-----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, CdAypzqUZI4myTEV+Lc4AN6RJbFjvzQU7J1oIq5AK58rmbiEj5suLYANTBi0GD/6 Sj7OBvD+Qf1qVVZKgs1Skw== 0000914062-05-000479.txt : 20050728 0000914062-05-000479.hdr.sgml : 20050728 20050728085049 ACCESSION NUMBER: 0000914062-05-000479 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050728 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050728 DATE AS OF CHANGE: 20050728 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: 05979127 BUSINESS ADDRESS: STREET 1: 600 GALLERIA PARKWAY STREET 2: STE 100 CITY: ATLANTA STATE: GA ZIP: 30339-5949 BUSINESS PHONE: 7707793311 MAIL ADDRESS: STREET 1: 600 GALLERIA PARKWAY STREET 2: STE 100 CITY: ATLANTA STATE: GA ZIP: 30339-5949 FORMER COMPANY: FORMER CONFORMED NAME: PROFIT RECOVERY GROUP INTERNATIONAL INC DATE OF NAME CHANGE: 19960207 8-K 1 prg8k72805.txt FORM 8-K - -------------------------------------------------------------------------------- UNITED STATES 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): JULY 28, 2005 ----------------------- PRG-SCHULTZ INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) -------------------------
GEORGIA 000-28000 58-2213805 (State or Other Jurisdiction (Commission File Number) (IRS Employer of Incorporation) Identification No.)
600 GALLERIA PARKWAY, SUITE 100, ATLANTA, GEORGIA 30339-5949 (Address of principal executive office) (zip code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (770) 779-3900 ------------------------------------------------------------- (Former name or former address, if changed since last report) ------------------------- Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) - -------------------------------------------------------------------------------- ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION. The information provided pursuant to this Item 2.02 is to be considered "filed" under the Securities Exchange Act of 1934 ("Exchange Act") and incorporated by reference into those filings of PRG-Schultz International, Inc. ("PRG-Schultz") that provide for the incorporation of all reports and documents filed by PRG-Schultz under the Exchange Act. On July 28, 2005, PRG-Schultz issued a press release announcing its results for the quarter ended June 30, 2005. PRG-Schultz hereby incorporates by reference herein the information set forth in its Press Release dated July 28, 2005, a copy of which is attached hereto as Exhibit 99.1. Except as otherwise provided in the press release, the press release speaks only as of the date of such press release and such press release 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 Release. See the risk factors contained in the Press Release for a discussion of certain risks and uncertainties that may impact such forward looking statements. For further information on other risk factors, please refer to the "Risk Factors" contained in PRG-Schultz's Form 10-K for the year ended December 31, 2004 filed with the Securities and Exchange Commission. PRG-Schultz disclaims any obligation or duty to update or modify these forward-looking statements. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements. N/A (b) Pro Forma Financial Information. N/A (c) Exhibits. Exhibit Number Description -------------- ----------- 99.1* Press Release dated July 28, 2005 ----------------- * This exhibit is filed, not furnished. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, PRG-Schultz International, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PRG-SCHULTZ INTERNATIONAL, INC. Date: July 28, 2005 By: /s/ Clinton McKellar ----------------------------------- Clinton McKellar, Jr. General Counsel and Secretary 3 EXHIBIT INDEX Exhibit Number Description - -------------- ----------- 99.1* Press Release dated July 28, 2005 - ----------------- * This exhibit is filed, not furnished. 4 EX-99.1 2 prg8k72805ex99.txt PRESS RELEASE EXHIBIT 99.1 PRG-SCHULTZ REPORTS SECOND QUARTER 2005 FINANCIAL RESULTS ATLANTA--(BUSINESS WIRE)--July 28, 2005--PRG-Schultz International, Inc. (Nasdaq:PRGX), the world's largest recovery audit firm, today announced financial results for the second quarter 2005. Second Quarter 2005 Highlights -- Revenues totaled $80.6 million -- Revenues from Accounts Payable Services totaled $68.2 million -- Revenues from Meridian VAT Reclaim totaled $12.4 million -- Diluted loss per share from continuing operations was ($0.10) for the quarter compared with diluted loss per share from continuing operations of ($0.01) during the second quarter of 2004 -- Loss for the quarter was higher than the range provided on July 20, 2005 due to a change in the treatment of the accounting for the retirement benefits for John Cook and Jack Toma -- Of the expenses included in the results from continuing operations, $4.3 million of expenses, or $0.07 per share, pertained to the following: -- $3.5 million associated with the Company's obligation for retirement benefits for John Cook and Jack Toma pursuant to their separation from the Company -- $0.3 million of costs relating to the Company's analysis of strategic alternatives -- $0.5 million of costs relating to the Company's implementation of strategic cost reduction initiatives -- Cost of revenue was 65.7% of revenues as compared to 62.5% in the second quarter of 2004. U.S. cost of revenue was 62.2% of U.S. revenues, as compared to 62.7% in the second quarter of 2004. (See Schedule 7 for a reconciliation of total revenues and cost of revenues) -- Net earnings (loss) was (7.8%) of revenues for the quarter, compared to (2.2%) a year ago. -- Earnings before interest, taxes, depreciation and amortization (EBITDA) was ($0.1) million, or (0.2%) of revenues for the quarter. (See Schedule 6 for a reconciliation of net earnings (loss) to EBITDA, a non-GAAP financial measure) James Moylan, Chief Financial Officer of PRG-Schultz, said, "Total revenues for the second quarter came in lower than we had anticipated due in large part to client specific issues concentrated in the U.K. that resulted in slower than anticipated conversion of claims to revenue and a shortfall in commercial revenue also in the U.K. More generally, the Company is currently working to refocus on operational and financial performance across the organization." Second Quarter 2005 Financial Results Revenues for the second quarter of 2005 totaled $80.6 million, compared to $90.4 million in the second quarter of 2004. Revenues from Accounts Payable Services totaled $68.2 million for the quarter compared to $76.8 million a year ago. Revenues from the Company's U.S. Accounts Payable Services operations were $41.8 million, compared to $48.3 million in the second quarter of 2004. The reduction in revenues was primarily attributable to a reduction in revenue from certain large U.S. retail audits. Revenues from the Company's International Accounts Payable service operations were $26.4 million, compared to $28.5 million in the second quarter of 2004, due in large part to client specific issues concentrated in the U.K. that resulted in a slower than anticipated conversion of claims to revenue and a shortfall in commercial revenue in the U.K. Revenues from Meridian VAT Reclaim for the second quarter of 2005 were $12.4 million, compared to $13.6 million a year ago. Cost of revenue was $53.0 million, or 65.7% of revenues for the second quarter of 2005, compared to $56.5 million, or 62.5% of revenues in the same period last year. Net loss for the second quarter of 2005 was ($6.3) million, or ($0.10) per share, compared to net loss of ($2.0) million, or ($0.03) per share, in the 2004 period. This loss is greater than the range indicated in the Company's July 20, 2005 press release, due to the determination that all costs associated with the retirement benefits for John Cook, former Chairman, President and Chief Executive Officer, and Jack Toma, former Vice Chairman, pursuant to their separation from the Company, should be expensed as of the end of the second quarter of 2005. These expenses amounted to $3.5 million for the quarter. Results in the second quarter of 2005 also included $0.5 million relating to previously disclosed strategic cost reduction initiatives, and $0.3 million of costs relating to the Company's analysis of strategic alternatives. The Company recorded tax expense of $0.4 million for the quarter, which reflects accruals on international operations. No U.S. tax credit was provided against the loss. Net loss from continuing operations for the second quarter of 2005 was ($6.3) million, or ($0.10) per diluted share, compared to a net loss of ($0.9) million, or ($0.01) per diluted share, during the second quarter of 2004. EBITDA for the second quarter of 2005 totaled ($0.1) million, or (0.2%) of revenues, compared to $4.5 million, or 5% of revenues, in the second quarter of 2004. (See Schedule 6 for a reconciliation of net earnings (loss) to EBITDA, a non-GAAP financial measure). Schedule 4 provides summary financial results from continuing operations for the second quarters of 2005 and 2004 by operating segment. Cash Flow, DSOs and Capital Expenditures Net cash used in operating activities for the second quarter of 2005 was ($6.5) million, compared to ($2.8) million in the second quarter of 2004. Company-wide, Days Sales Outstanding (DSOs) at the end of the second quarter of 2005 stood at 51 days, compared to 47 days a year ago. Capital expenditures totaled approximately $1.6 million for the second quarter of 2005, compared to $3.2 million in the same period a year ago. First Six Months 2005 Financial Results Revenues for the first six months of 2005 totaled $157.1 million, compared to $178.1 million in the first six months of 2004. Revenues from Accounts Payable Services and Meridian VAT totaled $134.5 million and $22.6 million, respectively, for the first six months of 2005, compared to $155.9 million and $22.2 million, respectively, for the first six months of 2004. Net loss for the first six months of 2005 was ($11.2) million, or ($0.18) per diluted share, compared to net earnings of $2.9 million, or $0.05 per diluted share, in the first six months of 2004. Net loss from continuing operations for the first six months of 2005 was ($11.4) million, or a loss of ($0.18) per diluted share. This compares to net loss from continuing operations of ($4.2) million, or ($0.07) per diluted share, in the first six months of 2004. EBITDA for the first six months of 2005 totaled $1.3 million, or 0.8% of revenues, compared to $5.3 million, or 3.0% of revenues, in the first six months of 2004. (See Schedule 6 for a reconciliation of net earnings (loss) to EBITDA, a non-GAAP financial measure.) Schedule 5 provides summary financial results from continuing operations for the first six months of 2005 and 2004 by operating segment. Cash Flow and Capital Expenditures Net cash used in operating activities for the six months ended June 30, 2005, was approximately ($9.1) million, compared to cash provided by operating activities of $2.5 million in the same period of 2004. The reduction of restricted cash in the prior year, the payment of the ALMA settlement in the first quarter of this year and lower deferred revenue balances were the primary factors in the change in cash flow performance. Capital expenditures totaled approximately $3.5 million for the first six months of 2005, compared to $7.4 million in the same period a year ago. Bank Credit Facility The Company's bank credit facility currently offers total potential availability of $30 million, limited by the Company's accounts receivable balance. At present the facility has actual total availability of about $25 million. There was $12 million borrowed under this facility at June 30, 2005, and the Company is using $4 million in the form of a letter of credit as collateral in its VAT business. Consequently, approximately $9 million was available under the facility as of June 30, 2005. As of July 27, 2005, approximately $7 million was available under the facility. The Company has met its covenants under the agreement for the second quarter. However, the Company expects that it will not meet its covenants as of the end of the third quarter. The Company is currently working with its bank to reach a mutually acceptable solution that will allow the Company to continue to borrow under the facility beyond the third quarter. Settlement in Class Action Lawsuit At a hearing on May 26, 2005, the United States District Court for the Northern District of Georgia approved the terms of the Settlement entered into with the plaintiffs in the Company's securities litigation. The Settlement had no financial impact in the second quarter of 2005 and does not require any further financial contribution by the Company. Discontinued Operations There were no results from Discontinued Operations for the quarter ended June 30, 2005, compared to a loss of ($1.0) million, or ($0.02) per share, in the year earlier period. The 2004 amount reflected additional provision to settle certain of the buyer's warranty claims related to the ALMA sale. Results from Discontinued Operations for the six months ended June 30, 2005 were a gain of $0.2 million compared to a gain of $7.1 million, or $0.12 per share, in the six months ended June 30, 2004. The 2005 gain relates to royalties from the sale of the Logistics Management Services business. The 2004 gain primarily represents the after-tax gain on the sale of the Communications Services Operations. Outlook Update As announced on July 20, 2005, given the Company's previously disclosed ongoing review of its financial forecast for the balance of 2005 and 2006, and in light of the recent management changes, PRG-Schultz will not be providing forward guidance at this time and has withdrawn its previously issued guidance with respect to 2005. Conference Call and Webcast Information PRG-Schultz will hold a conference call today, July 28, 2005, at 10:00 a.m. ET. Listeners in the U.S. and Canada should dial +1 888-396-0289 at least 5-10 minutes prior to the start of the conference. Listeners outside the U.S. or Canada should dial 773-799-3995. To be admitted to the call, verbally supply the passcode "PRGX." This information is required to join the call. A playback of the call will be available one hour after the conclusion of the live call, extending until midnight on August 11, 2005. To directly access the replay, dial +1 866-507-6388 (U.S./Canadian participants) or 203-369-1894 (international participants). This teleconference will also be audiocast on the Internet at www.prgx.com (go to the Investor Relations home page). Please note that the audiocast is "listen-only." Microsoft Windows Media Player is required to access the audiocast and can be downloaded from www.microsoft.com/windows/mediaplayer. A copy of this press release is also available at www.prgx.com under the heading "Investor Relations - News." About PRG-Schultz International, Inc. Headquartered in Atlanta, PRG-Schultz International, Inc. (PRG) is the world's leading profit improvement firm. PRG employs approximately 2,800 employees, providing clients in over 40 countries with insightful value to optimize and expertly manage their business transactions. Using proprietary software and expert audit methodologies, PRG industry specialists review client purchases and payment information to identify and recover overpayments. Forward Looking Statements Statements made in this news release that look forward in time, including statements regarding the Company's negotiations under its credit facility, 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 inherent risks involved in any contract negotiation. Should the Company violate the financial covenants of its senior credit facility and be unable to continue to borrow under it, it will have to seek alternate sources of financing, and there is no guarantee that such financing will be available on acceptable terms, if at all. In addition, a default and acceleration under the senior credit facility would result in a cross-default under and could result in an acceleration of the Company's approximately $125 million outstanding convertible notes. In such an instance, the Company would seek to refinance the notes, but there is no guarantee that it would be able to do so on acceptable terms, if at all. For a discussion of other risk factors that may be impact the Company's business, please see our Securities and Exchange Commission filings, including the Company's Forms 10-K and 10-Q as filed with the Securities and Exchange Commission on March 16, 2005 and May 10, 2005. The Company disclaims any obligation or duty to update or modify these forward-looking statements. SCHEDULE 1 PRG-Schultz International, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Amounts in thousands, except per share data) (Unaudited) Three Months Six Months Ended June 30, Ended June 30, ----------------- ------------------- 2005 2004 2005 2004 -------- -------- --------- --------- Revenues $80,563 $90,406 $157,085 $178,055 Cost of revenues 52,955 56,494 103,309 114,123 Selling, general and administrative expenses 31,427 33,244 60,213 66,450 -------- -------- --------- --------- Operating income (loss) (3,819) 668 (6,437) (2,518) Interest expense (2,193) (2,263) (4,120) (4,540) Interest income 132 115 249 296 -------- -------- --------- --------- Loss from continuing operations before income taxes and discontinued operations (5,880) (1,480) (10,308) (6,762) Income tax expense (benefit) 412 (563) 1,099 (2,570) -------- -------- --------- --------- Loss from continuing operations before discontinued operations (6,292) (917) (11,407) (4,192) Discontinued operations: Gain (loss) on disposal of discontinued operations including operating results for phase-out period, net of income taxes - (1,033) 219 7,089 -------- -------- --------- --------- Net earnings (loss) $(6,292) $(1,950) $(11,188) $2,897 ======== ======== ========= ========= Basic earnings (loss) per share: Loss from continuing operations before discontinued operations $(0.10) $(0.01) $(0.18) $(0.07) Discontinued operations - (0.02) - 0.12 -------- -------- --------- --------- Net earnings (loss) $(0.10) $(0.03) $(0.18) $0.05 ======== ======== ========= ========= Diluted earnings (loss) per share: Loss from continuing operations before discontinued operations $(0.10) $(0.01) $(0.18) $(0.07) Discontinued operations - (0.02) - 0.12 -------- -------- --------- --------- Net earnings (loss) $(0.10) $(0.03) $(0.18) $0.05 ======== ======== ========= ========= Weighted average shares outstanding: Basic 61,997 61,700 61,987 61,697 ======== ======== ========= ========= Diluted 61,997 61,700 61,987 61,697 ======== ======== ========= ========= SCHEDULE 2 PRG-Schultz International, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Amounts in thousands) (Unaudited) June 30, December 31, 2005 2004 --------- --------- ASSETS Current assets: Cash and cash equivalents $12,242 $12,596 Restricted cash 278 120 Receivables: Contract receivables 45,489 57,514 Employee advances and miscellaneous receivables 4,497 3,490 --------- --------- Total receivables 49,986 61,004 --------- --------- Funds held for client obligations 20,109 30,920 Prepaid expenses and other current assets 6,585 4,129 Deferred income taxes 1,951 1,951 --------- --------- Total current assets 91,151 110,720 Property and equipment 22,475 26,473 Goodwill 170,645 170,684 Intangible assets 29,539 30,232 Other assets 3,431 3,827 --------- --------- Total assets $317,241 $341,936 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current installments of long-term debt $12,500 $- Obligation for client payables 20,109 30,920 Accounts payable and accrued expenses 17,755 24,395 Accrued payroll and related expenses 35,461 41,791 Deferred revenue 4,194 6,466 --------- --------- Total current liabilities 90,019 103,572 Convertible notes, net of unamortized discount of $1,397 in 2005 and $1,714 in 2004 123,603 123,286 Deferred compensation 1,428 2,195 Deferred income taxes 4,201 4,201 Other long-term liabilities 4,731 5,098 --------- --------- Total liabilities 223,982 238,352 --------- --------- Shareholders' equity: Preferred stock - - Common stock 68 68 Additional paid-in capital 495,597 493,532 Accumulated deficit (354,167) (342,979) Accumulated other comprehensive income 1,635 1,740 Less treasury stock at cost (48,710) (48,710) Unearned portion of restricted stock (1,164) (67) --------- --------- Total shareholders' equity 93,259 103,584 --------- --------- Total liabilities and shareholders' equity $317,241 $341,936 ========= ========= SCHEDULE 3 PRG-Schultz International, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Amounts in thousands) (Unaudited) Six Months Ended June 30, ------------------ 2005 2004 --------- -------- Cash flows from operating activities: Net earnings (loss) $(11,188) $2,897 Gain on disposal of discontinued operations (219) (7,089) --------- -------- Loss from continuing operations (11,407) (4,192) Adjustments to reconcile loss from continuing operations to net cash provided by (used in) operating activities: Depreciation and amortization 8,250 8,787 Restricted stock compensation expense 196 (35) (Gain) Loss on sale of property and equipment - 32 Deferred income taxes - (5,105) Changes in operating assets and liabilities: Restricted cash securing letter of credit obligation (157) 5,371 Receivables 10,051 6,562 Prepaid expenses and other current assets (2,547) (1,536) Other assets (343) (98) Accounts payable and accrued expenses (5,013) (4,147) Accrued payroll and related expenses (5,341) (2,893) Deferred revenue (1,660) 67 Deferred compensation expense (767) (347) Other long-term liabilities (367) 82 --------- -------- Net cash provided by (used in) operating activities (9,105) 2,548 --------- -------- Cash flows from investing activities: Purchase of property and equipment, net of sale proceeds (3,542) (7,374) Proceeds from sale of discontinued operations - 19,116 --------- -------- Net cash provided by (used in) investing activities (3,542) 11,742 --------- -------- Cash flows from financing activities: Net borrowings (repayments) of debt 12,500 (19,500) Payments for issuance costs on convertible notes - (21) Net proceeds from common stock issuances 772 223 --------- -------- Net cash provided by (used in) financing activities 13,272 (19,298) --------- -------- Net cash provided by (used in) discontinued operations 234 (1,589) Effect of exchange rate changes on cash and cash equivalents (1,213) (662) --------- -------- Net change in cash and cash equivalents (354) (7,259) Cash and cash equivalents at beginning of period 12,596 26,658 --------- -------- Cash and cash equivalents at end of period $12,242 $19,399 ========= ======== SCHEDULE 4 PRG-Schultz International, Inc. and Subsidiaries Summary Operating Segment Results from Continuing Operations (Unaudited) Three Months Ended June 30, (Amounts in thousands, except per share data) --------------------------------------- 2005 2004 --------------------------------------- $ % Rev. $ % Rev. - --------------------------------------------------------------------- Accounts Payable Services - ------------------------- Revenues $68,167 $76,756 Operating income $6,019 8.8% $8,089 10.5% - --------------------------------------------------------------------- Meridian VAT Reclaim - -------------------- Revenues $12,396 $13,650 Operating income $3,230 26.1% $5,275 38.6% - --------------------------------------------------------------------- Corporate Support - ----------------- Operating loss ($13,068) -16.2% ($12,696) -14.0% - --------------------------------------------------------------------- Total - ----- Revenues $80,563 $90,406 Operating income (loss) ($3,819) -4.7% $668 0.7% Loss from continuing operations ($6,292) -7.8% ($917) -1.0% Diluted loss per share from continuing operations $(0.10) $(0.01) Diluted shares 61,997 61,700 - --------------------------------------------------------------------- Notes: Corporate Support Operating Loss % shown as a % of Total Revenues Loss from Continuing Operations and Diluted Loss Per Share from Continuing Operations are prior to Earnings from Discontinued Operations. SCHEDULE 5 PRG-Schultz International, Inc. and Subsidiaries Summary Operating Segment Results from Continuing Operations (Unaudited) Six Months Ended June 30, (Amounts in thousands, except per share data) --------------------------------------- 2005 2004 --------------------------------------- $ % Rev. $ % Rev. - --------------------------------------------------------------------- Accounts Payable Services - ------------------------- Revenues $134,468 $155,835 Operating income $10,847 8.1% $18,360 11.8% - --------------------------------------------------------------------- Meridian VAT Reclaim - -------------------- Revenues $22,617 $22,220 Operating income $5,916 26.2% $6,047 27.2% - --------------------------------------------------------------------- Corporate Support - ----------------- Operating loss ($23,200) -14.8% ($26,925) -15.1% - --------------------------------------------------------------------- Total - ----- Revenues $157,085 $178,055 Operating loss ($6,437) -4.1% ($2,518) -1.4% Loss from continuing operations ($11,407) -7.3% ($4,192) -2.4% Diluted loss per share from continuing operations $(0.18) $(0.07) Diluted shares 61,987 61,697 - --------------------------------------------------------------------- Notes: Corporate Support Operating Loss % shown as a % of Total Revenues Loss from Continuing Operations and Diluted Loss Per Share from Continuing Operations are prior to Earnings from Discontinued Operations. SCHEDULE 6 PRG-Schultz International, Inc. and Subsidiaries Reconciliation of Net Earnings (Loss) to EBITDA (Amounts in thousands) (Unaudited) Three Months Six Months Ended June 30, Ended June 30, -------------------- -------------------- 2005 2004 2005 2004 ---------- --------- --------- ---------- Reconciliation of net loss to EBITDA: - ----------------------------- Net earnings (loss) $(6,292) $(1,950) $(11,188) $2,897 Adjust for: Earnings (loss) from discontinued operations - (1,033) 219 7,089 ---------- --------- --------- ---------- Loss from continuing operations (6,292) (917) (11,407) (4,192) Adjust for: Income taxes 412 (563) 1,099 (2,570) Interest 2,061 2,148 3,871 4,244 Depreciation and amortization 3,690 3,868 7,749 7,841 ---------- --------- --------- ---------- EBITDA $(129) $4,536 $1,312 $5,323 ========== ========= ========= ========== Total revenues $80,563 $90,406 $157,085 $178,055 EBITDA as % of Revenues -0.2% 5.0% 0.8% 3.0% In this press release, the Company has provided a financial measure, EBITDA, defined as earnings from continuing operations before taxes, interest, depreciation and amortization disclosed herein. EBITDA is considered a 'non-GAAP' financial measure within the meaning of Regulation G and may not be similar to EBITDA measures employed by other companies. EBITDA is presented solely as a supplemental disclosure because management believes it to be an effective measure of the operating performance of the Company's core business activities. EBITDA is not provided as a measure of liquidity and should not be viewed as such. EBITDA should not be considered in isolation of, or as a substitute for, other measures for determining operating performance that are calculated in accordance with GAAP. This schedule provides a reconciliation of net loss to EBITDA in accordance with Securities and Exchange Commission guidance. SCHEDULE 7 PRG-Schultz International, Inc. and Subsidiaries Reconciliation of Total Revenues and Cost of Revenues (Amounts in thousands) (Unaudited) Three Months Six Months Ended June 30, Ended June 30, -------------------- ------------------- 2005 2004 2005 2004 --------- ---------- --------- --------- Revenues: U.S. Accounts Payable Services $41,739 $48,299 $82,443 $99,384 International Accounts Payable Services 26,428 28,457 52,025 56,451 Meridian VAT Reclaim 12,396 13,650 22,617 22,220 --------- ---------- --------- --------- Total revenues $80,563 $90,406 $157,085 $178,055 ========= ========== ========= ========= Cost of revenues: U.S. Accounts Payable Services $25,982 $30,302 $51,041 $61,928 International Accounts Payable Services 19,651 19,487 38,678 39,726 Meridian VAT Reclaim 7,322 6,705 13,590 12,469 --------- ---------- --------- --------- Total cost of revenues $52,955 $56,494 $103,309 $114,123 ========= ========== ========= ========= Cost of revenues as a percentage of revenue: U.S. Accounts Payable Services 62.2% 62.7% 61.9% 62.3% International Accounts Payable Services 74.4% 68.5% 74.3% 70.4% Meridian VAT Reclaim 59.1% 49.1% 60.1% 56.1% --------- ---------- --------- --------- Total cost of revenues as a percentage of revenue 65.7% 62.5% 65.8% 64.1% ========= ========== ========= ========= CONTACT: PRG-Schultz International, Inc. James E. Moylan, Jr., 770-779-6605 SOURCE: PRG-Schultz International, Inc. -----END PRIVACY-ENHANCED MESSAGE-----