EXHIBIT 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
PRG-SCHULTZ REPORTS FOURTH QUARTER AND FULL-YEAR 2003 FINANCIAL RESULTS
ATLANTA, FEBRUARY 23, 2004 - PRG-Schultz International, Inc. (Nasdaq: PRGX)
today announced financial results for the fourth quarter and full-year 2003 and
provided its initial outlook for the first quarter 2004 and full-year 2004.
FOURTH QUARTER 2003 FINANCIAL HIGHLIGHTS
o Revenues for the quarter totaled $95.9 million:
o Revenues from Accounts Payable Services totaled $87.2 million
which exceeded the Company's October 27, 2003 outlook of $82.0 -
$84.0 million.
o Revenues from Accounts Payable Services increased 8.3%
sequentially compared to $80.5 million for the third quarter of
2003.
o Revenues from Meridian VAT Reclaim totaled $8.7 million.
o Revenues for the quarter were within the Company's October 27,
2003 outlook of $95.0 - $97.0 million, despite the exclusion of
revenues from the Company's previously-owned Communications
Division. The Company's October 27, 2003 outlook included $4.0
million in expected fourth quarter revenues relating to the
Communications Division. The adjusted outlook, excluding the
Communications Division, would have been $91.0 - $93.0 million in
revenues.
o Revenues from the Company's previously-owned Communications Division
(including $4.3 million relating to the fourth quarter of 2003) are no
longer included as part of the Company's consolidated revenues for any
period presented since this division was declared a discontinued
operation during the fourth quarter of 2003 and subsequently sold on
January 16, 2004 for $19.1 million.
o Operating results for the quarter were affected by non-cash, pre-tax
impairment charges totaling $(206.9) million relating to goodwill and
other intangible assets.
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o Diluted loss per share from continuing operations was ($2.74) for the
quarter compared with diluted earnings per share from continuing
operations of $0.08 during the fourth quarter of 2002. The ($2.74)
loss per share includes impairment charges of ($2.73) per diluted
share and non-recurring charges relating to the Company's
previously-announced strategic business initiatives of ($0.05) per
diluted share.
o EBITDA margin was 6.3% of revenues for the quarter, compared to 12.8%
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 $28.0 million for
2003, from $39.4 million during 2002.
o Capital expenditures (excluding those related to the Company's
previously-owned Communications Division) totaled $11.7 million during
2003.
John Cook, Chairman and Chief Executive Officer of PRG-Schultz stated, "The
fourth quarter of 2003 was a milestone quarter given that we believe our
accounts payable business, both domestically and internationally, has turned the
corner toward stabilization. Revenues in the fourth quarter for each of these
geographical divisions exceeded comparable third quarter levels. Although we
continue to confront a number of significant challenges that we have brought to
your attention over the past year, PRG-Schultz remains the undisputed global
industry leader. The demand for our services continues to be strong. Our clients
remain loyal and supportive, and our employees are committed to providing
quality service."
FOURTH QUARTER 2003 FINANCIAL RESULTS
During the fourth quarter of 2003, the Company declared its Communications
Division a discontinued operation and subsequently sold it on January 16, 2004.
Accordingly, revenues and other operating results of the Communications Division
have been removed from the Company's continuing operations for all periods
presented. The Communications Division has historically been reported as part of
the Company's "Other Ancillary Services" reporting segment. This segment now
consists solely of the Meridian VAT Reclaim operations and has been
appropriately renamed. The Company's Channel Revenue unit has been reclassified
from Other Ancillary Services to Accounts Payable Services for all periods
presented due to its extremely small size.
Revenues for the fourth quarter of 2003 totaled $95.9 million, compared to
$113.8 million in the fourth quarter of 2002. Revenues from Accounts Payable
Services and Meridian VAT Reclaim totaled $87.2 million and $8.7 million,
respectively, for the quarter compared to $105.7 million and $8.1 million,
respectively, a year ago. The year-over-year decrease of approximately 18% in
Accounts Payable Services revenues was due primarily to a decrease in revenues
from the Company's U.S. Accounts Payable Services operations. This decline,
approximately 30% year-over-year, was due to various on-going challenges
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previously disclosed by the Company. Revenues from the Company's international
Accounts Payable Services operations increased by approximately 14%
year-over-year, with growth heavily influenced by the weakening of the U.S.
dollar against various international currencies in 2003. Revenues from Meridian
VAT Reclaim increased 8% year-over-year due to increased levels of cash
collections from the various VAT authorities that form the basis of revenue
recognition for this unit.
During the fourth quarter of 2003, as part of its annual intangible asset
impairment testing, the Company, together with its independent valuation
advisors, tested its goodwill balances as well as other intangible assets. As a
result of this process, the Company determined that non-cash, pre-tax intangible
asset impairment charges totaling ($206.9) million were required during the
quarter and year ended December 31, 2003 in accordance with applicable generally
accepted accounting principles.
Of the ($206.9) million of pre-tax impairment charges, (a) ($193.9) million
related to impaired goodwill associated with the Accounts Payable Services
operations (which constituted an impairment of 53.2% of the total recorded
goodwill of that reporting unit), (b) ($8.2) million related to impaired
goodwill associated with the Meridian VAT Reclaim operations (which constituted
an impairment of 100% of the total recorded goodwill of that reporting unit),
(c) ($3.0) million related to the partial impairment of a trade name, and (d)
($1.8) million related to certain internally-developed audit software which was
abandoned in favor of an alternative that was deemed superior.
The Company emphasized that all of these impairment charges are non-cash in
nature and that it remained in compliance with all of its bank credit covenants
as of December 31, 2003.
In terms of how the goodwill impairment charges were calculated, the Company
noted that:
o The goodwill impairment valuation is a two-part test. First, the fair value
of each reporting unit is developed and compared with its recorded book
value. If the fair value is less than book value, a second test is
required.
o The Company's public stock price decreased throughout much of 2003, making
the Company subject to the second test when required annual goodwill
impairment testing was conducted as of October 1, 2003. The second test,if
required, determines the amount of the actual impairment charge, if any,
and is essentially a hypothetical purchase price allocation as if an
outside party were acquiring the reporting unit for the identified fair
value.
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o Unimpaired goodwill under this second test is the residual amount after
fair value is allocated to all other assets and liabilities, including many
organically-created intangible assets which are not actually recorded on a
company's balance sheet under generally accepted accounting principles
because they did not result from a business acquisition.
o For a company like PRG-Schultz with significant and valuable unrecorded
intangible assets, such as a major portion of its relationships with a
marquis listing of multinational clients, a failure of step one of the
two-part goodwill impairment test can easily result in a significant
impairment charge under step two.
Net loss from continuing operations for the fourth quarter of 2003 was ($168.3)
million, or ($2.74) per diluted share, compared to net earnings of $4.8 million,
or $0.08 per diluted share, during the fourth quarter of 2002. The fourth
quarter of 2003 included after-tax charges of ($3.1) million, or ($0.05) per
diluted share, relating to the Company's previously disclosed strategic business
initiatives. The fourth quarter of 2002 included after-tax charges of ($8.6)
million, or ($0.11) 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 historically been added to the diluted
share count. For the quarter and year ended December 31, 2003, generally
accepted accounting principles require that these adjustments not be made since
the resulting calculations would have been anti-dilutive.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for the
fourth quarter of 2003 totaled $6.0 million, or 6.3% of revenues, compared to
$14.6 million, or 12.8% of revenues, in the fourth quarter of 2002. See Schedule
5 for a reconciliation of EBITDA, a non-GAAP financial measure, to net earnings
(loss).
FULL-YEAR 2003 FINANCIAL RESULTS
Revenues for the full-year 2003 totaled $375.7 million, compared to $446.9
million for the full-year 2002. Revenues from Accounts Payable Services and
Meridian VAT Reclaim totaled $335.3 million and $40.4 million, respectively,
during 2003, compared to $413.3 million and $33.6 million, respectively, a year
ago.
Net loss from continuing operations before cumulative effect of an accounting
change for the full-year 2003 was ($162.6) million, or ($2.63) per diluted
share, compared to net earnings of $26.4 million, or $0.38 per diluted share,
during full-year 2002.
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Earnings before interest, taxes, depreciation and amortization (EBITDA) for
full-year 2003 totaled $34.1 million, or 9.1% of revenues, compared to $68.8
million, or 15.4% of revenues, for the 2002 full-year period. See Schedule 5 for
a reconciliation of EBITDA, a non-GAAP financial measure, to net earnings
(loss).
Schedules 3 and 4 provide summary financial results from continuing operations
for the fourth quarters and full-years 2003 and 2002 by operating segment.
Schedule 5 provides a reconciliation of EBITDA, a non-GAAP financial measure, to
net earnings / loss.
CASH FLOW, DSOS AND CAPITAL EXPENDITURES
Net cash from operating activities for full-year 2003 was approximately $28.0
million, compared to $39.4 million in full-year 2002.
Company-wide, Days Sales Outstanding (DSOs) at the end of the fourth quarter of
2003 stood at 50 days, compared to 53 days a year ago.
Capital expenditures totaled approximately $11.7 million for full-year 2003,
compared to $23.3 million in the same period a year ago. Amounts for both years
exclude capital expenditures related to the Company's Communications Division
which was declared a discontinued operation in the fourth quarter of 2003 and
subsequently sold on January 16, 2004. Capital expenditures were higher in 2002
due to the acquisitions and integration of the businesses of Howard Schultz &
Associates International, Inc. and affiliates.
2004 OUTLOOK
Full-Year 2004:
For the full-year 2004, consolidated revenues are expected to range from $375.0
- - $380.0 million. Revenues from Accounts Payable Services are expected to range
from $344 - $347 million, and revenues from Meridian VAT Reclaim are expected to
range from $31 - $33 million.
Diluted earnings per share from continuing operations are expected to range from
$0.14 to $0.17 in 2004. This outlook includes an earnings reduction of
approximately $(0.08) per share to reflect already-identified severance and
other costs related to the Company's strategic business initiatives, which are
more fully discussed below.
First Quarter 2004:
For the first quarter of 2004, consolidated revenues are expected to range from
$86.0 - $88.0 million. Revenues from Accounts Payable Services are expected to
range from $78.0 - $79.0 million, and revenues from Meridian VAT Reclaim are
expected to approximate $8.0 - $9.0 million.
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Diluted earnings per share from continuing operations are expected to range from
a loss of $(0.05) to a loss of $(0.06) in the first quarter of 2004. This
outlook also includes an earnings reduction of approximately $(0.04) per share
related to the Company's strategic business initiatives.
STRATEGIC BUSINESS INITIATIVES
During late 2003, the Company announced a series of strategic initiatives
designed to ensure its continued growth, maintain its dedicated focus on its
clients, and sustain its success. Specifically, the Company announced plans to:
o Evolve the service model;
o Develop new business opportunities; and
o Grow the international business.
Evolve the Service Model:
PRG-Schultz, as currently constituted, reflects the former Profit Recovery Group
entity that was organically grown since 1990, and an assemblage of various
acquisitions culminating in the 2002 merger with 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 had been little focus until late 2003 on
developing uniform audit tools, audit methodologies and field staffing
protocols. The Company believes that this consistency is a critical prerequisite
to providing a uniform foundation for leveraging best practices throughout the
world. Another area PRG-Schultz is addressing is achieving revenue generation
and cost efficiencies by performing certain components of the Company's recovery
audit process in a specialized, centralized work group setting.
For 2004, our work on evolving the service model continues to concentrate on the
U.S. Accounts Payable business and domestic corporate support functions. The
Company currently expects annualized cost savings of $16.0 - $20.0 million in
2005 upon completion of this U.S.-based work effort. A significant portion of
these expected cost savings are being targeted for reinvestment to fund the cost
of new growth initiatives, including significant additional financial
commitments to international expansion and new business development. In
conducting this service model initiative, the Company is incurring expenses for
items such as employee severances, the closure of offices and the fees of
outside advisors. During 2003, the Company incurred after-tax costs of $(0.09)
per diluted share on these U.S. strategic business initiatives and expects to
incur after-tax costs of $(0.08) per diluted share in 2004.
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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 Company is 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:
The Company anticipates devoting significantly greater resources and emphasis in
2004 to its international operations with a goal of realizing the significant
revenue growth potential of these marketplaces. To that end, the Company
appointed Richard Bacon, a seasoned business executive, as Executive Vice
President of International Business in September 2003.
The ultimate goals of the Company's strategic initiatives are to improve our
client services, 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. "The successful execution of these three
strategic initiatives will allow us to resume top line growth and, as U.S.
revenues increase, should create a significant profit flow-through as a result
of our reduced expense base. I am also encouraged by the rapidly improving
economy that not only strengthens the operations of our clients, but also
inherently provides more purchase transactions for us to audit."
CONFERENCE CALL AND WEBCAST INFORMATION
PRG-Schultz will hold a conference call today, February 23, 2004, at 10:00 a.m.
E.T. Listeners in the U.S. and Canada should dial 800-374-0518 at least 5
minutes prior to the start of the conference. Listeners outside the U.S. 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."
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ABOUT PRG-SCHULTZ INTERNATIONAL, INC.
Headquartered in Atlanta, PRG-Schultz International, Inc. (PRG-Schultz) is the
world's leading provider of profit improvement services. PRG-Schultz employs
approximately 3,100 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 several times in
the past and may inadvertantly do so in the future, (ii) violation of our debt
covenants could result in an acceleration of our outstanding bank debt (totaling
$31.6 million at December 31, 2003) as well as debt under our convertible notes
(totaling $125.0 million in gross principal balance at December 31, 2003), and
we may not be able to secure sufficient liquid resources to pay the accelerated
debt, (iii) our bank credit facility is scheduled to expire on December 31,
2004, and there can be no assurance that we will be successful in extending or
replacing it, (iv) we may continue to experience revenue losses or delays as a
result of our U.S. retailing clients' actual and / or potential revision of
claim approval and claim processing guidelines, (v) 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, (vi) 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 unbudgeted expense in the
Company's financial statements and the creation of an unbudgeted liquidity
demand, (vii) modifications to auditor compensation models may negatively impact
employee productivity and retention, and therefore, our ability to generate
revenues, (viii) the Meridian VAT Reclaim operating 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, (ix) proposed legislative and regulatory initiatives concerning the
mechanisms of European value added taxation, if finalized as currently drafted,
would reduce material portions of the revenues of Meridian VAT Reclaim, (x) 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, (xi) our past and future
investments in technology may not benefit our business, (xii) 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, (xiii) our international expansion may prove unprofitable or
may take longer to accomplish than we anticipate, and (xiv) the reorganization
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of our U.S. 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 November 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.
# # #
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 TWELVE MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
------------------------------- ------------------------------
2003 2002 2003 2002
-------------- -------------- ------------- -------------
Revenues $ 95,864 $ 113,774 $ 375,701 $ 446,890
Cost of revenues 59,934 65,290 233,689 253,852
Selling, general and administrative expenses 33,858 38,702 124,240 142,001
Impairment charges 206,923 - 206,923 -
-------------- -------------- ------------- -------------
Operating income (loss) (204,851) 9,782 (189,151) 51,037
Interest (expense), net (2,284) (2,181) (8,948) (9,339)
-------------- -------------- ------------- -------------
Earnings (loss) from continuing operations before income taxes,
discontinued operations and cumulative effect of accounting
change (207,135) 7,601 (198,099) 41,698
Income tax expense (benefit) (38,793) 2,791 (35,484) 15,336
-------------- -------------- ------------- -------------
Earnings (loss) from continuing operations before discontinued
operations and cumulative effect of accounting change (168,342) 4,810 (162,615) 26,362
Discontinued operations:
Earnings (loss) from discontinued operations, net of income taxes 240 285 1,267 (7,794)
Gain on disposal / retention of discontinued operations, net of
income taxes - - 530 2,716
-------------- -------------- ------------- -------------
Earnings (loss) from discontinued operations 240 285 1,797 (5,078)
Earnings (loss) before cumulative effect of accounting change (168,102) 5,095 (160,818) 21,284
Cumulative effect of accounting change, net of income taxes - - - (8,216)
-------------- -------------- ------------- -------------
Net earnings (loss) $ (168,102) $ 5,095 $ (160,818) $ 13,068
============== ============== ============= =============
Basic earnings (loss) per share:
Earnings (loss) from continuing operations before discontinued
operations and cumulative effect of accounting change $ (2.74) $ 0.08 $ (2.63) $ 0.42
Discontinued operations 0.01 - 0.03 (0.08)
Cumulative effect of accounting change - - - (0.13)
-------------- -------------- ------------- -------------
Net earnings (loss) $ (2.73) $ 0.08 $ (2.60) $ 0.21
============== ============== ============= =============
Diluted earnings (loss) per share:
Earnings (loss) from continuing operations before discontinued
operations and cumulative effect of accounting change $ (2.74) $ 0.08 $ (2.63) $ 0.38
Discontinued operations 0.01 - 0.03 (0.06)
Cumulative effect of accounting change - - - (0.10)
-------------- -------------- ------------- -------------
Net earnings (loss) $ (2.73) $ 0.08 $ (2.60) $ 0.22
============== ============== ============= =============
Weighted average shares outstanding:
Basic 61,513 62,961 61,751 62,702
============== ============== ============= =============
Diluted 61,513 79,652 61,751 79,988
============== ============== ============= =============
SCHEDULE 2
PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
DECEMBER 31, DECEMBER 31,
2003 2002
------------------- ------------------
ASSETS
Current assets:
Cash and cash equivalents $ 26,658 $ 14,860
Restricted cash 5,758 -
Receivables:
Contract receivables 53,185 67,418
Employee advances and miscellaneous receivables 3,573 3,600
------------------- ------------------
Total receivables 56,758 71,018
------------------- ------------------
Funds held for client obligations 18,690 9,043
Prepaid expenses and other current assets 3,779 4,017
Deferred income taxes 9,211 25,930
Current assets of discontinued operations 3,179 2,609
------------------- ------------------
Total current assets 124,033 127,477
Property and equipment 29,466 33,619
Goodwill 170,619 371,833
Intangible assets 31,617 36,214
Deferred income taxes 65,370 10,628
Other assets 3,152 4,440
Long-term assets of discontinued operations 1,792 1,569
------------------- ------------------
Total assets $ 426,049 $ 585,780
=================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 31,600 $ 5,527
Obligation for client payables 18,690 9,043
Accounts payable and accrued expenses 25,780 23,985
Accrued payroll and related expenses 40,256 48,968
Deferred revenue 4,601 2,490
Current liabilities of discontinued operations 1,391 1,902
------------------- ------------------
Total current liabilities 122,318 91,915
Long-term bank debt, excluding current installments - 26,363
Convertible notes, net of unamortized discount of $2,605 in 2003 and
$3,509 in 2002 122,395 121,491
Deferred compensation 3,695 4,011
Other long-term liabilities 4,511 4,115
------------------- ------------------
Total liabilities 252,919 247,895
------------------- ------------------
Shareholders' equity:
Preferred stock - -
Common stock 67 67
Additional paid-in capital 492,878 491,894
Accumulated deficit (271,496) (110,678)
Accumulated other comprehensive income (loss) 616 (1,601)
Less treasury stock at cost (48,710) (41,182)
Unearned portion of restricted stock (225) (615)
------------------- ------------------
Total shareholders' equity 173,130 337,885
------------------- ------------------
Total liabilities and shareholders' equity $ 426,049 $ 585,780
=================== ==================
SCHEDULE 3
PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
SUMMARY OPERATING SEGMENT RESULTS FROM CONTINUING OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED DECEMBER 31
(IN THOUSANDS EXCEPT EARNINGS PER SHARE DATA)
2003 2002
------------------------------- ------------------------------
$ % REV. $ % REV.
------------------------------- ------------------------------
ACCOUNTS PAYABLE SERVICES
- -------------------------
Revenues $87,143 $105,700
Operating Income (Loss) ($180,949) -207.6% $31,452 29.8%
- -----------------------------------------------------------------------------------------------------
MERIDIAN VAT RECLAIM
- --------------------
Revenues $8,721 $8,074
Operating Income (Loss) ($7,233) -82.9% $1,069 13.2%
- -----------------------------------------------------------------------------------------------------
CORPORATE SUPPORT
- -----------------
Operating Loss ($16,669) -17.4% ($22,739) -20.0%
- -----------------------------------------------------------------------------------------------------
TOTAL
- -----
Revenues $95,864 $113,774
Operating Income (Loss) ($204,851) -213.7% $9,782 8.6%
Earnings (Loss) from
Continuing Operations ($168,342) -175.6% $4,810 4.2%
Diluted Earnings (Loss) Per
Share from Continuing
Operations ($2.74) $0.08
Diluted Shares 61,513 79,652
- -----------------------------------------------------------------------------------------------------
Notes:
Corporate Support Operating Income % shown as a % of Total Revenues
Earnings (Loss) from Continuing Operations and Diluted Earnings (Loss) Per Share
from Continuing Operations are prior to Earnings from Discontinued Operations.
SCHEDULE 4
PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
SUMMARY OPERATING SEGMENT RESULTS FROM CONTINUING OPERATIONS
(UNAUDITED)
TWELVE MONTHS ENDED DECEMBER 31
(IN THOUSANDS EXCEPT EARNINGS PER SHARE DATA)
2003 2002
------------------------------- ------------------------------
$ % REV. $ % REV.
------------------------------- ------------------------------
ACCOUNTS PAYABLE SERVICES
- -------------------------
Revenues $335,328 $413,260
Operating Income (Loss) ($137,977) -41.1% $114,004 27.6%
- -----------------------------------------------------------------------------------------------------
MERIDIAN VAT RECLAIM
- --------------------
Revenues $40,373 $33,630
Operating Income $3,702 9.2% $4,768 14.2%
- -----------------------------------------------------------------------------------------------------
CORPORATE SUPPORT
- -----------------
Operating Income ($54,876) -14.6% ($67,735) -15.2%
- -----------------------------------------------------------------------------------------------------
TOTAL
- -----
Revenues $375,701 $446,890
Operating Income (Loss) ($189,151) -50.3% $51,037 11.4%
Earnings (Loss) from
Continuing Operations ($162,615) -43.3% $26,362 5.9%
Diluted Earnings (Loss) Per
Share from Continuing
Operations ($2.63) $0.38
Diluted Shares 61,751 79,988
- -----------------------------------------------------------------------------------------------------
Notes:
Corporate Support Operating Income % shown as a % of Total Revenues
Earnings (Loss) from Continuing Operations and Diluted Earnings (Loss) Per Share
from Continuing Operations are prior to Earnings (Loss) from Discontinued
Operations (2003 & 2002) and Cumulative Effect of Accounting Change (2002).
SCHEDULE 5
PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF EBITDA TO NET EARNINGS (LOSS)
(UNAUDITED)
(IN THOUSANDS)
THREE MONTHS TWELVE MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
-------------------------------- ------------------------------
2003 2002 2003 2002
----------------- ------------- ------------------ ---------------
Net Earnings (Loss) $ (168,102) $ 5,095 $ (160,818) $ 13,068
Adjust for:
Cumulative Effect of Accounting Change,
Net of Income Taxes - - - (8,216)
Earnings (Loss) From Discontinued Operations 240 285 1,797 (5,078)
----------------- ------------- ------------------ ---------------
Earnings (Loss) from Continuing Operations (168,342) 4,810 (162,615) 26,362
Adjust for:
Income Taxes (38,793) 2,791 (35,484) 15,336
Interest 2,284 2,181 8,948 9,339
Depreciation and Amortization 3,952 4,809 16,336 17,763
Impairment Charges 206,923 - 206,923 -
----------------- ------------- ------------------ ---------------
EBITDA $ 6,024 $ 14,591 $ 34,108 $ 68,800
================= ============= ================== ===============
Total Revenues $ 95,864 $ 113,774 $ 375,701 $ 446,890
EBITDA as % of Revenues 6.3% 12.8% 9.1% 15.4%
In this press release, the Company has provided a financial measure, EBITDA,
defined as earnings from continuing operations before interest, taxes,
depreciation and amortization, as well as impairment charges disclosed herein.
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 is not provided as a measure
of liquidity and should not be viewed as such. EBITDA should not be considered
in isolation of, or as a substitute for, other measures for determining
operating performance 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.