HUDSON HIGHLAND GROUP RW BAIRD BUSINESS SOLUTIONS CONFERENCE February 25, 2009
Forward Looking Statements Please be advised that except for historical information, the statements made during this presentation and in these slides constitute forwardlooking statements under applicable securities laws. Such forwardlooking statements involve certain risks and uncertainties, including statements regarding the company's strategic direction, prospects and future results. Certain factors, including factors outside of our control, may cause actual results to differ materially from those contained in the forwardlooking statements, including the impact of global economic fluctuations including the current economic downturn, the ability of clients to terminate their relationship with the company at any time, risks in collecting the company's accounts receivable, implementation of the company's cost reduction initiatives effectively and the other risks discussed in our filings made with the Securities and Exchange Commission. These forwardlooking statements speak only as of the date of this presentation. The company assumes no obligation, and expressly disclaims any obligation, to review or confirm analysts' expectations or estimates or to update any forwardlooking statements, whether as a result of new information, future events or otherwise. 2
Highland Group Highland delivers global permanent recruitment, contract staffing and talent management services Highland spun out from Monster Worldwide April 1, 2003 Highland represents the consolidation of 67 acquisitions by former parent (54 acquisitions related to, 13 related to Highland) Divested seven business units with approx $300M in revenue from Sept 2006 to May 2008, including Energy & Engineering and Highland Partners Worldwide capabilities from over 100 offices in more than 20 countries, with approximately 3,100 employees 3
Our Strategic Focus is Simple Specialized Professional Resources Specialized Defined as service with knowledge and insight about candidate skills and clients Goal is to position experts selling to experts Specializations typically command higher margins due to scarcity of resources Professional Candidates with degrees (accounting, law, IT) or knowledge skills Resources 4 Includes permanent recruitment, temporary or project staffing, and services in candidate identification and selection
Q4 2008 Global Product Split Q4 2008 Revenue Q4 2008 Gross Margin Temporary Contracting Temporary Contracting 72% 8% Talent Mgmt. 36% 16% Talent Mgmt. 20% 48% Permanent Recruitment Permanent Recruitment 5
Q4 2008 Regional Split Q4 2008 Revenue Q4 2008 Gross Margin 34% Asia Pacific 35% Asia Pacific 41% 25% 49% 16% Europe Americas Europe Americas 6
2008 Regional Gross Margin Composition Europe 2008 Gross Margin: Asia Pacific 2008 Gross Margin: Continental Europe Asia 56% 24% 44% 76% United Kingdom Australia / New Zealand 7
2008 Americas Practice Groups 2008 Revenue 2008 Gross Margin 62% IT&T 22% 36% 4% 12% 17% Recruitment & Talent Mgmt. Financial Solutions IT&T 21% 49% 36% 15% 17% 15% Recruitment & Talent Mgmt. Financial Solutions Legal Legal 8
Unique Strengths of Geographically diverse business will benefit the company as different regions recover at different times Our focus on specialized practice groups offers some protection from cyclical forces We have marketleading brands around the world: Australia/New Zealand Belgium Singapore and China Balance in Netherlands IT Banking in the UK Legal in North America 9
Revenue and EBITDA Progress Since Spin $US in Millions Revenue (Revenue growth) Adjusted EBITDA (As % of Revenue) $1,400 $1,200 $1,000 $800 $600 $400 $200 $ 14% 2% 2% 20% 20% 0% 2% 3% 17% 2003 2004 2005 2006 2007 2008 $45 (8)% $30 2.0% 1.9% 2.8% 2.9% $15 $ $(15) $(30) $(45) $(60) 0.7% (7.0%) (1.3%) 0.4% 3.4% 2003 2004 2005 2006 2007 2008 (2.3%) (7.1%) 0.8% Full Year First Half Full Year First Half 10 Adjusted EBITDA is a nongaap measure defined as earnings before interest, income taxes, depreciation, amortization, and also excludes merger and integration costs, business reorganization, acquisitionrelated compensation and impaired goodwill. A reconciliation of EBITDA to operating income (loss) is included in the presentation.
Our Long Term EBITDA Margin Goal Remains 710% HHGP Asia Pacific Europe Americas 3.0% 1.0% 1.0% 3.0% 5.0% 7.0% 9.0% 2004 2005 2006 2007 2008 Long Term (1) Adjusted EBITDA is a nongaap measure defined as earnings before interest, income taxes, depreciation, amortization, and also excludes merger and integration costs, business reorganization, acquisitionrelated compensation and impaired goodwill. 11
But Current Economic Conditions Will Slow our Progress 2009 Declines much larger than 2001 Real GDP Growth, Percentage Change from Prior Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 United States 3.7 0.8 1.6 2.5 3.6 2.9 2.8 2.0 1.1 (1.6) 1. 6 United Kingdom 3.9 2.5 2.1 2.8 2.8 2.1 2.8 3.0 0.7 (2.8) 0. 2 Australia 3.6 2.1 4.0 3.4 3.2 3.2 2.5 4.4 2.5 0.5 1. 9 New Zealand 3.8 2.4 4.7 4.4 4.3 2.7 2.5 3.0 (0.5) (0.4) 1. 9 Eurozone 4.0 2.0 1.0 0.9 2.0 1.8 2.7 2.6 0.9 (2.0) 0. 5 Japan 2.9 0.2 0.3 1.4 2.7 1.9 2.4 2.4 (0.3) (2.6) 0. 6 China 13.0 9.0 6.7 8. 0 Source: OECD Economic Outlook No. 84, November 2008, IMF Data, January 28, 2009, European Commission on Economic and Financial Affairs, January 19, 2009 Forecast. 12
Unemployment Rates Around the Globe Percent of Labor Force 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 United States 4.0 4.8 5.8 6.0 5.5 5.1 4.6 4.6 5.7 7.3 7.5 United Kingdom 5.5 5.1 5.2 5.0 4.8 4.8 5.4 5.4 5.5 6.8 8.2 Australia 6.3 6.7 6.3 5.9 5.4 5.0 4.8 4.4 4.3 5.3 6.0 New Zealand 6.0 5.3 5.2 4.7 3.9 3.7 3.8 3.6 4.0 5.4 6.0 Eurozone 9.0 8.3 7.5 7.5 9.3 10.2 Japan 4.7 5.0 5.4 5.3 4.7 4.4 4.1 3.9 4.1 4.4 4.4 Source: OECD Economic Outlook No. 84, November 2008, European Commission, Interim Forecast, January 19, 2009. 13
Adjusted EBITDA Trends $US in Millions 16.0 $13.1 12.0 $11.9 $11.2 $10.6 $11.5 $8.8 8.0 $4.5 $6.3 $4.7 $7.1 $6.0 4.0 $3.1 0.0 ($0.0) Q1 Q2 Q3 ($0.4) Q4 (4.0) $(4.7) ($3.4) (8.0) 2005 2006 2007 2008 14 (1) Adjusted EBITDA is a nongaap measure defined as earnings before interest, income taxes, depreciation, amortization, and also excludes merger and integration costs, business reorganization, acquisitionrelated compensation and impaired goodwill. A reconciliation of EBITDA to operating income (loss) is included in the presentation.
Initial Trends in Q1 2009 15 Trends in January 2009 were consistent with December 2008 Gross margin was down approx 42% (32% on a constant currency basis) from January 2008 We did not give guidance for Q1 2009, given low visibility in the current economic climate We do expect operating conditions to remain weak during the first quarter but we are finding opportunities: Public sector, energy, life sciences are hiring Tailoring solutions to client needs Continuing to be aggressive on costs while preserving revenue generators We expect the seasonal decline in Revenue and adjusted EBITDA from Q4 to Q1 to be larger than usual
16 Financial Results
Q4 2008 Consolidated Financial Results $US in Millions Revenue Gross Margin SG&A Adj. EBITDA (1) Goodwill and other Impairments Op Income Net Income Diluted EPS (1) Adjusted EBITDA is a nongaap measure defined as earnings before interest, income taxes, depreciation, amortization, and also excludes merger and integration costs, business reorganization, acquisitionrelated compensation and impaired goodwill. A reconciliation of EBITDA to operating income (loss) is included in the presentation. 17(2) CC represents constant currency variance. 28% 16% 33% 23% 23% 12% 126% 118% CC CC CC CC CC CC Q4 2008 $207.4 $86.5 $89.9 ($3.4) $67.1 ($80.2) ($80.3) ($3.20) Q4 2007 $288.8 $129.4 $116.3 $13.1 $9.0 $12.0 $0.46
2008 Consolidated Financial Results $US in Millions 2008 2007 Revenue 8% $1,080.2 $1,173.1 8% CC Gross Margin 8% $464.1 $505.9 10% CC SG&A 5% $444.0 $465.7 6% CC Adj. EBITDA (1) 50% $20.1 $40.1 54% CC Goodwill and other Impairments $67.1 Op Income ($73.4) $16.7 CC Net Income ($74.3) $15.0 CC Diluted EPS ($2.95) $0.58 (1) Adjusted EBITDA is a nongaap measure defined as earnings before interest, income taxes, depreciation, amortization, and also excludes merger and integration costs, business reorganization, acquisitionrelated compensation and impaired goodwill. A reconciliation of EBITDA to operating income (loss) is included in the presentation. 18
Balance Sheet As of 12/31/08, $US in Millions Assets Liabilities and Equity Cash 49 Accounts Payable 16 Accounts Receivable 129 Accrued Expenses 78 Other Current Assets 16 ST Borrowings, Current Portion LTD 5 Total Current Assets 194 Accrued Integration and Reorg Costs 6 Total Current Liabilities 105 Net PP&E Intangibles Other Assets Total Assets 25 2 10 231 Longterm Liabilities 17 LT Accrued Integration and Reorg Costs 1 Shareholders Equity 108 Total Liabilities and Equity 231 19
2008 Cash Flow Summary $US in Millions YTD Dec08 YTD Dec07 Net (loss) income $ (74.3) $ 15.0 Depreciation and amortization 14.9 15.0 Goodwill and other impairment charges 67.1 Stockbased compensation 4.7 5.5 Gain on asset disposition (5.9) (10.2) Change in accounts receivable 50.4 26.2 Change in accounts payable and other liabilities (46.0) (12.7) Other 1.1 (1.0) Cash from operations 11.9 37.7 Capital expenditures (10.6) (13.3) Free cash flow 1.3 24.5 Payments for acquisitions and intangibles, net (6.6) (37.5) Proceeds from the sale of assets 20.9 2.9 Net borrowings (repayments) 5.3 Purchase of treasury shares (7.5) Other 2.1 2.0 20 Effect of exchange rates (5.4) 2.8 Change in cash 10.0 (5.4)
Q4 08 Regional Gross Margin Mix Approximate mix of gross margin by product around the globe Temp Perm Talent Mgmt Americas 80% 20% Europe 25% 50% 25% UK 40% 50% 10% Cont Europe 10% 50% 40% Asia Pacific 30% 60% 10% ANZ 40% 50% 10% Asia 95% 5% HHGP Total 36% 48% 16% 21
23 Appendix
EBITDA Reconciliation, Full Year $US in Millions 2008 Revenue 273.6 411.5 395.1 1,080.2 Gross margin 75.0 216.3 172.8 464.1 Adjusted EBITDA (1) 4.0 23.0 21.4 (28.3) 20.1 Acquisitionrelated exp Reorg expense 3.1 3.0 4.5 1.0 11.6 M&I expense 0.0 0.0 0.0 Goodwill and other impairm 40.7 19.6 6.7 67.1 EBITDA (1) (39.8) 0.4 10.1 (29.3) (58.6) D&A 4.6 5.8 4.1 0.2 14.8 Operating income (loss) (44.4) (5.4) 6.0 (29.5) (73.4) 2007 Revenue 291.5 466.4 415.1 1,173.1 Gross margin 87.5 237.5 180.9 505.9 Adjusted EBITDA (1) (0.1) 33.4 33.4 (26.5) 40.1 Acquisitionrelated exp 3.6 1.7 5.3 Reorg expense 0.5 2.4 (0.0) 1.4 4.4 M&I expense (0.1) (0.7) (0.8) EBITDA (1) (4.2) 29.2 33.4 (27.2) 31.3 D&A 4.4 6.0 3.9 0.3 14.6 Operating income (loss) (8.5) 23.1 29.5 (27.5) 16.7 2006 Revenue 306.7 454.4 392.3 1,153.5 Gross margin 91.5 207.6 158.8 457.9 Adjusted EBITDA (1) (5.4) 24.9 30.8 (27.7) 22.6 Acquisitionrelated exp 1.7 1.7 Reorg expense 1.8 2.7 0.9 0.7 6.0 M&I expense 0.4 0.0 (0.0) 0.4 EBITDA (1) (7.6) 20.5 30.0 (28.4) 14.5 D&A 6.3 6.9 3.2 3.4 19.8 Operating income (loss) (13.9) 13.7 26.8 (31.8) (5.2) 2005 Revenue 291.2 450.0 386.5 1,127.7 Gross margin 91.5 189.1 151.5 432.1 Adjusted EBITDA (1) 5.0 12.6 27.2 (37.4) 7.4 Acquisitionrelated exp Reorg expense 0.5 (0.0) 0.0 0.5 M&I expense (0.0) (0.0) (0.1) EBITDA (1) 4.5 12.6 27.2 (37.4) 7.0 D&A 5.1 4.3 6.5 0.6 16.5 Operating income (loss) (0.6) 8.3 20.7 (38.0) (9.5) 24 (1) Adjusted EBITDA is a nongaap measure defined as earnings before interest, income taxes, depreciation, amortization, and also excludes merger and integration costs, business reorganization, acquisitionrelated compensation and impaired goodwill. A reconciliation of EBITDA to operating income (loss) is included in the presentation.
EBITDA Reconciliation, Full Year $US in Millions 2004 Revenue 214.7 417.5 357.0 989.3 Gross margin 71.0 170.4 137.0 378.4 Adjusted EBITDA (1) 0.2 (0.8) 20.6 (33.2) (13.2) Acquisitionrelated exp Reorg expense 1.1 0.2 (0.3) 1.0 M&I expense (0.1) 0.4 (0.2) 0.1 EBITDA (1) (0.8) (1.5) 21.1 (33.2) (14.3) D&A 5.2 4.3 6.1 2.1 17.7 Operating income (loss) (6.0) (5.8) 15.0 (35.2) (32.0) 2003 Revenue 166.0 337.5 320.9 824.4 Gross margin 50.8 142.3 116.6 309.7 Adjusted EBITDA (1) (16.4) (14.2) 3.9 (31.2) (57.9) Acquisitionrelated exp Goodwill Impairment 55.4 128.7 11.3 195.4 Reorg expense 1.9 9.1 4.4 0.2 15.6 M&I expense (0.1) 2.9 (0.1) 2.7 EBITDA (1) (73.5) (155.0) (11.6) (31.4) (271.6) D&A 3.8 3.8 5.6 3.0 16.2 Operating income (loss) (77.4) (158.8) (17.2) (34.4) (287.8) 25 (1) Adjusted EBITDA is a nongaap measure defined as earnings before interest, income taxes, depreciation, amortization, and also excludes merger and integration costs, business reorganization, acquisitionrelated compensation and impaired goodwill. A reconciliation of EBITDA to operating income (loss) is included in the presentation.
EBITDA Reconciliation, Q1 $US in Millions Q1 2008 Revenue 83.3 111.3 100.9 295.5 Gross margin 22.8 58.5 44.3 125.6 Adjusted EBITDA (1) 1.2 5.8 5.2 (5.9) 6.3 Acquisitionrelated exp Reorg expense 1.5 (0.2) 0.1 1.3 M&I expense (0.0) 0.1 0.1 EBITDA (1) (0.2) 5.9 5.1 (5.9) 4.9 D&A 1.2 1.6 1.0 0.1 3.9 Operating income (loss) (1.4) 4.3 4.1 (6.0) 1.0 Q1 2007 Revenue 76.5 117.0 93.3 286.8 Gross margin 22.1 56.6 38.6 117.3 Adjusted EBITDA (1) (1.4) 6.6 5.6 (6.2) 4.5 Acquisitionrelated exp 0.3 0.3 Reorg expense 0.7 2.4 (0.1) 3.1 M&I expense EBITDA (1) (2.1) 3.8 5.6 (6.2) 1.1 D&A 1.1 1.6 0.9 0.1 3.7 Operating income (loss) (3.2) 2.2 4.7 (6.3) (2.6) Q1 2006 Q1 2005 Revenue 72.8 110.3 90.6 273.7 Gross margin 18.4 48.6 35.6 102.7 Adjusted EBITDA (1) (6.8) 5.4 4.5 (7.9) (4.7) Acquisitionrelated exp Reorg expense (0.0) (0.0) M&I expense EBITDA (1) (6.8) 5.4 4.5 (7.9) (4.7) D&A 1.5 1.6 0.8 0.2 4.0 Operating income (loss) (8.2) 3.8 3.8 (8.1) (8.8) Revenue 74.5 114.2 90.3 279.0 Gross margin 22.7 47.4 34.5 104.7 Adjusted EBITDA (1) 0.9 3.1 6.2 (10.1) (0.0) Acquisitionrelated exp Reorg expense 0.6 (0.1) (0.0) 0.5 M&I expense (0.0) (0.0) EBITDA (1) 0.3 3.2 6.2 (10.1) (0.5) D&A 0.9 0.9 2.4 0.1 4.4 Operating income (loss) (0.6) 2.3 3.8 (10.3) (4.9) 26 (1) Adjusted EBITDA is a nongaap measure defined as earnings before interest, income taxes, depreciation, amortization, and also excludes merger and integration costs, business reorganization, acquisitionrelated compensation and impaired goodwill. A reconciliation of EBITDA to operating income (loss) is included in the presentation.
EBITDA Reconciliation, Q2 $US in Millions Q2 2008 Revenue 71.5 116.8 117.6 305.9 Gross margin 20.2 64.5 52.6 137.2 Adjusted EBITDA (1) 1.7 10.0 8.7 (9.2) 11.2 Acquisitionrelated exp Reorg expense 0.2 0.8 1.1 M&I expense 0.0 (0.1) (0.0) EBITDA (1) 1.5 9.2 8.7 (9.2) 10.2 D&A 1.2 1.3 1.0 0.1 3.6 Operating income (loss) 0.3 7.9 7.7 (9.3) 6.6 Q2 2007 Revenue 70.8 120.8 105.4 297.0 Gross margin 21.2 62.7 45.8 129.7 Adjusted EBITDA (1) (1.3) 10.6 9.1 (6.5) 11.9 Acquisitionrelated exp 3.6 0.3 3.9 Reorg expense (0.0) (0.0) 0.0 1.6 1.6 M&I expense (0.0) (0.0) EBITDA (1) (4.8) 10.3 9.1 (8.1) 6.5 D&A 1.2 1.6 1.0 0.1 3.9 Operating income (loss) (6.0) 8.7 8.1 (8.2) 2.7 Q2 2006 Revenue 80.2 116.5 99.7 296.3 Gross margin 23.8 54.0 41.8 119.6 Adjusted EBITDA (1) (3.0) 7.9 8.9 (6.8) 7.1 Acquisitionrelated exp Reorg expense 0.2 (0.1) 0.2 0.3 0.7 M&I expense 0.1 0.1 EBITDA (1) (3.3) 8.0 8.8 (7.2) 6.3 D&A 1.3 1.7 0.8 0.2 3.9 Operating income (loss) (4.5) 6.3 8.0 (7.3) 2.4 Q2 2005 Revenue 71.4 116.0 104.6 292.0 Gross margin 22.3 50.1 42.2 114.6 Adjusted EBITDA (1) 0.6 4.2 9.3 (9.4) 4.7 Acquisitionrelated exp Reorg expense (0.1) (0.1) M&I expense 0.0 0.0 EBITDA (1) 0.7 4.2 9.3 (9.4) 4.8 D&A 1.0 0.8 2.2 0.1 4.1 Operating income (loss) (0.3) 3.4 7.1 (9.5) 0.7 27 (1) Adjusted EBITDA is a nongaap measure defined as earnings before interest, income taxes, depreciation, amortization, and also excludes merger and integration costs, business reorganization, acquisitionrelated compensation and impaired goodwill. A reconciliation of EBITDA to operating income (loss) is included in the presentation.
EBITDA Reconciliation, Q3 $US in Millions Q3 2008 Q3 2007 Revenue 66.5 99.1 105.8 271.4 Gross margin 18.0 50.5 46.4 114.9 Adjusted EBITDA (1) 1.6 3.2 7.2 (6.0) 6.0 Acquisitionrelated exp Reorg expense 0.1 0.8 2.0 2.9 M&I expense (0.0) 0.0 0.0 EBITDA (1) 1.5 2.4 5.2 (6.0) 3.1 D&A 1.2 1.5 1.2 0.1 3.9 Operating income (loss) 0.3 0.9 3.9 (6.1) (0.9) Revenue 75.7 115.0 109.7 300.4 Gross margin 23.2 58.4 47.9 129.4 Adjusted EBITDA (1) 1.4 6.1 10.0 (6.8) 10.6 Acquisitionrelated exp 0.3 0.3 Reorg expense (0.1) (0.0) (0.0) 0.0 (0.1) M&I expense (0.0) (0.7) (0.8) EBITDA (1) 1.4 5.7 10.0 (6.0) 11.1 D&A 1.0 1.5 1.0 0.0 3.5 Operating income (loss) 0.4 4.3 9.0 (6.1) 7.6 Q3 2006 Q3 2005 Revenue 79.4 114.4 104.6 298.4 Gross margin 24.9 51.0 42.1 118.0 Adjusted EBITDA (1) 2.0 4.2 10.0 (7.4) 8.8 Acquisitionrelated exp 0.8 0.8 Reorg expense 1.2 0.6 0.1 0.2 2.1 M&I expense 0.0 0.0 0.0 EBITDA (1) 0.8 2.8 9.9 (7.6) 5.9 D&A 1.1 1.7 0.8 0.2 3.7 Operating income (loss) (0.3) 1.1 9.2 (7.8) 2.1 Revenue 73.7 109.9 102.6 286.1 Gross margin 23.5 45.4 40.4 109.2 Adjusted EBITDA (1) 2.1 2.8 7.9 (9.8) 3.1 Acquisitionrelated exp Reorg expense M&I expense EBITDA (1) 2.1 2.8 7.9 (9.8) 3.1 D&A 1.7 0.9 1.0 0.1 3.7 Operating income (loss) 0.4 1.9 6.9 (9.9) (0.6) 28 (1) Adjusted EBITDA is a nongaap measure defined as earnings before interest, income taxes, depreciation, amortization, and also excludes merger and integration costs, business reorganization, acquisitionrelated compensation and impaired goodwill. A reconciliation of EBITDA to operating income (loss) is included in the presentation.
EBITDA Reconciliation, Q4 $US in Millions Q4 2008 Revenue 52.4 84.2 70.8 207.4 Gross margin 14.1 42.8 29.6 86.5 Adjusted EBITDA (1) (0.5) 4.0 0.3 (7.1) (3.4) Acquisitionrelated exp Reorg expense 1.2 1.6 2.4 1.0 6.3 M&I expense 0.0 0.0 Goodwill, other charges 40.7 19.6 6.7 67.1 EBITDA (1) (42.5) (17.2) (8.9) (8.1) (76.8) D&A 1.1 1.3 0.9 0.1 3.4 Operating income (loss) (43.6) (18.5) (9.8) (8.2) (80.2) Q4 2007 Revenue 68.5 113.6 106.8 288.8 Gross margin 21.0 59.8 48.6 129.4 Q4 2006 Q4 2005 Revenue 74.3 113.2 97.5 285.0 Gross margin 24.4 53.9 39.3 117.6 Adjusted EBITDA (1) 2.3 7.4 7.4 (5.5) 11.5 Acquisitionrelated exp 0.9 0.9 Reorg expense 0.3 2.2 0.7 0.1 3.3 M&I expense 0.3 (0.0) 0.3 EBITDA (1) 1.7 4.3 6.7 (5.7) 7.1 D&A 2.5 1.8 0.9 2.9 8.1 Operating income (loss) (0.8) 2.5 5.9 (8.6) (1.0) Revenue 71.6 110.0 89.0 270.5 Gross margin 23.1 46.2 34.4 103.7 29 Adjusted EBITDA (1) 1.2 10.1 8.7 (7.0) 13.1 Acquisitionrelated exp 0.8 0.8 Reorg expense (0.1) (0.0) (0.0) (0.1) (0.3) M&I expense 0.0 0.0 0.0 EBITDA (1) 1.3 9.3 8.8 (6.9) 12.5 D&A 1.1 1.4 1.0 0.0 3.5 Operating income (loss) 0.3 7.9 7.7 (6.9) 9.0 Adjusted EBITDA (1) 1.4 2.5 3.8 (8.2) (0.4) Acquisitionrelated exp Reorg expense 0.0 0.0 0.1 M&I expense (0.0) (0.0) EBITDA (1) 1.4 2.4 3.8 (8.2) (0.5) D&A 1.4 1.7 0.9 0.2 4.3 Operating income (loss) (0.0) 0.7 2.9 (8.3) (4.7) (1) Adjusted EBITDA is a nongaap measure defined as earnings before interest, income taxes, depreciation, amortization, and also excludes merger and integration costs, business reorganization, acquisitionrelated compensation and impaired goodwill. A reconciliation of EBITDA to operating income (loss) is included in the presentation.