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PRGX Global, Inc. Announces Fourth Quarter And Fiscal Year 2010 Financial Results

Stocks in this article: PRGX

Forward-Looking Statements

In addition to historical information, this press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include both implied and express statements regarding the Company's financial condition and revenue growth, investment program, business development efforts, and the success of its growth strategies and expansion into new markets, including anticipated opportunities in the healthcare industry.Such forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to differ materially from the historical results or from any results expressed or implied by such forward-looking statements. Risks that could affect the Company's future performance include revenues that do not meet expectations or justify costs incurred, the Company's ability to develop material sources of new revenue in addition to revenues from its core accounts payable services, changes in the market for the Company's services, the Company's ability to retain and attract qualified personnel, changes to Medicare and Medicaid recovery audit contractor programs, the Company's ability to integrate recent and future acquisitions, uncertainty in the credit markets, the Company's ability to maintain compliance with its financial covenants, client bankruptcies, loss of major clients, and other risks generally applicable to the Company's business. For a discussion of other risk factors that may impact the Company's business, please see the Company's filings with the Securities and Exchange Commission, including its Form 10-K filed on March 29, 2010. The Company disclaims any obligation or duty to update or modify these forward-looking statements.

 
SCHEDULE 1
PRGX Global, 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,
  2010 2009 2010 2009
         
Revenues  $ 50,345  $ 49,539  $184,081  $179,583
Cost of revenues  34,016  33,003  127,179  116,718
Gross margin  16,329  16,536  56,902  62,865
         
Selling, general and administrative expenses  12,261  12,376  49,081  43,873
         
Operating income  4,068  4,160  7,821  18,992
         
Gain on bargain purchase, net  --   --   --   2,388
Income before interest and income taxes  4,068  4,160  7,821  21,380
         
Interest expense, net  335  871  1,305  3,025
Loss on extinguishment of debt  --   --   1,381  -- 
         
Earnings before income taxes  3,733  3,289  5,135  18,355
         
Income tax expense (benefit)  (359)  1,261  1,882  3,028
         
Net earnings  $ 4,092  $ 2,028  $ 3,253  $ 15,327
         
         
Basic earnings per common share  $ 0.17  $ 0.09  $ 0.14  $ 0.67
         
Diluted earnings per common share  $ 0.17  $ 0.08  $ 0.13  $ 0.65
         
Weighted average common shares outstanding:        
Basic  24,223  23,450  23,906  22,915
Diluted  24,498  23,880  24,144  23,560
 
 
SCHEDULE 2
PRGX Global, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Amounts in thousands)
     
  December 31, December 31,
  2010 2009
  (Unaudited)  
ASSETS 
Current assets:    
Cash and cash equivalents  $ 18,448  $ 33,026
Restricted cash  64  256
Receivables:    
Contract receivables  35,893  32,515
Employee advances and miscellaneous receivables  827  276
Total receivables  36,720  32,791
     
Prepaid expenses and other current assets  3,622  2,335
Total current assets  58,854  68,408
     
Property and equipment, net  15,695  10,003
Goodwill  5,196  4,600
Intangible assets, net  23,855  24,104
Deferred income taxes  403  -- 
Other assets  2,318  3,398
Total assets   $ 106,321  $ 110,513
     
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:    
Current portions of debt obligations  $ 3,000  $ 3,260
Accounts payable and accrued expenses  14,365  15,707
Accrued payroll and related expenses  13,871  19,884
Refund liabilities and deferred revenue  8,560  8,383
Acquisition obligations  1,380  2,695
Total current liabilities  41,176  49,929
     
Debt obligations  9,000  11,070
Deferred income taxes  --   -- 
Noncurrent compensation obligations  271  978
Other long-term liabilities  7,031  7,097
Total liabilities  57,478  69,074
     
Shareholders' equity:    
Common stock  239  233
Additional paid-in capital  566,328  562,563
Accumulated deficit  (521,408)  (524,661)
Accumulated other comprehensive income  3,684  3,304
Total shareholders' equity  48,843  41,439
     
Total liabilities and shareholders' equity   $ 106,321  $ 110,513
 
 
SCHEDULE 3
PRGX Global, Inc. and Subsidiaries
Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA
(Amounts in thousands)
(Unaudited)
         
  Three Months Twelve Months
  Ended December 31, Ended December 31,
  2010 2009 2010 2009
Reconciliation of net earnings to EBITDA and to adjusted EBITDA:        
         
Net earnings  $ 4,092  $ 2,028  $ 3,253  $ 15,327
         
Adjust for:        
Income taxes  (359)  1,261  1,882  3,028
Interest expense, net  335  871  2,686  3,025
Depreciation and amortization  2,306  1,798  8,908  6,140
         
EBITDA  6,374  5,958  16,729  27,520
         
Foreign currency (gain) losses on intercompany balances  (16)  157  422  (1,595)
Litigation settlement  --   --   --   650
Acquisition obligations classified as compensation  106  --   371  -- 
Stock-based compensation  933  845  3,980  3,345
Gain on bargain purchase, net  --   --   --   (2,388)
         
Adjusted EBITDA  $ 7,397  $ 6,960  $ 21,502  $ 27,532
         
EBITDA and adjusted EBITDA are both "non-GAAP financial measures" presented as supplemental measures of our performance. They are not presented in accordance with accounting principles generally accepted in the United States, or GAAP. The Company believes these measures provide additional meaningful information in evaluating the Company's performance over time, and that the rating agencies and a number of lenders use EBITDA and similar measures for similar purposes. In addition, a measure similar to adjusted EBITDA is used in the restrictive covenants contained in the Company's secured credit facility. However, EBITDA and adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our results as reported under GAAP. In addition, in evaluating EBITDA and adjusted EBITDA, you should be aware that in the future we will incur expenses such as those used in calculating these measures. Our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.
 
 
SCHEDULE 4
PRGX Global, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
         
  Three Months Twelve Months
  Ended December 31, Ended December 31,
  2010 2009 2010 2009
Cash flows from operating activities:        
         
Net earnings  $ 4,092  $ 2,028  $ 3,253  $ 15,327
Adjustments to reconcile net earnings to net cash provided by operating activities:        
Gain on bargain purchase, net  --   --   --   (2,388)
Depreciation and amortization  2,306  1,798  8,908  6,140
Amortization of deferred debt costs  46  198  1,539  789
Stock-based compensation expense  933  845  3,980  3,345
(Increase) decrease in receivables  (3,770)  (345)  (2,077)  2,558
Increase (decrease) in accounts payable, accrued payroll and other accrued expenses  768  5,882  (8,540)  (5,856)
Other, primarily changes in assets and liabilities  (1,074)  120  (3,594)  (1,749)
Net cash provided by operating activities  3,301  10,526  3,469  18,166
         
Cash flows used in investing activities:        
Business acquisitions  (2,426)  --   (7,741)  (2,029)
Purchases of property and equipment, net of disposals  (1,685)  (3,446)  (6,934)  (5,511)
Net cash used in investing activities  (4,111)  (3,446)  (14,675)  (7,540)
         
Net cash used in financing activities  (1,116)  (1,448)  (3,510)  (5,701)
         
Effect of exchange rates on cash and cash equivalents  130  65  138  1,413
         
Net increase (decrease) in cash and cash equivalents  (1,796)  5,697  (14,578)  6,338
         
Cash and cash equivalents at beginning of period  20,244  27,329  33,026  26,688
         
Cash and cash equivalents at end of period  $ 18,448  $ 33,026  $ 18,448  $ 33,026
 
 
SCHEDULE 5
PRGX Global, Inc. and Subsidiaries
Results by Operating Segment *
(Amounts in thousands)
(Unaudited)
             
  Three Months Ended   Twelve Months Ended  
  December 31,   December 31,  
  2010 2009 Change 2010 2009 Change
Revenues            
Recovery Audit Services - Americas  $ 30,574  $ 29,556  $ 1,018  $115,156  $121,561  $ (6,405)
Recovery Audit Services - Europe/Asia-Pacific   15,026  18,294  (3,268)  57,590  52,489  5,101
New Services  4,745  1,689  3,056  11,335  5,533  5,802
Total  $ 50,345  $ 49,539  $ 806  $184,081  $179,583  $ 4,498
             
Cost of revenues            
Recovery Audit Services - Americas  $ 17,336  $ 17,145  $ (191)  $ 68,570  $ 68,002  $ (568)
Recovery Audit Services - Europe/Asia-Pacific   11,718  13,301  1,583  44,420  40,317  (4,103)
New Services  4,962  2,557  (2,405)  14,189  8,399  (5,790)
Total  $ 34,016  $ 33,003  $ (1,013)  $127,179  $116,718  $ (10,461)
             
Selling, general and administrative expenses            
Recovery Audit Services - Americas  $ 5,547  $ 4,770  $ (777)  $ 21,524  $ 17,647  $ (3,877)
Recovery Audit Services - Europe/Asia-Pacific   1,723  2,051  328  6,693  5,319  (1,374)
New Services  1,115  259  (856)  3,950  1,151  (2,799)
Corporate  3,876  5,296  1,420  16,914  19,756  2,842
Total  $ 12,261  $ 12,376  $ 115  $ 49,081  $ 43,873  $ (5,208)
             
Operating income            
Recovery Audit Services - Americas  $ 7,691  $ 7,641  $ 50  $ 25,062  $ 35,912  $ (10,850)
Recovery Audit Services - Europe/Asia-Pacific   1,585  2,942  (1,357)  6,477  6,853  (376)
New Services  (1,332)  (1,127)  (205)  (6,804)  (4,017)  (2,787)
Corporate  (3,876)  (5,296)  1,420  (16,914)  (19,756)  2,842
Total  $ 4,068  $ 4,160  $ (92)  $ 7,821  $ 18,992  $ (11,171)
             
Adjusted EBITDA            
Recovery Audit Services - Americas  $ 9,149  $ 8,868  $ 281  $ 30,963  $ 40,352  $ (9,389)
Recovery Audit Services - Europe/Asia-Pacific   2,081  3,563  (1,482)  8,871  6,527  2,344
New Services  (890)  (1,020)  130  (5,397)  (3,586)  (1,811)
Corporate  (2,943)  (4,451)  1,508  (12,935)  (15,761)  2,826
Total  $ 7,397  $ 6,960  $ 437  $ 21,502  $ 27,532  $ (6,030)
             
*The Recovery Audit Services - Americas segment represents recovery audit services, excluding New Services, provided in the United States, Canada and Latin America. The Recovery Audit Services - Europe/Asia-Pacific segment represents recovery audit services provided in Europe, Asia and the Pacific region. The New Services segment represents services provided to healthcare organizations (including recovery audit services), financial advisory services and business analytics services. 
CONTACT: PRGX Global, Inc.
         investor-relations@prgx.com
         Phone: 770-779-3011

PRGX Global, Inc. Logo

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