Exhibit Number 99.4
NEWS RELEASE
FOR IMMEDIATE RELEASE
PRG-SCHULTZ REPORTS FOURTH-QUARTER AND FULL-YEAR 2001 FINANCIAL RESULTS
Q4 Revenues Up 12.6% over Prior Year; Company Reports Q4 Pro-Forma Earnings per
Diluted Share from Continuing Operations of $0.08 Compared to $0.01 in Prior
Year
ATLANTA, FEBRUARY 18, 2002 - PRG-Schultz International, Inc. (Nasdaq: PRGX)
today announced its final financial results for the fourth-quarter and full-year
2001. The Company released preliminary results for the fourth quarter 2001 on
January 24, 2002.
Results from Continuing Operations
For the periods reported, results from continuing operations consist solely of
the Accounts Payable business.
Fourth Quarter 2001
Revenues from continuing operations for the fourth quarter of 2001 totaled $73.0
million, compared to $64.8 million for the fourth quarter of 2000, representing
an increase of 12.6%. Excluding special charges, earnings from continuing
operations for the fourth quarter of 2001 were $4.1 million or $0.08 per diluted
share, compared to $0.6 million, or $0.01 per diluted share in the fourth
quarter of 2000.
Special charges in the fourth quarter of 2001 for continuing operations
consisted of $2.7 million (or $0.03 per diluted share on an after-tax basis)
related to realignment and integration activities, in connection with the
acquisition of Howard Schultz & Associates and in line with previous Company
guidance, and $1.6 million (or $0.02 per diluted share on an after-tax basis)
associated with the previously-announced write-down of accounts receivable in
connection with the Chapter 11 filing of one of the Company's clients, Kmart.
Special charges in the fourth quarter of 2000 for continuing operations
consisted of $9.0 million (or $0.11 per diluted share on an after-tax basis)
related primarily to employee terminations, employee advance account reductions
due to auditor draws forgiven, and other provisions.
"We are very pleased with our financial results for the fourth quarter,"
commented John Cook, chief executive officer of PRG-Schultz. "Revenue growth in
our Accounts Payable business of approximately 13% was driven by strong
14
performance in both our US Retail and US Commercial businesses, which were up
approximately 20% and 13%, respectively, over the fourth quarter of last year.
Excluding special charges, EBITDA was 18% of revenues in the fourth quarter,
compared to 12% last year."
Full Year 2001
Revenues from continuing operations for the full-year 2001 totaled $259.3
million, compared to $255.1 million for the full-year 2000. Excluding special
charges, earnings from continuing operations for the full-year 2001 were $9.0
million or $0.18 per diluted share, compared to $10.6 million, or $0.21 per
diluted share for the full-year 2000.
In addition to the fourth quarter special charges outlined above, special
charges for the full year 2001 also included $0.8 million (or $0.01 per diluted
share on an after-tax basis) reported in the first quarter related to
realignment activities.
Results From Discontinued Operations
For the fourth quarter of 2001, the Company reported a loss from discontinued
operations of $55.9 million, of which $54.0 million was the previously disclosed
loss on the sale of the French Taxation Services Business in December 2001. For
the fourth quarter of 2000, the Company reported a loss from discontinued
operations of $22.0 million, which included approximately $21.9 million of
special charges on an after-tax basis.
For the full-year 2001, the Company reported a loss from discontinued operations
of $88.2 million, of which $85.0 million originated from the loss on disposal
from discontinued operations, net of income taxes.
On January 24, 2002, the Company announced that it would take its remaining
discontinued operations, which had been for sale since the first quarter of
2001, off the market. As a result, beginning in the first quarter of 2002, the
financial results of these three businesses, Meridian VAT Reclaim, the
Communications Division, and the Ship & Debit business, will again be classified
as part of the Company's continuing operations and reported in a separate
operating segment called Other Ancillary Services. In 2001, these businesses
generated revenues of $54.8 million and a net loss of approximately $1.5
million. The profitability of these businesses was negatively impacted in 2001
as a result of their "for sale" status during most of the year as well as
significant costs associated with sale efforts.
Extraordinary Item
As previously reported, the Company closed on a new bank credit facility on
December 31, 2001. The new facility replaced an existing facility that was
cancelled as a result. In connection with the cancellation, the Company recorded
a non-cash charge of approximately $2.6 million ($1.6 million or $0.03 per
diluted share on an after-tax basis) representing remaining deferred loan costs
15
associated with the previous bank credit facility. This charge has been recorded
on the Company's consolidated statement of operations as an extraordinary item,
as currently required under generally accepted accounting principles.
Cash Flow and DSO's
Net cash from operating activities from continuing operations for the twelve
months ended December 31, 2001 was approximately $22.9 million, compared to
approximately $31.1 million in 2000.
DSO's (Days Sales Outstanding) from continuing operations as of December 31,
2001 stood at 60 days, compared to 67 days a year ago. This improvement resulted
from lower DSO's in both the Company's US and international operations.
2002 Outlook
The Company reiterated its outlook for the full-year and first quarter 2002
provided on January 24, 2002.
Full-year 2002
Revenues for 2002 are expected to approximate $470 million. Revenues from
Accounts Payable Services are expected to be approximately $420 million, and
revenues from Other Ancillary Services are expected to be approximately $50
million.
For 2002, the Company expects to report, prior to non-recurring and transition
expenses, earnings per diluted share of approximately $0.65. Approximately $0.63
per diluted share, prior to non-recurring and transition expenses, is expected
to be generated from Accounts Payable Services, with the balance of
approximately $0.02 expected to be generated from Other Ancillary Services.
Non-recurring expenses estimated at up to $10 million (or approximately $0.08
per diluted share after-tax) consist of one-time charges related to realignment
and integration activities and include primarily severance and costs associated
with the elimination of duplicate facilities and facilities relocation.
Transition expenses, which represent costs in the process of being eliminated
over the course of the year, are estimated at up to $18 million (or
approximately $0.14 per diluted share after-tax) and relate primarily to
centralization of IT, employment of duplicate personnel for a transition period,
and consultancy services related to integration execution.
First Quarter 2002
Revenues for the first quarter of 2002 are expected to approximate $104 million.
Revenues from Accounts Payable Services are expected to be approximately $90
million, and revenues from Other Ancillary services are expected to be
approximately $14 million.
For the first quarter of 2002, the Company expects to report, prior to
non-recurring and transition expenses, earnings per diluted share of
approximately $0.13. Non-recurring expenses and transition expenses for the
first quarter are estimated at $0.02 and $0.06 per diluted share, respectively.
16
The Company became subject to SFAS 142, "Goodwill and Other Intangible Assets,"
effective January 1, 2002. SFAS 142 requires that an intangible asset be
amortized over its useful life and that goodwill not be amortized but evaluated
periodically for impairment. Accordingly, the 2002 outlook does not include any
goodwill amortization expense. The 2002 outlook also does not include goodwill
impairment charges, if any, which may be required under SFAS 142. To date, the
Company has not made an evaluation or assessment of future potential goodwill
impairment under the rules prescribed in SFAS 142.
During 2001, the Company classified Meridian VAT Reclaim, the Communications
Division, and the Ship & Debit business as discontinued operations and recorded
them on the balance sheet at net realizable value. In the first quarter of 2002,
when the Company reclassifies them as continuing operations, a non-cash gain or
loss may result which has not yet been calculated and is not reflected in the
above outlook.
Conference Call and Webcast Information
PRG will hold a conference call tomorrow, February 19, 2002 at 10 a.m. ET.
Listeners in the U.S. should dial 888.396.0289 at least 5 minutes prior to the
start of the conference. Listeners outside the U.S. should dial 712.257.2285. To
access the conference call, provide the leader's name 'John Cook' and the
passcode 'PRGX.'
The teleconference will also be audiocast on the Internet at www.prgx.com.
Microsoft Windows Media Player is required to access the audiocast and can be
downloaded from www.microsoft.com/windows/mediaplayer.
About PRG-Schultz International, Inc.
Headquartered in Atlanta, PRG-Schultz International, Inc. (PRG-Schultz) is the
world's leading provider of recovery audit services. PRG-Schultz employs
approximately 3,500 employees in 34 countries, providing clients with insightful
value to optimize and expertly manage their business transactions. PRG-Schultz's
clients represent a variety of industries, including retailing, wholesale
distribution, manufacturing, government, high-tech, and healthcare
organizations.
Forward Looking Statements
Statements made in this news release which look forward in time involve risks
and uncertainties and are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such risks and uncertainties
include the following: (i) we may not be able to successfully integrate Howard
Schultz and Associates (HS&A) and achieve the planned post-acquisition synergy
cost savings due to unexpected costs, loss of former HS&A auditors and other
personnel, loss of revenue with respect to shared clients and other reasons,
(ii) if the current economic slowdown continues, our clients may not return to
previous purchasing levels, and as a result we may be unable to recognize
17
anticipated revenues, (iii) the bankruptcy of any of our larger clients,
including without limitation, potential negative effects of the recent Kmart
bankruptcy filing could impair then-existing accounts receivable and reduce
expected future revenues from such clients, (iv) since the businesses comprising
the other ancillary services segment have been operated during the last year
primarily for the purpose of preparing them for sale, they may require
additional time and effort of Company executives and additional Company
resources to help them achieve desired profitability and may distract management
from its focus on the Company's core accounts payable business, and there is no
guaranty that the Company can operate these businesses efficiently and
profitably, (v) the previously announced intention to dispose of the
discontinued operations has in some instances resulted in the loss of key
personnel and diminished operating results in such operations which may be
difficult to reverse going forward, (vi) we may not achieve anticipated expense
savings, (vii) our past and future investments in technology and e-commerce may
not benefit our business, (viii) our accounts payable businesses may not grow as
expected, and (ix) our international expansion may prove unprofitable. Other
risks and uncertainties that may affect our business include (i) our ability to
effectively manage our business during our business integration with HS&A, (ii)
the possibility of an adverse judgment in pending securities litigation, (iii)
the impact of certain accounting pronouncements by the Financial Accounting
Standards Board or the United States Securities and Exchange Commission, (iv)
potential timing issues that could delay revenue recognition, (v) the effect of
strikes, (vi) future weakness in the currencies of countries in which we
transact business, (vii) changes in economic cycles, (viii) competition from
other companies, (ix) changes in governmental regulations applicable to us, and
other risk factors detailed in our Securities and Exchange Commission filings,
including the Company's definitive proxy statement filed December 19, 2001. The
Company disclaims any obligation or duty to update or modify these
forward-looking statements.
# # #
Contacts:
Investor Contact: Media & Client Contact:
Leslie H. Kratcoski Michelle B. Duncan
Investor Relations Corporate Communications
(770) 779-3099 (770) 779-3295
18
1439626