeiture thereof, theGrantee shall be entitled to receive all dividends and other distributions paid with respect to the Restricted Stock. If any suchdividends or distributions are paid in shares of Common Stock, then such shares shall be subject to the same restrictions as theshares of Restricted Stock with respect to which they were paid.(c) Subject to the provisions of this Agreement, the Grantee shall have, with respect to the Restricted Stock, all otherrights of holders of Common Stock.7. Securities Law Restrictions. Notwithstanding anything herein to the contrary, shares of Restricted Stock shall not beissued hereunder if, in the opinion of counsel to2 the Company, such exercise and/or issuance may result in a violation of federal or state securities laws or the securities laws of anyother relevant jurisdiction.8. Change in Control. If, within twelve (12) months following the date of a Change in Control (as defined in the Plan),the Grantee’s employment or service with the Company or its Affiliates is terminated without Cause (as defined below) by theCompany or is terminated for Good Reason (as defined below) by the Grantee, then the shares of Restricted Stock will fully vest andthe restrictions imposed upon the Restricted Stock by Section 2 will be immediately deemed to have lapsed.(a) Definition of Cause. For purposes of this Agreement, Cause shall be defined as:i. the willful or negligent failure of the Grantee to perform the Grantee’s duties and obligations in any materialrespect (other than any failure resulting from Grantee’s disability), which failure is not cured within fifteen (15) daysafter receipt of written notice thereof, provided that there shall be no obligation to provide any additional written noticeif the Grantee’s failure to perform is repeated and the Grantee has previously received one (1) or more written notices;ii. acts of dishonesty or willful misconduct by the Grantee with respect to the Company;iii. conviction of a felony or violation of any law involving moral turpitude, dishonesty, disloyalty or fraud, ora pleading of guilty or nolo contendere to such charge;iv. repeated refusal to perform the reasonable and legal instructions of the Grantee’s supervisors;v. any material breach of this Agreement; orvi. failure to confirm compliance with the Company’s Code of Conduct after 10 days’ written noticerequesting confirmation.(b) Definition of Good Reason. The Grantee shall have “Good Reason” for termination of employment in connectionwith a Change in Control of the Company in the event of:(i) any breach of this Agreement by the Company, other than an isolated, insubstantial and inadvertent failurenot occurring in bad faith that the Company remedies promptly after receipt of notice thereof given by the Grantee;(ii) any reduction in the Grantee’s base salary, percentage of base salary available as incentive compensationor bonus opportunity or benefits, in each case relative to those most favorable to the Grantee in effect at any timeduring the 180-day period prior to the Change in Control;3 (iii) the removal of the Grantee from, or any failure to reelect or reappoint the Grantee to, any of the positionsheld with the Company on the date of the Change in Control or any other positions with the Company to which theGrantee shall thereafter be elected, appointed or assigned, except in the event that such removal or failure to reelect orreappoint relates to the termination by the Company of the Grantee’s employment for Cause or by reason of disabilitypursuant to the Grantee’s Employment Agreement;(iv) a good faith determination by the Grantee that there has been a material adverse change, without theGrantee’s written consent, in the Grantee’s working conditions or status with the Company relative to the mostfavorable working conditions or status in effect during the 180-day period prior to the Change in Control, includingbut not limited to (A) a significant change in the nature or scope of the Grantee’s authority, powers, functions, duties orresponsibilities, or (B) a significant reduction in the level of support services, staff, secretarial and other assistance,office space and accoutrements, but in each case excluding for this purpose an isolated, insubstantial and inadvertentevent not occurring in bad faith that the Company remedies within ten (10) days after receipt of notice thereof given bythe Grantee;(v) the relocation of the Grantee’s principal place of employment to a location more than 50 miles from theGrantee’s principal place of employment on the date 180 days prior to the Change in Control; or(vi) the Company requires the Grantee to travel on Company business 20% in excess of the average numberof days per month the Grantee was required to travel during the 180-day period prior to the Change in Control.9. No Employment Rights. Nothing in this Agreement shall give the Grantee any right to continue in the employmentof the Company or any Affiliate, or interfere in any way with the right of the Company or any Affiliate to terminate the employment ofthe Grantee.10. Plan Provisions. The provisions of the Plan shall govern if and to the extent that there are inconsistencies betweenthose provisions and the provisions hereof. The Grantee acknowledges receipt of a copy of the Plan prior to the execution of thisAgreement. Capitalized terms used in this Agreement but not defined herein shall have the meaning given to them in the Plan.11. Administration. The Committee will have full power and authority to interpret and apply the provisions of thisAgreement and act on behalf of the Company and the Board in connection with this Agreement, and the decision of the Committee asto any matter arising under this Agreement shall be binding and conclusive as to all persons.12. Binding Effect; Headings. This Agreement shall be binding upon and shall inure to the benefit of the parties heretoand their respective successors and permitted assigns. The subject headings of Sections of this Agreement are included for the purposeof convenience only4 and shall not affect the construction or interpretation of any of its provisions. All references in this Agreement to “$” or “dollars” are toUnited States dollars.13. Employee Handbook and Arbitration Agreements. As a material inducement to the Company to grant this awardof Restricted Stock and to enter into this Agreement, the Grantee hereby expressly agrees to (a) comply with and abide by the termsand conditions of, and rules relating to, such Grantee’s employment with the Company or an Affiliate set forth in the applicableemployee handbook and (b) be bound by the terms and provisions of any arbitration or similar agreement to which the Grantee is orbecomes a party with the Company or an Affiliate.14. Confidentiality, Non-Solicitation and Work Product Assignment. As a material inducement to the Company togrant this award of Restricted Stock and enter into this Agreement, the Grantee hereby expressly agrees to be bound by the followingcovenants, terms and conditions:(a) Definition. “Confidential Information” consists of all information or data relating to the business of the Company,including but not limited to, business and financial information; new product development and technological data; personnelinformation and the identities of employees; the identities of clients and suppliers and prospective clients and suppliers; clientlists and potential client lists; development, expansion and business strategies, plans and techniques; computer programs,devices, methods, techniques, processes and inventions; research and development activities; trade secrets as defined byapplicable law and other materials (whether in written, graphic, audio, visual, electronic or other media, including computersoftware) developed by or on behalf of the Company which is not generally known to the public, which the Company has andwill take precautions to maintain as confidential, and which derives at least a portion of its value to the Company from itsconfidentiality. Additionally, Confidential Information includes information of any third party doing business with theCompany (actively or prospectively) that the Company or such third party identifies as being confidential. ConfidentialInformation does not include any information that is in the public domain or otherwise publicly available (other than as a resultof a wrongful act by the Grantee or an agent or other employee of the Company). For purposes of this Section 14, the term “theCompany” also refers to each of its officers, directors, employees and agents, all subsidiary and affiliated entities, all benefitplans and benefit plans’ sponsors and administrators, fiduciaries, affiliates, and all successors and assigns of any of them.(b) Agreement to Maintain the Confidentiality of Confidential Information. The Grantee acknowledges that, as a resultof his/her employment by the Company, he/she will have access to such Confidential Information and to additionalConfidential Information which may be developed in the future. The Grantee acknowledges that all Confidential Information isthe exclusive property of the Company, or in the case of Confidential Information of a third party, of such third party. TheGrantee agrees to hold all Confidential Information in trust for the benefit of the owner of such Confidential Information. TheGrantee further agrees that he/she will use Confidential Information for the sole purpose of performing his/her work for theCompany, and that during his/her employment with the5 Company, and at all times after the termination of that employment for any reason, the Grantee will not use for his/her benefit,or the benefit of others, or divulge or convey to any third party any Confidential Information obtained by the Grantee duringhis/her employment by the Company, unless it is pursuant to the Company’s prior written permission.(c) Return of Property. The Grantee acknowledges that he/she has not acquired and will not acquire any right, title orinterest in any Confidential Information or any portion thereof. The Grantee agrees that upon termination of his/heremployment for any reason, he/she will deliver to the Company immediately, but in no event later that the last day of his/heremployment, all documents, data, computer programs and all other materials, and all copies thereof, that were obtained or madeby the Grantee during his/her employment with the Company, which contain or relate to Confidential Information and willdestroy all electronically stored versions of the foregoing.(d) Disclosure and Assignment of Inventions and Creative Works. The Grantee agrees to promptly disclose in writingto the Company all inventions, ideas, discoveries, developments, improvements and innovations (collectively “Inventions”),whether or not patentable and all copyrightable works, including but limited to computer software designs and programs(“Creative Works”) conceived, made or developed by the Grantee, whether solely or together with others, during the period theGrantee is employed by the Company. The Grantee agrees that all Inventions and all Creative Works, whether or notconceived or made during working hours, that: (1) relate directly to the business of the Company or its actual or demonstrablyanticipated research or development, or (2) result from the Grantee’s work for the Company, or (3) involve the use of anyequipment, supplies, facilities, Confidential Information, or time of the Company, are the exclusive property of the Company.The Grantee hereby assigns and agrees to assign all right, title and interest in and to all such Inventions and Creative Works tothe Company. The Grantee understands that he/she is not required to assign to the Company any Invention or Creative Workfor which no equipment, supplies, facilities, Confidential Information or time of the Company was used, unless such Inventionor Creative Work relates directly to the Company’s business or actual or demonstrably anticipated research and development,or results from any work performed by the Grantee for the Company.(e) Non-Solicitation of Clients. During the period of the Grantee’s employment with the Company and for a period ofone year from the date of termination of such employment for any reason, the Grantee agrees that he/she will not, directly orindirectly, for the Grantee’s benefit or on behalf of any person, corporation, partnership or entity whatsoever, call on, solicit,perform services for, interfere with or endeavor to entice away from the Company any client to whom the Grantee providesservices at any time during the 12 month period proceeding the date of termination of the Grantee’s employment with theCompany, or any prospective client to whom the Grantee had made a presentation at any time during the 12 month periodpreceding the date of termination of the Grantee’s employment with the Company.6 (f) Non-Solicitation of Employees. For a period of one year after the date of termination of the Grantee’s employmentwith the Company for any reason, the Grantee agrees that he/she will not, directly or indirectly, hire, attempt to hire, solicit foremployment or encourage the departure of any employee of the Company, to leave employment with the Company, or anyindividual who was employed by the Company as of the last day of the Grantee’s employment with the Company.(g) Enforcement. If, at the time of enforcement of this Section 14, a court holds that any of the restrictions stated hereinare unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope or geographicalarea deemed reasonable under such circumstances will be substituted for the stated period, scope or area as contained in thisSection 14. Because money damages would be an inadequate remedy for any breach of the Grantee’s obligations under thisAgreement, in the event the Grantee breaches or threatens to breach this Section 14, the Company, or any successors orassigns, may, in addition to other rights and remedies existing in its favor, apply to any court of competent jurisdiction forspecific performance, or injunctive or other equitable relief in order to enforce or prevent any violations of this Section 14.(h) Miscellaneous. The Grantee acknowledges and agrees that the provisions of this Section 14 are in addition to, andnot in lieu of, any confidentiality, non-solicitation, work product assignment and/or similar obligations that the Grantee mayhave with respect to the Company and/or its Affiliates, whether by agreement, fiduciary obligation or otherwise and that thegrant and the vesting of the Restricted Stock contemplated by this Agreement are expressly made contingent on the Grantee'scompliance with the provisions of this Section 14. Notwithstanding anything to the contrary in this Agreement, to the extentthere is any conflict between the terms of this Agreement and the terms of any executive employment agreement (the“Employment Agreement”) between the Grantee and the Company, the terms of the Employment Agreement will control.Without in any way limiting the provisions of this Section 14, the Grantee further acknowledges and agrees that the provisionsof this Section 14 shall remain applicable in accordance with their terms after the Grantee's termination of employment with theCompany, regardless of whether (1) the Grantee's termination or cessation of employment is voluntary or involuntary or (2) theRestricted Stock has not or will not vest.15. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State ofDelaware, without regard to conflict of law principles thereof. This Agreement constitutes the entire agreement between the partieswith respect to the subject matter hereof and controls and supersedes any prior understandings, agreements or representations by orbetween the parties, written or oral with respect to its subject matter and may not be modified except by written instrument executed bythe parties. The Grantee has not relied on any representation not set forth in this Agreement.7 IN WITNESS WHEREOF, this Agreement has been executed as of the date first above written.HUDSON GLOBAL, INC.By: Name:Title: Grantee – Signature Grantee – Print Name8 Exhibit 10.13Summary of Hudson Global, Inc.Compensation for Non-employee Members of the Board of DirectorsThe Company’s policy of compensation for the non-employee members of the Board of Directors effective as of October 2, 2015 is as follows:Each non-employee director is entitled to receive an annual retainer of $25,000 paid in quarterly installments, a fee of $2,000 for each Board and Boardcommittee meeting attended in person, and a fee of $1,000 for each telephonic Board and Board committee meeting in which the director participates. TheChairmen of the Audit Committee, Compensation Committee, Nominating and Governance Committee and Strategic Planning Committee receive anadditional annual retainer of $25,000, $10,000, $5,000 and $75,000, respectively, paid in quarterly installments. The annual retainer, the fees for attendingin-person and telephonic Board and Board committee meetings, and the retainer for serving as a Chairman of a Board committee, except for the StrategicPlanning Committee, are paid in share units that are deferred to a retirement account until the director ceases board service. The retainer for serving as theChairman of the Strategic Planning Committee is paid in cash. Each non-employee director also is entitled to receive $65,000 paid annually in share unitsthat are deferred to a retirement account until the director ceases board service. Upon first being elected or appointed as a director, each non-employeedirector is granted an option to purchase 50,000 shares of the Company’s common stock under the terms of the Hudson Global, Inc. 2009 Incentive Stock andAwards Plan, as amended and restated. The exercise price of the options is the fair market value of a share of common stock on the date of grant. Options havea term of five years and become exercisable as follows: 50% immediately on the date of grant and 100% upon the first anniversary of the grant date (providedthat if the Company’s Board of Directors does not designate such individual as a director nominee for election as a director at the Company’s first annualmeeting of stockholders following the grant date, then the remainder of such option that has not yet vested will immediately vest). Additionally, directors arereimbursed for out-of-pocket expenses associated with attending meetings of the Board and Board committees. Exhibit 10.18August 6, 2015Delivered via Company EmailMr. David F. KirbyDear David:zWe are pleased to extend to you the offer of a promotion to Senior Vice President, Treasury and Investor Relations of Hudson Global, Inc. (the“Company”) reporting to Stephen A. Nolan, Chief Executive Officer effective as of August 8, 2015. Further to the job requirements for this positiondiscussed with you, the terms of employment are as follows:1.CompensationYour annualized base salary will be US$230,000.00, which shall be paid semi-monthly at a rate of US$9,583.34, less applicable taxes andwithholdings.In addition to your base salary, you will be eligible to participate in the Global Corporate Management Bonus Plan with an annual incentive targetbonus of 50% of your base salary (a US$115,000.00 Target Bonus). For 2015, the incentive will be prorated based on the effective date of yourpromotion. To be eligible for any incentive, you must be actively employed and in good standing with the Company on the day the incentives arepaid, except to the extent otherwise provided in Section 4 or Section 5 below in the case of your termination by the Company without Cause (asdefined below) or your termination from the Company for Good Reason (as defined below) after a Change in Control (as defined below). Allcompensation plans for the Company’s Global Leadership Team and Executive Officers can be changed at any time at the sole discretion of theCompensation Committee of the Board of Directors.2.EquityYou will be eligible to receive a grant of equity of the Company under the terms of the Company’s long-term incentive plan as in effect from time totime, and as otherwise determined by the Compensation Committee. Any equity award will be subject to Compensation Committee approval, andwill be subject in all respects to the Company’s standard equity award agreement which must be signed and returned by you, and which includes,among other things, a vesting schedule and is subject to your continued employment. The effective grant date for any grant of equity will be, inaccordance with the Company’s equity award policy, seven calendar days after the date the Company first issues a quarterly earnings releaseafter the date the Compensation Committee approves your grant.3.VacationYou will continue accruing vacation time of four weeks of vacation per annum subject to the Company’s vacation policy. Holidays, floatingholidays, personal days and sick days are also available as outlined in the Company’s employee handbook.Employee’s acknowledgment of first page details: /s/ DFK(Initials) David F. KirbyPage 2 of 9August 6, 20154.Termination and SeveranceThe Company may terminate your employment at any time for any reason or for no reason; provided that, if such termination is without Cause, theCompany will be required to provide you with thirty (30) days’ written notice. If you are terminated from the Company without Cause, then, subjectto the execution and delivery of the Company’s then current form of separation agreement and general release applicable to similarly-situatedemployees, you will receive: (i) severance based on your then applicable base salary for a minimum period of six (6) months following yourSeparation from Service (as defined below), payable in regular installments in accordance with the Company’s applicable payroll practices;provided, however, that, in addition to the minimum six (6) months of severance, the period during which you receive severance (the “SeverancePeriod”) will be extended by one (1) month for each one (1) month of service following the effective date of your promotion up to a maximumSeverance Period of twelve (12) months, (ii) any bonus earned by you under the Company’s annual incentive plan for the fiscal year immediatelyprior to the year of your termination to the extent such bonus has not previously been paid and (iii) any bonus, on a pro rata basis, earned by youunder the Company’s annual incentive plan for the fiscal year in which you are terminated. If you elect to exercise your rights to continue groupmedical and dental plan coverage for a limited period (commonly referred to as “COBRA rights”) within the statutorily prescribed time periodcommencing immediately following the termination date, and you pay an amount equal to an active employee’s share of the premium for suchbenefits, the Company will pay the excess of the full COBRA cost over the amount paid by you during the Severance Period. You (or your estate)will not receive any severance if you are terminated for “Cause”, if you voluntarily resign from your position with the Company or upon your deathor termination as a result of disability.Notwithstanding the foregoing, if the severance pay that is payable during the first six (6) months following your Separation from Service exceedstwo times the lesser of (i) your annualized compensation paid by the Company for the calendar year preceding the calendar year in which theSeparation from Service occurs (as adjusted for any increase during that year that was expected to continue indefinitely if the Separation fromService had not occurred), or (ii) the compensation limit in effect pursuant to Section 401(a)(17) of the Code (as defined below) for the calendaryear in which your Separation from Service occurs, then payment of such excess shall be delayed and paid in a lump sum on the first day of theseventh (7th) month following the month in which the Separation from Service occurs, and in such event, the payment shall be accompanied by apayment of interest calculated at the rate of interest announced by the Federal Reserve Board (or any successor thereto) from time to time as the“federal funds rate”, such rate to be determined on the date of your termination of employment, compounded quarterly.Your receipt of the severance payments and premium payments by the Company set forth in this Section 4 are conditioned upon your executing acomprehensive release and waiver agreement and covenant not to sue as provided by the Company at the time of termination.“Cause” shall mean the occurrence of any one or more of the following events: (i) your willful failure to perform, or gross negligence in, theperformance of, your duties and obligations or compliance with the reasonable and legal business directions of the Chief Executive Officer,following delivery to you of a written notice from the Company which describes the basis for the Company’s reasonable belief that you have notsubstantially performed your duties and your failure to remedy such performance concerns within 30 days; or (ii) your willful failure to comply with amaterial employment policy or contractual obligation to the Company; or (iii) your commission of (a) a felony, (b) criminal dishonesty or (c) fraud.In consideration of the aforementioned severance provision, if you choose to resign from your position with the Company, you acknowledge andagree to provide the Company with a 90-day written notice prior to the effective date of your resignation.Employee’s acknowledgment of second page details: /s/ DFK(Initials) David F. KirbyPage 3 of 9August 6, 20155. Change in ControlNotwithstanding any other provisions of this letter to the contrary:a.Employment Period. If a Change in Control occurs when you are employed by the Company, the Company will continue thereafter to employ youduring the period commencing on the date of a Change in Control and ending on the first anniversary of such date (the “Employment Period”),provided that your employment will remain on an “at will” basis during the Employment Period, and thereafter will continue to be subject to theterms and provisions of this letter.b.Covered Termination. If there is any termination of your employment during the Employment Period by you for Good Reason or by the Companyother than by reason of Cause, your disability or your death (a “Covered Termination”), then you shall be entitled to receive, and the Companyshall promptly pay, that portion of the base salary under Section 1 earned through the date of the termination and, in lieu of further base salaryfor periods following such termination, as liquidated damages and severance pay (in lieu of, and not in addition to, any severance pay pursuantSection 4), the Termination Payment pursuant to Section 5(c).c.Termination Payment.(i)The “Termination Payment” shall be an amount equal to your severance amount determined pursuant to clauses (i) and (ii) of Section 4 plusyour pro rata target bonus under the Company’s Global Corporate Management Bonus Plan for the year in which termination occurs. TheTermination Payment shall be paid to you in cash equivalent on the first day of the seventh (7th) month following the month in which theSeparation from Service occurs, and in such event, the Termination Payment shall be accompanied by a payment of interest calculatedusing the annual rate of interest announced by the Federal Reserve Board (or any successor thereto) from time to time as the “federal fundsrate”, such rate to be determined on the date of your termination of employment, compounded quarterly. Such lump sum payment shall notbe reduced by any present value or similar factor, and you shall not be required to mitigate the amount of the Termination Payment bysecuring other employment or otherwise, nor will such Termination Payment be reduced by reason of you securing other employment or forany other reason. The Termination Payment shall be in lieu of, and acceptance by you of the Termination Payment shall constitute yourrelease of any rights of you to, any other cash severance payments under any Company severance policy, practice or agreement.(ii)Notwithstanding any other provision of this letter, if any portion of the Termination Payment or any other payment under this letter, or underany other agreement with or plan of the Company or its Affiliates (as defined below) (in the aggregate, “Total Payments”), would constitutean “excess parachute payment” and would, but for this Section 5(c)(ii), result in the imposition on you of an excise tax under Code Section4999 (the “Excise Tax”), then the Total Payments to be made to you shall either be (A) delivered in full, or (B) delivered in the greatestamount such that no portion of such Total Payment would be subject to the Excise Tax, whichever of the foregoing results in the receipt byyou of the greatest benefit on an after-tax basis (taking into account the applicable federal, state and local income taxes and the ExciseTax).Employee’s acknowledgment of third page details: /s/ DFK(Initials) David F. KirbyPage 4 of 9August 6, 2015(iii)Within forty (40) days following a Covered Termination or notice by the Company to you of its belief that there is a payment or benefit due toyou which will result in an “excess parachute payment”, you and the Company, at the Company’s expense, shall obtain the opinion (whichneed not be unqualified) of nationally recognized tax counsel (“National Tax Counsel”) selected by the Company and reasonably acceptableto you (which may be regular outside counsel to the Company), which opinion sets forth (A) the amount of the Base Period Income, (B) theamount and present value of Total Payments, (C) the amount and present value of any excess parachute payments determined withoutregard to any reduction of the Total Payments pursuant to Section 5(c)(ii), and (D) the net after-tax proceeds to you, taking into account thetax imposed under Code Section 4999 if (X) the Total Payments were reduced in accordance with Section 5(c)(ii) or (Y) the Total Paymentswere not so reduced. If such National Tax Counsel opinion determines that Section 5(c)(ii)(B) above applies, then the Termination Paymenthereunder or any other payment or benefit determined by such counsel to be includable in Total Payments shall be reduced or eliminated sothat under the bases of calculations set forth in such opinion there will be no excess parachute payment. In such event, payments orbenefits included in the Total Payments shall be reduced or eliminated by applying the following principles, in order: (1) the payment orbenefit with the higher ratio of the parachute payment value to present economic value (determined using reasonable actuarial assumptions)shall be reduced or eliminated before a payment or benefit with a lower ratio; (2) the payment or benefit with the later possible payment dateshall be reduced or eliminated before a payment or benefit with an earlier payment date; and (3) cash payments shall be reduced prior tonon-cash benefits; provided that if the foregoing order of reduction or elimination would violate Code Section 409A, then the reduction shallbe made pro rata among the payments or benefits included in the Total Payments (on the basis of the relative present value of theparachute payments). For purposes of such opinion, the value of any noncash benefits or any deferred payment or benefit shall bedetermined by the Company’s independent auditors in accordance with the principles of Section 280G(d)(3) and (4) (or any successorprovisions) of the Code, which determination shall be evidenced in a certificate of such auditors addressed to the Company and you. Theopinion of National Tax Counsel shall be addressed to the Company and you and shall be binding upon the Company and you. If suchNational Tax Counsel so requests in connection with the opinion required by this Section 5(c)(iii), you and the Company shall obtain, at theCompany’s expense, and the National Tax Counsel may rely on, the advice of a firm of recognized executive compensation consultants asto the reasonableness of any item of compensation to be received by you solely with respect to its status under Section 280G of the Codeand the regulations thereunder.Employee’s acknowledgment of fourth page details: /s/ DFK(Initials) David F. KirbyPage 5 of 9August 6, 2015(iv) For purposes of this letter, (A) the terms “excess parachute payment” and “parachute payments” shall have the meanings assigned to themin Section 280G (or any successor provision) of the Code and such “parachute payments” shall be valued as provided therein; (B) presentvalue shall be calculated in accordance with Section 280G(d)(4) (or any successor provision) of the Code; and (C) you shall be deemed topay federal income tax and employment taxes at your actual marginal rate of federal income and employment taxation, and state and localincome taxes at your actual marginal rate of taxation in the state or locality of your domicile (determined in both cases in the calendar yearin which the termination of employment or notice described in Section 5(c)(iii) above is given, whichever is earlier), net of the maximumreduction in federal income taxes that may be obtained from the deduction of such state and local taxes. As used in this letter, the term“Base Period Income” means an amount equal to your “annualized includable compensation for the base period” as defined inSection 280G(d)(1) (or any successor provision) of the Code.(v)The Company agrees to bear all costs associated with, and to indemnify and hold harmless, the National Tax Counsel of and from any andall claims, damages, and expenses resulting from or relating to its determinations pursuant to this Section 5(c), except for claims, damagesor expenses resulting from the gross negligence or willful misconduct of such firm.(vi)This Section 5(c) shall be amended to comply with any amendment or successor provision to Sections 280G or 4999 of the Code. If suchprovisions are repealed without successor, then this Section 9(c) shall be cancelled without further effect.d.Additional Benefits. If there is a Covered Termination and you are entitled to the Termination Payment, then until the earlier of the end of theEmployment Period or such time as you have obtained new employment and are covered by benefits which in the aggregate are at least equal invalue to the following benefits, you shall continue to be covered, at the expense of the Company, by the same or equivalent health and dentalcoverage as you were covered by immediately prior to the termination of your employment and such coverage shall count as COBRAcontinuation coverageEmployee’s acknowledgment of fifth page details: /s/ DFK(Initials) David F. KirbyPage 6 of 9August 6, 2015e.Definition of Change in Control. For purposes hereof, a “Change in Control” shall be deemed to occur on the first to occur of any one of thefollowing events: (a) the consummation of a consolidation, merger, share exchange or reorganization involving the Company, unless suchconsolidation, merger, share exchange or reorganization is a “Non-Control Transaction” (as defined below); (b) the stockholders of the Companyapprove a plan of complete liquidation or dissolution of the Company or an agreement for the sale or disposition by the Company of all, orsubstantially all, of the assets of the Company (in one transaction or a series of related transactions within any period of 24 consecutivemonths), other than a sale or disposition by the Company of all, or substantially all, of the Company’s assets to an entity at least 75% of thecombined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions astheir ownership of the Company immediately prior to such sale; (c) any person (as such term is used in Section 13(d) and 14(d)(2) of theSecurities Exchange Act of 1934, as amended (the “Exchange Act”)) (other than (1) the Company, (2) any subsidiary of the Company, (3) atrustee or other fiduciary holding securities under any employee benefit plan (or any trust forming a part thereof) maintained by the Company orany subsidiary or (4) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions astheir ownership of stock in the Company) is or becomes the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act), directlyor indirectly, of securities of the Company (not including in the securities beneficially owned by such person any securities acquired directly fromthe Company after the date hereof pursuant to express authorization by the Board that refers to this exception) representing more than 20% ofthe then outstanding shares of Common Stock or the combined voting power of the Company’s then outstanding voting securities; or (d) thefollowing individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, as of the date hereof,constitute the entire Board and any new director (other than a director whose initial assumption of office is in connection with an actual orthreatened election contest) whose appointment or election by the Board or nomination for election by the Company’s stockholders wasapproved or recommended by a vote of at least two-thirds of the directors then still in office who either were directors on the date hereof orwhose appointment, election or nomination for election was previously so approved or recommended. Notwithstanding the foregoing, no “Changein Control” shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately followingwhich the record holders of the Common Stock immediately prior to such transaction or series of transactions continue to have substantially thesame proportionate ownership in an entity that owns all or substantially all of the assets or voting securities of the Company immediatelyfollowing such transaction or series of transactions. A “Non-Control Transaction” shall mean a consolidation, merger, share exchange orreorganization of the Company where (a) the stockholders of the Company immediately before such consolidation, merger, share exchange orreorganization beneficially own, directly or indirectly, more than 50% of the then outstanding shares of common stock and the combined votingpower of the outstanding voting securities of the corporation resulting from such consolidation, merger, share exchange or reorganization (the“Surviving Corporation”); (b) the individuals who were members of the Board immediately prior to the execution of the agreement providing forsuch consolidation, merger, share exchange or reorganization constitute at least 50% of the members of the board of directors of the SurvivingCorporation; and Employee’s acknowledgment of sixth page details: /s/ DFK(Initials) David F. KirbyPage 7 of 9August 6, 2015(c) no person (other than (1) the Company, (2) any subsidiary of the Company or (3) any employee benefit plan (or any trust forming a part thereof)maintained by the Company, the Surviving Corporation or any subsidiary) is or becomes the beneficial owner, directly or indirectly, of securities ofthe Company (not including in the securities beneficially owned by such person any securities acquired directly from the Company after the datehereof pursuant to express authorization by the Board that refers to this exception) representing more than 20% of the then outstanding shares ofthe common stock of the Surviving Corporation or the combined voting power of the Surviving Corporation’s then outstanding voting securities.f.Good Reason. You shall have “Good Reason” for termination of employment in connection with a Change in Control of the Company in the eventof:(i)any breach of this letter by the Company, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith that theCompany remedies promptly after receipt of notice thereof given by you;(ii)any reduction in your base salary, percentage of base salary available as incentive compensation or bonus opportunity or benefits, in eachcase relative to those most favorable to you in effect at any time during the 180-day period prior to the Change in Control;(iii)the removal of you from, or any failure to reelect or reappoint you to, any of the positions held with the Company on the date of the Changein Control or any other positions with the Company to which you shall thereafter be elected, appointed or assigned, except in the event thatsuch removal or failure to reelect or reappoint relates to the termination by the Company of your employment for Cause or by reason ofdisability pursuant to Section 4;(iv)a good faith determination by you that there has been a material adverse change, without your written consent, in the your workingconditions or status with the Company relative to the most favorable working conditions or status in effect during the 180-day period prior tothe Change in Control, including but not limited to (A) a significant change in the nature or scope of your authority, powers, functions, dutiesor responsibilities, or (B) a significant reduction in the level of support services, staff, secretarial and other assistance, office space andaccoutrements, but in each case excluding for this purpose an isolated, insubstantial and inadvertent event not occurring in bad faith thatthe Company remedies within ten (10) days after receipt of notice thereof given by you;(v)the relocation of your principal place of employment to a location more than 50 miles from your principal place of employment on the date180 days prior to the Change in Control; or(vi)the Company requires you to travel on Company business 20% in excess of the average number of days per month you were required totravel during the 180-day period prior to the Change in Control.Employee’s acknowledgment of seventh page details: /s/ DFK(Initials) David F. KirbyPage 8 of 9August 6, 2015g.Certain Defined Termsi.Affiliate. The term “Affiliate” means each entity that is required to be included in the Company’s controlled group of corporations within themeaning of Code Section 414(b), or that is under common control with the Company within the meaning of Code Section 414(c); providedthat the phrase “at least 50 percent” shall be used in place of the phrase “at least 80 percent” each place it appears therein or in theregulations thereunder.ii.Code. The term “Code” means the Internal Revenue Code of 1986, including any amendments thereto or successor tax codes thereof andthe rules and regulations promulgated thereunder.iii.Separation from Service. The term “Separation from Service” means your termination of employment from the Company and its Affiliates,or if you continue to provide services following your termination of employment, such later date as is considered a separation fromservice, within the meaning of Code Section 409A, from the Company and its Affiliates. Specifically, if you continue to provide services tothe Company or an Affiliate in a capacity other than as an employee, such shift in status is not automatically a Separation from Service.You will be presumed to have terminated employment from the Company and its Affiliates when the level of bona fide services providedby you (whether as an employee or independent contractor) to the Company and its Affiliates permanently decreases to a level of twentypercent (20%) or less of the level of services rendered by such individual, on average, during the immediately preceding 36 months (orsuch lesser period of service). Notwithstanding the foregoing, if you take a leave of absence for purposes of military leave, sick leave orother bona fide leave of absence, you will not be deemed to have incurred a Separation from Service for the first six (6) months of theleave of absence, or if longer, for so long as your right to reemployment is provided either by statute or by contract; provided that if theleave of absence is due to a medically determinable physical or mental impairment that can be expected to result in death or last for acontinuous period of not less than six (6) months, where such impairment causes you to be unable to perform the duties of your positionof employment or any substantially similar position of employment, the leave may be extended for up to twenty-nine (29) months withoutcausing a Separation from Service.6. Conditions of Employmenta.At Will EmploymentYour promotion as Senior Vice President, Treasury and Investor Relations with the Company is scheduled to commence on August 8, 2015. Toprevent any misunderstandings between us, this letter (including the Hudson Agreement (as defined below)) sets forth the entire agreementbetween us regarding the new terms of your employment and supersedes any prior discussions or agreements between us or between you and anyother representative of the Company regarding your employment. This letter may not be amended or modified except by a document in writingsigned by both of us. Please understand that while it is our hope that our relationship will be a long one, your employment remains on an “at will”basis. Nothing in this letter should be construed as creating any other type of employment relationship.Employee’s acknowledgment of eighth page details: /s/ DFK(Initials) David F. KirbyPage 9 of 9August 6, 2015b.Code of ConductIn accepting your new position as Senior Vice President, Treasury and Investor Relations, you must acknowledge receipt of the Company’s Codeof Business Conduct and Ethics (the “Code”) and confirm that you will comply with such Code. You also agree to confirm compliance annually withthe Code.c.Indemnification.The Company shall to the fullest extent permitted by the Company’s certificate of incorporation and bylaws in effect from time to time, subject tothe conditions thereof, indemnify you against expenses, judgements, fines, settlements and other amounts actually and reasonably incurred inconnection with any proceedings against you by third parties arising by reason of the fact that you are or were an agent or employee of theCompany.d.Code Section 409A ExemptionThe benefits provided by this letter are intended to be exempt from the provisions of Section 409A of the Internal Revenue Code of 1986, asamended, and shall be construed, interpreted, administered and limited as necessary to preserve such exemption.e.Governing LawNotwithstanding principles of conflicts of law of any jurisdiction to the contrary, all terms and provisions to this letter are to be construed andgoverned by the laws of the State of New York without regard to the laws of any other jurisdiction in which you reside or perform any dutieshereunder or where any violation of this letter occurs.f.Confidentiality, Non-Solicitation, and Work Product Agreement, and Mutual Agreement to Arbitrate Claims (“Hudson Agreement”)Due to the nature of our business and in an effort to protect our clients, the Company requires you to sign the most current version of theConfidentiality, Non-Solicitation, and Work Product Agreement, and Mutual Agreement to Arbitrate Claims. The Hudson Agreement is enclosed foryour review and signature and forms part of this letter. It is a goal of the Company to provide as positive an experience for you as possible.Please acknowledge your acceptance of this promotion to Senior Vice President, Treasury and Investor Relations and the terms outlined above bysigning and dating this letter and returning it to me along with the signed Hudson Agreement. You are welcome to call me anytime with questionsat 212-351-7400.Sincerely,/s/ Peg BuchenrothPeg BuchenrothChief People Officer, Americas & CorporateEnclosureAcknowledged and Agreed:/s/ David F. Kirby August 7, 2015David F. Kirby Date CONFIDENTIALITY, NON-SOLICITATIONAND WORK PRODUCT ASSIGNMENT AGREEMENT,AND MUTUAL AGREEMENT TO ARBITRATE CLAIMSAs a material inducement to and in consideration of his/her employment by Hudson Global, Inc. and/or its, subsidiaries,affiliates or successors (individually and collectively, “Hudson”), David F. Kirby (the “Employee”) agrees as follows: 1. Confidential Information1.1 Definition.“Confidential Information” consists of all information or data relating to the business of Hudson, including but not limited to,business and financial information; new product development and technological data; personal information and the identities ofemployees; the identities and personal information of applicants for employment; the identities of clients and suppliers and prospectiveclients and suppliers; client lists and potential client lists; resumes; development, expansion and business strategies, plans andtechniques; computer programs, devices, methods, techniques, processes and inventions; research and development activities; tradesecrets as defined by applicable law and other materials (whether in written, graphic, audio, visual, electronic or other media, includingcomputer software) developed by or on behalf of Hudson which is not generally known to the public, which Hudson has and will takeprecautions to maintain as confidential, and which derives at least a portion of its value to Hudson from its confidentiality.Additionally, Confidential Information includes information of any third party doing business with Hudson (actively or prospectively)that Hudson or such third party identifies as being confidential. Confidential Information does not include any information that is in thepublic domain or otherwise publicly available (other than as a result of a wrongful act by the Employee or an agent or other employeeof Hudson) or information relating to the terms and conditions of employment or to lawful, protected, concerted activity under theNational Labor Relations Act.1.2 Agreement to Maintain the Confidentiality of Hudson’s Confidential Information.The Employee acknowledges that, as a result of his/her employment by Hudson, he/she will have access to such ConfidentialInformation and to additional Confidential Information which may be developed in the future. The Employee acknowledges that allConfidential Information is the exclusive property of Hudson, or in the case of Confidential Information of a third party, of such thirdparty. The Employee agrees to hold all Confidential Information in trust for the benefit of the owner of such ConfidentialInformation. The Employee further agrees that he/she will use Confidential Information for the sole purpose of performing his/herwork for Hudson, and that during his/her employment with Hudson, and at all times after the termination of that employment for anyreason, the Employee will not use for his/her benefit, or the benefit of others, or divulge or convey to any third party any ConfidentialInformation obtained by the Employee during his/her employment by Hudson, unless it is pursuant to Hudson’s prior writtenpermission. 1.3 Return of Property.The Employee acknowledges that he/she has not acquired and will not acquire any right, title or interest in any ConfidentialInformation or any portion thereof. The Employee agrees that upon termination of his/her employment for any reason, he/she willdeliver to Hudson immediately, but in no event later that the last day of his/her employment, all documents, data, computer programsand all other materials, and all copies thereof, that were obtained or made by the Employee during his/her employment with Hudson,which contain or relate to Confidential Information.1.4 Agreement to Maintain the Confidentiality of Client’s Confidential Information.Employee may have access to confidential client information during Employee’s employment with Hudson. Confidential clientinformation includes all information about client’s business affairs that is provided to Hudson by its clients, which is not already knownor readily available to the general public. Knowledge of a client’s business affairs must never be disclosed or used in an impropermanner.In order to maintain the professional confidence that is the basis of the client relationship, Employees of Hudson shall not:a.Discuss the clients’ affairs with other clients or with third parties, unless Hudson has been authorized to do so.b.Identify any particular client where Hudson did work when discussing the specific projects performed with otherpotential or existing clients.c.Discuss the confidential information to clients’ employees not authorized to receive it.d.Discuss confidential client matters in public places where conversations may be overheard.2. Disclosure and Assignment of Inventions and Creative WorksThe Employee agrees to promptly disclose in writing to Hudson all inventions, ideas, discoveries, developments, improvementsand innovations (collectively “Inventions”), whether or not patentable and all copyrightable works, including but limited to computersoftware designs and programs (“Creative Works”) conceived, made ordeveloped by the Employee, whether solely or together with others, during the period the Employee is employed by Hudson. TheEmployee agrees that all Inventions and all Creative Works, whether or not conceived or made during working hours, that: (a) relatedirectly to the business of Hudson or its actual or demonstrably anticipated research or development, or (b) result from the Employee’swork for Hudson, or (c) involve the use of any equipment, supplies, facilities, Confidential Information, or time of Hudson, are theexclusive property of Hudson. The Employee hereby assigns and agrees to assign all right, title and interest in and to all suchInventions and Creative Works to Hudson. The Employee understands that he/she is not required to assign to Hudson any Invention orCreative Work for which no equipment, supplies, facilities, Confidential Information or time of Hudson was used, unless such Invention or Creative Work relatesdirectly to Hudson’s business or actual or demonstrably anticipated research and development, or results from any work performed bythe Employee for Hudson.3. Future Restrictions3.1 Non-Solicitation of Clients.During the period of the Employee’s employment with Hudson and for a period of one year from the date of termination ofsuch employment for any reason, the Employee agrees that he/she will not, directly or indirectly, for the Employee’s benefit or onbehalf of any person, corporation, partnership or entity whatsoever, call on, solicit, perform services for, interfere with or endeavor toentice away from Hudson any client to whom Employee provided services at any time during the 12 month period preceding the dateof termination of the Employee’s employment with Hudson, or any prospective client to whom Employee had contact with during the6 month period preceding the date of termination of Employee’s employment with Hudson. A “prospective client” shall be defined asan individual or company that expressed interest in working with Hudson.3.2 Non-Solicitation of Employees.During the period of the Employee’s employment with Hudson and for a period of one year after the date of termination ofEmployee’s employment with Hudson for any reason, the Employee agrees that he/she will not, directly or indirectly, hire, attempt tohire, recruit, solicit, refer to any third party or encourage the departure of:(i)any personnel of Hudson; or,(ii)any personnel of Hudson’s clients or customers for which Employee has provided services while employed by Hudson.3.3. Non-Solicitation of CandidatesFor a period of one year after the date of termination of Employee’s employment with Hudson for any reason, the Employeeagrees that he/she will not, directly orindirectly, solicit for employment any candidate for employment for whom Employee solicited or placed with Hudson during his/heremployment with Hudson.4. Prior Employment ObligationsEmployee represents and warrants that Employee has notified Hudson of any contractual or other obligations affectingEmployee’s employment with Hudson. Employee agrees not to use during his/her employment with Hudson or disclose to Hudsonany trade secret or information that Employee is required to keep confidential relating to Employee’s former employers, clients,customers or suppliers. Employee will not bring onto Hudson’s premises or use in the scope of Employee’s employment with Hudsonany unpublished document or any property belonging to any such persons or entities without their consent. 5. Agreement to Arbitrate5.1 Acknowledgment.Hudson and the Employee (together the “Parties”) further recognize that differences may arise between either of them after orduring Employee's employment with Hudson.The Parties understand and agree that by entering into this agreement to arbitrate claims, each anticipates gaining the benefit ofarbitration as a speedy, impartial dispute-resolution procedure, and understands and agrees that both are voluntarily consenting toforego other types of litigation, except as specifically listed below in Section 5.3. Employee acknowledges that his/her agreement tosubmit to arbitration as described in this Agreement is in consideration of and is a material inducement to his/her employment byHudson.5.2 Claims Covered by this Agreement.Hudson and Employee mutually consent to the resolution by arbitration of all claims or controversies (tort, contract orstatutory), whether or not arising out of Employee’s employment (or its termination), that Hudson may have against Employee or thatEmployee may have against Hudson ("claims"). The claims covered by this Agreement include, but are not limited to, claims forwages, bonuses, overtime pay, or other compensation due; claims for breach of any contract or covenant (express or implied); tortclaims, including but not limited to, defamation, wrongful termination, invasion of privacy and intentional infliction of emotionaldistress; claims for discrimination (including, but not limited to, race, sex, religion, national origin, age, marital status, or medicalcondition or disability), harassment and/or retaliation; claims for benefits or the monetary equivalent of benefits (except where anemployee benefit or pension plan specifies that its claims procedure is subject to an arbitration procedure different from this one); andclaims for violation of any federal, state, or othergovernmental law, statute, regulation, or ordinance, except claims excluded in the following Section 5.3.5.3 Claims Not Covered by the Agreement.Claims not covered by this Agreement include claims that Employee may have now or in the future for workers’ compensation,unemployment benefits, unfair labor practice charges under the National Labor Relations Act, or any collective/class action claims forwhich Employee claims to be a representative class member. Also not covered are claims by Hudson based on criminal acts ofEmployee, and claims for injunctive or other equitable relief for: (a) breach or threatened breach of any non-competition, non-solicitation, confidentiality and/or patent or invention assignment agreements; (b) unfair competition; or (c) the misappropriation, useand/or unauthorized disclosure of trade secrets or confidential information, as to each of which Employee understands and agrees thatHudson may immediately seek and obtain relief from a court of competent jurisdiction.5.4 Required Notice of All Claims and Statute of Limitations. The Parties agree that each must deliver written notice of any claim to the other party within one (1) year of the date theaggrieved party first has knowledge of the event giving rise to the claim; otherwise the claim will be void and deemed waived, even ifthere is a federal or state statute of limitations which would have given more time to pursue the claim.5.5 Arbitration Procedures.Hudson and Employee agree that, except as provided in this Agreement, any arbitration shall be in accordance with the then-current employment dispute rules of the American Arbitration Association ("AAA") and all arbitration demands shall be through AAAunless Hudson and Employee mutually agree to a different dispute resolution company.The arbitrator shall render a written award and opinion in the form typically rendered in arbitrations. The award shall be finaland binding.5.6 Arbitration Fees and Costs.Hudson will pay the reasonable fees and costs of the arbitrator. Hudson and Employee will each pay its and his/her costs andattorneys’ fees, if any. However, if either Party prevails on a statutory claim that affords the prevailing party attorneys’ fees, thearbitrator may award reasonable fees to the prevailing Party.5.7 Requirements for Modification or Revocation.This Agreement to arbitrate shall survive the termination of Employee’s employment. It may only be revoked or modified by awriting signed by the parties which specifically states intent to revoke or modify this Agreement.5.8 Sole and Entire Agreement.This is the complete agreement of the parties on the subject of arbitration of disputes except for any arbitration agreement inconnection with any pension or benefit plan. This Agreement supersedes any prior or contemporaneous oral or written understandingon the subject. Employee is not relying on any representations, oral or written, on the subject of the effect, enforceability or meaning ofthis Agreement, except as specifically set forth in this Agreement.5.9 Construction.If any provision, portion or section of this Agreement is judged to be void or otherwise unenforceable, in whole or in part, suchjudgment will not affect the validity of the remainder of this Agreement.6. Miscellaneous6.1 Not a Guarantee of Employment.This Agreement is not, and shall not be construed to create, any contract of employment or guarantee of employment for anyspecific time or under any specific terms or conditions., express or implied, and each of the Parties remains free to terminate the employment relationship at any time, for any reason or noreason, with or without notice, reason, or cause.6.2 Enforcement.If, at the time of enforcement of this Agreement, a court holds that any of the restrictions stated herein are unreasonable undercircumstances then existing, the parties hereto agree that the maximum period, scope or geographical area deemed reasonable undersuch circumstances will be substituted for the stated period, scope or area as contained in this Agreement. Because money damageswould be an inadequate remedy for any breach of the Employee’s obligations under this Agreement, in the event the Employeebreaches or threatens to breach this Agreement, Hudson, or any successors or assigns, may, in addition to other rights and remediesexisting in its favor, apply to any court of competent jurisdiction for specific performance, or injunctive or other equitable relief in orderto enforce or prevent any violations of this Agreement.6.3 Severability.Whenever possible, each provision of this Agreement will be interpreted in such a way as to be effective and valid underapplicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under my applicablelaw or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provisions, but this Agreementand/or such provision will be reformed,construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.6.4 Complete Agreement.This Agreement contains the complete agreement and understanding between the parties and supersedes and preempts anyprior understanding, agreement or representation by or between the parties, written or oral, relating to the subject matter containedherein.6.5 Additional Rights and Causes of Action.This Agreement is in addition to and does not in any way waive or detract from any rights or causes of action Hudson mayhave relating to Confidential Information or other protectable information or interests under statutory or common law or under anyother agreement.6.6 Governing Law.Notwithstanding principles of conflicts of law of any jurisdiction to the contrary, all terms and provisions of this Agreement areto be construed and governed by the laws of the State where Employee was employed by Hudson without regard to the laws of anyother jurisdiction wherein the Employee resides or performs any duties hereunder or where any violation of this Agreement occurs. 6.7 Successors and Assigns.The Agreement will inure to the benefit of and be enforceable by Hudson and its successors and assigns. The Employee maynot assign the Employee’s rights or delegate the Employee’s obligations hereunder.6.8 Waivers.The waiver by either the Employee or Hudson of a breach by the other party of any provision of this Agreement shall notoperate or be construed as a waiver of any subsequent breach by the breaching party.HUDSON AND EMPLOYEE ACKNOWLEDGE THAT (A) EACH HAS CAREFULLY READ THIS AGREEMENT,(B) EACH UNDERSTANDS ITS TERMS,(C) ALL UNDERSTANDINGS AND AGREEMENTS BETWEEN HUDSON AND EMPLOYEE RELATING TO THESUBJECTS COVERED IN THE AGREEMENT ARE CONTAINED IN IT, AND (D) EACH HAS ENTERED INTO THISAGREEMENT VOLUNTARILY AND NOT IN RELIANCE ON ANY PROMISES OR REPRESENTATIONS BY THEOTHER, OTHER THAN THOSE CONTAINED IN THIS AGREEMENT ITSELF. EMPLOYEE FURTHERACKNOWLEDGES THAT HE/SHE HAS BEEN GIVEN SUFFICIENT TIME AND OPPORTUNITY TO CONSIDERWHETHER TO SIGN THIS AGREEMENT; AND HAS NOT BEEN FORCED OR COERCED INTO DOING SO.IN WITNESS WHEREOF, the parties hereto have executed this Confidentiality Agreement and Mutual Agreement toArbitrate Claims.DAVID F. KIRBY HUDSON GLOBAL, INC./s/ David F. Kirby /s/ Peg Buchenroth Signature of Employee Signature of Authorized RepresentativeDavid F. Kirby Chief People Officer, Americas and CorporatePrint Name of Employee Title of RepresentativeAugust 7, 2015 August 6, 2015 Date Date Exhibit 21Subsidiaries of Hudson Global, Inc. Subsidiary State or jurisdictionof incorporation Percentage ownedHudson Global Resources (Aust) Pty Limited Australia 100%Hudson Highland (APAC) Pty Limited Australia 100%Hudson Belgium SA NV Belgium 100%Hudson Global Resources Belgium NV Belgium 100%James Botrie and Associates, Inc. Canada 100%Hudson Recruitment Shanghai Limited China 100%Hudson Highland Group Holdings International, Inc. Delaware 100%Hudson Global Resources S.A.S. France 100%Hudson Global Resources Hong Kong Limited Hong Kong 100%Hudson HoldCo (Hong Kong) Limited Hong Kong 100%Hudson Global Resources Jersey Limited Jersey 100%Hudson Europe BV Netherlands 100%Hudson Global Resources (NZ) Ltd New Zealand 100%Hudson Global Resources Management, Inc. Pennsylvania 100%Hudson Global Resources Sp.Zo.O Poland 100%Hudson Global Resources (Singapore) Pte Limited Singapore 100%Hudson Global Resources Madrid S.L. Spain 100%Hudson Global Resources S.L. Spain 100%Hudson Global Resources Switzerland Switzerland 100%Hudson Global Resources Limited United Kingdom 100%Listed above are certain consolidated directly or indirectly owned Hudson Global, Inc. subsidiaries included in the consolidated financial statements ofHudson Global, Inc. Unlisted subsidiaries, considered in the aggregate, do not constitute a significant subsidiary. Exhibit 23Consent of Independent Registered Public Accounting FirmThe Board of Directors and StockholdersHudson Global, Inc.: We consent to the incorporation by reference in the registration statements (No. 333-119563) on Form S-4 and (Nos. 333-104209, 333-104210, 333-104212,333-117005, 333-117006, 333-126915, 333-161170, 333-161171, 333-176007 and 333-182973) on Form S-8 of Hudson Global, Inc. of our reports datedMarch 3, 2016, with respect to the consolidated balance sheets of Hudson Global, Inc. and subsidiaries as of December 31, 2015 and 2014, and the relatedconsolidated statements of operations, comprehensive income, cash flows and stockholders' equity for each of the years in the three-year period endedDecember 31, 2015, and the related financial statement schedules listed in Item 15(2), and the effectiveness of internal control over financial reporting as ofDecember 31, 2015, which reports appear in the December 31, 2015 annual report on Form 10-K of Hudson Global, Inc./s/ KPMG LLP New York, New York March 3, 2016 Exhibit 31.1 CERTIFICATIONS I, Stephen A. Nolan, certify that:1.I have reviewed this annual report on Form 10-K of Hudson Global, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant's internal control over financial reporting; and5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting. Dated:March 3, 2016/s/ STEPHEN A. NOLAN Stephen A. Nolan Chief Executive Officer Exhibit 31.2 CERTIFICATIONS I, Patrick Lyons, certify that:1.I have reviewed this annual report on Form 10-K of Hudson Global, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant's internal control over financial reporting; and5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting. Dated:March 3, 2016/s/ PATRICK LYONS Patrick Lyons Chief Financial Officer and Chief Accounting Officer Exhibit 32.1 Written Statement of the Chief Executive OfficerPursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002 Solely for the purposes of complying with 18 U.S.C. Section 1350, I, the undersigned Chief Executive Officer of Hudson Global, Inc. (the “Company”),hereby certify, based on my knowledge, that the Annual Report on Form 10-K of the Company for the year ended December 31, 2015 (the “Report”) fullycomplies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in allmaterial respects, the financial condition and results of operations of the Company. /s/ STEPHEN A. NOLAN Stephen A. Nolan March 3, 2016 Exhibit 32.2 Written Statement of the Chief Financial Officer and Chief Accounting OfficerPursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002 Solely for the purposes of complying with 18 U.S.C. Section 1350, I, the undersigned Chief Financial Officer and Chief Accounting Officer of HudsonGlobal, Inc. (the “Company”), hereby certify, based on my knowledge, that the Annual Report on Form 10-K of the Company for the year endedDecember 31, 2015 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that informationcontained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ PATRICK LYONS Patrick Lyons March 3, 2016

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