Hudson Global (HSON) 8-K Hudson Highland Group Reports

Exhibit 99.1

For Immediate Release	Contacts:	Richard W. Pehlke
		Hudson Highland Group
		212-351-7285
		rich.pehlke@hhgroup.com
		Thomas Smith
		Ogilvy Public Relations Worldwide
		212-880-5269
		thomas.smith@ogilvypr.com

Hudson Highland Group Reports

2005 Third Quarter and Nine Month Results

NEW YORK, NY – October 25, 2005 –Hudson Highland Group, Inc. (NASDAQ: HHGP), one of the world’s leading providers of specialized professional staffing, retained executive search and human capital solutions, today announced financial results for the third quarter and nine months ended September 30, 2005.

2005 Third Quarter Highlights

• Revenue of $356.6 million, an increase of 13.2 percent from $315.0 million for the third quarter of 2004

• Gross margin of $135.2 million, or 37.9 percent of revenue, an increase of 16.1 percent from $116.4 million, or 37.0 percent of revenue, for the third quarter of 2004

• EBITDA of $8.7 million, up from a loss of $2.4 million for the third quarter of 2004

• Net income of $2.3 million, or $0.10 per basic share and $0.09 per diluted share, compared to a net loss of $6.9 million, or $0.34 per basic and diluted share for the third quarter of 2004

• Completed acquisition of Balance Ervaring op Projectbasis B.V. (Balance), a leading professional contract staffing firm in the Netherlands in August

“Our strategy is paying off,” said Jon Chait, chairman and chief executive officer of Hudson Highland Group. “Our results to date have positioned the company for a strong 2005 overall and demonstrate continuing progress toward our long term profitability goals. Despite historically weak third quarter industry trends, every operating unit delivered improved profitability on a year-over-year basis.”

“We achieved stronger operating leverage and better EBITDA margins than expected during the third quarter and are raising our guidance for the year accordingly,” said Richard W. Pehlke, Hudson Highland Group’s executive vice president and chief financial officer.

Guidance

Given the current economic environment, the company expects EBITDA as a percent of revenue to be at least 2 percent in 2005 and believes that an assumption of 12 to 15 percent revenue growth for 2005 remains reasonable. Considering the strong year-to-date results and the impact of the Balance acquisition, the company now expects 2005 full-year EBITDA to range from $30 to $34 million. This is based on expectations of constant currency revenue and gross margin growth of 30 to 35 percent in Hudson North America, 10 to 15 percent in Hudson Europe, and 0 to 5 percent in Hudson Asia Pacific and Highland Partners.

Given the current economic environment, the company continues to expect EBITDA as a percent of revenue to be 3.5 to 4 percent in 2006, and believes revenue growth assumptions above 10 percent would be unreasonable.

2005 Nine Month Results

For the first nine months of 2005, Hudson Highland Group reported revenue of $1.074 billion, up 17.8 percent from $912.3 million for the same nine-month period last year. Net income was $2.5 million, or $0.12 per basic share and $0.11 per diluted share, compared with a net loss of $25.4 million, or $1.33 per basic and diluted share, for the same nine-month period last year.

Conference Call / Webcast

Hudson Highland Group will conduct a conference call tomorrow Wednesday, October 26, 2005 at 9:00 AM EDT to discuss this announcement. Individuals wishing to participate can join the conference call by dialing 1-800-374-1532 followed by the participant passcode 1462858 at 8:50 AM EDT. For those outside the United States, please call in on 1-706-634-5594 followed by the participant passcode 1462858. Hudson Highland Group’s quarterly conference call can also be accessed online through Yahoo! Finance at www.yahoo.com and the investor information section of the company’s website atwww.hhgroup.com.

Hudson Highland Group

Hudson Highland Group is one of the world’s leading professional staffing, retained executive search and human capital solution providers. We help our clients achieve greater organizational performance by attracting, selecting, engaging and developing the best and brightest people for their businesses. Our approximately 3,800 employees in more than 20 countries are dedicated to providing unparalleled service and value to our clients. More information about Hudson Highland Group is available atwww.hhgroup.com.

Safe Harbor Statement

This press release contains statements that the company believes to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this press release, including those under the caption “Guidance” and other statements regarding the company’s future financial condition, results of operations, business operations and business prospects, are forward-looking statements. Words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “predict,” “believe” and similar words, expressions and variations of these words and expressions are intended to identify forward-looking statements. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These factors include, but are not

limited to, the impact of global economic fluctuations on temporary contracting operations; the cyclical nature of the company’s executive search and mid-market professional staffing businesses; the company’s ability to manage its growth and fund working capital associated therewith; risks associated with expansion; the company’s reliance on information systems and technology; competition; fluctuations in operating results; risks relating to foreign operations, including foreign currency fluctuations; dependence on highly skilled professionals and key management personnel; the impact of employees departing with existing executive search clients; risks maintaining professional reputation and brand name; restrictions imposed by blocking arrangements; exposure to employment-related claims, and limits on insurance coverage related thereto; government regulations; the company’s ability to successfully operate as an independent company and the level of costs associated therewith; and restrictions on the company’s operating flexibility due to the terms of its credit facility. Additional information concerning these and other factors is contained in the company’s filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date of this press release. The company assumes no obligation, and expressly disclaims any obligation, to review or confirm analysts’ expectations or estimates or to update any forward-looking statements, whether as a result of new information, future events or otherwise.

###

Financial Tables Follow

HUDSON HIGHLAND GROUP, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2005			2004			2005			2004
Revenue	$	356,604		$	315,029		$	1,074,307		$	912,264
Direct costs		221,436			198,615			669,765			570,970
Gross margin		135,168			116,414			404,542			341,294
Selling, general and administrative expenses		126,661			115,797			381,974			346,211
Depreciation and amortization		4,217			4,368			13,701			14,362
Business reorganization expenses (recoveries)		(149	)		3,314			143			3,450
Merger and integration recoveries		—			(317	)		(35	)		(354	)
Operating income (loss)		4,439			(6,748	)		8,759			(22,375	)
Other income (expense):
Other income (expense), net		380			128			376			(1,759	)
Interest income (expense), net		(331	)		203			(1,253	)		(53	)
Income (loss) before provision for income taxes		4,488			(6,417	)		7,882			(24,187	)
Provision for income taxes		2,193			530			5,359			1,251
Net income (loss)	$	2,295		$	(6,947	)	$	2,523		$	(25,438	)
Basic and diluted income (loss) per share:
Basic income (loss)	$	.10		$	(.34	)	$	.12		$	(1.33	)
Diluted income (loss)	$	.09		$	(.34	)	$	.11		$	(1.33	)
Weighted average shares outstanding:
Basic		23,875,000			20,306,000			21,686,000			19,146,000
Diluted		25,540,000			20,306,000			22,951,000			19,146,000

HUDSON HIGHLAND GROUP, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(in thousands, except share and per share amounts)

	September 30, 2005			December 31, 2004
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	33,698		$	21,064
Accounts receivable, net		241,127			197,582
Other current assets		15,977			14,187
Total current assets		290,802			232,833
Property and equipment, net		32,644			36,360
Intangibles, net		31,200			6,104
Other assets		5,233			6,081
	$	359,879		$	281,378
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	36,595		$	27,023
Accrued expenses and other current liabilities		146,685			140,903
Short-term borrowings and current portion of long-term debt		25,784			4,066
Accrued business reorganization expenses		5,079			8,930
Accrued merger and integration expenses		1,487			1,872
Total current liabilities		215,630			182,794
Accrued business reorganization expenses, non-current		4,439			6,832
Accrued merger and integration expenses, non-current		2,121			3,329
Other non-current liabilities		4,396			2,648
Long-term debt, less current portion		1,134			2,041
Total liabilities		227,720			197,644
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value, 10,000,000 shares authorized; none issued or outstanding		—			—
Common stock, $0.001 par value, 100,000,000 shares authorized; issued: 24,210,911 and 20,612,966 shares, respectively		24			21
Additional paid-in capital		403,549			353,825
Accumulated deficit		(309,052	)		(311,576	)
Accumulated other comprehensive income - translation adjustments		37,868			41,694
Treasury stock, 15,798 shares		(230	)		(230	)
Total stockholders’ equity		132,159			83,734
	$	359,879		$	281,378

HUDSON HIGHLAND GROUP, INC.

SEGMENT ANALYSIS

(in thousands)

(unaudited)

For the Three Months Ended September 30, 2005	Americas			Europe			Asia Pac		Corporate & Other			Total
Revenue
Hudson	$	109,090		$	117,285		$	114,410	$	471		$	341,256
Highland		11,132			3,271			945		—			15,348
	$	120,222		$	120,556		$	115,355	$	471		$	356,604
Gross Margin
Hudson	$	28,694		$	49,561		$	42,093	$	309		$	120,657
Highland		10,327			3,206			978		—			14,511
	$	39,021		$	52,767		$	43,071	$	309		$	135,168
Adjusted EBITDA (1)
Hudson	$	5,079		$	3,537		$	8,730	$	(948	)	$	16,398
Highland		1,032			160			215		—			1,407
Corporate		—			—			—		(9,298	)		(9,298	)
	$	6,111		$	3,697		$	8,945	$	(10,246	)	$	8,507
EBITDA (1)
Hudson	$	5,080		$	3,537		$	8,730	$	(948	)	$	16,399
Highland		1,180			160			215		—			1,555
Corporate		—			—			—		(9,298	)		(9,298	)
	$	6,260		$	3,697		$	8,945	$	(10,246	)	$	8,656	��
For the Three Months Ended September 30, 2004	Americas			Europe			Asia Pac		Corporate & Other			Total
Revenue
Hudson	$	83,013		$	114,957		$	102,175	$	683		$	300,828
Highland		11,181			1,318			1,702		—			14,201
	$	94,194		$	116,275		$	103,877	$	683		$	315,029
Gross Margin
Hudson	$	22,658		$	43,129		$	36,501	$	643		$	102,931
Highland		10,664			1,253			1,566		—			13,483
	$	33,322		$	44,382		$	38,067	$	643		$	116,414
Adjusted EBITDA (1)
Hudson	$	3,014		$	(318	)	$	7,227	$	(1,328	)	$	8,595
Highland		1,293			(890	)		81		—			484
Corporate		—			—			—		(8,462	)		(8,462	)
	$	4,307		$	(1,208	)	$	7,308	$	(9,790	)	$	617
EBITDA (1)
Hudson	$	1,995		$	(268	)	$	7,807	$	(1,328	)	$	8,206
Highland		(1,316	)		(890	)		82		—			(2,124	)
Corporate		—			—			—		(8,462	)		(8,462	)
	$	679		$	(1,158	)	$	7,889	$	(9,790	)	$	(2,380	)

(1) See the Reconciliation of Adjusted EBITDA to Operating Income (Loss) for a description of note (1).

HUDSON HIGHLAND GROUP, INC.

SEGMENT ANALYSIS

(in thousands)

(unaudited)

For the Nine Months Ended September 30, 2005	Americas			Europe			Asia Pac			Corporate & Other			Total
Revenue
Hudson	$	327,815		$	364,341		$	334,236		$	1,662		$	1,028,054
Highland		34,820			8,426			3,007			—			46,253
	$	362,635		$	372,767		$	337,243		$	1,662		$	1,074,307
Gross Margin
Hudson	$	82,970		$	154,522		$	122,057		$	1,182		$	360,731
Highland		32,635			8,233			2,943			—			43,811
	$	115,605		$	162,755		$	125,000		$	1,182		$	404,542
Adjusted EBITDA (1)
Hudson	$	12,957		$	12,567		$	25,658		$	(3,340	)	$	47,842
Highland		2,978			179			(723	)		—			2,434
Corporate		—			—			—			(27,708	)		(27,708	)
	$	15,935		$	12,746		$	24,935		$	(31,048	)	$	22,568
EBITDA (1)
Hudson	$	12,483		$	12,646		$	25,658		$	(3,340	)	$	47,447
Highland		3,272			179			(730	)		—			2,721
Corporate		—			—			—			(27,708	)		(27,708	)
	$	15,755		$	12,825		$	24,928		$	(31,048	)	$	22,460
For the Nine Months Ended September 30, 2004	Americas			Europe			Asia Pac			Corporate & Other			Total
Revenue
Hudson	$	235,243		$	327,233		$	302,805		$	1,263		$	866,544
Highland		32,948			5,463			7,309			—			45,720
	$	268,191		$	332,696		$	310,114		$	1,263		$	912,264
Gross Margin
Hudson	$	59,899		$	132,382		$	104,841		$	1,166		$	298,288
Highland		31,109			5,177			6,720			—			43,006
	$	91,008		$	137,559		$	111,561		$	1,166		$	341,294
Adjusted EBITDA (1)
Hudson	$	6,054		$	(458	)	$	15,967		$	(4,453	)	$	17,110
Highland		2,101			(1,115	)		946			—			1,932
Corporate		—			—			—			(23,959	)		(23,959	)
	$	8,155		$	(1,573	)	$	16,913		$	(28,412	)	$	(4,917	)
EBITDA (1)
Hudson	$	5,105		$	(408	)	$	16,329		$	(4,453	)	$	16,573
Highland		(293	)		(1,281	)		947			—			(627	)
Corporate		—			—			—			(23,959	)		(23,959	)
	$	4,812		$	(1,689	)	$	17,276		$	(28,412	)	$	(8,013	)

(1) See the Reconciliation of Adjusted EBITDA to Operating Income (Loss) for a description of note (1).

HUDSON HIGHLAND GROUP, INC.

RECONCILIATION OF ADJUSTED EBITDA TO OPERATING INCOME (LOSS)

(in thousands)

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2005			2004			2005			2004
Hudson
Adjusted EBITDA (1)	$	16,398		$	8,595		$	47,842		$	17,110
Business reorganization (expenses) recoveries		1			(706	)		(430	)		(891	)
Merger and integration recoveries		—			317			35			354
EBITDA (1)		16,399			8,206			47,447			16,573
Depreciation and amortization		(3,744	)		(3,860	)		(12,264	)		(11,192	)
Operating income	$	12,655		$	4,346		$	35,183		$	5,381
Highland
Adjusted EBITDA (1)	$	1,407		$	484		$	2,434		$	1,932
Business reorganization (expenses) recoveries		148			(2,608	)		287			(2,559	)
EBITDA (1)		1,555			(2,124	)		2,721			(627	)
Depreciation and amortization		(327	)		(473	)		(1,023	)		(1,305	)
Operating income (loss)	$	1,228		$	(2,597	)	$	1,698		$	(1,932	)
Corporate
Adjusted EBITDA and EBITDA (1)	$	(9,298	)	$	(8,462	)	$	(27,708	)	$	(23,959	)
Depreciation and amortization		(146	)		(35	)		(414	)		(1,865	)
Corporate expenses	$	(9,444	)	$	(8,497	)	$	(28,122	)	$	(25,824	)
Hudson Highland Group consolidated
Adjusted EBITDA (1)	$	8,507		$	617		$	22,568		$	(4,917	)
Business reorganization (expenses) recoveries		149			(3,314	)		(143	)		(3,450	)
Merger and integration recoveries		—			317			35			354
EBITDA (1)		8,656			(2,380	)		22,460			(8,013	)
Depreciation and amortization		(4,217	)		(4,368	)		(13,701	)		(14,362	)
Operating income (loss)	$	4,439		$	(6,748	)	$	8,759		$	(22,375	)

(1) Non-GAAP earnings before interest, income taxes, special charges, other non-operating expense, and depreciation and amortization (“Adjusted EBITDA”) and non-GAAP earnings before interest, income taxes, other non-operating expense, and depreciation and amortization (“EBITDA”) are presented to provide additional information about the company’s operations on a basis consistent with the measures which the company uses to manage its operations and evaluate its performance. Management also uses these measurements to evaluate capital needs and working capital requirements. Adjusted EBITDA and EBITDA should not be considered in isolation or as a substitute for operating income, cash flows from operating activities, and other income or cash flow statement data prepared in accordance with generally accepted accounting principles or as a measure of the company’s profitability or liquidity. Furthermore, adjusted EBITDA and EBITDA as presented above may not be comparable with similarly titled measures reported by other companies.