Filed pursuant to Rule 424(b)(3)
Registration Statement No. 333-31805
PROSPECTUS
THE PROFIT RECOVERY GROUP INTERNATIONAL, INC.
166,559 SHARES OF COMMON STOCK
NO PAR VALUE PER SHARE
This Prospectus relates to an aggregate of 166,559 shares of Common
Stock, no par value per share (the "Common Stock"), of The Profit Recovery Group
International, Inc., a Georgia corporation ("PRGX" or the "Company"). All of the
Common Stock offered hereby may be sold from time to time by and for the account
of the Selling Shareholders named in this Prospectus (the "Selling
Shareholders"), or for the account of pledgees, donees, transferees or other
successors in interest of the Selling Shareholders. See "Selling Shareholders"
herein.
The methods of sale of the Common Stock offered hereby are described
under the heading "Plan of Distribution." The Company will receive none of the
proceeds from such sales. Except as set forth below, the Company will pay all
expenses (other than underwriting and brokerage expenses, fees, discounts, and
commissions, all of which will be paid by the Selling Shareholders) incurred in
connection with the offering described in this Prospectus. The lesser of
one-half of all expenses incurred or $6,000 will be paid by one of the Selling
Shareholders. See "Selling Shareholders" herein.
The Selling Shareholders and any broker-dealers that participate in the
distribution of the Common Stock offered hereby may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"1933 Act"), and any commission or profit on the resale of shares received by
such broker-dealers may be deemed to be underwriting commissions and discounts
under the 1933 Act. Upon the Company's being notified by the Selling
Shareholders that any material arrangement has been entered into with a broker
or dealer for the sale of the shares through a secondary distribution, or a
purchase by a broker or dealer, a supplemented Prospectus will be filed, if
required, disclosing among other things the names of such brokers and dealers,
the number of shares involved, the price at which such shares are being sold and
the commissions paid or the discounts or concessions allowed to such
broker-dealers.
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 3.
Sales of the Common Stock may also be made for the account of the
Selling Shareholders, or for the account of donees, transferees or other
successors in interest of the Selling Shareholders, pursuant to Rule 144 under
the 1933 Act. The Common Stock of the Company is listed on The Nasdaq Stock
Market's National Market System (Symbol: PRGX). On July 28, 1997, the closing
price of the Common Stock was $17.00 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-----------------
THE DATE OF THIS PROSPECTUS IS JULY 29, 1997.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission, 450
Fifth Street, N.W., Judiciary Plaza, Room 1024, Washington, D.C. 20549; and at
regional offices of the Commission at the Citicorp Center, 500 West Madison,
Suite 1400, Chicago, Illinois 60661 and at 7 World Trade Center, New York, New
York 10048. Copies of such material may be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Such material may also be inspected and copied at
the offices of The Nasdaq Stock Market, 1735 K Street, Washington, D.C.
20006-1500, on which the Company's Common Stock is listed. In addition, the
Commission maintains a site on the World Wide Web portion of the Internet that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of such site is http://www.sec.gov.
As permitted by the rules and regulations of the Commission, this
Prospectus omits certain information contained in the Registration Statement on
Form S-3, as amended (the "Registration Statement"), of which this Prospectus is
a part. For further information with respect to the Company and the Common
Stock, reference is made to the Registration Statement and the exhibits thereto.
Statements made in this Prospectus as to the contents of any contract, agreement
or other document are not necessarily complete; and while the Company believes
the descriptions of the material provisions of such contracts, agreements and
other documents contained in this Prospectus are accurate summaries of such
material provisions, reference is made to such contract, agreement or other
document filed as an exhibit to the Registration Statement for a more complete
description of the matter involved, and each such statement is qualified in its
entirety by such reference.
NOTE: THE DISCUSSIONS IN THIS PROSPECTUS CONTAIN FORWARD LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. STATEMENTS CONTAINED IN THIS
PROSPECTUS THAT ARE NOT HISTORICAL FACTS ARE FORWARD LOOKING STATEMENTS THAT ARE
SUBJECT TO THE SAFE HARBOR CREATED BY THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995. A NUMBER OF IMPORTANT FACTORS COULD CAUSE THE COMPANY'S ACTUAL
RESULTS FOR 1997 AND BEYOND TO DIFFER MATERIALLY FROM PAST RESULTS AND FROM
THOSE EXPRESSED OR IMPLIED IN ANY FORWARD LOOKING STATEMENTS MADE BY, OR ON
BEHALF OF, THE COMPANY. THESE FACTORS INCLUDE, WITHOUT LIMITATION, THOSE LISTED
UNDER THE HEADING "RISK FACTORS."
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company hereby incorporates by reference in this Prospectus the
following documents previously filed with the Commission pursuant to the
Exchange Act: (i) Annual Report of the Company on Form 10-K for the year ended
December 31, 1996, (ii) Quarterly Report of the Company on Form 10-Q for the
quarter ended March 31, 1997, (iii) Current Report on Form 8-K filed with the
Commission on July 29, 1997, and (iv) the description of the Company's Common
Stock contained in the Company's registration statement filed under Section 12
of the Exchange Act, including any amendment or report filed for the purpose of
updating such description.
Each document filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Common Stock pursuant hereto shall be
deemed to be incorporated by reference in this Prospectus and to be a part of
this Prospectus from the date of filing of such document. Any statement
contained in this Prospectus or in a document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be modified or
superseded for purposes of the Registration Statement and this Prospectus to the
extent that a statement contained in this Prospectus or in any subsequently
filed document that also is or is deemed to be incorporated by reference in this
Prospectus
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modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement or this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of any such person, a
copy of any or all of the documents that are incorporated by reference in this
Prospectus, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests should be
directed to The Profit Recovery Group International, Inc., Attn: Chief Financial
Officer, 2300 Windy Ridge Parkway, Suite 100 North, Atlanta, Georgia 30339-8426,
telephone (770) 955-3815.
THE COMPANY
The Company is a leading provider of accounts payable and other
recovery audit services to large retailers and other transaction-intensive
companies. In businesses with large purchase volumes and continuously
fluctuating prices, some small percentage of erroneous overpayments to vendors
is inevitable, resulting in "lost profits." The Company identifies and documents
these overpayments by using sophisticated proprietary technology and advanced
audit techniques and methodologies, and by employing highly trained, experienced
recovery audit specialists. The Company continuously updates and refines its
proprietary databases that serve as a central repository reflecting its
auditors' experiences, vendor practices and knowledge of regional and national
pricing information, including seasonal allowances, discounts and rebates, but
excluding confidential client data.
The earliest of the Company's predecessors were formed in November
1990, and in early 1991 acquired the operating assets of Roy Greene Associates,
Inc. and Bottom Line Associates, Inc. which were formed in 1971 and 1985,
respectively. In January 1995, the Company's predecessors acquired the operating
assets of Fial & Associates, Inc., a direct competitor. The predecessor business
entities that comprised the Company generally were either Subchapter S
corporations or partnerships, all under common ownership and control. In April
1995, the Company's predecessors reorganized and its international entities
became C corporations. Additionally, prior to the Company's March 1996 initial
public offering, all domestic entities became C corporations. Subsequent to the
Company's initial public offering, the Company has conducted its operations
through its various wholly-owned domestic and international subsidiaries.
The Company has operations outside the United States in Australia,
Belgium, Canada, France, Germany, Mexico, The Netherlands, New Zealand, the
United Kingdom and portions of Asia, including Hong Kong, Indonesia, Malaysia,
Singapore, Taiwan and Thailand.
RECENT DEVELOPMENTS
On May 23, 1997, pursuant to an Agreement and Plan of Reorganization,
The Hale Group, a California corporation ("Hale"), a provider of recovery audit
services primarily for companies engaged in the healthcare business, was merged
into the Company's wholly-owned subsidiary, Accounts Payable Recovery Services,
Inc., a Georgia corporation. Pursuant to the merger, the Company issued 75,000
shares of its Common Stock and paid approximately $800,000 in cash to the former
Hale shareholders.
RISK FACTORS
In addition to the other information in this Prospectus, the following
risk factors should be considered carefully in evaluating an investment in the
Common Stock offered hereby.
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SEASONALITY; FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
The Company has experienced and expects to continue to experience
significant seasonality in its business. The Company typically realizes higher
revenues and operating income in the last two quarters of its fiscal year,
reflecting the inherent purchasing and operational cycles of the retailing
industry, which is the principal industry currently served by the Company.
Quarterly operating results also are affected by the timing of acquisitions and
the timing and magnitude of expenses associated with entering new markets.
Fluctuations in quarterly operating results may result in volatility in the
price of the Common Stock.
DEPENDENCE ON KEY CLIENTS
For the year ended December 31, 1996, the Company derived 14.4% of its
revenues from Wal-Mart Stores, Inc. and its affiliates ("Wal-Mart") and 34.6% of
revenues from its five largest clients (including Wal-Mart) as compared to 12.7%
and 30.1%, respectively, for 1995 and 15.5% and 44.0%, respectively, for 1994.
The Company anticipates that its reliance on any individual client or its five
largest clients will decrease over time as its client base increases.
Nevertheless, there can be no assurance that the Company's client base will
increase or that the Company's largest clients will continue to utilize the
Company's services at the same level. In addition, should one or more of such
large clients file for bankruptcy or otherwise cease to do business with the
Company, the Company's business, financial condition and results of operations
could be materially and adversely affected.
UNCERTAINTY OF REVENUE RECOGNITION ESTIMATES
AND COLLECTION OF CONTRACT RECEIVABLES
The Company recognizes revenue at the time overpayment claims are
presented to and approved by clients, as adjusted for estimated uncollectible
claims. Submitted claims that are not approved by the clients for whatever
reason are not considered when recognizing revenues. Estimated uncollectible
claims initially are established, and subsequently adjusted, for each individual
client based on historical collection rates, types of claims identified, current
industry conditions and other factors which, in the opinion of management,
deserve recognition. There can be no assurance that these estimates of
uncollectible claims will be adequate, and if underestimated, the Company's
financial condition and results of operations could be materially and adversely
affected.
Claims subsequently are processed by clients and generally taken as
credits against outstanding payables or future purchases from the involved
vendors. Once credits are taken, the Company invoices its clients for its
contractually stipulated percentage of the amounts recovered. The Company's
contract receivables as of any balance sheet date are largely unbilled because
the Company does not control the timing or extent of client claims processing,
and because the timing of a client's payments for future purchases from the
involved vendors is outside the Company's control. Consequently, there can be no
assurance that the Company will collect its contract receivables because it is
dependent on its clients pursuing such claims. This lengthy revenue and cash
receipts cycle also subjects the Company to increased risk that contract
receivables will not be collected because (i) the client or the involved vendors
may file for bankruptcy protection, or (ii) the client may cease to do business
with the involved vendors, thus eliminating the ability to take a credit against
current and future purchases.
MANAGEMENT OF EXPANDING OPERATIONS
The Company recently has experienced a period of growth that placed
significant additional responsibilities on its operational, managerial and other
resources. There can be no assurance that the Company will be able to hire and
retain a sufficient number of qualified auditors to meet its anticipated growth
or, if hired, that the Company will be able to provide the depth of training it
is currently providing, or that a sufficient number of qualified non- auditor
personnel can be hired to support the activities of such additional auditors. In
particular, as the Company expands internationally, it will need to hire, train
and retain qualified personnel in countries where language, cultural or
regulatory impediments may exist. The Company's ability to manage its growth
successfully will require continued improvement in its operational, managerial
and financial systems controls. If the Company's management
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is unable to manage growth effectively, the Company's business, financial
condition and results of operations could be adversely affected.
INTERNATIONAL OPERATIONS
Although the Company derived only 18.9% of its revenues from
international operations in 1996, the Company is relying heavily on rapid and
sustained international expansion to achieve its long-term growth objectives.
The Company currently operates outside the United States in Australia, Belgium,
Canada, France, Germany, Mexico, The Netherlands, New Zealand, the United
Kingdom and portions of Asia, including Hong Kong, Indonesia, Malaysia,
Singapore, Taiwan and Thailand, and anticipates commencing operations in South
Africa and South America during 1997. Although the Company's recovery audit
services constitute a generally accepted business practice among retailers in
the U.S. and in certain other countries, the services offered by the Company
have not yet become generally accepted retailing business practice in many
international markets. There can be no assurance that the Company's services
will be accepted by retailers, vendors or other involved parties in such foreign
markets. The failure of such parties to accept and utilize the services offered
by the Company could have a material adverse effect on the Company's results of
operations and growth.
International revenues are subject to inherent risks, including
political and economic instability, difficulties in staffing and managing
foreign operations and in accounts receivable collections, fluctuating currency
exchange rates, costs associated with localizing service offerings in foreign
countries, unexpected changes in regulatory requirements, difficulties in the
repatriation of earnings and burdens of complying with a wide variety of foreign
laws and labor practices. The Company has encountered, and expects to continue
to encounter, significant expense and delays in expanding its international
operations because of language and cultural differences, and staffing,
communications and related issues.
In the Company's experience, entry into new international markets
requires significant management time as well as start-up expenses for market
development, hiring and establishing office facilities before any significant
revenues are generated. As a result, initial operations in a new market
typically operate at low margins or may be unprofitable. The Company's
international expansion strategy will require substantial financial resources
and may result in the Company incurring additional indebtedness and dilutive
issuances of equity securities. There can be no assurance that such financing
will be available to the Company on terms and conditions acceptable to the
Company.
REVISED AUDITOR COMPENSATION PROGRAM
The Company has developed a revised compensation program for its
non-management domestic field auditors which it believes will more equitably
compensate these individuals for their unique experience, skills and
contributions in meeting Company objectives. The revised program has been
designed with considerable input from auditor focus groups, has been subjected
to thorough in-house testing, and has undergone extensive field tests in the
first quarter of 1997. The revised program was implemented in May 1997. The
Company has attempted to design the revised program such that future aggregate
domestic auditor compensation expense will be unchanged from aggregate amounts
which would otherwise be paid under the existing program. Although the Company
and certain of its domestic auditors have expended considerable time and
resources to design the revised program, there can be no assurance that it will
meet its design objectives. If the design objectives of the revised compensation
program are not achieved, the Company's domestic costs and revenues could be
materially and adversely affected.
DEPENDENCE ON PROPRIETARY TECHNOLOGY; INTELLECTUAL PROPERTY RIGHTS
The Company's operations could be materially and adversely affected if
it were not able to adequately protect its proprietary software, audit
techniques and methodologies and other proprietary intellectual property rights.
The Company relies upon a combination of the trade secret laws, nondisclosure
and other contractual arrangements and technical measures to protect its
proprietary rights. Although the Company presently holds U.S.
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registered trademarks and U.S. registered copyrights on certain of its
proprietary technology, there can be no assurance that it will be able to obtain
similar protection on its other intellectual property. The Company generally
enters into confidentiality agreements with its employees, consultants, clients
and potential clients and limits access to, and distribution of, its proprietary
information. There can be no assurance, however, that the steps taken by the
Company in this regard will be adequate to deter misappropriation of its
proprietary information or that the Company will be able to detect unauthorized
use and take appropriate steps to enforce its intellectual property rights.
Further, the Company's competitors may independently develop technologies that
are substantially equivalent or superior to the Company's technology. Although
the Company believes that its services and products do not infringe on the
intellectual property rights of others, there can be no assurance that such a
claim will not be asserted against the Company in the future.
COMPETITION
The recovery audit business is highly competitive. The competitive
factors affecting the market for the Company's recovery audit services include:
establishment and maintenance of client relationships, quality and quantity of
claims identified, experience and professionalism of audit staff, rates for
services, technology and geographic scope of operations. The Company's principal
competitors include local or regional firms and one firm, Howard Schultz &
Associates, with a network of affiliate organizations in the U.S. and abroad.
Management believes this affiliated network has been in operation longer than
the Company and may have achieved greater revenues than the Company in 1996.
There can be no assurance that the Company will continue to be able to compete
successfully with such firms. In addition, competitive pricing pressures could
adversely affect the Company's margins and may have a material adverse effect on
the Company's business, financial condition and results of operations.
ACQUISITIONS
Thus far during 1997, the Company has acquired three complimentary
businesses, Shaps Group, Inc., Accounts Payable Recovery Service, Inc. and The
Hale Group. In addition, the Company intends to aggressively pursue possible
future acquisitions. While there are currently no commitments with respect to
any significant acquisitions, management frequently evaluates strategic
opportunities and the Company is pursuing, and intends to continue to pursue,
the acquisition of domestic and international businesses, including both direct
competitors and businesses providing other types of recovery services. Future
acquisitions may include much larger businesses than those acquired to date.
There can be no assurance, however, that the Company will be successful in
consummating further acquisitions due to factors such as receptivity of
potential acquisition candidates and valuation issues. Additionally, there can
be no assurance that future acquisitions, if consummated, can be successfully
assimilated into the Company. Future acquisitions by the Company may result in
the diversion of management's attention from day-to-day operations and may
include numerous other risks, including difficulties in the integration of the
operations, technology and personnel of the acquired companies. Moreover, future
acquisitions by the Company may result in dilutive issuances of equity
securities, the incurrence of additional debt and amortization expenses related
to goodwill and other intangible assets that may materially and adversely affect
the Company's operating results. There can be no assurance that the acquisition
opportunities will continue to exist, that the Company will be able to acquire
business operations or companies that satisfy the Company's acquisition
criteria, or that any such acquisitions will be on terms favorable to the
Company.
DEPENDENCE ON KEY PERSONNEL
The development of the Company's business and its operations have been
materially dependent upon the active participation of John M. Cook, Michael A.
Lustig and its other executive officers and key employees. The loss of the
services of one or more of these persons could have a material adverse effect on
the business, financial condition and results of operations of the Company. The
Company has entered into employment agreements with Mr. Cook, Mr. Lustig and
other members of management. The Company also maintains key man life insurance
policies in the aggregate amount of $13.3 million on the life of Mr. Cook.
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CONTROL BY MANAGEMENT
Executive officers and directors of the Company, collectively,
beneficially own approximately 65% of the outstanding Common Stock. As a result,
members of management collectively have the power to elect the Board of
Directors of the Company, to approve or disapprove any other matters requiring
shareholder approval without the vote of any other shareholders and effectively
to control the affairs and policies of the Company.
CERTAIN ANTI-TAKEOVER PROVISIONS
The Company's Articles of Incorporation and Bylaws and Georgia law
contain provisions that may have the effect of delaying, deferring or inhibiting
a future acquisition of the Company not approved by the Board of Directors in
which the shareholders otherwise might receive an attractive value for their
shares or that a substantial number or even a majority of the Company's
shareholders might believe to be in their best interest. These provisions are
intended to encourage any person interested in acquiring the Company to
negotiate with and obtain the approval of the Board of Directors of the Company
in connection with the transaction. These provisions include a staggered Board
of Directors, special meeting call restrictions and the ability of the Board of
Directors to consider the interests of various constituencies, including
employees, clients and creditors of the Company and the local community. In
addition, the Company's Articles of Incorporation authorize the Company to issue
shares of preferred stock with such designations, powers, preferences and rights
as may be fixed by the Board of Directors, without any further vote or action by
the shareholders. Such provisions also could discourage bids for the shares of
Common Stock at a premium, as well as create a depressive effect on the market
price for the shares of Common Stock.
INDEMNIFICATION AND LIMITATION ON LIABILITY
The Company's Articles of Incorporation and Bylaws limit the liability
of its directors to the fullest extent permitted under the laws of the State of
Georgia. The Company's Bylaws provide that the Company shall indemnify its
directors and officers and that the Company has the power to indemnify its
employees and other agents to the maximum extent possible and in a manner
permitted by Georgia law. In addition, the Company's shareholders have approved,
and the Company has entered into, individual agreements to indemnify its
directors and certain officers.
VOLATILE STOCK PRICE
The Company's Common Stock is traded on The Nasdaq Stock Market. The
Company's Common Stock was initially offered to the public on March 26, 1996 at
$11.00 per share. Following the Company's initial public offering, the trading
price of the Common Stock has been subject to fluctuations, with a high close of
$23 1/4 on August 16, 1996 and a low close of $11 1/16 on March 19, 1997. As of
July 28, 1997 the Common Stock closed at $17.00. In addition, future
announcements concerning the Company or its key clients or competitors,
technological innovations, government regulations, litigation or changes in
earnings estimates by analysts may cause the market price of the Common Stock to
fluctuate substantially. Furthermore, stock prices for many companies fluctuate
widely for reasons that may be unrelated to their operating results.
CLIENT BANKRUPTCIES
The Company currently derives a substantial portion of its revenues
from clients in the retailing industry. The retailing industry is an intensely
competitive environment, and retailer bankruptcy filings are not uncommon.
During 1996, 1995 and 1994, certain of the Company's domestic retailing clients
filed for bankruptcy protection, resulting in aggregate net charges to
operations of $403,000, $468,000 and $247,000, respectively. Future bankruptcy
filings by the Company's clients, particularly any of the Company's key clients,
could have a material adverse effect on the Company's business, financial
condition and results of operations.
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USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Common Stock offered by the Selling Shareholders.
SELLING SHAREHOLDERS
The Profit Recovery Group International, Inc. Common Stock to which
this Prospectus relates is being offered by former shareholders (the "Shaps
Selling Shareholders") of Shaps Group, Inc., a California corporation ("Shaps"),
and by Mr. Louis D. Lerner ("Lerner"), a former shareholder of Accounts Payable
Recovery Services, Inc., a Texas corporation ("APRS") (the Shaps Selling
Shareholders and Lerner are collectively referred to herein as the "Selling
Shareholders"). The Company acquired substantially all of the assets of Shaps
effective as of January 1, 1997. An aggregate of 375,000 shares were issued to
the Shaps Selling Shareholders in connection with the acquisition. The Shaps
Selling Shareholders received demand registration rights with respect to all of
the shares of The Profit Recovery Group International, Inc. Common Stock
received by them pursuant to the acquisition, and have exercised their rights
with respect to 153,500 shares of Common Stock as to which their demand rights
were currently exercisable. Mr. Lerner acquired his shares of Common Stock in
connection with the Company's acquisition of APRS in February 1997. Although Mr.
Lerner acquired registration rights with respect to his shares, they do not
begin to become exercisable until 1998. The Company has agreed to allow Mr.
Lerner to include all of the shares received by him pursuant to the APRS
acquisition in this registration in consideration of Mr. Lerner's agreement to
pay the lesser of one-half of the Company's expenses in effecting this
registration or $6,000.
The following table states the number of shares of Common Stock of the
Company beneficially owned by the Selling Shareholders as of June 30, 1997, and
the number of such shares which may be sold for the account of the Selling
Shareholders.
Beneficial Beneficial
Beneficial Relationship Ownership Prior Shares Ownership After
Owner to Company to the Offering(1) Offered the Offering(2)
- ---------- ------------ ------------------ ------- -------------------
Shares Percentage Shares Percentage
------ ---------- ------ ----------
Joel Shaps President, PRG 281,250 * 100,000 181,250 *
Manufacturing and
High Technology
Division
Shealagh
Meehan Vice President, 75,000 * 37,500 37,500 *
PRG Manufacturing
and High Technology
Division
Carol and
Richard Auditors 37,500(3) * 16,000 21,500(3) *
Leavitt
Louis D.
Lerner Vice President, 13,059 * 13,059 ___ *
PRG Healthcare and
Energy Division
- ------------------------
(1) Percentage is the percentage of outstanding shares of each class of
Common Stock beneficially owned as of June 30, 1997. As of such date,
18,230,149 shares of Common Stock were outstanding.
(2) Assumes all offered securities will be sold.
(3) Includes 18,750 shares of Common Stock which Mr. and Mrs. Leavitt
currently have the right to purchase from Mr. Shaps.
*Less than one percent.
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PLAN OF DISTRIBUTION
The Shares covered hereby may be offered and sold from time to time by
the Selling Shareholders. The Selling Shareholders will act independently of the
Company in making decisions with respect to the timing, manner and size of each
sale. Such sales may be made on The Nasdaq Stock Market or otherwise, at prices
related to the then current market price or in negotiated transactions,
including one or more of the following methods: (a) purchases by a broker-dealer
as principal and resale by such broker or dealer for its account pursuant to
this Prospectus; (b) ordinary brokerage transactions and transactions in which
the broker solicits purchasers; and (c) block trades in which the broker-dealer
so engaged will attempt to sell the Shares as agent but may position and resell
a portion of the block as principal to facilitate the transaction. The Company
has been advised by the Selling Shareholders that they have not made any
arrangements relating to the distribution of the Shares covered by this
Prospectus. In effecting sales, broker-dealers engaged by the Selling
Shareholders may arrange for other broker-dealers to participate. Broker-dealers
may receive commissions or discounts from the Selling Shareholder in amounts to
be negotiated.
In offering the Shares covered hereby, the Selling Shareholders and any
broker-dealers and any other participating broker-dealers who execute sales for
the Selling Shareholders may be deemed to be "underwriters" within the meaning
of the Securities Act in connection with such sales, and any profits realized by
the Selling Shareholders and the compensation of such broker-dealer may be
deemed to be underwriting discounts and commissions. In addition, any Shares
covered by this Prospectus which qualify for sale pursuant to Rule 144 may be
sold under Rule 144 rather than pursuant to this Prospectus. None of the Shares
covered by this Prospectus presently qualify for sale pursuant to Rule 144 and
it is not anticipated that any Shares will so qualify during the effectiveness
of the Registration Statement in which this Prospectus is contained.
The Company has advised the Selling Shareholders that during such time
as they may be engaged in a distribution of Shares covered hereby, they are
required to comply with Regulation M under the Exchange Act as described below
and, in connection therewith, that they may not engage in any stabilization
activity in connection with the Company's Common Stock, are required to furnish
to each purchaser and/or broker-dealer through which Shares covered hereby may
be offered copies of this Prospectus, and may not bid for or purchase any
securities of the Company or attempt to induce any person to purchase any
securities of the Company except as permitted under the Exchange Act. Each
Selling Shareholder has agreed to inform the Company when the distribution of
his or her Shares is completed.
Regulation M under the Exchange Act also prohibits, with certain
exceptions, participants in a distribution from bidding for or purchasing, for
an account in which the participant has a beneficial interest, any of the
securities that are the subject of the distribution. Regulation M also governs
bids and purchases made in order to stabilize the price of a security in
connection with a distribution of the security.
This offering will terminate on the earlier of 90 days from the date
hereof or the date on which all Shares offered hereby have been sold by the
Selling Shareholder.
In order to comply with certain states' securities laws, if applicable,
the Shares offered hereby will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, the Shares may not be
sold in certain states unless they have been registered or qualified for sale in
such states or an exemption from registration or qualification is available and
is complied with.
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<PAGE>
LEGAL MATTERS
Certain legal matters in connection with the Common Stock covered by
this Prospectus are being passed upon by Arnall Golden & Gregory, LLP. Jonathan
Golden, the sole stockholder of Jonathan Golden P.C. (a partner of Arnall Golden
& Gregory, LLP), is a director of the registrant. As of the date hereof,
attorneys with Arnall Golden & Gregory, LLP beneficially own an aggregate of
approximately 1,100,000 shares of the registrant's Common Stock.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1996 and 1995, and for each of the years in the three-year period ended December
31, 1996, included in the Company's Form 10-K for the year ended December 31,
1996 have been incorporated by reference herein and in the registration
statement in reliance upon the report of KPMG Peat Marwick LLP, independent
auditors, incorporated by reference herein, and upon the authority of said firm
as experts in accounting and auditing.
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