##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 0-28000
 
 PRG-Schultz International, Inc.
  Georgia(State or other jurisdiction of 
incorporation or organization)
    
    58-2213805(I.R.S. Employer
Identification No.)600 Galleria ParkwaySuite 100Atlanta, Georgia(Address of principal executive offices)
    
    30339-5986(Zip Code)
 Registrant s telephone number, including area code: (770) 779-3900
 þ o
 o o
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ




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##### 



PRG-SCHULTZ INTERNATIONAL, INC.
 FORM 10-Q
For the Quarter Ended June 30, 2009
 INDEX
 Page No.Part I.Financial InformationItem 1.
    
    Financial Statements
    
    
    1Condensed Consolidated Statements of Operations for the Three and Six Months Ended
June 30, 2009 and 2008 (Unaudited)
    
    
    1Condensed Consolidated Balance Sheets as of June 30, 2009 (Unaudited) and
December 31, 2008
    
    
    2Condensed Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 2009 and 2008 (Unaudited)
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    14Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    24Item 4.
    
    Controls and Procedures
    
    
    25Part II.Other InformationItem 1.
    
    Legal Proceedings
    
    
    26Item 1A.
    
    Risk Factors
    
    
    26Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26Item 3.
    
    Defaults Upon Senior Securities
    
    
    26Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    26Item 5.
    
    Other Information
    
    
    27Item 6.
    
    Exhibits
    
    
    28Signatures
    
    
    30EX-31.1EX-31.2EX-32.1




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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues
    
    $
    45,471
    
    
    $
    49,648
    
    
    $
    84,723
    
    
    $
    97,911Cost of revenues
    
    
    28,052
    
    
    
    32,941
    
    
    
    54,219
    
    
    
    63,193Gross margin
    
    
    17,419
    
    
    
    16,707
    
    
    
    30,504
    
    
    
    34,718Selling, general and administrative expenses
    
    
    11,049
    
    
    
    11,024
    
    
    
    21,018
    
    
    
    23,867Operating income
    
    
    6,370
    
    
    
    5,683
    
    
    
    9,486
    
    
    
    10,851Interest expense, net
    
    
    727
    
    
    
    765
    
    
    
    1,426
    
    
    
    1,756Earnings before income taxes
    
    
    5,643
    
    
    
    4,918
    
    
    
    8,060
    
    
    
    9,095Income taxes
    
    
    618
    
    
    
    400
    
    
    
    1,162
    
    
    
    993Net earnings
    
    $
    5,025
    
    
    $
    4,518
    
    
    $
    6,898
    
    
    $
    8,102Basic earnings per common share (Note B)
    
    $
    0.22
    
    
    $
    0.21
    
    
    $
    0.31
    
    
    $
    0.37Diluted earnings per common share (Note B)
    
    $
    0.21
    
    
    $
    0.20
    
    
    $
    0.30
    
    
    $
    0.35Weighted-average common shares outstanding (Note B):Basic
    
    
    22,641
    
    
    
    21,734
    
    
    
    22,395
    
    
    
    21,629Diluted
    
    
    23,382
    
    
    
    22,942
    
    
    
    23,260
    
    
    
    22,823
 See accompanying Notes to Condensed Consolidated Financial Statements.
 1




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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
 June 30,2009
    
    
    December 31,(Unaudited)
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents (Notes F and I)
    
    $
    28,482
    
    
    $
    26,688Restricted cash
    
    
    388
    
    
    
    61Receivables:Contract receivables, less allowances of $691 in 2009 and $921 in 2008:Billed
    
    
    23,520
    
    
    
    28,143Unbilled
    
    
    4,917
    
    
    
    5,56828,437
    
    
    
    33,711Employee advances and miscellaneous receivables, less allowances of $310 in 2009 and $311 in 2008
    
    
    226
    
    
    
    285Total receivables
    
    
    28,663
    
    
    
    33,996Prepaid expenses and other current assets
    
    
    2,571
    
    
    
    2,264Total current assets
    
    
    60,104
    
    
    
    63,009Property and equipment, at cost
    
    
    31,543
    
    
    
    30,041Less accumulated depreciation and amortization
    
    
    (23,858
    )
    
    
    (22,140
    )Property and equipment, net
    
    
    7,685
    
    
    
    7,901Goodwill (Note I)
    
    
    4,600
    
    
    
    4,600Intangible assets, less accumulated amortization of $11,946 in 2009 and $10,932 in 2008 (Note I)
    
    
    17,954
    
    
    
    18,968Unbilled receivables
    
    
    1,569
    
    
    
    1,789Other assets
    
    
    2,084
    
    
    
    2,516$
    93,996
    
    
    $
    98,783LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses
    
    $
    13,687
    
    
    $
    16,275Accrued payroll and related expenses
    
    
    17,381
    
    
    
    22,536Refund liabilities
    
    
    6,958
    
    
    
    7,870Deferred revenue
    
    
    458
    
    
    
    502Current portions of debt and capital lease obligations (Note G)
    
    
    5,332
    
    
    
    5,314Total current liabilities
    
    
    43,816
    
    
    
    52,497Long-term debt and capital lease obligations (Note G)
    
    
    11,660
    
    
    
    14,331Deferred income taxes
    
    
    244
    
    
    
    234Noncurrent compensation obligations
    
    
    1,464
    
    
    
    2,849Refund liabilities
    
    
    787
    
    
    
    897Other long-term liabilities
    
    
    5,085
    
    
    
    5,265Total liabilities
    
    
    63,056
    
    
    
    76,073Commitments and contingencies (Note H)Shareholders equity (Note B):Common stock, no par value; $.01 stated value per share. Authorized 50,000,000 shares;
23,029,103 shares issued and outstanding in 2009 and 21,789,645 shares issued and
outstanding in 2008
    
    
    230
    
    
    
    218Additional paid-in capital
    
    
    560,868
    
    
    
    559,359Accumulated deficit
    
    
    (533,090
    )
    
    
    (539,988
    )Accumulated other comprehensive income
    
    
    2,932
    
    
    
    3,121Total shareholders equity
    
    
    30,940
    
    
    
    22,710$
    93,996
    
    
    $
    98,783
 See accompanying Notes to Condensed Consolidated Financial Statements.
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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 Six Months EndedJune 30,2009
    
    
    2008Cash flows from operating activities:Net earnings
    
    $
    6,898
    
    
    $
    8,102Adjustments to reconcile net earnings to net cash provided by operating activities:Depreciation and amortization
    
    
    2,708
    
    
    
    2,716Amortization of deferred loan costs
    
    
    394
    
    
    
    390Stock-based compensation expense
    
    
    1,004
    
    
    
    4,584(Gain) loss on sale of property and equipment
    
    
    28
    
    
    
    (5
    )Deferred income taxes
    
    
    10
    
    
    
    323Changes in assets and liabilities:Restricted cash
    
    
    (327
    )
    
    
    (164
    )Billed receivables
    
    
    5,200
    
    
    
    7,431Unbilled receivables
    
    
    871
    
    
    
    1,244Prepaid expenses and other current assets
    
    
    (256
    )
    
    
    108Other assets
    
    
    45
    
    
    
    (13
    )Accounts payable and accrued expenses
    
    
    (3,748
    )
    
    
    (4,849
    )Accrued payroll and related expenses
    
    
    (5,535
    )
    
    
    (12,041
    )Refund liabilities
    
    
    (1,022
    )
    
    
    (3,155
    )Deferred revenue
    
    
    (52
    )
    
    
    (117
    )Noncurrent compensation obligations
    
    
    (578
    )
    
    
    (1,676
    )Other long-term liabilities
    
    
    (180
    )
    
    
    (439
    )Net cash provided by operating activities
    
    
    5,460
    
    
    
    2,439Cash flows from investing activities:Purchases of property and equipment, net of disposal proceeds
    
    
    (1,409
    )
    
    
    (1,102
    )Net cash used in investing activities
    
    
    (1,409
    )
    
    
    (1,102
    )Cash flows from financing activities:Repayments of debt
    
    
    (2,653
    )
    
    
    (23,635
    )Repurchases of common stock
    
    
    (246
    )
    
    
    Payments for deferred loan costs
    
    
    
    
    
    
    (59
    )Net cash used in financing activities
    
    
    (2,899
    )
    
    
    (23,694
    )Effect of exchange rates on cash and cash equivalents
    
    
    642
    
    
    
    145Net change in cash and cash equivalents
    
    
    1,794
    
    
    
    (22,212
    )Cash and cash equivalents at beginning of period
    
    
    26,688
    
    
    
    42,364Cash and cash equivalents at end of period
    
    $
    28,482
    
    
    $
    20,152Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    $
    1,059
    
    
    $
    1,955Cash paid during the period for income taxes, net of refunds
    
    $
    2,425
    
    
    $
    1,311
 See accompanying Notes to Condensed Consolidated Financial Statements.
 3




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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Note A  Basis of Presentation
    New Accounting Standards
 SFAS No. 141(R). Business
Combinations
 SFAS No. 160. Noncontrolling Interests in
Consolidated Financial Statements
 SFAS No. 161 Disclosures about Derivative
Instruments and Hedging Activities  an amendment of FASB Statement No. 133 Accounting for
Derivative Instruments and Hedging Activities
 4




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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 SFAS No. 165 Subsequent Events
 SFAS No. 166 Accounting for Transfers of
Financial Assets, an amendment of SFAS No. 140
 SFAS No. 167 Amendments to FASB Interpretation
No. 46(R)
 FSP APB 14-1. Accounting for
Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash
Settlement)
 FSP EITF 03-6-1. Determining
Whether Instruments Granted in Share-Based Transactions Are Participating Securities
 5




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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Note B  Earnings Per Common Share
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,Basic earnings per common share:
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Numerator for earnings per common share calculations:Net earnings
    
    $
    5,025
    
    
    $
    4,518
    
    
    $
    6,898
    
    
    $
    8,102Denominator:Denominator for basic earnings per common share
 weighted-average common shares outstanding
during the period
    
    
    22,641
    
    
    
    21,734
    
    
    
    22,395
    
    
    
    21,629Basic earnings per common share
    
    $
    0.22
    
    
    $
    0.21
    
    
    $
    0.31
    
    
    $
    0.37
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,Diluted earnings per common share:
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Numerator for earnings per common share calculations:Net earnings
    
    $
    5,025
    
    
    $
    4,518
    
    
    $
    6,898
    
    
    $
    8,102Denominator:Denominator for basic earnings per common share 
weighted-average common shares outstanding during the
period
    
    
    22,641
    
    
    
    21,734
    
    
    
    22,395
    
    
    
    21,629Incremental shares from stock-based compensation plans
    
    
    741
    
    
    
    1,208
    
    
    
    865
    
    
    
    1,194Denominator for diluted earnings per common share
    
    
    23,382
    
    
    
    22,942
    
    
    
    23,260
    
    
    
    22,823Diluted earnings per common share
    
    $
    0.21
    
    
    $
    0.20
    
    
    $
    0.30
    
    
    $
    0.35
  Note C  Stock-Based Compensation
   6




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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
         7




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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     Note D  Operating Segments and Related Information
  Domestic Accounts Payable Services
  International Accounts Payable Services
  Corporate Support
  8




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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  InternationalAccountsDomestic Accounts
    
    
    Payable
    
    
    CorporatePayable Services
    
    
    Services
    
    
    Support
    
    
    TotalThree Months Ended June 30, 2009Revenues
    
    $
    26,443
    
    
    $
    19,028
    
    
    $
    
    
    
    $
    45,471EBITDA
    
    $
    8,633
    
    
    $
    4,822
    
    
    $
    (5,668
    )
    
    $
    7,787Foreign currency (gains) losses on
intercompany balances
    
    
    
    
    
    
    (1,679
    )
    
    
    
    
    
    
    (1,679
    )Litigation settlement
    
    
    
    
    
    
    
    
    
    
    650
    
    
    
    650Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    989
    
    
    
    989Adjusted EBITDA
    
    $
    8,633
    
    
    $
    3,143
    
    
    $
    (4,029
    )
    
    $
    7,747Three Months Ended June 30, 2008Revenues
    
    $
    28,280
    
    
    $
    21,368
    
    
    $
    
    
    
    $
    49,648EBITDA
    
    $
    8,759
    
    
    $
    3,118
    
    
    $
    (4,879
    )
    
    $
    6,998Foreign currency (gains) losses on
intercompany balances
    
    
    
    
    
    
    91
    
    
    
    
    
    
    
    91Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    1,550
    
    
    
    1,550Adjusted EBITDA
    
    $
    8,759
    
    
    $
    3,209
    
    
    $
    (3,329
    )
    
    $
    8,639Six Months Ended June 30, 2009Revenues
    
    $
    49,678
    
    
    $
    35,045
    
    
    $
    
    
    
    $
    84,723EBITDA
    
    $
    15,121
    
    
    $
    6,535
    
    
    $
    (9,462
    )
    
    $
    12,194Foreign currency (gains) losses on
intercompany balances
    
    
    
    
    
    
    (1,074
    )
    
    
    
    
    
    
    (1,074
    )Litigation settlement
    
    
    
    
    
    
    
    
    
    
    650
    
    
    
    650Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    1,004
    
    
    
    1,004Adjusted EBITDA
    
    $
    15,121
    
    
    $
    5,461
    
    
    $
    (7,808
    )
    
    $
    12,774Six Months Ended June 30, 2008Revenues
    
    $
    56,494
    
    
    $
    41,417
    
    
    $
    
    
    
    $
    97,911EBITDA
    
    $
    18,143
    
    
    $
    6,902
    
    
    $
    (11,478
    )
    
    $
    13,567Foreign currency (gains) losses on
intercompany balances
    
    
    
    
    
    
    (466
    )
    
    
    
    
    
    
    (466
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    4,584
    
    
    
    4,584Adjusted EBITDA
    
    $
    18,143
    
    
    $
    6,436
    
    
    $
    (6,894
    )
    
    $
    17,685
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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net earnings
    
    $
    5,025
    
    
    $
    4,518
    
    
    $
    6,898
    
    
    $
    8,102Income taxes
    
    
    618
    
    
    
    400
    
    
    
    1,162
    
    
    
    993Interest, net
    
    
    727
    
    
    
    765
    
    
    
    1,426
    
    
    
    1,756Depreciation and amortization
    
    
    1,417
    
    
    
    1,315
    
    
    
    2,708
    
    
    
    2,716EBITDA
    
    
    7,787
    
    
    
    6,998
    
    
    
    12,194
    
    
    
    13,567Foreign currency (gains) losses on
intercompany balances
    
    
    (1,679
    )
    
    
    91
    
    
    
    (1,074
    )
    
    
    (466
    )Litigation settlement
    
    
    650
    
    
    
    
    
    
    
    650
    
    
    
    Stock-based compensation
    
    
    989
    
    
    
    1,550
    
    
    
    1,004
    
    
    
    4,584Adjusted EBITDA
    
    $
    7,747
    
    
    $
    8,639
    
    
    $
    12,774
    
    
    $
    17,685
 Note E  Comprehensive Income
 Reporting Comprehensive Income
 Note F  Cash Equivalents
   Note G  Long Term Debt
   10




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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   Note H  Commitments and Contingencies
 Legal Proceedings
   Retirement Obligations
  Note I  Fair Value Measurements
 Fair Value Measurements
 11




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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Fair Value Measurements at Reporting Date UsingQuoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Assets
    
    
    Observable Inputs
    
    
    Unobservable InputsReporting Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)As of June 30, 2009Assets:Cash and cash equivalents
    
    $
    28,482
    
    
    $
    28,482
    
    
    $
    
    
    
    $
    As of December 31, 2008Assets:Cash and cash equivalents
    
    $
    26,688
    
    
    $
    26,688
    
    
    $
    
    
    
    $
    
  Fair Value Measurements UsingQuoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Assets
    
    
    Observable Inputs
    
    
    Unobservable InputsReporting Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)As of June 30, 2009Assets:Goodwill
    
    $
    4,600
    
    
    $
    
    
    
    $
    
    
    
    $
    4,600Intangible assets, net
    
    
    17,954
    
    
    
    
    
    
    
    
    
    
    
    17,954$
    22,554
    
    
    $
    
    
    
    $
    
    
    
    $
    22,554As of December 31, 2008Assets:Goodwill
    
    $
    4,600
    
    
    $
    
    
    
    $
    
    
    
    $
    4,600Intangible assets, net
    
    
    18,968
    
    
    
    
    
    
    
    
    
    
    
    18,968$
    23,568
    
    
    $
    
    
    
    $
    
    
    
    $
    23,568
 Goodwill and Other Intangible Assets
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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Note J  Subsequent Events
       13




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Introduction
     14




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Results of Operations
  Three Months
    
    Six MonthsEnded
    
    EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008Revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of revenues
    
    
    61.7
    
    
    
    66.4
    
    
    
    64.0
    
    
    
    64.5Gross margin
    
    
    38.3
    
    
    
    33.6
    
    
    
    36.0
    
    
    
    35.5Selling, general and administrative expenses
    
    
    24.3
    
    
    
    22.2
    
    
    
    24.8
    
    
    
    24.4Operating income
    
    
    14.0
    
    
    
    11.4
    
    
    
    11.2
    
    
    
    11.1Interest expense, net
    
    
    1.6
    
    
    
    1.5
    
    
    
    1.7
    
    
    
    1.8Earnings before income taxes
    
    
    12.4
    
    
    
    9.9
    
    
    
    9.5
    
    
    
    9.3Income taxes
    
    
    1.4
    
    
    
    0.8
    
    
    
    1.4
    
    
    
    1.0Net earnings
    
    
    11.0
    %
    
    
    9.1
    %
    
    
    8.1
    %
    
    
    8.3
    %
 Three and Six Months Ended June 30, 2009 Compared to the Corresponding Periods of the Prior Year
 Accounts Payable Services
 Revenues
 Three Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Domestic Accounts Payable Services revenues
    
    $
    26.4
    
    
    $
    28.3
    
    
    $
    49.7
    
    
    $
    56.5International Accounts Payable Services revenues
    
    
    19.0
    
    
    
    21.3
    
    
    
    35.0
    
    
    
    41.4Total Accounts Payable Services revenues
    
    $
    45.4
    
    
    $
    49.6
    
    
    $
    84.7
    
    
    $
    97.9
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Cost of Revenues (COR).
  Three Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Domestic Accounts Payable Services COR
    
    $
    14.5
    
    
    $
    16.8
    
    
    $
    29.1
    
    
    $
    32.5International Accounts Payable Services COR
    
    
    13.5
    
    
    
    16.2
    
    
    
    25.1
    
    
    
    30.8Total Accounts Payable Services COR
    
    $
    28.0
    
    
    $
    33.0
    
    
    $
    54.2
    
    
    $
    63.3
  16




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##### Table of Contents



Selling, General and Administrative Expenses (SG&A).
  Three Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Domestic Accounts Payable Services SG&A
    
    $
    4.5
    
    
    $
    4.0
    
    
    $
    7.9
    
    
    $
    8.3International Accounts Payable Services SG&A
    
    
    0.9
    
    
    
    2.2
    
    
    
    3.7
    
    
    
    4.1Total Accounts Payable Services SG&A
    
    $
    5.4
    
    
    $
    6.2
    
    
    $
    11.6
    
    
    $
    12.4
    Corporate Support
  17




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##### Table of Contents



Three Months
    
    Six MonthsEnded
    
    EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008Corporate Support SG&A
    
    $
    5.6
    
    
    $
    4.8
    
    
    $
    9.4
    
    
    $
    11.4
  Other Items
 Interest Expense.
 Income Tax Expense.
 Liquidity and Capital Resources
  Operating Activities.
 Investing Activities and Depreciation Expense.
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##### Table of Contents



Financing Activities and Interest Expense.
  Secured Credit Facility
      19




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##### Table of Contents



Stock Repurchase Program
  2006 Management Incentive Plan
    Executive Severance Payments
  20




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##### Table of Contents



Off Balance Sheet Arrangements
  Critical Accounting Policies
   New Accounting Standards
 SFAS No. 141(R). Business
Combinations
 SFAS No. 160. Noncontrolling Interests in
Consolidated Financial Statements
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##### Table of Contents



SFAS No. 161 Disclosures about Derivative
Instruments and Hedging Activities  an amendment of FASB Statement No. 133 Accounting for
Derivative Instruments and Hedging Activities
 SFAS No. 165 Subsequent Events
 SFAS No. 166 Accounting for Transfers of
Financial Assets, an amendment of SFAS No. 140
 SFAS No. 167 Amendments to FASB Interpretation
No. 46(R)
 FSP APB 14-1. Accounting for
Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash
Settlement)
 FSP EITF 03-6-1. Determining
Whether Instruments Granted in Share-Based Transactions Are Participating Securities
 Forward-Looking Statements
  22




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23




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Foreign Currency Market Risk.
 Interest Rate Risk
 Stock-Based Compensation.
 24




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##### Table of Contents



Item 4. Controls and Procedures
   25




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
   
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
   19,504,555 97.56% 488,179
 19,486,880 97.47% 505,854
  26




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##### Table of Contents



19,774,322 98.91% 209,225 9,187
 
 Item 5. Other Information
  27




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##### Table of Contents



Item 6. Exhibits
 ExhibitNumber
    
    Description3.1
    
    Restated Articles of Incorporation of the Registrant, as amended
and corrected through August 11, 2006 (restated solely for the
purpose of filing with the Commission) (incorporated by reference
to Exhibit 3.1 to the Registrants Report on Form 8-K filed on
August 17, 2006).3.2
    
    Amended and Restated Bylaws of the Registrant (incorporated by
reference to Exhibit 3.1 to the Registrants Form 8-K filed on
December 11, 2007).4.1
    
    Specimen Common Stock Certificate (incorporated by reference to
Exhibit 4.1 to the Registrants Form 10-K for the year ended
December 31, 2001).4.2
    
    See Restated Articles of Incorporation and Bylaws of the
Registrant, filed as Exhibits 3.1 and 3.2, respectively.4.3
    
    Shareholder Protection Rights Agreement, dated as of August 9,
2000, between the Registrant and Rights Agent, effective May 1,
2002 (incorporated by reference to Exhibit 4.3 to the Registrants
Form 10-Q for the quarterly period ended June 30, 2002).4.3.1
    
    First Amendment to Shareholder Protection Rights Agreement, dated
as of March 12, 2002, between the Registrant and Rights Agent
(incorporated by reference to Exhibit 4.3 to the Registrants Form
10-Q for the quarterly period ended September 30, 2002).4.3.2
    
    Second Amendment to Shareholder Protection Rights Agreement, dated
as of August 16, 2002, between the Registrant and Rights Agent
(incorporated by reference to Exhibit 4.3 to the Registrants Form
10-Q for the quarterly period ended September 30, 2002).4.3.3
    
    Third Amendment to Shareholder Protection Rights Agreement, dated
as of November 7, 2006, between the Registrant and Rights Agent
(incorporated by reference to Exhibit 4.1 to the Registrants Form
8-K filed on November 14, 2005).4.3.4
    
    Fourth Amendment to Shareholder Protection Rights Agreement, dated
as of November 14, 2006, between the Registrant and Rights Agent
(incorporated by reference to Exhibit 4.1 to the Registrants Form
8-K filed on November 30, 2005).4.3.5
    
    Fifth Amendment to Shareholder Protection Rights Agreement, dated
as of March 9, 2006, between the Registrant and Rights Agent
(incorporated by reference to Exhibit 4.9 to the Registrants Form
10-K for the year ended December 31, 2005).4.3.6
    
    Sixth Amendment to Shareholder Protection Rights Agreement, dated
as of September 17, 2007, between the Registrant and Rights Agent
(incorporated by reference to Exhibit 4.1 to the Registrants Form
8-K filed on September 21, 2007).4.4
    
    Indenture dated as of March 17, 2006 governing 10% Senior
Convertible Notes due 2011, with Form of Note appended
(incorporated by reference to Exhibit 4.1 to the Registrants Form
8-K filed on March 23, 2006).4.4.1
    
    Supplemental Indenture to 10% Senior Convertible Notes Indenture
dated September 4, 2007 (incorporated by reference to Exhibit 10.2
to the Registrants Form 8-K filed on September 5, 2007).4.5
    
    Indenture dated as of March 17, 2006 governing 11% Senior Notes
due 2011, with Form of Note appended (incorporated by reference to
Exhibit 4.2 to the Registrants Form 8-K filed on March 23,
2006).4.5.1
    
    Supplemental Indenture to 11% Senior Notes Indenture dated
September 4, 2007 (incorporated by reference to Exhibit 10.1 to
the Registrants Form 8-K filed on September 5, 2007).10.1
    
    Employment Agreement dated May 26, 2009, by and between Mr. Robert
B. Lee and the Company (incorporated by reference to Exhibit 10.1
to the Registrants Form 8-K filed on June 1, 2009).10.2
    
    Separation Agreement, dated May 29, 2009, by and between Mr.
Bradley T. Roos and the Company (incorporated by reference to
Exhibit 10.2 to the Registrants Form 8-K filed on June 1, 2009).31.1
    
    Certification of the Chief Executive Officer, pursuant to Rule
13a-14(a) or 15d-14(a), for the quarter ended June 30, 2009.
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ExhibitNumber
    
    Description31.2
    
    Certification of the Chief Financial Officer, pursuant to Rule
13a-14(a) or 15d-14(a), for the quarter ended June 30, 2009.32.1
    
    Certification of the Chief Executive Officer and Chief Financial
Officer, pursuant to 18 U.S.C. Section 1350, for the quarter ended
June 30, 2009.
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SIGNATURES
  PRG-SCHULTZ INTERNATIONAL, INC.August 10, 2009
    By:
    /s/ Romil BahlRomil BahlPresident, Chief Executive Officer, Director
(Principal Executive Officer)August 10, 2009
    By:
    /s/ Robert B. LeeRobert B. LeeChief Financial Officer, Treasurer and Controller

(Principal Financial and Accounting Officer) 30