10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 0-28000

PRGX Global, Inc.

(Exact name of registrant as specified in its charter)

Georgia	58-2213805
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
600 Galleria Parkway	30339-5986
Suite 100	(Zip Code)
Atlanta, Georgia
(Address of principal executive offices)

Registrant’s telephone number, including area code: (770) 779-3900

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

¨  Large accelerated filer	ý	Accelerated filer
¨  Non-accelerated filer     (Do not check if a smaller reporting company)	¨	Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  ý

Common shares of the registrant outstanding at October 25, 2013 were 29,215,660.

PRGX GLOBAL, INC.

FORM 10-Q

For the Quarter Ended September 30, 2013

INDEX

	Page No.
Part I. Financial Information
Item 1. Financial Statements	1
Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2013 and 2012 (Unaudited)	1
Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2013 and 2012 (Unaudited)	1
Condensed Consolidated Balance Sheets as of September 30, 2013 (Unaudited) and December 31, 2012	2
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2013 and 2012 (Unaudited)	3
Notes to Condensed Consolidated Financial Statements	4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3. Quantitative and Qualitative Disclosures About Market Risk	25
Item 4. Controls and Procedures	26
Part II. Other Information
Item 1. Legal Proceedings	27
Item 1A. Risk Factors	27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3. Defaults Upon Senior Securities	27
Item 4. Mine Safety Disclosures	27
Item 5. Other Information	27
Item 6. Exhibits	28
Signatures	30

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PRGX GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Revenue	$	53,403		$	52,087		$	148,709		$	155,394
Operating expenses:
Cost of revenue	30,876			32,461			92,804			99,991
Selling, general and administrative expenses	13,944			13,242			38,285			38,575
Depreciation of property and equipment	2,034			1,716			6,069			4,808
Amortization of intangible assets	1,204			1,431			3,812			5,217
Total operating expenses	48,058			48,850			140,970			148,591
Operating income	5,345			3,237			7,739			6,803
Foreign currency transaction (gains) losses on short-term intercompany balances	(636		)	(348		)	(54		)	(190		)
Interest expense (income), net	75			515			(89		)	1,548
Earnings before income taxes	5,906			3,070			7,882			5,445
Income tax expense	1,029			505			1,671			1,586
Net earnings	$	4,877		$	2,565		$	6,211		$	3,859
Basic earnings per common share (Note B)	$	0.17		$	0.10		$	0.21		$	0.15
Diluted earnings per common share (Note B)	$	0.16		$	0.10		$	0.21		$	0.15
Weighted-average common shares outstanding (Note B):
Basic	29,396			25,541			29,075			25,370
Diluted	29,815			26,250			29,517			25,942

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013			2012
Net earnings	$	4,877	$	2,565	$	6,211		$	3,859
Foreign currency translation adjustments	96		136		(933		)	430
Comprehensive income	$	4,973	$	2,701	$	5,278		$	4,289

See accompanying Notes to Condensed Consolidated Financial Statements.

1

PRGX GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	September 30, 2013 (Unaudited)			December 31, 2012
ASSETS
Current assets:
Cash and cash equivalents (Note E)	$	42,407		$	37,806
Restricted cash	127			65
Receivables:
Contract receivables, less allowances of $1,957 in 2013 and $1,693 in 2012:
Billed	30,687			32,626
Unbilled	12,261			12,501
	42,948			45,127
Employee advances and miscellaneous receivables, less allowances of $220 in 2013 and $538 in 2012	1,182			1,352
Total receivables	44,130			46,479
Prepaid expenses and other current assets	3,785			3,853
Total current assets	90,449			88,203
Property and equipment	61,200			56,924
Less accumulated depreciation and amortization	(43,215		)	(37,350		)
Property and equipment, net	17,985			19,574
Goodwill	13,665			13,669
Intangible assets, less accumulated amortization of $31,366 in 2013 and $27,720 in 2012	14,709			18,399
Noncurrent portion of unbilled receivables	1,415			1,391
Other assets	2,093			2,350
Total assets	$	140,316		$	143,586
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	10,256		$	14,136
Accrued payroll and related expenses	15,612			20,874
Refund liabilities	6,612			6,979
Deferred revenue	1,237			1,551
Current portion of debt (Note F)	3,750			3,000
Business acquisition obligations	2,994			4,218
Total current liabilities	40,461			50,758
Long-term debt (Note F)	—			3,000
Noncurrent business acquisition obligations	—			2,479
Noncurrent refund liabilities	960			1,159
Other long-term liabilities	367			1,538
Total liabilities	41,788			58,934
Commitments and contingencies (Note H)
Shareholders’ equity (Note B):
Common stock, no par value; $.01 stated value per share. Authorized 50,000,000 shares; 29,215,660 shares issued and outstanding as of September 30, 2013 and 27,893,132 shares issued and outstanding as of December 31, 2012	292			279
Additional paid-in capital	602,630			594,045
Accumulated deficit	(506,989		)	(513,200		)
Accumulated other comprehensive income	2,595			3,528
Total shareholders’ equity	98,528			84,652
Total liabilities and shareholders’ equity	$	140,316		$	143,586

See accompanying Notes to Condensed Consolidated Financial Statements.

2

PRGX GLOBAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Nine Months Ended September 30,
	2013			2012
Cash flows from operating activities:
Net earnings	$	6,211		$	3,859
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	9,881			10,025
Amortization of deferred loan costs (Note F)	137			137
Stock-based compensation expense	3,777			4,479
Deferred income taxes	115			(253		)
Foreign currency transaction (gains) losses on short-term intercompany balances	(54		)	(190		)
Changes in operating assets and liabilities:
Restricted cash	(62		)	(59		)
Billed receivables	1,705			(430		)
Unbilled receivables	216			(3,290		)
Prepaid expenses and other current assets	(139		)	922
Other assets	24			(213		)
Accounts payable and accrued expenses	(4,001		)	(536		)
Accrued payroll and related expenses	(5,305		)	(1,611		)
Refund liabilities	(566		)	457
Deferred revenue	(341		)	(662		)
Noncurrent compensation obligations	285			276
Other long-term liabilities	(1,588		)	(546		)
Net cash provided by operating activities	10,295			12,365
Cash flows from investing activities:
Business acquisition	—			(1,437		)
Purchases of property and equipment, net of disposal proceeds	(4,544		)	(5,689		)
Net cash used in investing activities	(4,544		)	(7,126		)
Cash flows from financing activities:
Repayments of long-term debt	(2,250		)	(2,250		)
Restricted stock repurchased from employees for withholding taxes	(1,241		)	(1,357		)
Proceeds from option exercises	611			496
Payments of deferred acquisition consideration	(1,904		)	(2,891		)
Net proceeds from issuance of common stock	4,118			—
Net cash used in financing activities	(666		)	(6,002		)
Effect of exchange rates on cash and cash equivalents	(484		)	289
Net increase (decrease) in cash and cash equivalents	4,601			(474		)
Cash and cash equivalents at beginning of period	37,806			20,337
Cash and cash equivalents at end of period	$	42,407		$	19,863
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	488		$	264
Cash paid during the period for income taxes, net of refunds received	$	2,315		$	1,661

See accompanying Notes to Condensed Consolidated Financial Statements.

3

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note A – Basis of Presentation

The accompanying Condensed Consolidated Financial Statements (Unaudited) of PRGX Global, Inc. and its wholly owned subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month and nine-month periods ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

Except as otherwise indicated or unless the context otherwise requires, “PRGX,” “we,” “us,” “our” and the “Company” refer to PRGX Global, Inc. and its subsidiaries. For further information, refer to the Consolidated Financial Statements and Footnotes thereto included in the Company’s Form 10-K for the year ended December 31, 2012.

Beginning with the third quarter of 2013, we present fair value adjustments to acquisition-related contingent consideration as an adjustment to our segment measure earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") as presented in Note D - Operating Segments and Related Information.  We now include these fair value adjustments in the Adjusted EBITDA calculation in the "Acquisition-related charges (benefits)" line, which we renamed from "Acquisition transaction costs and acquisition obligations classified as compensation." Accordingly, we have revised the presentation of our Adjusted EBITDA calculation for all relevant prior periods.

Unbilled Receivables

A significant portion of the unbilled receivables presented in the Condensed Consolidated Balance Sheets relate to our Healthcare Claims Recovery Audit services as we generally cannot invoice the prime contractors for whom we operate as a subcontractor under the Medicare RAC program until cash is collected by the prime contractors. These unbilled receivables, net of the related reserves, were $7.9 million and $9.6 million as of September 30, 2013 and December 31, 2012, respectively. As of November 1, 2013, we billed $0.3 million of the unbilled receivables relating to the Medicare RAC program that were outstanding as of September 30, 2013.

New Accounting Standards

A summary of the new accounting standards issued by the Financial Accounting Standards Board (“FASB”) and included in the Accounting Standards Codification (“ASC”) that apply to PRGX is set forth below:

FASB ASC Update No. 2013-02. In February 2013, the FASB issued Accounting Standards Update No. 2013-02, Comprehensive Income—Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). ASU 2013-02 requires an entity to provide information about significant amounts reclassified out of accumulated other comprehensive income on the respective line items in net income if the amounts being reclassified are required under U.S. generally accepted accounting principles (GAAP) to be reclassified in their entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. The Company adopted these changes prospectively as of its fiscal year beginning January 1, 2013. The adoption of ASU No. 2013-02 did not have a material impact on our consolidated results of operations, financial position or cash flows.

FASB ASC Update No. 2013-11. In July 2013, the FASB issued Accounting Standards Update No. 2013-11, Income Taxes—Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”). ASU 2013-11 requires an unrecognized tax benefit to be presented as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward that the entity intends to use and is available for settlement at the reporting date. ASU 2013-11 is effective on a prospective basis for fiscal years, and interim periods within those years, beginning after December 15, 2013. We do not expect the adoption of ASU No. 2013-11 to have a material impact on our consolidated results of operations, financial position or cash flows.

4

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Note B – Earnings Per Common Share

The following tables set forth the computations of basic and diluted earnings per common share for the three and nine months ended September 30, 2013 and 2012 (in thousands, except per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
Basic earnings per common share:	2013		2012		2013		2012
Numerator:
Net earnings	$	4,877	$	2,565	$	6,211	$	3,859
Denominator:
Weighted-average common shares outstanding	29,396		25,541		29,075		25,370
Basic earnings per common share	$	0.17	$	0.10	$	0.21	$	0.15

	Three Months Ended September 30,				Nine Months Ended September 30,
Diluted earnings per common share:	2013		2012		2013		2012
Numerator:
Net earnings	$	4,877	$	2,565	$	6,211	$	3,859
Denominator:
Weighted-average common shares outstanding	29,396		25,541		29,075		25,370
Incremental shares from stock-based compensation plans	419		709		442		572
Denominator for diluted earnings per common share	29,815		26,250		29,517		25,942
Diluted earnings per common share	$	0.16	$	0.10	$	0.21	$	0.15

Weighted-average shares outstanding excludes anti-dilutive shares underlying options that totaled 1.6 million shares from the computation of diluted earnings per common share for the three and nine months ended September 30, 2013. Weighted-average shares outstanding excludes anti-dilutive shares underlying options that totaled 0.6 million shares and anti-dilutive Performance Units related to the Company's 2006 Management Incentive Plan that totaled 0.2 million from the computation of diluted earnings per common share for the three and nine months ended September 30, 2012. The number of common shares we used in the basic and diluted earnings per common share computations include nonvested restricted shares of 0.7 million and 0.9 million for the three and nine months ended September 30, 2013 and 2012, respectively, and nonvested restricted share units that we consider to be participating securities of 0.2 million for both the three and nine months ended September 30, 2013 and 2012.

On December 11, 2012, we closed a public offering of 6,249,234 shares of our common stock, which consisted of 2,500,000 shares sold by us and 3,749,234 shares sold by certain selling shareholders, at a price to the public of $6.39 per share. The net proceeds to us from the public offering, after deducting underwriting discounts and commissions and offering expenses, were $14.7 million. We did not receive any proceeds from the sale of shares by the selling shareholders. In addition, the underwriters elected to exercise an overallotment option for an additional 687,385 shares, and completed the additional sale on January 8, 2013. The net proceeds to us from the overallotment, after deducting underwriting discounts and commission and offering expenses, were $4.1 million.

In August 2012, we entered into the Ninth Amendment to our Shareholder Protection Rights Agreement with American Stock Transfer and Trust Company, our Rights Agent, dated as of August 9, 2000, as amended (the “Shareholder Rights Plan”), which extended the expiration date of the Shareholder Rights Plan to August 9, 2013. The Board of Directors of the Company allowed the Shareholder Rights Plan to expire on August 9, 2013 in accordance with its terms.

5

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Note C – Stock-Based Compensation

The Company currently has three stock-based compensation plans under which awards have been granted: (1) the Stock Incentive Plan; (2) the 2006 Management Incentive Plan (“2006 MIP”); and (3) the 2008 Equity Incentive Plan (“2008 EIP”) (collectively, the “Plans”). We describe the Plans in the Company’s Annual Report on Form 10–K for the fiscal year ended December 31, 2012.

2008 EIP Awards

Stock options granted under the 2008 EIP generally have a term of seven years and vest in equal annual increments over the vesting period, which typically is three years for employees and one year for directors. The following table summarizes stock option grants during the nine months endedSeptember 30, 2013 and 2012:

Grantee Type	# of Options Granted	Vesting Period	Weighted Average Exercise Price		Weighted Average Grant Date Fair Value
2013
Director group	75,490	1 year or less	$	5.67	$	2.00
Director group	17,092	3 years	$	6.83	$	3.76
Employee group	449,875	3 years	$	5.58	$	2.44
Employee inducement (1)	20,000	3 years	$	7.14	$	3.81
2012
Director group	51,276	1 year or less	$	7.53	$	3.97
Employee group	597,250	3 years	$	7.54	$	4.12
Employee inducement (2)	45,000	3 years	$	8.54	$	4.58

(1) The Company granted non-qualified performance-based stock options outside its existing stock-based compensation plans in the first quarter of 2013 to one employee in connection with the employee joining the Company.

(2) The Company granted non-qualified stock options outside its existing stock-based compensation plans in the third quarter of 2012 to one employee in connection with the employee joining the Company.

Nonvested stock awards, including both restricted stock and restricted stock units, generally are nontransferable until vesting and the holders are entitled to receive dividends with respect to the nonvested shares. Prior to vesting, the grantees of restricted stock are entitled to vote the shares, but the grantees of restricted stock units are not entitled to vote the shares. Generally, nonvested stock awards vest in equal annual increments over the vesting period, which typically is three years for employees and one year for directors. The following table summarizes nonvested stock awards granted during the nine months endedSeptember 30, 2013 and 2012:

6

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Grantee Type	# of Shares Granted	Vesting Period	Weighted Average Grant Date Fair Value
2013
Director group	75,490	1 year or less	$	5.67
Director group	17,092	3 years	$	6.83
Employee group	449,875	3 years	$	5.58
Employee inducement (1)	20,000	3 years	$	7.14
2012
Director group	51,276	1 year or less	$	7.53
Employee group	426,286	3 years	$	7.55
Employee inducement (2)	45,000	3 years	$	8.54

(1) The Company granted nonvested performance-based stock awards (restricted stock) outside its existing stock-based compensation plans in the first quarter of 2013 to one employee in connection with the employee joining the Company.

(2) The Company granted nonvested stock awards (restricted stock units) outside its existing stock-based compensation plans in the third quarter of 2012 to one employee in connection with the employee joining the Company.

2006 MIP Performance Units

On June 19, 2012, seven senior officers of the Company were granted 154,264 Performance Units under the 2006 MIP, comprising all remaining available awards under the 2006 MIP. The awards had an aggregate grant date fair value of $1.2 million and vest ratably over three years. Upon vesting, the Performance Units will be settled by the issuance of Company common stock equal to 60% of the number of Performance Units being settled and the payment of cash in an amount equal to 40% of the fair market value of that number of shares of common stock equal to the number of Performance Units being settled. During the second quarter of 2013, an aggregate of 52,334 Performance Units were settled by five current executive officers and one former executive officer, and 16,524 Performance Units were forfeited by one former executive officer. Such settlements resulted in the issuance of 31,399 shares of common stock and cash payments totaling $0.1 million. As of September 30, 2013, a total of 85,406 Performance Units were outstanding, none of which were vested.

Selling, general and administrative expenses for the three months ended September 30, 2013 and 2012 include $1.3 million and $1.8 million, respectively, related to stock-based compensation charges. Selling, general and administrative expenses for the nine months ended September 30, 2013 and 2012 include $3.8 million and $4.5 million, respectively, related to stock-based compensation charges. At September 30, 2013, there was $8.1 million of unrecognized stock-based compensation expense related to stock options, restricted stock awards, restricted stock unit awards, and Performance Unit awards which we expect to recognize over a weighted-average period of 2.0 years.

Note D – Operating Segments and Related Information

We conduct our operations through three reportable segments:

Recovery Audit Services – Americas represents recovery audit services (other than Healthcare Claims Recovery Audit services) provided in the United States of America (“U.S.”), Canada and Latin America.

Recovery Audit Services – Europe/Asia-Pacific represents recovery audit services (other than Healthcare Claims Recovery Audit services) provided in Europe, Asia and the Pacific region.

New Services represents Profit Optimization services and Healthcare Claims Recovery Audit services.

Additionally,Corporate Support includes the unallocated portion of corporate selling, general and administrative expenses not specifically attributable to the three reportable segments.

7

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

We evaluate the performance of our reportable segments based upon revenue and measures of profit or loss we refer to as EBITDA and Adjusted EBITDA. We define Adjusted EBITDA as earnings from continuing operations before interest and taxes (“EBIT”), adjusted for depreciation and amortization (“EBITDA”), and then further adjusted for unusual and other significant items that management views as distorting the operating results of the various segments from period to period. Such adjustments include restructuring charges, stock-based compensation, bargain purchase gains, acquisition-related charges and benefits (acquisition transaction costs, acquisition obligations classified as compensation, and fair value adjustments to acquisition-related contingent consideration), intangible asset impairment charges, certain litigation costs and litigation settlements, certain severance charges and foreign currency transaction gains and losses on short-term intercompany balances viewed by management as individually or collectively significant. We do not have any inter-segment revenue. Segment information for the three and nine months ended September 30, 2013 and 2012 (in thousands) is as follows:

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			New Services		Corporate Support			Total
Three Months Ended September 30, 2013
Revenue	$	32,365		$	12,009		$	9,029	$	—		$	53,403
Net earnings												$	4,877
Income tax expense												1,029
Interest expense, net												75
EBIT	$	9,418		$	1,987		$	270	$	(5,694	)	5,981
Depreciation of property and equipment	1,414			124			496		—			2,034
Amortization of intangible assets	698			323			183		—			1,204
EBITDA	11,530			2,434			949		(5,694		)	9,219
Foreign currency transaction (gains) losses on short-term intercompany balances	(80		)	(574		)	—		18			(636		)
Acquisition-related charges	662			—			44		—			706
Transformation severance and related expenses	20			56			85		—			161
Stock-based compensation	—			—			—		1,304			1,304
Adjusted EBITDA	$	12,132		$	1,916		$	1,078	$	(4,372	)	$	10,754

8

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			New Services			Corporate Support			Total
Three Months Ended September 30, 2012
Revenue	$	33,235		$	11,406		$	7,446		$	—		$	52,087
Net earnings													$	2,565
Income tax expense													505
Interest expense, net													515
EBIT	$	9,964		$	304		$	(651	)	$	(6,032	)	3,585
Depreciation of property and equipment	1,111			90			515			—			1,716
Amortization of intangible assets	767			462			202			—			1,431
EBITDA	11,842			856			66			(6,032		)	6,732
Foreign currency transaction (gains) losses on short-term intercompany balances	(85		)	(266		)	3			—			(348		)
Acquisition-related charges (benefits)	—			(14		)	93			—			79
Transformation severance and related expenses	245			273			—			—			518
Stock-based compensation	—			—			—			1,839			1,839
Adjusted EBITDA	$	12,002		$	849		$	162		$	(4,193	)	$	8,820

	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific			New Services			Corporate Support			Total
Nine Months Ended September 30, 2013
Revenue	$	87,999	$	33,796		$	26,914		$	—		$	148,709
Net earnings												$	6,211
Income tax expense												1,671
Interest income, net												(89		)
EBIT	$	21,643	$	2,354		$	(522	)	$	(15,682	)	7,793
Depreciation of property and equipment	4,138		362			1,569			—			6,069
Amortization of intangible assets	2,094		1,171			547			—			3,812
EBITDA	27,875		3,887			1,594			(15,682		)	17,674
Foreign currency transaction (gains) losses on short-term intercompany balances	143		(199		)	—			2			(54		)
Acquisition-related charges (benefits)	987		(900		)	144			—			231
Transformation severance and related expenses	100		593			85			—			778
Stock-based compensation	—		—			—			3,777			3,777
Adjusted EBITDA	$	29,105	$	3,381		$	1,823		$	(11,903	)	$	22,406

9

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			New Services			Corporate Support			Total
Nine Months Ended September 30, 2012
Revenue	$	91,640		$	39,122		$	24,632		$	—		$	155,394
Net earnings													$	3,859
Income tax expense													1,586
Interest expense, net													1,548
EBIT	$	21,994		$	3,515		$	(2,270	)	$	(16,246	)	6,993
Depreciation of property and equipment	3,016			217			1,575			—			4,808
Amortization of intangible assets	3,120			1,491			606			—			5,217
EBITDA	28,130			5,223			(89		)	(16,246		)	17,018
Foreign currency transaction (gains) losses on short-term intercompany balances	(77		)	(117		)	4			—			(190		)
Acquisition-related charges (benefits)	—			(485		)	288			—			(197		)
Transformation severance and related expenses	358			351			327			—			1,036
Wage claim costs	577			—			—			—			577
Stock-based compensation	—			—			—			4,479			4,479
Adjusted EBITDA	$	28,988		$	4,972		$	530		$	(11,767	)	$	22,723

10

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Note E – Cash and Cash Equivalents

Cash and cash equivalents include all cash balances and highly liquid investments with an initial maturity of three months or less from date of purchase. We place our temporary cash investments with high credit quality financial institutions. At times, certain investments may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limit or otherwise may not be covered by FDIC insurance. Some of our cash and cash equivalents are held at banks in jurisdictions outside the U.S. that have restrictions on transferring such assets outside of these countries on a temporary or permanent basis. Such restricted net assets are not significant in comparison to our consolidated net assets.

Our cash and cash equivalents included short-term investments of approximately $25.2 million as of September 30, 2013 and $25.1 million as of December 31, 2012, of which approximately $4.1 million and $1.6 million, respectively, were held at banks outside of the United States, primarily in Brazil and Canada.

Note F – Debt

Debt consisted of the following (in thousands):

	September 30, 2013		December 31, 2012
SunTrust term loan due quarterly through January 2014	$	3,750	$	6,000
Less current portion	3,750		3,000
Noncurrent portion	$	—	$	3,000

On January 19, 2010, we entered into a four-year revolving credit and term loan agreement with SunTrust Bank (“SunTrust”). The SunTrust credit facility consists of a $15.0 million committed revolving credit facility and a $15.0 million term loan. The SunTrust credit facility is guaranteed by the Company and all of its material domestic subsidiaries and secured by substantially all of the assets of the Company. Availability under the SunTrust revolver is based on eligible accounts receivable and other factors. As of September 30, 2013, we had no outstanding borrowings under the SunTrust revolver.

The SunTrust term loan requires quarterly principal payments of $0.8 million beginning in March 2010, and a final principal payment of $3.0 million due in January 2014. The loan agreement requires mandatory prepayments with the net cash proceeds from certain asset sales, equity offerings and insurance proceeds received by the Company. In connection with our equity offering in December 2012 (see Note B, Earnings Per Common Share), we obtained a waiver of the requirement to prepay the loan from SunTrust that enabled us to retain the net proceeds from the offering. The loan agreement also requires an annual additional prepayment contingently payable in April of each year based on excess cash flow (“ECF”) in the prior year if our leverage ratio as defined in the agreement exceeds a certain threshold. Our leverage ratio has remained below the threshold and ECF payments have not been required in any year.

Interest on both the revolver and term loan is payable monthly and accrues at an index rate using the one-month LIBOR rate, plus an applicable margin as determined by the loan agreement. The applicable interest rate margin varies from 2.25% per annum to 3.5% per annum, dependent on our consolidated leverage ratio, and is determined in accordance with a pricing grid under the SunTrust loan agreement. The applicable margin was 2.25% and the interest rate was approximately 2.43% at September 30, 2013. We also must pay a commitment fee of 0.5% per annum, payable quarterly, on the unused portion of the $15.0 million SunTrust revolving credit facility. We made mandatory principal payments on the SunTrust term loan totaling $2.3 million during the nine months ended September 30, 2013. The Company was in compliance with the covenants in its SunTrust credit facility as of September 30, 2013.

Note G – Fair Value of Financial Instruments

We state cash equivalents at cost, which approximates fair market value. The carrying values for receivables from clients, unbilled services, accounts payable, deferred revenue and other accrued liabilities reasonably approximate fair market value due to the nature of the financial instrument and the short term maturity of these items.

We recorded bank debt of $3.8 million as of September 30, 2013 and $6.0 million as of December 31, 2012 at the unpaid balances as of those dates based on the effective borrowing rates and repayment terms when originated. This debt is subject to variable rate terms, and we believe that its fair value is approximately equal to its carrying value. We consider the factors used in determining the fair value of this debt to be Level 3 inputs (significant unobservable inputs).

11

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

We recorded business acquisition obligations of $3.0 million as of September 30, 2013 and $6.7 million as of December 31, 2012 representing the fair value of deferred consideration and earn-out payments estimated to be due as of those dates. We determine the estimated fair values based on our projections of future revenue and profits or other factors used in the calculation of the ultimate payment to be made. The discount rate that we use to value the liability is based on specific business risk, cost of capital, and other factors. We consider these factors to be Level 3 inputs (significant unobservable inputs).

Note H – Commitments and Contingencies

Legal Proceedings

We are party to a variety of legal proceedings arising in the normal course of business. While the results of these proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will not have a material adverse effect on our financial position, results of operations or cash flows.

Note I – Business Acquisitions

During 2012, we acquired the assets of several third-party audit firms to which we had subcontracted a portion of our audit services in our Recovery Audit Services – Europe/Asia-Pacific segment. We refer to the subcontractors as associates, and to the acquisitions as associate migrations. In an associate migration, we generally transfer all of the employees of the associate entity to PRGX, and continue to service the related clients with the same personnel as were providing services prior to the associate migration. We intend for the associate migrations to provide more standardization and centralization of our audit procedures, thereby increasing client service while also decreasing costs. Generally, revenue remains unchanged as a result of an associate migration, and expenses change from a fixed percentage of revenue to a variable amount based on actual employee and related costs. The 2012 associate migrations included CRC Management Consultants LLP (“CRC”) in January 2012 for a purchase price valued at $1.0 million; QFS Ltd (“QFS”) in June 2012 for a purchase price valued at $0.4 million; and Nordic Profit Provider AB (“NPP”) in November 2012 for a purchase price valued at $0.1 million.

The allocation of the aggregate fair values of the assets acquired and purchase price for these associate migrations is summarized as follows (in thousands):

Fair values of net assets acquired:
Equipment	$	10
Intangible assets, primarily non-compete agreements	171
Working capital, including work in progress	666
Goodwill	695
Fair value of net assets acquired	$	1,542
Fair value of purchase price	$	1,542

The following unaudited pro forma condensed financial information presents the combined results of operations of the Company, CRC, QFS, and NPP as if the acquisitions had occurred as of January 1, 2012. The unaudited pro forma financial information is not indicative of, nor does it purport to project, the future financial position or operating results of the Company. Pro forma adjustments included in these amounts consist primarily of amortization expense associated with the intangible assets recorded in the allocation of the purchase price. The unaudited pro forma financial information excludes acquisition and integration costs and does not give effect to any estimated and potential cost savings or other operating efficiencies that could result from the acquisition. Unaudited pro forma condensed financial information is as follows (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2012		2012
Revenue	$	52,087	$	155,394
Net earnings	$	2,569	$	4,323

12

PRGX GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Note J – Income Taxes

We are subject to income taxes in the U.S. and numerous foreign jurisdictions, and our effective tax rate is generally lower than the expected tax rate due to reductions of our deferred tax asset valuation allowance. In the nine months ended September 30, 2013, we also reversed $0.5 million of accruals made in prior years for uncertain tax positions. Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service in the U.S. and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.

On March 17, 2006, the Company experienced an ownership change as defined under Section 382 of the Internal Revenue Code (“IRC”). This ownership change resulted in an annual IRC Section 382 limitation that limits the use of certain tax attribute carry-forwards and also resulted in the write-off of certain deferred tax assets and the related valuation allowances that the Company recorded in 2006. On August 4, 2008, the Company experienced an additional ownership change as defined under Section 382 of the IRC. This ownership change resulted in an additional annual IRC Section 382 limitation that also limits the use of certain tax attribute carry-forwards. The 2008 limitation did not decrease the amount of U.S. federal loss carry-forwards available to the Company, and the Company projects that this limitation will not cause the related tax attributes to expire unused. Therefore, the 2008 ownership change did not impact the Company’s financial position, results of operations or cash flows.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We conduct our operations through three reportable segments: Recovery Audit Services – Americas, Recovery Audit Services – Europe/Asia-Pacific and New Services. The Recovery Audit Services – Americas segment represents recovery audit services (other than Healthcare Claims Recovery Audit services) we provide in the U.S., Canada and Latin America. The Recovery Audit Services – Europe/Asia-Pacific segment represents recovery audit services (other than Healthcare Claims Recovery Audit services) we provide in Europe, Asia and the Pacific region. The New Services segment includes Profit Optimization services as well as Healthcare Claims Recovery Audit services. We include the unallocated portion of corporate selling, general and administrative expenses not specifically attributable to the three reportable segments in Corporate Support.

Recovery auditing is a business service focused on finding overpayments created by errors in payment transactions, such as missed or inaccurate discounts, allowances and rebates, vendor pricing errors, erroneous coding and duplicate payments. Generally, we earn our recovery audit revenue by identifying overpayments made by our clients, assisting our clients in recovering the overpayments from their vendors, and collecting a specified percentage of the recoveries from our clients as our fee. The fee percentage we earn is based on specific contracts with our clients that generally also specify: (a) time periods covered by the audit; (b) the nature and extent of services we are to provide; and (c) the client’s responsibilities to assist and cooperate with us. Clients generally recover claims by either taking credits against outstanding payables or future purchases from the relevant vendors, or receiving refund checks directly from those vendors. The manner in which a claim is recovered by a client is often dictated by industry practice. In addition, many clients establish client-specific procedural guidelines that we must satisfy prior to submitting claims for client approval. For some services we provide, such as certain of our Profit Optimization services, we earn our compensation in the form of a flat fee, a fee per hour, or a fee per other unit of service.

We earn the vast majority of our recovery audit revenue from clients in the retail industry due to many factors, including the high volume of transactions and the complicated pricing and allowance programs typical in this industry. Changes in consumer spending associated with economic fluctuations generally impact our recovery audit revenue to a lesser degree than they affect individual retailers due to several factors, including:

• Diverse client base – our clients include a diverse mix of discounters, grocery, pharmacy, department and other stores that tend to be impacted to varying degrees by general economic fluctuations, and even in opposite directions from each other depending on their position in the market and their market segment;

• Motivation – when our clients experience a downturn, they frequently are more motivated to use our services to recover prior overpayments to make up for relatively weaker financial performance in their own business operations;

• Nature of claims – the relationship between the dollar amount of recovery audit claims identified and client purchases is non-linear. Claim volumes are generally impacted by purchase volumes, but a number of other factors may have an even more significant impact on claim volumes, including new items being purchased, changes in discount, rebate, marketing allowance and similar programs offered by vendors and changes in a client’s or a vendor’s information processing systems; and

• Timing – the client purchase data on which we perform our recovery audit services is historical data that typically reflects transactions between our clients and their vendors that took place 3 to 15 months prior to the data being provided to us for audit. As a result, we generally experience a delayed impact from economic changes that varies by client and the impact may be positive or negative depending on the individual clients’ circumstances.

While the net impact of the economic environment on our recovery audit revenue is difficult to determine or predict, we believe that for the foreseeable future, our revenue will remain at a level that will not have a significant adverse impact on our liquidity, and we have taken steps to mitigate any adverse impact of an economic downturn on our revenue and overall financial health. These steps include devoting substantial efforts to develop a lower cost service delivery model to enable us to more cost effectively serve our clients. Further, we continue to pursue our ongoing growth strategy to expand our business beyond our core recovery audit services to retailers by growing the portion of our business that provides recovery audit services to enterprises other than retailers and growing our New Services segment which includes our Healthcare Claims Recovery Audit services and our Profit Optimization services. Our Healthcare Claims Recovery Audit services include services we provide as a subcontractor to three of the four prime contractors in the Medicare Recovery Audit Contractor program (the “Medicare RAC program”) of the Centers for Medicare and Medicaid Services (“CMS”).

Despite the factors noted above and the strategies we have employed to mitigate the impact of macroeconomic issues on our business, our revenue was impacted negatively in the nine months of 2013 by the challenging business climate, particularly in Europe. We experienced delays in claim approvals at certain clients and several clients in Europe entered administration (similar to bankruptcy), thereby delaying or ceasing our activities at those clients.

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Separately, auditing under the current Medicare RAC program contracts is expected to come to an end not later than the first quarter of 2014. However, certain auditing and other activities under those contracts may end prior to that time and new contracts for the Medicare RAC program are expected to be awarded within the next several months. Our current Medicare RAC program subcontracts have recently been amended to reflect certain restrictions recently imposed by CMS on all Medicare recovery auditors, including the time periods available to make claim selections and the types of claims that may be audited. These restrictions began to limit our Medicare RAC program revenue in the third quarter of 2013 and we expect them to have an even greater negative impact on our fourth quarter Medicare RAC program revenue. Further, we expect our Medicare RAC program revenue from the current subcontracts to be minimal in the first quarter of 2014, with revenue beyond this date being largely dependent on our being awarded a new contract for the Medicare RAC program. We have not yet received the revised request for proposal from CMS for the next Medicare RAC program contracts, and therefore the precise timing of the awards for the new contracts remains somewhat uncertain.

Non-GAAP Financial Measures

EBIT, EBITDA and Adjusted EBITDA are all "non-GAAP financial measures" presented as supplemental measures of the Company’s 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 its 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, EBIT, EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of the Company’s results as reported under GAAP. In addition, in evaluating EBIT, EBITDA and Adjusted EBITDA, you should be aware that, as described above, the adjustments may vary from period to period and in the future the Company will incur expenses such as those used in calculating these measures. The Company’s presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items.

Results of Operations

The following table sets forth the percentage of revenue represented by certain items in the Company’s Condensed Consolidated Statements of Income (Unaudited) for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Revenue	100.0	%	100.0	%	100.0	%	100.0	%
Operating expenses:
Cost of revenue	57.8		62.3		62.4		64.3
Selling, general and administrative expenses	26.1		25.4		25.7		24.8
Depreciation of property and equipment	3.8		3.3		4.1		3.1
Amortization of intangible assets	2.2		2.8		2.6		3.4
Total operating expenses	89.9		93.8		94.8		95.6
Operating income	10.1		6.2		5.2		4.4
Foreign currency transaction (gains) losses on short-term intercompany balances	(1.1	)	(0.7	)	—		(0.1	)
Interest expense (income), net	0.1		1.0		(0.1	)	1.0
Earnings before income taxes	11.1		5.9		5.3		3.5
Income tax expense	1.9		1.0		1.1		1.0
Net earnings	9.2	%	4.9	%	4.2	%	2.5	%

15

Three and Nine Months Ended September 30, 2013 Compared to the Corresponding Periods of the Prior Year

Revenue. Revenue was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Recovery Audit Services – Americas	$	32,365	$	33,235	$	87,999	$	91,640
Recovery Audit Services – Europe/Asia-Pacific	12,009		11,406		33,796		39,122
New Services	9,029		7,446		26,914		24,632
Total	$	53,403	$	52,087	$	148,709	$	155,394

Total revenue increased for the three months ended September 30, 2013 by $1.3 million, or 2.5%, compared to the same period in 2012. Total revenue decreased for the nine months ended September 30, 2013 by $6.7 million, or 4.3%, compared to the same period in 2012.

Below is a discussion of our revenue for our three reportable segments.

Recovery Audit Services – Americas revenue decreased by $0.9 million, or 2.6%, for the third quarter of 2013 compared to the third quarter of 2012. For the nine months ended September 30, 2013, revenue decreased by $3.6 million, or 4.0%, compared to the same period in the prior year. One of the factors contributing to changes in our reported revenue is the strength of the U.S. dollar relative to foreign currencies. Changes in the average value of the U.S. dollar relative to foreign currencies impact our reported revenue. On a constant dollar basis, adjusted for changes in foreign exchange (“FX”) rates, revenue for the third quarter of 2013decreased by 1.3% compared to a decrease of 2.6% as reported and decreased by 3.2% during the first nine months of 2013 compared to a decrease of 4.0% as reported.

In addition to the impact of the change in FX rates, the year over year net decreases in our Recovery Audit Services – Americas revenue in the three and nine months ended September 30, 2013 were due to a number of factors. Revenue increased 1.3% in the third quarter and 2.0% in the nine-month period due to new clients. Revenue declined 4.0% in the third quarter and 6.0% in the nine-month period at our existing clients due primarily to claim approval delays in the third quarter at a significant retail client that we believe will be resolved in the fourth quarter, as well as lower revenue from another significant retail client that has increased its internal resources and is identifying more claims itself, and, to a lesser extent, lower contingency fee rates at a few other clients. Revenue from discontinued clients had a negligible impact on both the three and nine-month periods ended September 30, 2013. Revenue from new clients as a percentage of Recovery Audit Services – Americas revenue was 3.1% in the third quarter and 3.5% in the nine-month period.

Recovery Audit Services – Europe/Asia-Pacific revenue increased by $0.6 million, or 5.3%, for the three months ended September 30, 2013 compared to the same period in 2012. For the nine months ended September 30, 2013, revenue decreased by $5.3 million, or 13.6%, compared to the nine months ended September 30, 2012. Changes in FX rates had only a negligible impact on Recovery Audit Services - Europe / Asia-Pacific revenue for the third quarter compared to the same period in 2012. On a constant dollar basis, adjusted for changes in FX rates, revenue decreased by 12.7% during the first nine months of 2013 compared to a decrease of 13.6% as reported. The 5.3% net increase in revenue in the quarter included a 2.3% increase from existing clients and a 9.3% increase attributable to new clients, partially offset by declines of 6.3% attributable to discontinued clients and clients that entered administration. In the third quarter, we resolved some of the claim delays we encountered in the first half of the year and generally saw an improved economic environment, resulting in the increase in revenue from our existing clients. The 12.7% net decrease on a constant dollar basis for the nine-month period included net decreases in revenue of 9.3% attributable to existing clients, 2.1% attributable to cyclical clients and 9.8% attributable to discontinued clients and clients that entered administration, partially offset by an increase of 8.5% attributable to new clients. Revenue from existing clients declined primarily due to weak economic conditions in Europe for an extended period, fewer claims identified and delays in claim approvals at continuing clients, and declines at several commercial clients where audits are cyclical in nature. Revenue from new clients as a percentage of Recovery Audit Services – Europe/Asia-Pacific revenue was 13.5% in both the third quarter and the nine-month period.

New Services revenue increased by $1.6 million, or 21.3%, for the three months ended September 30, 2013 compared to the same period in 2012. For the nine months ended September 30, 2013, revenue increased by $2.3 million, or 9.3%, compared to the nine months ended September 30, 2012. We generate New Services revenue from our Profit Optimization services and our Healthcare Claims Recovery Audit services, which we derive primarily from our participation in the Medicare RAC program. The increases in New Services revenue in both the three-month and nine-month periods are due primarily to our Healthcare Claims Recovery Audit revenue increasing as we continued to benefit from greater efficiencies in claims

16

processing and improved findings rates. These increases were partially offset by slight decreases in our Profit Optimization services revenue in these periods. As discussed above, future revenue from the Medicare RAC program remains significantly dependent on the Medicare RAC program rules and restrictions and the terms of our Medicare RAC program subcontracts. We anticipate that our Healthcare Claims Recovery Audit revenue will be lower in the fourth quarter than in the third quarter due to these restrictions.

Cost of Revenue (“COR”). COR consists principally of commissions and other forms of variable compensation we pay to our auditors based primarily on the level of overpayment recoveries and/or profit margins derived therefrom, fixed auditor salaries, compensation paid to various types of hourly support staff and salaries for operational and client service managers for our recovery audit and our Profit Optimization services businesses. COR also includes other direct and indirect costs incurred by these personnel, including office rent, travel and entertainment, telephone, utilities, maintenance and supplies and clerical assistance. A significant portion of the components comprising COR is variable and will increase or decrease with increases or decreases in revenue.

COR was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Recovery Audit Services – Americas	$	15,584	$	16,854	$	45,144	$	48,876
Recovery Audit Services – Europe/Asia-Pacific	8,832		9,314		27,255		30,395
New Services	6,460		6,293		20,405		20,720
Total	$	30,876	$	32,461	$	92,804	$	99,991

COR as a percentage of revenue for Recovery Audit Services – Americas was 48.2% and 50.7% for the three months ended September 30, 2013 and 2012, respectively. For the nine months ended September 30, 2013 and 2012, COR as a percentage of revenue for Recovery Audit Services – Americas was 51.3% and 53.3%, respectively. The decrease in COR as a percentage of revenue for the three and nine months ended September 30, 2013 compared to the same periods in 2012 is due primarily to cost savings driven by our Next-Generation Recovery Audit service delivery model and lower relative costs for the incremental revenue from one client from which we generated greater revenue in the 2013 periods than in the 2012 periods.

COR as a percentage of revenue for Recovery Audit Services – Europe/Asia-Pacific was 73.5% and 81.7% for the three months ended September 30, 2013 and 2012, respectively. For the nine months ended September 30, 2013 and 2012, COR as a percentage of revenue for Recovery Audit Services – Europe/Asia-Pacific was 80.6% and 77.7%, respectively. The changes in COR as a percentage of revenue primarily resulted from the changes in revenue in the 2013 periods. COR declined 5.2% and 10.3% in the three and nine months ended September 30, 2013 compared to the same periods in 2012. This improvement resulted in lower COR as a percentage of revenue in the three-month period, but was not sufficient to offset the impact of the decline in revenue between the nine-month periods.

The higher COR as a percentage of revenue for Recovery Audit Services – Europe/Asia-Pacific (73.5% for the third quarter of 2013 and 80.6% for the nine months ended September 30, 2013) compared to Recovery Audit Services – Americas (48.2% for the third quarter of 2013 and 51.3% for the nine months ended September 30, 2013) is due primarily to differences in service delivery models, scale and geographic fragmentation. The Recovery Audit Services – Europe/Asia-Pacific segment generally serves fewer clients in each geographic market and on average generates lower revenue per client than those served by the Company’s Recovery Audit Services – Americas segment.

New Services COR relates primarily to costs of Profit Optimization services and costs associated with the Medicare RAC program subcontracts. COR as a percentage of revenue for New Services was 71.5% and 84.5% for the three months ended September 30, 2013 and 2012, respectively. For the nine months ended September 30, 2013 and 2012, COR as a percentage of revenue for New Services was 75.8% and 84.1%, respectively. The improvement in COR as a percentage of revenue for New Services is primarily due to the increase in revenue in our Healthcare Claims Recovery Audit service line. COR as a percentage of revenue for our Profit Optimization services improved in both the three months and the nine months ended September 30, 2013 compared to the same periods in 2012 primarily due to cost savings initiatives we implemented in 2012, partially offset by the slight decreases in revenue in both periods.

Selling, General and Administrative Expenses (“SG&A”). SG&A expenses of the Recovery Audit and New Services segments include the expenses of sales and marketing activities, information technology services and allocated corporate data center costs, human resources, legal, accounting, administration, foreign currency transaction gains and losses other than those relating to short-term intercompany balances and gains and losses on asset disposals related to the Recovery Audit and New

17

Services segments. Corporate Support SG&A represents the unallocated portion of SG&A expenses which are not specifically attributable to our segment activities and include the expenses of information technology services, the corporate data center, human resources, legal, accounting, treasury, administration and stock-based compensation charges.

SG&A expenses were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Recovery Audit Services – Americas	$	5,331	$	4,624	$	14,837	$	14,711
Recovery Audit Services – Europe/Asia-Pacific	1,317		1,502		2,853		3,621
New Services	1,620		1,084		4,915		3,997
Subtotal for reportable segments	8,268		7,210		22,605		22,329
Corporate Support	5,676		6,032		15,680		16,246
Total	$	13,944	$	13,242	$	38,285	$	38,575

Recovery Audit Services – Americas SG&A increased by $0.7 million, or 15.3%, for the three months ended September 30, 2013 from the comparable period in 2012. For the nine months ended September 30, 2013, SG&A increased$0.1 million, or 0.9%, from the comparable period in 2012. These increases are due primarily to sales commissions paid to a third party and fair value adjustments recorded to increase the expected acquisition-related contingent consideration payable in connection with one client for which we generated higher revenue in the 2013 periods than in the 2012 periods, partially offset by lower incentive compensation accruals in the 2013 periods than in the 2012 periods and wage claim costs incurred in 2012 with no comparable expenses in 2013.

Recovery Audit Services – Europe/Asia-Pacific SG&A decreased$0.2 million, or 12.3%, for the three months ended September 30, 2013 compared to the same period in 2012. For the nine months ended September 30, 2013, SG&A decreased$0.8 million, or 21.2%, from the comparable period in 2012. The decrease in the three-month period primarily is due to lower provisions for bad debts in the third quarter of 2013 compared to the third quarter of 2012. In addition to this change, the decrease in the nine-month period also includes fair value adjustments recorded to reduce the acquisition-related contingent consideration payable for a prior acquisition and lower incentive compensation accruals. The earn-out period relating to this business acquisition has ended, and we have no remaining amounts due relating to this obligation.

New Services SG&A increased$0.5 million, or 49.4%, in the three months ended September 30, 2013 compared to the same period in 2012. For the nine months ended September 30, 2013, SG&A increased$0.9 million, or 23.0%, from the comparable period in 2012. The increases in both the three-month and nine-month periods are due primarily to additional sales personnel we added in both Healthcare Claims Recovery Audit and Profit Optimization. The nine-month period also includes costs we incurred in connection with the proposal we submitted in April 2013 for a new contract in the Medicare RAC program.

Corporate Support SG&A decreased$0.4 million, or 5.9%, for the three months ended September 30, 2013 compared to the same period in 2012. For the nine months ended September 30, 2013, SG&A decreased$0.6 million, or 3.5%, from the comparable period in 2012. These decreases are due primarily to lower stock-based compensation expense and lower incentive compensation accruals in the three and nine months ended September 30, 2013.

Depreciation of property and equipment. Depreciation of property and equipment was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Recovery Audit Services – Americas	$	1,414	$	1,111	$	4,138	$	3,016
Recovery Audit Services – Europe/Asia-Pacific	124		90		362		217
New Services	496		515		1,569		1,575
Total	$	2,034	$	1,716	$	6,069	$	4,808

The increases in depreciation relate primarily to improvements we made to our IT infrastructure and to an increase in the depreciation of capitalized software development costs as we place developed software in service.

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Amortization of intangible assets. Amortization of intangible assets was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Recovery Audit Services – Americas	$	698	$	767	$	2,094	$	3,120
Recovery Audit Services – Europe/Asia-Pacific	323		462		1,171		1,491
New Services	183		202		547		606
Total	$	1,204	$	1,431	$	3,812	$	5,217

The decrease in amortization expense is primarily due to the 2012 periods including greater amortization of intangible assets recorded in connection with our acquisitions completed over the last few years.

Foreign Currency Transaction (Gains) Losses on Short-Term Intercompany Balances. Foreign currency transaction gains and losses on short-term intercompany balances result from fluctuations in the exchange rates for foreign currencies and the U.S. dollar and the impact of these fluctuations, primarily on balances payable by our foreign subsidiaries to their U.S. parent. Substantial changes from period to period in foreign currency exchange rates may significantly impact the amount of such gains and losses. The strengthening of the U.S. dollar relative to other currencies results in recorded losses on short-term intercompany balances receivable from our foreign subsidiaries while the relative weakening of the U.S. dollar results in recorded gains. In the three months ended September 30, 2013 and 2012, we recorded foreign currency transaction gains of $0.6 million and $0.3 million, respectively, on short-term intercompany balances. In the nine months ended September 30, 2013 and 2012, we recorded foreign currency transaction gains of $0.1 million and $0.2 million, respectively, on short-term intercompany balances.

Net Interest Expense (Income). Net interest expense was $0.1 million and $0.5 million for the three months ended September 30, 2013 and 2012, respectively. Net interest income was $0.1 million and net interest expense was $1.5 million for the nine months ended September 30, 2013 and 2012, respectively. Net interest income in the nine months ended September 30, 2013 is primarily due to the reversal of $0.8 million of accruals made in prior years for interest on uncertain tax positions, as described in more detail under Income Tax Expense below. The decrease in net interest expense in the three months ended September 30, 2013 is due to a reversal of $0.1 million of interest accruals for uncertain tax positions recorded in prior years. In addition, the three and nine month periods in 2013 included lower interest expense associated with business acquisition obligations, lower accruals for interest on uncertain tax positions and lower interest expense on debt outstanding than the comparable 2012 periods.

Income Tax Expense. Our income tax expense amounts as reported in the accompanying Condensed Consolidated Financial Statements (Unaudited) do not reflect amounts that normally would be expected due to several factors. The most significant of these factors is that for U.S. tax reporting purposes we have net operating loss carryforwards and other tax attributes which created deferred tax assets on our balance sheet. We reduce our deferred tax assets by a valuation allowance if it is more likely than not that some portion or all of a deferred tax asset will not be realized. Generally, these factors result in our recording no net income tax expense or benefit relating to our operations in the United States. Reported income tax expense for the three and nine months ended September 30, 2013 and 2012 primarily results from taxes on the income of certain of our foreign subsidiaries. We also recorded the reversal of $0.5 million of accruals made in previous years for uncertain tax positions in the nine months ended September 30, 2013. Together with the reversal of interest expense accruals described above, the total reduction to our reserves for uncertain tax positions in the nine months ended September 30, 2013 was $1.3 million. The uncertain tax positions relate to potential tax liabilities in several states and in several countries outside of the U.S. The reduction in the related accruals that we recorded in the nine months ended September 30, 2013 was due to the imposition of limitations on our potential liability resulting from our entering into voluntary disclosure agreements with several states in the U.S. Under these voluntary disclosure agreements, we agreed to file required returns for specified periods, and received waivers of the requirement to file other returns as well as limitations on the taxes and other amounts required to be paid in connection with such filings.

Adjusted EBITDA. We evaluate the performance of our operating segments based upon revenue and measures of profit or loss we refer to as EBITDA and Adjusted EBITDA. We define Adjusted EBITDA as earnings from continuing operations before interest and taxes (“EBIT”), adjusted for depreciation and amortization (“EBITDA”), and then adjusted for unusual and other significant items that management views as distorting the operating results of the various segments from period to period. Such adjustments include restructuring charges, stock-based compensation, bargain purchase gains, acquisition-related charges and benefits (acquisition transaction costs, acquisition obligations classified as compensation, and fair value adjustments to acquisition-related contingent consideration), intangible asset impairment charges, certain litigation costs and litigation

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settlements, severance charges and foreign currency transaction gains and losses on short-term intercompany balances viewed by management as individually or collectively significant.

Reconciliations of net earnings to each of EBIT, EBITDA and Adjusted EBITDA for the periods included in this report are as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Net earnings	$	4,877		$	2,565		$	6,211		$	3,859
Income tax expense	1,029			505			1,671			1,586
Interest expense (income), net	75			515			(89		)	1,548
EBIT	5,981			3,585			7,793			6,993
Depreciation of property and equipment	2,034			1,716			6,069			4,808
Amortization of intangible assets	1,204			1,431			3,812			5,217
EBITDA	9,219			6,732			17,674			17,018
Foreign currency transaction (gains) losses on short-term intercompany balances	(636		)	(348		)	(54		)	(190		)
Acquisition-related charges (benefits)	706			79			231			(197		)
Transformation severance and related expenses	161			518			778			1,036
Wage claim costs	—			—			—			577
Stock-based compensation	1,304			1,839			3,777			4,479
Adjusted EBITDA	$	10,754		$	8,820		$	22,406		$	22,723

Acquisition-related charges (benefits) increased$0.6 million and $0.4 million for the three and nine months ended September 30, 2013, respectively compared to the same periods in 2012. These increases are due primarily to fair value adjustments recorded to change the expected contingent consideration payable for prior acquisitions.

Transformation severance and related expenses decreased$0.4 million, or 68.9%, for the three months ended September 30, 2013 compared to the same period in 2012. For the nine months ended September 30, 2013, transformation severance and related expenses decreased$0.3 million, or 24.9%, from the comparable period in 2012. Transformation severance and related expenses fluctuate with the implementation of the phases of our Next-Generation Recovery Audit service delivery model.

Wage claim costs for the nine months ended September 30, 2012 relate to specific legal issues that were resolved in 2012. We have not incurred any similar costs in 2013.

Stock-based compensation decreased$0.5 million, or 29.1%, for the three months ended September 30, 2013 compared to the same period in 2012. For the nine months ended September 30, 2013, stock-based compensation decreased$0.7 million, or 15.7%, from the comparable period in 2012. These decreases are due primarily to the 2012 periods including the acceleration of vesting of outstanding awards for certain executives in connection with their separation from the Company, and to a lesser extent to greater forfeitures of nonvested awards and fewer aggregate nonvested stock awards outstanding in the 2013 periods and lower fair values assigned to more recent stock awards.

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We include a detailed calculation of Adjusted EBITDA by segment in Note D of “Notes to Consolidated Financial Statements” included in Item 1 of this Form 10-Q. A summary of Adjusted EBITDA by segment for the three months and nine months ended September 30, 2013 and 2012 was as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Recovery Audit Services – Americas	$	12,132		$	12,002		$	29,105		$	28,988
Recovery Audit Services – Europe/Asia-Pacific	1,916			849			3,381			4,972
New Services	1,078			162			1,823			530
Subtotal for reportable segments	15,126			13,013			34,309			34,490
Corporate Support	(4,372		)	(4,193		)	(11,903		)	(11,767		)
Total	$	10,754		$	8,820		$	22,406		$	22,723

Recovery Audit Services – Americas Adjusted EBITDA increased$0.1 million, or 1.1%, for the three months ended September 30, 2013 compared to the same period in 2012. For the nine months ended September 30, 2013, Recovery Audit Services – Americas Adjusted EBITDA increased$0.1 million, or 0.4%, from the comparable period in 2012. These increases resulted from a greater decrease in COR than revenue in both periods, partially offset by higher SG&A expenses.

Recovery Audit Services – Europe/Asia-Pacific Adjusted EBITDA increased$1.1 million, or 125.7%, for the three months ended September 30, 2013 compared to the same period in 2012. For the nine months ended September 30, 2013, Recovery Audit Services – Europe/Asia-Pacific Adjusted EBITDA decreased$1.6 million, or 32.0%, from the comparable period in 2012. The increase in the third quarter is due to higher revenue and lower COR and SG&A expenses in the third quarter of 2013 compared to the third quarter of 2012. The decrease in the nine-month period is due to lower revenue, partially offset by lower COR and SG&A expenses in the 2013 period compared to the 2012 period.

New Services Adjusted EBITDA increased$0.9 million, or 565.4%, for the three months ended September 30, 2013 compared to the same period in 2012. For the nine months ended September 30, 2013, New Services Adjusted EBITDA increased$1.3 million, or 244.0%, from the comparable period in 2012. These increases are due primarily to the increases in revenue in this segment without comparable increases in COR and SG&A expenses.

Corporate Support Adjusted EBITDA decreased$0.2 million, or 4.3%, for the three months ended September 30, 2013 compared to the same period in 2012. For the nine months ended September 30, 2013, Corporate Support Adjusted EBITDA decreased$0.1 million, or 1.2%, from the comparable period in 2012. These decreases are due primarily to higher payroll-related expenses resulting from annual compensation adjustments and additional sales and marketing expenses.

Liquidity and Capital Resources

As of September 30, 2013, we had $42.4 million in cash and cash equivalents and no borrowings under the revolver portion of our credit facility. The revolver had approximately $9.0 million of calculated availability for borrowings. The Company was in compliance with the covenants in its SunTrust credit facility as of September 30, 2013.

Operating Activities. Net cash provided by operating activities was $10.3 million and $12.4 million during the nine months ended September 30, 2013 and 2012, respectively. These amounts consist of two components, specifically, net earnings adjusted for certain non-cash items (such as depreciation, amortization, stock-based compensation expense, and deferred income taxes) and changes in assets and liabilities, primarily working capital, as follows (in thousands):

	Nine Months Ended September 30,
	2013			2012
Net earnings	$	6,211		$	3,859
Adjustments for certain non-cash items	13,856			14,198
	20,067			18,057
Changes in operating assets and liabilities	(9,772		)	(5,692		)
Net cash provided by operating activities	$	10,295		$	12,365

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The change in net cash provided by operating activities primarily resulted from higher net earnings adjusted for non-cash items, more than offset by changes in operating assets and liabilities. These changes included higher payments made in the 2013 period for incentive compensation earned in 2012 than were made in the 2012 period for incentive compensation earned in 2011, lower incentive compensation accruals in the 2013 period, and higher payments in 2013 for equipment purchased in 2012, which were partially offset by greater collections of receivables in the 2013 period. We include an itemization of these changes in our Condensed Consolidated Statements of Cash Flows (Unaudited) included in Item 1 of this Form 10-Q.

Investing Activities. Net cash used for property and equipment capital expenditures was $4.5 million and $5.7 million during the nine months ended September 30, 2013 and 2012, respectively. These capital expenditures primarily related to investments we made to upgrade our information technology infrastructure, develop our Next-Generation Recovery Audit service delivery model, and develop software relating to our participation in the Medicare RAC program and our Profit Optimization toolsets.

Capital expenditures are discretionary and we currently expect full year 2013 capital expenditures to decline slightly from the full year 2012 levels. Although we continue to enhance our Next-Generation Recovery Audit service delivery model and our Healthcare Claims Recovery Audit systems, these projects have required less development in 2013 than they did in 2012, and we expect this trend to continue for the remainder of 2013. We may alter our capital expenditure plans should we experience changes in our operating results which cause us to adjust our operating plans.

We made business acquisition payments of $1.4 million in the nine months ended September 30, 2012 relating to our acquisition of assets, principally work in progress, as part of associate migrations. We did not complete a business acquisition in the nine months ended September 30, 2013.

Financing Activities. Net cash used in financing activities was $0.7 million and $6.0 million for the nine months ended September 30, 2013, and 2012, respectively. The decrease in net cash used in financing activities in the nine months ended September 30, 2013 compared to same period in 2012 is due to the $4.1 million of net proceeds we received from the issuance of common stock in January 2013. This issuance relates to the exercise of the overallotment option for an additional 685,375 shares by the underwriters of our December 2012 public offering (see Common Stock Offering below). We made mandatory payments of $2.3 million on our term loan in each nine-month period. Payments of deferred acquisition consideration of $1.9 million and $2.9 million during the nine months ended September 30, 2013 and 2012, respectively, include earn-out payments we made relating to the acquisition of The Johnsson Group, deferred compensation relating to the acquisition of Etesius Limited and additional working capital payments and earn-out payments related to the BSI acquisition.

Secured Credit Facility

On January 19, 2010, we entered into a four-year revolving credit and term loan agreement with SunTrust Bank (“SunTrust”). We used substantially all the funds from the SunTrust term loan to repay in full the $14.1 million outstanding under our then-existing Ableco LLC term loan. The SunTrust credit facility consists of a $15.0 million committed revolving credit facility and a $15.0 million term loan. The SunTrust credit facility is guaranteed by the Company and its domestic subsidiaries and is secured by substantially all of our assets. Amounts available for borrowing under the SunTrust revolver are based on our eligible accounts receivable and other factors. Borrowing availability under the SunTrust revolver at September 30, 2013 was $9.0 million. We had no borrowings outstanding under the SunTrust revolver as of September 30, 2013.

The SunTrust term loan requires quarterly principal payments of $0.8 million from March 2010 through December 2013, and a final principal payment of $3.0 million in January 2014. The loan agreement requires mandatory prepayments with the net cash proceeds from certain asset sales, equity offerings and insurance proceeds received by the Company. In connection with our equity offering in December 2012 (see “Common Stock Offering” below), we obtained a waiver of the requirement to prepay the loan from SunTrust that enabled us to retain the net proceeds from the offering. The loan agreement also requires an additional annual prepayment contingently payable in April of each year based on excess cash flow (“ECF”) in the prior year if our leverage ratio, as defined in the agreement, exceeds a certain threshold. Our leverage ratio has remained below the threshold and ECF payments have not been required in any year.

Interest on both the revolver and term loan is payable monthly and accrues at an index rate based on the one-month LIBOR rate, plus an applicable margin as determined by the loan agreement. The applicable interest rate margin varies from 2.25% per annum to 3.5% per annum, depending on our consolidated leverage ratio, and is determined in accordance with a pricing grid under the SunTrust loan agreement. The applicable margin was 2.25% and the interest rate was approximately 2.43% at September 30, 2013. We also must pay a commitment fee of 0.5% per annum, payable quarterly, on the unused portion of the $15.0 million SunTrust revolving credit facility.

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The SunTrust credit facility includes customary affirmative, negative, and financial covenants binding on the Company, including delivery of financial statements and other reports, maintenance of existence, and transactions with affiliates. The negative covenants limit the ability of the Company, among other things, to incur debt, incur liens, make investments, sell assets, repurchase shares of its capital stock or declare or pay dividends on its capital stock. The financial covenants included in the SunTrust credit facility, among other things, limit the amount of capital expenditures the Company can make, set forth maximum leverage and net funded debt ratios for the Company and a minimum fixed charge coverage ratio, and also require the Company to maintain minimum consolidated earnings before interest, taxes, depreciation and amortization. In addition, the SunTrust credit facility includes customary events of default.

We believe that we will have sufficient borrowing capacity and cash generated from operations to fund our capital and operational needs for at least the next twelve months.

Common Stock Offering

On December 11, 2012, we closed our public offering of 6,249,234 shares of our common stock, which consisted of 2,500,000 shares sold by us and 3,749,234 shares sold by certain selling shareholders, at a price to the public of $6.39 per share. The net proceeds to us from the public offering, after deducting underwriting discounts and commissions and offering expenses, were $14.7 million. We did not receive any proceeds from the sale of shares by the selling shareholders. In addition, the underwriters elected to exercise an overallotment option for an additional 687,385 shares, and we completed the sale of these additional shares on January 8, 2013. The net proceeds to us from the exercise of the overallotment option, after deducting underwriting discounts and commission and offering expenses, were $4.1 million.

Off-Balance Sheet Arrangements

As of September 30, 2013, the Company did not have any material off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of the SEC’s Regulation S-K.

Critical Accounting Policies

We describe the Company’s significant accounting policies in Note 1 of Notes to Consolidated Financial Statements of the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. We consider certain of these accounting policies to be “critical” to the portrayal of the Company’s financial position and results of operations, as they require the application of significant judgment by management. As a result, they are subject to an inherent degree of uncertainty. We identify and discuss these “critical” accounting policies in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. Management bases its estimates and judgments on historical experience and on various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, management evaluates its estimates and judgments, including those considered “critical”. Management has discussed the development, selection and evaluation of accounting estimates, including those deemed “critical,” and the associated disclosures in this Form 10-Q with the Audit Committee of the Board of Directors.

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Forward-Looking Statements

Some of the information in this Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which statements involve substantial risks and uncertainties including, without limitation, (1) statements that contain projections of the Company’s future results of operations or of the Company’s financial condition, (2) statements regarding the adequacy of the Company’s current working capital and other available sources of funds, (3) statements regarding goals and plans for the future, including the Company’s strategic initiatives and growth opportunities, (4) expectations regarding future revenue trends, and (5) the anticipated impact of the Company’s participation in the Medicare RAC program. All statements that cannot be assessed until the occurrence of a future event or events should be considered forward-looking. These statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and can be identified by the use of forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue” or similar words. Risks and uncertainties that may potentially impact these forward-looking statements include, without limitation, those set forth under Part I, Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 and its other periodic reports filed with the Securities and Exchange Commission. The Company disclaims any obligation or duty to update or modify these forward-looking statements.

There may be events in the future, however, that the Company cannot accurately predict or over which the Company has no control. The risks and uncertainties listed in this section, as well as any cautionary language in this Form 10-Q, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. You should be aware that the occurrence of any of the events denoted above as risks and uncertainties and elsewhere in this Form 10-Q could have a material adverse effect on our business, financial condition and results of operations.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Market Risk. Our reporting currency is the U.S. dollar, although we transact business in various foreign locations and currencies. As a result, our financial results could be significantly affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which we provide our services. Our operating results are exposed to changes in exchange rates between the U.S. dollar and the currencies of the other countries in which we operate. When the U.S. dollar strengthens against other currencies, the value of foreign functional currency revenue decreases. When the U.S. dollar weakens, the value of the foreign functional currency revenue increases. Overall, we are a net receiver of currencies other than the U.S. dollar and, as such, benefit from a weaker dollar. We therefore are adversely affected by a stronger dollar relative to major currencies worldwide. During the three and nine months ended September 30, 2013, we recognized $5.2 million and $9.2 million, respectively, of operating income from operations located outside the U.S., virtually all of which was originally accounted for in currencies other than the U.S. dollar. Upon translation into U.S. dollars, such operating income would increase or decrease, assuming a hypothetical 10% change in weighted-average foreign currency exchange rates against the U.S. dollar, by approximately $0.5 million and $0.9 million for the three and nine months ended September 30, 2013. We currently do not have any arrangements in place to hedge our foreign currency risk.

Interest Rate Risk. Our interest income and expense are sensitive to changes in the general level of U.S. interest rates. In this regard, changes in U.S. interest rates affect the interest earned on our cash equivalents as well as interest paid on our debt. We had $3.8 million outstanding under a term loan and $9.0 million of calculated borrowing availability under our revolving credit facility as of September 30, 2013, but had no amounts drawn under the revolving credit facility as of that date. Interest on both the revolver and the term loan are payable monthly and accrue at an index rate using the one-month LIBOR rate plus an applicable margin as determined by the loan agreement. The applicable interest rate margin varies from 2.25% per annum to 3.5% per annum. The applicable margin was 2.25% and the interest rate was approximately 2.43% at September 30, 2013. Assuming full utilization of the revolving credit facility, a hypothetical 100 basis point change in interest rates applicable to the revolver would result in an approximate $0.1 million change in annual pre-tax income. A hypothetical 100 basis point change in interest rates applicable to the term loan would result in a less than $0.1 million change in annual pre-tax income.

In order to mitigate some of this interest rate risk, we entered into an interest rate swap agreement with SunTrust Bank in October 2010 under which we pay additional interest on a notional amount of $3.8 million through December 31, 2013 to the extent that the one-month LIBOR rate is below 1.23%, and receive payments from SunTrust Bank to the extent the index exceeds this level. The notional amount is equal to the final two payments due under the term loan in December 2013 and January 2014. Currently, one–month LIBOR is below 1.23% and we are paying a minimal amount of additional interest under this agreement. Should one–month LIBOR rates increase above the 1.23% level, we will incur additional interest expense on all of the amounts outstanding under our credit facility, but will offset a portion of this additional expense with the income we earn from the swap agreement.

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Item 4. Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of its management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in the Exchange Act Rule 13a-15(e)) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2013.

There were no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2013 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are party to a variety of legal proceedings arising in the normal course of business. While the results of these proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will not have a material adverse effect on our financial position, results of operations or cash flows.

Item 1A. Risk Factors

There have been no material changes in the risks facing the Company as described in the Company’s Form 10-K for the year ended December 31, 2012.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Company’s current credit facility prohibits the payment of any cash dividends on the Company’s capital stock.

The following table sets forth information regarding the purchases of the Company’s equity securities made by or on behalf of the Company or any affiliated purchaser (as defined in Exchange Act Rule 10b-18) during the three-month period ended September 30, 2013:

2013	Total Number of Shares Purchased (a)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
					(millions of dollars)
July 1 - July 31	—	$	—	—	$	—
August 1 - August 31	818	$	6.01	—	$	—
September 1 - September 30	—	$	—	—	$	—
	818	$	6.01	—

(a) All shares purchased during the quarter were surrendered by employees to satisfy tax withholding obligations upon vesting of restricted stock.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

Exhibit Number	Description
3.1	Restated Articles of Incorporation of the Registrant, as amended and corrected through August 11, 2006 (restated solely for the purpose of filing with the Commission) (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on August 17, 2006).
3.1.1	Articles of Amendment of the Registrant effective January 20, 2010 (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on January 25, 2010).
3.2	Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on December 11, 2007).
4.1	Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 10-K for the year ended December 31, 2001).
4.2	See Restated Articles of Incorporation and Bylaws of the Registrant, filed as Exhibits 3.1 and 3.2, respectively.
4.3	Shareholder Protection Rights Agreement, dated as of August 9, 2000, between the Registrant and Rights Agent (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed on August 9, 2000).
4.3.1	First Amendment to Shareholder Protection Rights Agreement, dated as of March 12, 2002, between the Registrant and Rights Agent (incorporated by reference to Exhibit 4.3 to the Registrant’s Form 10-Q for the quarterly period ended June 30, 2002).
4.3.2	Second Amendment to Shareholder Protection Rights Agreement, effective as of August 16, 2002, between the Registrant and Rights Agent (incorporated by reference to Exhibit 4.3 to the Registrant’s Form 10-Q for the quarterly period ended September 30, 2002).
4.3.3	Third Amendment to Shareholder Protection Rights Agreement, effective as of November 7, 2005, between the Registrant and Rights Agent (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed on November 14, 2005).
4.3.4	Fourth Amendment to Shareholder Protection Rights Agreement, effective as of November 14, 2005, between the Registrant and Rights Agent (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed on November 30, 2005).
4.3.5	Fifth Amendment to Shareholder Protection Rights Agreement, effective as of March 15, 2006, between the Registrant and Rights Agent (incorporated by reference to Exhibit 4.9 to the Registrant’s Form 10-K for the year ended December 31, 2005).
4.3.6	Sixth Amendment to Shareholder Protection Rights Agreement, effective as of September 17, 2007, between the Registrant and Rights Agent (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed on September 21, 2007).
4.3.7	Seventh Amendment to Shareholder Protection Rights Agreement, effective as of August 9, 2010, between the Registrant and Rights Agent (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed on August 9, 2010).
4.3.8	Eighth Amendment to Shareholder Protection Rights Agreement, effective as of August 4, 2011, between the Registrant and Rights Agent (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q for the quarterly period ended June 30, 2011).
4.3.9	Ninth Amendment to Shareholder Protection Rights Agreement, effective as of August 2, 2012, between the Registrant and Rights Agent (incorporated by reference to Exhibit 4.3.9 to the Registrant’s Form 10-Q for the quarterly period ended June 30, 2012).
31.1	Certification of the Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a), for the quarter ended September 30, 2013.
31.2	Certification of the Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a), for the quarter ended September 30, 2013.
32.1	Certification of the Chief Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, for the quarter ended September 30, 2013.

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101 The following financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013, formatted in Extensible Business Reporting Language (“XBRL”): (i) Condensed Consolidated Statements of Income, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements.*

* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not to be “filed” or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Act of 1934, as amended, and otherwise are not subject to liability under these sections.

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SIGNATURES

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, thereunto duly authorized.

	PRGX GLOBAL, INC.
November 5, 2013	By:	/s/ Romil Bahl
		Romil Bahl
		President, Chief Executive Officer, Director (Principal Executive Officer)
November 5, 2013	By:	/s/ Robert B. Lee
		Robert B. Lee
		Chief Financial Officer and Treasurer (Principal Financial Officer)

30

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Romil Bahl, certify that:

1. I have reviewed this Form 10-Q of PRGX Global, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

(b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 5, 2013	By:	/s/ Romil Bahl
		Romil Bahl
		President, Chief Executive Officer, Director (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Robert B. Lee, certify that:

1. I have reviewed this Form 10-Q of PRGX Global, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

(b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 5, 2013	By:	/s/ Robert B. Lee
		Robert B. Lee
		Chief Financial Officer and Treasurer (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of PRGX Global, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Romil Bahl, President and Chief Executive Officer of the Company and I, Robert B. Lee, Chief Financial Officer and Treasurer, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of the undersigned’s knowledge: (1) the Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 5, 2013	By:	/s/ Romil Bahl
		Romil Bahl
		President, Chief Executive Officer, Director (Principal Executive Officer)
November 5, 2013	By:	/s/ Robert B. Lee
		Robert B. Lee
		Chief Financial Officer and Treasurer (Principal Financial Officer)

XML

Basis of Presentation Organization, Consolidation and Presentation of Financial Statements (Policies)

9 Months Ended

Sep. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

The accompanying Condensed Consolidated Financial Statements (Unaudited) of PRGX Global, Inc. and its wholly owned subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month and nine-month periods ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

Except as otherwise indicated or unless the context otherwise requires, “PRGX,” “we,” “us,” “our” and the “Company” refer to PRGX Global, Inc. and its subsidiaries. For further information, refer to the Consolidated Financial Statements and Footnotes thereto included in the Company’s Form 10-K for the year ended December 31, 2012.

Beginning with the third quarter of 2013, we present fair value adjustments to acquisition-related contingent consideration as an adjustment to our segment measure earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") as presented in Note D - Operating Segments and Related Information.  We now include these fair value adjustments in the Adjusted EBITDA calculation in the "Acquisition-related charges (benefits)" line, which we renamed from "Acquisition transaction costs and acquisition obligations classified as compensation." Accordingly, we have revised the presentation of our Adjusted EBITDA calculation for all relevant prior periods.

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents (Note E)	$ 42,407	$ 37,806
Restricted cash	127	65
Contract receivables, less allowances of $1,957 in 2013 and $1,693 in 2012:
Billed	30,687	32,626
Unbilled	12,261	12,501
Receivables Net	42,948	45,127
Employee advances and miscellaneous receivables, less allowances of $220 in 2013 and $538 in 2012	1,182	1,352
Total receivables	44,130	46,479
Prepaid expenses and other current assets	3,785	3,853
Total current assets	90,449	88,203
Property and equipment	61,200	56,924
Less accumulated depreciation and amortization	(43,215)	(37,350)
Property and equipment, net	17,985	19,574
Goodwill	13,665	13,669
Intangible assets, less accumulated amortization of $31,366 in 2013 and $27,720 in 2012	14,709	18,399
Noncurrent portion of unbilled receivables	1,415	1,391
Other assets	2,093	2,350
Total assets	140,316	143,586
Current liabilities:
Accounts payable and accrued expenses	10,256	14,136
Accrued payroll and related expenses	15,612	20,874
Refund liabilities	6,612	6,979
Deferred revenue	1,237	1,551
Current portion of debt (Note F)	3,750	3,000
Business acquisition obligations	2,994	4,218
Total current liabilities	40,461	50,758
Long-term debt (Note F)	0	3,000
Noncurrent business acquisition obligations	0	2,479
Noncurrent refund liabilities	960	1,159
Other long-term liabilities	367	1,538
Total liabilities	41,788	58,934
Commitments and contingencies (Note H)
Shareholders’ equity (Note B):
Common stock, no par value; $.01 stated value per share. Authorized 50,000,000 shares; 29,215,660 shares issued and outstanding as of September 30, 2013 and 27,893,132 shares issued and outstanding as of December 31, 2012	292	279
Additional paid-in capital	602,630	594,045
Accumulated deficit	(506,989)	(513,200)
Accumulated other comprehensive income	2,595	3,528
Total shareholders’ equity	98,528	84,652
Total liabilities and shareholders' equity	$ 140,316	$ 143,586

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Operating Segments and Related Information

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Operating Segments and Related Information

Operating Segments and Related Information

We conduct our operations through three reportable segments:

Recovery Audit Services – Americas represents recovery audit services (other than Healthcare Claims Recovery Audit services) provided in the United States of America (“U.S.”), Canada and Latin America.

Recovery Audit Services – Europe/Asia-Pacific represents recovery audit services (other than Healthcare Claims Recovery Audit services) provided in Europe, Asia and the Pacific region.

New Services represents Profit Optimization services and Healthcare Claims Recovery Audit services.

Additionally,Corporate Support includes the unallocated portion of corporate selling, general and administrative expenses not specifically attributable to the three reportable segments.

We evaluate the performance of our reportable segments based upon revenue and measures of profit or loss we refer to as EBITDA and Adjusted EBITDA. We define Adjusted EBITDA as earnings from continuing operations before interest and taxes (“EBIT”), adjusted for depreciation and amortization (“EBITDA”), and then further adjusted for unusual and other significant items that management views as distorting the operating results of the various segments from period to period. Such adjustments include restructuring charges, stock-based compensation, bargain purchase gains, acquisition-related charges and benefits (acquisition transaction costs, acquisition obligations classified as compensation, and fair value adjustments to acquisition-related contingent consideration), intangible asset impairment charges, certain litigation costs and litigation settlements, certain severance charges and foreign currency transaction gains and losses on short-term intercompany balances viewed by management as individually or collectively significant. We do not have any inter-segment revenue. Segment information for the three and nine months ended September 30, 2013 and 2012 (in thousands) is as follows:

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			New Services		Corporate Support			Total
Three Months Ended September 30, 2013
Revenue	$	32,365		$	12,009		$	9,029	$	—		$	53,403
Net earnings												$	4,877
Income tax expense												1,029
Interest expense, net												75
EBIT	$	9,418		$	1,987		$	270	$	(5,694	)	5,981
Depreciation of property and equipment	1,414			124			496		—			2,034
Amortization of intangible assets	698			323			183		—			1,204
EBITDA	11,530			2,434			949		(5,694		)	9,219
Foreign currency transaction (gains) losses on short-term intercompany balances	(80		)	(574		)	—		18			(636		)
Acquisition-related charges	662			—			44		—			706
Transformation severance and related expenses	20			56			85		—			161
Stock-based compensation	—			—			—		1,304			1,304
Adjusted EBITDA	$	12,132		$	1,916		$	1,078	$	(4,372	)	$	10,754

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			New Services			Corporate Support			Total
Three Months Ended September 30, 2012
Revenue	$	33,235		$	11,406		$	7,446		$	—		$	52,087
Net earnings													$	2,565
Income tax expense													505
Interest expense, net													515
EBIT	$	9,964		$	304		$	(651	)	$	(6,032	)	3,585
Depreciation of property and equipment	1,111			90			515			—			1,716
Amortization of intangible assets	767			462			202			—			1,431
EBITDA	11,842			856			66			(6,032		)	6,732
Foreign currency transaction (gains) losses on short-term intercompany balances	(85		)	(266		)	3			—			(348		)
Acquisition-related charges (benefits)	—			(14		)	93			—			79
Transformation severance and related expenses	245			273			—			—			518
Stock-based compensation	—			—			—			1,839			1,839
Adjusted EBITDA	$	12,002		$	849		$	162		$	(4,193	)	$	8,820

	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific			New Services			Corporate Support			Total
Nine Months Ended September 30, 2013
Revenue	$	87,999	$	33,796		$	26,914		$	—		$	148,709
Net earnings												$	6,211
Income tax expense												1,671
Interest income, net												(89		)
EBIT	$	21,643	$	2,354		$	(522	)	$	(15,682	)	7,793
Depreciation of property and equipment	4,138		362			1,569			—			6,069
Amortization of intangible assets	2,094		1,171			547			—			3,812
EBITDA	27,875		3,887			1,594			(15,682		)	17,674
Foreign currency transaction (gains) losses on short-term intercompany balances	143		(199		)	—			2			(54		)
Acquisition-related charges (benefits)	987		(900		)	144			—			231
Transformation severance and related expenses	100		593			85			—			778
Stock-based compensation	—		—			—			3,777			3,777
Adjusted EBITDA	$	29,105	$	3,381		$	1,823		$	(11,903	)	$	22,406

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			New Services			Corporate Support			Total
Nine Months Ended September 30, 2012
Revenue	$	91,640		$	39,122		$	24,632		$	—		$	155,394
Net earnings													$	3,859
Income tax expense													1,586
Interest expense, net													1,548
EBIT	$	21,994		$	3,515		$	(2,270	)	$	(16,246	)	6,993
Depreciation of property and equipment	3,016			217			1,575			—			4,808
Amortization of intangible assets	3,120			1,491			606			—			5,217
EBITDA	28,130			5,223			(89		)	(16,246		)	17,018
Foreign currency transaction (gains) losses on short-term intercompany balances	(77		)	(117		)	4			—			(190		)
Acquisition-related charges (benefits)	—			(485		)	288			—			(197		)
Transformation severance and related expenses	358			351			327			—			1,036
Wage claim costs	577			—			—			—			577
Stock-based compensation	—			—			—			4,479			4,479
Adjusted EBITDA	$	28,988		$	4,972		$	530		$	(11,767	)	$	22,723

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Business Acquisitions (Tables)

9 Months Ended

Sep. 30, 2013

Business Combinations [Abstract]

Summary of the allocation of the aggregate fair values of the assets acquired and purchase price for the associate migrations

The allocation of the aggregate fair values of the assets acquired and purchase price for these associate migrations is summarized as follows (in thousands):

Fair values of net assets acquired:
Equipment	$	10
Intangible assets, primarily non-compete agreements	171
Working capital, including work in progress	666
Goodwill	695
Fair value of net assets acquired	$	1,542
Fair value of purchase price	$	1,542

Unaudited pro forma condensed financial information

Unaudited pro forma condensed financial information is as follows (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2012		2012
Revenue	$	52,087	$	155,394
Net earnings	$	2,569	$	4,323

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Basis of Presentation Unbilled Receivables (Policies)

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Trade and Other Accounts Receivable, Unbilled Receivables, Policy [Policy Text Block]

Unbilled Receivables

A significant portion of the unbilled receivables presented in the Condensed Consolidated Balance Sheets relate to our Healthcare Claims Recovery Audit services as we generally cannot invoice the prime contractors for whom we operate as a subcontractor under the Medicare RAC program until cash is collected by the prime contractors. These unbilled receivables, net of the related reserves, were $7.9 million and $9.6 million as of September 30, 2013 and December 31, 2012, respectively. As of November 1, 2013, we billed $0.3 million of the unbilled receivables relating to the Medicare RAC program that were outstanding as of September 30, 2013.

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Business Acquisitions (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012
Unaudited pro forma condensed financial information
Revenues	$ 52,087	$ 155,394
Net earnings	$ 2,569	$ 4,323

XML

Earnings Per Common Share (Details Textual) (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended	1 Months Ended	3 Months Ended	9 Months Ended		12003 Months Ended
	Jan. 08, 2013	Dec. 11, 2012	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 3013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of common shares in the basic and diluted earnings per common share (shares)			900,000	700,000	900,000	700,000
Nonvested restricted share (shares)			200,000	200,000	200,000	200,000
Public Offering Common stock shares (shares)		6,249,234
Public Offering By Company (shares)		2,500,000
Public Offering by Selling Shareholders (shares)		3,749,234
Public Offering, Price per share (usd per share)		$ 6.39
Public Offering, Net proceeds	$ 4,100	$ 14,700		$ 4,118	$ 0
Additional Shares, Overallotment option (shares)	687,385
Performance Unit [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Weighted average shares outstanding excludes anti-dilutive shares underlying options (shares)			200,000		200,000
Non-qualified Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Weighted average shares outstanding excludes anti-dilutive shares underlying options (shares)			600,000	1,600,000	600,000	1,600,000

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Earnings Per Common Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended	9 Months Ended		12003 Months Ended
	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 3013
Numerator:
Net earnings	$ 2,565	$ 6,211	$ 3,859	$ 4,877
Denominator:
Weighted-average common shares outstanding (shares)	25,541	29,075	25,370	29,396
Basic earnings (loss) per common share (usd per share)	$ 0.10	$ 0.21	$ 0.15	$ 0.17
Numerator:
Net earnings	$ 2,565	$ 6,211	$ 3,859	$ 4,877
Denominator:
Weighted-average common shares outstanding (shares)	25,541	29,075	25,370	29,396
Incremental shares from stock-based compensation plans (shares)	709	442	572	419
Denominator for diluted earnings (loss) per common share (shares)	26,250	29,517	25,942	29,815
Diluted earnings (loss) per common share (usd per share)	$ 0.10	$ 0.21	$ 0.15	$ 0.16

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Debt (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Components of long-term debt
Less current portion	$ 3,750	$ 3,000
Noncurrent portion	0	3,000
Sun Trust Term Loan [Member]
Components of long-term debt
SunTrust term loan due quarterly through January 2014	3,750	6,000
Less current portion	3,750	3,000
Noncurrent portion	$ 0	$ 3,000

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Income Taxes (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013
Income Tax Disclosure [Abstract]
Reversed foreign income taxes accruals	$ 0.5

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Operating Segments and Related Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended		12003 Months Ended
	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 3013
Segment information
Revenue	$ 52,087	$ 148,709	$ 155,394	$ 53,403
Net earnings	2,565	6,211	3,859	4,877
Income tax expense	505	1,671	1,586	1,029
Interest expense (income), net	515	(89)	1,548	75
EBIT	3,585	7,793	6,993	5,981
Depreciation of property and equipment	1,716	6,069	4,808	2,034
Amortization of intangible assets	1,431	3,812	5,217	1,204
EBITDA	6,732	17,674	17,018	9,219
Foreign currency transaction (gains) losses on short-term intercompany balances	348	54	190	636
Acquisition-Related Charges (Benefits)	79	231	(197)	706
Transformation severance and related expenses	518	778	1,036	161
Wage claim costs			577
Stock-based compensation	1,839	3,777	4,479	1,304
Adjusted EBITDA	8,820	22,406	22,723	10,754
Recovery Audit Services - Americas [Member]
Segment information
Revenue	33,235	87,999	91,640	32,365
EBIT	9,964	21,643	21,994	9,418
Depreciation of property and equipment	1,111	4,138	3,016	1,414
Amortization of intangible assets	767	2,094	3,120	698
EBITDA	11,842	27,875	28,130	11,530
Foreign currency transaction (gains) losses on short-term intercompany balances	85	(143)	77	80
Acquisition-Related Charges (Benefits)	0	987	0	662
Transformation severance and related expenses	245	100	358	20
Wage claim costs			577
Stock-based compensation			0
Adjusted EBITDA	12,002	29,105	28,988	12,132
Recovery Audit Services - Europe/Asia- Pacific [Member]
Segment information
Revenue	11,406	33,796	39,122	12,009
EBIT	304	2,354	3,515	1,987
Depreciation of property and equipment	90	362	217	124
Amortization of intangible assets	462	1,171	1,491	323
EBITDA	856	3,887	5,223	2,434
Foreign currency transaction (gains) losses on short-term intercompany balances	266	199	117	574
Acquisition-Related Charges (Benefits)	(14)	(900)	(485)	0
Transformation severance and related expenses	273	593	351	56
Adjusted EBITDA	849	3,381	4,972	1,916
New Services [Member]
Segment information
Revenue	7,446	26,914	24,632	9,029
EBIT	(651)	(522)	(2,270)	270
Depreciation of property and equipment	515	1,569	1,575	496
Amortization of intangible assets	202	547	606	183
EBITDA	66	1,594	(89)	949
Foreign currency transaction (gains) losses on short-term intercompany balances	(3)	0	(4)	0
Acquisition-Related Charges (Benefits)	93	144	288	44
Transformation severance and related expenses	0	85	327	85
Adjusted EBITDA	162	1,823	530	1,078
Corporate Support [Member]
Segment information
EBIT	(6,032)	(15,682)	(16,246)	(5,694)
EBITDA	(6,032)	(15,682)	(16,246)	(5,694)
Foreign currency transaction (gains) losses on short-term intercompany balances		(2)	0	(18)
Stock-based compensation	1,839	3,777	4,479	1,304
Adjusted EBITDA	$ (4,193)	$ (11,903)	$ (11,767)	$ (4,372)

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Basis of Presentation Unbilled Receivables (Details Textual) (USD $)	Sep. 30, 2013	Dec. 31, 2012	Nov. 01, 2013 Medicare RAC [Member]	Sep. 30, 2013 Medicare RAC [Member]	Sep. 30, 2012 Medicare RAC [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts, Notes, Loans and Financing Receivable, Net, Current				$ 7,900,000	$ 9,600,000
Additional Billed Receivables Current	$ 30,687,000	$ 32,626,000	$ 300,000

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Cash flows from operating activities:
Net earnings	$ 6,211	$ 3,859
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	9,881	10,025
Amortization of deferred loan costs (Note F)	137	137
Stock-based compensation expense	3,777	4,479
Deferred income taxes	115	(253)
Foreign currency transaction (gains) losses on short-term intercompany balances	(54)	(190)
Changes in operating assets and liabilities:
Restricted cash	(62)	(59)
Billed receivables	1,705	(430)
Unbilled receivables	216	(3,290)
Prepaid expenses and other current assets	(139)	922
Other assets	24	(213)
Accounts payable and accrued expenses	(4,001)	(536)
Accrued payroll and related expenses	(5,305)	(1,611)
Refund liabilities	(566)	457
Deferred revenue	(341)	(662)
Noncurrent compensation obligations	285	276
Other long-term liabilities	(1,588)	(546)
Net cash provided by operating activities	10,295	12,365
Cash flows from investing activities:
Business acquisition	0	(1,437)
Purchases of property and equipment, net of disposal proceeds	(4,544)	(5,689)
Net cash used in investing activities	(4,544)	(7,126)
Cash flows from financing activities:
Repayments of long-term debt	(2,250)	(2,250)
Restricted stock repurchased from employees for withholding taxes	(1,241)	(1,357)
Proceeds from option exercises	611	496
Payments of deferred acquisition consideration	(1,904)	(2,891)
Net proceeds from issuance of common stock	4,118	0
Net cash used in financing activities	(666)	(6,002)
Effect of exchange rates on cash and cash equivalents	(484)	289
Net increase (decrease) in cash and cash equivalents	4,601	(474)
Cash and cash equivalents at beginning of period	37,806	20,337
Cash and cash equivalents at end of period	42,407	19,863
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	488	264
Cash paid during the period for income taxes, net of refunds received	$ 2,315	$ 1,661

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Earnings Per Common Share

9 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

Earnings (Loss) Per Common Share

Earnings Per Common Share

The following tables set forth the computations of basic and diluted earnings per common share for the three and nine months ended September 30, 2013 and 2012 (in thousands, except per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
Basic earnings per common share:	2013		2012		2013		2012
Numerator:
Net earnings	$	4,877	$	2,565	$	6,211	$	3,859
Denominator:
Weighted-average common shares outstanding	29,396		25,541		29,075		25,370
Basic earnings per common share	$	0.17	$	0.10	$	0.21	$	0.15

	Three Months Ended September 30,				Nine Months Ended September 30,
Diluted earnings per common share:	2013		2012		2013		2012
Numerator:
Net earnings	$	4,877	$	2,565	$	6,211	$	3,859
Denominator:
Weighted-average common shares outstanding	29,396		25,541		29,075		25,370
Incremental shares from stock-based compensation plans	419		709		442		572
Denominator for diluted earnings per common share	29,815		26,250		29,517		25,942
Diluted earnings per common share	$	0.16	$	0.10	$	0.21	$	0.15

Weighted-average shares outstanding excludes anti-dilutive shares underlying options that totaled 1.6 million shares from the computation of diluted earnings per common share for the three and nine months ended September 30, 2013. Weighted-average shares outstanding excludes anti-dilutive shares underlying options that totaled 0.6 million shares and anti-dilutive Performance Units related to the Company's 2006 Management Incentive Plan that totaled 0.2 million from the computation of diluted earnings per common share for the three and nine months ended September 30, 2012. The number of common shares we used in the basic and diluted earnings per common share computations include nonvested restricted shares of 0.7 million and 0.9 million for the three and nine months ended September 30, 2013 and 2012, respectively, and nonvested restricted share units that we consider to be participating securities of 0.2 million for both the three and nine months ended September 30, 2013 and 2012.

On December 11, 2012, we closed a public offering of 6,249,234 shares of our common stock, which consisted of 2,500,000 shares sold by us and 3,749,234 shares sold by certain selling shareholders, at a price to the public of $6.39 per share. The net proceeds to us from the public offering, after deducting underwriting discounts and commissions and offering expenses, were $14.7 million. We did not receive any proceeds from the sale of shares by the selling shareholders. In addition, the underwriters elected to exercise an overallotment option for an additional 687,385 shares, and completed the additional sale on January 8, 2013. The net proceeds to us from the overallotment, after deducting underwriting discounts and commission and offering expenses, were $4.1 million.

In August 2012, we entered into the Ninth Amendment to our Shareholder Protection Rights Agreement with American Stock Transfer and Trust Company, our Rights Agent, dated as of August 9, 2000, as amended (the “Shareholder Rights Plan”), which extended the expiration date of the Shareholder Rights Plan to August 9, 2013. The Board of Directors of the Company allowed the Shareholder Rights Plan to expire on August 9, 2013 in accordance with its terms.

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Cash and Cash Equivalents

9 Months Ended

Sep. 30, 2013

Cash and Cash Equivalents [Abstract]

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents include all cash balances and highly liquid investments with an initial maturity of three months or less from date of purchase. We place our temporary cash investments with high credit quality financial institutions. At times, certain investments may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limit or otherwise may not be covered by FDIC insurance. Some of our cash and cash equivalents are held at banks in jurisdictions outside the U.S. that have restrictions on transferring such assets outside of these countries on a temporary or permanent basis. Such restricted net assets are not significant in comparison to our consolidated net assets.

Our cash and cash equivalents included short-term investments of approximately $25.2 million as of September 30, 2013 and $25.1 million as of December 31, 2012, of which approximately $4.1 million and $1.6 million, respectively, were held at banks outside of the United States, primarily in Brazil and Canada.

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Stock-Based Compensation

The Company currently has three stock-based compensation plans under which awards have been granted: (1) the Stock Incentive Plan; (2) the 2006 Management Incentive Plan (“2006 MIP”); and (3) the 2008 Equity Incentive Plan (“2008 EIP”) (collectively, the “Plans”). We describe the Plans in the Company’s Annual Report on Form 10–K for the fiscal year ended December 31, 2012.

2008 EIP Awards

Stock options granted under the 2008 EIP generally have a term of seven years and vest in equal annual increments over the vesting period, which typically is three years for employees and one year for directors. The following table summarizes stock option grants during the nine months endedSeptember 30, 2013 and 2012:

Grantee Type	# of Options Granted	Vesting Period	Weighted Average Exercise Price		Weighted Average Grant Date Fair Value
2013
Director group	75,490	1 year or less	$	5.67	$	2.00
Director group	17,092	3 years	$	6.83	$	3.76
Employee group	449,875	3 years	$	5.58	$	2.44
Employee inducement (1)	20,000	3 years	$	7.14	$	3.81
2012
Director group	51,276	1 year or less	$	7.53	$	3.97
Employee group	597,250	3 years	$	7.54	$	4.12
Employee inducement (2)	45,000	3 years	$	8.54	$	4.58

(1) The Company granted non-qualified performance-based stock options outside its existing stock-based compensation plans in the first quarter of 2013 to one employee in connection with the employee joining the Company.

(2) The Company granted non-qualified stock options outside its existing stock-based compensation plans in the third quarter of 2012 to one employee in connection with the employee joining the Company.

Nonvested stock awards, including both restricted stock and restricted stock units, generally are nontransferable until vesting and the holders are entitled to receive dividends with respect to the nonvested shares. Prior to vesting, the grantees of restricted stock are entitled to vote the shares, but the grantees of restricted stock units are not entitled to vote the shares. Generally, nonvested stock awards vest in equal annual increments over the vesting period, which typically is three years for employees and one year for directors. The following table summarizes nonvested stock awards granted during the nine months endedSeptember 30, 2013 and 2012:

Grantee Type	# of Shares Granted	Vesting Period	Weighted Average Grant Date Fair Value
2013
Director group	75,490	1 year or less	$	5.67
Director group	17,092	3 years	$	6.83
Employee group	449,875	3 years	$	5.58
Employee inducement (1)	20,000	3 years	$	7.14
2012
Director group	51,276	1 year or less	$	7.53
Employee group	426,286	3 years	$	7.55
Employee inducement (2)	45,000	3 years	$	8.54

(1) The Company granted nonvested performance-based stock awards (restricted stock) outside its existing stock-based compensation plans in the first quarter of 2013 to one employee in connection with the employee joining the Company.

(2) The Company granted nonvested stock awards (restricted stock units) outside its existing stock-based compensation plans in the third quarter of 2012 to one employee in connection with the employee joining the Company.

2006 MIP Performance Units

On June 19, 2012, seven senior officers of the Company were granted 154,264 Performance Units under the 2006 MIP, comprising all remaining available awards under the 2006 MIP. The awards had an aggregate grant date fair value of $1.2 million and vest ratably over three years. Upon vesting, the Performance Units will be settled by the issuance of Company common stock equal to 60% of the number of Performance Units being settled and the payment of cash in an amount equal to 40% of the fair market value of that number of shares of common stock equal to the number of Performance Units being settled. During the second quarter of 2013, an aggregate of 52,334 Performance Units were settled by five current executive officers and one former executive officer, and 16,524 Performance Units were forfeited by one former executive officer. Such settlements resulted in the issuance of 31,399 shares of common stock and cash payments totaling $0.1 million. As of September 30, 2013, a total of 85,406 Performance Units were outstanding, none of which were vested.

Selling, general and administrative expenses for the three months ended September 30, 2013 and 2012 include $1.3 million and $1.8 million, respectively, related to stock-based compensation charges. Selling, general and administrative expenses for the nine months ended September 30, 2013 and 2012 include $3.8 million and $4.5 million, respectively, related to stock-based compensation charges. At September 30, 2013, there was $8.1 million of unrecognized stock-based compensation expense related to stock options, restricted stock awards, restricted stock unit awards, and Performance Unit awards which we expect to recognize over a weighted-average period of 2.0 years.

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Stock-Based Compensation (Details) (USD $)	3 Months Ended		12003 Months Ended
	Sep. 30, 2012		Sep. 30, 3013
Director group [Member]
Summary of stock option grants
Grantee Type	Director group		Director group
No. of Options Granted (shares)			75,490
Vesting Period	1 year or less		1 year or less
Vesting Period	1 year
Weighted Average Exercise Price (usd per share)	$ 7.53		$ 5.67
Weighted Average Grant Date Fair Value (usd per share)			$ 2.00
Director Group 1 [Member]
Summary of stock option grants
Grantee Type			Director group
No. of Options Granted (shares)			17,092
Vesting Period			3 years
Weighted Average Exercise Price (usd per share)			$ 6.83
Weighted Average Grant Date Fair Value (usd per share)			$ 3.76
Employee [Member]
Summary of stock option grants
Grantee Type	Employee group		Employee group
No. of Options Granted (shares)			449,875
Vesting Period	3 years		3 years
Weighted Average Exercise Price (usd per share)	$ 7.54		$ 5.58
Weighted Average Grant Date Fair Value (usd per share)			$ 2.44
Employee inducement (1) [Member]
Summary of stock option grants
Grantee Type	Employee inducement (2)		Employee inducement (1)
No. of Options Granted (shares)	45,000	[1]	20,000	[2]
Vesting Period	3 years	[1]	3 years	[2]
Weighted Average Exercise Price (usd per share)	$ 8.54	[1]	$ 7.14	[2]
Weighted Average Grant Date Fair Value (usd per share)	$ 4.58	[1]	$ 3.81	[2]

[1] The Company granted non-qualified stock options outside its existing stock-based compensation plans in the third quarter of 2012 to one employee in connection with the employee joining the Company.

[2] The Company granted non-qualified performance-based stock options outside its existing stock-based compensation plans in the first quarter of 2013 to one employee in connection with the employee joining the Company.

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Operating Segments and Related Information (Details Textual)	9 Months Ended
	Sep. 30, 2013 Segment
Segment Reporting [Abstract]
Number of reportable segments	3

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Business Acquisitions (Details) (Associate Migrations [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2013
Associate Migrations [Member]
The summary of the allocation of the aggregate fair values of the assets acquired and purchase price for the associate migrations
Equipment	$ 10
Intangible assets, primarily non-compete agreements	171
Working capital, including work in progress	666
Goodwill	695
Fair value of net assets acquired	1,542
Fair value of purchase price	$ 1,542

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Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended		12003 Months Ended
	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 3013
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]
Net earnings	$ 2,565	$ 6,211	$ 3,859	$ 4,877
Foreign currency translation adjustments	136	(933)	430	96
Comprehensive income	$ 2,701	$ 5,278	$ 4,289	$ 4,973

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Legal Proceedings

We are party to a variety of legal proceedings arising in the normal course of business. While the results of these proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will not have a material adverse effect on our financial position, results of operations or cash flows.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Statement of Financial Position [Abstract]
Allowances for contract receivables	$ 1,957	$ 1,693
Allowances for employee advances and miscellaneous receivables	220	538
Accumulated amortization on intangible assets	$ 31,366	$ 27,720
Common stock, par value (usd per share)	$ 0	$ 0
Common stock, stated value per share (usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized (shares)	50,000,000	50,000,000
Common stock, shares issued (shares)	29,215,660	27,893,132
Common stock, shares outstanding (shares)	29,215,660	27,893,132

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Condensed Consolidated Statements of Income (Loss) (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended	9 Months Ended		12003 Months Ended
	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 3013
Income Statement [Abstract]
Revenue	$ 52,087	$ 148,709	$ 155,394	$ 53,403
Operating expenses:
Cost of revenue	32,461	92,804	99,991	30,876
Selling, general and administrative expenses	13,242	38,285	38,575	13,944
Depreciation of property and equipment	1,716	6,069	4,808	2,034
Amortization of intangible assets	1,431	3,812	5,217	1,204
Total operating expenses	48,850	140,970	148,591	48,058
Operating income	3,237	7,739	6,803	5,345
Foreign currency transaction (gains) losses on short-term intercompany balances	(348)	(54)	(190)	(636)
Interest expense (income), net	515	(89)	1,548	75
Earnings before income taxes	3,070	7,882	5,445	5,906
Income tax expense	505	1,671	1,586	1,029
Net earnings	$ 2,565	$ 6,211	$ 3,859	$ 4,877
Basic earnings (loss) per common share (Note B) (usd per share)	$ 0.10	$ 0.21	$ 0.15	$ 0.17
Diluted earnings (loss) per common share (Note B) (usd per share)	$ 0.10	$ 0.21	$ 0.15	$ 0.16
Weighted-average common shares outstanding (Note B):
Basic (shares)	25,541	29,075	25,370	29,396
Diluted (shares)	26,250	29,517	25,942	29,815

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Stock-Based Compensation (Details 1) (USD $)	3 Months Ended		12003 Months Ended	3 Months Ended	9 Months Ended		12003 Months Ended	9 Months Ended	3 Months Ended	12003 Months Ended	3 Months Ended	9 Months Ended		3 Months Ended		12003 Months Ended		9 Months Ended
	Sep. 30, 2012 Restricted Stock and Restricted Stock Units [Member]	Sep. 30, 2012 Director group [Member]	Sep. 30, 3013 Director group [Member]	Sep. 30, 2012 Director group [Member] 2008 Equity Incentive Plan [Member] Restricted Stock and Restricted Stock Units [Member]	Sep. 30, 2013 Director group [Member] 2008 Equity Incentive Plan [Member] Restricted Stock and Restricted Stock Units [Member]	Sep. 30, 2012 Director group [Member] 2008 Equity Incentive Plan [Member] Restricted Stock and Restricted Stock Units [Member]	Sep. 30, 3013 Director Group 1 [Member]	Sep. 30, 2013 Director Group 1 [Member] 2008 Equity Incentive Plan [Member] Restricted Stock and Restricted Stock Units [Member]	Sep. 30, 2012 Employee [Member]	Sep. 30, 3013 Employee [Member]	Sep. 30, 2012 Employee [Member] 2008 Equity Incentive Plan [Member] Restricted Stock and Restricted Stock Units [Member]	Sep. 30, 2013 Employee [Member] 2008 Equity Incentive Plan [Member] Restricted Stock and Restricted Stock Units [Member]	Sep. 30, 2012 Employee [Member] 2008 Equity Incentive Plan [Member] Restricted Stock and Restricted Stock Units [Member]	Sep. 30, 2012 Employee inducement (1) [Member]		Sep. 30, 3013 Employee inducement (1) [Member]		Sep. 30, 2013 Employee inducement (1) [Member] 2008 Equity Incentive Plan [Member] Restricted Stock and Restricted Stock Units [Member]		Sep. 30, 2012 Employee inducement (1) [Member] 2008 Equity Incentive Plan [Member] Restricted Stock and Restricted Stock Units [Member]
Summary of nonvested stock awards granted
Grantee Type					Director group	Director group		Director group				Employee group	Employee group					Employee inducement (1)		Employee inducement (2)
No. of Shares Granted (shares)	0				75,490	51,276		17,092			597,250	449,875	426,286					20,000	[1]	45,000	[2]
Vesting Period		1 year or less	1 year or less		1 year or less	1 year or less
Vesting Period		1 year					3 years	3 years	3 years	3 years		3 years	3 years	3 years	[3]	3 years	[4]	3 years	[1]	3 years	[2]
Weighted Average Grant Date Fair Value (usd per share)			$ 2.00	$ 3.97	$ 5.67	$ 7.53	$ 3.76	$ 6.83		$ 2.44	$ 4.12	$ 5.58	$ 7.55	$ 4.58	[3]	$ 3.81	[4]	$ 7.14	[1]	$ 8.54	[2]

[1] The Company granted nonvested performance-based stock awards (restricted stock) outside its existing stock-based compensation plans in the first quarter of 2013 to one employee in connection with the employee joining the Company.

[2] The Company granted nonvested stock awards (restricted stock units) outside its existing stock-based compensation plans in the third quarter of 2012 to one employee in connection with the employee joining the Company.

[3] The Company granted non-qualified stock options outside its existing stock-based compensation plans in the third quarter of 2012 to one employee in connection with the employee joining the Company.

[4] The Company granted non-qualified performance-based stock options outside its existing stock-based compensation plans in the first quarter of 2013 to one employee in connection with the employee joining the Company.

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Debt (Tables)

9 Months Ended

Sep. 30, 2013

Debt Disclosure [Abstract]

Components of long-term debt

Debt consisted of the following (in thousands):

	September 30, 2013		December 31, 2012
SunTrust term loan due quarterly through January 2014	$	3,750	$	6,000
Less current portion	3,750		3,000
Noncurrent portion	$	—	$	3,000

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Business Acquisitions (Details Textual) (USD $) In Thousands, unless otherwise specified	Jan. 31, 2012 CRC Management Consultants LLP [Member]	Jun. 29, 2012 QFS Limited [Member]	Nov. 30, 2012 Nordic Profit Provider AB [Member]
Business Acquisitions (Textual) [Abstract]
Total estimated purchase price	$ 1,000	$ 400	$ 100

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Debt (Details Textual) (USD $)	9 Months Ended	12003 Months Ended
	Sep. 30, 2013	Sep. 30, 3013	Jan. 19, 2010
Line of Credit Facility [Line Items]
Revolving Credit facility commitment fee (percent)	0.50%
Minimum [Member]
Line of Credit Facility [Line Items]
Applicable margin (percent)	2.25%
Maximum [Member]
Line of Credit Facility [Line Items]
Applicable margin (percent)	3.50%
SunTrust Bank [Member]
Line of Credit Facility [Line Items]
Four-year revolving credit & Term Loan agreement		Jan. 19, 2010
Period of term loan and the revolving credit facility		4 years
Frequency of payment		Monthly
SunTrust term loan, Line of credit facility, frequency of payment		Quarterly
Index rate used as reference for interest rate on revolver and term loan		One-month LIBOR rate
Applicable margin (percent)	2.25%
Revolving Credit facility and Term Loan interest rate (percent)	2.4319%
Mandatory principal payments on SunTrust term loan	$ 2,300,000
Sun Trust Term Loan [Member]
Line of Credit Facility [Line Items]
First payment on the term loan		Mar. 31, 2010
Committed revolving credit facility			15,000,000
Committed term loan			15,000,000
Term loan requires quarterly principal payments	800,000
Frequency of payment		Quarterly
Term loan final principal payment	3,000,000
Sun Trust Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Committed revolving credit facility	15,000,000
Revolving credit facility outstanding	$ 0

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Fair Value of Financial Instruments (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Bank Loan Obligations [Member]
Fair Value of Financial Instruments (Textual) [Abstract]
Fair value of long term debt	$ 3.8	$ 6.0
Business Acquisition Obligations [Member]
Fair Value of Financial Instruments (Textual) [Abstract]
Fair value of long term debt	$ 3.0	$ 6.7

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

We state cash equivalents at cost, which approximates fair market value. The carrying values for receivables from clients, unbilled services, accounts payable, deferred revenue and other accrued liabilities reasonably approximate fair market value due to the nature of the financial instrument and the short term maturity of these items.

We recorded bank debt of $3.8 million as of September 30, 2013 and $6.0 million as of December 31, 2012 at the unpaid balances as of those dates based on the effective borrowing rates and repayment terms when originated. This debt is subject to variable rate terms, and we believe that its fair value is approximately equal to its carrying value. We consider the factors used in determining the fair value of this debt to be Level 3 inputs (significant unobservable inputs).

We recorded business acquisition obligations of $3.0 million as of September 30, 2013 and $6.7 million as of December 31, 2012 representing the fair value of deferred consideration and earn-out payments estimated to be due as of those dates. We determine the estimated fair values based on our projections of future revenue and profits or other factors used in the calculation of the ultimate payment to be made. The discount rate that we use to value the liability is based on specific business risk, cost of capital, and other factors. We consider these factors to be Level 3 inputs (significant unobservable inputs).

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Stock-Based Compensation (Details Textual) (USD $) In Millions, except Share data, unless otherwise specified	9 Months Ended	3 Months Ended	9 Months Ended		12003 Months Ended	3 Months Ended	12003 Months Ended	3 Months Ended	12003 Months Ended	1 Months Ended	12003 Months Ended			3 Months Ended	12003 Months Ended	3 Months Ended	9 Months Ended				12003 Months Ended	3 Months Ended	12003 Months Ended
	Sep. 30, 2013 compensation_plan	Sep. 30, 2012 The Plans [Member]	Sep. 30, 2013 The Plans [Member]	Sep. 30, 2012 The Plans [Member]	Sep. 30, 3013 The Plans [Member]	Sep. 30, 2012 Employee Group [Member]	Sep. 30, 3013 Employee Group [Member]	Sep. 30, 2012 Director Group [Member]	Sep. 30, 3013 Director Group [Member]	Jun. 30, 2012 Performance Shares [Member] 2006 Management Incentive Plan [Member]	Sep. 30, 3013 Performance Shares [Member] 2006 Management Incentive Plan [Member] executive_officer	Sep. 30, 2013 Performance Shares [Member] 2006 Management Incentive Plan [Member]	Jun. 19, 2012 Performance Shares [Member] 2006 Management Incentive Plan [Member]	Sep. 30, 2012 Restricted Stock and Restricted Stock Units [Member]	Sep. 30, 3013 Restricted Stock and Restricted Stock Units [Member] 2008 Equity Incentive Plan [Member]	Sep. 30, 2012 Restricted Stock and Restricted Stock Units [Member] Employee Group [Member] 2008 Equity Incentive Plan [Member]	Sep. 30, 2013 Restricted Stock and Restricted Stock Units [Member] Employee Group [Member] 2008 Equity Incentive Plan [Member]	Sep. 30, 2012 Restricted Stock and Restricted Stock Units [Member] Employee Group [Member] 2008 Equity Incentive Plan [Member]	Sep. 30, 2013 Restricted Stock and Restricted Stock Units [Member] Director Group [Member] 2008 Equity Incentive Plan [Member]	Sep. 30, 2012 Restricted Stock and Restricted Stock Units [Member] Director Group [Member] 2008 Equity Incentive Plan [Member]	Sep. 30, 3013 Restricted Stock and Restricted Stock Units [Member] Director [Member] 2008 Equity Incentive Plan [Member]	Sep. 30, 2012 Stock Options [Member] 2008 Equity Incentive Plan [Member]	Sep. 30, 3013 Stock Options [Member] 2008 Equity Incentive Plan [Member]	Sep. 30, 3013 Stock Options [Member] Employee [Member] 2008 Equity Incentive Plan [Member]	Sep. 30, 3013 Stock Options [Member] Director [Member] 2008 Equity Incentive Plan [Member]
Stock-Based Compensation (Textual) [Abstract]
Number of stock-based compensation plans	3
Stock options expiration period																							7 years
Stock options vesting period						3 years	3 years	1 year									3 years	3 years			1 year			3 years	1 year
Stock options award vesting right															vest in equal annual increments over the vesting period								vest in equal annual increments over the vesting period
No. of Options Granted (shares)							449,875		75,490													0
No. of Shares Granted (shares)														0		597,250	449,875	426,286	75,490	51,276
Total of performance units were outstanding and fully vested (shares)												85,406	154,264
Grant date fair value awards										$ 1.2
Percentage of performance units (percent)											60.00%
Percentage of fair market value (percent)											40.00%
Performance units settled in period (shares)											52,334
Number of executive officers that settled performance units in period (executive officers)											5
Number of former executive officers that settled performance units in period (executive officers)											1
Perfomance units forfeited in period (shares)											16,524
Number of former executive officers that forfeited performance units in period (executive officer)											1
Common stock issued during period (shares)											31,399
Cash payments for shares settled during period											0.1
Selling, general and administrative expenses		1.8	3.8	4.5	1.3
Unrecognized stock-based compensation expense related to stock options			$ 8.1
Weighted-average period for recognizing stock compensation expense					1 year 11 months 20 days

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Income Taxes

9 Months Ended

Sep. 30, 2013

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We are subject to income taxes in the U.S. and numerous foreign jurisdictions, and our effective tax rate is generally lower than the expected tax rate due to reductions of our deferred tax asset valuation allowance. In the nine months ended September 30, 2013, we also reversed $0.5 million of accruals made in prior years for uncertain tax positions. Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. In addition, we are subject to the continuous examination of our income tax returns by the Internal Revenue Service in the U.S. and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.

On March 17, 2006, the Company experienced an ownership change as defined under Section 382 of the Internal Revenue Code (“IRC”). This ownership change resulted in an annual IRC Section 382 limitation that limits the use of certain tax attribute carry-forwards and also resulted in the write-off of certain deferred tax assets and the related valuation allowances that the Company recorded in 2006. On August 4, 2008, the Company experienced an additional ownership change as defined under Section 382 of the IRC. This ownership change resulted in an additional annual IRC Section 382 limitation that also limits the use of certain tax attribute carry-forwards. The 2008 limitation did not decrease the amount of U.S. federal loss carry-forwards available to the Company, and the Company projects that this limitation will not cause the related tax attributes to expire unused. Therefore, the 2008 ownership change did not impact the Company’s financial position, results of operations or cash flows.

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Debt

9 Months Ended

Sep. 30, 2013

Debt Disclosure [Abstract]

Debt

Debt

Debt consisted of the following (in thousands):

	September 30, 2013		December 31, 2012
SunTrust term loan due quarterly through January 2014	$	3,750	$	6,000
Less current portion	3,750		3,000
Noncurrent portion	$	—	$	3,000

On January 19, 2010, we entered into a four-year revolving credit and term loan agreement with SunTrust Bank (“SunTrust”). The SunTrust credit facility consists of a $15.0 million committed revolving credit facility and a $15.0 million term loan. The SunTrust credit facility is guaranteed by the Company and all of its material domestic subsidiaries and secured by substantially all of the assets of the Company. Availability under the SunTrust revolver is based on eligible accounts receivable and other factors. As of September 30, 2013, we had no outstanding borrowings under the SunTrust revolver.

The SunTrust term loan requires quarterly principal payments of $0.8 million beginning in March 2010, and a final principal payment of $3.0 million due in January 2014. The loan agreement requires mandatory prepayments with the net cash proceeds from certain asset sales, equity offerings and insurance proceeds received by the Company. In connection with our equity offering in December 2012 (see Note B, Earnings Per Common Share), we obtained a waiver of the requirement to prepay the loan from SunTrust that enabled us to retain the net proceeds from the offering. The loan agreement also requires an annual additional prepayment contingently payable in April of each year based on excess cash flow (“ECF”) in the prior year if our leverage ratio as defined in the agreement exceeds a certain threshold. Our leverage ratio has remained below the threshold and ECF payments have not been required in any year.

Interest on both the revolver and term loan is payable monthly and accrues at an index rate using the one-month LIBOR rate, plus an applicable margin as determined by the loan agreement. The applicable interest rate margin varies from 2.25% per annum to 3.5% per annum, dependent on our consolidated leverage ratio, and is determined in accordance with a pricing grid under the SunTrust loan agreement. The applicable margin was 2.25% and the interest rate was approximately 2.43% at September 30, 2013. We also must pay a commitment fee of 0.5% per annum, payable quarterly, on the unused portion of the $15.0 million SunTrust revolving credit facility. We made mandatory principal payments on the SunTrust term loan totaling $2.3 million during the nine months ended September 30, 2013. The Company was in compliance with the covenants in its SunTrust credit facility as of September 30, 2013.

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Basis of Presentation

9 Months Ended

Sep. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation and Significant Accounting Policies [Text Block]

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements (Unaudited) of PRGX Global, Inc. and its wholly owned subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month and nine-month periods ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

Except as otherwise indicated or unless the context otherwise requires, “PRGX,” “we,” “us,” “our” and the “Company” refer to PRGX Global, Inc. and its subsidiaries. For further information, refer to the Consolidated Financial Statements and Footnotes thereto included in the Company’s Form 10-K for the year ended December 31, 2012.

Beginning with the third quarter of 2013, we present fair value adjustments to acquisition-related contingent consideration as an adjustment to our segment measure earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") as presented in Note D - Operating Segments and Related Information.  We now include these fair value adjustments in the Adjusted EBITDA calculation in the "Acquisition-related charges (benefits)" line, which we renamed from "Acquisition transaction costs and acquisition obligations classified as compensation." Accordingly, we have revised the presentation of our Adjusted EBITDA calculation for all relevant prior periods.

Unbilled Receivables

A significant portion of the unbilled receivables presented in the Condensed Consolidated Balance Sheets relate to our Healthcare Claims Recovery Audit services as we generally cannot invoice the prime contractors for whom we operate as a subcontractor under the Medicare RAC program until cash is collected by the prime contractors. These unbilled receivables, net of the related reserves, were $7.9 million and $9.6 million as of September 30, 2013 and December 31, 2012, respectively. As of November 1, 2013, we billed $0.3 million of the unbilled receivables relating to the Medicare RAC program that were outstanding as of September 30, 2013.

New Accounting Standards

A summary of the new accounting standards issued by the Financial Accounting Standards Board (“FASB”) and included in the Accounting Standards Codification (“ASC”) that apply to PRGX is set forth below:

FASB ASC Update No. 2013-02. In February 2013, the FASB issued Accounting Standards Update No. 2013-02, Comprehensive Income—Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). ASU 2013-02 requires an entity to provide information about significant amounts reclassified out of accumulated other comprehensive income on the respective line items in net income if the amounts being reclassified are required under U.S. generally accepted accounting principles (GAAP) to be reclassified in their entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. The Company adopted these changes prospectively as of its fiscal year beginning January 1, 2013. The adoption of ASU No. 2013-02 did not have a material impact on our consolidated results of operations, financial position or cash flows.

FASB ASC Update No. 2013-11. In July 2013, the FASB issued Accounting Standards Update No. 2013-11, Income Taxes—Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”). ASU 2013-11 requires an unrecognized tax benefit to be presented as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward that the entity intends to use and is available for settlement at the reporting date. ASU 2013-11 is effective on a prospective basis for fiscal years, and interim periods within those years, beginning after December 15, 2013. We do not expect the adoption of ASU No. 2013-11 to have a material impact on our consolidated results of operations, financial position or cash flows.

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements (Unaudited) of PRGX Global, Inc. and its wholly owned subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month and nine-month periods ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

Except as otherwise indicated or unless the context otherwise requires, “PRGX,” “we,” “us,” “our” and the “Company” refer to PRGX Global, Inc. and its subsidiaries. For further information, refer to the Consolidated Financial Statements and Footnotes thereto included in the Company’s Form 10-K for the year ended December 31, 2012.

Beginning with the third quarter of 2013, we present fair value adjustments to acquisition-related contingent consideration as an adjustment to our segment measure earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") as presented in Note D - Operating Segments and Related Information.  We now include these fair value adjustments in the Adjusted EBITDA calculation in the "Acquisition-related charges (benefits)" line, which we renamed from "Acquisition transaction costs and acquisition obligations classified as compensation." Accordingly, we have revised the presentation of our Adjusted EBITDA calculation for all relevant prior periods.

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Cash and Cash Equivalents (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Line of Credit Facility [Line Items]
Cash and cash equivalents included short-term investments	$ 25.2	$ 25.1
Foreign Banks [Member]
Line of Credit Facility [Line Items]
Cash and cash equivalents included short-term investments	$ 4.1	$ 1.6

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Basis of Presentation New Accounting Standards (Policies)

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

New Accounting Standards

A summary of the new accounting standards issued by the Financial Accounting Standards Board (“FASB”) and included in the Accounting Standards Codification (“ASC”) that apply to PRGX is set forth below:

FASB ASC Update No. 2013-02. In February 2013, the FASB issued Accounting Standards Update No. 2013-02, Comprehensive Income—Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). ASU 2013-02 requires an entity to provide information about significant amounts reclassified out of accumulated other comprehensive income on the respective line items in net income if the amounts being reclassified are required under U.S. generally accepted accounting principles (GAAP) to be reclassified in their entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. The Company adopted these changes prospectively as of its fiscal year beginning January 1, 2013. The adoption of ASU No. 2013-02 did not have a material impact on our consolidated results of operations, financial position or cash flows.

FASB ASC Update No. 2013-11. In July 2013, the FASB issued Accounting Standards Update No. 2013-11, Income Taxes—Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”). ASU 2013-11 requires an unrecognized tax benefit to be presented as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward that the entity intends to use and is available for settlement at the reporting date. ASU 2013-11 is effective on a prospective basis for fiscal years, and interim periods within those years, beginning after December 15, 2013. We do not expect the adoption of ASU No. 2013-11 to have a material impact on our consolidated results of operations, financial position or cash flows.

Comprehensive Income, Policy [Policy Text Block]

FASB ASC Update No. 2013-02. In February 2013, the FASB issued Accounting Standards Update No. 2013-02, Comprehensive Income—Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). ASU 2013-02 requires an entity to provide information about significant amounts reclassified out of accumulated other comprehensive income on the respective line items in net income if the amounts being reclassified are required under U.S. generally accepted accounting principles (GAAP) to be reclassified in their entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. The Company adopted these changes prospectively as of its fiscal year beginning January 1, 2013. The adoption of ASU No. 2013-02 did not have a material impact on our consolidated results of operations, financial position or cash flows.

Description of New Accounting Pronouncements Not yet Adopted [Text Block]

FASB ASC Update No. 2013-11. In July 2013, the FASB issued Accounting Standards Update No. 2013-11, Income Taxes—Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”). ASU 2013-11 requires an unrecognized tax benefit to be presented as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward that the entity intends to use and is available for settlement at the reporting date. ASU 2013-11 is effective on a prospective basis for fiscal years, and interim periods within those years, beginning after December 15, 2013. We do not expect the adoption of ASU No. 2013-11 to have a material impact on our consolidated results of operations, financial position or cash flows.

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Business Acquisitions

9 Months Ended

Sep. 30, 2013

Business Combinations [Abstract]

Business Acquisitions

Business Acquisitions

During 2012, we acquired the assets of several third-party audit firms to which we had subcontracted a portion of our audit services in our Recovery Audit Services – Europe/Asia-Pacific segment. We refer to the subcontractors as associates, and to the acquisitions as associate migrations. In an associate migration, we generally transfer all of the employees of the associate entity to PRGX, and continue to service the related clients with the same personnel as were providing services prior to the associate migration. We intend for the associate migrations to provide more standardization and centralization of our audit procedures, thereby increasing client service while also decreasing costs. Generally, revenue remains unchanged as a result of an associate migration, and expenses change from a fixed percentage of revenue to a variable amount based on actual employee and related costs. The 2012 associate migrations included CRC Management Consultants LLP (“CRC”) in January 2012 for a purchase price valued at $1.0 million; QFS Ltd (“QFS”) in June 2012 for a purchase price valued at $0.4 million; and Nordic Profit Provider AB (“NPP”) in November 2012 for a purchase price valued at $0.1 million.

The allocation of the aggregate fair values of the assets acquired and purchase price for these associate migrations is summarized as follows (in thousands):

Fair values of net assets acquired:
Equipment	$	10
Intangible assets, primarily non-compete agreements	171
Working capital, including work in progress	666
Goodwill	695
Fair value of net assets acquired	$	1,542
Fair value of purchase price	$	1,542

The following unaudited pro forma condensed financial information presents the combined results of operations of the Company, CRC, QFS, and NPP as if the acquisitions had occurred as of January 1, 2012. The unaudited pro forma financial information is not indicative of, nor does it purport to project, the future financial position or operating results of the Company. Pro forma adjustments included in these amounts consist primarily of amortization expense associated with the intangible assets recorded in the allocation of the purchase price. The unaudited pro forma financial information excludes acquisition and integration costs and does not give effect to any estimated and potential cost savings or other operating efficiencies that could result from the acquisition. Unaudited pro forma condensed financial information is as follows (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2012		2012
Revenue	$	52,087	$	155,394
Net earnings	$	2,569	$	4,323

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Operating Segments and Related Information (Tables)

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Segment information

Segment information for the three and nine months ended September 30, 2013 and 2012 (in thousands) is as follows:

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			New Services		Corporate Support			Total
Three Months Ended September 30, 2013
Revenue	$	32,365		$	12,009		$	9,029	$	—		$	53,403
Net earnings												$	4,877
Income tax expense												1,029
Interest expense, net												75
EBIT	$	9,418		$	1,987		$	270	$	(5,694	)	5,981
Depreciation of property and equipment	1,414			124			496		—			2,034
Amortization of intangible assets	698			323			183		—			1,204
EBITDA	11,530			2,434			949		(5,694		)	9,219
Foreign currency transaction (gains) losses on short-term intercompany balances	(80		)	(574		)	—		18			(636		)
Acquisition-related charges	662			—			44		—			706
Transformation severance and related expenses	20			56			85		—			161
Stock-based compensation	—			—			—		1,304			1,304
Adjusted EBITDA	$	12,132		$	1,916		$	1,078	$	(4,372	)	$	10,754

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			New Services			Corporate Support			Total
Three Months Ended September 30, 2012
Revenue	$	33,235		$	11,406		$	7,446		$	—		$	52,087
Net earnings													$	2,565
Income tax expense													505
Interest expense, net													515
EBIT	$	9,964		$	304		$	(651	)	$	(6,032	)	3,585
Depreciation of property and equipment	1,111			90			515			—			1,716
Amortization of intangible assets	767			462			202			—			1,431
EBITDA	11,842			856			66			(6,032		)	6,732
Foreign currency transaction (gains) losses on short-term intercompany balances	(85		)	(266		)	3			—			(348		)
Acquisition-related charges (benefits)	—			(14		)	93			—			79
Transformation severance and related expenses	245			273			—			—			518
Stock-based compensation	—			—			—			1,839			1,839
Adjusted EBITDA	$	12,002		$	849		$	162		$	(4,193	)	$	8,820

	Recovery Audit Services – Americas		Recovery Audit Services – Europe/Asia- Pacific			New Services			Corporate Support			Total
Nine Months Ended September 30, 2013
Revenue	$	87,999	$	33,796		$	26,914		$	—		$	148,709
Net earnings												$	6,211
Income tax expense												1,671
Interest income, net												(89		)
EBIT	$	21,643	$	2,354		$	(522	)	$	(15,682	)	7,793
Depreciation of property and equipment	4,138		362			1,569			—			6,069
Amortization of intangible assets	2,094		1,171			547			—			3,812
EBITDA	27,875		3,887			1,594			(15,682		)	17,674
Foreign currency transaction (gains) losses on short-term intercompany balances	143		(199		)	—			2			(54		)
Acquisition-related charges (benefits)	987		(900		)	144			—			231
Transformation severance and related expenses	100		593			85			—			778
Stock-based compensation	—		—			—			3,777			3,777
Adjusted EBITDA	$	29,105	$	3,381		$	1,823		$	(11,903	)	$	22,406

	Recovery Audit Services – Americas			Recovery Audit Services – Europe/Asia- Pacific			New Services			Corporate Support			Total
Nine Months Ended September 30, 2012
Revenue	$	91,640		$	39,122		$	24,632		$	—		$	155,394
Net earnings													$	3,859
Income tax expense													1,586
Interest expense, net													1,548
EBIT	$	21,994		$	3,515		$	(2,270	)	$	(16,246	)	6,993
Depreciation of property and equipment	3,016			217			1,575			—			4,808
Amortization of intangible assets	3,120			1,491			606			—			5,217
EBITDA	28,130			5,223			(89		)	(16,246		)	17,018
Foreign currency transaction (gains) losses on short-term intercompany balances	(77		)	(117		)	4			—			(190		)
Acquisition-related charges (benefits)	—			(485		)	288			—			(197		)
Transformation severance and related expenses	358			351			327			—			1,036
Wage claim costs	577			—			—			—			577
Stock-based compensation	—			—			—			4,479			4,479
Adjusted EBITDA	$	28,988		$	4,972		$	530		$	(11,767	)	$	22,723

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Earnings Per Common Share (Tables)

9 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

Computations of basic and diluted earnings (loss) per common share

The following tables set forth the computations of basic and diluted earnings per common share for the three and nine months ended September 30, 2013 and 2012 (in thousands, except per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
Basic earnings per common share:	2013		2012		2013		2012
Numerator:
Net earnings	$	4,877	$	2,565	$	6,211	$	3,859
Denominator:
Weighted-average common shares outstanding	29,396		25,541		29,075		25,370
Basic earnings per common share	$	0.17	$	0.10	$	0.21	$	0.15

	Three Months Ended September 30,				Nine Months Ended September 30,
Diluted earnings per common share:	2013		2012		2013		2012
Numerator:
Net earnings	$	4,877	$	2,565	$	6,211	$	3,859
Denominator:
Weighted-average common shares outstanding	29,396		25,541		29,075		25,370
Incremental shares from stock-based compensation plans	419		709		442		572
Denominator for diluted earnings per common share	29,815		26,250		29,517		25,942
Diluted earnings per common share	$	0.16	$	0.10	$	0.21	$	0.15

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Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Oct. 25, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	PRGX GLOBAL, INC.
Entity Central Index Key	0001007330
Document Type	10-Q
Document Period End Date	Sep. 30, 2013
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		29,215,660

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of stock option grants

The following table summarizes stock option grants during the nine months endedSeptember 30, 2013 and 2012:

Grantee Type	# of Options Granted	Vesting Period	Weighted Average Exercise Price		Weighted Average Grant Date Fair Value
2013
Director group	75,490	1 year or less	$	5.67	$	2.00
Director group	17,092	3 years	$	6.83	$	3.76
Employee group	449,875	3 years	$	5.58	$	2.44
Employee inducement (1)	20,000	3 years	$	7.14	$	3.81
2012
Director group	51,276	1 year or less	$	7.53	$	3.97
Employee group	597,250	3 years	$	7.54	$	4.12
Employee inducement (2)	45,000	3 years	$	8.54	$	4.58

(1) The Company granted non-qualified performance-based stock options outside its existing stock-based compensation plans in the first quarter of 2013 to one employee in connection with the employee joining the Company.

(2) The Company granted non-qualified stock options outside its existing stock-based compensation plans in the third quarter of 2012 to one employee in connection with the employee joining the Company.

Summary of nonvested stock awards granted

The following table summarizes nonvested stock awards granted during the nine months endedSeptember 30, 2013 and 2012:

Grantee Type	# of Shares Granted	Vesting Period	Weighted Average Grant Date Fair Value
2013
Director group	75,490	1 year or less	$	5.67
Director group	17,092	3 years	$	6.83
Employee group	449,875	3 years	$	5.58
Employee inducement (1)	20,000	3 years	$	7.14
2012
Director group	51,276	1 year or less	$	7.53
Employee group	426,286	3 years	$	7.55
Employee inducement (2)	45,000	3 years	$	8.54

(1) The Company granted nonvested performance-based stock awards (restricted stock) outside its existing stock-based compensation plans in the first quarter of 2013 to one employee in connection with the employee joining the Company.

(2) The Company granted nonvested stock awards (restricted stock units) outside its existing stock-based compensation plans in the third quarter of 2012 to one employee in connection with the employee joining the Company.