SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 14, 1997
THE PROFIT RECOVERY GROUP
INTERNATIONAL, INC.
(Exact name of registrant as specified in charter)
Georgia 0-28000 58-2213805
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
2300 Windy Ridge Parkway
Suite 100 North
Atlanta, Georgia 30339-8426
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (770) 955-3815
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On July 14, 1997, the Registrant issued a press release ("Press
Release") announcing its results of operations for the quarter ended June 30,
1997. The Registrant hereby incorporates by reference herein the information set
forth in its Press Release dated July 14, 1997, a copy of which is annexed
hereto as Exhibit 99.
Except for the historical information contained in this report, the
statements made by the Registrant are forward looking statements that involve
risks and uncertainties. All such statements are subject to the safe harbor
created by the Private Securities Litigation Reform Act of 1995. The
Registrant's future financial performance could differ significantly from the
expectations of management and from results expressed or implied in the Press
Release. For example, the Company may not continue to grow earnings and revenues
significantly while also achieving additional reductions in the number of days
revenue in accounts receivable. For further information on these and other risk
factors, please refer to the "Risk Factors" section of the Registrant's Form S-3
filed on July 22, 1997.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
Exhibit
Number Description
- ------- -----------
99 Press Release dated July 14, 1997
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE PROFIT RECOVERY GROUP
INTERNATIONAL, INC.
Date: July 29, 1997 By: /s/ Donald E. Ellis, Jr.
-------------------------------------
Donald E. Ellis, Jr., Senior
Vice President, Chief Financial
Officer and Treasurer
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EXHIBIT INDEX
Exhibit
Number Description
- ------- -------------
99 Press Release dated July 14, 1997
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THE PROFIT RECOVERY GROUP INTERNATIONAL REPORTS RESULTS FOR QUARTER ENDED JUNE
30, 1997
July 14, 1997 4:08 PM EDT
COMPARABLE EARNINGS UP 52%
ATLANTA, July 14 /PRNewswire/ -- The Profit Recovery Group International, Inc.
(Nasdaq: PRGX) (the "Company") reported today that its net earnings for the
second quarter ended June 30, 1997 increased 52% to $2.4 million, or $0.13 per
share. Net earnings for the second quarter of 1996 were $1.6 million, or $0.09
per share. Per share amounts are based on 18.6 million shares for the second
quarter of 1997 and 18.3 million shares for the second quarter of 1996.
The Company's total revenues for the 1997 second quarter increased 44% to $25.9
million, compared with $18.0 million a year earlier. Operating income for the
second quarter increased 56% to $3.8 million, compared with $2.4 million in the
second quarter of the prior year.
Several factors contributed to the increased earnings, including a significant
rise in international business, and revenues derived from new healthcare,
technology and retailing clients in the U.S. During the quarter, the Company's
revenues also benefited from its May 1997 acquisition of The Hale Group, a
California-based firm specializing in providing recovery audit services to the
healthcare industry.
"By almost any measure the Company had a banner second quarter," said John M.
Cook, Chairman and Chief Executive. "The Company exceeded all of its principal
operating objectives both domestically and internationally, including a
reduction of the number of days revenue in accounts receivable to 155 from 167.
We are entering the all important second half of the year from a position of
particular strength, confident that we can continue to grow earnings and
revenues significantly while also achieving additional reductions in our number
of days revenue in accounts receivable."
For the six months ended June 30, 1997, the Company's net earnings increased 72%
to $3.2 million, or $0.17 per share, up from pro forma net earnings of $1.8
million, or $0.12 per share. The 1996 net earnings are stated on a pro forma
basis to include an estimated provision for income taxes since the Company's
earnings were taxed directly to its individual owners prior to the March 1996
initial public offering.
Revenues for the six months ended June 30, 1997 increased 39% to $46.8 million,
compared with $33.6 million in the year ago period. Operating income for the
current six months increased 48% to $5.0 million, up from $3.4 million in the
first six months of 1996.
Statements in this release which look forward in time involve risks and
uncertainties, including the ability of the Company to successfully implement
its operating strategy and acquisition strategy, the Company's ability to manage
rapid expansion, changes in economic cycles, competition from other companies,
changes in the laws and government regulations applicable to the Company and
other risk factors detailed in the Company's Securities and Exchange Commission
filings.
The Profit Recovery Group International, Inc. is a leading provider of accounts
payable and other recovery audit services to large retailers and other
transaction-intensive companies. The Company has over 800 employees worldwide
and conducts its operations in North America, Europe, Asia and the Pacific.
458073.1
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THE PROFIT RECOVERY GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended June 30,
1997 1996
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Revenues $ 25,858 $ 17,963
Cost of revenues 13,331 9,480
Selling, general and administrative
expenses 8,723 6,040
Operating income 3,804 2,443
Interest income, net 55 106
Earnings before income taxes 3,859 2,549
Income taxes - (1) 1,491 994
Net earnings $ 2,368 $ 1,555
Pro Forma Information:
Historical earnings before income taxes $ 3,859 $ 2,549
Pro forma income taxes - (2) 1,491 994
Pro forma net earnings $ 2,368 $ 1,555
Pro forma earnings per common and
common equivalent share - (3) $ 0.13 $ 0.09
Weighted average common and common
equivalent shares outstanding 18,639 18,268
Six Months Ended June 30,
1997 1996
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Revenues $ 46,818 $ 33,578
Cost of revenues 24,860 18,103
Selling, general and administrative
expenses 16,919 12,071
Operating income 5,039 3,404
Interest income (expense), net 118 (389)
Earnings before income taxes 5,157 3,015
Income taxes - (1) 1,997 4,694
Net earnings (loss) $ 3,160 $ (1,679)
Pro Forma Information:
Historical earnings before income taxes $ 5,157 $ 3,015
Pro forma income taxes - (2) 1,997 1,176
Pro forma net earnings $ 3,160 $ 1,839
Pro forma earnings per common and
common equivalent share - (3) $ 0.17 $ 0.12
Weighted average common and common
equivalent shares outstanding 18,625 16,703
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(1)--The Company's predecessor business entities generally were either
Subchapter S corporations or partnerships. As a result, income tax
liabilities were the responsibilities of the respective shareholders and
partners. In connection with the Company's March 26, 1996 initial public
offering, all domestic entities became C corporations. As a result of these
conversions to C corporations, the Company incurred a charge to operations
of $3.7 million in the first quarter of 1996 for cumulative deferred income
taxes.
(2)--The results of operations for the six months ended June 30, 1996, have been
adjusted on a pro forma basis to reflect federal and state income taxes as
if the Company's predecessors had been C corporations throughout.
(3)--All per share results give effect to a 2-for-1 stock split (effected in the
form of a stock dividend) at the time of the initial public offering. For
the six months ended June 30, the initial public offering. For the six
months ended June 30, 1996, $97,000 of interest on convertible debt, net of
income taxes, must be combined with pro forma net earnings when calculating
per share results.
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THE PROFIT RECOVERY GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
June 30, Dec. 31,
1997 1996
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ASSETS
Current assets:
Cash and cash equivalents $ 14,189 $ 16,891
Receivables:
Billed contract receivables 3,424 3,864
Unbilled contract receivables 35,100 30,734
Employee advances 1,711 1,363
Total receivables 40,235 35,961
Refundable income taxes --- 2,049
Prepaid expenses and other current assets 1,594 528
Total current assets 56,018 55,429
Property and equipment:
Computer and other equipment 8,255 5,753
Furniture and fixtures 1,830 1,569
Leasehold improvements 1,309 1,183
Total 11,394 8,505
Less accumulated depreciation and amortization 3,562 2,272
Total 7,832 6,233
Noncompete agreements, less accumulated
amortization 3,992 4,509
Deferred loan costs, less accumulated
amortization 40 56
Goodwill, less accumulated amortization 6,300 393
Deferred income taxes 1,174 1,174
Other assets 578 524
Total $ 75,934 $ 68,318
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 84 $ 79
Accounts payable and accrued expenses 1,968 1,383
Accrued payroll and related expenses 16,714 16,356
Deferred income taxes 7,607 7,607
Total current, liabilities 26,373 25,425
Long-term debt, excluding current installments 702 692
Deferred compensation 2,134 1,642
Total liabilities 29,209 27,759
Shareholders' equity
Common stock 18 18
Additional paid-in capital 37,228 34,188
Cumulative translation adjustments (65) (31)
Retained earnings 9,544 6,384
Total shareholders' equity 46,725 40,559
Total $ 75,934 $ 68,318
SOURCE The Profit Recovery Group International, Inc.
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