Form 8-K
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C.
20549
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported): May 18, 2006
_______________________
PRG-SCHULTZ
INTERNATIONAL, INC.
(Exact
name of registrant as specified in its charter)
_________________________
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Georgia
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000-28000
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58-2213805
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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600
Galleria Parkway, Suite 100, Atlanta, Georgia 30339-5949
(Address
of principal executive office) (zip code)
Registrant’s
telephone number, including area code: (770) 779-3900
_____________________________________________________________
(Former
name or former address, if changed since last report)
_________________________
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
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Item
4.01 Changes in Registrant’s Certifying Accountant.
On
May
18, 2006, the Chairman of the Audit Committee of the Board of Directors of
PRG-Schultz International, Inc. ("the Company") received a letter from KPMG
LLP
("KPMG") stating that the client-auditor relationship between KPMG and the
Company had ceased. This letter followed an earlier verbal notice received
that
day by the Chairman of the Audit Committee of the Company to the effect that
KPMG declined to stand for reelection in response to the Company’s request for
proposals from several independent accounting firms to serve a three year
engagement as the Company’s independent auditor.
The
audit
reports of KPMG LLP on the consolidated financial statements of the Company
as
of and for the years ended December 31, 2005 and 2004 did not contain an adverse
opinion or disclaimer of opinion, and were not qualified or modified as to
uncertainty, audit scope or accounting principles, except that KPMG LLP’s audit
report on the consolidated financial statements of the Company as of and for
the
year ended December 31, 2005 contained a separate paragraph stating that “the
accompanying consolidated financial statements have been prepared assuming
that
the Company will continue as a going concern. As discussed in Notes 1 and 8
to
the consolidated financial statements, the Company has substantial debt
obligations and, during 2005, it was required to enter into a forbearance
agreement to obtain covenant relief. The Company has incurred significant losses
in each of the years in the three−year period ended December 31, 2005 and has a
shareholders' deficit of $102.4 million at December 31, 2005. Realization of
assets and the satisfaction of liabilities in the normal course of business
are
dependent on, among other things, the Company's ability to return to
profitability, to complete planned restructuring activities and to generate
positive cash flows from operations, as well as maintaining credit facilities
adequate to conduct its business. These matters raise substantial doubt about
the Company’s ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 1. The consolidated financial
statements do not include any adjustments that might result from the outcome
of
this uncertainty.”
The
audit
report of KPMG LLP on management’s assessment of the effectiveness of internal
control over financial reporting and the effectiveness of internal control
over
financial reporting as of December 31, 2005 did not contain an adverse opinion
or disclaimer of opinion, and was not qualified or modified as to uncertainty,
audit scope or accounting principles, except that KPMG LLP’s report indicates
that the Company did not maintain effective internal control over financial
reporting as of December 31, 2005 because of the effect of material weaknesses
on the achievement of the objectives of the control criteria and contains an
explanatory paragraph that states that the Company identified material
weaknesses relating to company level controls and internal controls over revenue
recognition.
The
audit
report of KPMG LLP on management’s assessment of the effectiveness of internal
control over financial reporting and the effectiveness of internal control
over
financial reporting as of December 31, 2004 did not contain an adverse opinion
or disclaimer of opinion, and was not qualified or modified as to uncertainty,
audit scope or accounting principles, except that KPMG LLP’s report indicates
that the Company did not maintain effective internal control over financial
reporting as of December 31, 2004 because of the effect of material weaknesses
on the achievement of the objectives of the control criteria and contains an
explanatory paragraph that states that the Company identified material
weaknesses relating to internal
controls over accounting for revenue and the reserve for estimated refunds
and
internal controls over the Company’s income tax accounting
practices.
During
the fiscal years ended December 31, 2004 and December 31, 2005 and the
subsequent interim period through May 18, 2006, the Company had no disagreements
with KPMG on any matter of accounting principles or practice, financial
statement disclosure, or auditing scope or procedure, which, if not resolved
to
the satisfaction of KPMG, would have caused them to make reference to the
subject matter of such disagreements in connection with its
reports.
Except
for the material weaknesses described above, during the Company's fiscal years
ended December 31, 2004 and 2005, and in the subsequent interim period through
May 18, 2006, there were no "reportable events" as defined in Regulation S-K
Item 304(a)(1)(v).
The
Company has provided KPMG with a copy of the above disclosures and has requested
that KPMG review these disclosures and furnish the Company with a letter
addressed to the Securities and Exchange Commission as specified by Item
304(a)(3) of Regulation S-K. A copy of this letter is included as Exhibit 16.1
to this filing.
Item
9.01 Financial Statements and Exhibits
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(a)
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Financial
Statements
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N/A
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(b)
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Pro
Forma Financial Information
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N/A
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(c)
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Exhibits
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Exhibit
Number
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Description
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16.1
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Letter
from KPMG LLP dated May 24, 2006
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, PRG-Schultz
International, Inc. has duly caused this report to be signed on its behalf
by
the undersigned hereunto duly authorized.
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PRG-SCHULTZ
INTERNATIONAL, INC.
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Date:
May 24, 2006
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By:
/s/
Victor A. Allums
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Victor
A. Allums
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Senior
Vice President
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