EX-99.1 2 g23973exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
PRGX Global, Inc. 2009 Unaudited Selected Financial Information
     Management evaluates the performance of its operating segments based upon revenues and measures of profit or loss it refers to as EBITDA and adjusted EBITDA. Adjusted EBITDA is earnings from continuing operations before interest, taxes, depreciation and amortization (“EBITDA”) as adjusted for unusual and other significant items that management views as distorting the operating results of the various segments from period to period. Adjustments include restructuring charges, stock-based compensation, bargain purchase gains, intangible asset impairment charges, litigation settlements, severance charges and foreign currency gains and losses on intercompany balances viewed by management as individually or collectively significant. The Company does not have any inter-segment revenues. Segment information by quarter for 2009 is presented below (in thousands):
                                         
    Recovery     Recovery Audit                    
    Audit     Services —                    
    Services —     Europe/Asia —     New     Corporate        
    Americas     Pacific     Services     Support     Total  
Three Months Ended March 31, 2009
                                        
Revenues
   $ 28,141     $ 10,008     $ 1,103     $ —     $ 39,252  
 
                              
 
                                        
EBITDA
   $ 9,252     $ (239 )   $ (812 )   $ (3,794 )   $ 4,407  
Foreign currency (gains) losses on intercompany balances
     (1 )     606       —       —       605  
Stock-based compensation
     —       —       —       15       15  
 
                              
Adjusted EBITDA
   $ 9,251     $ 367     $ (812 )   $ (3,779 )   $ 5,027  
 
                              
 
                                        
Three Months Ended June 30, 2009
                                        
Revenues
   $ 32,070     $ 11,951     $ 1,450     $ —     $ 45,471  
 
                              
 
                                        
EBITDA
   $ 11,641     $ 2,439     $ (625 )   $ (5,668 )   $ 7,787  
Foreign currency (gains) losses on intercompany balances
     (320 )     (1,359 )     —       —       (1,679 )
Litigation settlement
     —       —       —       650       650  
Stock-based compensation
     —       —       —       989       989  
 
                              
Adjusted EBITDA
   $ 11,321     $ 1,080     $ (625 )   $ (4,029 )   $ 7,747  
 
                              

 

 

                                         
    Recovery     Recovery Audit                    
    Audit     Services —                    
    Services —     Europe/Asia —     New     Corporate        
    Americas     Pacific     Services     Support     Total  
Three Months Ended September 30, 2009
                                        
Revenues
   $ 31,794     $ 12,236     $ 1,291     $ —     $ 45,321  
 
                              
 
                                        
EBITDA
   $ 10,916     $ 4,581     $ (1,131 )   $ (4,998 )   $ 9,368  
Foreign currency (gains) losses on intercompany balances
     (2 )     (676 )     —       —       (678 )
Stock-based compensation
     —       —       —       1,496       1,496  
Gain on bargain purchase
     —       (2,388 )     —       —       (2,388 )
 
                              
Adjusted EBITDA
   $ 10,914     $ 1,517     $ (1,131 )   $ (3,502 )   $ 7,798  
 
                              
 
                                        
Three Months Ended December 31, 2009
                                        
Revenues
   $ 29,556     $ 18,294     $ 1,689     $ —     $ 49,539  
 
                              
 
                                        
EBITDA
   $ 8,901     $ 3,372     $ (1,019 )   $ (5,296 )   $ 5,958  
Foreign currency (gains) losses on intercompany balances
     (31 )     188       —       —       157  
Stock-based compensation
     —       —       —       845       845  
 
                              
Adjusted EBITDA
   $ 8,870     $ 3,560     $ (1,019 )   $ (4,451 )   $ 6,960  
 
                              
     The following table reconciles net earnings to EBITDA and adjusted EBITDA for each of the four quarterly periods ended December 31, 2009 (in thousands). Certain reclassifications have been made to conform with classifications adopted in the fourth quarter of 2009.
                                 
    Three Months Ended  
    March 31,     June 30,     September 30,     December 31,  
    2009     2009     2009     2009  
Net earnings
   $ 1,873     $ 5,025     $ 6,401     $ 2,028  
 
Income taxes
     544       618       605       1,261  
Interest, net
     699       727       728       871  
Depreciation and amortization
     1,291       1,417       1,634       1,798  
 
                        
EBITDA
     4,407       7,787       9,368       5,958  
 
                                
Foreign currency (gains) losses on intercompany balances
     605       (1,679 )     (678 )     157  
Litigation settlement
     —       650       —       —  
Stock-based compensation
     15       989       1,496       845  
Gain on bargain purchase
     —       —       (2,388 )     —  
 
                        
Adjusted EBITDA
   $ 5,027     $ 7,747     $ 7,798     $ 6,960  
 
                        
     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.

 

 

     The following tables set forth 2009 quarterly and annual operating results by operating segments. Certain reclassifications have been made to conform with classifications adopted in the fourth quarter of 2009.
                                         
    Recovery     Recovery Audit                    
    Audit     Services —                    
    Services —     Europe/Asia —     New     Corporate        
    Americas     Pacific     Services     Support     Total  
Three Months Ended:
                                        
March 31, 2009
                                        
Revenues
   $ 28,141     $ 10,008     $ 1,103     $ —     $ 39,252  
Cost of revenues
     16,756       8,002       1,655       —       26,413  
 
                              
Gross margin
     11,385       2,006       (552 )     —       12,839  
Selling, general and administrative expenses
     3,311       2,310       308       3,794       9,723  
 
                              
Operating income (loss)
   $ 8,074     $ (304 )   $ (860 )   $ (3,794 )   $ 3,116  
 
                              
 
                                        
June 30, 2009
                                        
Revenues
   $ 32,070     $ 11,951     $ 1,450     $ —     $ 45,471  
Cost of revenues
     17,070       9,375       1,883       —       28,328  
 
                              
Gross margin
     15,000       2,576       (433 )     —       17,143  
Selling, general and administrative expenses
     4,538       204       363       5,668       10,773  
 
                              
Operating income (loss)
   $ 10,462     $ 2,372     $ (796 )   $ (5,668 )   $ 6,370  
 
                              
 
                                        
September 30, 2009
                                        
Revenues
   $ 31,794     $ 12,236     $ 1,291     $ —     $ 45,321  
Cost of revenues
     17,031       9,639       2,304       —       28,974  
 
                              
Gross margin
     14,763       2,597       (1,013 )     —       16,347  
Selling, general and administrative expenses
     5,028       754       221       4,998       11,001  
 
                              
Operating income (loss)
   $ 9,735     $ 1,843     $ (1,234 )   $ (4,998 )   $ 5,346  
 
                              
 
                                        
December 31, 2009
                                        
Revenues
   $ 29,556     $ 18,294     $ 1,689     $ —     $ 49,539  
Cost of revenues
     17,145       13,301       2,557       —       33,003  
 
                              
Gross margin
     12,411       4,993       (868 )     —       16,536  
Selling, general and administrative expenses
     4,770       2,051       259       5,296       12,376  
 
                              
Operating income (loss)
   $ 7,641     $ 2,942     $ (1,127 )   $ (5,296 )   $ 4,160  
 
                              
 
                                        
Twelve Months Ended December 31, 2009:
                                        
Revenues
   $ 121,561     $ 52,489     $ 5,533     $ —     $ 179,583  
Cost of revenues
     68,002       40,317       8,399       —       116,718  
 
                              
Gross margin
     53,559       12,172       (2,866 )     —       62,865  
Selling, general and administrative expenses
     17,647       5,319       1,151       19,756       43,873  
 
                              
Operating income (loss)
   $ 35,912     $ 6,853     $ (4,017 )   $ (19,756 )   $ 18,992