EXHIBIT NUMBER 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
PRG-SCHULTZ REPORTS SECOND QUARTER 2003 FINANCIAL RESULTS
ANNOUNCES STRATEGIC BUSINESS INITIATIVES TO BETTER POSITION
COMPANY FOR LONG-TERM GROWTH
ATLANTA, JULY 28, 2003 - PRG-Schultz International, Inc. (Nasdaq: PRGX) today
announced financial results for the second quarter 2003, updated its 2003
full-year outlook and provided an outlook for the third quarter 2003. In
addition, the Company announced certain strategic initiatives aimed at improving
financial performance and positioning it for long-term sustainable and
profitable growth.
SECOND QUARTER 2003 FINANCIAL HIGHLIGHTS
o Net earnings were $0.07 per diluted share.
o Revenues totaled $99.3 million:
o Revenues from Accounts Payable Services totaled $82.2 million.
o Revenues from Other Ancillary Services totaled $17.1 million.
o Operating income margin was 9.2% of revenues for the quarter, compared to
12.4% a year ago.
o EBITDA margin was 13.6% of revenues for the quarter, compared to 15.7% a
year ago (see schedule 5 for reconciliation of EBITDA to net earnings).
o Cash flow from operating activities increased to $14.0 million for the six
months ended June 30, 2003, from $8.9 million in the same period a year
ago.
o Capital expenditures totaled $5.6 million for the six months ended June 30,
2003.
John Cook, chairman, chief executive officer and president of PRG-Schultz
stated, "We were disappointed with our financial results for the second quarter.
Our US retail accounts payable operations continue to be adversely impacted by
an extremely weak retailing environment. Additionally, some of our largest US
retail accounts payable clients remain extremely cautious 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,
several of our retail clients have slowed the process of approving and
processing our claim findings, subjecting them to additional levels of internal
review. We view both the continued weakness in the retailing environment and
this climate of unprecedented caution by our clients to be temporary in nature,
but believe they could continue at least for the duration of 2003."
"We attribute some of our performance to the need for better execution,
particularly as it relates to results in our international accounts payable
operations and continued challenges in our US commercial accounts payable
operations. We are actively addressing these execution shortcomings through
multiple courses of corrective action in order to capitalize on the significant
long-term potential of these businesses, which we continue to believe to be
promising."
STRATEGIC BUSINESS INITIATIVES
Cook continued, "We firmly believe that the value proposition we present to our
clients remains powerful and consistent, and that each of the markets we serve
provides long-term opportunities which PRG-Schultz, as the definitive industry
leader, is uniquely poised to capture. As a result, we are undertaking several
strategic initiatives to improve our business performance and to position
ourselves for sustainable profitable growth once overall business conditions
improve."
The Company is currently identifying and implementing actionable plans in its US
accounts payable business and corporate support functions to improve
productivity and profitability by streamlining the organization for cost
efficiency while providing greater consistency in its audit tools and
methodologies. All of these initiatives, which are considerable in scope, have
the ultimate objective of strengthening the Company's partnerships with its
clients. The Company will be conducting this work over the next 12 months in
planned stages and preliminarily expects to achieve annualized cost savings of
at least $10 - $12 million and create an operating structure which will position
PRG-Schultz to better achieve long-term sustainable and profitable growth.
SECOND QUARTER 2003 FINANCIAL RESULTS
Revenues for the second quarter of 2003 totaled $99.3 million, compared to
$118.3 million in the second quarter of 2002. Revenues from Accounts Payable
Services and Other Ancillary Services totaled $82.2 million and $17.1 million,
respectively, for the quarter compared to $104.8 million and $13.5 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
from the Company's US Accounts Payable Services operations, which declined
approximately 29% year-over-year. Revenues from the Company's international
Accounts Payable Services operations were approximately even with the same
period last year, adversely impacted by a decrease in revenues from the United
Kingdom. Revenues from Other Ancillary Services increased 27% year-over-year,
due to the generation of higher revenues in the Company's Meridian VAT Reclaim
business.
Net earnings for the second quarter of 2003 were $4.3 million, or $0.07 per
diluted share, compared to $7.8 million, or $0.11 per diluted share, in the
second quarter of 2002.
As required under generally accepted accounting principles, after-tax interest
and amortization expense related to the Company's convertible notes of
approximately $1.0 million and $2.1 million, respectively, for the second
quarter and first six months of both 2003 and 2002 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 both the second quarter and first six months of 2003 and
2002.
Operating income for the second quarter totaled $9.1 million, or 9.2% of
revenues, compared to $14.7 million, or 12.4% of revenues, in the same period a
year ago. Earnings before interest, taxes, depreciation and amortization
(EBITDA) for the second quarter of 2003 totaled $13.5 million, or 13.6% of
revenues, compared to $18.5 million, or 15.7% of revenues, in the second quarter
of 2002. See schedule 5 for a reconciliation of EBITDA, a non-GAAP financial
measure, to net earnings.
The Company reiterated that, to the best of 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 work performed by PRG-Schultz.
FIRST SIX MONTHS 2003 FINANCIAL RESULTS
Revenues for the first six months of 2003 totaled $199.9 million, compared to
$228.6 million in the first six months of 2002. Revenues from Accounts Payable
Services and Other Ancillary Services totaled $166.7 million and $33.2 million,
respectively, for the first six months compared to $202.4 million and $26.2
million, respectively, a year ago.
Net earnings for the first six months of 2003 were $9.0 million, or $0.14 per
diluted share, compared to a loss of $1.7 million. Earnings from continuing
operations, prior to discontinued operations, for the first six months of 2003
were $8.7 million, or $0.14 per diluted share. This compares to earnings from
continuing operations, prior to discontinued operations and the cumulative
effect of an accounting change, of $13.2 million, or $0.19 per diluted share, in
the first six months of 2002.
Operating income for the first six months of 2003 totaled $18.3 million, or 9.2%
of revenues, compared to $25.6 million, or 11.2% of revenues, in the same period
a year ago. Earnings before interest, taxes, depreciation and amortization
(EBITDA) for the first six months of 2003 totaled $26.8 million, or 13.4% of
revenues, compared to $34.6 million, or 15.1% of revenues, in the first six
months of 2002. See schedule 5 for a reconciliation of EBITDA, a non-GAAP
financial measure, to net earnings.
Effective January 1, 2002, the Company implemented SFAS 142, "Goodwill and Other
Intangible Assets." SFAS 142 requires that an intangible asset with a finite
life be amortized over its useful life and that an intangible asset with an
infinite life and goodwill not be amortized but evaluated for impairment. During
the second quarter of 2002, the Company and its advisors completed the required
transitional testing and determined that $28.3 million of goodwill pertaining to
the Other Ancillary Services segment was impaired as of January 1, 2002. In
accordance with generally accepted accounting principles, this non-cash
impairment charge in the amount of $17.2 million on an after-tax basis was
recorded as a cumulative effect of a change in accounting principle, retroactive
to January 1, 2002.
During the first quarter of 2003, the Company recorded an after-tax gain from
discontinued operations of $0.3 million to reflect receipt of a portion of the
revenue-based royalty from the sale of the Logistics Management Services segment
in October 2001, as adjusted for certain expenses accrued as part of the
estimated loss on the sale of the segment. During the first quarter of 2002, the
Company recorded a non-cash, after-tax gain from discontinued operations of $2.3
million, as required by generally accepted accounting principles, to return the
accounting for the previously discontinued operations to the historical cost
basis.
Schedules 3 & 4 provide summary financial results from continuing operations for
the second quarter and first six months of 2003 and 2002 by operating segment.
Schedule 5 provides a reconciliation of EBITDA, a non-GAAP financial measure, to
net earnings.
CASH FLOW, DSOs AND CAPITAL EXPENDITURES
Net cash from operating activities for the six months ended June 30, 2003 was
approximately $14.0 million, compared to $8.9 million in 2002.
Company-wide, Days Sales Outstanding (DSOs) for the second quarter of 2003 stood
at 53 days, compared to 52 days a year ago. DSOs for Accounts Payable Services
were 62 days, compared to 57 days a year ago. Company-wide DSOs were lower than
those for Accounts Payable Services, as two of the three business units which
comprise the Other Ancillary Services reporting segment are on the cash basis of
revenue recognition in accordance with Securities and Exchange Commission
guidance.
Capital expenditures totaled approximately $5.6 million for the first six months
of 2003, compared to $14.6 million in the same period a year ago. Capital
expenditures were significantly higher for the full year 2002 than the Company
estimates for 2003 due to the acquisition and integration of Howard Schultz &
Associates, as well as the relocation of the Company's corporate headquarters in
2002. The Company currently expects capital expenditures in 2003 to total
approximately $13 million.
SHARE REPURCHASES
On October 28, 2002, the Company announced that its Board of Directors
authorized the repurchase of up to $50.0 million of PRG-Schultz common shares.
Purchases may be made in the open market or in privately negotiated transactions
from time to time and will depend on market conditions, business opportunities
and other factors. During the second quarter 2003, the Company repurchased
386,067 shares for approximately $2.5 million. The Company funded the purchases
and anticipates funding future purchases through a combination of cash flow from
operations and borrowings under the Company's senior bank credit facility. There
remain approximately $35.0 million of share repurchases available under the
authorization. The Company does not currently intend to effect any repurchases
of shares during the quarter ending September 30, 2003.
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 June 30,
2003, the Company had outstanding borrowings under this credit facility of $38.3
million and was in full compliance with all covenants. Based upon the Company's
outlook for the duration of 2003, as set forth in a separate section of this
press release, the Company believes it highly probable that it will not be in
compliance with one or more of the financial ratio covenants contained in the
credit facility when the next required calculation is made on September 30,
2003. The Company will be working with its banking syndicate over the next two
months with a view toward prospectively relaxing the stringency of its financial
ratio covenants. Should the company not be in compliance with one or more of the
financial ratio covenants when the next required calculation is made on
September 30, 2003, and if an agreement with the banking syndicate to relax the
stringency of the financial ratio covenants has not been concluded prior to the
due date of the Company's Form 10-Q for the third quarter of 2003, the Company
will be required to reclassify its long-term debt to the banks as a current
liability as of September 30, 2003. Although there can be no assurance as to the
outcome of these negotiations, the three banks that comprise the Company's
current banking syndicate have historically been cooperative and accommodating
in similar past situations. The Company intends to issue a press release
immediately upon resolution of this matter.
2003 OUTLOOK
The Company noted that, as a result of the continuing challenges in the business
environment, coupled with the currently-known incremental costs of undertaking
the previously discussed strategic business initiatives, it is lowering its
revenues and earnings estimates for the remainder of the year. The Company also
noted that, given the preliminary status of identifying and implementing these
initiatives, neither the savings to be achieved nor total costs to be incurred
in achieving those savings are reflected in this guidance. Specific costs that
have already been identified or incurred in connection with these strategic
initiatives are reflected in this outlook and are noted below.
Full-year 2003
For the full-year 2003, total revenues from continuing operations are expected
to range from $410 - 415 million. Revenues from Accounts Payable Services are
estimated to range from $350 - 355 million. Revenues from Other Ancillary
Services are estimated to approximate $60 million.
Diluted earnings per share from continuing operations are expected to range from
$0.31 - 0.34 in 2003. This outlook includes an earnings reduction of
approximately $0.04 per diluted share to reflect already-identified severance
and other costs related to the Company's strategic business initiatives as noted
above.
The Company anticipates generating operating income margin in the range of 10% -
11% of revenues in 2003. Depreciation and amortization are expected to
approximate 4% of revenues.
Third quarter 2003
For the third quarter 2003, total revenues from continuing operations are
expected to range from $100 - 103 million. Revenues from Accounts Payable
Services are estimated to range from $86 - 89 million. Revenues from Other
Ancillary Services are estimated to approximate $14 million.
Diluted earnings per share from continuing operations are expected to range from
$0.05 - 0.06 in the third quarter of 2003. This outlook includes an earnings
reduction of approximately $0.02 per diluted share to reflect already-identified
severance and other costs related to the Company's strategic business
initiatives as noted above.
CONFERENCE CALL AND WEBCAST INFORMATION
PRG-Schultz will hold a conference call today, July 28, 2003 at 10 a.m. ET.
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 access the conference call, provide the leader's
name 'John Cook', reference the Company, and provide the passcode 'PRGX.'
The teleconference will also be audiocast on the Internet at www.prgx.com.
Microsoft Windows Media Player is required to access the audiocast and can be
downloaded from www.microsoft.com/windows/mediaplayer.
ABOUT PRG-SCHULTZ INTERNATIONAL, INC.
Headquartered in Atlanta, PRG-Schultz International, Inc. (PRG-Schultz) is the
world's leading provider of recovery audit services. PRG-Schultz employs
approximately 3,500 employees, 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 in the past and
it is highly probable that we will do so again when we subsequently report our
covenant compliance for the rolling four quarter period ending September 30,
2003, (ii) violation of our debt covenants could result in an acceleration of
our outstanding bank debt (totaling $38.3 million as of June 30, 2003) and we
may not have sufficient liquid resources to pay the accelerated debt, (iii) if
the current economic conditions do not improve, particularly the current
negative conditions in the retail sector, our clients may not make sufficient
levels of purchases from which to deduct our claim findings and we therefore may
be unable to recognize anticipated revenues, (iv) we may experience revenue
losses or delays as a result of our clients' potential revision of claim
approval and claim processing guidelines, (v) the continued weakness in the
retailing environment and the climate of caution by our clients may continue
longer than anticipated, (vi) 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, (vii)
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 provision in the Company's financial
statements, (viii) modifications to auditor compensation models may negatively
impact employee productivity and retention, and therefore, our ability to
generate revenues, (ix) the businesses comprising the Other Ancillary Services
segment may require additional time and effort of Company executives and
additional Company resources to help them achieve desired profitability and may
distract management from its focus on the Company's core Accounts Payable
Services business, and there is no guarantee that the Company can operate these
businesses efficiently and profitably, (x) we may not achieve anticipated
expense savings in connection with our strategic business 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, and (xiv) the integration of our US Accounts Payable Services
operations 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 May 13, 2003. The Company disclaims any obligation or
duty to update or modify these forward-looking statements.
# # #
CONTACT:
Leslie H. Kratcoski
Investor Relations
(770) 779-3099
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,
2003 2002 2003 2002
---------------- --------------- --------------- -------------
Revenues $ 99,268 $ 118,297 $ 199,913 $ 228,583
Cost of revenues 60,631 68,689 122,561 131,937
Selling, general and administrative expenses 29,502 34,949 59,053 71,090
---------------- --------------- --------------- -------------
Operating income 9,135 14,659 18,299 25,556
Interest (expense), net (2,218) (2,429) (4,430) (4,674)
---------------- --------------- --------------- -------------
Earnings from continuing operations before income
taxes, discontinued operations and cumulative
effect of accounting change 6,917 12,230 13,869 20,882
Income taxes 2,594 4,439 5,201 7,726
---------------- --------------- --------------- -------------
Earnings from continuing operations before
discontinued operations and cumulative effect of
accounting change 4,323 7,791 8,668 13,156
Discontinued operations:
Gain on disposal / retention of discontinued
operations, net of income taxes - - 324 2,310
---------------- --------------- --------------- -------------
Gain from discontinued operations - - 324 2,310
---------------- --------------- --------------- -------------
Earnings before cumulative effect of accounting change 4,323 7,791 8,992 15,466
Cumulative effect of accounting change, net of income
taxes - - - (17,208)
---------------- --------------- --------------- -------------
Net earnings (loss) $ 4,323 $ 7,791 $ 8,992 $ (1,742)
================ =============== =============== =============
Basic earnings (loss) per share:
Earnings from continuing operations before
discontinued operations and cumulative effect of
accounting change $ 0.07 $ 0.12 $ 0.14 $ 0.21
Discontinued operations - - 0.01 0.04
Cumulative effect of accounting change - - - (0.28)
---------------- --------------- --------------- -------------
Net earnings (loss) $ 0.07 $ 0.12 $ 0.15 $ (0.03)
================ =============== =============== =============
Diluted earnings (loss) per share:
Earnings from continuing operations before
discontinued operations and cumulative effect of
accounting change $ 0.07 $ 0.11 $ 0.14 0.19
Discontinued operations - - - 0.03
Cumulative effect of accounting change - - - (0.22)
---------------- --------------- --------------- -------------
Net earnings $ 0.07 0.11 0.14 -
================ =============== =============== =============
Weighted average shares outstanding:
Basic 61,658 63,955 62,020 61,743
================ =============== =============== =============
Diluted 78,054 81,825 78,482 79,219
================ =============== =============== =============
SCHEDULE 2
PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
JUNE 30, DECEMBER 31,
2003 2002
-------------------- -----------------
ASSETS
Current assets:
Cash and cash equivalents $ 23,841 $ 14,860
Receivables:
Contract receivables 58,148 69,976
Employee advances and miscellaneous receivables 3,196 3,600
-------------------- -----------------
Total receivables 61,344 73,576
-------------------- -----------------
Funds held for client obligations 14,464 9,043
Prepaid expenses and other current assets 5,074 4,068
Deferred income taxes 22,994 25,930
-------------------- -----------------
Total current assets 127,717 127,477
Property and equipment 33,481 35,057
Goodwill 372,380 371,833
Intangible assets 35,373 36,214
Deferred income taxes 10,988 10,628
Other assets 4,459 4,571
-------------------- -----------------
Total assets $ 584,398 $ 585,780
==================== =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ - $ 5,527
Obligation for client payables 14,464 9,043
Accounts payable and accrued expenses 22,213 24,269
Accrued payroll and related expenses 34,196 50,411
Deferred revenue 4,327 2,665
-------------------- -----------------
Total current liabilities 75,200 91,915
Long-term debt, excluding current installments 38,342 26,363
Convertible notes, net of unamortized discount of $3,061 in 2003 and
$3,509 in 2002 121,939 121,491
Deferred compensation 3,668 4,011
Other long-term liabilities 4,038 4,115
-------------------- -----------------
Total liabilities 243,187 247,895
-------------------- -----------------
Shareholders' equity:
Preferred stock - -
Common stock 67 67
Additional paid-in capital 492,095 491,894
Accumulated deficit (101,686) (110,678)
Accumulated other comprehensive loss (76) (1,601)
Less treasury stock at cost (48,710) (41,182)
Unearned portion of restricted stock (479) (615)
-------------------- -----------------
Total shareholders' equity 341,211 337,885
-------------------- -----------------
Total liabilities and shareholders' equity $ 584,398 $ 585,780
==================== =================
SCHEDULE 3
PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
SUMMARY OPERATING SEGMENT RESULTS FROM CONTINUING OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED JUNE 30
(IN THOUSANDS EXCEPT EARNINGS PER SHARE DATA)
-------------------------------------------------------------
2003 2002
-------------------------------------------------------------
$ % REV. $ % REV.
- ----------------------------------------------------------------------------------------------------
ACCOUNTS PAYABLE SERVICES
Revenues $82,189 $104,849
Operating Income $14,703 17.9% $28,595 27.3%
- ----------------------------------------------------------------------------------------------------
OTHER ANCILLARY SERVICES
Revenues $17,079 $13,448
Operating Income $5,590 32.7% $522 3.9%
- ----------------------------------------------------------------------------------------------------
CORPORATE SUPPORT
Operating Income ($11,158) -11.2% ($14,458) -12.2%
- ----------------------------------------------------------------------------------------------------
TOTAL
Revenues $99,268 $118,297
Operating Income $9,135 9.2% $14,659 12.4%
Earnings from
Continuing Operations $4,323 4.4% $7,791 6.6%
Diluted Earnings Per Share from
Continuing Operations $0.07 $0.11
Diluted Shares 78,054 81,825
- ----------------------------------------------------------------------------------------------------
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 an Accounting Change (2002).
SCHEDULE 4
PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
SUMMARY OPERATING SEGMENT RESULTS FROM CONTINUING OPERATIONS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30
(IN THOUSANDS EXCEPT EARNINGS PER SHARE DATA)
---------------------------------------------------------------------
2003 2002
---------------------------------------------------------------------
$ % REV. $ % REV.
- ------------------------------------------------------------------------------------------------------------
ACCOUNTS PAYABLE SERVICES
Revenues $ 166,722 $ 202,347
Operating Income $30,630 18.4% $ 53,133 26.3%
- ------------------------------------------------------------------------------------------------------------
OTHER ANCILLARY SERVICES
Revenues $ 33,191 $ 26,236
Operating Income $ 10,770 32.4% $ 3,081 11.7%
- ------------------------------------------------------------------------------------------------------------
CORPORATE SUPPORT
Operating Income $ (23,101) -11.6% $ (30,658) -13.4%
- ------------------------------------------------------------------------------------------------------------
TOTAL
Revenues $ 199,913 $ 228,583
Operating Income $ 18,299 9.2% $ 25,556 11.2%
Earnings from
Continuing Operations $ 8,668 4.3% $ 13,156 5.8%
Diluted Earnings Per Share from
Continuing Operations $ 0.14 $ 0.19
Diluted Shares 78,482 79,219
- ------------------------------------------------------------------------------------------------------------
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 an Accounting Change (2002).
SCHEDULE 5
PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF EBITDA TO EARNINGS FROM CONTINUING OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
--------------------------------- ---------------------------------
2003 2002 2003 2002
--------------- --------------- --------------- ---------------
Net Earnings $ 4,323 $ 7,791 $ 8,992 $ (1,742)
Deduct:
Cumulative Effect of Accounting Change,
Net of Income Taxes - - - (17,208)
Gain From Discontinued Operations - - 324 2,310
- ---------------------------------------- --------------- --------------- --------------- ---------------
Earnings from Continuing Operations $ 4,323 $ 7,791 $ 8,668 $ 13,156
Add:
Income Taxes 2,594 4,439 5,201 7,726
Interest 2,218 2,429 4,430 4,674
Depreciation and Amortization 4,317 3,885 8,480 9,054
- --------------------------------------- --------------- --------------- --------------- ---------------
EBITDA $ 13,452 $ 18,544 $ 26,779 $ 34,610
Total Revenues 99,268 118,297 199,913 228,583
EBITDA as % of Revenues 13.6% 15.7% 13.4% 15.1%
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.