Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
PRG-SCHULTZ REPORTS SECOND QUARTER 2004 FINANCIAL RESULTS
ATLANTA, JULY 22, 2004 - PRG-Schultz International, Inc. (Nasdaq: PRGX) today
announced financial results for the second quarter of 2004, updated its 2004
full-year outlook and provided an outlook for the third quarter of 2004.
SECOND QUARTER 2004 FINANCIAL HIGHLIGHTS
o Revenues totaled $90.4 million.
- Revenues from Accounts Payable Services totaled $76.7 million
- Revenues from Meridian VAT Reclaim totaled $13.7 million
o Operating income margin was 0.7% of revenues for the quarter, compared to
9% a year ago. Net loss was 2% of revenues for the quarter.
o EBITDA margin was 5% of revenues for the quarter, compared to 13% a year
ago (see Schedule 6 for a reconciliation of EBITDA, a non-GAAP financial
measure, to net earnings (loss)).
o Before discontinued operations, diluted loss per share from continuing
operations was $0.01 for the quarter compared with diluted earnings per
share from continuing operations of $0.06 during the second quarter of
2003. The $0.01 loss per share in 2004 was within the range of the
Company's April 22, 2004 outlook and represents three straight quarters of
meeting the Company's guidance on per share results from continuing
operations.
o Loss from continuing operations before discontinued operations for the
quarter was $0.9 million or 1% of revenues, compared to earnings of $4.0
million or 4% of revenues for the comparable 2003 period.
o Cash flow provided by operating activities was $2.5 million for the first
six months of 2004, down from $13.6 million for the same period in 2003.
o Capital expenditures totaled $7.4 million for the six months ended June 30,
2004.
John Cook, Chairman and Chief Executive Officer of PRG-Schultz stated, "Our
results are in line with expectations, and we continue to make progress toward
meeting our goals. I believe that the pieces are in place to show continuing
improvement in our operating performance."
SECOND QUARTER 2004 FINANCIAL RESULTS
Revenues for the second quarter of 2004 totaled $90.4 million, compared to $95.0
million in the second quarter of 2003. Revenues from Accounts Payable Services
and Meridian VAT Reclaim totaled $76.7 million and $13.7 million, respectively,
for the quarter compared to $82.8 million and $12.2 million, respectively, a
year ago. The year-over-year decrease of approximately 7% 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 12%
year-over-year, was due to various on-going challenges previously disclosed by
the Company in the management discussion and analysis portion of the 10-Q filed
with the SEC on May 7, 2004. Also, our U.S. Accounts Payable clients continue to
take a more conservative approach toward claims recognition. Revenues from the
Company's International Accounts Payable Services operations have increased by
approximately 1% year-over-year. Revenues from Meridian VAT Reclaim for the
second quarter of 2004 increased approximately 12% year-over-year.
Net loss from continuing operations for the second quarter of 2004 was $0.9
million or $0.01 per diluted share, compared to net earnings from continuing
operations of $4.0 million or $0.06 per diluted share during the second quarter
of 2003. Results in the the second quarter of 2004 included after-tax charges of
$2.1 million, or $0.03 per diluted share relating to the Company's previously
disclosed strategic business initiatives. Net loss for the quarter was $2.0
million or $0.03 per share, compared to net earnings of $4.3 million or $0.07
per share for the same quarter of 2003. Discontinued operations in the second
quarter of 2004 experienced a charge of $1.0 million or $0.02 per share
primarily to reflect an increase in the expected cost of the indemnifications
given at the time of the sale of Alma.
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 (loss) 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 ended June 30, 2004, generally accepted accounting
principles require that these adjustments not be made since the resulting
calculations would have been anti-dilutive.
Operating income for the second quarter totaled $0.7 million or 0.7% of
revenues, compared to $8.5 million, or 9% of revenues, in the same period last
year.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for the
second quarter of 2004 totaled $4.5 million or 5% of revenues, compared to $12.6
million or 13% of revenues in the second quarter of 2003. (See Schedule 6 for a
reconciliation of EBITDA, a non-GAAP financial measure, to net earnings (loss)).
Schedule 4 provides summary financial results from continuing operations for the
second quarters of 2004 and 2003 by operating segment.
CASH FLOW, DSOS AND CAPITAL EXPENDITURES
Net cash used in operating activities for the second quarter of 2004 was $2.8
million, compared to net cash provided by operating activities of $1.1 million
in the second quarter of 2003.
Company-wide, Days Sales Outstanding (DSOs) at the end of the second quarter of
2004 stood at 47 days, compared to 53 days a year ago.
Capital expenditures totaled approximately $3.2 million for the second quarter
of 2004, compared to $1.9 million in the same period a year ago.
FULL SIX MONTHS 2004 FINANCIAL RESULTS
Revenues for the first six months of 2004 totaled $178.1 million, compared to
$191.6 million in the first six months of 2003. Revenues from Accounts Payable
Services and Meridian VAT totaled $155.9 million and $22.2 million,
respectively, for the first six months of 2004, compared to $167.7 million and
$23.9 million, respectively, for the first six months of 2003.
Net earnings for the first six months of 2004 were $2.9 million (2% of revenues)
or $0.05 per diluted share, compared to $9.0 million (5% of revenues) or $0.14
per diluted share in the first six months of 2003. Net loss from continuing
operations for the first six months of 2004 was $4.2 million or a loss of $0.07
per diluted share. This compares to net earnings from continuing operations of
$8.1 million or $0.13 per diluted share in the first six months of 2003.
Operating loss for the first six months of 2004 totaled $2.5 million or 1% of
revenues, compared to operating income of $17.3 million or 9% of revenues in the
same period a year ago. Earnings before interest, taxes, depreciation and
amortization (EBITDA) for the first six months of 2004 totaled $5.3 million or
3% of revenues, compared to $25.4 million or 13% of revenues in the first six
months of 2003. See Schedule 6 for a reconciliation of EBITDA, a non-GAAP
financial measure, to net earnings (loss).
Schedule 5 provides summary financial results from continuing operations for the
first six months of 2004 and 2003 by operating segment.
CASH FLOW AND CAPITAL EXPENDITURES
Net cash provided by operating activities for the six months ended June 30,
2004, was approximately $2.5 million, compared to $13.6 million in the same
period of 2003.
Capital expenditures totaled approximately $7.4 million for the first six months
of 2004, compared to $5.1 million in the same period a year ago. Amounts for
both years exclude capital expenditures related to the Company's Communications
Services operations, which were declared discontinued operations during the
fourth quarter of 2003 and subsequently sold on January 16, 2004.
2004 OUTLOOK
Second Half of 2004 Outlook:
For the second half of 2004, consolidated revenues are anticipated to range
between $192 million and $197 million, which reflect year-over-year growth of
between 4% and 7%. This outlook anticipates a 2-5% growth in our U.S. business
and 11-13% for our International business. Revenues from Meridian VAT Reclaim
are expected to be flat when compared against last year. This revenue growth
should produce net earnings in the range of $8.6-10.5 million and EBITDA in the
range of $28-30 million for an EBITDA margin of 14-15%. Our projection has been
impacted by $4-5 million (2-3% of anticipated revenues) of charges related to
the company's strategic initiatives. (See Schedule 6 for a reconciliation of
projected EBITDA, a non-GAAP financial measure, to projected net earnings).
John Cook stated, "Our business is expected to show significant improvement in
the last half of 2004 as we realize the benefits of our strategic initiatives in
our operating results. The organization is keenly focused on moving toward a
goal of a 20% EBITDA margin, which we believe is realistic."
Third Quarter 2004 Outlook:
For the third quarter of 2004, consolidated revenues are expected to range from
$92 to $95 million. Revenues from Accounts Payable Services are expected to
range from $84 to $86 million, and revenues from Meridian VAT Reclaim are
expected to range from $8 to $9 million.
Diluted earnings per share from continuing operations are expected to range from
$0.01-$0.03 in the third quarter of 2004. This outlook includes an earnings
reduction of approximately $0.03 per diluted share to reflect already-identified
severance and other costs related to the Company's strategic business
initiatives, as disclosed in the management discussion and analysis portion of
the 10-Q filed with the SEC on May 7, 2004.
Full-Year 2004 Outlook:
For the full-year 2004, consolidated revenues are expected to range from $370 to
$375 million. Revenues from Accounts Payable Services are expected to range from
$334 to $337 million, and revenues from Meridian VAT Reclaim are expected to
range from $36 to $38 million.
Diluted earnings per share from continuing operations are expected to range from
$0.07- $0.10 in 2004. This outlook includes an earnings reduction of
approximately $0.12 per diluted share to reflect already-identified severance
and other costs related to the Company's strategic business initiatives, as
disclosed in the management discussion and analysis portion of the 10-Q filed
with the SEC on May 7, 2004.
Full year capital expenditures for 2004 are expected to be approximately $12
million, about the same as those in 2003.
CONFERENCE CALL AND WEBCAST INFORMATION
PRG-Schultz will hold a conference call today, July 22, 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.' A playback
of the call will be available two hours after the conclusion of the live call,
extending until midnight on July 29, 2004. To access the replay, dial
800-642-1687 (US / Canadian participants) or 706-645-9291 (international
participants). Enter the conference ID#8450428 to connect to the replay.
The live teleconference will also be audiocast on the Internet at www.prgx.com
(go to the Investor Relations home page). Please note that the audiocast is
'listen-only.' Microsoft Windows Media Player is required to access the
audiocast 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 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 inadvertently do so in the future, (ii) violation of our debt
covenants could result in an acceleration of our outstanding bank debt (totaling
$12.1 million at June 30, 2004) as well as debt under our convertible notes
(totaling $125.0 million in gross principal balance at June 30, 2004), and we
may not be able to secure sufficient liquid resources to pay the accelerated
debt, (iii) our bank credit facility, which we rely upon to provide a meaningful
portion of our liquidity, 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)
an indeterminate 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
consolidated 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
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-K as filed with the
Securities and Exchange Commission on March 5, 2004, and Form 10-Q as filed with
the Securities and Exchange Commission on May 7, 2004. The Company disclaims any
obligation or duty to update or modify these forward-looking statements.
# # #
CONTACTS: James Moylan Linda Master-Parker
Chief Financial Officer VP Corporate Communications
(770) 779-6605 (770) 779-3295
SCHEDULE 1
PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------------------- ------------------------------
2004 2003 2004 2003
-------------- -------------- -------------- -------------
Revenues $ 90,406 $ 95,023 $ 178,055 $ 191,616
Cost of revenues 56,494 57,566 114,123 116,600
Selling, general and administrative expenses 33,244 28,940 66,450 57,733
-------------- -------------- -------------- -------------
Operating income (loss) 668 8,517 (2,518) 17,283
Interest (expense), net (2,148) (2,218) (4,244) (4,430)
-------------- -------------- -------------- -------------
Earnings (loss) from continuing operations before
income taxes and discontinued operations (1,480) 6,299 (6,762) 12,853
Income tax expense (benefit) (563) 2,334 (2,570) 4,774
-------------- -------------- -------------- -------------
Earnings (loss) from continuing operations before
discontinued operations (917) 3,965 (4,192) 8,079
Discontinued operations:
Earnings from discontinued operations, net of
income taxes - 358 - 589
Gain (loss) on disposal of discontinued
operations including operating results for
phase-out period, net of income taxes (1,033) - 7,089 324
-------------- -------------- -------------- -------------
Earnings (loss) from discontinued operations (1,033) 358 7,089 913
-------------- -------------- -------------- -------------
Net earnings (loss) $ (1,950) $ 4,323 $ 2,897 $ 8,992
============== ============== ============== =============
Basic earnings (loss) per share:
Earnings (loss) from continuing operations before
discontinued operations $ (0.01) $ 0.06 $ (0.07) $ 0.13
Discontinued operations (0.02) 0.01 0.12 0.01
-------------- -------------- -------------- -------------
Net earnings (loss) $ (0.03) $ 0.07 $ 0.05 $ 0.14
============== ============== ============== =============
Diluted earnings (loss) per share:
Earnings (loss) from continuing operations before
discontinued operations $ (0.01) $ 0.06 $ (0.07) $ 0.13
Discontinued operations (0.02) 0.01 0.12 0.01
-------------- -------------- -------------- -------------
Net earnings (loss) $ (0.03) $ 0.07 $ 0.05 $ 0.14
============== ============== ============== =============
Weighted average shares outstanding:
Basic 61,700 61,658 61,697 62,020
============== ============== ============== =============
Diluted 61,700 61,904 61,697 78,482
============== ============== ============== =============
SCHEDULE 2
PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
JUNE 30, DECEMBER 31,
2004 2003
------------------- ------------------
ASSETS
Current assets:
Cash and cash equivalents $ 19,399 $ 26,658
Restricted cash 240 5,758
Receivables:
Contract receivables 47,312 53,185
Employee advances and miscellaneous receivables 2,563 3,573
------------------- ------------------
Total receivables 49,875 56,758
------------------- ------------------
Funds held for client obligations 20,330 18,690
Prepaid expenses and other current assets 4,792 3,779
Deferred income taxes 9,211 9,211
Current assets of discontinued operations - 3,179
------------------- ------------------
Total current assets 103,847 124,033
Property and equipment 29,510 29,466
Goodwill 170,495 170,619
Intangible assets 30,924 31,617
Deferred income taxes 65,132 65,370
Other assets 3,162 3,152
Long-term assets of discontinued operations - 1,792
------------------- ------------------
Total assets $ 403,070 $ 426,049
=================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 12,100 $ 31,600
Obligation for client payables 20,330 18,690
Accounts payable and accrued expenses 22,440 25,780
Accrued payroll and related expenses 37,150 40,256
Deferred revenue 4,466 4,601
Current liabilities of discontinued operations - 1,391
------------------- ------------------
Total current liabilities 96,486 122,318
Convertible notes, net of unamortized discount of $2,173 in 2004 and
$2,605 in 2003 122,827 122,395
Deferred compensation 3,348 3,695
Other long-term liabilities 4,593 4,511
------------------- ------------------
Total liabilities 227,254 252,919
------------------- ------------------
Shareholders' equity:
Preferred stock - -
Common stock 68 67
Additional paid-in capital 492,965 492,878
Accumulated deficit (268,599) (271,496)
Accumulated other comprehensive income 217 616
Less treasury stock at cost (48,710) (48,710)
Unearned portion of restricted stock (125) (225)
------------------- ------------------
Total shareholders' equity 175,816 173,130
------------------- ------------------
Total liabilities and shareholders' equity $ 403,070 $ 426,049
=================== ==================
SCHEDULE 3
PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
-----------------------------------
2004 2003
--------------- ---------------
Cash flows from operating activities:
Net earnings $ 2,897 $ 8,992
Gain on disposal of discontinued operations (7,089) (324)
Earnings from discontinued operations - (589)
--------------- ---------------
Earnings (loss) from continuing operations (4,192) 8,079
Adjustments to reconcile earnings (loss) from continuing
operations to net cash provided by operating activities:
Depreciation and amortization 8,787 8,880
Restricted stock compensation expense (35) 88
(Gain) loss on sale of property, plant and equipment 32 (51)
Deferred compensation expense (347) (343)
Deferred income taxes (5,105) 2,360
Income tax benefit relating to stock option exercises - 35
Changes in operating assets and liabilities:
Restricted cash securing letter of credit obligation 5,371 -
Receivables 6,562 13,263
Prepaid expenses and other current assets (1,536) (922)
Other assets (98) (210)
Accounts payable and accrued expenses (4,147) (3,270)
Accrued payroll and related expenses (2,893) (15,997)
Deferred revenues 67 1,753
Other long-term liabilities 82 (77)
--------------- ---------------
Net cash provided by operating activities 2,548 13,588
--------------- ---------------
Cash flows from investing activities:
Purchase of property and equipment, net of sale proceeds (7,374) (5,098)
Proceeds from the sale of certain discontinued operations 19,116 -
--------------- ---------------
Net cash provided by (used in) investing activities 11,742 (5,098)
--------------- ---------------
Cash flows from financing activities:
Net repayments of debt (19,500) 6,452
Payments for issuance costs on convertible notes (21) (12)
Net proceeds from common stock issuances 223 214
Purchase of treasury shares - (7,528)
--------------- ---------------
Net cash used in financing activities (19,298) (874)
--------------- ---------------
Net cash (used in) provided by discontinued operations (1,589) 279
Effect of exchange rate changes on cash and cash equivalents (662) 1,086
--------------- ---------------
Net change in cash and cash equivalents (7,259) 8,981
Cash and cash equivalents at beginning of period 26,658 14,860
--------------- ---------------
Cash and cash equivalents at end of period $ 19,399 $ 23,841
=============== ===============
SCHEDULE 4
PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
SUMMARY OPERATING SEGMENT RESULTS FROM CONTINUING OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED JUNE 30,
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
2004 2003
- -----------------------------------------------------------------------------------------------------
$ % REV. $ % REV.
- -----------------------------------------------------------------------------------------------------
ACCOUNTS PAYABLE SERVICES
- -------------------------
Revenues $76,756 $82,836
Operating income $8,089 10.5% $14,789 17.9%
- -----------------------------------------------------------------------------------------------------
MERIDIAN VAT RECLAIM
- --------------------
Revenues $13,650 $12,187
Operating income $5,275 38.6% $4,886 40.1%
- -----------------------------------------------------------------------------------------------------
CORPORATE SUPPORT
- -----------------
Operating loss ($12,696) -14.0% ($11,158) -11.7%
- -----------------------------------------------------------------------------------------------------
TOTAL
- -----
Revenues $90,406 $95,023
Operating income $668 0.7% $8,517 9.0%
Earnings (loss) from
continuing operations ($917) -1.0% $3,965 4.2%
Diluted earnings (loss) per
share from continuing operations ($0.01) $0.06
Diluted shares 61,700 61,904
- -----------------------------------------------------------------------------------------------------
Notes:
Corporate Support Operating Loss % 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.
SCHEDULE 5
PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
SUMMARY OPERATING SEGMENT RESULTS FROM CONTINUING OPERATIONS
(UNAUDITED)
SIX MONTHS ENDED June 30,
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
2004 2003
- -----------------------------------------------------------------------------------------------------
$ % REV. $ % REV.
- -----------------------------------------------------------------------------------------------------
ACCOUNTS PAYABLE SERVICES
- -------------------------
Revenues $155,835 $167,698
Operating income $18,360 11.8% $30,579 18.2%
- -----------------------------------------------------------------------------------------------------
MERIDIAN VAT RECLAIM
- --------------------
Revenues $22,220 $23,918
Operating income $6,047 27.2% $9,805 41.0%
- -----------------------------------------------------------------------------------------------------
CORPORATE SUPPORT
- -----------------
Operating loss ($26,925) -15.1% ($23,101) -12.1%
- -----------------------------------------------------------------------------------------------------
TOTAL
- -----
Revenues $178,055 $191,616
Operating income (loss) ($2,518) -1.4% $17,283 9.0%
Earnings (loss) from
continuing operations ($4,192) -2.4% $8,079 4.2%
Diluted earnings (loss) per
share from continuing operations ($0.07) $0.13
Diluted shares 61,697 78,482
- -----------------------------------------------------------------------------------------------------
Notes:
Corporate Support Operating Loss % 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 6
PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NET EARNINGS (LOSS) TO EBITDA AND
RECONCILIATION OF PROJECTED NET EARNINGS TO PROJECTED EBITDA
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
--------------------------- --------------------------
2004 2003 2004 2003
------------- ------------ ------------ ------------
Reconciliation of net earnings (loss) to EBITDA:
- -----------------------------------------------
Net earnings (loss) $ (1,950) $ 4,323 $ 2,897 $ 8,992
Adjust for:
Earnings (loss) from discontinued operations (1,033) 358 7,089 913
------------- ------------ ------------ ------------
Earnings (loss) from continuing operations (917) 3,965 (4,192) 8,079
Adjust for:
Income taxes (563) 2,334 (2,570) 4,774
Interest 2,148 2,218 4,244 4,430
Depreciation and amortization 3,868 4,089 7,841 8,158
------------- ------------ ------------ ------------
EBITDA $ 4,536 $ 12,606 $ 5,323 $ 25,441
============= ============ ============ ============
Total revenues $ 90,406 $ 95,023 $ 178,055 $ 191,616
EBITDA as % of Revenues 5.0% 13.3% 3.0% 13.3%
Range of Outlook
-----------------------------------
Reconciliation of projected net earnings to projected EBITDA: Low High
- ------------------------------------------------------------ ------------------ ---------------
Projected net earnings for the second half of 2004 $ 8,600 $ 10,500
Adjust for:
Earnings (loss) from discontinued operations - -
------------------ ---------------
Projected earnings from continuing operations for the second half of 2004 8,600 10,500
Adjust for:Income taxes 7,000 7,000
Interest 4,500 4,500
Depreciation and amortization 8,300 8,300
------------------ ---------------
Projected EBITDA for the second half of 2004 $ 28,400 $ 30,300
================== ===============
Projected full year 2004 revenues $ 370,000 $ 375,000
Actual revenues first six months of 2004 178,055 178,055
------------------ ---------------
Projected revenues for the second half of 2004 $ 191,945 $ 196,945
================== ===============
Projected EBITDA for the second half of 2004 as % of
projected revenues for the second half of 2004 14.8% 15.4%
In this press release, the Company has provided a financial measure, EBITDA,
defined as earnings from continuing operations before taxes, interest,
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 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 net earnings
(loss) to EBITDA and a reconciliation of projected net earnings to projected
EBITDA, in accordance with Securities and Exchange Commission guidance.