A lot of companies talk about “best practices,” but at PRG, best practices are the foundation of our business. A key competitive advantage for PRG is the breadth and depth of our recovery services operations. With a base of more than 2,500 clients, we have the opportunity to observe best practices and make recommendations to improve existing processes. As part of our strategic realignment, we intend to better leverage our ability to share our audit methodologies between our retail and commercial divisions. To this end, PRG has created a dedicated task force of seasoned experts and audit development specialists charged with improving the quality, quantity, and efficiency of recovery generation as it applies to specific industries. We have taken a further step in best practices by aligning our field operations on the basis of client segments rather than geography in an effort to improve service delivery and account management and to achieve maximum client retention and satisfaction across the entire client base.

Extending best practices across the Company is not only a matter of sharing process information. PRG’s auditors bring a wealth of experience to the Company. Former controllers, chief financial officers, accounts payable managers, retail buyers, tax managers, bankers, health care professionals, and procurement managers are among the professional backgrounds represented on the audit team. By contributing their unique perspectives to the audit process, a client’s entire organization can benefit from a more comprehensive approach to its business and, more specifically, to its audit challenges. This is a team that has ample incentive to learn. We’re a pay-for-performance company, driven by our ability to meet the financial objectives of our clients. The better equipped our team is to help our clients recover profits, the richer the rewards – a true win-win situation.

A major pillar in PRG’s strategic plan is to expand and accelerate our international market penetration. As evidenced by last year’s 30% revenue growth rate, the international Accounts Payable markets represent a tremendous opportunity. With operations already established on six continents, including the Americas, Africa, Asia, Europe, and Australia, we have a solid base upon which to build further.

More than half of the top 200 retailers worldwide are located outside of the U.S., yet remarkably, relatively few engage in recovery audit services. An even greater market opportunity emerges beyond the retail segment. PRG is uniquely positioned to capitalize on this opportunity – we have an established, seasoned management team in place to speed the delivery of commercial audit services in these international markets. Our approach is deliberate and methodical – we’ve set our sights on the emerging revenue opportunities in markets such as Brazil, Germany, Italy, Portugal, and Spain, where the number of retailers, commercial operations, and multinational companies presents attractive new business scenarios.

Investment in technology has always been a strategic priority for PRG. Advanced audit methodologies, proprietary software, and extensive databases all provide PRG’s auditors with powerful tools to recover profits at the line-item level. As the world of technology continues to evolve and the volume of business-to-business transactions multiplies, significant technology investments will continue to allow PRG to differentiate itself.

An important benefit of narrowing the Company’s focus to the Accounts Payable arena will be the ability to more closely concentrate technology development initiatives. PRG’s e-commerce strategy of developing a Web-based platform is designed to take advantage of two major opportunities. The first of these is the ability to utilize the Internet in providing Accounts Payable services to our existing clients. Internet delivery applications have the potential to increase the amount, reduce the cost, and enhance the speed of electronic data available – all to improve the audit process and realize larger recoveries for our clients.

The second opportunity this strategy affords is enabling PRG to penetrate a much broader range of clients, specifically the mid-size client segment. Because these companies have traditionally not been in a position to invest in EDI (electronic data interchange) transaction technologies, the mid-size market has historically not represented a profitable or attractive opportunity for PRG. As the Internet enables the automation of purchasing and payables data for this client segment, the availability of electronic data will bring the practice of recovery services to a market whose potential has largely gone untapped by our service industry.

The Internet also opens up new service areas for PRG. MRO (maintenance, repair and operating) purchases, for instance, often comprise up to 15 to 25% of a company’s purchases. Prior to Web-based procurement, MRO purchases were primarily paper-based and not practical to review. As more and more corporations move to electronic procurement, PRG will be able to cost-effectively analyze purchases and related payments to recover additional profits for our clients. MRO audits, in particular, could potentially build our commercial business substantially.

A critical part of realizing the potential that lies before PRG is having the financial wherewithal to fund growth initiatives. As the only publicly-traded company in the recovery audit industry, PRG has multiple options to access capital. The implementation of its strategic realignment will further strengthen its capital structure. Proceeds from the divestiture of assets will be used to reduce debt, further strengthening the Company’s balance sheet.

In addition, steps have been taken to gain greater visibility into the business through the realignment of financial and operations support groups specifically charged with managing audit planning, evaluating audit productivity and profitability, proactively monitoring key metrics and drivers of revenue, and further cultivating financial discipline. The expected outcomes will be more predictable revenues and earnings, lower Days Sales Outstanding (DSOs), and stronger cash flow from operations that more closely tracks with future net earnings, all with the aim of restoring company value.