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

April 27, 2009
Date of Report (Date of earliest event reported)

PRG-Schultz International, 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))

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 April 27, 2009, PRG-Schultz International, Inc.(“PRG” or the “Company”) issued a press release announcing its unaudited results for the first quarter of 2009, 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 April 27, 2009

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.

PRG-Schultz International, Inc.
By:	/s/ Victor A. Allums
	Victor A. Allums
	Senior Vice President, Secretary and General Counsel

Dated: April 27, 2009

EXHIBIT INDEX

Exhibit
Number	Description of Exhibits
99.1	Press Release dated April 27, 2009

EX-99.1

Exhibit 99.1

PRESS RELEASE

FOR IMMEDIATE RELEASE

PRG-Schultz Announces First Quarter 2009 Financial Results

ATLANTA, April 27, 2009 — PRG-Schultz International, Inc. (Nasdaq: PRGX), the world’s largest recovery audit firm, today announced its unaudited financial results for the first quarter of 2009.

Highlights of Financial Results

• Net earnings for the 2009 first quarter were $1.9 million, or $0.08 per basic and diluted share, compared to net earnings of $3.6 million, or $0.17 per basic share and $0.16 per diluted share for the same period in 2008. The first quarter 2009 net earnings included $0.6 million of foreign currency losses on intercompany balances and a negligible net charge for stock-based compensation. The inter-company balances result primarily from transfer pricing charges to the Company’s foreign subsidiaries. The first quarter 2008 net earnings included a $3.0 million charge for stock-based compensation and $0.6 million of foreign currency gains on intercompany balances.

• Adjusted EBITDA for the 2009 first quarter was $5.0 million compared to $9.0 million of adjusted EBITDA for the same period in 2008. The 2009 first quarter adjusted EBITDA is earnings before interest, taxes, depreciation and amortization (EBITDA) excluding stock-based compensation and the $0.6 million of foreign currency losses on intercompany balances. The comparable adjusted EBITDA amount for the first quarter of 2008 excludes from EBITDA for such period the charge of $3.0 million related to stock-based compensation and the $0.6 million of foreign currency gains on intercompany balances. (Schedule 3 attached to this press release provides a reconciliation of net earnings to each of EBITDA and adjusted EBITDA).

• Consolidated revenue for the first quarter of 2009 was $39.3 million, a decrease of $9.0 million, or 18.7%, compared to $48.3 million for the same period in 2008. On a constant dollar basis adjusted for changes in foreign currency exchange rates, 2009 first quarter revenue declined slightly less than 10% compared to the same period in 2008.

Liquidity

At March 31, 2009 the Company had cash and cash equivalents of $24.5 million and had no borrowings against its revolving credit facility. Total debt outstanding at quarter-end was $18.3 million, which included a $17.8 million outstanding balance on a variable rate term loan due 2011 and a $0.5 million capital lease obligation. During the first quarter of 2009 the Company repurchased 78,754 shares of its common stock at an average per share price of $3.13.

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“Our first quarter revenues reflect the adverse impact of the downturn in the economy, particularly in the U.S.” said Romil Bahl, president and chief executive officer. “Our clients’ purchases in certain segments of the U.S. retail industry continue to decline and many of our clients’ vendor partners are experiencing their own financial issues. The combination of these factors makes it more difficult for our clients to offset valid claims against other purchases from their vendors. We believe that this is partially a timing issue and many of these claims will turn into future recoveries for our clients.”

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 2009 financial results. To access the conference call, listeners in the U.S. and Canada should dial 866-510-0704 at least 5 minutes prior to the start of the conference. Listeners outside the U.S. and Canada should dial 617-597-5362. To be admitted to the call, listeners should use passcode 82978495. A replay of the call will be available approximately one hour after the conclusion of the live call, extending through May 28, 2009. 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 43212487.

This teleconference will also be audiocast on the Internet at www.prgx.com (click on “Events” under “Investor Relations”). A replay of the audiocast will be available at the same location on www.prgx.com beginning approximately one hour after the conclusion of the live audiocast, extending through May 28, 2009. 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.

About PRG-Schultz International, Inc.

Headquartered in Atlanta, PRG-Schultz International, Inc. is the world’s leading recovery audit firm, providing clients throughout the world 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.

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

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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 outlook on the economic environment, the impact of the current economic environment on the Company’s clients and their vendors, and the likelihood that identified claims will result in future recoveries for clients. 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 16, 2009. The Company disclaims any obligation or duty to update or modify these forward-looking statements.

Contact: PRG-Schultz International, Inc.
Peter Limeri
770-779-6464

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SCHEDULE 1
PRG-Schultz International, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Amounts in thousands, except per share data)
(Unaudited)

	Three Months
	Ended March 31,
	2009			2008
Revenues	$	39,252		$	48,263
Cost of revenues		26,167			30,252
Gross margin		13,085			18,011
Selling, general and administrative expenses		9,969			12,843
Operating income		3,116			5,168
Interest expense, net		(699	)		(991	)
Earnings before income taxes		2,417			4,177
Income taxes		544			593
Net earnings	$	1,873		$	3,584
Basic earnings per common share	$	0.08		$	0.17
Diluted earnings per common share	$	0.08		$	0.16
Weighted average common shares outstanding:
Basic		22,146			21,524
Diluted		23,136			22,843

SCHEDULE 2
PRG-Schultz International, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Amounts in thousands)

	March 31,			December 31,
	2009			2008
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	24,459		$	26,688
Restricted cash		120			61
Receivables:
Contract receivables		26,764			33,711
Employee advances and miscellaneous receivables		204			285
Total receivables		26,968			33,996
Prepaid expenses and other current assets		1,704			2,264
Total current assets		53,251			63,009
Property and equipment		7,822			7,901
Goodwill		4,600			4,600
Intangible assets		18,461			18,968
Other assets		3,695			4,305
Total assets	$	87,829		$	98,783
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portions of debt obligations	$	5,323		$	5,314
Accounts payable and accrued expenses		11,795			16,275
Accrued payroll and related expenses		16,268			22,536
Refund liabilities and deferred revenue		7,589			8,372
Total current liabilities		40,975			52,497
Debt obligations		12,996			14,331
Noncurrent compensation obligations		2,133			2,849
Other long-term liabilities		6,298			6,396
Total liabilities		62,402			76,073
Shareholders’ equity:
Common stock		221			218
Additional paid-in capital		559,986			559,359
Accumulated deficit		(538,115	)		(539,988	)
Accumulated other comprehensive income		3,335			3,121
Total shareholders’ equity		25,427			22,710
Total liabilities and shareholders’ equity	$	87,829		$	98,783

SCHEDULE 3
PRG-Schultz International, Inc. and Subsidiaries
Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA
(Amounts in thousands)
(Unaudited)

	Three Months
	Ended March 31,
	2009		2008
Reconciliation of net earnings to EBITDA and to adjusted EBITDA:
Net earnings	$	1,873	$	3,584
Adjust for:
Income taxes		544		593
Interest		699		991
Depreciation and amortization		1,291		1,401
EBITDA		4,407		6,569
Foreign currency (gains) losses on intercompany balances		605		(557	)
Stock-based compensation		15		3,034
Adjusted EBITDA	$	5,027	$	9,046

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.

SCHEDULE 4
PRG-Schultz International, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)

	Three Months
	Ended March 31,
	2009			2008
Cash flows from operating activities:
Net earnings	$	1,873		$	3,584
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization		1,291			1,401
Amortization of debt discounts and deferred costs		197			194
Stock-based compensation expense		15			3,034
(Increase) decrease in receivables		6,759			(11,525	)
Increase (decrease) in accounts payable, accrued payroll and other accrued expenses		(10,375	)		2,217
Other, primarily changes in assets and liabilities		608			652
Net cash provided by (used in) operating activities		368			(443	)
Cash flows from investing activities — purchases of property and equipment, net of disposals		(745	)		(417	)
Net cash used in financing activities		(1,572	)		(22,345	)
Effect of exchange rates on cash and cash equivalents		(280	)		281
Net decrease in cash and cash equivalents		(2,229	)		(22,924	)
Cash and cash equivalents at beginning of period		26,688			42,364
Cash and cash equivalents at end of period	$	24,459		$	19,440