-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R0cpohWUPvPn8at5V15vFwR15dKOPByrnZz+1v2tA2WrUkfE9KD4vxee0fTXiJyY VmhseAl8i/TUwVLLJDlOaw== 0000914062-02-000158.txt : 20020414 0000914062-02-000158.hdr.sgml : 20020414 ACCESSION NUMBER: 0000914062-02-000158 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20020124 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020220 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRG SCHULTZ INTERNATIONAL INC CENTRAL INDEX KEY: 0001007330 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT [8700] IRS NUMBER: 582213805 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-28000 FILM NUMBER: 02554459 BUSINESS ADDRESS: STREET 1: 2300 WINDY RIDGE PKWY STREET 2: STE 100 N CITY: ATLANTA STATE: GA ZIP: 30339-8426 BUSINESS PHONE: 7707793900 MAIL ADDRESS: STREET 1: 2300 WINDY RIDGE PKWY STREET 2: STE 100 NORTH CITY: ATLANTA STATE: GA ZIP: 30339-8426 FORMER COMPANY: FORMER CONFORMED NAME: PROFIT RECOVERY GROUP INTERNATIONAL INC DATE OF NAME CHANGE: 19960207 8-K 1 prg8k22002.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): January 24, 2002 PRG-SCHULTZ INTERNATIONAL, INC. (Exact name of registrant as specified in charter) Commission File Number 000-28000 Georgia 58-2213805 (State or other jurisdiction of (IRS Employer Identification incorporation) No.) 2300 Windy Ridge Parkway Suite 100 North Atlanta, Georgia 30339-8426 (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code (770) 779-3900 (Former name or former address, if changed since last report) Item 5. Other Events. On January 24, 2002, PRG-Schultz International, Inc. ("PRG-Schultz") issued a press release announcing shareholder approval for the acquisition of substantially all of the assets of Howard Schultz & Associates International, Inc. ("HSA-Texas") and substantially all of the stock of certain of its affiliated foreign operating companies, a press release announcing the closing of the HSA-Texas acquisitions and the board of directors' decision to reclassify remaining discontinued operations as continuing and a press release appointing Mark C. Perlberg as PRG-Schultz's Chief Operating Officer. In addition, on February 18, 2002, PRG-Schultz issued a press release announcing its results for the quarter-ended December 31, 2001 and the year-ended December 31, 2001. PRG-Schultz hereby incorporates by reference herein the information set forth in its Press Releases dated January 24, 2002 and February 18, 2002, copies of which are attached hereto as Exhibits 99.1, 99.2, 99.3 and 99.4. Except as otherwise provided in the press releases, the press releases speak only as of the date of such press releases and such press releases shall not create any implication that the affairs of PRG-Schultz have continued unchanged since such date. Except for the historical information contained in this report, the statements made by PRG-Schultz are forward looking statements that involve risks and uncertainties. All such statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. PRG-Schultz's future financial performance could differ significantly from the expectations of management and from results expressed or implied in the Press Releases. For further information on other risk factors, please refer to the "Risk Factors" contained in PRG-Schultz's Current Report on Form 8-K filed on December 17, 2001 with the Securities and Exchange Commission. Item 7. Financial Statements and Exhibits. (a) Financial Statements. Not applicable. (b) Pro Forma Financial Information. Not applicable. (c) Exhibits. Exhibit Number Description 99.1 Press Release dated January 24, 2002 99.2 Press Release dated January 24, 2002 99.3 Press Release dated January 24, 2002 99.4 Press Release dated February 18, 2002 2 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PRG-SCHULTZ INTERNATIONAL, INC. Date: February 20, 2002 By: /s/ Donald E. Ellis, Jr. --------------------------------------------- Donald E. Ellis, Jr., Executive Vice President - Finance, Chief Financial Officer and Treasurer (Principal Financial Officer) 3 EXHIBIT INDEX Exhibit Number Description Page 99.1 Press Release dated January 24, 2002 5 99.2 Press Release dated January 24, 2002 8 99.3 Press Release dated January 24, 2002 13 99.4 Press Release dated February 18, 2002 14 4 1439626 EX-99.1 3 prg8k22002ex991.txt PRESS RELEASE Exhibit Number 99.1 Press Release The Profit Recovery Group International Announces Shareholder Approval For Acquisition of Howard Schultz & Associates Transaction to Close Today; Four New Directors Elected ATLANTA, Jan. 24 /PRNewswire-FirstCall/ -- The Profit Recovery Group International, Inc. (Nasdaq: PRGX - news) today announced shareholder approval of the Company's issuance of shares and options to acquire Howard Schultz & Associates International, Inc. (HS&A). The transaction, which involves the issuance by PRG of 14,759,970 shares of PRG common stock and options to purchase approximately 1,100,000 shares of PRG common stock to acquire substantially all of the assets of HS&A and substantially all of the stock of certain of its affiliated foreign operating companies, is expected to close later today. The Company, whose name has been changed to PRG-Schultz International, Inc., remains headquartered in Atlanta and its common stock will continue to be traded on Nasdaq under the ticker symbol PRGX. The close of this transaction marks the beginning of a new era in the evolution of our company, and the industry as a whole," said John Cook, chief executive officer of PRG-Schultz. "As the world of technology continues to rapidly evolve, and the volume of business transactions processed continues to grow, significant investments and resources are required to best serve our clients' businesses. The combination of our two companies enables us to pool our best practices, consolidate our research and development efforts, and leverage our unique areas of specialization, resulting in an organization that offers the most comprehensive accounts payable services in the industry. At the same time, we expect to realize significant operating synergies to drive profitability -- all for the benefit of our clients, our associates and our shareholders." PRG-Schultz also announced today that, at the special meeting, shareholders approved the election of four new directors. Howard Schultz, founder of HS&A and its chairman since 1970, has been elected chairman of PRG-Schultz's board of directors. The three other directors elected today include Andrew Schultz, executive vice president and member of HS&A's board of directors since January 2000, Nate Levine, founder and chief executive officer of ETAN Industries, which owns Cable Management Associates, a multiple cable system operator serving over 55,000 subscribers, and Arthur Budge, Jr., president and chief executive officer of Five States Energy Company, an owner of a portfolio of oil and gas investments. John Cook continues in his role as chief executive officer and president. Conference Call and Webcast Information As previously announced, PRG will hold a conference call tomorrow, January 25, 2002 at 9:00 a.m. EST to further discuss the information in this press release and to provide an update with respect to other company developments. To access the conference call, listeners in the US should dial 888.396.0289 at least 5 minutes prior to the start of the conference. Listeners outside the US should 5 dial 712.257.2285. To be admitted to the call, provide the leader's name "John Cook" and the passcode "PRGX." The teleconference will also be audiocast on the Internet at www.prgx.com . Microsoft Windows Media Player is required to access the audiocast. Media Player can be downloaded from www.microsoft.com/windows/mediaplayer. About PRG-Schultz International, Inc. Headquartered in Atlanta, PRG-Schultz International, Inc. (PRG-Schultz) is the world's leading provider of recovery audit services. PRG-Schultz's accounts payable operations employ approximately 3,100 employees in 34 countries providing clients with insightful value to optimize and expertly manage their business transactions. PRG-Schultz's clients represent a variety of industries including retailing, wholesale distribution, manufacturing, government, high-tech and healthcare organizations. Shares of PRG-Schultz are traded on the Nasdaq National Market under the symbol PRGX. For additional information visit the web site at www.prgx.com. Forward-Looking Statements Statements made in this news release which look forward in time involve risks and uncertainties and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such risks and uncertainties include the following: (i) we may not be able to successfully integrate Howard Schultz and Associates and achieve the planned post- acquisition synergy cost savings due to unexpected costs, loss of former Schultz auditors and other personnel, loss of revenue with respect to shared clients and other reasons, (ii) if the current economic slowdown continues, our clients may not return to previous purchasing levels, and as a result we may be unable to recognize anticipated revenues, (iii) the effect of bankruptcies of our larger clients, including without limitation, potential negative effects of the recent K-Mart bankruptcy filing, (iv) in general, if announced divestitures are not sold by March 15, 2002, accounting regulations will require that their results be reincluded in continuing operations, and since these businesses have been operated during the last year primarily for the purpose of preparing them for sale, they may require additional time and effort of company executives and additional company resources to help them achieve profitability and may distract management from its focus on the company's core accounts payable business, and there is no guaranty that the company can operate these businesses efficiently and profitably, (v) the previously announced intention to dispose of the discontinued operations has in some instances resulted in the loss of key personnel and diminished operating results in such operations which may be difficult to reverse going forward, (vi) we may not achieve anticipated expense savings, (vii) our past and future investments in technology and e-commerce may not benefit our business, (viii) our Accounts Payable businesses may not grow as expected, and (ix) our international expansion may prove unprofitable, Other risks and uncertainties that may affect our business include (i) our ability to effectively manage our business during our business integration with Howard Schultz and Associates, (ii) the possibility of an adverse judgment in pending securities litigation, (iii) the impact of certain accounting pronouncements by the Financial Accounting Standards Board or the United States Securities and Exchange Commission, (iv) potential timing issues that could delay revenue recognition, (v) the effect of strikes, (vi) future weakness in the currencies 6 of countries in which we transact business, (vii) changes in economic cycles, (viii) competition from other companies, (ix) changes in governmental regulations applicable to us, and other risk factors, detailed in our Securities and Exchange Commission filings, including the Company's definitive proxy statement filed December 19, 2001. The Company disclaims any obligation or duty to update or modify these forward-looking statements. SOURCE: Profit Recovery Group International, Inc. 7 1439626 EX-99.2 4 prg8k22002ex992.txt PRESS RELEASE Exhibit Number 99.2 Press Release PRG-Schultz Announces Closing of HS&A Transaction; Preliminary Q4 2001 Results; Board Decision to Reclassify Remaining Discontinued Operations As Continuing; and 2002 Outlook Company Expects to Report Q4 2001 Earnings Per Diluted Share From Continuing Operations of $0.08 Prior to Special Charges and Revenue Growth of 12.6% Over Prior Year Period; 2002 Pro-Forma Earnings Per Diluted Share Expected To be Approximately $0.65 ATLANTA, Jan. 24 /PRNewswire-FirstCall/ -- PRG-Schultz (Nasdaq: PRGX - news) announced earlier today that the Company's shareholders approved the Company's issuance of shares and options to acquire Howard Schultz & Associates, as well as the election of four new members of the Company's board of directors. The transaction closed earlier today. "PRG-Schultz represents the very best in the industry's human talent and sophisticated technologies," said John Cook, chief executive officer of PRG-Schultz. "Together, we will expand the scope of our audits, audit more closely to the time of transactions, and provide an enhanced service offering. The combined capabilities of PRG-Schultz will enable us to deliver superior results and maximize findings for our clients, while at the same time driving profitability." Preliminary Fourth Quarter 2001 Results For the fourth quarter of 2001, the Company expects to report approximately $73 million in revenues from continuing operations, representing 12.6% growth over the prior year period. Prior to special charges, the Company expects to report earnings per diluted share from continuing operations of $0.08. Continuing operations in the fourth quarter of 2001 consisted solely of the Accounts Payable segment. Special charges for the fourth quarter of 2001 are expected to include costs associated with realignment and integration activities of approximately $0.03 per diluted share, in line with previous Company guidance; a non-cash charge of approximately $0.03 per diluted share representing remaining deferred loan costs associated with the cancellation of the Company's previous bank credit facility, as previously disclosed; and up to approximately $0.02 per diluted share associated with a write-down of accounts receivable in connection with the Chapter 11 filing of one of its clients, Kmart. The Company's financial results for the fourth quarter of 2001 are still undergoing both internal verification and external audit by the Company's independent auditors and, as such, are subject to change. The Company expects to report complete and final financial results for the fourth quarter and full-year ended December 31, 2001 on February 18, 2002. "I am very pleased with our preliminary financial results for the fourth quarter," commented John Cook, chief executive officer of PRG-Schultz. "Revenue growth in our Accounts Payable business of approximately 13% was driven 8 primarily by strong performance in our US Retail business, which was up approximately 20% over the fourth quarter of last year. This level of growth in the current environment is highly encouraging and confirms that the value proposition we offer our clients remains strong. It also says a great deal about our management and people, all of whom have worked very hard to deliver strong operating results during incredibly dynamic times for both the market as a whole and our company." Status of Discontinued Operations The remaining discontinued operations have been for sale since the first quarter of 2001 and, as such, the one-year period typically provided for under generally accepted accounting principles to classify operations as discontinued and to complete divestment is nearly complete. Furthermore, the Company has concluded that the current negative market conditions are not conducive to receiving a fair price for these businesses. As such, the newly reconstituted Board of Directors, which met earlier today, has approved a proposal to take the Company's three remaining discontinued operations off the market. As a result, beginning in the first quarter of 2002, the financial results of these three businesses, Meridian VAT Reclaim, the Communications Division, and the Ship and Debit business, will be classified as part of the Company's continuing operations and reported in a separate operating segment called Other Ancillary Services. As previously disclosed, the Company realized a net loss on the sale of the French Taxation Services Business of approximately $54 million in the fourth quarter 2001. Outlook Cook continued, "Management team members from both PRG and HS&A have spent approximately six months working hand-in-hand to develop a detailed 2002 financial plan for our combined company. Our approach throughout has been to thoughtfully construct a `zero-based' cost structure to maximize the long-term growth of the combined companies' revenue and earnings base. We believe we have successfully identified this steady-state cost structure and developed a methodical and time-sequenced series of work plans to achieve it by the end of 2002. We have identified for each quarter those anticipated expenses that are either non-recurring or transitional in nature and we will be measuring these and discussing them during our regular quarterly financial reporting. We believe that this process will provide our shareholders with greater insight into our earnings run-rate going into 2003." Full-year 2002 Revenues for 2002 are expected to approximate $470 million. Revenues from Accounts Payable Services are expected to be approximately $420 million and revenues from Other Ancillary Services are expected to be approximately $50 million. For 2002, the Company expects to report, prior to non-recurring and transition expenses, earnings per diluted share of approximately $0.65. Approximately $0.63 9 per diluted share, prior to non-recurring and transition expenses, is expected to be generated from Accounts Payable Services, with the balance of approximately $0.02 expected to be generated from Other Ancillary Services. Non-recurring expenses estimated at up to $10 million (or approximately $0.08 per diluted share after-tax) consist of one-time charges related to realignment and integration activities and include primarily severance and costs associated with the elimination of duplicate facilities and facilities relocation. Transition expenses, which represent costs in the process of being eliminated over the course of the year, are estimated at up to $18 million (or approximately $0.14 per diluted share after-tax) and relate primarily to centralization of IT, employment of duplicate personnel for a transition period, and consultancy services related to integration execution. First Quarter 2002 Revenues for the first quarter of 2002 are expected to approximate $104 million. Revenues from Accounts Payable Services are expected to be approximately $90 million, and revenues from Other Ancillary services are expected to be approximately $14 million. For the first quarter of 2002, the Company expects to report, prior to non-recurring and transition expenses, earnings per diluted share of approximately $0.13. Non-recurring expenses and transition expenses for the first quarter are estimated at $0.08 per diluted share. The Company became subject to FAS 142, "Goodwill and Other Intangible Assets," effective January 1, 2002. FAS 142 requires that an intangible asset be amortized over its useful life and that goodwill not be amortized but evaluated periodically for impairment. Accordingly, the 2002 outlook does not include any goodwill amortization expense. The 2002 outlook also does not include goodwill impairment charges, if any, which may be required under FAS 142. To date, the Company has not made an evaluation or assessment of future potential goodwill impairment under the rules prescribed in FAS 142. During 2001, the Company classified Meridian VAT Reclaim, the Communications Division, and the Ship and Debit business as discontinued operations and recorded them on the balance sheet at net realizable value. In the first quarter of 2002, when the Company reclassifies them as continuing operations, a non-cash gain or loss may result which has not yet been calculated and is not reflected in the above outlook. Conference Call and Webcast Information As previously announced, PRG-Schultz will hold a conference call tomorrow, January 25, 2002 at 9:00 AM EST to further discuss the information in this press release and to provide an update with respect to other company developments. To access the conference call, listeners in the US should dial 888.396.0289 at least 5 minutes prior to the start of the conference. Listeners outside the US should dial 712.257.2285. To be admitted to the call, provide the leader's name 10 `John Cook' and the passcode `PRGX.' The teleconference will also be audiocast on the Internet at www.prgx.com . Microsoft Windows Media Player is required to access the audiocast. Media Player can be downloaded from www.microsoft.com/windows/mediaplayer . About PRG-Schultz International, Inc. Headquartered in Atlanta, PRG-Schultz International, Inc. (PRG-Schultz) is the world's leading provider of recovery audit services. PRG-Schultz employs approximately 3,500 employees in 34 countries providing clients with insightful value to optimize and expertly manage their business transactions. PRG-Schultz's clients represent a variety of industries including retailing, wholesale distribution, manufacturing, government, high-tech, and healthcare organizations. Shares of PRG-Schultz are traded on the NASDAQ National Market under the symbol PRGX. For additional information visit our web site at www.prgx.com. Forward Looking Statements Statements made in this news release which look forward in time involve risks and uncertainties and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such risks and uncertainties include the following: (i) we may not be able to successfully integrate Howard Schultz and Associates and achieve the planned post- acquisition synergy cost savings due to unexpected costs, loss of former Schultz auditors and other personnel, loss of revenue with respect to shared clients and other reasons, (ii) if the current economic slowdown continues, our clients may not return to previous purchasing levels, and as a result we may be unable to recognize anticipated revenues, (iii) the bankruptcy of any of our larger clients, including without limitation, potential negative effects of the recent K-Mart bankruptcy filing could impair then-existing accounts receivable and reduce expected future revenues from such clients, (iv) since the businesses comprising the other ancillary services segment have been operated during the last year primarily for the purpose of preparing them for sale, they may require additional time and effort of Company executives and additional Company resources to help them achieve profitability and may distract management from its focus on the Company's core accounts payable business, and there is no guaranty that the Company can operate these businesses efficiently and profitably, (v) the previously announced intention to dispose of the discontinued operations has in some instances resulted in the loss of key personnel and diminished operating results in such operations which may be difficult to reverse going forward, (vi) we may not achieve anticipated expense savings, (vii) our past and future investments in technology and e-commerce may not benefit our business, (viii) our Accounts Payable businesses may not grow as expected, and (ix) our international expansion may prove unprofitable. Other risks and uncertainties that may affect our business include (i) our ability to effectively manage our business during our business integration with Howard Schultz and Associates, (ii) the possibility of an adverse judgment in pending securities litigation, (iii) the impact of certain accounting pronouncements by the Financial Accounting Standards Board or the United States Securities and Exchange Commission, (iv) potential timing issues that could delay revenue recognition, (v) the effect of strikes, (vi) future weakness in the currencies of countries in which we transact business, (vii) changes in economic cycles, 11 (viii) competition from other companies, (ix) changes in governmental regulations applicable to us, and other risk factors, detailed in our Securities and Exchange Commission filings, including the Company's definitive proxy statement filed December 19, 2001. The Company disclaims any obligation or duty to update or modify these forward-looking statements. SOURCE: Profit Recovery Group International, Inc. 12 1439626 EX-99.3 5 prg8k22002ex993.txt PRESS RELEASE Exhibit Number 99.3 PRG-Schultz Appoints Mark C. Perlberg Chief Operating Officer ATLANTA, Jan. 24 /PRNewswire-FirstCall/ -- PRG-Schultz International, Inc. (Nasdaq: PRGX - news), today announced that the board of directors has named Mark C. Perlberg executive vice president and chief operating officer. Perlberg, 45, has been president of the Company's Accounts Payable group since February 2000 and will continue to report to John Cook, chief executive officer. "Mark's substantial management experience and leadership abilities, combined with a deep understanding of our company, our people and our industry make him the ideal person to execute on our strategies as a combined PRG- Schultz organization," said John Cook, chief executive officer of PRG-Schultz. Since joining PRG-Schultz in 2000, Perlberg has been a driving force behind the identification of key growth strategies. Perlberg's wide range of operational skills has fueled the growth and development of the Company's client service teams, while his results-oriented management style, dynamic thinking, and depth of global experience have been instrumental in the Company's U.S. and international client expansion. Prior to joining PRG-Schultz, Perlberg managed John H. Harland's check business in 24 states, including sales, customer support and production. Perlberg graduated magna cum laude from both the Boston College Law School and the University of Rochester. About PRG-Schultz International, Inc. Headquartered in Atlanta, PRG-Schultz International, Inc. (PRG-Schultz) is the world's leading provider of recovery audit services. PRG-Schultz employs approximately 3,500 employees in 34 countries providing clients with insightful value to optimize and expertly manage their business transactions. PRG-Schultz's clients represent a variety of industries including retailing, wholesale distribution, manufacturing, government, high-tech and healthcare organizations. Shares of PRG-Schultz are traded on the Nasdaq National Market under the symbol PRGX. For additional information visit the web site at www.prgx.com. SOURCE: PRG-Schultz International, Inc. 13 1439626 EX-99.4 6 prg8k22002ex994.txt PRESS RELEASE Exhibit Number 99.4 NEWS RELEASE FOR IMMEDIATE RELEASE PRG-SCHULTZ REPORTS FOURTH-QUARTER AND FULL-YEAR 2001 FINANCIAL RESULTS Q4 Revenues Up 12.6% over Prior Year; Company Reports Q4 Pro-Forma Earnings per Diluted Share from Continuing Operations of $0.08 Compared to $0.01 in Prior Year ATLANTA, FEBRUARY 18, 2002 - PRG-Schultz International, Inc. (Nasdaq: PRGX) today announced its final financial results for the fourth-quarter and full-year 2001. The Company released preliminary results for the fourth quarter 2001 on January 24, 2002. Results from Continuing Operations For the periods reported, results from continuing operations consist solely of the Accounts Payable business. Fourth Quarter 2001 Revenues from continuing operations for the fourth quarter of 2001 totaled $73.0 million, compared to $64.8 million for the fourth quarter of 2000, representing an increase of 12.6%. Excluding special charges, earnings from continuing operations for the fourth quarter of 2001 were $4.1 million or $0.08 per diluted share, compared to $0.6 million, or $0.01 per diluted share in the fourth quarter of 2000. Special charges in the fourth quarter of 2001 for continuing operations consisted of $2.7 million (or $0.03 per diluted share on an after-tax basis) related to realignment and integration activities, in connection with the acquisition of Howard Schultz & Associates and in line with previous Company guidance, and $1.6 million (or $0.02 per diluted share on an after-tax basis) associated with the previously-announced write-down of accounts receivable in connection with the Chapter 11 filing of one of the Company's clients, Kmart. Special charges in the fourth quarter of 2000 for continuing operations consisted of $9.0 million (or $0.11 per diluted share on an after-tax basis) related primarily to employee terminations, employee advance account reductions due to auditor draws forgiven, and other provisions. "We are very pleased with our financial results for the fourth quarter," commented John Cook, chief executive officer of PRG-Schultz. "Revenue growth in our Accounts Payable business of approximately 13% was driven by strong 14 performance in both our US Retail and US Commercial businesses, which were up approximately 20% and 13%, respectively, over the fourth quarter of last year. Excluding special charges, EBITDA was 18% of revenues in the fourth quarter, compared to 12% last year." Full Year 2001 Revenues from continuing operations for the full-year 2001 totaled $259.3 million, compared to $255.1 million for the full-year 2000. Excluding special charges, earnings from continuing operations for the full-year 2001 were $9.0 million or $0.18 per diluted share, compared to $10.6 million, or $0.21 per diluted share for the full-year 2000. In addition to the fourth quarter special charges outlined above, special charges for the full year 2001 also included $0.8 million (or $0.01 per diluted share on an after-tax basis) reported in the first quarter related to realignment activities. Results From Discontinued Operations For the fourth quarter of 2001, the Company reported a loss from discontinued operations of $55.9 million, of which $54.0 million was the previously disclosed loss on the sale of the French Taxation Services Business in December 2001. For the fourth quarter of 2000, the Company reported a loss from discontinued operations of $22.0 million, which included approximately $21.9 million of special charges on an after-tax basis. For the full-year 2001, the Company reported a loss from discontinued operations of $88.2 million, of which $85.0 million originated from the loss on disposal from discontinued operations, net of income taxes. On January 24, 2002, the Company announced that it would take its remaining discontinued operations, which had been for sale since the first quarter of 2001, off the market. As a result, beginning in the first quarter of 2002, the financial results of these three businesses, Meridian VAT Reclaim, the Communications Division, and the Ship & Debit business, will again be classified as part of the Company's continuing operations and reported in a separate operating segment called Other Ancillary Services. In 2001, these businesses generated revenues of $54.8 million and a net loss of approximately $1.5 million. The profitability of these businesses was negatively impacted in 2001 as a result of their "for sale" status during most of the year as well as significant costs associated with sale efforts. Extraordinary Item As previously reported, the Company closed on a new bank credit facility on December 31, 2001. The new facility replaced an existing facility that was cancelled as a result. In connection with the cancellation, the Company recorded a non-cash charge of approximately $2.6 million ($1.6 million or $0.03 per diluted share on an after-tax basis) representing remaining deferred loan costs 15 associated with the previous bank credit facility. This charge has been recorded on the Company's consolidated statement of operations as an extraordinary item, as currently required under generally accepted accounting principles. Cash Flow and DSO's Net cash from operating activities from continuing operations for the twelve months ended December 31, 2001 was approximately $22.9 million, compared to approximately $31.1 million in 2000. DSO's (Days Sales Outstanding) from continuing operations as of December 31, 2001 stood at 60 days, compared to 67 days a year ago. This improvement resulted from lower DSO's in both the Company's US and international operations. 2002 Outlook The Company reiterated its outlook for the full-year and first quarter 2002 provided on January 24, 2002. Full-year 2002 Revenues for 2002 are expected to approximate $470 million. Revenues from Accounts Payable Services are expected to be approximately $420 million, and revenues from Other Ancillary Services are expected to be approximately $50 million. For 2002, the Company expects to report, prior to non-recurring and transition expenses, earnings per diluted share of approximately $0.65. Approximately $0.63 per diluted share, prior to non-recurring and transition expenses, is expected to be generated from Accounts Payable Services, with the balance of approximately $0.02 expected to be generated from Other Ancillary Services. Non-recurring expenses estimated at up to $10 million (or approximately $0.08 per diluted share after-tax) consist of one-time charges related to realignment and integration activities and include primarily severance and costs associated with the elimination of duplicate facilities and facilities relocation. Transition expenses, which represent costs in the process of being eliminated over the course of the year, are estimated at up to $18 million (or approximately $0.14 per diluted share after-tax) and relate primarily to centralization of IT, employment of duplicate personnel for a transition period, and consultancy services related to integration execution. First Quarter 2002 Revenues for the first quarter of 2002 are expected to approximate $104 million. Revenues from Accounts Payable Services are expected to be approximately $90 million, and revenues from Other Ancillary services are expected to be approximately $14 million. For the first quarter of 2002, the Company expects to report, prior to non-recurring and transition expenses, earnings per diluted share of approximately $0.13. Non-recurring expenses and transition expenses for the first quarter are estimated at $0.02 and $0.06 per diluted share, respectively. 16 The Company became subject to SFAS 142, "Goodwill and Other Intangible Assets," effective January 1, 2002. SFAS 142 requires that an intangible asset be amortized over its useful life and that goodwill not be amortized but evaluated periodically for impairment. Accordingly, the 2002 outlook does not include any goodwill amortization expense. The 2002 outlook also does not include goodwill impairment charges, if any, which may be required under SFAS 142. To date, the Company has not made an evaluation or assessment of future potential goodwill impairment under the rules prescribed in SFAS 142. During 2001, the Company classified Meridian VAT Reclaim, the Communications Division, and the Ship & Debit business as discontinued operations and recorded them on the balance sheet at net realizable value. In the first quarter of 2002, when the Company reclassifies them as continuing operations, a non-cash gain or loss may result which has not yet been calculated and is not reflected in the above outlook. Conference Call and Webcast Information PRG will hold a conference call tomorrow, February 19, 2002 at 10 a.m. ET. Listeners in the U.S. should dial 888.396.0289 at least 5 minutes prior to the start of the conference. Listeners outside the U.S. should dial 712.257.2285. To access the conference call, provide the leader's name 'John Cook' and the passcode 'PRGX.' The teleconference will also be audiocast on the Internet at www.prgx.com. Microsoft Windows Media Player is required to access the audiocast and can be downloaded from www.microsoft.com/windows/mediaplayer. About PRG-Schultz International, Inc. Headquartered in Atlanta, PRG-Schultz International, Inc. (PRG-Schultz) is the world's leading provider of recovery audit services. PRG-Schultz employs approximately 3,500 employees in 34 countries, providing clients with insightful value to optimize and expertly manage their business transactions. PRG-Schultz's clients represent a variety of industries, including retailing, wholesale distribution, manufacturing, government, high-tech, and healthcare organizations. Forward Looking Statements Statements made in this news release which look forward in time involve risks and uncertainties and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such risks and uncertainties include the following: (i) we may not be able to successfully integrate Howard Schultz and Associates (HS&A) and achieve the planned post-acquisition synergy cost savings due to unexpected costs, loss of former HS&A auditors and other personnel, loss of revenue with respect to shared clients and other reasons, (ii) if the current economic slowdown continues, our clients may not return to previous purchasing levels, and as a result we may be unable to recognize 17 anticipated revenues, (iii) the bankruptcy of any of our larger clients, including without limitation, potential negative effects of the recent Kmart bankruptcy filing could impair then-existing accounts receivable and reduce expected future revenues from such clients, (iv) since the businesses comprising the other ancillary services segment have been operated during the last year primarily for the purpose of preparing them for sale, they may require additional time and effort of Company executives and additional Company resources to help them achieve desired profitability and may distract management from its focus on the Company's core accounts payable business, and there is no guaranty that the Company can operate these businesses efficiently and profitably, (v) the previously announced intention to dispose of the discontinued operations has in some instances resulted in the loss of key personnel and diminished operating results in such operations which may be difficult to reverse going forward, (vi) we may not achieve anticipated expense savings, (vii) our past and future investments in technology and e-commerce may not benefit our business, (viii) our accounts payable businesses may not grow as expected, and (ix) our international expansion may prove unprofitable. Other risks and uncertainties that may affect our business include (i) our ability to effectively manage our business during our business integration with HS&A, (ii) the possibility of an adverse judgment in pending securities litigation, (iii) the impact of certain accounting pronouncements by the Financial Accounting Standards Board or the United States Securities and Exchange Commission, (iv) potential timing issues that could delay revenue recognition, (v) the effect of strikes, (vi) future weakness in the currencies of countries in which we transact business, (vii) changes in economic cycles, (viii) competition from other companies, (ix) changes in governmental regulations applicable to us, and other risk factors detailed in our Securities and Exchange Commission filings, including the Company's definitive proxy statement filed December 19, 2001. The Company disclaims any obligation or duty to update or modify these forward-looking statements. # # # Contacts: Investor Contact: Media & Client Contact: Leslie H. Kratcoski Michelle B. Duncan Investor Relations Corporate Communications (770) 779-3099 (770) 779-3295 18 1439626 -----END PRIVACY-ENHANCED MESSAGE-----