NCO Portfolio Management Sees Revenue Increase 28.4% over Year-Ago

BALTIMORE, MD — NCO Portfolio Management, Inc. (“NCPM”)(Nasdaq: NCPM), a leading purchaser and manager of delinquent accounts receivable, announced today that, during the second quarter of 2003, it achieved net income of $0.08 per share, on a diluted basis.

Total collections on purchased accounts receivable for the second quarter of 2003 were $35.6 million, an increase of $9.3 million, or 35.4%, from $26.3 million in the second quarter a year ago. Revenue in the second quarter of 2003 increased $4.0 million, or 28.4%, to $18.1 million from $14.1 million the previous year. Income from operations was $4.0 million for the second quarter of 2003, a decrease of $0.2 million, or 4.8%, from $4.2 million a year ago. During the second quarter of 2003, net income was $1.0 million, or $0.08 per share, on a diluted basis, compared to net income of $1.7 million, or $0.13 per share, on a diluted basis, from the second quarter in the previous year.

Operating expenses were $14.1 million and $9.9 million in the second quarter of 2003 and 2002, respectively. Included in operating expenses for the second quarter of 2003 and 2002 was $12.0 million and $8.1 million of servicing fees, respectively, paid for collection activities, including contingency legal fees. It is important to note that servicing fees are paid as a percentage of collections and not as a function of revenue. Servicing fees as a percentage of collections for the second quarter of 2003 and 2002 were 33.7% and 30.6%, respectively. All of the servicing fees for the second quarter of 2003 and 2002 were paid to NCO Group, Inc. (“NCOG”). NCOG owns 63.3% of our outstanding common stock.

While total overall collections for the quarter ended June 30, 2003, were relatively strong for the second quarter, there were several portfolios acquired over a year ago that incurred collection shortfalls that resulted in reductions in expected future collections. Some of these shortfalls were significant enough to create impairments as the current expected future collections fell below the current carrying values on these portfolios. These impairments are despite normal, ongoing adjustments to projected collections from the time of acquisition forward. The impairments recorded during the second quarter of 2003 and 2002 were approximately $612,000 and $401,000, respectively, which represented 0.4% and 0.3%, of the carrying value of total purchased accounts receivable as of June 30, 2003 and 2002, respectively. The combined carrying values of all impaired portfolios as of June 30, 2003 and 2002, totaled $9.7 million, or 6.8%, and $8.3 million, or 6.5%, respectively, of total purchased accounts receivable.

Commenting on the quarter, Michael J. Barrist, Chairman and Chief Executive Officer, stated, “I am pleased that NCO Portfolio was able to meet its earnings objectives for the quarter, despite what continues to be a difficult environment for the acquisition of portfolios within our targeted price range. As we move into the latter two quarters, we will focus on our strategy of continued refinement of our collection processes, penetration of additional markets, and the addition of new sellers to our client base. These initiatives, in conjunction with strict adherence to our underwriting discipline, will allow us to maintain our current level of profitability over the next several quarters and position NCPM for additional growth as market conditions improve.”

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