EXHIBIT 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
PRG-SCHULTZ REPORTS THIRD QUARTER 2003 FINANCIAL RESULTS
ATLANTA, OCTOBER 27, 2003 - PRG-Schultz International, Inc. (Nasdaq: PRGX) today
announced financial results for the third quarter 2003 and provided an outlook
for the fourth quarter 2003.
Third Quarter 2003 Financial Highlights
o Net loss for the quarter was ($1.7 million), or (1.8%) of revenues,
and represented ($0.03) per diluted share. This net loss included
after-tax charges of $2.4 million, or $0.04 per diluted share,
relating to the Company's strategic business initiatives.
o Revenues for the quarter totaled $92.6 million:
o Revenues from Accounts Payable Services totaled $79.9 million.
o Revenues from Other Ancillary Services totaled $12.7 million.
o Operating loss was ($829,000), or (0.9%) of revenues, compared to
operating income of $17.3 million, or 14.9% of revenues, during the
third quarter of 2002.
o EBITDA margin was 3.9% of revenues for the quarter, compared to 18.6%
a year ago (see schedule 5 for a reconciliation of EBITDA, a non-GAAP
financial measure, to net earnings / loss).
o Cash flow from operating activities decreased to $22.6 million for the
nine months ended September 30, 2003, from $27.5 million during the
same period a year ago.
o Capital expenditures totaled $8.2 million for the nine months ended
September 30, 2003.
John Cook, Chairman and Chief Executive Officer of PRG-Schultz stated, "On the
domestic front, we continued to be impacted in the third quarter by the
challenges we faced during the first two quarters of 2003. These include ongoing
extreme caution displayed by some of our largest US retail accounts payable
clients in light of numerous and highly publicized inquiries by the Securities
and Exchange Commission into the overall accounting for vendor-supplied
promotional allowances. As a result, there was negligible improvement, if any,
during the quarter with respect to several of our largest US retail clients, who
continued with more deliberate procedures for approving and processing our claim
findings and continued to subject them to additional levels of internal review.
We remain steadfast in our belief that this climate of unprecedented caution by
some of our largest US retail accounts payable clients is temporary in nature,
but it is now clear to us that it will extend into 2004."
"We continue to attribute some of our performance to the need for better
execution, particularly as it relates to results in our international accounts
payable operations and ongoing challenges in our US commercial accounts payable
operations. We also continue to actively address these execution shortcomings
through multiple courses of corrective action in order to capitalize on the
significant long-term potential of these businesses, which we have always
believed, and continue to believe, to be promising."
THIRD QUARTER 2003 FINANCIAL RESULTS
Revenues for the third quarter of 2003 totaled $92.6 million, compared to $116.1
million in the third quarter of 2002. Revenues from Accounts Payable Services
and Other Ancillary Services totaled $79.9 million and $12.7 million,
respectively, for the quarter compared to $101.8 million and $14.3 million,
respectively, a year ago. The year-over-year decrease of approximately 22% in
Accounts Payable Services revenues was due primarily to a decrease in revenues
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from the Company's US Accounts Payable Services operations, which declined by
approximately 28% year-over-year. Revenues from the Company's international
Accounts Payable Services operations declined by approximately 6%
year-over-year, adversely impacted by a significant decrease in revenues from
the United Kingdom. Revenues from Other Ancillary Services decreased by 11%
year-over-year, due to the generation of lower revenues from each of the three
business entities that comprise that operating segment.
Net loss for the third quarter of 2003 was ($1.7 million), or ($0.03) per
diluted share, compared to net earnings of $9.7 million, or $0.13 per diluted
share, during the third quarter of 2002. The third quarter of 2003 included
after-tax charges of $2.4 million, or $0.04 per diluted share, relating to the
Company's previously disclosed strategic business initiatives. The third quarter
of 2002 included after-tax charges of $3.2 million, or $0.04 per diluted share,
relating to the integration of the businesses of Howard Schultz & Associates
International, Inc., which the Company acquired in January 2002.
Historically, after-tax interest and amortization expense related to the
Company's convertible notes have been added back to earnings from continuing
operations for the purpose of calculating diluted earnings per share.
Correspondingly, the approximately 16.1 million common shares into which the
convertible notes can be exchanged have been added to the diluted share count.
For the quarter and nine-month periods ended September 30, 2003, generally
accepted accounting principles require that these adjustments not be made since
the resulting calculations would have been anti-dilutive.
Operating (loss) for the third quarter of 2003 totaled ($829,000), or (0.9%) of
revenues, compared to operating income of $17.3 million, or 14.9% of revenues,
in the same period a year ago. Earnings before interest, taxes, depreciation and
amortization (EBITDA) for the third quarter of 2003 totaled $3.6 million, or
3.9% of revenues, compared to $21.6 million, or 18.6% of revenues, in the third
quarter of 2002. See Schedule 5 for a reconciliation of EBITDA, a non-GAAP
financial measure, to net earnings.
The Company reiterated that, to its knowledge, the SEC investigations into
vendor-supplied promotional allowances focus on how and when retailers record
promotional allowances in their income statements, which is unrelated to the
recovery audit services performed by PRG-Schultz.
FIRST NINE MONTHS 2003 FINANCIAL RESULTS
Revenues for the first nine months of 2003 totaled $292.5 million, compared to
$344.7 million in the first nine months of 2002. Revenues from Accounts Payable
Services and Other Ancillary Services totaled $246.6 million and $45.9 million,
respectively, for the first nine months of 2003 compared to $304.2 million and
$40.5 million, respectively, a year ago.
Net earnings for the first nine months of 2003 were $7.3 million, or $0.12 per
diluted share, compared to $8.0 million, or $0.14 per diluted share, during the
comparable period in 2002.
Operating income for the first nine months of 2003 totaled $17.5 million, or
6.0% of revenues, compared to $42.8 million, or 12.4% of revenues, in the same
period a year ago. Earnings before interest, taxes, depreciation and
amortization (EBITDA) for the first nine months of 2003 totaled $30.4 million,
or 10.4% of revenues, compared to $56.2 million, or 16.3% of revenues, for the
first nine months of 2002. See Schedule 5 for a reconciliation of EBITDA, a
non-GAAP financial measure, to net earnings.
During the nine-month period ended September 30, 2002, the Company recorded an
after-tax charge of $17.2 million, or $0.21 per diluted share, relating to the
implementation of SFAS 142, "Goodwill and Other Intangible Assets". In
accordance with generally accepted accounting principles, this non-cash goodwill
impairment charge relating to transitional impairment testing was recorded as a
cumulative effect of a change in accounting principle. Future goodwill
impairment charges, if any, are required to be charged against operating income
in the Company's consolidated statements of operations.
Schedules 3 & 4 provide summary financial results from continuing operations for
the third quarter and first nine months of 2003 and 2002 by operating segment.
Schedule 5 provides a reconciliation of EBITDA, a non-GAAP financial measure, to
net earnings / loss.
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CASH FLOW, DSOs AND CAPITAL EXPENDITURES
Net cash from operating activities for the nine months ended September 30, 2003
was approximately $22.6 million, compared to $27.5 million in 2002.
Company-wide, Days Sales Outstanding (DSOs) at the end of the third quarter of
2003 stood at 51 days, compared to 52 days a year ago.
Capital expenditures totaled approximately $8.2 million for the first nine
months of 2003, compared to $19.4 million in the same period a year ago. Capital
expenditures were higher in the 2002 period due to the acquisitions and
integration of the businesses of Howard Schultz & Associates International, Inc.
and affiliates.
BANK CREDIT FACILITY
The Company maintains a $55.0 million senior bank credit facility that is
syndicated between three banking institutions led by Bank of America. The
facility contains customary covenants including financial ratios. As of
September 30, 2003, the Company had outstanding borrowings under this credit
facility of $29.0 million and was not in compliance with the stipulated fixed
charge coverage ratio or the leverage ratio. The Company has been working with
Bank of America, as lead bank, over the last two months with a view toward
prospectively relaxing the stringency of its financial ratio covenants as well
as allowing the Company to take other prudent managerial actions. The Company
has also recently entered into discussions with the other two banks in the
syndicate. On September 29, 2003, the banking syndicate executed a waiver in
favor of the Company wherein the Company acknowledged its lack of credit
covenant compliance and the syndicate agreed to forbear exercising their
available rights and remedies until November 15, 2003. The Company considers it
highly probable that it will be able to reach a satisfactory agreement with its
banking syndicate no later than November 14, 2003, when its SEC Form 10-Q for
the quarter ended September 30, 2003 is due. The $29.0 million of outstanding
borrowings at September 30, 2003 has been reflected on the accompanying
Condensed Consolidated Balance Sheet (Unaudited) as a long-term liability due to
the Company's belief that it will reach a satisfactory agreement with its
banking syndicate no later than November 14, 2003. Should the banking syndicate
not grant appropriate relief by November 14, 2003, the Company will be required
by generally accepted accounting principles to reclassify the $29.0 million as a
current liability in the Condensed Consolidated Balance Sheet (Unaudited)
contained in its forthcoming SEC Form 10-Q for the quarter ended September 30,
2003.
OUTLOOK FOR FOURTH QUARTER OF 2003
For the fourth quarter of 2003, consolidated revenues are expected to range from
$95.0 - $97.0 million. Revenues from Accounts Payable Services are expected to
range from $82.0 - $84.0 million, and revenues from Other Ancillary Services are
expected to be approximately $13.0 million.
Diluted (loss) per share for the quarter ending December 31, 2003 is expected to
range from breakeven to a loss of ($0.02). This outlook includes an earnings
reduction of approximately $0.06 per diluted share to reflect already-identified
severance and other costs related to the Company's strategic business
initiatives, which are more fully discussed below.
As of September 30, 2003, the Company's Condensed Consolidated Balance Sheet
(Unaudited) reflected goodwill of $372.4 million and deferred tax assets of
$36.3 million. The Company has not completed its operating budget for 2004 and
does not presently contemplate its completion until late in 2003 so that the
costs and savings of its previously discussed strategic business initiatives can
be appropriately considered and included. The Company's operating budget for
2004 and its internal outlook beyond next year will be integral factors in
assessing the recoverability of goodwill and deferred tax assets when routine
impairment testing is undertaken during the quarter ending December 31, 2003.
The foregoing outlook for the quarter ended December 31, 2003 does not consider
the impact of any impairment charges, should such be warranted by generally
accepted accounting principles.
STRATEGIC BUSINESS INITIATIVES
In July 2003, the Company announced a series of strategic initiatives designed
to ensure our continued growth, maintain our dedicated focus on our clients, and
sustain our success. Specifically, the Company announced plans to:
o Evolve the service model;
o Develop new business opportunities; and
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o Grow the international business.
Evolve the Service Model
PRG-Schultz as currently constituted is essentially an assemblage of
approximately two dozen acquisitions over a dozen years, culminating in the 2002
merger of The Profit Recovery Group International, Inc. and Howard Schultz &
Associates International, Inc. Although the Company believes that it has been
successful in eliminating duplicative selling, general and administrative costs
as merged entities were assimilated, there has been little focus until earlier
this year in developing consistent audit tools, audit methodologies and field
staffing protocols. The Company believes that this consistency is a critical
prerequisite to better serving our clients since it provides a uniform
foundation for propagating best practices throughout the world. Another area we
are addressing is gaining cost efficiencies through the standardization of the
more routine sub-components of our recovery audit process that lend themselves
to greater efficiency and cost-effectiveness when performed in a specialized,
centralized work group setting.
The Model Evolution work initially concentrates on the US accounts payable
business and domestic corporate support functions. The Company will be
conducting the US aspect of its work through most of 2004 and continues to
expect annualized cost savings of at least $12.0 million upon completion of the
US-based work effort. In conducting this work, the Company is incurring expenses
for items such as employee severances, the closure of offices and the fees of
outside advisors. During the quarter ended September 30, 2003, the Company
incurred after-tax costs of $2.4 million, or $0.04 per diluted share, on these
US strategic business initiatives and expects to continue to incur quarterly
charges until project completion, including expected after-tax costs of $3.6
million, or $0.06 per diluted share, in the fourth quarter of 2003.
Develop New Business
During 2003, the Company created, funded and staffed a discrete business
development unit charged with developing new channels of revenue for the
Company. The business development group is led by a senior business executive,
Paul van Leeuwen, who was brought into the Company earlier this year due to his
specific expertise in this area. The Company is highly pleased with the progress
and initiatives of the new group to-date and intends to devote considerably
greater resources to the group in 2004.
Grow the International Business
We anticipate devoting significantly greater resources and emphasis in 2004 to
our international operations with a goal of realizing the truly massive revenue
growth potential of those marketplaces. To that end, the Company appointed
Richard Bacon as Executive Vice President of International Operations in
September 2003. Mr. Bacon is a seasoned international business executive.
The ultimate goals of the Company's strategic initiatives are to better serve
our clients, to resume acceptable levels of revenue growth, and to adequately
and appropriately compensate our revenue-producing professionals.
"This is a dynamic time for our Company as we make significant progress towards
an exciting new future," said Cook. "Together, we will be passionately creative
and innovative, with a disciplined approach towards creating value for our
clients in ways no other firm can."
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CONFERENCE CALL AND WEBCAST INFORMATION
PRG-Schultz will hold a conference call today, October 27, 2003, at 10:00 a.m.
ET. Listeners in the US and Canada should dial 800-374-0518 at least 5 minutes
prior to the start of the conference. Listeners outside the US or Canada should
dial 706-643-1837. To be admitted to the call, provide the leader's name 'John
Cook,' reference the Company, and provide the passcode 'PRGX.'
The teleconference will also be webcast on the Internet at www.prgx.com (go to
the Investor Relations home page). Microsoft Windows Media Player is required to
access the webcast and can be downloaded from
www.microsoft.com/windows/mediaplayer.
A copy of this press release is also available at www.prgx.com under the heading
"Investor Relations - News."
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, providing clients in over 40 countries with
insightful value to optimize and expertly manage their business transactions.
Using proprietary software and expert audit methodologies, PRG-Schultz industry
specialists review client invoices, purchase orders, receiving documents,
databases, and correspondence files to recover lost profits due to overpayments
or under-deductions. PRG-Schultz is retained on a pay-for-performance basis,
receiving a percentage of each dollar recovered.
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 have violated our debt covenants for the rolling
four quarter period ending September 30, 2003, and our banking syndicate may not
see fit to grant relief beyond the current forbearance waiver which expires on
November 15, 2003, (ii) violation of our debt covenants could result in an
acceleration of our outstanding bank debt (totaling $29.0 million at September
30, 2003) as well as debt under our convertible notes (totaling $125 million in
gross principal balance at September 30, 2003), and we may not be able to secure
sufficient liquid resources to pay the accelerated debt, (iii) we may continue
to experience revenue losses or delays as a result of our US retailing clients'
actual and / or potential revision of claim approval and claim processing
guidelines, (iv) the bankruptcy of any of our larger clients, or of any such
clients' larger customers or suppliers, could impair then-existing accounts
receivable and reduce expected future revenues from such clients, (v) a portion
of $5.5 million in payments on account from a bankrupt client of the Company
received during the quarter ended March 31, 2003 might be recoverable as
"preference payments" under United States bankruptcy laws and, if so, would
result in the recording of an expense in the Company's financial statements,
(vi) modifications to auditor compensation models may negatively impact employee
productivity and retention, and therefore, our ability to generate revenues,
(vii) the businesses comprising the Other Ancillary Services segment may require
additional time and effort of Company executives and may therefore distract
management from its focus on the Company's core Accounts Payable Services
business, (viii) we may not achieve anticipated expense savings in connection
with our strategic business initiatives and may incur costs in excess of those
currently anticipated in order to implement these initiatives, (ix) our past and
future investments in technology may not benefit our business, (x) our Accounts
Payable Services businesses may not grow as expected, and we may not be able to
increase the number of clients, particularly commercial clients, utilizing
broad-scope audits, (xi) our international expansion may prove unprofitable or
may take longer to accomplish than we anticipate, and (xii) the reorganization
of our US Accounts Payable Services operations in connection with our current
strategic business initiatives may adversely affect our ability to generate
anticipated revenues and profits and may not be successful or may require more
time, management attention or expense than we currently anticipate. Other risks
and uncertainties that may affect our business include (i) the possibility of an
adverse judgment in pending securities litigation, (ii) potential timing issues
that could delay revenue recognition, (iii) future weakness in the currencies of
countries in which we transact business, (iv) changes in economic cycles, (v)
competition from other companies, (vi) changes in governmental regulations
applicable to us, and other risk factors discussed in our Securities and
Exchange Commission filings, including the Company's Form 10-Q as filed with the
Securities and Exchange Commission on August 12, 2003 and Form 10-K as filed
with the Securities and Exchange Commission on March 17, 2003. The Company
disclaims any obligation or duty to update or modify these forward-looking
statements.
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# # #
Contact:
Gene Ellis
Chief Financial Officer
(770) 779-3230
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SCHEDULE 1
PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------------------- ------------------------------
2003 2002 2003 2002
-------------- -------------- ------------- -------------
Revenues $ 92,576 $ 116,116 $ 292,489 $ 344,699
Cost of revenues 60,104 64,758 182,665 196,695
Selling, general and administrative expenses 33,301 34,097 92,354 105,187
-------------- -------------- ------------- -------------
Operating income (loss) (829) 17,261 17,470 42,817
Interest (expense), net (2,234) (2,484) (6,664) (7,158)
-------------- -------------- ------------- -------------
Earnings (loss) from continuing operations before income taxes,
discontinued operations and cumulative effect of accounting
change (3,063) 14,777 10,806 35,659
Income taxes (1,149) 5,468 4,052 13,194
-------------- -------------- ------------- -------------
Earnings (loss) from continuing operations before discontinued
operations and cumulative effect of accounting change (1,914) 9,309 6,754 22,465
Discontinued operations:
Gain on disposal / retention of discontinued operations, net of
income taxes 206 406 530 2,716
-------------- -------------- ------------- -------------
Earnings (loss) before cumulative effect of accounting change (1,708) 9,715 7,284 25,181
Cumulative effect of accounting change, net of income taxes - - - (17,208)
-------------- -------------- ------------- -------------
Net earnings (loss) $ (1,708) $ 9,715 $ 7,284 $ 7,973
============== ============== ============= =============
Basic earnings (loss) per share:
Earnings (loss) from continuing operations before discontinued
operations and cumulative effect of accounting change $ (0.03) $ 0.14 $ 0.11 $ 0.36
Discontinued operations - 0.01 0.01 0.04
Cumulative effect of accounting change - - - (0.27)
-------------- -------------- ------------- -------------
Net earnings (loss) $ (0.03) $ 0.15 $ 0.12 $ 0.13
============== ============== ============= =============
Diluted earnings (loss) per share:
Earnings (loss) from continuing operations before discontinued
operations and cumulative effect of accounting change $ (0.03) $ 0.13 $ 0.11 $ 0.32
Discontinued operations - - 0.01 0.03
Cumulative effect of accounting change - - - (0.21)
-------------- -------------- ------------- -------------
Net earnings (loss) $ (0.03) $ 0.13 $ 0.12 $ 0.14
============== ============== ============= =============
Weighted average shares outstanding:
Basic 61,450 64,362 61,830 62,616
============== ============== ============= =============
Diluted 61,450 81,861 62,090 80,099
============== ============== ============= =============
SCHEDULE 2
PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
2003 2002
----------------- -----------------
ASSETS
Current assets:
Cash and cash equivalents $ 21,260 $ 14,860
Restricted cash 5,756 -
Receivables:
Contract receivables 51,984 69,976
Employee advances and miscellaneous receivables 3,602 3,600
----------------- -----------------
Total receivables 55,586 73,576
----------------- -----------------
Funds held for client obligations 16,960 9,043
Prepaid expenses and other current assets 4,450 4,068
Deferred income taxes 25,243 25,930
----------------- -----------------
Total current assets 129,255 127,477
Property and equipment 32,034 35,057
Goodwill 372,412 371,833
Intangible assets 34,980 36,214
Deferred income taxes 11,075 10,628
Other assets 4,454 4,571
----------------- -----------------
Total assets $ 584,210 $ 585,780
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ - $ 5,527
Obligation for client payables 16,960 9,043
Accounts payable and accrued expenses 24,891 24,269
Accrued payroll and related expenses 39,311 50,411
Deferred revenue 4,588 2,665
----------------- -----------------
Total current liabilities 85,750 91,915
Long-term debt, excluding current installments 29,000 26,363
Convertible notes, net of unamortized discount of $2,832 in 2003 and
$3,509 in 2002 122,168 121,491
Deferred compensation 3,581 4,011
Other long-term liabilities 4,051 4,115
----------------- -----------------
Total liabilities 244,550 247,895
----------------- -----------------
Shareholders' equity:
Preferred stock - -
Common stock 67 67
Additional paid-in capital 492,377 491,894
Accumulated deficit (103,394) (110,678)
Accumulated other comprehensive loss (384) (1,601)
Less treasury stock at cost (48,710) (41,182)
Unearned portion of restricted stock (296) (615)
----------------- -----------------
Total shareholders' equity 339,660 337,885
----------------- -----------------
Total liabilities and shareholders' equity $ 584,210 $ 585,780
================= =================
SCHEDULE 3
PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
SUMMARY OPERATING SEGMENT RESULTS FROM CONTINUING OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30
(IN THOUSANDS EXCEPT EARNINGS PER SHARE DATA)
2003 2002
----------------------------- ---------------------------
$ % Rev. $ % Rev.
----------------------------- ---------------------------
ACCOUNTS PAYABLE SERVICES
- -------------------------
Revenues $79,895 $101,854
Operating Income $12,274 15.4% $28,399 27.9%
----------------------------- ---------------------------
OTHER ANCILLARY SERVICES
- ------------------------
Revenues $12,681 $14,262
Operating Income $2,003 15.8% $3,200 22.4%
----------------------------- ---------------------------
CORPORATE SUPPORT
- -----------------
Operating Income ($15,106) -16.3% ($14,338) -12.3%
----------------------------- ---------------------------
TOTAL
- -----
Revenues $92,576 $116,116
Operating Income (Loss) ($829) -0.9% $17,261 14.9%
Earnings (Loss) from
Continuing Operations ($1,914) -2.1% $9,309 8.0%
Diluted Earnings (Loss) Per
Share from Continuing
Operations ($0.03) $0.13
----------------------------- ---------------------------
Diluted Shares 61,450 81,861
----------------------------- ---------------------------
Notes:
Corporate Support Operating Income % Shown as a % of Total Revenues
Earnings from Continuing Operations and Diluted Earnings Per Share from
Continuing Operations are prior to Gain from Discontinued Operations (2003 &
2002) and Cumulative Effect of Accounting Change (2002).
SCHEDULE 4
PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
SUMMARY OPERATING SEGMENT RESULTS FROM CONTINUING OPERATIONS
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30
(IN THOUSANDS EXCEPT EARNINGS PER SHARE DATA)
2003 2002
----------------------------- ---------------------------
$ % Rev. $ % Rev.
----------------------------- ---------------------------
ACCOUNTS PAYABLE SERVICES
- -------------------------
Revenues $246,617 $304,201
Operating Income $42,904 17.4% $81,532 26.8%
----------------------------- ---------------------------
OTHER ANCILLARY SERVICES
- ------------------------
Revenues $45,872 $40,498
Operating Income $12,773 27.8% $6,281 15.5%
----------------------------- ---------------------------
CORPORATE SUPPORT
- -----------------
Operating Income ($38,207) -13.1% ($44,996) -13.1%
----------------------------- ---------------------------
TOTAL
- -----
Revenues $292,489 $344,699
Operating Income $17,470 6.0% $42,817 12.4%
Earnings from
Continuing Operations $6,754 2.3% $22,465 6.5%
Diluted Earnings Per Share
from Continuing Operation $0.11 $0.32
- -----------------------------------------------------------------------------------------------------
Diluted Shares 62,090 80,099
- -----------------------------------------------------------------------------------------------------
Notes:
Corporate Support Operating Income % Shown as a % of Total Revenues
Earnings from Continuing Operations and Diluted Earnings Per Share from
Continuing Operations are prior to Gain from Discontinued Operations (2003 &
2002) and Cumulative Effect of Accounting Change (2002).
SCHEDULE 5
PRG-Schultz International, Inc. and Subsidiaries
Reconciliation of EBITDA to Earnings from Continuing Operations
(Unaudited)
(in thousands)
Three Months Nine Months
Ended September 30, Ended September 30,
- ---------------------------------------------------------------------------------------------------------------------------
2003 2002 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------
Net Earnings (Loss) $ (1,708) $ 9,715 $ 7,284 $ 7,973
Deduct:
Cumulative Effect of Accounting Change,
Net of Income Taxes - - - (17,208)
Gain From Discontinued Operations 206 406 530 2,716
Earnings (Loss) from Continuing Operations (1,914) 9,309 6,754 22,465
Add:
Income Taxes (1,149) 5,468 4,052 13,194
Interest 2,234 2,484 6,664 7,158
Depreciation and Amortization 4,411 4,338 12,891 13,392
EBITDA $ 3,582 $ 21,599 $ 30,361 $ 56,209
Total Revenues $ 92,576 $ 116,116 $292,489 $ 344,699
EBITDA as % of Revenues 3.9% 18.6% 10.4% 16.3%
In this press release, the Company has provided a financial measure, EBITDA,
defined as earnings from continuing operations before interest, taxes,
depreciation and amortization. EBITDA is considered a 'non-GAAP' financial
measure within the meaning of Regulation G and may not be similar to EBITDA
measures employed by other companies. EBITDA is presented solely as a
supplemental disclosure because management believes it to be an effective
measure of the operating performance of the Company's core business activities.
EBITDA should not be considered in isolation of, or as a substitute for, other
measures for determining operating performance or liquidity that are calculated
in accordance with GAAP. This schedule provides a reconciliation of EBITDA to
net income, in accordance with Securities and Exchange Commission guidance.