NCO Group Announces First Quarter Results of $0.43 Per Share and Provides Investor Guidance for the Second Quarter of 2004

NCO Group Announces First Quarter Results of $0.43 Per Share and
Provides Investor Guidance for the Second Quarter of 2004 


HORSHAM, Pa., May 3  /PRNewswire-FirstCall/ -- NCO Group, Inc. ("NCO" or the
"Company") , a leading provider of business process outsourcing services,
announced today that during the first quarter of 2004 it achieved net income of
$12.0 million, or $0.43 per diluted share, as compared to net income of $11.2
million, or $0.41 per diluted share, in the first quarter of 2003. These
earnings were above NCO's previously announced guidance of $0.38 to $0.42 per
diluted share.

Revenue in the first quarter of 2004 was $201.2 million, an increase of 6.5%,
or $12.2 million, from revenue of $189.0 million in the first quarter of the
previous year.

During the first quarter, NCO's operations were organized into market specific
divisions that included: U.S. Operations, Portfolio Management and
International Operations. These divisions accounted for $183.4 million, $21.6
million and $21.0 million of the revenue for the first quarter of 2004,
respectively. Included in U.S. Operations' revenue was $15.1 million of
inter-company revenue from Portfolio Management and included in International
Operations' revenue was $9.7 million of inter-company revenue from U.S.
Operations. In the first quarter of 2003, these divisions accounted for $173.1
million, $18.2 million and $15.8 million of the revenue, respectively, before
inter-company eliminations of $12.3 million included in U.S. Operations and
$5.8 million included in International Operations.

NCO's payroll and related expenses as a percentage of revenue decreased for the
first quarter of 2004 as compared to the same period in the prior year. The
decrease in payroll and related expenses as a percentage of revenue was
partially attributable to an increase in collector productivity due to higher
liquidation rates in the first quarter of 2004 as compared to the same period
last year. Additionally, an increase in the use of attorneys and other
third-party service providers reduced payroll expense as a percentage of
revenue in this quarter as these costs are reflected in selling, general and
administrative expense.

NCO's selling, general and administrative expenses as a percentage of revenue
increased for the first quarter of 2004 as compared to the same period in the
prior year. The increase in selling, general and administrative expenses as a
percentage of revenue was primarily attributable to the increase in collections
from outside attorneys and other third party service providers that are
compensated on a contingency basis.

NCO also announced that it expects earnings per share to be approximately $0.38
to $0.42 per diluted share for the second quarter of 2004.

Commenting on the quarter, Michael J. Barrist, Chairman and Chief Executive
Officer, stated, "We entered 2004 with an operating plan that focused on
meeting our current year financial goals as well as our long-term objectives of
transitioning NCO into a global provider of business process outsourcing. I am
pleased that during the first quarter NCO exceeded its financial objectives and
met or exceeded all of its operational objectives. Additionally, we completed
the NCO Portfolio transaction and we began the process of implementing our new
ERP solution. We also moved forward on several key initiatives that positioned
us for the rapid integration of RMH Teleservices, which was acquired on April
2, 2004, and will create the core competencies needed for NCO to begin blending
our multiple service offerings together in order to sell solutions-based
outsourcing to our clients."

Commenting on the economic environment, Mr. Barrist stated, "During the first
quarter, we operated in a slightly better than anticipated collection
environment. We are encouraged by this but feel it is too early to determine
whether the improved collection environment is indicative of an improving
economy or an anomaly based on a stronger than expected impact from the tax
season."

NCO will host an investor conference call on Tuesday, May 4, 2004, at 10:00
a.m., ET, to address the items discussed in this press release in more detail
and to allow the investment community an opportunity to ask questions.
Interested parties can access the conference call by dialing [phone]
(domestic callers) or [phone] (international callers). A taped replay of
the conference call will be made available for seven days and can be accessed
by interested parties by dialing [phone] (domestic callers) or (706)
645-9291 (international callers) and providing the pass code 7110497. A
transcript of the conference call will also be available on NCO's website
(http://www.ncogroup.com/) and will be furnished to the SEC in a Form 8-K
report.

NCO Group, Inc. is a leading provider of business process outsourcing services
including accounts receivable management, customer relationship management and
other services. NCO provides services through over 90 offices in the United
States, Canada, the United Kingdom, India, Barbados and the Philippines.

  For further information:

   At NCO Group, Inc.
   Michael J. Barrist,
   Chairman and CEO
   Steven L. Winokur,
   EVP, Finance and CFO
   [phone]
   http://www.ncogroup.com/



Certain statements in this press release, including, without limitation,
statements as to fluctuations in quarterly operating results, statements
concerning projections, statements concerning the long-term collection contact,
statements concerning strategic initiatives, statements as to the economy and
its effects on NCO's business, statements as to the integration of the
acquisitions of RMH Teleservices, Inc. and the minority interest of NCO
Portfolio Management, Inc., statements as to trends, statements as to NCO's or
management's beliefs, expectations or opinions, and all other statements in
this press release, other than historical facts, are forward-looking
statements, as such term is defined in the Securities Exchange Act of 1934,
which are intended to be covered by the safe harbors created thereby. Forward-
looking statements are subject to risks and uncertainties, are subject to
change at any time and may be affected by various factors that may cause actual
results to differ materially from the expected or planned results. In addition
to the factors discussed above, certain other factors, including without
limitation, the risk that NCO will not be able to implement its business
strategy as and when planned, risks related to the ERP implementation, risks
related to the final outcome of the environmental liability, risks related to
past and possible future terrorists attacks, risks related to the economy, the
risk that NCO will not be able to improve margins, risks relating to growth and
future acquisitions, risks related to the integration of the acquisitions of
RMH Teleservices, Inc. and the minority interest of NCO Portfolio Management,
Inc., risks related to fluctuations in quarterly operating results, risks
related to the timing of contracts, risks related to international operations,
risks relating to any adverse impact of restating the Company's historical
financial statements and other risks detailed from time to time in NCO's
filings with the Securities and Exchange Commission, including the Annual
Report on Form 10-K for the year ended December 31, 2003, can cause actual
results and developments to be materially different from those expressed or
implied by such forward-looking statements. The Company disclaims any intent or
obligation to publicly update or revise any forward-looking statements,
regardless of whether new information becomes available, future developments
occur or otherwise.

                               NCO GROUP, INC.
                      Unaudited Selected Financial Data
                (in thousands, except for per share amounts)


  Statements of Income:
                                        For the Three Months Ended March 31,
                                                   2003              2004

  Revenue                                       $189,017          $201,231

  Operating costs and expenses:
      Payroll and related expenses                88,298            91,039
      Selling, general and
       administrative expenses                    68,958            76,645
      Depreciation and amortization expense        7,856             7,778
                                                 165,112           175,462
  Income from operations                          23,905            25,769

  Other income (expense):
      Interest and investment income                 836               996
      Interest expense                            (5,819)           (5,288)
                                                  (4,983)           (4,292)
  Income before income taxes                      18,922            21,477

  Income tax expense                               7,179             8,888

  Income from operations before minority interest 11,743            12,589

  Minority interest                                 (551)             (606)

  Net income                                     $11,192           $11,983

  Net income per share:
      Basic                                        $0.43             $0.46
      Diluted                                      $0.41             $0.43

  Weighted average shares outstanding:
      Basic                                       25,908            26,125
      Diluted                                     29,718            30,234


  Selected Balance Sheet Information:
                                                  As of             As of
                                               December 31,       March 31,
                                                   2003              2004

  Cash and cash equivalents                      $45,644           $64,010
  Current assets                                 229,452           241,822
  Total assets                                   946,111           969,133

  Current liabilities                            123,043           137,839
  Long-term debt, net of current
   portion                                       248,964           231,140
  Shareholders' equity                           490,417           543,434


                               NCO GROUP, INC.
                      Unaudited Selected Financial Data
                 (in thousands, except for per share amounts)

  Consolidating Statements of Income:

                                  For the Three Months Ended March 31, 2004
                                                        Intercompany
                                         NCO       NCO    Elimina-  Consoli-
                                        Group  Portfolio   tions     dated

  Revenue                             $194,709  $21,602  $(15,080) $201,231

  Operating costs and expenses:
     Payroll and related expenses       90,392      647        --    91,039
     Selling, general and
      administrative expenses           75,634   16,091   (15,080)   76,645
     Depreciation and amortization
      expense                            7,697       81        --     7,778
                                       173,723   16,819   (15,080)  175,462
  Income from operations                20,986    4,783        --    25,769

  Other income (expense):
     Interest and investment income        502      630      (136)      996
     Interest expense                   (2,656)  (2,684)       52    (5,288)
                                        (2,154)  (2,054)      (84)   (4,292)
  Income before income tax expense      18,832    2,729       (84)   21,477

  Income tax expense                     7,896      992        --     8,888

  Income from operations before
   minority interest                    10,936    1,737       (84)   12,589

  Minority interest (1)                     --      (84)     (522)     (606)

  Net income                           $10,936   $1,653     $(606)  $11,983

  (1)  Prior to March 26, 2004, NCO Group owned 63% percent of the
       outstanding common stock of NCO Portfolio Management, Inc.
       On March 26, 2004, NCO Group acquired all of the outstanding common
       stock of NCO Portfolio that it did not own.


DATASOURCE: NCO Group, Inc.



CONTACT:  Michael J. Barrist, Chairman and CEO, or Steven L. Winokur,

EVP, Finance and CFO, [phone], both of NCO Group, Inc.



Web site:  http://www.ncogroup.com/

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