##### 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 March 31, 2007
 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
    
    58-2213805(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 600 Galleria Parkway
    
    30339-5986Suite 100
    
    (Zip Code)Atlanta, Georgia(Address of principal executive offices)
 Registrant s telephone number, including area code: (770) 779-3900
 þ o
  o o þ
 o þ




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##### 



PRG-SCHULTZ INTERNATIONAL, INC.
 FORM 10-Q
For the Quarter Ended March 31, 2007
 INDEX
 Page No.Part I.Financial InformationItem 1. Financial Statements (Unaudited)
    
    
    1Condensed Consolidated Statements of Operations for the Three Months Ended
March 31, 2007 and 2006
    
    
    1Condensed Consolidated Balance Sheets as of March 31, 2007 and December 31, 2006
    
    
    2Condensed Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2007 and 2006
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    22Item 4. Controls and Procedures
    
    
    23Part II.Other InformationItem 1. Legal Proceedings
    
    
    24Item 1A. Risk Factors
    
    
    24Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    24Item 3. Defaults Upon Senior Securities
    
    
    24Item 4. Submission of Matters to a Vote of Security Holders
    
    
    24Item 5. Other Information
    
    
    24Item 6. Exhibits
    
    
    25Signatures
    
    
    27EX-10.1 2007 PERFORMANCE BONUS PLANEX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEO AND CFO




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements (Unaudited)
 PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
(In thousands, except per share data)
 Three Months EndedMarch 31,2007
    
    
    2006Revenues
    
    $
    66,908
    
    
    $
    65,538Cost of revenues
    
    
    45,464
    
    
    
    47,257Gross margin
    
    
    21,444
    
    
    
    18,281Selling, general and administrative expenses
    
    
    14,740
    
    
    
    14,894Operational restructuring expense (NOTE I)
    
    
    
    
    
    
    408Operating income (loss)
    
    
    6,704
    
    
    
    2,979Interest expense, net
    
    
    (4,115
    )
    
    
    (2,543
    )Loss on
financial restructuring (NOTE H)
    
    
    
    
    
    
    (10,129
    )Earnings (loss) from continuing operations before income taxes and
discontinued operations
    
    
    2,589
    
    
    
    (9,693
    )Income taxes
    
    
    1,055
    
    
    
    650Earnings (loss) from continuing operations before discontinued
operations
    
    
    1,534
    
    
    
    (10,343
    )Discontinued
operations (NOTE B):Earnings (loss) from discontinued
operations
    
    
    (11
    )
    
    
    49Net earnings (loss)
    
    $
    1,523
    
    
    $
    (10,294
    )Basic earnings (loss) per common share (NOTE C):Earnings (loss) from continuing operations before discontinued operations
    
    $
    0.16
    
    
    $
    (1.67
    )Earnings (loss) from discontinued operations
    
    
    (0.00
    )
    
    
    0.01Net earnings (loss)
    
    $
    0.16
    
    
    $
    (1.66
    )Diluted earnings (loss) per common share (NOTE C):Earnings (loss) from continuing operations before discontinued operations
    
    $
    0.13
    
    
    $
    (1.67
    )Earnings (loss) from discontinued operations
    
    
    (0.00
    )
    
    
    0.01Net earnings (loss)
    
    $
    0.13
    
    
    $
    (1.66
    )Weighted-average common shares outstanding (NOTE C):Basic
    
    
    8,373
    
    
    
    6,211Diluted
    
    
    12,164
    
    
    
    6,211
 See accompanying Notes to Condensed Consolidated Financial Statements.
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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (Unaudited)
(In thousands, except per share data)
 March 31,
    
    
    December 31,2007
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents (Note G)
    
    $
    21,359
    
    
    $
    35,013Restricted cash
    
    
    3,413
    
    
    
    3,438Receivables:Contract receivables, less allowances of $1,490 in 2007 and $1,919 in 2006Billed
    
    
    30,930
    
    
    
    32,464Unbilled
    
    
    7,790
    
    
    
    8,45738,720
    
    
    
    40,921Employee advances and miscellaneous receivables, less allowances of $1,638 in 2007 and
$1,306 in 2006
    
    
    769
    
    
    
    2,534Total receivables
    
    
    39,489
    
    
    
    43,455Funds held for client obligations
    
    
    42,104
    
    
    
    42,304Prepaid expenses and other current assets
    
    
    2,488
    
    
    
    2,667Deferred income taxes
    
    
    
    
    
    
    139Total current assets
    
    
    108,853
    
    
    
    127,016Property and equipment, at cost
    
    
    66,211
    
    
    
    66,650Less accumulated depreciation and amortization
    
    
    (56,737
    )
    
    
    (56,247
    )Property and equipment, net
    
    
    9,474
    
    
    
    10,403Goodwill
    
    
    4,600
    
    
    
    4,600Intangible assets, less accumulated amortization of $7,185 in 2007 and $6,838 in 2006
    
    
    22,715
    
    
    
    23,062Unbilled receivables
    
    
    1,557
    
    
    
    3,175Deferred income taxes
    
    
    171
    
    
    
    391Other assets
    
    
    9,806
    
    
    
    10,020$
    157,176
    
    
    $
    178,667LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)Current liabilities:Obligations for client payables
    
    $
    42,104
    
    
    $
    42,304Accounts payable and accrued expenses
    
    
    19,082
    
    
    
    23,676Accrued payroll and related expenses
    
    
    29,777
    
    
    
    41,026Refund liabilities
    
    
    10,207
    
    
    
    10,112Deferred revenue
    
    
    3,631
    
    
    
    3,930Current portions of debt obligations
    
    
    1,434
    
    
    
    750Total current liabilities
    
    
    106,235
    
    
    
    121,798Senior notes, net of unamortized discount of $7,338 in 2007 and $7,659 in 2006 (Note H)
    
    
    44,117
    
    
    
    43,796Senior convertible notes, including unamortized premium of $5,153 in 2007 and
$5,519 in 2006 (Note H)
    
    
    67,108
    
    
    
    68,030Other debt obligations (Note H)
    
    
    15,457
    
    
    
    25,096Noncurrent compensation obligations
    
    
    7,426
    
    
    
    5,859Refund liabilities
    
    
    1,772
    
    
    
    1,659Other long-term liabilities
    
    
    5,602
    
    
    
    5,713Total liabilities
    
    
    247,717
    
    
    
    271,951Mandatorily redeemable participating preferred stock (Note H)
    
    
    8,916
    
    
    
    11,199Shareholders equity (deficit) (Notes D and H):Common stock, no par value; $.01 stated value per share. Authorized 50,000,000 shares;
issued 9,343,798 in 2007 and 8,398,770 in 2006
    
    
    93
    
    
    
    84Additional paid-in capital
    
    
    517,612
    
    
    
    513,920Accumulated deficit
    
    
    (570,625
    )
    
    
    (571,818
    )Accumulated other comprehensive income
    
    
    2,173
    
    
    
    2,041Treasury stock, at cost; 576,453 shares in 2007 and 2006
    
    
    (48,710
    )
    
    
    (48,710
    )Total
shareholders equity (deficit)
    
    
    (99,457
    )
    
    
    (104,483
    )Commitments and contingencies (Note I)
    
    $
    157,176
    
    
    $
    178,667
 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)
 Three Months EndedMarch 31,2007
    
    
    2006Cash flows from operating activities:Net earnings (loss)
    
    $
    1,523
    
    
    $
    (10,294
    )Earnings (loss) from discontinued operations
    
    
    (11
    )
    
    
    49Earnings (loss) from continuing operations
    
    
    1,534
    
    
    
    (10,343
    )Adjustments to reconcile earnings (loss) from continuing
operations to net cash provided by (used in) operating activities:Loss on financial restructuring
    
    
    
    
    
    
    10,129Depreciation and amortization
    
    
    2,211
    
    
    
    2,856Amortization of debt discount, premium and deferred loan costs
    
    
    492
    
    
    
    245Stock-based compensation costs
    
    
    2,734
    
    
    
    367(Gain) loss on sale of property, plant and equipment
    
    
    92
    
    
    
    (6
    )Deferred income taxes
    
    
    359
    
    
    
    63Changes in assets and liabilities:Restricted cash
    
    
    64
    
    
    
    (334
    )Billed receivables
    
    
    3,493
    
    
    
    11,298Unbilled receivables
    
    
    2,285
    
    
    
    744Prepaid expenses and other current assets
    
    
    201
    
    
    
    (412
    )Other assets
    
    
    7
    
    
    
    2,136Accounts payable and accrued expenses
    
    
    (5,132
    )
    
    
    844Accrued payroll and related expenses
    
    
    (11,363
    )
    
    
    (9,202
    )Refund liabilities
    
    
    208
    
    
    
    (746
    )Deferred revenue
    
    
    (338
    )
    
    
    290Noncurrent compensation obligations
    
    
    (372
    )
    
    
    (398
    )Other long-term liabilities
    
    
    (111
    )
    
    
    (57
    )Net cash provided by (used in) operating activities
    
    
    (3,636
    )
    
    
    7,474Cash flows from investing activities:Purchases of property and equipment, net of disposal proceeds
    
    
    (395
    )
    
    
    (302
    )Net cash used in investing activities
    
    
    (395
    )
    
    
    (302
    )Cash flows from financing activities:Net borrowings (repayments) of debt
    
    
    (9,580
    )
    
    
    8,200Issuance costs of preferred stock
    
    
    
    
    
    
    (1,281
    )Payments for deferred loan cost
    
    
    (203
    )
    
    
    (7,750
    )Net cash provided by (used in) financing activities
    
    
    (9,783
    )
    
    
    (831
    )Cash flows from discontinued operations:Operating cash flows
    
    
    (11
    )
    
    
    (430
    )Investing cash flows
    
    
    
    
    
    
    485Net cash provided by (used in) discontinued operations
    
    
    (11
    )
    
    
    55Effect of exchange rates on cash and cash equivalents
    
    
    171
    
    
    
    21Net change in cash and cash equivalents
    
    
    (13,654
    )
    
    
    6,417Cash and cash equivalents at beginning of period
    
    
    35,013
    
    
    
    11,848Cash and cash equivalents at end of period
    
    $
    21,359
    
    
    $
    18,265Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    $
    6,986
    
    
    $
    310Cash paid during the period for income taxes, net of refunds
    
    $
    318
    
    
    $
    386
 See accompanying Notes to Condensed Consolidated Financial Statements.
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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 March 31, 2007 and 2006
(Unaudited)
 Note A  Basis of Presentation
     New Accounting Standards
 Accounting for Uncertainty in Income Taxes  an Interpretation of FASB Statement No. 109
 Fair Value Measurements
 The Fair Value Option for Financial Assets
and Financial Liabilities  Including an amendment of FASB Statement No. 115
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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Note B  Discontinued Operations
  Three MonthsEndedMarch 31,2007
    
    
    2006Operating income (loss) from discontinued operations
    
    $
    (11
    )
    
    $
    (436
    )Gain (loss) on disposal of discontinued operations
    
    
    
    
    
    
    485Earnings (loss) from discontinued operations
    
    $
    (11
    )
    
    $
    49
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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Note C  Earnings (Loss) Per Common Share
  Three Months EndedMarch 31,2007
    
    
    2006Basic earnings (loss) per common share:Numerator for earnings (loss) per common share calculations:Earnings (loss) from continuing operations before
discontinued operations
    
    $
    1,534
    
    
    $
    (10,343
    )Preferred dividends
    
    
    (158
    )
    
    
    (49
    )Earnings (loss) for
purposes of computing
basic earnings (loss)
per common share from
continuing operations
    
    
    1,376
    
    
    
    (10,392
    )Earnings (loss) from discontinued operations
    
    
    (11
    )
    
    
    49Earnings (loss) for
purposes of computing
basic net earnings
(loss) per common
share
    
    $
    1,365
    
    
    $
    (10,343
    )Denominator:Denominator for basic earnings (loss) per common
share  weighted-average common shares outstanding
during the period
    
    
    8,373
    
    
    
    6,211Basic earnings (loss) per common share:Earnings (loss) from continuing operations before
discontinued operations
    
    $
    0.16
    
    
    $
    (1.67
    )Earnings (loss) from discontinued operations
    
    
    (0.00
    )
    
    
    0.01Net earnings (loss)
    
    $
    0.16
    
    
    $
    (1.66
    )
 Three Months EndedMarch 31,2007
    
    
    2006Diluted earnings (loss) per common share:Numerator for earnings (loss) per common share calculations:Earnings (loss) from continuing operations before discontinued operations
    
    $
    1,534
    
    
    $
    (10,343
    )Preferred dividends
    
    
    
    
    
    
    (49
    )Earnings (loss) for purposes of
computing diluted earnings
(loss) per common share from
continuing operations
    
    
    1,534
    
    
    
    (10,392
    )Earnings (loss) from discontinued operations
    
    
    (11
    )
    
    
    49Earnings (loss) for purposes of
computing diluted net earnings
(loss) per common share
    
    $
    1,523
    
    
    $
    (10,343
    )Denominator:Denominator for basic earnings (loss) per common share  weighted-average common shares
outstanding during the period
    
    
    8,373
    
    
    
    6,211Effect of dilutive securities:Incremental shares from stock-based compensation plans
    
    
    452
    
    
    
    Incremental shares from conversion of convertible preferred stock
    
    
    3,339
    
    
    
    Denominator for diluted earnings (loss) per common share
    
    
    12,164
    
    
    
    6,211Diluted earnings (loss) per common share:Earnings (loss) from continuing operations before discontinued operations
    
    $
    0.13
    
    
    $
    (1.67
    )Earnings (loss) from discontinued operations
    
    
    (0.00
    )
    
    
    0.01Net earnings (loss)
    
    $
    0.13
    
    
    $
    (1.66
    )
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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Note D  Stock-Based Compensation
     Note E - Operating Segments and Related Information
  Accounts Payable Services
  Meridian
  Corporate Support
  7




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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  AccountsPayable
    
    
    
    
    
    
    CorporateServices
    
    
    Meridian
    
    
    Support
    
    
    TotalQuarter Ended March 31, 2007Revenues
    
    $
    57,030
    
    
    $
    9,878
    
    
    $
    3⁄4
    
    
    $
    66,908EBITDA
    
    $
    15,373
    
    
    $
    797
    
    
    $
    (7,255
    )
    
    $
    8,915Stock-based compensation
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    2,734
    
    
    
    2,734Adjusted EBITDA
    
    $
    15,373
    
    
    $
    797
    
    
    $
    (4,521
    )
    
    $
    11,649Quarter Ended March 31, 2006Revenues
    
    $
    55,715
    
    
    $
    9,823
    
    
    $
    3⁄4
    
    
    $
    65,538EBITDA
    
    $
    9,563
    
    
    $
    1,707
    
    
    $
    (5,435
    )
    
    $
    5,835Severance and restructuring expenses
    
    
    (123
    )
    
    
    3⁄4
    
    
    
    531
    
    
    
    408Stock-based compensation
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    367
    
    
    
    367Adjusted EBITDA
    
    $
    9,440
    
    
    $
    1,707
    
    
    $
    (4,537
    )
    
    $
    6,610
  Three MonthsEndedMarch 31,2007
    
    
    2006Earnings (loss) from continuing operations
before discontinued operations
    
    $
    1,534
    
    
    $
    (10,343
    )Income taxes
    
    
    1,055
    
    
    
    650Interest, net
    
    
    4,115
    
    
    
    2,543Loss on financial restructuring
    
    
    3⁄4
    
    
    
    10,129Depreciation and amortization
    
    
    2,211
    
    
    
    2,856EBITDA
    
    
    8,915
    
    
    
    5,835Severance and restructuring charges
    
    
    3⁄4
    
    
    
    408Stock-based compensation
    
    
    2,734
    
    
    
    367Adjusted EBITDA
    
    $
    11,649
    
    
    $
    6,610
  Note F  Comprehensive Income
 Reporting Comprehensive Income
 8




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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Note G - Cash Equivalents
   Note H - Financial Restructuring
      9




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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Note I - Commitments and Contingencies
 Legal Proceedings
   Indemnification and Consideration Concerning Certain Future Asset Impairment Assessments
   10




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PRG-SCHULTZ INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Industrial Development Authority Grants
  Retirement Obligations
  Operational Restructuring Obligations
   11




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Introduction
  Revenue Recognition 
 Revenue Recognition
    12




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Critical Accounting Policies
  New Accounting Standards
 Accounting for Uncertainty in Income Taxes  an Interpretation of FASB Statement No. 109
 Fair Value Measurements
 The Fair Value Option for Financial Assets
and Financial Liabilities  Including an amendment of FASB Statement No. 115
 13




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Results of Operations
  Three Months EndedMarch 31,2007
    
    
    2006Revenues
    
    
    100.0
    %
    
    
    100.0
    %Cost of revenues
    
    
    68.0
    
    
    
    72.1Gross margin
    
    
    32.0
    
    
    
    27.9Selling, general and administrative expenses
    
    
    22.0
    
    
    
    22.7Operational restructuring expenses
    
    
    
    
    
    
    0.6Operating income (loss)
    
    
    10.0
    
    
    
    4.6Interest expense, net
    
    
    (6.1
    )
    
    
    (3.9
    )Loss on financial
restructuring
    
    
    
    
    
    
    (15.5
    )Earnings (loss) from continuing
operations before income taxes and
discontinued operations
    
    
    3.9
    
    
    
    (14.8
    )Income taxes
    
    
    1.6
    
    
    
    1.0Earnings (loss) from continuing
operations before discontinued
operations
    
    
    2.3
    
    
    
    (15.8
    )Earnings (loss) from discontinued
operations
    
    
    0.0
    
    
    
    0.1Net earnings (loss)
    
    
    2.3
    %
    
    
    (15.7
    )%
  Quarter Ended March 31, 2007 Compared to the Quarter Ended March 31, 2006
 Accounts Payable Services
 Revenue
 2007
    
    
    2006Domestic Accounts Payable Services revenue
    
    $
    37.0
    
    
    $
    34.7International Accounts Payable Services revenue
    
    
    20.0
    
    
    
    21.0Total Accounts Payable Services revenue
    
    $
    57.0
    
    
    $
    55.7
   14




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Cost of Revenues ( ).
  2007
    
    
    2006Domestic Accounts Payable Services COR
    
    $
    21.8
    
    
    $
    23.6International Accounts Payable Services COR
    
    
    15.5
    
    
    
    16.3Total Accounts Payable Services COR
    
    $
    37.3
    
    
    $
    39.9
  Selling, General, and Administrative Expenses .
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2007
    
    
    2006Domestic Accounts Payable Services SG&A
    
    $
    3.6
    
    
    $
    5.8International Accounts Payable Services SG&A
    
    
    2.7
    
    
    
    3.3Total Accounts Payable Services SG&A
    
    $
    6.3
    
    
    $
    9.1
  Meridian
  2007
    
    
    2006Revenues
    
    $
    9.9
    
    
    $
    9.8Cost of revenues
    
    
    8.2
    
    
    
    7.4Selling, general and administrative expenses
    
    
    1.1
    
    
    
    0.9Operating income
    
    $
    0.6
    
    
    $
    1.5
 Revenues.
  COR.
  SG&A
  16




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Corporate Support
 SG&A.
 2007
    
    
    2006Selling, general and administrative expenses
    
    $
    7.3
    
    
    $
    4.9
  Operational Restructuring Expense
   2007
    
    
    2006Restructuring expense
    
    $
    0.0
    
    
    $
    0.4
  Financial Restructuring
    17




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Discontinued Operations
     Other Items
 Interest Expense.
 Income Tax Expense (Benefit).
 Accounting for Uncertainty in Income Taxes  an Interpretation of FASB Statement No. 109
 18




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Liquidity and Capital Resources
    .
 Off Balance Sheet Arrangements
  Executive Severance Payments
  19




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Bankruptcy Litigation
  Contingent Obligation to Repay Industrial Development Authority of Ireland Grant
  Limitation on Tax Loss and Credit Carryforwards
  Forward Looking Statements
  20




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21




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Foreign Currency Market Risk.
 Interest Rate Risk
 Derivative Instruments.
 Stock-Based Compensation.
 22




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Item 4. Controls and Procedures
   23




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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
  
 Item 5. Other Information
  24




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##### Table of Contents



Item 6. Exhibits
 ExhibitNumber
    
    Description3.1
    
    Restated Articles of Incorporation of the Registrant,
as amended and restated 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
    
    Restated Bylaws of the Registrant (incorporated by
reference to Exhibit 3.2 to the Registrants Form 10-Q
for the quarter ended September 30, 2005).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 Report on Form 10-K
for the year ended December 31, 2005).4.4
    
    Indenture dated November 26, 2001 by and between
Registrant and Sun Trust Bank (incorporated by
reference to Exhibit 4.3 to Registrants Registration
Statement No. 333-76018 on Form S-3 filed December 27,
2001).4.5
    
    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).4.6
    
    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).
 25




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ExhibitNumber
    
    Description10.1*
    
    2007 Performance Bonus Plan31.1
    
    Certification of the Chief Executive Officer, pursuant
to Rule 13a-14(a) or 15d-14(a), for the quarter ended
March 31, 2007.31.2
    
    Certification of the Chief Financial Officer, pursuant
to Rule 13a-14(a) or 15d-14(a), for the quarter ended
March 31, 2007.32.1
    
    Certification of the Chief Executive Officer and Chief
Financial Officer, pursuant to 18 U.S.C. Section 1350,
for the quarter ended March 31, 2007.
 
 *
    
    Confidential treatment, pursuant to 17 CFR Secs. §§ 200.80 and 240.24b-2, has been requested
regarding certain portions of the indicated Exhibit, which portions have been filed separately with
the Commission. 26




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SIGNATURES
  PRG-SCHULTZ INTERNATIONAL, INC.May 14, 2007
    
    By:
    
    /s/ James B. McCurryJames B. McCurryPresident, Chairman of the Board andChief Executive Officer(Principal Executive Officer)May 14, 2007
    
    By:
    
    /s/ PETER LIMERIPeter Limeri.Chief Financial Officer and Treasurer(Principal Financial Officer)
 27