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

May 3, 2010
Date of Report (Date of earliest event reported)

PRGX Global, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Georgia
(State or Other Jurisdiction of Incorporation)

0-28000	58-2213805
(Commission File Number)	(IRS Employer Identification No.)
600 Galleria Parkway, Suite 100, Atlanta, Georgia	30339-5949
(Address of Principal Executive Offices)	(Zip Code)

770-779-3900

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(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):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EX-99.1

Item 2.02. Results of Operations and Financial Condition.

     The following information is being furnished pursuant to Item 2.02 of Form 8-K. This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

     On May 3, 2010, PRGX Global, Inc. (“PRGX” or the “Company”) issued a press release announcing its unaudited results for the first quarter of 2010, a copy of which is furnished herewith as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

     The following exhibits are filed herewith:

     99.1 Press Release dated May 3, 2010

SIGNATURES

     Pursuant to the requirements of Section 12 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.

PRGX Global, Inc.
By:	/s/ Victor A. Allums
	Victor A. Allums
	Senior Vice President, Secretary and General Counsel

Dated: May 3, 2010

EXHIBIT INDEX

Exhibit
Number		Description of Exhibits
	99.1	Press Release dated May 3, 2010

EX-99.1

Exhibit 99.1

PRESS RELEASE

FOR IMMEDIATE RELEASE

PRGX Announces First Quarter 2010 Financial Results

ATLANTA, May 3, 2010 – PRGX Global, Inc. (Nasdaq: PRGX), the world’s leader in recovery audit and the pioneer in a new category of services called profit discovery, today announced its unaudited financial results for the first quarter (Q1) 2010.

Highlights

• Revenues for Q1 2010 were $41.3 million vs. $39.3 million in Q1 2009 – an increase of 5.3% (a decline of 0.5% after adjustment for changes in foreign exchange rates)

• Net loss for Q1 2010 was $3.5 million ($0.15 loss per basic and diluted share) vs. net earnings of $1.9 million ($0.08 earnings per basic and diluted share) in Q1 2009

• Adjusted EBITDA for Q1 2010 was $2.3 million vs. $5.0 million in Q1 2009

• Completed previously announced debt refinancing

• Completed previously announced acquisition of Etesius Limited

“I would like to express some pride in our company’s performance this quarter – we believe that this performance supports our excitement about the future. The first quarter year over year results represent our company’s best top-line performance in recent years. Prior to this quarter, year over year revenues have been consistently declining, sometimes at double digit rates,” said Romil Bahl, president and chief executive officer. “While nobody has to remind us that the vast majority of the work of implementing our strategy remains ahead of us, we are proving the ability to ‘fill the hole’ created in our core business over the last several years following our financial turnaround.”

First Quarter Results

Adjusted EBITDA for the 2010 first quarter was $2.3 million compared to $5.0 million of adjusted EBITDA for the same period in 2009. The 2010 first quarter adjusted EBITDA is earnings before interest, taxes, depreciation and amortization (EBITDA) excluding a charge of $0.8 million related to stock-based compensation and $0.6 million of foreign currency losses on intercompany balances. The comparable adjusted EBITDA amount for the first quarter of 2009 excludes from EBITDA for such period a $0.02 million charge for stock-based compensation and $0.6 million of foreign currency losses on intercompany balances. (Schedule 3 attached to this press release provides a reconciliation of net earnings to each of EBITDA and adjusted EBITDA).

The reduction in adjusted EBITDA reflects the impact of the Company’s investments in previously announced growth strategies. A significant portion of the costs associated

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with these various investments is included in both “Cost of revenues” and “Selling, general and administrative expenses” reported in the Company’s statement of operations.

Net loss for the 2010 first quarter was $3.5 million, or $0.15 loss per basic and diluted share, compared to net earnings of $1.9 million, or $0.08 earnings per basic and diluted share for the same period in 2009. The first quarter 2010 net loss included a $1.4 million interest charge for the write-off of deferred debt costs resulting from the refinancing of our debt, the $0.8 million related to stock-based compensation and the $0.6 million of foreign currency losses on intercompany balances. The first quarter 2009 net earnings included the $0.02 million charge for stock-based compensation and the $0.6 million charge for foreign currency losses on intercompany balances.

Liquidity

At March 31, 2010, the Company had cash and cash equivalents of $23.5 million and had no borrowings against its revolving credit facility. Total debt outstanding at quarter-end was $14.4 million, which included a $14.2 million outstanding balance on a variable rate term loan due 2014. During the 2010 first quarter, the company used cash of $3.8 million for payments related to previously announced business acquisitions.

First Quarter Earnings Call

As previously announced, management will hold a conference call tomorrow morning at 8:30 AM (Eastern Time) to discuss the Company’s first quarter 2010 financial results. To access the conference call, listeners in the U.S. and Canada should dial 866-272-9941 at least 5 minutes prior to the start of the conference. Listeners outside the U.S. and Canada should dial 617-213-8895. To be admitted to the call, listeners should use passcode 48100393. A replay of the call will be available approximately two hours after the conclusion of the live call, extending through June 4, 2010. To directly access the replay, dial 888-286-8010 (U.S. and Canada) or 617-801-6888 (outside the U.S. and Canada). The passcode for the replay is 62605013.

This teleconference will also be audiocast on the Internet at www.prgx.com (click on “Audio Archives” under “Investors”). A replay of the audiocast will be available at the same location on www.prgx.com beginning approximately two hours after the conclusion of the live audiocast, extending through June 4, 2010. Please note that the Internet audiocast is “listen-only.” Microsoft Windows Media Player is required to access the live audiocast and the replay and can be downloaded from www.microsoft.com/windows/mediaplayer.

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About PRGX Global, Inc.

Headquartered in Atlanta, Georgia, PRGX Global, Inc. is pioneering “profit discovery,” the combination of audit, analytics and advisory services to improve client financial performance. PRGX remains the world’s leader in recovery auditing. It serves the majority of the top 50 global retailers and many other leading companies, and is active in an expanding range of markets, including healthcare. Until January 2010, PRGX was known as PRG-Schultz International, Inc.

Non-GAAP Financial Measures

EBITDA and adjusted EBITDA are both “non-GAAP financial measures” presented as supplemental measures of our performance. They are not presented in accordance with accounting principles generally accepted in the United States, or GAAP. The Company believes these measures provide additional meaningful information in evaluating the Company’s performance over time, and that the rating agencies and a number of lenders use EBITDA and similar measures for similar purposes. In addition, a measure similar to adjusted EBITDA is used in the restrictive covenants contained in the Company’s secured credit facility. However, EBITDA and adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our results as reported under GAAP. In addition, in evaluating EBITDA and adjusted EBITDA, you should be aware that, as described above, the adjustments may vary from period to period and in the future we will incur expenses such as those used in calculating these measures. Our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items. Schedule 3 to this press release provides a reconciliation of net earnings to each of EBITDA and adjusted EBITDA.

Forward Looking Statements

In addition to historical information, this press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include both implied and express statements regarding the Company’s financial condition, its growth strategy and possibilities for the future. Such forward looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to differ materially from the historical results or from any results expressed or implied by such forward-looking statements. Risks that could affect the Company’s future performance include revenues that do not meet expectations or justify costs incurred, the Company’s ability to develop material sources of new revenue in addition to revenues from its core accounts payable services, changes in the market for the Company’s services, the Company’s ability to retain existing personnel, potential legislative and regulatory changes applicable to the Medicare recovery audit contractor program, uncertainty in the credit markets, client bankruptcies, loss of major clients, and other risks generally applicable to the Company’s business. For a discussion of other risk factors that may impact the Company’s business, please see the Company’s filings with the Securities and Exchange Commission, including its Form 10-K filed on March 29, 2010. The Company disclaims any obligation or duty to update or modify these forward-looking statements.

Contact: PRGX Global, Inc.
Robert Lee
770-779-6464

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SCHEDULE 1
PRGX Global, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Amounts in thousands, except per share data)
(Unaudited)

	Three Months
	Ended March 31,
	2010			2009
Revenues	$	41,329		$	39,252
Cost of revenues		29,908			26,167
Gross margin		11,421			13,085
Selling, general and administrative expenses		12,655			9,969
Operating income (loss)		(1,234	)		3,116
Interest expense, net		1,795			699
Earnings (loss) before income taxes		(3,029	)		2,417
Income taxes		436			544
Net earnings (loss)	$	(3,465	)	$	1,873
Basic earnings (loss) per common share	$	(0.15	)	$	0.08
Diluted earnings (loss) per common share	$	(0.15	)	$	0.08
Weighted average common shares outstanding:
Basic		23,527			22,146
Diluted		23,527			23,136

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SCHEDULE 2
PRGX Global, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Amounts in thousands)

	March 31,			December 31,
	2010			2009
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	23,507		$	33,026
Restricted cash		121			256
Receivables:
Contract receivables		29,389			32,515
Employee advances and miscellaneous receivables		714			276
Total receivables		30,103			32,791
Prepaid expenses and other current assets		2,307			2,335
Total current assets		56,038			68,408
Property and equipment, net		14,071			10,003
Goodwill		6,326			4,600
Intangible assets, net		24,283			24,104
Other assets		1,955			3,398
Total assets	$	102,673		$	110,513
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portions of debt obligations	$	3,176		$	3,260
Accounts payable and accrued expenses		11,816			15,707
Accrued payroll and related expenses		16,173			19,884
Refund liabilities and deferred revenue		9,051			8,383
Acquisition obligations		1,976			2,695
Total current liabilities		42,192			49,929
Debt obligations		11,250			11,070
Deferred income taxes		325			—
Noncurrent compensation obligations		974			978
Other long-term liabilities		8,990			7,097
Total liabilities		63,731			69,074
Shareholders’ equity:
Common stock		233			233
Additional paid-in capital		563,373			562,563
Accumulated deficit		(528,126	)		(524,661	)
Accumulated other comprehensive income		3,462			3,304
Total shareholders’ equity		38,942			41,439
Total liabilities and shareholders’ equity	$	102,673		$	110,513

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SCHEDULE 3
PRGX Global, Inc. and Subsidiaries
Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA
(Amounts in thousands)
(Unaudited)

	Three Months
	Ended March 31,
	2010			2009
Reconciliation of net earnings (loss) to EBITDA and to adjusted EBITDA:
Net earnings (loss)	$	(3,465	)	$	1,873
Adjust for:
Income taxes		436			544
Interest expense, net		1,795			699
Depreciation and amortization		2,110			1,291
EBITDA		876			4,407
Foreign currency losses on intercompany balances		621			605
Stock-based compensation		818			15
Adjusted EBITDA	$	2,315		$	5,027

EBITDA and adjusted EBITDA are both “non-GAAP financial measures” presented as supplemental measures of our performance. They are not presented in accordance with accounting principles generally accepted in the United States, or GAAP. The Company believes these measures provide additional meaningful information in evaluating the Company’s performance over time, and that the rating agencies and a number of lenders use EBITDA and similar measures for similar purposes. In addition, a measure similar to adjusted EBITDA is used in the restrictive covenants contained in the Company’s secured credit facility. However, EBITDA and adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our results as reported under GAAP. In addition, in evaluating EBITDA and adjusted EBITDA, you should be aware that in the future we will incur expenses such as those used in calculating these measures. Our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.

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SCHEDULE 4
PRGX Global, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)

	Three Months
	Ended March 31,
	2010			2009
Cash flows from operating activities:
Net earnings (loss)	$	(3,465	)	$	1,873
Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		2,110			1,291
Amortization of deferred debt costs		1,411			197
Stock-based compensation expense		818			15
Decrease in receivables		3,421			6,759
Decrease in accounts payable, accrued payroll and other accrued expenses		(7,287	)		(10,375	)
Other, primarily changes in assets and liabilities		(476	)		608
Net cash provided by (used in) operating activities		(3,468	)		368
Cash flows used in investing activities:
Business acquisitions		(3,840	)		—
Purchases of property and equipment, net of disposals		(1,457	)		(745	)
Net cash used in investing activities		(5,297	)		(745	)
Net cash used in financing activities		(450	)		(1,572	)
Effect of exchange rates on cash and cash equivalents		(304	)		(280	)
Net decrease in cash and cash equivalents		(9,519	)		(2,229	)
Cash and cash equivalents at beginning of period		33,026			26,688
Cash and cash equivalents at end of period	$	23,507		$	24,459

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