NCO Group Reports a Net Loss of $17.5 million for Q4 2006

NCO Group, Inc., a leading provider of business process outsourcing services, announced today that during the fourth quarter of 2006, it reported a net loss of $17.5 million. These results, which were in line with the company’s expectations, included approximately $26.9 million of charges, net of taxes, related to the going-private transaction and, to a lesser extent, the company’s restructuring and integration plans. The charges included transaction related charges of $11.0 million, purchase accounting related adjustments of $4.1 million, restructuring charges of $1.8 million and integration charges of $783,000. The charges also included $6.3 million of incremental interest expense and $2.9 million of incremental amortization relating to the intangible assets.

On November 15, 2006, NCO was acquired by and became a wholly owned subsidiary of Collect Holdings, Inc., an entity controlled by One Equity Partners and its affiliates (OEP), a private equity investment fund, with participation by Michael J. Barrist, Chairman, President and Chief Executive Officer of NCO, certain other members of executive management and other co- investors. Under the terms of the merger agreement, NCO shareholders received $27.50 in cash, without interest, for each share of NCO common stock that they held.

The accompanying unaudited selected financial data are presented for two periods, Predecessor and Successor, which relate to the period of operations preceding the transaction and the period of operations succeeding the transaction, respectively. Collect Holdings, Inc. was formed on July 13, 2006 and had no operations from date of inception until the transaction on November 15, 2006.

The following discussion of the company’s results of operations has been prepared by comparing the mathematical combination, without making any pro forma adjustments, of the Successor and Predecessor periods in the quarter ended December 31, 2006 to the quarter ended December 31, 2005. This presentation does not comply with generally accepted accounting principles in the U.S.; however, the Company believes it provides the most meaningful comparison of its results. The combined operating results have not been presented on a pro forma basis, and do not reflect the actual results that would have been achieved if the transaction had not occurred and may not be predictive of future results of operations.

NCO is organized into three operating divisions: Accounts Receivable Management (ARM), Customer Relationship Management (CRM) and Portfolio Management.

Overall revenue in the fourth quarter of 2006 was $280.6 million, a decrease of 3.4%, or $9.7 million, from revenue of $290.3 million in the fourth quarter of 2005. The decrease was primarily attributable to a $7.1 million reduction from purchase accounting related adjustments.

For the fourth quarter of 2006, ARM’s revenue was $200.6 million as compared to $216.8 million in the fourth quarter of 2005. The decrease was attributable to a more difficult operating environment within consumer collections and a $6.8 million decrease in inter-company revenue from Portfolio Management, due to a more challenging portfolio purchase environment during 2006. Revenue within this operating division related to portfolio collections is eliminated in consolidation.

<!–PAGEBREAK–>

During the fourth quarter of 2006, the ARM division recorded approximately $13.9 million, net of taxes, of transaction related charges, purchase accounting adjustments and restructuring and integration costs. This compares to charges of $4.0 million in the fourth quarter of 2005, related to restructuring and integration costs.

For the fourth quarter of 2006, CRM’s revenue was $68.9 million as compared to $54.1 million in the fourth quarter of 2005. The increase was primarily attributable to new clients ramping up business during 2006. While these new contracts have allowed this division to expand its revenue base in 2006, the deployment of large numbers of seats on an expedited schedule adversely impacts near-term profitability because the operating expenses are incurred in advance of the revenue growth. During the quarter, this division recorded approximately $212,000, net of taxes, of charges related to the transaction and integration costs.

For the fourth quarter of 2006, Portfolio Management’s revenue was $33.9 million compared to $48.8 million in the fourth quarter of 2005. This decrease was primarily attributable to a $6.2 million reduction in revenue related to the impact of the required revaluation of this division’s assets and liabilities as a result of purchase accounting, as well as lower revenue derived from purchased portfolios since the fourth quarter of 2005 results included the impact of two business combinations that were completed during the third quarter of 2005, each of which included the acquisition of material portfolios of purchased accounts receivable. Additionally, the company had approximately $703,000 of asset sales in the fourth quarter of 2006 as compared to $4.1 million in the fourth quarter of
2005.

Commenting on the quarter Michael J. Barrist, Chairman and Chief Executive Officer, stated, "We are very pleased that during the fourth quarter we were able to complete our going-private transaction and begin the next chapter in our corporate development. In conjunction with the transaction, we made several operational, management and organizational changes that were designed to streamline our cost structure and provide a new framework for the company moving forward. While the purchase accounting and restructuring initiatives have a short-term adverse impact, which primarily affected the fourth quarter of 2006, I am pleased to report that these changes have already begun to yield results. Based on our preliminary results, each of the company’s divisions exceeded their financial and
operational objectives for the first quarter of 2007."

NCO also announced that it will host an investor conference call on Wednesday, April 18, 2007, at 10:00 a.m., ET, to address the items discussed above 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) 634-6082 (international callers) and providing the pass code 5952391. 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 5952391.