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NCO Group, Inc. Reports Record Third Quarter Results And Announces Three-For-Two Stock Split

FORT WASHINGTON, Pa., Nov. 5 /PRNewswire/ -- NCO Group, Inc. (Nasdaq: NCOG), a leading provider of accounts receivable management and related services, reported today that acquisitions and strong internal growth boosted revenue and profits to record levels. Net income for the third quarter, which ended September 30, 1997, rose 259% to $2.1 million, or $.23 per share, from $579,000, or $.12 per share, in the third quarter a year ago. Revenue in the third quarter of 1997 was $21.7 million, an increase of 182% or $14.0 million, from revenue of $7.7 million in the third quarter of the previous year.

Net income for the nine months ended September 30, 1997 rose 212% to $5.1 million, or $.64 per share, from $1.6 million, or $.34 per share, for the prior year. Revenue for the nine months ended September 30, 1997 was $61.0 million, an increase of 201% or $40.7 million, from revenue of $20.3 million for the prior year. On a pro forma basis, had the acquisitions of Goodyear & Associates ("Goodyear"), CMS A/R Services (CMSA/R), Tele-Research Center, Inc. ("TRC") and the CRW Financial, Inc. Collection Division ("CRWCD") occurred on January 1, 1997, earnings per share for the nine months ended September 30, 1997 would have been $.66 per share.

Michael J. Barrist, Chairman and Chief Executive Officer, stated "Historically the third quarter produces many more challenges for our business, however we were able to continue to utilize our core business strategies in order to produce record results. We have continued our commitment to the rapid assimilation of acquired companies and maintained a strong focus on profitability. We are confident that our strategy for growth, both internal and through acquisitions will continue to enhance shareholder value."

The addition of new clients and growth in business from existing clients represented $2.0 million of the increase in revenue for the three months ended September 30, 1997, and revenue attributable to the MAB acquisition completed in September 1996 represented $2.4 million of the increase. In addition, for the three months ended September 30, 1997, $5.6 million of revenue was attributable to the CRWCD acquisition completed in February 1997, and $4.0 million was attributable to the Goodyear, CMS A/R, and TRC acquisitions completed in January 1997. For the nine months ended September 30, 1997, the addition of new clients and growth in business from existing clients represented $4.8 million of the increase in revenue and revenue attributable to the MAB acquisition represented $9.3 million of the increase. In addition, for the nine months ended September 30, 1997, $15.4 million of revenue was attributable to the CRWCD acquisition, and $11.2 million was attributable to the Goodyear, CMS A/R, and TRC acquisitions.

Income from operations climbed 163% to $3.1 million for the third quarter of 1997, up from $1.2 million for the same period a year ago. For the nine months ended September 30, 1997, income from operations rose 162% to $8.5 million, up from $3.3 million for the same period a year ago. Due to the 1997 acquisitions having a higher cost structure than the Company, NCO experienced an increase in its payroll and related expenses as a percentage of revenue for both the three and nine months ended September 30, 1997. The Company has begun to leverage its infrastructure by realizing additional efficiencies and bringing the acquired companies cost structures in line with NCO's core operating results. The Company intends to continue to leverage its infrastructure and realize further economies through (i) further reduction in payroll and related expenses relating primarily to redundant collections and administrative personnel, (ii) further reductions in facilities costs, and (iii) further reductions in certain expenses such as telephone, mailing and data processing.

The Company also announced that it has declared a three-for-two stock split, payable on December 5, 1997, to shareholders of record at the close of business on November 21, 1997.

On July 4, 1997, the Company relocated its corporate headquarters and operations center to an 82,000 square foot, state of the art facility in Fort Washington, Pennsylvania. The new address is 515 Pennsylvania Avenue, Fort Washington, PA 19034. The new telephone number is 215-793-9300.

On July 8, 1997, the Company completed a public offering selling 2,875,000 shares of common stock including 1,444,000 shares issued by the Company and 1,431,000 shares sold by certain selling shareholders. The proceeds of the offering, after underwriting discounts and expenses, were approximately $39.4 million. Acquisition-related borrowings of $8.35 million were repaid at that time.

NCO Group, Inc. is a leading provider of accounts receivable management and related services utilizing an extensive teleservices infrastructure. The Company develops and implements customized accounts receivable management solutions for clients employing advanced workstations and sophisticated call management systems. The Company currently provides these services on a national basis from twenty-one call centers located in fifteen states. NCO Group, Inc. is traded on the Nasdaq National Market under the symbol NCOG.

Certain statements in this press release, including, without limitation, statements as to the Company's objective to grow through strategic acquisitions and internal growth, the ability to realize operating efficiencies in the integration of its acquisitions or as to the Company's or management's beliefs, expectations or opinions, are forward-looking statements that involve risks and uncertainties and are subject to change at any time. In addition to the factors discussed above, certain other factors, including without limitation, risks that the Company will not be able to realize operating efficiencies in the integration of its acquisitions, risks associated with growth and future acquisitions, fluctuations in quarterly operating results, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K, filed on March 31, 1997, as amended, and the Company's registration statement on Form S-1, filed on June 11, 1997, can cause actual results and developments to be materially different from those expressed or implied by such forward-looking statements.

A copy of the Annual Report on Form 10-K can be obtained, without charge except for exhibits, by written request to Steven L. Winokur, Executive Vice-President, Finance/CFO, NCO Group, Inc., 515 Pennsylvania Avenue, Ft. Washington, PA 19034.

For more information on NCO Group, Inc., via fax at no charge, dial 1-800-pro-info and enter ticker symbol NCOG.
 NCO GROUP, INC.
 Unaudited Selected Financial Data
 (in thousands, except for per share amounts)


Statement of Income:
 Three Months Ended Nine Months Ended
 September 30, September 30,
 1996 1997 1996 1997
 Actual Actual Pro Actual Actual Pro
 Forma Forma
 (1,2,3) (1,2,3)
 Revenue $7,714 $21,739 $21,739 $20,257 $60,978 $63,819


Operating costs

and expense:

Payroll and related
 expenses 3,630 10,697 10,697 9,584 30,279 31,558


Selling, general and

administrative
 expenses 2,501 7,086 7,085 6,596 19,777 20,882


Depreciation and
 amortization 400 844 844 823 2,388 2,517
 6,531 18,627 18,626 17,003 52,444 54,957


Income from
 operations 1,183 3,112 3,113 3,254 8,534 8,862


Other income (expense):

Interest and
 investment income 33 445 445 81 607 607
 Interest expense (249) (85) (57) (607) (507) (174)


Loss on disposal of
 fixed assets -- (41) (41) -- (41) (41)
 (216) 319 347 (526) 59 392


Income before income
 taxes 967 3,431 3,460 2,728 8,593 9,254


Pro forma provision
 for taxes (2) 388 1,350 1,356 1,092 3,488 3,756
 Pro forma net income$579 $2,081 $2,104 $1,636 $5,105 $5,498


Pro forma net income
 per share $0.12 $0.23 $0.23 $0.34 $0.64 $0.66


Pro forma weighted

average shares
 outstanding 4,753 9,078 9,252 4,753 8,014 8,361


Selected Balance Sheet Information:
 As of Dec. 31, As of Sept. 30,
 1996 1997
 Cash and cash equivalents $12,058 $33,422
 Current assets $17,260 $44,809
 Total assets $35,826 $96,143
 Current liabilities $3,631 $9,191
 Long-term liabilities $1,548 $1,538
 Stockholders' equity $30,648 $85,414


(1) Gives effect to: (i) the acquisitions of Goodyear & Associates, CMS
 A/R Services, Tele-Research Center and CRW Financial, Inc.,
 Collections Division as if they had occurred on January 1, 1997;
 (ii) the reduction of certain redundant operating costs and expenses
 that were immediately identifiable at the time of the acquisitions;
 (iii) the issuance of 76,923 shares of stock in connection with the
 conversion of a $1.0 million seller-financed note payable.
 (iv) the elimination of additional interest expense associated with
 acquisition-related debt assumed to be repaid with the offering
 proceeds


(2) Pro forma net income has been computed as if the Company had been
 fully subject to federal and state income taxes for all periods
 presented.


(3) Pro forma information does not include the pro forma effect of the
 acquisitions of Credit Acceptance Corporation or ADVANTAGE Financial,
 Inc. These acquisitions were completed on September 29, 1997 and
 September 30, 1997 respectively, but were not effective until
 October 1, 1997.


SOURCE NCO Group, Inc.
 -0- 11/05/97


/CONTACT: Michael J. Barrist, Chairman and CEO, or Steven L. Winokur, EVP, Finance, and CFO, both of NCO Group, Inc., 215-793-9300; or Joe Calabrese, General, Judith Sylk-Siegel, Media, or Christina Howard, Analysts, all of the Financial Relations Board, 212-661-8030, for NCO Group/

(NCOG)

CO: NCO Group, Inc.; Goodyear & Associates; CMS A/R Services; Tele-Research

Center, Inc.; CRW Financial, Inc. ST: Pennsylvania IN: FIN SU: ERN

WF -- NYW042 -- 8229 11/05/97 09:08 EST http://www.prnewswire.com
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