NCO Group Announces Fourth Quarter Results of $0.23 Per Diluted Share, After Special Charges of $0.15 Per Share

NCO Group, Inc., a leading provider of business process outsourcing services, announced today that during the fourth quarter of 2005, it reported net income of $7.5 million, or $0.23 per diluted share, as compared to net income of $12.2 million, or $0.36 per diluted share, in the fourth quarter of 2004. These results are after special charges of $5.2 million, net of taxes, or approximately $0.15 per diluted share.

The special charges are associated with the previously announced restructuring of the Company’s legacy operations to streamline the cost structure, and integration of recent acquisitions. The restructuring charges are included as a separate line item under operating costs and expenses, and the integration charges are included in payroll and related expenses and selling, general and administrative expenses.

NCO is organized into four divisions that include Accounts Receivable Management North America (“ARM North America”), Customer Relationship Management (“CRM”), Portfolio Management, and Accounts Receivable Management International (“ARM International”).

Overall revenue in the fourth quarter of 2005 was $290.3 million, an increase of 22.4%, or $53.0 million, from revenue of $237.3 million in the fourth quarter of 2004. Included in ARM North America’s revenue for the fourth quarter of 2005, was $29.3 million of inter-company revenue from Portfolio Management and included in ARM International’s revenue was $50,000 of inter- company revenue from Portfolio Management. Included in ARM North America’s revenue for the fourth quarter of 2004 was $15.4 million of inter-company revenue from Portfolio Management and included in ARM International’s revenue was $86,000 of inter-company revenue from Portfolio Management. All inter-company revenue is eliminated in consolidation.

For the fourth quarter of 2005, ARM North America’s revenue was $211.7 million as compared to $176.8 million in the fourth quarter of 2004. The increase was primarily attributable to the acquisition of Risk Management Alternatives, Inc. (“RMA”), which was completed on September 12, 2005. The increase was also attributable to an increase in inter-company revenue from Portfolio Management. During the quarter, the lingering effects from Hurricanes Katrina and Rita continued to negatively impact our collection efforts in the affected areas. In addition, the Company experienced the expected deterioration in the amount of payments it received from consumers as compared to the fourth quarter of 2004, which the Company believes is due to the effects of higher fuel costs on the broader economy. Continued pressure from client initiatives to reduce costs also had an adverse impact on revenue. During the quarter this division recorded approximately $4.0 million, net of tax, of restructuring charges and costs associated with integration of the Company’s recent acquisitions.

For the fourth quarter of 2005, CRM’s revenue was $54.1 million as compared to $46.8 million in the fourth quarter of 2004. This $7.3 million increase was primarily attributable to new client ramp-up during the third and fourth quarters of 2005. While these new contracts will allow this division to expand its revenue base in 2006, the deployment of large numbers of seats on an expedited schedule adversely impacted near-term earnings due to incremental operating expenses related to the implementation of these new business opportunities. Partially offsetting the revenue from new clients was the previously discussed reduction in revenue from a major client where we ceased providing certain services when they decided to exit the consumer long- distance space due to a change in telecommunications laws. During the quarter this division recorded approximately $477,000, net of tax, of restructuring charges.

For the fourth quarter of 2005, Portfolio Management’s revenue was approximately $48.8 million compared to $26.0 million in the fourth quarter of 2004. The increase primarily reflects additional revenue from portfolio assets acquired as part of two business combinations during the third quarter of 2005, as well as $4.1 million of revenue from the expected sale of portions of several older portfolios with little or no remaining carrying value.

For the fourth quarter of 2005, ARM International had revenue of approximately $5.1 million compared to $3.1 million in the fourth quarter of 2004. The increase in revenue was primarily attributable to the acquisition of the international operations of RMA. During the quarter this division recorded approximately $785,000, net of tax, of restructuring and integration charges.

Commenting on the quarter, Michael J. Barrist, Chairman and Chief Executive Officer, stated, “During the fourth quarter we continued to execute on the planned restructuring of our service platform, which is expected to begin yielding tangible benefits as we move through 2006. This effort will allow us to better react to the changing needs of our client base. In combination with continued strong growth opportunities within our CRM and Portfolio sectors, these changes should allow us to meet our overall goal of providing our investors with consistent growth in both revenue and earnings.”

NCO also announced that it expects diluted earnings per share to be approximately $1.52 to $1.72 for 2006. This range includes the effects of approximately $6.1 million, after taxes, or approximately $0.18 per diluted share, of restructuring and integration costs expected to be incurred during the first quarter of 2006. For the first quarter NCO expects diluted earnings per share to be approximately $0.17 to $0.22. This range includes the effects of the approximately $6.1 million, after taxes, or approximately $0.18 per diluted share, of restructuring and integration costs.

NCO will host an investor conference call on Tuesday, February 14, 2006, at 10:00 a.m., ET, to address the items discussed in the 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 888-209-7450 (domestic callers) or 706-643-7734 (international callers) and providing the pass code 5031185. A taped replay of the conference call will be made available for seven days and can be accessed by interested parties by dialing 800-642-1687 (domestic callers) or 706-645-9291 (international callers) and providing the pass code 5031185. 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 Report on Form 8-K.