PRECISION RESPONSE CORP, 424B4, 1996-07-17

PRECISION RESPONSE CORP
424B4, 1996-07-17
BUSINESS SERVICES, NEC

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<PAGE> 1
Filed Pursuant to Rule 424(b)(4)
Registration No. 333-03209

4,000,000 SHARES

PRECISION RESPONSE LOGO

COMMON STOCK

Of the 4,000,000 shares of Common Stock offered hereby, 3,600,000 are being
sold by Precision Response Corporation and 400,000 are being sold by the Selling
Shareholders. The Company will not receive any of the proceeds from the sale of
the shares by the Selling Shareholders. See "Principal and Selling
Shareholders." A substantial portion of the net proceeds to be received by the
Company from this offering will be used to repay indebtedness and to pay a
distribution of S corporation earnings to the Company's current shareholders.
See "Use of Proceeds."

Prior to this offering, there has been no public market for the Common
Stock. See "Underwriting" for the factors considered in determining the initial
public offering price. The Common Stock has been approved for quotation on the
Nasdaq National Market under the symbol "PRRC."

---------------------

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 6.

---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
UNDERWRITING PROCEEDS TO
PRICE DISCOUNTS AND PROCEEDS TO SELLING
TO PUBLIC COMMISSIONS(1) COMPANY(2) SHAREHOLDERS
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share.................... $14.50 $1.02 $13.48 $13.48
- -------------------------------------------------------------------------------------------------
Total(3)..................... $58,000,000 $4,080,000 $48,528,000 $5,392,000
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>

(1) The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting offering expenses estimated at $600,000, all of which will
be paid by the Company.
(3) The Selling Shareholders (Mark J. Gordon, David L. Epstein and two trusts
for the benefit of Mr. Gordon's children) have granted the Underwriters a
30-day option to purchase up to 600,000 additional shares of Common Stock
solely to cover over-allotments, if any. See "Principal and Selling
Shareholders." If this option is exercised in full, the total Price to
Public, Underwriting Discounts and Commissions, Proceeds to Company and
Proceeds to Selling Shareholders will be $66,700,000, $4,692,000,
$48,528,000 and $13,480,000, respectively. See "Underwriting."

---------------------

The shares of Common Stock are offered by the Underwriters subject to prior
sale, when, as and if delivered to and accepted by them, and are subject to the
right of the Underwriters to withdraw, cancel, or modify such offer and to
reject any order in whole or in part. It is expected that delivery of the shares
of Common Stock will be made on or about July 22, 1996.

DAIN BOSWORTH INCORPORATED FURMAN SELZ

THE DATE OF THIS PROSPECTUS IS JULY 16, 1996
<PAGE> 2

PRECISION RESPONSE LOGO

PRC IS A FULL-SERVICE PROVIDER
OF TELEPHONE-BASED MARKETING
AND CUSTOMER SERVICE SOLUTIONS
ON AN OUTSOURCED BASIS
TO LARGE CORPORATIONS

TELESERVICES

Most of PRC's teleservicing activities involve responding
to inbound calls from its clients' customers. By the end of
June 1996, PRC will be operating approximately 2,100
workstations in six call centers capable of handling 30
million calls per month. The Company expects to add two
additional call centers and approximately 900 additional
workstations in the second half of 1996.

[Photograph depicting PRC customer service representatives]

[Photograph depicting PRC On-Line
screen]

DATABASE
MARKETING AND
MANAGEMENT

The Company helps its clients more
effectively target marketing
programs and designs customer
service programs which capture
information useful in the client's
marketing efforts. PRC On-Line, the
Company's proprietary software
application, allows PRC clients to
review their programs' progress on
line, in real time.
[Photograph depicting fulfillment
operations]

FULFILLMENT

Fulfillment services include high-speed
laser and electronic document printing,
lettershop and mechanical inserting,
sorting, packaging and mailing
capabilities. These services enable PRC
to support its clients' full-service
marketing and customer service programs.
---------------------

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

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<PAGE> 3

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and Financial Statements and
notes thereto appearing elsewhere in this Prospectus. See "Risk Factors" for
information prospective investors should consider. All references in this
Prospectus to "PRC" or the "Company" refer to Precision Response Corporation.
Except as otherwise indicated, all information in this Prospectus (i) has been
adjusted to reflect a recently completed 127,350-for-1 and a subsequent
1.287789556-for-1 stock split of the outstanding Common Stock by way of share
dividends and (ii) assumes no exercise of the Underwriters' over-allotment
option. See "Underwriting."

THE COMPANY

PRC is a leading full-service provider of telephone-based marketing and
customer service solutions on an outsourced basis to large corporations. Through
the integration of its teleservicing, database marketing and management, and
fulfillment capabilities, the Company is able to provide a "one-stop" solution
to meet its clients' needs. The Company believes that its one-stop solution
approach, combined with its sophisticated use of advanced technology, provide a
distinct competitive advantage in attracting clients seeking to cost-effectively
contact or service prospective or existing customers. The Company's ongoing
clients include several divisions of AT&T Corp., British Airways plc, Taco Bell
Corp., Ryder Truck Rental, Inc. and FTD, Inc. These clients collectively
accounted for 70.3% of the Company's revenues in 1995, and AT&T Corp. and Ryder
Truck Rental, Inc. each accounted for more than 10% of the Company's revenues in
1995. New clients expected to contribute to 1996 revenues include United Parcel
Service of America, Inc., DirecTV, Pizza Hut Inc. and Video Guide.

PRC's revenues for 1995 increased 101.4% to $30.2 million and its operating
income for 1995 increased to $1.8 million from an operating loss of $81,000 for
1994. For the first quarter of 1996, revenues increased 97.1% to $11.6 million
and operating income increased 67.4% to $890,000 from the comparable quarter of
1995. Since 1993, the Company has focused primarily on customer service programs
for large corporations with significant ongoing teleservicing needs. As a
result, most of the Company's teleservicing activities involve inbound (customer
initiated) calls rather than outbound (PRC initiated) calls. For the first
quarter of 1996, 82.2% of the Company's teleservicing revenues were from inbound
calls. The Company currently operates approximately 2,100 workstations in six
telephone call centers capable of handling up to 30 million calls per month and
expects to add two additional call centers and approximately 900 additional
workstations in the second half of 1996.

The telephone-based marketing and customer service industry has experienced
substantial growth over the past ten years. Telephone-based direct marketing
expenditures increased from an estimated $34 billion in 1984 to an estimated $77
billion in 1994. The Company believes that only a small percentage of those 1994
expenditures was for outsourced services. The Company expects that large
companies increasingly will outsource telephone-based marketing and customer
service activities in order to focus internal resources on their core
competencies and to improve the quality and cost-effectiveness of their
marketing and customer service efforts by using the expertise and specialized
capability of larger-scale teleservices providers. The Company also believes
that organizations with superior customer service and sophisticated, advanced
technology, such as PRC, will particularly benefit from this outsourcing trend.

PRC's objective is to become the premier full-service provider of
telephone-based marketing and customer service solutions. The Company's strategy
for achieving this objective is to offer high-quality, fully integrated services
to its clients which are customized to address each client's unique needs, and
to improve the quality and cost-effectiveness of the client's marketing and
customer service operations. The Company believes it possesses, and is
enhancing, a number of competitive strengths that will help it achieve its
objective, including:

- "One-Stop" Solutions Through Fully Integrated Services. The Company's
integration of teleservicing, database marketing and management, and
fulfillment services as part of a one-stop solution provides a
cost-effective and efficient method for its clients to manage their
growing direct marketing and customer service needs. The Company is
typically involved in all stages of formulating, designing and
implementing its clients' marketing and customer service programs. PRC
believes that this solution-oriented, value-added approach to addressing
its clients' needs distinguishes PRC from its competitors and plays a
vital role in the Company's ability to attract and retain clients.

- Advanced Technology. The Company's sophisticated use of advanced
technology enables it to develop and deliver solutions to its clients'
complex marketing and customer service needs. Through

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<PAGE> 4

the efforts of its information services group comprised of over 100
information systems specialists, the Company has designed comprehensive
systems that allow it to rapidly develop and implement application
software for each client's program and to integrate the Company's
centrally managed wide area network with the client's management
information systems. PRC has also developed specialized software programs,
CCPro and PRC On-Line, which more cost-effectively utilize the Company's
hardware capabilities and also provide a seamless interaction with its
clients' systems.

- Rapid Deployment of Call Centers. PRC has the ability to have a call
center fully operational in approximately 60 days, as demonstrated by the
recent openings of a 270 workstation call center and a 340 workstation
call center in April 1996 and a 500 workstation call center in June 1996.
The Company plans in advance of the actual need for new call centers by
maintaining a list of prospective sites that can be leased on short notice
and have been pre-qualified in terms of the availability of necessary
utilities and parking, suitability for build-out as a call center and
access to a suitable labor pool. This ability to rapidly expand its
capacity has enabled the Company to provide rapid response to its clients'
needs and to compete effectively for new business opportunities.

- Long-Term Client Relationships. The Company seeks to develop long-term
client relationships by becoming an integral part of its clients' overall
marketing and customer service efforts. Account services teams, comprised
of representatives of the teleservices, information services and
fulfillment departments, work closely with each client to formulate,
design and implement the client's program. This close working relationship
positions PRC as a strategic partner with its clients.

- Strong Commitment to Quality. PRC strives to achieve the highest quality
standards in the industry. Approximately 80% of PRC's customer service
representatives are full-time, which the Company believes results in
greater stability and quality in the workforce. The Company utilizes a
rigorous screening process for new hires and extensive classroom and
on-the-job training programs. Each representative's performance is
monitored regularly by a quality assurance team, and the client commitment
team ensures that the Company fulfills its commitments in connection with
each client program in a timely manner. Because PRC's services involve
direct contact with its clients' customers, the Company's commitment to
quality is critical to its ability to attract and retain clients.

PRC's operations are organized to effectively provide one-stop solutions to
its clients' marketing and customer service needs. Each client program is
managed by an account services manager who is generally dedicated to a single
client. The account services manager assembles a team from the teleservices,
information services and fulfillment operating groups which is assigned
responsibility for a program throughout its term. This team works with the
client to formulate and design a marketing or customer service program tailored
to achieve that client's objectives. In implementing the program, the account
services team is supported by the human resources department which carefully
selects the customer service representatives for that particular program. In
addition, the quality assurance and client commitment teams monitor the program
to ensure that it is carried out in accordance with specifications.

The Company is a Florida corporation and its principal executive office is
located at 1505 N.W. 167th Street, Miami, Florida 33169. Its telephone number is
(305) 626-4600.

THE OFFERING

Common Stock offered by the Company..... 3,600,000 shares

Common Stock offered by the Selling
Shareholders............................ 400,000 shares

Common Stock to be outstanding after
this offering........................... 20,000,000 shares(1)

Use of proceeds by the Company.......... To repay indebtedness, to pay a
distribution of S corporation
earnings to the Company's current
shareholders, and for general
corporate purposes, including call
center expansion and working
capital.

Nasdaq Stock Market symbol.............. PRRC
- ---------------
(1) Excludes 272,000 shares of Common Stock issuable upon exercise of stock
options to be granted under the Company's Employee Stock Plan on the date
of this Prospectus, of which options for 21,000 shares will have exercise
prices of $0.01 per share and options for 251,000 shares will have exercise
prices equal to the initial public offering price. Also excludes 1,756,268
additional shares of Common Stock reserved for future issuance under the
Company's Stock Plans. See "Management -- Employee Stock Plan and Director
Stock Plan" and Note 11 of Notes to Financial Statements.

4
<PAGE> 5

SUMMARY FINANCIAL AND OPERATING DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
MARCH 31, 1996
------------------------
ACTUAL AS ADJUSTED(5)
------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital........................................................................... $ 3,327 $ 43,336
Total assets.............................................................................. 15,922 55,481
Short-term obligations(6)................................................................. 1,029 579
Long-term obligations, less current maturities............................................ 5,894 529
Shareholders' equity...................................................................... 3,414 48,577
</TABLE>

- ---------------
(1) Prior to this offering, the Company was an S corporation and not subject to
Federal and Florida corporate income taxes. The statement of operations
data reflects a pro forma provision (benefit) for income taxes as if the
Company were subject to Federal and Florida corporate income taxes for all
periods. This pro forma provision (benefit) for income taxes is computed
using a combined Federal and state tax rate of 37.6%. See Note 10 of Notes
to Financial Statements.
(2) The actual weighted average number of shares outstanding during each of
these periods was 16,400,000 but, as required by generally accepted
accounting principles, the weighted average number of shares outstanding
has been increased by 127,061 shares which are not actually outstanding.
This number is equal to the number of shares which, when multiplied by
$15.00 per share (the assumed initial public offering price at the time the
financial statements included herein were issued), would have been
sufficient to replace the amount of the Dividend (see "Distribution of S
Corporation Earnings") in excess of pro forma earnings for the twelve
months ended March 31, 1996. See Note 10 of Notes to Financial Statements.
(3) Supplemental pro forma net income per share would have been $0.06 per share
and $0.03 per share for the year ended December 31, 1995 and the three
months ended March 31, 1996, respectively, giving effect to the use of a
portion of the net proceeds of this offering to repay the Company's bank
borrowings at January 1, 1995, and assuming an increase in the number of
weighted average shares outstanding to 16,722,395 (based on a price of
$15.00 per share, the assumed initial public offering price at the time the
financial statements included herein were issued).
(4) The Company currently operates six call centers with approximately 2,100
workstations. In the second half of 1996, the Company expects to add two
more call centers and approximately 900 additional workstations.
(5) Adjusted to give effect to the conversion of the Company to a C corporation,
the payment of net amount due from shareholders upon completion of the
offering, the sale of the Common Stock offered by the Company hereby and
the application of the estimated net proceeds therefrom as set forth under
"Use of Proceeds." See Note 10 of Notes to Financial Statements.
(6) Short-term obligations consist of current maturities of long-term
obligations, which include notes payable, installment loans and capital
leases.

5
<PAGE> 6

RISK FACTORS

In addition to the other information set forth in this Prospectus, the
following risk factors should be considered carefully in evaluating the Company
and its business before purchasing any of the shares of Common Stock offered
hereby.

FACTORS AFFECTING ABILITY TO MANAGE AND SUSTAIN GROWTH

The Company has experienced rapid growth over the last year and in
particular during the second quarter of 1996. This rapid growth may be expected
to place a strain on the Company's operational and administrative resources. Its
ability to manage and respond to this growth will be critical to its success.
The Company anticipates continued growth to be driven primarily by industry
trends towards outsourcing of telephone-based marketing and customer service
operations and increased sales by the Company to new and existing clients and in
new markets. Future growth will depend on a number of factors, including the
effective and timely initiation and development of client relationships, opening
of new call centers, and recruitment, motivation and retention of qualified
personnel. Sustaining growth will also require the continuing enhancement of
operational and financial systems and will require additional management,
operational and financial resources. There can be no assurance that the Company
will be able to manage its expanding operations effectively or that it will be
able to maintain or accelerate its growth. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business."

RELIANCE ON MAJOR CLIENTS AND KEY INDUSTRIES

A substantial portion of the Company's revenue is generated from relatively
few clients and the loss of a significant client or clients could have a
materially adverse effect on the Company. The Company's five and two largest
clients collectively accounted for 77.0% and 59.4%, respectively, of the
Company's total revenues in 1995, and 76.5% and 66.2%, respectively, of the
Company's total revenues for the first three months of 1996. The Company's
largest client in 1995 and the first three months of 1996 was AT&T. The Company
conducts business with several divisions of AT&T, which the Company considers to
be separate clients. AT&T's various divisions, in the aggregate, accounted for
approximately 42.1% and 61.3% of the Company's total revenues during 1995 and
the first quarter of 1996, respectively. As of December 31, 1995 and March 31,
1996, accounts receivable from the Company's five largest clients represented
approximately 77.1% and 76.4%, respectively, of total accounts receivable. The
Company is dependent upon the timely payment of these accounts and any default
by these clients would adversely affect the Company's liquidity. Many of the
Company's clients are concentrated in the telecommunications, transportation,
consumer products and food and beverage industries. A trend in any of these
industries not to use, or to reduce their use of, outsourced telephone-based
marketing, customer service, database marketing and management, and fulfillment
services could have a materially adverse effect on the Company's business. The
Company generally operates under contracts which may be terminated by its
clients on short notice. See "Business."

COMPETITIVE AND FRAGMENTED INDUSTRY; POTENTIAL FUTURE COMPETING TECHNOLOGIES AND
TRENDS

The industry in which the Company competes is very competitive and highly
fragmented. PRC's competitors range in size from very small firms offering
special applications and short term projects to large independent firms and the
in-house operations of many clients and potential clients. A number of
competitors have capabilities and resources equal to, or greater than, the
Company's. Some of the Company's services also compete with other forms of
direct marketing such as television, radio, on-line services as well as the
Internet, and other marketing media. There can be no assurance that, as the
Company's industry continues to evolve, additional competitors with greater
resources than the Company will not enter the industry (or particular segments
of the industry) or that the Company's clients will not choose to conduct more
of their telephone-based marketing or customer service activities internally.
See "Business -- Competition."

The telemarketing industry has grown significantly over the past ten years.
The development of new forms of direct sales and marketing techniques, such as
interactive home shopping through television, computer networks and other media,
could have an adverse effect on the demand for the Company's services. In
addition, the increased use of new telephone-based technologies, such as
interactive voice response systems, could reduce the demand for certain of the
Company's offerings. Moreover, the effectiveness of marketing by

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telephone could also decrease as a result of consumer saturation and increased
consumer resistance to this direct marketing tool. Although the Company attempts
to monitor industry trends and respond accordingly, there can be no assurance
that the Company will be able to anticipate and successfully respond to such
trends in a timely manner. See "Business."

DEPENDENCE ON LABOR FORCE

The Company's industry is very labor intensive and has experienced high
personnel turnover. Many of the Company's employees receive modest hourly wages.
Although the Company believes that its turnover rate is low compared to its
competitors, the teleservicing industry in general has a relatively high
turnover rate. A higher turnover rate among the Company's employees would
increase the Company's recruiting and training costs and decrease operating
efficiencies and productivity. Some of the Company's operations, particularly
its technical help desk, frequent flyer program and technology-based inbound
customer service, require specially trained employees. Growth in the Company's
business will require it to recruit and train qualified personnel at an
accelerated rate from time to time. There can be no assurance that the Company
will be able to continue to hire, train and retain a sufficient labor force of
qualified employees. A significant portion of the Company's costs consists of
wages to hourly workers. An increase in hourly wages, costs of employee benefits
or employment taxes could materially adversely effect the Company. See
"Business -- Personnel and Training."

RELIANCE ON TECHNOLOGY

The Company has invested significantly in sophisticated and specialized
telecommunications and computer technology, and has focused on the application
of this technology to provide customized solutions to meet its clients' needs.
The Company anticipates that it will be necessary to continue to select, invest
in and develop new and enhanced technology on a timely basis in the future in
order to maintain its competitiveness. The Company's future success will also
depend in part on its ability to continue to develop information technology
solutions which keep pace with evolving industry standards and changing client
demands. There can be no assurance that the Company will be successful in
anticipating technological changes or in selecting and developing new and
enhanced information technology on a timely basis. Although the Company believes
that its systems are among the most advanced in the industry, its technological
advantage arises from the sophisticated application of technology that is
readily available to or could legally be duplicated by its competitors. There
can be no assurance that this technological advantage can be maintained. In
addition, the Company's business is highly dependent on its computer and
telephone equipment and software systems, and the temporary or permanent loss of
such equipment or systems, through casualty or operating malfunction, could have
a materially adverse effect on the Company's business. The Company's business is
not materially dependent on its ability to protect any intellectual property.
See "Business -- Business Strategy" and "-- Technology."

DEPENDENCE ON KEY PERSONNEL

The success of the Company depends in large part upon the abilities and
continued service of its executive officers and other key employees such as Mark
J. Gordon and David L. Epstein, its Chief Executive Officer and President,
respectively. While the Company has employment agreements with certain of its
key personnel, there can be no assurance that the Company will be able to retain
the services of such key personnel. The Company does not maintain key person
insurance policies with respect to its key personnel. The loss of key personnel
could have a materially adverse effect on the Company. In order to support its
growth, the Company will be required to effectively recruit, develop and retain
additional qualified management personnel. See "Management."

DEPENDENCE ON TELEPHONE SERVICE

The Company's business is materially dependent on service provided by
various local and long distance telephone companies. A significant increase in
the cost of telephone services that is not recoverable through an increase in
the price of the Company's services, or any significant interruption in
telephone services, could have a materially adverse impact on the Company's
business and operating margins.

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<PAGE> 8

GOVERNMENT REGULATION

The Company's industry has become subject to an increasing amount of
Federal and state regulation in the past five years. The Rules of the Federal
Communications Commission (the "FCC") under the Federal Telephone Consumer
Protection Act of 1991, among other things, limit the hours during which
telemarketers may call consumers and prohibit the use of automated telephone
dialing equipment to call certain telephone numbers. The FCC, private
individuals and state attorneys general may seek both injunctive and monetary
relief for violation of these FCC rules. Monetary damages may be awarded for the
greater of actual damages or $1,500 per offense for willful violation of these
rules. The Federal Telemarketing and Consumer Fraud and Abuse Prevention Act of
1994 (the "TCFAPA") broadly authorizes the Federal Trade Commission (the "FTC")
to issue regulations prohibiting misrepresentation in telephone sales. In August
1995, the FTC issued regulations under the TCFAPA which, among other things,
require certain price, warranty, refund and payment disclosures when placing
telephone solicitation calls and specifically address other perceived
telemarketing abuses in the offering of prizes and the sale of business
opportunities or investments. The FTC, private individuals and state attorneys
general may seek both injunctive and monetary damages for violation of these FTC
rules. Penalties may range up to $10,000 for each intentional violation of these
rules. The Company's operating procedures comply with the telephone solicitation
rules of the FCC and FTC. However, there can be no assurance that additional
Federal or state legislation, or changes in regulatory implementation, would not
limit the activities of the Company or its clients in the future or
significantly increase the cost of regulatory compliance.

Several of the industries in which the Company's clients operate are
subject to varying degrees of government regulation. Generally, compliance with
these regulations is the responsibility of the Company's clients. However, the
Company could be subject to a variety of enforcement or private actions for its
failure or the failure of its clients to comply with such regulations. See
"Business -- Government Regulation."

POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

The Company has experienced and expects to continue to experience quarterly
variations in revenues and operating income as a result of many factors,
including the timing of clients' marketing campaigns and customer service
programs, the timing of additional selling, general and administrative expenses
to acquire and support new business and changes in the Company's revenue mix
among its various service offerings. In connection with certain contracts, the
Company could incur costs in periods prior to recognizing revenue under those
contracts. In addition, the Company must plan its operating expenditures based
on revenue forecasts, and a revenue shortfall below such forecast in any quarter
would likely adversely affect the Company's operating results for that quarter.
The effects of seasonality on PRC's business have historically been obscured by
its growing revenues. However, the Company's business tends to be slower in the
first and third quarters due to client marketing programs which are typically
slower in the post-holiday and summer months. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Quarterly Results."

FUTURE CAPITAL NEEDS

The Company believes that funds generated from operations, together with
the net proceeds of this offering and available borrowings, will be sufficient
to meet working capital needs at least through 1997. The Company's long term
capital requirements beyond 1997 will depend on many factors, including, but not
limited to, the rate at which the Company expands its business. To the extent
that the funds generated from the sources described above are insufficient to
fund the Company's activities in the short or long term, the Company would need
to raise additional funds through public or private financings. No assurance can
be given that additional financing will be available or that, if available, it
will be available on terms favorable to the Company. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."

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NO PRIOR PUBLIC MARKET; POTENTIAL VOLATILITY

Prior to this offering, there has been no public market for the Company's
Common Stock, and there can be no assurance that an active trading market for
the Common Stock will develop or be sustained following this offering. The
initial public offering price of the Common Stock offered hereby has been
determined by negotiations among the Company, the Selling Shareholders and the
Representatives of the Underwriters and may bear no relationship to the trading
prices of the Common Stock after this offering. See "Underwriting" for a
description of certain factors considered in determining the initial public
offering price for the Common Stock. The trading price of the Common Stock could
be subject to significant fluctuations in response to actual or anticipated
variations in the Company's quarterly operating results and other factors, such
as the introduction of new services or technologies by the Company or its
competitors, changes in other conditions or trends in the Company's industry or
in the industries of any of the Company's significant clients, changes in
governmental regulation, changes in securities analysts' estimates of the
Company's, or its competitors' or industry's, future performance or general
market conditions. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Quarterly Results." General market price
declines or market volatility in the future, or future declines or volatility in
the prices of stock for companies in the Company's industry or sector, could
also affect the market price of the Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE

Sale of substantial amounts of Common Stock in the public market after this
offering could adversely affect the market price of the Common Stock. Upon
closing of this offering, the Company will have a total of 20,000,000 shares of
Common Stock outstanding. Of these shares, the 4,000,000 shares offered hereby
(4,600,000 shares if the Underwriters' over-allotment option is exercised in
full) will be freely tradable without restriction under the Securities Act of
1933, as amended (the "Securities Act"). All of the remaining 16,000,000 shares
are "restricted securities" as defined by Rule 144 promulgated under the
Securities Act. Beginning 180 days after the date of this Prospectus, upon the
expiration of lock-up agreements with the Underwriters, 14,360,000 of these
shares will be available for sale in the public market subject to compliance
with Rule 144 volume and other requirements. The remaining 1,640,000 shares of
restricted securities will be eligible for sale beginning in February 1998, in
compliance with Rule 144 volume and other requirements. The Company intends to
register for issuance or resale the 2,028,268 shares of Common Stock reserved
for issuance under the Stock Plans. On the date of this Prospectus, the Company
will grant options to purchase 272,000 shares under the Employee Stock Plan,
none of which will be immediately exercisable. In connection with their
employment agreements with the Company, Messrs. Gordon, Epstein, Mondre and
Murray have been granted certain rights with respect to the registration of
their Common Stock under the Securities Act. If the Company proposes to register
any of its securities under the Securities Act, Messrs. Gordon, Epstein, Mondre
and Murray are entitled to include at the Company's expense all or a portion of
their shares therein, subject to certain conditions. Messrs. Gordon and Epstein
may also require the Company to register all or a portion of their shares under
the Securities Act at the Company's expense in the event of the termination of
their employment for any reason, subject to certain conditions. See
"Management -- Employee Stock Plan and Director Stock Plan," "Principal and
Selling Shareholders," "Shares Eligible for Future Sale" and "Underwriting."

CONTROL BY AND BENEFITS TO OFFICERS AND DIRECTORS

Following completion of this offering, Mark J. Gordon and David L. Epstein,
the Company's Chief Executive Officer and President, respectively, will
beneficially own 48.2% and 31.8%, respectively, of the outstanding Common Stock
(46.5% and 30.6% if the Underwriters' over-allotment option is exercised in
full). As a result, Mr. Gordon and Mr. Epstein will continue to be able to elect
the entire Board of Directors of the Company and to control the outcome of all
other matters requiring action by its shareholders. Such voting concentration
may have the effect of discouraging, delaying or preventing a change in control
of the Company. See "Management" and "Principal and Selling Shareholders." A
substantial portion of the net proceeds to be received by the Company in this
offering will be used to pay a distribution of S corporation earnings to the
Company's current shareholders, all of whom are officers and directors or
affiliates of officers and directors

9
<PAGE> 10

(including Mr. Gordon and Mr. Epstein), and to repay certain indebtedness, some
of which is guaranteed by Mr. Gordon and Mr. Epstein. See "Distribution of S
Corporation Earnings," "Use of Proceeds" and "Management -- Compensation
Committee Interlocks and Insider Participation." Mr. Gordon and Mr. Epstein are
also Selling Shareholders in this offering. See "Principal and Selling
Shareholders."

CERTAIN FLORIDA STATUTORY PROVISIONS

The State of Florida has enacted legislation that may deter or frustrate
takeovers of Florida corporations. The Florida Control Share Act generally
provides that shares acquired in excess of certain specified thresholds will not
possess any voting rights unless such voting rights are approved by a majority
vote of a corporation's disinterested shareholders. The Florida Affiliated
Transactions Act generally requires supermajority approval by disinterested
shareholders of certain specified transactions between a public corporation and
holders of more than 10% of the outstanding voting shares of the corporation (or
their affiliates). Florida law also authorizes the Company to indemnify the
Company's directors, officers, employees and agents. The Company has adopted a
charter and by-law with such an indemnity and has entered into indemnification
agreements with all of its executive officers and directors. See "Description of
Capital Stock -- Certain Statutory Provisions" and "Management -- Limitation of
Liability and Indemnification Matters."

EFFECT OF CERTAIN CHARTER AND BYLAW PROVISIONS

The Company's Articles of Incorporation (the "Articles") and Bylaws (the
"Bylaws") contain certain provisions that could discourage potential takeover
attempts and make attempts by the Company's shareholders to change management
more difficult. Such provisions include the requirement that the Company's
shareholders follow an advance notification procedure for certain shareholder
nominations of candidates for the Board of Directors and for new business to be
conducted at any meeting of the shareholders. The Articles also provide that
special meetings of the shareholders may only be called by the Board of
Directors or the holders of not less than 50% of all votes entitled to be cast
on any issue to be considered at the special meeting. The Articles further
require that any actions by the shareholders of the Company may be taken only
upon the vote of the shareholders at a meeting and may not be taken by written
consent. In addition, the Articles allow the Board of Directors to issue up to
25,000,000 shares of preferred stock and to fix the rights, privileges and
preferences of those shares without any further vote or action by the
shareholders. The rights of the holders of Common Stock will be subject to, and
may be adversely affected by, the rights of the holders of any preferred stock
that may be issued by the Company in the future. While the Company has no
present intention to issue preferred stock, any such issuance could have the
effect of making it more difficult for a third party to acquire a majority of
the outstanding voting stock of the Company. See "Description of Capital
Stock -- Certain Charter and Bylaw Provisions."

DILUTION

Investors purchasing Common Stock in this offering will experience
immediate and substantial dilution of $12.07 in the net tangible book value per
share of Common Stock. See "Dilution."

10
<PAGE> 11

DISTRIBUTION OF S CORPORATION EARNINGS

Prior to this offering the Company was treated for Federal and Florida
income tax purposes as an S corporation under the Internal Revenue Code of 1986,
as amended (the "Code"), and comparable state tax laws. As a result, earnings of
the Company have been taxed for Federal and Florida income tax purposes directly
to the shareholders of the Company, rather than to the Company. In connection
with this offering, the Company will be converted from an S corporation to a C
corporation under the Code. Prior to consummation of this offering, the
Company's Board of Directors intends to declare a cash dividend payable to the
current shareholders of the Company (the "Dividend"). The Dividend will be equal
to the Company's estimate of its accumulated taxable income prior to conversion
to a C corporation, to the extent such taxable income has not previously been
distributed. If the Company had been converted to a C corporation on March 31,
1996, the Company estimates, based on its earnings through the first three
months of 1996, the Dividend would have equaled approximately $2.9 million. The
actual amount of the Dividend will depend upon the Company's earnings prior to
its conversion to a C corporation (which will not occur until completion of this
offering), and is expected to be materially higher than $2.9 million. A portion
of the net proceeds to be received by the Company from this offering will be
used to pay the Dividend.

The Company and its current shareholders are parties to an S Corporation
Tax Allocation and Indemnification Agreement (the "Tax Agreement") relating to
their respective income tax liabilities. The Tax Agreement indemnifies the
shareholders for any adjustments causing an increase in the shareholders'
Federal and state income tax liability (including interest and penalties)
related to the Company's tax years prior to the consummation of this offering,
unless such adjustments result in or are related to a corresponding decrease in
the shareholders' Federal and state income tax liability with respect to another
S corporation taxable year. Subject to certain limitations, the Tax Agreement
also provides that the Company will be indemnified by the shareholders with
respect to Federal and state income taxes (plus interest and penalties) shifted
from an S corporation taxable year to a Company taxable year subsequent to the
consummation of this offering. Since the shareholders have not given any
security for their indemnification obligation, the Company's ability to collect
such payments is dependent upon the financial condition of the shareholders at
the time any such indemnification obligation arises. The Company is not aware of
any tax adjustments which may arise under the Tax Agreement. The Tax Agreement
further provides that to the extent that the accumulated taxable income of the
Company prior to its conversion to a C corporation, as subsequently established
in connection with the filing of the Company's tax return for the Company's
short S corporation tax year, is less than the Dividend, the shareholders who
receive the Dividend will make a payment equal to such difference to the
Company, and if such accumulated taxable income is greater than the Dividend,
the Company will make an additional distribution equal to such difference to
such shareholders, in either case, with interest thereon. Any payment made by
the Company to the shareholders pursuant to the Tax Agreement may be considered
by the Internal Revenue Service or the state taxing authorities to be
nondeductible by the Company for income tax purposes. See Note 10 of Notes to
Financial Statements.

11
<PAGE> 12

USE OF PROCEEDS

The net proceeds to be received by the Company from this offering are
estimated to be approximately $47.9 million after deducting underwriting
discounts and estimated offering expenses. The Company will not receive any
proceeds from the sale of Common Stock by the Selling Shareholders.

The principal purpose of this offering is to provide the additional capital
needed to support the Company's continued expansion and growth. The Company will
use a portion of the net proceeds of this offering to repay all amounts
outstanding under the Company's three-year, $15 million revolving credit
facility (which had an outstanding balance as of June 1, 1996 of approximately
$8.4 million) and various installment loans (which had an aggregate balance as
of June 1, 1996 of approximately $964,000) and to pay the Dividend. See
"Distribution of S Corporation Earnings." The balance of the net proceeds will
be used for general corporate purposes, including call center expansion and
working capital. The Company's capital expenditures for 1996 are expected to be
approximately $16.0 million, including approximately $8.5 million for the two
new call centers the Company expects to open in the second half of 1996. Pending
such uses, the Company intends to invest the net proceeds of this offering in
short-term interest-bearing instruments.

The $15 million revolving credit facility to be paid down with the proceeds
of this offering accrues interest at the Company's option at the prime rate plus
0.5% or the LIBOR rate plus 3% and terminates in May 1999. The revolving credit
facility has been used for working capital to support the Company's operations
and growth. The various installment loans to be repaid with the proceeds of this
offering have interest rates ranging from 8.5% to 11.0% and maturity dates from
July 1997 to March 2006. The proceeds from the installment loans have been used
for facilities and equipment expenditures. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources" and Notes 4 and 5 of Notes to Financial Statements for a
discussion of the terms of the revolving credit facility and various installment
loans.

DIVIDEND POLICY

The Company currently intends to retain future earnings to finance its
growth and development and therefore does not anticipate paying any cash
dividends in the foreseeable future. In addition, the Company's revolving credit
facility restricts the payment of cash dividends by the Company. Payment of any
future dividends will depend upon the future earnings and capital requirements
of the Company and other factors which the Board of Directors considers
appropriate. No dividends were paid to the shareholders in 1993, 1994 and 1995.
For certain information regarding the Dividend to be paid by the Company in
1996, see "Distribution of S Corporation Earnings."

12
<PAGE> 13

CAPITALIZATION

The following table sets forth the current maturities of long-term
obligations and capitalization of the Company (i) at March 31, 1996, (ii) pro
forma to give effect to the conversion of the Company to a C corporation, the
accrual of the Dividend and the receipt of net amounts due from shareholders
upon completion of this offering (see Note 10 of Notes to Financial Statements),
and (iii) pro forma as adjusted to reflect the receipt and application of the
net proceeds from the issuance and sale by the Company of 3,600,000 shares of
Common Stock offered hereby. See "Use of Proceeds." This table should be read in
conjunction with the Company's Financial Statements and notes thereto appearing
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1996
--------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
------ --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Current maturities of long-term obligations...................... $1,029 $ 1,029 $ 579
====== ======== =======
Long-term obligations, less current maturities................... $5,894 $ 5,894 $ 529
------ -------- -------
Shareholders' equity:
Preferred Stock, $0.01 par value per share, 25 million shares
authorized, none issued and outstanding..................... -- -- --
Common Stock, $0.01 par value per share, 100 million shares
authorized; 16,400,000 shares issued and outstanding actual
and pro forma; and 20,000,000 shares issued and outstanding
pro forma as adjusted(1).................................... 164 164 200
Additional paid-in capital..................................... 72 72 47,964
Retained earnings.............................................. 3,541 413 413
Due from shareholders, net..................................... (363) -- --
------ -------- -------
Total shareholders' equity............................. 3,414 649 48,577
------ -------- -------
Total capitalization................................. $9,308 $ 6,543 $49,106
====== ======== =======
</TABLE>

- ---------------

(1) Excludes 272,000 shares of Common Stock issuable upon exercise of stock
options to be granted under the Company's Employee Stock Plan on the date
of this Prospectus, of which options for 21,000 shares will have exercise
prices of $0.01 per share and options for 251,000 shares will have exercise
prices equal to the initial public offering price. Also excludes 1,756,268
additional shares of Common Stock reserved for future issuance under the
Company's Stock Plans. See "Management -- Employee Stock Plan and Director
Stock Plan" and Note 11 of Notes to Financial Statements.

13
<PAGE> 14

DILUTION

The net tangible book value of the Company at March 31, 1996, was
approximately $3.4 million or $0.21 per share of Common Stock. Net tangible book
value per share represents the amount of total tangible assets less total
liabilities, divided by the number of shares of Common Stock outstanding. Net
tangible book value dilution per share represents the difference between the
amount paid by purchasers of Common Stock in this offering and the pro forma net
tangible book value per share of Common Stock immediately after completion of
this offering.

After giving effect to the conversion of the Company to a C corporation as
though the conversion had occurred on March 31, 1996 (see Note 10 of Notes to
Financial Statements), including accrual of the Dividend (which would have been
approximately $2.9 million as of March 31, 1996), the receipt of net amounts due
from shareholders of approximately $363,000 and recording a net deferred tax
liability of $211,000, the Company's pro forma net tangible book value at March
31, 1996, prior to completion of this offering, would have been approximately
$649,000 or $0.04 per share of Common Stock. After giving effect to the sale of
the shares of Common Stock offered by the Company and the application by the
Company of the estimated net proceeds therefrom, the pro forma net tangible book
value of the Company as of March 31, 1996, would have been approximately $48.6
million or $2.43 per share. This represents an immediate increase in pro forma
net tangible book value of $2.39 per share to existing shareholders and an
immediate dilution of $12.07 per share to new shareholders purchasing Common
Stock in this offering. The following table illustrates this dilution:

<TABLE>
<S> <C> <C>
Initial public offering price per share.............................. $14.50
Net tangible book value per share at March 31, 1996................ $ 0.21
Decrease in net tangible book value attributable to payment of the
Dividend(1)..................................................... (0.18)
Increase in net tangible book value attributable to the receipt of
$363,000 due from shareholders(1)............................... 0.02
Decrease in net tangible book value attributable to establishment
of $211,000 net deferred tax liability(1)....................... (0.01)
------
Pro forma net tangible book value per share prior to this offering... 0.04
Increase per share attributable to new shareholders.................. 2.39
------
Pro forma net tangible book value per share after this offering(2)... 2.43
------
Total net tangible book value dilution per share to new
shareholders....................................................... $12.07
======
</TABLE>

- ---------------

(1) See Note 10 of Notes to Financial Statements.
(2) Excludes 272,000 shares of Common Stock issuable upon exercise of stock
options to be granted under the Company's Employee Stock Plan on the date
of this Prospectus, of which options for 21,000 shares will have exercise
prices of $0.01 per share and options for 251,000 shares will have exercise
prices equal to the initial public offering price. See
"Management -- Employee Stock Plan and Director Stock Plan" and Note 11 of
Notes to Financial Statements.

14
<PAGE> 15

SELECTED FINANCIAL AND OPERATING DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

The following selected financial and operating data are qualified by
reference to and should be read in conjunction with the Company's Financial
Statements and notes thereto included elsewhere in this Prospectus and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The statement of operations data presented below for 1995 and the
balance sheet data as of December 31, 1995 have been derived from the Company's
Financial Statements included elsewhere in this Prospectus, which have been
audited by Coopers & Lybrand L.L.P. The statement of operations data presented
below for 1994 and 1993 and the balance sheet data as of December 31, 1994 have
been derived from the Company's Financial Statements included elsewhere in this
Prospectus, which have been audited by Gurland & Goldberg, P.A. The statement of
operations data presented below for 1992 and 1991 and the balance sheet data as
of December 31, 1993, 1992 and 1991 have been derived from audited financial
statements not included herein. The statement of operations data for each of the
three-month periods ended March 31, 1995 and 1996 and the balance sheet data as
of March 31, 1996 have been derived from the unaudited Financial Statements of
the Company included elsewhere in this Prospectus. Such unaudited financial
statements have been reviewed by Coopers & Lybrand L.L.P. In the opinion of
management, the unaudited financial statements include all normal and recurring
adjustments that management considers necessary for a fair presentation of the
results for such periods. The selected financial and operating data for the
three months ended March 31, 1996 are not necessarily indicative of the results
to be expected for 1996.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------------------- -----------------------
1991 1992 1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.......................... $16,206 $16,107 $18,218 $14,998 $30,204 $5,910 $11,649
---------- ---------- ---------- ---------- ---------- ---------- ----------
Cost of services.................. 8,712 7,759 10,675 9,070 18,372 3,465 7,120
Preoperating costs................ -- -- -- -- 573 -- 174
Selling, general and
administrative
expenses........................ 5,539 7,623 7,278 6,009 9,431 1,913 3,465
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total operating expenses.......... 14,251 15,382 17,953 15,079 28,376 5,378 10,759
---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating income (loss)........... 1,955 725 265 (81) 1,828 532 890
Interest expense.................. 106 150 197 292 372 81 136
Gain (loss) on disposal of
assets.......................... -- (36) (314) 1 -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss) as
reported(1)..................... 1,849 539 (246) (372) 1,456 451 754
Pro forma provision (benefit) for
income taxes(1)................. 717 247 (46) (86) 619 184 312
---------- ---------- ---------- ---------- ---------- ---------- ----------
Pro forma net income (loss)(1).... $ 1,132 $ 292 $ (200) $ (286) $ 837 $ 267 $ 442
========= ========= ========= ========= ========= ========= =========
Pro forma net income per
share(1)(2)..................... $0.05(3) $0.03(3)
========= =========
Weighted average number of shares
of common stock
outstanding(2).................. 16,527,061 16,527,061
========== ==========
NUMBER OF WORKSTATIONS
(AT END OF PERIOD)................ 120 320 320 320 550 550 980(4)
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, 1996
-------------------------------------------- --------------------------
1991 1992 1993 1994 1995 ACTUAL AS ADJUSTED(5)
------ ------ ------ ------- ------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)...................... $ 961 $ (11) $ 160 $(1,423) $ 1,365 $ 3,327 $ 43,336
Total assets................................... 5,148 6,392 7,933 7,737 12,713 15,922 55,481
Short-term obligations(6)...................... 296 1,128 2,084 2,499 1,182 1,029 579
Long-term obligations, less current
maturities................................... 737 776 1,565 1,020 3,924 5,894 529
Shareholders' equity........................... 2,147 2,186 1,940 1,474 2,816 3,414 48,577
</TABLE>

15
<PAGE> 16

- ---------------

(1) Prior to this offering, the Company was an S corporation and not subject to
Federal and Florida corporate income taxes. The statement of operations data
reflects a pro forma provision (benefit) for income taxes as if the Company
were subject to Federal and Florida corporate income taxes for all periods.
This pro forma provision (benefit) for income taxes is computed using a
combined Federal and state tax rate of 37.6%. See Note 10 of Notes to
Financial Statements.
(2) The actual weighted average number of shares outstanding during each of
these periods was 16,400,000 but, as required by generally accepted
accounting principles, the weighted average number of shares outstanding has
been increased by 127,061 shares which are not actually outstanding. This
number is equal to the number of shares which, when multiplied by $15.00 per
share (the assumed initial public offering price at the time the financial
statements included herein were issued), would have been sufficient to
replace the amount of the Dividend (see "Distribution of S Corporation
Earnings") in excess of pro forma earnings for the twelve months ended March
31, 1996. See Note 10 of Notes to Financial Statements.
(3) Supplemental pro forma net income per share would have been $0.06 per share
and $0.03 per share for the year ended December 31, 1995 and the three
months ended March 31, 1996, respectively, giving effect to the use of a
portion of the net proceeds of this offering to repay the Company's bank
borrowings at January 1, 1995, and assuming an increase in the number of
weighted average shares outstanding to 16,722,395 (based on a price of
$15.00 per share, the assumed initial public offering price at the time the
financial statements included herein were issued).
(4) The Company currently operates six call centers with approximately 2,100
workstations. In the second half of 1996, the Company expects to add two
more call centers and approximately 900 additional workstations.
(5) Adjusted to give effect to the conversion of the Company to a C corporation,
the payment of net amount due from shareholders upon completion of this
offering, the sale of the Common Stock offered by the Company hereby and the
application of the estimated net proceeds therefrom as set forth under "Use
of Proceeds." See Note 10 of Notes to Financial Statements.
(6) Short-term obligations consist of short-term debt, if applicable, and
current maturities of long-term obligations, which include notes payable,
installment loans and capital leases.

16
<PAGE> 17

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the Company's results of operations and its
liquidity and capital resources should be read in conjunction with "Selected
Financial and Operating Data" and the Financial Statements of the Company and
related notes thereto appearing elsewhere in this Prospectus.

OVERVIEW

PRC was incorporated in 1982 as a fulfillment company. In order to better
serve the marketing and customer service needs of its clients, the Company
expanded its services to include database marketing and management in 1984, and
began offering teleservices in 1988. Over the next five years, PRC's
teleservices activities grew dramatically as a result of the Company's work with
The Upjohn Company's national marketing program for its Rogaine product. This
single program represented 70.7%, 65.2% and 36.5% of the Company's total
revenues for 1991, 1992 and 1993, respectively.

In 1993, the Company made a strategic decision to focus on becoming a
full-service provider of integrated services in order to attract large corporate
clients with a variety of ongoing telephone-based marketing and customer service
needs. The Company believed that this strategy would position it as a strategic
partner with its clients and lead to the establishment of long-term
relationships. To implement its strategy, the Company made significant
investments in management, personnel, systems, facilities and equipment. Since
1993, investments in systems, facilities and equipment, including the value of
all leased equipment, have amounted to approximately $11.0 million.

In 1994, The Upjohn Company effected a change in its marketing strategy for
the Rogaine product and elected not to extend its program with the Company.
However, the Company continued to expand services to existing clients and to
attract new clients. For clients other than The Upjohn Company, the Company's
total revenues grew from $11.6 million for 1993 to $30.2 million for 1995.

Today PRC offers its customers single source, integrated solutions for
their teleservicing, database marketing and management, and fulfillment needs.
The Company focuses its teleservicing activities on inbound (customer initiated)
calls. Approximately 92.3% of the Company's 1995 teleservicing revenues (and
approximately 62.3% of PRC's overall revenues) were derived from inbound calls.

Prior to this offering, the Company elected to be treated for Federal and
Florida income tax purposes as an S corporation under the Code and comparable
state tax laws. As a result, earnings of the Company have been taxed for Federal
and Florida income tax purposes directly to the shareholders of the Company,
rather than to the Company. In connection with this offering, the Company will
convert from an S corporation to a C corporation under the Code. The statement
of operations data for all periods includes a provision (benefit) for Federal
and state income taxes as if the Company were subject to Federal and Florida
corporate income taxes for all periods. This pro forma provision (benefit) is
computed using a combined Federal and state tax rate of 37.6%. See "Distribution
of S Corporation Earnings" and Note 10 of Notes to Financial Statements.

17
<PAGE> 18

RESULTS OF OPERATIONS

The following table sets forth statement of operations data as a percentage
of revenues for the periods indicated.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------- -----------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Revenues......................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of services................................. 58.6 60.5 60.8 58.6 61.1
Preoperating costs............................... -- -- 1.9 -- 1.5
Selling, general and administrative expenses..... 40.0 40.1 31.2 32.4 29.7
----- ----- ----- ----- -----
Operating income (loss).......................... 1.4 (0.6) 6.1 9.0 7.7
Interest expense................................. 1.1 1.9 1.2 1.4 1.2
Gain (loss) on disposal of assets................ (1.7) -- -- -- --
----- ----- ----- ----- -----
Net income (loss) as reported(1)................. (1.4) (2.5) 4.9 7.6 6.5
Pro forma provision (benefit) for income
taxes(1)....................................... (0.3) (0.6) 2.1 3.1 2.7
----- ----- ----- ----- -----
Pro forma net income (loss)(1)................... (1.1)% (1.9)% 2.8% 4.5% 3.8%
===== ===== ===== ===== =====
</TABLE>

- ---------------

THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31,
1995

Revenues. Revenues increased $5.7 million, or 97.1%, to $11.6 million for
the first three months of 1996 from $5.9 million for the comparable period of
1995. Teleservicing activities, principally inbound services, accounted for the
majority of the change with an increase in revenues of $4.5 million, or 128.6%,
to $8.0 million for the first quarter of 1996 from $3.5 million for the
comparable quarter of 1995. The teleservicing growth was primarily a result of
increased activity from existing clients, principally in the telecommunications
industry. Revenues for information services in conjunction with teleservicing
activities increased $600,000, or 42.9%, to $2.0 million for the first three
months of 1996 from $1.4 million for the comparable period of 1995. Information
services include the design, development and implementation of software
applications for use in a particular client program and the integration of the
Company's systems with those of its clients.

Cost of Services. Cost of services represents labor and telephone expenses
directly related to revenue generating activities as well as each department's
management salaries and equipment depreciation. Cost of services increased to
$7.1 million for the first quarter of 1996 from $3.5 million for the comparable
period of 1995, an increase of $3.6 million, or 105.5%, primarily as a result of
new employees to staff expanded operations. As a percentage of revenues, cost of
services increased to 61.1% for the first three months of 1996 from 58.6% for
the comparable period of 1995. This increase was attributable primarily to
volume pricing for large teleservicing programs.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses represent the cost of central services the Company
provides to support and manage its departmental activities, including senior
management, facilities expenses (including operating leases), and other support
functions such as sales and marketing, human resources and accounting. Selling,
general and administrative expenses increased $1.6 million, or 81.1%, to $3.5
million for the first quarter of 1996 from $1.9 million for the comparable
period of 1995, primarily as a result of increased expenses attributable to new
facilities as well as additional staff to support the Company's higher calling
volumes in 1996. As a percentage of revenues, however, these expenses decreased
to 29.7% for the three months of 1996 from 32.4% for the comparable period of
1995. This percentage decrease was directly attributable to increased revenues
without a commensurate increase in expenses.

18
<PAGE> 19

Preoperating Costs. Preoperating costs include certain incremental costs
incurred at a facility prior to the actual commencement of operations, including
rent, new-hire salaries and expenses for utilities, equipment leases and
security. The costs incurred for the first three months of 1996 primarily relate
to the opening of a 340 workstation call center in April 1996.

Interest Expense. Interest expense increased slightly to $136,000, or 1.2%
of revenues, for the first quarter of 1996 from $81,000, or 1.4% of revenues,
for the comparable period of 1995. This increase reflected higher average
outstanding borrowings, which were used to finance working capital needs, to
open new facilities and to purchase related equipment, and higher interest
rates.

Pro Forma Net Income. Pro forma net income increased 65.3% to $441,000, or
3.8% of revenues, for the first three months of 1996 compared to pro forma net
income of $267,000, or 4.5% of revenues, for the comparable period of 1995. Pro
forma net income includes a provision for Federal and state income taxes. See
Note 10 of Notes to Financial Statements.

1995 COMPARED TO 1994

Revenues. Revenues increased $15.2 million, or 101.4%, to $30.2 million
for 1995 from $15.0 million for 1994. Teleservicing activities, principally
inbound services, accounted for the majority of the change with an increase in
revenues of $12.5 million, or 160.3%, to $20.3 million for 1995 from $7.8
million for 1994. The teleservicing growth was primarily a result of increased
activity from existing clients, principally in the transportation industry, and
the addition of new clients in the telecommunications industry. Revenues for
information services in conjunction with teleservicing activities also increased
$2.2 million, or 73.3%, to $5.2 million for 1995 from $3.0 million for 1994.

Cost of Services. Cost of services increased to $18.4 million for 1995
from $9.1 million for 1994, an increase of $9.3 million, or 102.6%, primarily as
a result of new employees to staff expanded operations. As a percentage of
revenues, cost of services was 60.8% for 1995 and 60.5% for 1994.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $3.4 million, or 56.7%, to $9.4 million for
1995 from $6.0 million for 1994, primarily as a result of increased
administrative and recruiting costs necessary to support the Company's growth,
as well as increased salaries for additional sales and marketing personnel. As a
percentage of revenues, however, these expenses decreased to 31.2% for 1995 from
40.1% for 1994. This percentage decrease was primarily attributable to
management and related costs being unusually high relative to revenues in 1994
as the Company was positioning itself for anticipated growth by expanding its
management team.

Preoperating Costs. Preoperating costs incurred in 1995 primarily relate
to the opening of a 430 workstation call center in January 1996.

Interest Expense. Interest expense increased slightly to $372,000, or 1.2%
of revenues, for 1995 from $292,000, or 1.9% of revenues, for 1994. This
increase reflected higher average outstanding borrowings which were used to
finance working capital needs, to open new facilities and to purchase related
equipment.

Pro Forma Net Income. Pro forma net income increased to $837,000, or 2.8%
of revenues, for 1995 compared to pro forma net loss of $286,000, or 1.9% of
revenues, for 1994. Pro forma net income (loss) includes a provision (benefit)
for Federal and state income taxes. See Note 10 of Notes to Financial
Statements.

1994 COMPARED TO 1993

Revenues. Revenues decreased $3.2 million, or 17.7%, to $15.0 million for
1994 from $18.2 million for 1993. The change is principally due to the loss of
revenues ($5.7 million from 1993) associated with the discontinuance of The
Upjohn Company's Rogaine program with the Company due to a change in marketing
strategy. This program, which began in 1988, was completed in early 1994.
Revenues from clients other than The Upjohn Company increased $2.5 million, or
21.6%, to $14.1 million for 1994 from $11.6 million for 1993. Revenues from
teleservicing activities, principally inbound services, for clients other than
The Upjohn

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<PAGE> 20

Company increased $1.1 million, or 17.1%, to $7.3 million for 1994 from $6.2
million for 1993. The teleservicing growth was primarily a result of increased
activity from existing clients, principally in the food and beverage industry,
as well as from the addition of new clients in the transportation and financial
services industries. Revenues for information services and account services in
conjunction with teleservicing activities from clients other than The Upjohn
Company also increased $1.2 million, or 38.1%, to $4.2 million for 1994 from
$3.0 million for 1993.

Cost of Services. Cost of services decreased to $9.1 million for 1994 from
$10.7 million for 1993, a decrease of $1.6 million, or 15.0%. As a percentage of
revenues, cost of services was 60.5% in 1994 and 58.6% in 1993.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased $1.3 million, or 17.4%, to $6.0 million for
1994 from $7.3 million for 1993, primarily as a result of a decrease in
compensation paid to shareholders in their capacities as employees of the
Company in 1994 and expenses incurred in 1993 associated with the winding down
of The Upjohn Company's Rogaine program with the Company. This decrease was
partially offset by an increase in costs associated with several senior level
management personnel as the Company positioned itself for growth. As a
percentage of revenues, these expenses remained relatively constant.

Interest Expense. Interest expense increased slightly to $292,000, or 1.9%
of revenues, for 1994 from $197,000, or 1.1% of revenues, for 1993. This
increase reflected higher average outstanding borrowings which were used to
finance working capital needs and to purchase computer and telecommunications
equipment.

Pro Forma Net Income. Pro forma net loss increased 43.0% to $286,000, or
1.9% of revenues, for 1994 compared to pro forma net loss of $200,000, or 1.1%
of revenues, for 1993. Pro forma net loss includes a benefit for Federal and
state income taxes. See Note 10 of Notes to Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of liquidity have historically been cash flow
from operating activities, bank borrowings and capital lease financing. In May
1996, the Company entered into a new three-year, $15 million revolving credit
facility, under which the Company may borrow up to 85% of eligible accounts
receivable. During the first year of this facility, the Company may borrow
(subject to the $15 million aggregate limit) an amount not to exceed $2.5
million unrelated to the level of accounts receivable (the "overformula
advance") for a period of one year from the closing date of the loan. The credit
facility accrues interest at the Company's option at the prime rate plus 0.5% or
the LIBOR rate plus 3%; the overformula advance accrues interest at the prime
rate plus 1%. The credit facility is primarily collateralized by accounts
receivable. The Company is required to maintain certain financial covenants,
including minimum tangible net worth and earnings, to limit capital expenditure
to no more than $11 million per year and to limit additional indebtedness. The
Company does not believe that these limitations on capital expenditures and
indebtedness will restrain its ability to grow. The Company is also restricted
from paying dividends except for tax distributions to its shareholders in
connection with S corporation earnings and distributions in connection with the
termination of its S corporation status. The initial borrowings under this
credit facility were used to retire the $5.7 million outstanding balance under
the Company's previous credit facility and a note payable with an outstanding
balance of approximately $250,000. For information about the Company's previous
and existing borrowings, see Notes 4 and 5 of Notes to Financial Statements.

Capital expenditures, including capital lease financings, were $2.6
million, $2.0 million and $1.6 million for 1995, 1994 and 1993, respectively.
The Company expects capital expenditures to approximate $16.0 million for 1996,
including approximately $8.5 million for the two call centers the Company
expects to open in the second half of 1996. Capital expenditures for the first
quarter of 1996 were approximately $887,000. Historically, capital expenditures
have been, and future expenditures are anticipated to be, primarily for
facilities and equipment to support expansion of PRC's operations.

The Company believes that funds generated from operations, the net proceeds
of this offering, availability under its new revolving credit facility and lease
financing will be sufficient to finance its current and

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<PAGE> 21

anticipated operations and planned capital expenditures at least through 1997.
The Company's long term capital requirements beyond 1997 will depend on many
factors, including, but not limited to, the rate at which the Company expands
its business. To the extent that the funds generated from the sources described
above are insufficient to fund the Company's activities in the short or long
term, the Company would need to raise additional funds through public or private
financings. No assurance can be given that additional financing will be
available or that, if available, it will be available on terms favorable to the
Company.

The following table sets forth certain information from the Company's
statement of cash flows for the periods indicated.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
--------------------------- ---------------
1993 1994 1995 1995 1996
------- ------- ------- ----- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating
activities..................................... $ (880) $ 2,264 $ 600 $ 309 $ (990)
Net cash used in investing activities............ (1,230) (1,474) (1,578) (356) (479)
Net cash provided by (used in) financing
activities..................................... 1,755 (223) 458 (322) 1,254
</TABLE>

Cash used in operating activities was $990,000 for the first quarter of
1996. This was the result of $1.1 million of income before depreciation and
amortization offset by $2.1 million of changes in operating assets and
liabilities. The additional working capital was principally related to the
increase in accounts receivable resulting from the increase in revenues over the
same period. Cash used in investing activities for the first three months of
1996 was $479,000, primarily related to the purchase of computer and
telecommunications equipment. Cash provided by financing activities for the
first quarter of 1996 was $1.3 million, reflecting revolving credit facility
borrowings to fund working capital needs.

Cash provided by operating activities was $309,000 for the first quarter of
1995. This was the result of $714,000 of income before depreciation and
amortization, offset by $405,000 of changes in operating assets and liabilities.
Cash used in investing activities for the first three months of 1995 was
$356,000, primarily related to the purchase of computer and telecommunications
equipment. Cash used in financing activities for the first quarter of 1995 was
$322,000, reflecting repayments on long-term obligations.

Cash provided by operating activities was $600,000 for 1995, reflecting
$2.6 million of income before depreciation and amortization, offset by $2.0
million of changes in operating assets and liabilities. The additional working
capital was principally related to the increase in accounts receivable resulting
from the increase in revenues over the same period. Cash used in investing
activities for 1995 was $1.6 million, primarily related to the purchase of
telecommunications equipment, and, to a lesser extent, computers and leasehold
improvements. Cash provided by financing activities for 1995 was $458,000,
reflecting revolving credit facility and other bank borrowings to fund working
capital needs and capital expenditure requirements.

Cash provided by operating activities was $2.3 million for 1994, reflecting
$423,000 of income before depreciation and amortization, plus $1.9 million of
changes in operating assets and liabilities. The working capital change was
principally related to the decrease in accounts receivable resulting from the
decrease in revenues over the same period. Cash used in investing activities for
1994 was $1.5 million, primarily related to the purchase of computer equipment
and, to a lesser extent, telecommunications equipment and leasehold
improvements. Cash used in financing activities for 1994 was $223,000,
reflecting net repayments of long-term obligations.

Cash used in operating activities was $880,000 for 1993, reflecting $1.6
million of changes in operating assets and liabilities, offset by $726,000 of
income before depreciation and amortization and loss on disposal of assets. The
additional working capital was principally related to the increase in accounts
receivable resulting from the increase in revenues over the same period. Cash
used in investing activities for 1993 was $1.2 million, primarily related to the
purchase of computer equipment. Cash provided by financing activities for 1993
was $1.8 million, reflecting revolving credit facility and other bank borrowings
to fund working capital needs and capital expenditure requirements.

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<PAGE> 22

INFLATION

Inflation has not had a material impact upon operating results, and the
Company does not expect it to have such an impact in the future. However, there
can be no assurance that the Company's business will not be affected by
inflation in the future.

QUARTERLY RESULTS

The Company has experienced and expects to continue to experience quarterly
variations in revenues and operating income principally as a result of the
timing of clients' marketing campaigns and customer service programs, the
commencement of new contracts, changes in the Company's revenue mix among its
various service offerings, construction and start-up of new call centers and the
timing of additional selling, general and administrative expenses to acquire and
support such new business. While the effects of seasonality on PRC's business
often are obscured by the addition of new clients and growing revenues, the
Company's business tends to be slower in the first and third quarters of its
fiscal year because client marketing and customer service programs are typically
slower in the post-holiday and summer months.

RECENTLY ISSUED ACCOUNTING STANDARDS

The Financial Accounting Standards Board has issued two financial
accounting standards ("FAS") which became effective January 1, 1996. The
standards are FAS 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of," and FAS 123, "Accounting for
Stock-Based Compensation."

FAS 121 requires that long-lived assets, such as property and equipment,
and certain identifiable intangibles to be held and used be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. An impairment loss, based on
the fair value of the asset, should be recognized if the expected future cash
flows (undiscounted and without interest charges) resulting from the use and
eventual disposition of the asset is less than the carrying amount of the asset.
Based on the Company's current operating results and circumstances, FAS 121 is
not expected to impact its financial position or results of operations.

FAS 123 establishes a fair value based method of accounting for stock-based
compensation plans. It encourages, but does not require, entities to adopt that
method in place of current practice. The standard also requires pro forma
disclosures of results and earnings per share even if the new accounting method
is not adopted. The Company does not expect to adopt the non-mandatory
provisions of FAS 123. Accordingly, the standard will not impact the Company's
financial position or results of operations.

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<PAGE> 23

BUSINESS

GENERAL

INDUSTRY OVERVIEW

The telephone-based marketing and customer service industry has experienced
substantial growth over the past ten years. Telephone-based direct marketing
expenditures increased from an estimated $34 billion in 1984 to an estimated $77
billion in 1994. Telephone contact with customers is increasing as more
companies realize its benefits, including high response rates, low cost per
transaction and direct interaction with customers, which allows on-line access
to detailed customer or product information and immediate response to customer
inquiries. With the proliferation of toll-free "800" and "888" numbers, the
telephone is becoming a principal means of providing customer service.

The Company believes that only a small percentage of the $77 billion in
teleservicing expenditures in 1994 was for outsourced services. The Company
expects that large companies increasingly will outsource these activities in
order to focus internal resources on their core competencies and to improve the
quality and cost-effectiveness of their marketing and customer service efforts
by using the experience and specialized capabilities of larger-scale
teleservices providers. The Company also believes that organizations with
superior customer service and sophisticated, advanced technology, such as PRC,
will particularly benefit from this outsourcing trend.

The teleservices industry has evolved over the last ten years from
primarily single-facility, low-technology environments to large, full-service
organizations with multi-location, high-volume call centers. This evolution has
resulted primarily from the development of sophisticated computer and
telecommunications equipment and software which enable teleservices providers to
implement large-scale, professional programs. However, the industry remains
highly fragmented and is comprised of a large number of in-house operations and
independent companies. Many of these organizations provide only a limited number
of services.

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<PAGE> 24

BUSINESS STRATEGY

PRC's objective is to become the premier full-service provider of
telephone-based marketing and customer service solutions. The Company's strategy
for achieving this objective is to offer high-quality, fully integrated services
to its clients which are customized to address each client's unique needs and to
improve the quality and cost-effectiveness of the client's marketing and
customer service operations. The Company believes it possesses, and is
enhancing, a number of competitive strengths that will help it achieve its
objective, including:

- Advanced Technology. The Company's sophisticated use of advanced
technology enables it to develop and deliver solutions to its clients'
complex marketing and customer service needs. Through the efforts of its
information services group comprised of over 100 information systems
specialists, the Company has designed comprehensive systems that allow it
to rapidly develop and implement application software for each client's
program and to integrate the Company's centrally managed wide area network
with the client's management information systems. PRC has also developed
specialized software programs, CCPro and PRC On-Line, which more
cost-effectively utilize the Company's hardware capabilities and also
provide a seamless interaction with its clients' systems. CCPro, a call
management software program jointly developed with an unaffiliated
software development company, is able to predict when an overflow of
inbound calls is imminent and automatically redirects inbound calls to
outbound customer service representatives working on universal
workstations. PRC On-Line, a proprietary software package, allows PRC
clients to review their programs on line, in real time to obtain
comprehensive trend analyses and to instantly alter program parameters.

- Strong Commitment to Quality. PRC strives to achieve the highest quality
standards in the industry. Approximately 80% of PRC's customer service
representatives are full-time, which the Company believes results in
greater stability and quality in the workforce. The Company has developed
a rigorous screening process for new hires. All new representatives
participate in extensive classroom and on-the-job training programs
lasting up to five weeks. After training, each representative's
performance is monitored regularly through on-site supervision, remote and
on-site call monitoring and on-line performance tracking. The Company's
client commitment team ensures that the Company fulfills its commitments
in connection with each client program in a timely manner. Because PRC's
services

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<PAGE> 25

involve direct contact with its client's customers, the Company's
commitment to quality is critical to its ability to attract and retain
clients.

OPERATIONS OVERVIEW

Program Formulation and Design. PRC's account services team works with the
client to formulate a marketing and customer service program suited to the
client's needs. The information services group uses its substantial expertise in
rapid application development and effective systems integration to help clients
more effectively target marketing programs, resulting in higher response rates
and profitability, and to design customer service programs which capture
information useful in the client's customer retention programs and other
marketing operations. PRC offers a wide array of services, including
formulating, designing and customizing database architecture, programming,
demographic and psychographic profiling, and scripting. For 1995 and the first
quarter of 1996, account services and information services were 23.0% and 22.6%
of the Company's total revenues, respectively.

Program Implementation. PRC's account services team works with the
teleservices and fulfillment operating groups to implement the client's
marketing or customer service program. Teleservicing operations involve direct
communication with the clients' customers through inbound (customer initiated)
or outbound (PRC initiated) calls. For 1995, teleservices accounted for 67.3% of
the Company's total revenues. Of this amount, 92.3% resulted from inbound calls.
For the first quarter of 1996, teleservices accounted for 68.5% of the Company's
total revenues, of which 82.2% resulted from inbound calls.

In handling inbound calls, the Company's customer service representatives
respond to a variety of customer requests, including inquiries, complaints,
direct mail responses and order processing. The customer typically calls a
toll-free "800" number to request product or service information, place an order
for a product or service, or obtain assistance regarding a previous order or
purchase (including "help line" support). PRC's automated call distributors and
digital switches identify each inbound call by "800" number and route the call
to a PRC representative trained for that client's program. Simultaneously with
receipt of the call, the representative's computer screen displays customer,
product and service information relevant to the call.

PRC's outbound services include conducting customer satisfaction and
preference surveys and cross-selling client products, as well as providing
pro-active customer management with the goal of increased sales and enhanced
customer retention. In almost all cases, outbound calls are made to existing
customers of the client or to respond to customer initiated inquiries. The
Company's outbound call management system utilizes predictive dialers which
automatically dial the telephone numbers, determine if a live connection is made
and present connected calls to a customer service representative who has been
trained specifically for the client's program. The customer's name, other
information about the customer and the program script simultaneously appear on
the customer service representative's computer screen. The representative then
uses the script to take an order for the client's product or service or to
request information for addition to the client's database.

The Company's teleservicing operations have been greatly enhanced by the
use of universal workstation technology. Universal workstations allow the
customer service representative to automatically handle either inbound or
outbound calls as the demand dictates. The Company's call management software
program, CCPro, predicts when an overflow of inbound calls is imminent and
automatically directs inbound calls to customer service representatives working
on universal workstations who would otherwise be handling

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<PAGE> 26

outbound calls. This ensures that calls from existing customers or prospective
customers are answered promptly. It also increases efficiency from the client's
standpoint by allowing the customer service representative (for whose services
the client generally pays by the hour) to be productive with either inbound or
outbound calls. As of May 1, 1996, over 90% of the Company's workstations were
universal workstations and the Company expects that all workstations added in
the future will be universal.

Information obtained during a customer call by the PRC customer service
representative is captured by the Company's database marketing and management
systems. This information is used by PRC to ensure high quality performance and
to provide fulfillment services if necessary. PRC's database marketing and
management technology also enables the Company to seamlessly connect with its
clients' systems and thus deliver on-line, real-time program information. PRC's
clients accessing this information through PRC On-Line or other reports to
obtain comprehensive trend analyses are able to monitor, evaluate and alter
program parameters as necessary to improve effectiveness.

Fulfillment services include high-speed laser and electronic document
printing, lettershop, and mechanical inserting, sorting, packaging and mailing
capabilities. While fulfillment services represent a relatively small portion of
the Company's revenues, they enable the Company to support full-service
marketing and customer service programs by managing and fulfilling requests for
literature, pharmaceutical products and other specialty items and by permitting
the rapid distribution of client marketing information. For 1995 and the first
quarter of 1996, fulfillment accounted for 9.3% and 8.7%, respectively, of the
Company's total revenues.

Quality Assurance. PRC maintains its strong commitment to quality through
its quality assurance and client commitment teams. Within each of PRC's
operating divisions the quality assurance teams monitor performance to ensure
that the Company's services are delivered at a level of quality that meets the
Company's and client's standards. For example, in the teleservicing department,
the quality assurance team monitors customer service representatives in order to
maintain quality and efficiency, including compliance with the client's script
and number and length of calls handled. The client commitment team functions on
a company-wide basis to audit the fulfillment of the Company's commitments to
the client with respect to each program.

Client Reporting. Data derived from marketing and customer service
programs are a source of valuable information to PRC's clients in evaluating
ongoing programs and planning and designing future programs. PRC has developed
technologies and reporting procedures that effectively convert raw data gathered
during the course of the program into useful information upon which clients can
base strategic decisions and more effectively respond to customer needs and
inquiries. PRC's proprietary software product, PRC On-Line, allows clients to
monitor their programs on line, in real time to obtain comprehensive trend
analyses and modify program parameters as necessary. In addition, PRC provides
clients with customized reports in printed form, electronic mail,
computer-to-computer transmission, disk, tape and on-line.

TECHNOLOGY

PRC's sophisticated use of advanced technology enables it to develop and
deliver solutions to its clients' complex marketing and customer service needs.
The Company's information services group, which includes over 100 information
systems specialists, has developed the Company's call management and database
marketing and management systems. The information services group uses this
platform to design and implement application software for each client's program.
The Company believes that its platform is among the most advanced in the
industry and provides a significant competitive advantage in attracting new
business. Since 1993, investments in these systems, including the value of
leased equipment, have amounted to approximately $8.7 million.

The Company utilizes a UNIX-based open architecture system comprised of
multiple computer systems which, in conjunction with its rapid application tool
for user interface development, allows PRC to expand capacity from a PC-class
computer to a mainframe without rewriting software, and provides flexibility in
designing applications tailored to the clients' needs. In conjunction with the
Company's use of Oracle and Sybase database applications, the UNIX-based open
architecture system permits the Company to seamlessly interact with many
different types of client systems and permits the utilization of a "hub and
spoke"

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<PAGE> 27

configuration to electronically link each call center's system to the Company's
operational headquarters, resulting in a centrally managed wide area network.
PRC also utilizes computer-telephone integration and universal workstation
technologies as part of its wide area network. All PRC hardware is attached to
an uninterruptable power supply designed for protection against outages or any
data loss due to power variations, as well as a diesel generator to assure an
uninterrupted power source. The Company believes that the integrity of client
information is more than adequately protected by its data security system and
its off-site disaster back-up storage facilities.

PRC On-Line. The Company's proprietary software application, PRC On-Line,
allows its clients to review their programs' progress on line, in real time to
obtain comprehensive trend analyses and to instantly alter program parameters.
The Company believes that the capabilities of its PRC On-Line software
application provide it with a significant competitive advantage, particularly
with large, sophisticated marketing-oriented companies. The increased
communication and control provided by PRC On-Line allows clients to utilize
PRC's services as a seamless extension of their in-house marketing and customer
services operations.

CCPro. The Company's call management software program, CCPro, enables the
Company to more efficiently utilize its universal workstations. CCPro
encompasses all aspects of call management, including predictive dialing,
outbound call management, call routing and dynamic reallocation between inbound
and outbound calls. CCPro is able to predict when an overflow of inbound calls
is imminent and automatically directs these calls to available outbound
operators. PRC has a non-exclusive, perpetual, worldwide license to use CCPro,
which it developed in conjunction with an unaffiliated software development
company. Because this software is available to the Company on a royalty-free
basis, the Company believes its cost per workstation is significantly less than
its competitors who license third-party software.

PERSONNEL AND TRAINING

PRC believes that its rigorous approach to hiring and training its
employees is a key component of its ability to provide high quality service. The
Company carefully selects the locations for its call centers based on
demographic studies in order to ensure the availability of an adequate and
qualified pool of potential employees. Its hiring procedures are designed to
ensure that only the most qualified candidates are offered employment. The
Company offers extensive classroom and on-the-job training programs for its
personnel, including instruction on the businesses of PRC's clients and proper
telephone sales and customer service techniques. Each new customer service
representative receives up to five weeks of training, which provides the skills
training he or she needs to work on a specific, dedicated client program. The
Company offers a benefits package to all full-time employees after six months of
employment. The Company believes that such a careful selection process results
in a high quality, dedicated work force. As of May 1, 1996, the Company had
1,749 full-time employees and 66 part-time personnel, of which 1,452 of the
full-time employees and 60 of the part-time personnel were customer service
representatives. The Company believes that its percentage of full-time customer
service representatives is high relative to its competitors, and that this
results in greater stability and quality in its workforce. None of PRC's
employees is subject to a collective bargaining agreement. The Company considers
its relations with its employees to be good.

SALES AND MARKETING

The Company believes its reputation for providing high quality, one-stop
solutions has enabled it to obtain new business through requests for proposals,
client referrals and cross-selling to existing clients. In addition, the
Company's sales and marketing group actively pursues new business opportunities
by identifying companies and industries which can benefit from the Company's
services. Working with the information services group, the sales and marketing
team is able to demonstrate to prospective clients its rapid application
development and effective systems integration capabilities to meet the proposed
program objectives. The Company has hired, and continues to seek to hire, sales
and marketing personnel with significant industry experience in order to take
advantage of their expertise and established relationships.

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<PAGE> 28

CLIENT RELATIONSHIPS

The Company seeks to develop and maintain long-term relationships with its
clients. PRC targets those companies which have the potential for generating
recurring revenues due to the magnitude of their marketing programs or customer
service departments. PRC believes that its clients view it as a strategic
partner and a valuable resource in formulating, designing and implementing their
marketing and customer service programs. As of May 1, 1996, the Company provided
its services to over 40 clients in industries such as telecommunications,
transportation, consumer products and food and beverage. The Company's ongoing
clients include several divisions of AT&T Corp., British Airways plc, Taco Bell
Corp., Ryder Truck Rental, Inc. and FTD, Inc. New clients expected to contribute
to 1996 revenues include United Parcel Service of America, Inc., DirecTV, Pizza
Hut Inc. and Video Guide. The Company's five and two largest clients accounted
for 77.0% and 59.4%, respectively, of its total revenues for 1995, and 76.5% and
66.2%, respectively, of total revenues for the first quarter of 1996. Revenues
generated by the various divisions of AT&T, the Company's largest client,
accounted for 42.1% of revenues for 1995 and 61.3% of revenues for the first
quarter of 1996. Revenues from Ryder Truck Rental, Inc. accounted for 17.3% of
total revenues for 1995, but no client other than AT&T accounted for 10% or more
of total revenues for the first quarter of 1996.

Although the Company enters into written contracts with its clients,
generally either party retains the right to terminate on varying periods of
prior notice. Contracts typically encompass all aspects of the Company's
relationship with the client, with all charges set forth in one document. The
Company's teleservicing charges are usually based either on a fixed hourly fee
for dedicated service or on a transaction (i.e., number of calls completed)
basis for shared environments. Charges for database marketing and management
services are based on an hourly rate or on the volume of information stored.
Fulfillment service charges are typically assessed on a transaction basis, with
an additional charge for warehousing products. The Company assesses separate
charges for program design, development and implementation, database design and
management, training or retraining of personnel, processing and access fees and
account services, where appropriate.

COMPETITION

The industry in which PRC operates is very competitive and highly
fragmented. PRC's competitors range in size from very small firms offering
specialized applications and short-term projects, to large independent firms and
the in-house operations of many clients and potential clients. In-house
teleservicing and customer service organizations comprise the largest segment of
the industry. The market includes non-captive teleservicing and customer service
operations such as APAC TeleServices, Inc., ITI Marketing Services, Inc.,
MATRIXX Marketing Inc., SITEL Corporation, TeleServices Resources and West
Telemarketing Corporation. In addition, some of PRC's services also compete with
other forms of direct marketing such as mailhouses, television, radio and
on-line services as well as the Internet. PRC believes that the principal
competitive factors in its industry are a reputation for quality, sales and
marketing results, price, technological expertise, and the ability to promptly
provide clients with customized and creative solutions and approaches to their
marketing and customer service needs. The Company believes that it competes
favorably with other companies with respect to the foregoing factors for
large-scale, ongoing marketing and customer service programs where the principal
competitive factor is quality. The Company has not chosen to compete for high-
volume outbound marketing programs where the principal competitive factor is
price. A number of competitors currently have capabilities and resources greater
than PRC's, which might competitively disadvantage PRC in bidding for very large
programs.

GOVERNMENT REGULATION

Telephone sales practices are regulated at both the Federal and state
level. The rules of the Federal Communications Commission (the "FCC") under the
Federal Telephone Consumer Protection Act of 1991 (the "TCPA") prohibit the
initiation of telephone solicitations to residential subscribers before 8:00
a.m. or after 9:00 p.m., local time, and prohibit the use of automated telephone
dialing equipment to call certain telephone numbers. In addition, the FCC rules
require telemarketers to have procedures in place to maintain lists of
residential customers who do not want to receive telephone solicitations and to
avoid making calls to

28
<PAGE> 29

those customers. The FCC rules also prohibit the use of pre-recorded or
artificial voice calls to consumers (with limited exceptions) and advertising
via telephone facsimile machines. The FCC, private individuals and state
attorneys general may seek both injunctive and monetary relief for violation of
these FCC rules. Monetary damages may be awarded for the greater of actual
damages or $1,500 per offense for willful violation of these rules.

The Federal Telemarketing and Consumer Fraud and Abuse Prevention Act of
1994 (the "TCFAPA") broadly authorizes the Federal Trade Commission to issue
regulations prohibiting misrepresentation in telephone sales. In August 1995,
the FTC issued rules under the TCFAPA. These rules set forth disclosure
requirements for telemarketers when placing calls, prohibit deceptive
telemarketing acts or practices during solicitation, provide guidelines on
collecting payments by check and credit cards, provide restrictions on abusive
telephone solicitation practices and promulgate certain record keeping
requirements. The FTC, private individuals and state attorneys general may seek
both injunctive and monetary damages for violation of these FTC rules. Penalties
may range up to $10,000 for each intentional violation of these rules.

The Company believes that it is in compliance with the TCPA and the FCC
rules thereunder and with the FTC's rules under the TCFAPA. The Company trains
its customer service representatives to comply with the FTC and FCC rules and
programs its call management system to avoid telephone calls during restricted
hours or to individuals maintained on PRC's "do-not-call" list.

Most states have enacted or are considering legislation to regulate
telephone solicitations. For example some states require telemarketers to be
licensed by state regulatory agencies prior to soliciting purchasers within that
state. Additionally, telephone sales in certain states cannot be final unless a
written contract is delivered to and signed by the buyer and may be cancelled
within three business days. At least one state also prohibits telemarketers from
requiring credit card payment and several other states require certain
telemarketers to obtain licenses and post bonds. Penalties for violation of
these state telemarketing regulations vary from state to state and include civil
as well as criminal penalties. From time to time, bills are introduced in
Congress which, if enacted, would regulate the use of credit information. The
Company cannot predict whether this legislation will be enacted and what effect,
if any, it would have on the Company or its industry.

The industries served by the Company are also subject to varying degrees of
government regulation. The Company works closely with its clients and their
advisors to develop the scripts to be used by PRC in connection with making
consumer contacts. In connection with its fulfillment service, the Company holds
complimentary drug distributor and prescription drug wholesaler permits issued
by the State of Florida allowing the Company to handle and distribute drugs to
doctors and pharmacists. The Company generally requires its clients to indemnify
PRC against claims and expenses arising with respect to the Company's services
performed on its clients' behalf. The Company has never been held responsible
for the regulatory noncompliance by a client.

FACILITIES

The Company's corporate headquarters are located in Miami, Florida in
leased facilities consisting of 56,745 square feet of office space.
Approximately 53,745 square feet of the corporate office space are leased, while
the remaining 3,000 square feet are subleased. The primary leases terminate in
1997, with the Company holding the option to extend for two three-year terms.
The sublease also terminates in 1997, with the Company holding the option to
renew for three three-year terms. The Company's fulfillment operations are
located in a separate leased facility in Miami, Florida consisting of 47,577
square feet. This lease expires in 2001 and the Company has the option to extend
the lease for one five-year term.

29
<PAGE> 30

The Company leases the facilities listed below for its call centers, all of
which are located in Florida:

<TABLE>
<CAPTION>
CURRENT NUMBER
OF
LOCATION OPENING DATE WORKSTATIONS
------------------------------------------------------ ------------ --------------
<S> <C> <C>
4300 N.W. 135th St., Miami............................ May 1988 120
1505 N.W. 167th St., Miami (site of headquarters)..... July 1992 430
14261 Industrial Way, Miami Lakes..................... January 1996 430
1525 N.W. 167th St., Miami............................ April 1996 270
11975 S.W. 140th Terrace, Miami....................... April 1996 340
5166 E. Colonial Dr., Orlando......................... June 1996 500
------
Total....................................... 2,090
===========
</TABLE>

Of the total number of workstations listed above, approximately 1,950 are
universal workstations which can be used for both inbound and outbound calls.

The leases for these facilities generally expire between 1997 and 2005, and
all leases contain renewal options. The Company also leases additional
facilities incidental to its operations. The Company believes that its existing
facilities are suitable and adequate for its current operations, but additional
facilities will be required to support growth. The Company further believes that
suitable space will be available as needed to expand its business on
commercially reasonable terms. In addition to the facilities list above, the
Company anticipates that it will open two new call centers and add approximately
900 universal workstations in the second half of 1996. See
"Management -- Compensation Committee Interlocks and Insider Participation" and
Note 7 of Notes to Financial Statements.

LEGAL PROCEEDINGS

The Company is not involved in any legal proceedings that, individually or
in the aggregate, management believes will have a material adverse effect on the
Company or its operations if decided adversely to the Company.

30
<PAGE> 31

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information with respect to the
executive officers and directors of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------- --- -------------------------------------------------------
<S> <C> <C>
Mark J. Gordon 48 Chairman of the Board and Chief Executive Officer
David L. Epstein 32 President and Director
James F. Murray 43 Chief Operating Officer and Director
Richard D. Mondre 51 Executive Vice President, General Counsel, Secretary
and Director
Richard N. Ferry, Jr. 44 Senior Vice President -- Business Development
Thomas C. Teper 34 Vice President -- Facilities Acquisition and
Development
Joseph E. Gillis 39 Chief Financial Officer and Treasurer
</TABLE>

The following sets forth the background of each of the Company's executive
officers and directors, including the principal occupation of those individuals
for the past five years:

Mark J. Gordon joined the Company in 1984 and became a director at
that time. Mr. Gordon has served as the Company's Chief Executive Officer
since 1985.

David L. Epstein joined the Company in 1982, was named Executive Vice
President in 1984, and has served as its President since 1985. He became a
director of the Company in April 1996.

James F. Murray joined the Company in November 1993 as its Chief
Operating Officer and was named a director in May 1996. From November 1988
to November 1993, Mr. Murray was the Executive Vice President in charge of
overall operations of Altman Development Company, a large multi-family
residential real estate development and management company. Mr. Murray is a
Certified Public Accountant.

Richard D. Mondre joined the Company in March 1996 as its Executive
Vice President, General Counsel and Secretary. He became a director of the
Company in May 1996. From January 1983 to March 1996, Mr. Mondre was a
partner at the law firm of Rubin Baum Levin Constant Friedman & Bilzin,
which serves as the Company's regular outside counsel. Mr. Mondre remains
"Of Counsel" to that law firm.

Richard N. Ferry, Jr. joined the Company in November 1994 as its Vice
President -- Business Development and was appointed a Senior Vice President
in that position in May 1996. From November 1993 to November 1994, Mr.
Ferry was a principal of Virtual Marketing International, providing
consulting services to a number of companies, including many of the
Company's competitors, in the teleservicing and direct marketing
industries. From November 1991 to November 1993, Mr. Ferry was the Director
of Marketing Services at Century Telecommunications, a provider of
telephone services, and from September 1984 until November 1991, Mr. Ferry
was the Vice President of Operations for Advanced Telemarketing Corp., a
provider of teleservices.

Thomas C. Teper joined the Company in May 1990 as the Vice President
of Finance and Chief Financial Officer. Mr. Teper was appointed Vice
President of Corporate Planning and Development in January 1994 and Vice
President -- Facilities Acquisition and Development in May 1996. Mr. Teper
is a Certified Public Accountant.

Joseph E. Gillis joined the Company in November 1994 as its Chief
Financial Officer and Treasurer. From October 1993 until joining the
Company, Mr. Gillis was the Chief Financial Officer of William Schneider,
Inc., a jewelry manufacturer. From June 1989 to October 1993, Mr. Gillis
was the Vice President of Finance for the Vertical Blind Division of Hunter
Douglas, Inc., a manufacturer of window coverings, or its predecessor,
Profile Corporation. Mr. Gillis is a Certified Public Accountant.

31
<PAGE> 32

INDEPENDENT DIRECTORS; COMMITTEES

The Company intends to add two independent members to its Board of
Directors within 90 days after the date of this Prospectus.

The Company's Board of Directors will establish an Audit Committee, a
majority of the members of which will be independent directors, and a
Compensation Committee, all the members of which will be independent directors.
The Audit Committee will recommend the annual engagement of the Company's
auditors, with whom the Audit Committee will review the scope of audit and
non-audit assignments, related fees, the accounting principles used by the
Company in financial reporting, internal financial auditing procedures and the
adequacy of the Company's internal control procedures. The Compensation
Committee will determine executive officers' salaries and bonuses and will
administer the Company's Stock Plans.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company did not have a Compensation Committee during its last completed
year. The compensation of the Company's executive officers was determined by Mr.
Gordon, as the Company's sole director, for this period.

The Company's facility at 4300 N.W. 135th Street, Miami, as well as two
additional facilities located at 4250 N.W. 135th Street, Miami, and 13180 N.W.
43rd Avenue, Miami (both of the latter facilities are currently used for
warehouse space), are leased to the Company by a corporation, of which Mr.
Gordon is the sole shareholder. Prior to May 1, 1996, such facilities were
leased to the Company on a month-to-month basis. Rent expenses under this
arrangement amounted to approximately $345,000, $211,000 and $194,000 for 1993,
1994 and 1995, respectively. In May 1996, the Company entered into written
leases for such facilities. The leases commenced on May 1, 1996 and run for a
term of five years with the Company holding a five-year renewal option. The
aggregate monthly rents for these three properties is approximately $23,000. The
Company believes that the rents payable under these leases are no less favorable
to it than could be obtained from unaffiliated parties. See Note 7 of Notes to
Financial Statements.

The Company has guaranteed mortgage loans of the affiliated corporation
(mentioned above) which is owned by Mr. Gordon and which leases property to the
Company. Mr. Gordon has agreed to indemnify the Company for any losses incurred
by reason of such guaranty. As of May 1, 1996, the outstanding principal
balances on these three loans were approximately $888,000, $167,000 and
$151,000, respectively, and the monthly payment amounts were approximately
$9,000, $2,000 and $2,000, respectively. The largest outstanding balances for
these loans for 1993, 1994 and 1995 were $1.4 million, $1.4 million and $1.3
million, respectively. See Note 7 of Notes to Financial Statements.

The Company subleases its facility at 11975 S.W. 140th Terrace, Miami, from
a partnership owned jointly by Messrs. Gordon and Epstein. The term of this
sublease expires in January 1999 and the monthly rental obligation is
approximately $13,000 for 1996, $14,000 for 1997 and $15,000 for 1998. The
property is subleased to the Company on the same terms as the primary lease with
an unaffiliated party. The affiliated partnership holds an option to purchase
the property. The Company also subleases a parking facility adjacent to the
11975 S.W. 140th Terrace facility from the same affiliated partnership. This
sublease also expires in January 1999 and the monthly rental obligation is
approximately $2,000 plus one-twelfth of the applicable real estate taxes. This
property is also subleased to the Company on the same terms as the primary
lease. The Company was originally the lessee under both primary leases, but
assigned its interest to the partnership in May 1996 for nominal consideration.
The Company has also entered into a net lease with the aforementioned
partnership for an additional parking area to be effective when the partnership
acquires the parking area. The acquisition is expected to occur in June 1996.
The term of the lease will expire five years from the date of the acquisition
and the monthly rental obligation will be approximately $2,500. The Company
believes that the rents payable under these subleases and the net lease, when
effective, are, or will be, no less favorable than could be obtained from
unaffiliated parties. See Note 7 of Notes to Financial Statements.

Nu World Realty, Inc. ("Nu World"), a company which is owned by a relative
of Mr. Gordon, has acted, and will continue to act, as a co-broker in
transactions pursuant to which the Company leases some of its

32
<PAGE> 33

facilities. Mr. Gordon is licensed to act as a real estate salesperson for Nu
World and receives a portion of the commissions payable to Nu World. From
January 1, 1993 to May 1, 1996, Nu World had earned approximately $89,000 in
commissions from the lessors in connection with these lease transactions, of
which Mr. Gordon was paid approximately $46,000. The Company has paid no portion
of these commissions and believes that the brokerage fees paid in connection
with these lease transactions are consistent with industry standards.

A portion of the drawings under the Company's new three-year, $15 million
credit facility was used to repay the approximate outstanding amount of $5.7
million under the Company's $5.8 million revolving credit facility which was to
expire on May 30, 1996, and a bank note payable in the approximate outstanding
amount of $250,000 scheduled to mature in October 1996. The $5.8 million credit
facility was guaranteed by Messrs. Gordon and Epstein and the bank note was
guaranteed by Mr. Gordon. A portion of the proceeds of this offering will be
used to repay all outstanding amounts under various installment loans guaranteed
by Messrs. Gordon and/or Epstein. The aggregate outstanding amounts under these
loans as of June 1, 1996 was approximately $800,000. See Notes 4 and 5 of Notes
to Financial Statements.

For information concerning the Dividend to be paid by the Company to its
current shareholders in 1996 and the Tax Agreement to be entered into between
the Company and its current shareholders, see "Distribution of S Corporation
Earnings."

The Company has from time to time advanced amounts to Messrs. Gordon and
Epstein. Such advances have been made on an interest-free basis. During 1993,
1994 and 1995, the largest amount of such advances to Mr. Gordon was
approximately $78,000, $105,000 and $216,000, respectively. The outstanding
balance at March 31, 1996 was approximately $295,000. The largest amount of
advances to Mr. Epstein during 1993, 1994 and 1995 was approximately $126,000,
$105,000 and $127,000, respectively. The outstanding balance owed by Mr. Epstein
at March 31, 1996 was approximately $206,000. As of March 31, 1996, the Company
was indebted to Mr. Gordon and Mr. Epstein for approximately $32,000 and
$105,000, respectively. These advances were represented by notes paying interest
at 6% per annum. The net amount owed to the Company by Mr. Gordon and Mr.
Epstein will be repaid concurrently with the closing of this offering. See Note
7 of Notes to Financial Statements.

The Company funds a portion of the life insurance premiums payable with
respect to three split-dollar life insurance policies owned by The Mark Gordon
Family Trust. The amounts paid by the Company are repayable without interest
upon the death of Mr. Gordon, the surrender of the policies or the termination
of the arrangement. This obligation is secured by the benefits payable under the
insurance policies. The amounts outstanding for these premiums as of December
31, 1993, 1994 and 1995, and March 31, 1996 were approximately $59,000, $76,000,
$92,000 and $92,000, respectively.

DIRECTOR COMPENSATION

Prior to this Offering, directors have not received compensation for acting
as such. After this offering, directors who are not employees or officers of the
Company will receive a quarterly retainer of $1,500 and will receive $500 for
attendance at each meeting of the Board of Directors or committee thereof. Such
directors will also receive an option to purchase 2,500 shares of Common Stock
upon initial election and upon each re-election as a director at the Company's
annual meeting of shareholders. Directors may also be reimbursed for certain
expenses in connection with attendance at Board and committee meetings. Other
than with respect to reimbursement of expenses, directors who are employees or
officers of the Company will not receive additional compensation for service as
a director. See "Employee Stock Plan and Director Stock Plan."

EMPLOYMENT AGREEMENTS

Mark J. Gordon and David L. Epstein. Each of Mr. Gordon and Mr. Epstein
has an employment agreement with the Company, the terms of which are
substantially similar. The initial employment term is the period from July 1,
1996 to June 30, 2001, but is subject to annual renewal thereafter. However, the
employee may terminate the agreement at any time on 30 days notice. Each has a
minimum base salary of $425,000 per annum (adjusted for inflation) subject to
increase by the Compensation Committee. An annual bonus is

33
<PAGE> 34

payable based on criteria to be agreed upon by the Compensation Committee and
the employee at the beginning of each year. No such criteria have yet been
established. Each agreement provides for the annual grant of stock options in a
number to be determined by the Compensation Committee, but for no fewer than 5%
of the aggregate number of shares for which options were granted under the Stock
Plans during the year. Each has certain piggyback and demand registration
rights. See "Shares Eligible for Future Sale." If either Mr. Gordon's or Mr.
Epstein's employment is terminated by death, disability or voluntary
resignation, the employee is entitled to severance equal to 18 months salary,
bonus and benefits, and if employment is terminated by the Company without cause
(as defined in the agreements), the terminated individual is entitled to
severance equal to salary, bonus and benefits for the balance of the contract
term or three years, whichever is longer.

Richard D. Mondre. Mr. Mondre's employment agreement extends to March 31,
1999, and provides for minimum annual compensation of $400,000, subject to
increase by the Compensation Committee based on Company performance and other
factors. If Mr. Mondre's employment is terminated by the Company during the term
of the contract without cause, he will be entitled to severance equal to the
compensation and benefits payable over the balance of the term, not to exceed
$450,000. If a change in control has occurred, the $450,000 cap does not apply.
A change in control generally means that neither Mr. Gordon nor Mr. Epstein
controls the Company. Mr. Mondre is granted piggyback registration rights for
his Company stock. See "Shares Eligible for Future Sale." He is authorized to
remain "Of Counsel" to Rubin Baum Levin Constant Friedman & Bilzin as long as
his duties in that capacity do not interfere with his performance under the
employment agreement.

James F. Murray. Mr. Murray's employment agreement extends to March 31,
1999 and provides for a base annual salary of $200,000 plus an annual bonus
equal to 1% of the Company's pre-tax net income for 1996, 1997 and 1998. If Mr.
Murray's employment is terminated by the Company during the term of the contract
without cause, he will be entitled to severance equal to the compensation and
benefits payable over the balance of the term, not to exceed $300,000. Mr.
Murray is granted piggyback registration rights for his Company stock. See
"Shares Eligible for Future Sale."

Richard N. Ferry, Jr. Mr. Ferry's employment agreement extends for three
years to June 30, 1999 and provides for a base annual salary of $175,000 in the
first year, with incremental increases of $25,000 for each of the next two
years. An annual bonus is payable based on Mr. Ferry's performance. On the date
of this Prospectus, Mr. Ferry will be granted an option to purchase 36,000
shares of Common Stock at an exercise price per share equal to the initial
public offering price of the Common Stock offered hereby, and an option to
purchase 21,000 shares at an exercise price of $0.01 per share. These options
will vest one third on January 5, 1997, 1998 and 1999. If Mr. Ferry's employment
is terminated by the Company during the term of the contract without cause, he
will be entitled to severance equal to his compensation and benefits for 180
days from the date of termination.

EXECUTIVE COMPENSATION

The following table sets forth information with respect to all compensation
paid or earned for services rendered to the Company in 1995 by the chief
executive officer and its four other most highly compensated executive officers
whose aggregate annual compensation exceeded $100,000 (together, the "Named
Executive Officers"). No bonus was paid to any Named Executive Officer during
1995. The Company does not have a pension plan or a long-term incentive plan,
has not issued any restricted stock awards and has not granted any stock options
or stock appreciation rights prior to this offering. The value of all
perquisites and other personal benefits received by each Named Executive Officer
did not exceed 10% of the Named Executive Officer's total annual salary.

34
<PAGE> 35

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------- ALL OTHER
NAME AND PRINCIPAL POSITION SALARY COMPENSATION(1)
---------------------------------------------------- ------------------- ---------------
<S> <C> <C>
Mark J. Gordon, Chief Executive Officer............. $ 281,496 $19,366
David L. Epstein, President......................... 276,635 14,981
James F. Murray, Chief Operating Officer............ 148,185 --
Richard N. Ferry, Jr., Vice President, Business
Development....................................... 122,294 --
Thomas C. Teper, Vice President, Corporate Planning
and Development................................... 120,370 2,421
</TABLE>

- ---------------

(1) Consists of premiums on life and disability insurance policies and, with
respect to Mark J. Gordon, includes premiums paid for three split-dollar
life insurance policies for the benefit of The Mark Gordon Family Trust.

EMPLOYEE STOCK PLAN AND DIRECTOR STOCK PLAN

The Company has adopted a 1996 Incentive Stock Plan (the "Employee Stock
Plan") and a 1996 Nonemployee Director Stock Option Plan (the "Director Stock
Plan"; together with the Employee Stock Plan, the "Stock Plans"). Officers, key
employees and nonemployee consultants may be granted stock options, stock
appreciation rights, stock awards, performance shares and performance units
under the Employee Stock Plan. The Company has reserved 1,931,684 shares of
Common Stock for issuance under the Employee Stock Plan and 96,584 shares of
Common Stock for issuance under the Director Stock Plan, after giving effect to
the recently completed stock splits by way of share dividends, and subject in
each case to further antidilution adjustments.

The Director Stock Plan will provide for annual grants of a non-qualified
stock option to each nonemployee director of the Company. The option will allow
such directors to purchase 2,500 shares of Common Stock at an exercise price
equal to the fair market value of the Common Stock on the date of grant. These
options will have a term of ten years and vest in equal installments over three
years.

Prior to the establishment of the Compensation Committee (the "Committee")
of the Board of Directors, the Employee Stock Plan will be administered by the
Board of Directors of the Company. Upon completion of this offering, the
Employee Stock Plan will be administered by the Committee, whose members must
qualify as "disinterested persons" (as such term is defined under Rule 16b-3 of
the Securities Exchange Act of 1934, as amended). The Board of Directors or
Committee will be authorized to determine, among other things, the key employees
to whom, and the times at which, options and other benefits are to be granted,
the number of shares subject to each option, the applicable vesting schedule and
the exercise price (provided that, except for 50,000 shares which may be granted
at an exercise price as low as $0.01 per share, the exercise price may not be
less than 85% of fair market value of the Common Stock at the date of grant).
The Board of Directors or Committee will also determine the treatment to be
afforded to a participant in the Employee Stock Plan in the event of termination
of employment for any reason, including death, disability or retirement. Under
the Employee Stock Plan the maximum term of an incentive stock option is ten
years and the maximum term of a nonqualified stock option is fifteen years.

The Board of Directors has the power to amend the Stock Plans from time to
time. Shareholder approval of an amendment is only required to the extent that
it is necessary to maintain the Stock Plans' status as protected plans under
applicable securities laws or the Employee Stock Plan's status as a qualified
plan under applicable tax laws.

Prior to this offering, no options had been granted under the Company's
Stock Plans. On the date of this Prospectus, Richard N. Ferry, Jr., the
Company's Senior Vice President -- Business Development, will be granted two
options to purchase 36,000 and 21,000 shares, respectively, under the Employee
Stock Plan. The

35
<PAGE> 36

options granted to Mr. Ferry will vest in equal installments on January 5, 1997,
1998 and 1999 and will have a total term of seven years. The option for 21,000
shares will have an exercise price of $0.01 per share and the option for 36,000
shares will have an exercise price equal to the initial public offering price.
Options to purchase an aggregate of 215,000 shares will be granted under the
Employee Stock Plan to 139 other employees of the Company (including Thomas C.
Teper, the Company's Vice President -- Facilities Acquisition and Development,
who will be granted an option to purchase 20,000 shares, and Joseph E. Gillis,
the Company's Chief Financial Officer and Treasurer, who will be granted an
option to purchase 10,000 shares). These options will have an exercise price
equal to the initial public offering price of the Common Stock offered hereby,
will vest at the rate of 20% per year and will have a total term of seven years.

PROFIT SHARING PLAN

The Board of Directors of the Company has adopted a Profit Sharing Plan
(the "Profit Sharing Plan"). Under the terms of this plan, the Company makes
elective contributions to the Profit Sharing Plan, the allocation of which is
based on salary. All employees are eligible for participation in the plan on the
January 1 nearest the attainment of age 21 and completion of two years of
service with the Company. The Company did not contribute to the Profit Sharing
Plan for the year ended December 31, 1995.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

The Company's Articles contain a provision eliminating the personal
liability of its directors for monetary damages resulting from breaches of their
fiduciary duty to the extent permitted by the Business Corporation Act of
Florida. This provision in the Articles does not eliminate the duty of care and,
in appropriate circumstances, equitable remedies such as an injunction or other
forms of non-monetary relief would remain available under Florida law. Each
director will continue to be subject to liability for breach of a director's
duty of loyalty to the Company or its shareholders, for acts or omissions not in
good faith or involving intentional misconduct, for knowing violations of law,
for any transaction from which the director derived an improper personal benefit
and for improper distributions to shareholders. This provision also does not
affect a director's responsibilities under any other laws, such as the Federal
securities laws or state or Federal environmental laws.

The Company's Articles and Bylaws provide that the Company will indemnify
its directors and officers, and may indemnify its employees and other agents, to
the fullest extent permitted by law. The Company's Bylaws also permit it to
secure insurance on behalf of any person it is required or permitted to
indemnify for any liability arising out of his or her actions in such capacity,
regardless of whether the Articles and Bylaws would permit indemnification. The
Company intends to maintain liability insurance for its directors and officers.

The Company has entered into agreements to indemnify its directors and its
executive officers, in addition to the indemnification provided for in the
Company's Articles and Bylaws. These agreements, among other things, indemnify
the Company's directors and such officers for all direct and indirect expenses
and costs (including, without limitation, all reasonable attorneys' fees and
related disbursements, other out of pocket costs and reasonable compensation for
time spent by such persons for which they are not otherwise compensated by the
Company or any third person) and liabilities of any type whatsoever (including,
but not limited to, judgments, fines and amounts paid in settlement) actually
and reasonably incurred by such person in connection with either the
investigation, defense, settlement or appeal of any threatened, pending or
completed action, suit or other proceeding, including any action by or in the
right of the corporation, arising out of such person's services as a director,
officer, employee or other agent of the Company, any subsidiary of the Company
or any other company or enterprise to which the person provides services at the
request of the Company. The Company believes that these provisions and
agreements are necessary to attract and retain talented and experienced
directors and officers.

At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent of the Company where indemnification will
be required or permitted. The Company is not aware of any threatened litigation
or proceeding that might result in a claim for such indemnification.

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<PAGE> 37

CERTAIN TRANSACTIONS

For a discussion of certain transactions between the Company, on the one
hand, and Mr. Gordon, Mr. Epstein or their respective affiliates, on the other
hand, see "Management -- Compensation Committee Interlocks and Insider
Participation." For information concerning the Dividend to be paid by the
Company to its current shareholders in 1996 and the Tax Agreement to be entered
into between the Company and its current shareholders, see "Distribution of S
Corporation Earnings."

Richard D. Mondre, the Company's Executive Vice President, General Counsel
and Secretary and a director, was a Partner of Rubin Baum Levin Constant
Friedman & Bilzin ("Rubin Baum") until immediately prior to joining the Company
in March 1996 and remains "Of Counsel" to that firm. Rubin Baum has acted as the
Company's regular outside legal counsel since 1987. The total fees and costs
paid by the Company to Rubin Baum in 1993, 1994, 1995 and the first four months
of 1996 were approximately $171,000, $191,000, $210,000 and $72,000,
respectively. The Company believes that the fees paid to Rubin Baum are no less
favorable than could be obtained from other comparable law firms in the area.

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of June 1, 1996 and as adjusted for the sale of the
shares offered hereby by (i) each shareholder of the Company prior to this
offering; (ii) each director of the Company; (iii) each Named Executive Officer;
and (iv) all directors and executive officers of the Company as a group. The
table also reflects the number of shares to be sold by the Selling Shareholders.
Except as otherwise indicated, the Company believes that the beneficial owners
of the Common Stock listed below, based on information provided by such owners,
have sole investment and voting power with respect to such shares. The address
of each of the shareholders named below is the Company's principal executive
office.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY NUMBER OF SHARES BENEFICIALLY
OWNED PRIOR TO OFFERING SHARES OWNED AFTER OFFERING(1)
----------------------- BEING -----------------------
NAME NUMBER PERCENT(2) OFFERED(1) NUMBER PERCENT(2)
- ------------------------------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Mark J. Gordon(3)(7)(8)............. 9,840,000 60.0% 200,000 9,640,000 48.2%
David L. Epstein(4)(7)(8)........... 6,560,000 40.0 200,000 6,360,000 31.8
Richard D. Mondre(5)(7)(8).......... 4,920,000 30.0 -- 4,920,000 24.6
James F. Murray(6)(7)(8)............ 820,000 5.0 -- 820,000 4.1
Richard N. Ferry, Jr.(9)............ -- -- -- -- --
Thomas C. Teper(9).................. -- -- -- -- --
All executive officers and directors
as a group (7 persons)(10)........ 16,400,000 100.0 400,000 16,000,000 80.0
</TABLE>

- ---------------

(1) Messrs. Gordon and Epstein are offering shares directly owned by them.
Assumes no exercise of the Underwriters' over-allotment option to purchase
up to an aggregate of 600,000 additional shares from the Selling
Shareholders. If the over-allotment option is exercised in full, Mr. Gordon
could sell an additional 350,000 shares directly owned by him, Mr. Epstein
could sell an additional 200,000 shares directly owned by him and the Jason
Howard Gordon PRC Trust and the Stacy Lynn Gordon PRC Trust each could sell
25,000 shares owned by them, reducing the percentage of shares beneficially
owned by Messrs. Gordon, Epstein and Mondre to 46.5%, 30.6% and 24.4%,
respectively. Any shares sold pursuant to the over-allotment option will
first be sold pro rata by Mr. Gordon and Mr. Epstein then, to the extent
the option is exercised for more than Mr. Gordon's and Mr. Epstein's
shares, pro rata by the two trusts. See footnotes (4) and (5) below.
(2) Percentage of beneficial ownership is based on 16,400,000 shares of Common
Stock outstanding as of the date of this Prospectus, and 20,000,000 shares
of Common Stock to be outstanding after completion of this offering.
(3) Includes 615,000 shares beneficially owned by Mr. Mondre and 615,000 shares
beneficially owned by Mr. Murray but as to which, pursuant to voting trust
agreements between Mr. Gordon and each of Messrs. Mondre and Murray, Mr.
Gordon has voting control. Such voting trust agreements continue until
February 2006, subject to earlier termination in certain circumstances, and
give Mr. Gordon

37
<PAGE> 38

absolute discretion in voting the shares. See "Description of Capital
Stock -- Shareholder and Voting Trust Agreements." Also includes 820,000
shares as to which Mr. Gordon shares the voting and dispositive duties as
co-trustee under the David Epstein 1995 Grantor Trust, a trust created by
Mr. Epstein for the benefit of his children.
(4) Includes 205,000 shares beneficially owned by Mr. Mondre and 205,000 shares
beneficially owned by Mr. Murray but as to which, pursuant to voting trust
agreements between Mr. Epstein and each of Messrs. Mondre and Murray, Mr.
Epstein has voting control. Such voting trust agreements continue until
February 2006, subject to earlier termination in certain circumstances, and
give Mr. Epstein absolute discretion in voting the shares. See "Description
of Capital Stock -- Shareholder and Voting Trust Agreements." Also includes
1,640,000 and 1,640,000 shares, respectively, as to which Mr. Epstein
shares the voting and dispositive duties as co-trustee under the Jason
Howard Gordon PRC Trust and the Stacy Lynn Gordon PRC Trust, trusts created
for the benefit of Mr. Gordon's children.
(5) Includes 820,000 shares beneficially owned by Mr. Mondre which are subject
to voting trust agreements described in (3) and (4) above. Also includes
1,640,000, 1,640,000 and 820,000 shares, respectively, as to which Mr.
Mondre shares the voting and dispositive duties as co-trustee under the
Jason Howard Gordon PRC Trust, the Stacy Lynn Gordon PRC Trust and the
David Epstein 1995 Grantor Trust.
(6) All of the shares beneficially owned by Mr. Murray are subject to the
voting trust agreements described in (3) and (4) above.
(7) Mr. Gordon and Mr. Epstein each has the right to acquire some or all of the
other's shares in certain circumstances pursuant to a shareholder agreement
and each has certain rights to acquire shares owned by Messrs. Mondre and
Murray pursuant to shareholder agreements. For a more detailed description
of these rights, see "Description of Capital Stock -- Shareholder and
Voting Trust Agreements."
(8) Immediately prior to the date of this Prospectus, each of Messrs. Gordon,
Mondre and Murray currently expects to transfer a certain number of shares
to a family limited partnership in which each such person will be the sole
general partner and either a member of his family or one or more trusts for
the benefit of members of his family will be the sole limited partners, and
Mr. Epstein currently expects to transfer a number of shares to trusts for
the benefit of members of his family. The shares transferred by Messrs.
Mondre and Murray will be released from the voting trust and shareholder
agreements described herein, thereby resulting in a reduction in the number
of shares beneficially owned by Messrs. Gordon and Epstein by 87,500 and
29,166 shares, respectively. The shares transferred by Mr. Epstein will
further reduce the number of shares beneficially owned by Mr. Epstein by
3,300 shares.
(9) Excludes options to be granted on the date of this Prospectus. See
"Employee Stock Plan and Director Stock Plan."
(10) See other footnotes above.

38
<PAGE> 39

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 125 million shares,
of which 100 million shares are Common Stock, par value $0.01 per share, and 25
million shares are preferred stock, par value $0.01 per share. As of the date of
this Prospectus, after giving effect to the recently completed 127,350-for-1 and
a subsequent 1.287789556-for-1 stock split by way of share dividends, there were
16,400,000 shares of Common Stock outstanding held of record by nine
shareholders, and no preferred stock outstanding. See "Principal and Selling
Shareholders." After completion of this offering 20,000,000 shares of Common
Stock will be issued and outstanding.

The following description of the capital stock of the Company and certain
provisions of the Company's Articles and Bylaws is a summary and is qualified in
its entirety by the provisions of the Articles and Bylaws, which have been filed
as exhibits to the Company's Registration Statement, of which this Prospectus is
a part.

COMMON STOCK

The issued and outstanding shares of Common Stock are, and the Common Stock
to be sold by the Company in this offering will be, validly issued, fully paid
and nonassessable. Subject to the rights of holders of preferred stock, the
holders of outstanding Common Stock are entitled to receive dividends out of
assets legally available therefor at such times and in such amounts as the Board
of Directors may from time to time determine. See "Dividend Policy." The shares
of Common Stock are neither redeemable nor convertible, and the holders thereof
have no preemptive or subscription rights to purchase any securities of the
Company. Upon liquidation, dissolution or winding up of the Company, the holders
of Common Stock are entitled to receive, pro-rata, the assets of the Company
which are legally available for distribution, after payment of all debts and
other liabilities and subject to the prior rights of any holders of preferred
stock then outstanding. Each outstanding share of Common Stock is entitled to
one vote on all matters submitted to a vote of shareholders. There is no
cumulative voting in the election of Directors.

PREFERRED STOCK

The Company's Articles authorize the Board of Directors to issue the
preferred stock in classes or series and to establish the designations,
preferences, qualifications, limitations or restrictions of any class or series
with respect to the rate and nature of dividends, the amounts payable upon
liquidation, the price and terms and conditions on which shares may be redeemed,
the terms and conditions for conversion or exchange into any other class or
series of shares, voting and preemptive rights and other terms. The Company may
issue, without approval of the holders of Common Stock, preferred stock which
has voting, dividend or liquidation rights superior to the Common Stock and
which may adversely affect the rights of holders of Common Stock. The issuance
of preferred stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could, among other things, adversely
affect the voting power of the holders of Common Stock and could have the effect
of discouraging, delaying, deferring or preventing a change in control of the
Company. The Company has no present plan to issue any preferred stock.

SHAREHOLDER AND VOTING TRUST AGREEMENTS

Mr. Gordon and Mr. Epstein are parties to a shareholder agreement which
grants to each the right to purchase some or all of the other's shares upon the
death or total incapacity of the other or the involuntary transfer of the
other's shares, and a right of first refusal on any shares proposed to be sold
to a third party.

Mr. Mondre and Mr. Murray acquired their shares of Common Stock 75% from
Mr. Gordon and 25% from Mr. Epstein in February 1996 at a price of $0.55 per
share ($900,000 in total for both purchases). The purchase prices are evidenced
by nine-year promissory notes, each bearing interest at 5.61% per annum, with
interest payable annually and the entire principal due at maturity. Such notes
are guaranteed by Mr. Mondre's or Mr. Murray's (as applicable) spouse and are
secured by a pledge of the shares sold pursuant to separate pledge agreements.
Since the acquisition, a number of favorable developments at the Company have
occurred including the obtaining of a new revolving credit facility and
significant new business from new and existing clients. See "Risk
Factors -- Factors Affecting Ability to Manage and Sustain Growth" and
" -- Reliance on

39
<PAGE> 40

Major Clients and Key Industries," "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources" and "Business -- General."

In connection with the acquisition, Mr. Mondre and Mr. Murray each entered
into shareholders agreements with Mr. Gordon and Mr. Epstein which provide for
significant restrictions on Mr. Mondre and Mr. Murray's respective rights to
sell, alienate or otherwise dispose of the shares of Common Stock owned by Mr.
Mondre and Mr. Murray that were acquired from Mr. Gordon and Mr. Epstein,
respectively, as well as rights on the part of Mr. Gordon and Mr. Epstein to
purchase those shares under certain circumstances. Such restrictions and
purchase rights do not relate to shares which may be owned by Mr. Mondre and Mr.
Murray from time to time that were not acquired from Mr. Gordon or Mr. Epstein.
Currently, all shares of Common Stock owned by Mr. Mondre and Mr. Murray were,
in fact, acquired from either Mr. Gordon or Mr. Epstein. Generally, neither Mr.
Mondre nor Mr. Murray may sell, alienate or otherwise dispose of their shares of
Common Stock prior to April 1, 1999, without the consent of Mr. Gordon and Mr.
Epstein, subject to certain exceptions including a change in control,
termination of employment without cause, a sale of the Company, a sale of shares
in a public offering and death or disability (subject to the repurchase rights
of Mr. Gordon and Mr. Epstein described below). Mr. Mondre's Common Stock is
subject to repurchase by Mr. Gordon and Mr. Epstein at the acquisition price if
Mr. Mondre dies or becomes disabled prior to April 1, 1997, or if his employment
with the Company terminates during his three-year employment term as a result of
his resignation or termination by the Company with cause. One-half of Mr.
Murray's Common Stock is subject to repurchase by Mr. Gordon and Mr. Epstein at
the acquisition price if Mr. Murray dies or becomes disabled prior to April 1,
1997, and all of his Common Stock is subject to repurchase at the acquisition
price if his employment with the Company terminates during his three-year
employment term as a result of his resignation or termination by the Company
with cause. All of such repurchase rights terminate upon a change in control, a
sale of the Company, or termination of employment without cause during the
three-year employment term.

Pursuant to voting trust agreements entered into at the time of acquisition
of the shares, each of Mr. Gordon and Mr. Epstein retained the right to vote the
shares sold by him to Mr. Mondre and Mr. Murray until February, 2006, subject to
earlier termination in certain events. The voting trusts terminate with respect
to any shares permitted to be sold by either Mr. Mondre or Mr. Murray under the
applicable shareholder agreement described above and terminate completely upon
the death of the voting trustee or upon a change in control.

CERTAIN STATUTORY PROVISIONS

The Company is subject to Sections 607.0901 and 607.0902 of the Florida
Business Corporation Act. In general, Section 607.0901 restricts the ability of
a greater than 10% shareholder of a company to engage in a wide range of
specified transactions between such company and such shareholder or a person or
entity controlled by or controlling such shareholder. The statute provides that
such a transaction must be approved by the affirmative vote of the holders of
two-thirds of such company's voting shares, unless it is approved by a majority
of the disinterested directors. Section 607.0902 restricts the ability of a
third party to effect an unsolicited change in control of a company. In general,
the statute provides that shares acquired in a transaction which effects a
certain threshold change in the ownership of a company's voting shares (a
"control share acquisition") have the same voting rights as shares held by the
acquiring person prior to the acquisition only to the extent granted by a
resolution adopted by shareholders in a prescribed manner. These statutory
provisions may have an anti-takeover effect by deterring unsolicited offers or
delaying changes in control or management of the Company.

CERTAIN CHARTER AND BYLAW PROVISIONS

The Company's Articles and Bylaws contain a number of provisions related to
corporate governance and to the rights of shareholders. In particular, the
Bylaws provide that shareholders are required to follow an advance notification
procedure for certain shareholder nominations of candidates for the Board of
Directors and for certain other shareholder business to be conducted at any
meeting of the shareholders. The Articles provide that special meetings of the
shareholders may only be called by the Board of Directors or by holders of

40
<PAGE> 41

not less than 50% of the outstanding voting shares of the Company. The Articles
further require that any actions to be taken by the shareholders of the Company
may be taken only upon the vote of the shareholders at a meeting and may not be
taken by written consent. The existence of these provisions in the Company's
Articles and Bylaws may have the effect of discouraging a change in control of
the Company and limiting shareholder participation in certain transactions or
circumstances by limiting shareholders' participation to annual and special
meetings of shareholders and making such participation contingent upon adherence
to certain prescribed procedures. The affirmative vote of the holders of a least
66 2/3% of the outstanding capital stock is required to amend or repeal these
provisions.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company, New York, New York.

41
<PAGE> 42

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no market for the Common Stock.
Sales of substantial amounts of Common Stock in the public market, or the
perception that such sales could occur, could depress the prevailing market
price of the Common Stock.

Upon the closing of this offering, the Company will have 20,000,000 shares
of Common Stock outstanding. Of these shares, the 4,000,000 shares offered
hereby will be freely tradable without restriction or registration under the
Securities Act, except for any shares purchased by an affiliate of the Company
(in general, a person who has a control relationship with the Company), which
will be subject to the limitations of Rule 144 promulgated under the Securities
Act. All of the remaining 16,000,000 outstanding shares of Common Stock are
deemed to be "restricted securities," as that term is defined in Rule 144.
Beginning 180 days after the date of this Prospectus, upon the expiration of
lock-up agreements with the Underwriters (described below), 14,360,000 of these
shares will be available for sale subject to compliance with Rule 144 volume and
other requirements. The remaining 1,640,000 shares of restricted securities will
be eligible for sale beginning in February 1998, in compliance with Rule 144
volume and other requirements.

All holders of Common Stock of the Company have agreed for a period of 180
days after the date of this Prospectus that they will not sell, consent to sell
or otherwise dispose of any shares of Common Stock, any options or warrants to
purchase shares of Common Stock, or any shares convertible into or exchangeable
for shares of Common Stock, owned directly by such persons or with respect to
which they have the power of disposition, without the prior written consent of
Dain Bosworth Incorporated. See "Underwriting."

In general, under Rule 144 as currently in effect, beginning 90 days after
this offering, any person (or persons whose shares are aggregated) who owns
shares that were last acquired from the issuer or an affiliate of the issuer at
least two years prior to a proposed sale is entitled to sell, within any
three-month period, a number of shares which does not exceed the greater of 1%
of the then-outstanding shares of the Company's Common Stock (200,000 shares
immediately after this offering) or the average weekly trading volume of the
Company's Common Stock in the over-the-counter market during the four calendar
weeks preceding the date on which notice of the sale is filed with the
Securities and Exchange Commission (the "Commission"). Sales under Rule 144 may
also be subject to certain manner of sale provisions, notice requirements and
the availability of current public information about the Company. Any person (or
persons whose shares are aggregated) who is not deemed to have been an affiliate
of the Company at any time during the three months preceding a proposed sale,
and who owns restricted securities that were last acquired from the issuer or an
affiliate of the issuer at least three years prior to a proposed sale, is
entitled to sell such shares under Rule 144(k) without regard to the volume
limitation, manner of sale provisions, public information requirements or notice
requirements.

The Company is authorized to issue up to 2,028,268 shares of Common Stock
under the Stock Plans. See "Management -- Employee Stock Plan and Director Stock
Plan." The Company intends to file one or more registration statements under the
Securities Act covering the issuance or resale of these shares of Common Stock
promptly following the closing of this offering. Shares registered under such
registration statement will, subject to Rule 144 volume limitations applicable
to affiliates, be available for sale in the open market, subject to vesting
restrictions and the lock-up arrangements described above.

No predictions can be made of the effect, if any, that the availability of
shares for sale or the actual sale of shares will have on market prices
prevailing from time to time.

In connection with their employment agreements with the Company, Messrs.
Gordon, Epstein, Mondre and Murray have been granted certain rights with respect
to the registration of their Common Stock under the Securities Act. If the
Company proposes to register any of its securities under the Securities Act,
Messrs. Gordon, Epstein, Mondre and Murray are entitled to notice of such
registration and are entitled to include at the Company's expense all or a
portion of their shares therein, subject to certain conditions. Messrs. Gordon
and Epstein may also require the Company to register all or a portion of their
shares under the Securities Act at the Company's expense in the event of their
termination of employment for any reason, subject to certain conditions.

42
<PAGE> 43

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below, for which Dain Bosworth Incorporated and Furman Selz
LLC are acting as representatives (the "Representatives"), have severally agreed
to purchase from the Company and the Selling Shareholders the shares of Common
Stock offered hereby. Each Underwriter will purchase the number of shares set
forth opposite its name below, and will purchase such shares at the price to
public, less the underwriting discounts and commissions set forth on the cover
page of this Prospectus.

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
------------------------------------------------------------- ----------------
<S> <C>
Dain Bosworth Incorporated................................... 1,190,000
Furman Selz LLC.............................................. 1,190,000
Alex. Brown & Sons Incorporated.............................. 60,000
Goldman, Sachs & Co. ........................................ 60,000
Lehman Brothers Inc. ........................................ 60,000
Montgomery Securities........................................ 60,000
J.P. Morgan Securities Inc. ................................. 60,000
Oppenheimer & Co., Inc. ..................................... 60,000
Robertson, Stephens & Company LLC............................ 60,000
Smith Barney Inc. ........................................... 60,000
Rauscher Pierce Refsnes, Inc. ............................... 60,000
Advest, Inc. ................................................ 40,000
Robert W. Baird & Co. Incorporated........................... 40,000
William Blair & Company, L.L.C............................... 40,000
J.C. Bradford & Co. ......................................... 40,000
The Chicago Corporation...................................... 40,000
EVEREN Securities, Inc. ..................................... 40,000
Gerard Klauer Mattison & Co. LLC............................. 40,000
Interstate/Johnson Lane Corporation.......................... 40,000
Janney Montgomery Scott Inc. ................................ 40,000
Jefferies & Company, Inc. ................................... 40,000
Legg Mason Wood Walker, Incorporated......................... 40,000
McDonald & Company Securities, Inc. ......................... 40,000
Morgan Keegan & Company, Inc. ............................... 40,000
Needham & Company, Inc. ..................................... 40,000
Piper Jaffray Inc. .......................................... 40,000
Principal Financial Securities, Inc. ........................ 40,000
Raymond James & Associates, Inc. ............................ 40,000
The Robinson-Humphrey Company, Inc. ......................... 40,000
Sutro & Co. Incorporated..................................... 40,000
Tucker Anthony Incorporated.................................. 40,000
Wedbush Morgan Securities.................................... 40,000
Wheat, First Securities, Inc. ............................... 40,000
George K. Baum & Company..................................... 25,000
Brean Murray, Foster Securities Inc. ........................ 25,000
Cruttenden Roth Incorporated................................. 25,000
GS(2) Securities, Inc. ...................................... 25,000
Hoak Securities Corp. ....................................... 25,000
John G. Kinnard and Company, Incorporated.................... 25,000
Kirkpatrick, Pettis, Smith, Polian Inc. ..................... 25,000
Parker/Hunter Incorporated................................... 25,000
----------------
Total.............................................. 4,000,000
=============
</TABLE>

43
<PAGE> 44

The Underwriting Agreement provides that the Underwriters' obligations are
subject to conditions precedent and that the Underwriters are committed to
purchase all shares of Common Stock offered hereby (other than those covered by
the over-allotment option described below) if the Underwriters purchase any
shares. The Representatives have advised the Company and the Selling
Shareholders that the several Underwriters may offer the shares of Common Stock
directly to the public at the price to public set forth on the cover page of
this Prospectus and to certain dealers at the price to public less a concession
not exceeding $0.59 per share. The Underwriters may allow, and such dealers may
re-allow, a concession not exceeding $0.10 per share to other dealers. After the
shares of Common Stock are released for sale to the public, the Representatives
may change the initial price to public and other selling terms.

The Selling Shareholders have granted to the Underwriters an option,
exercisable for 30 days after the date of this Prospectus, to purchase up to an
aggregate of 600,000 additional shares of the Common Stock (350,000 shares from
Mr. Gordon, 200,000 from Mr. Epstein and 50,000 from two trusts for the benefit
of Mr. Gordon's children), at the price to public, less the underwriting
discounts and commissions set forth on the cover page of this Prospectus. See
footnote 1 to the table under "Principal and Selling Shareholders." The
Underwriters may purchase these shares solely to cover over-allotments, if any,
in connection with the sale of Common Stock offered hereby. If the Underwriters
exercise the over-allotment option, the Underwriters will purchase additional
shares in approximately the same proportion as those in the above table.

The Underwriting Agreement provides that the Company, the Selling
Shareholders and the Underwriters will indemnify each other against certain
liabilities, including liabilities under the Act, in connection with this
offering. Prior to this offering, the Company paid Dain Bosworth Incorporated
approximately $18,000 for financial consulting services and related expenses.

The Representatives have informed the Company that the Underwriters do not
intend to confirm sales to any account over which they exercise discretionary
authority.

The Company and all of its current shareholders, directors and executive
officers have agreed not to offer, sell, grant an option to purchase or
otherwise dispose of any shares of Common Stock for a period of 180 days after
the date of this Prospectus without the prior written consent of Dain Bosworth
Incorporated. This restriction does not prevent the Company from granting
options under the Stock Plans or issuing unregistered securities in a merger,
consolidation, acquisition, joint venture or other arrangement as long as those
securities are not registered under the Securities Act prior to the end of the
180-day period.

Prior to this offering, there has been no public market for the Common
Stock. The price to public has been determined by agreement among the Company,
the Selling Shareholders and the Representatives. In determining the price to
public, the Company, the Selling Shareholders and the Representatives
considered, among other things, the history of and prospects for the industry in
which the Company operates, past and present operations and earnings of the
Company and the trend of such earnings, the qualifications of the Company's
management, the general condition of the securities markets at the time of this
offering and the market prices for other publicly traded companies.

LEGAL MATTERS

Certain legal matters with respect to the validity of the shares of Common
Stock offered hereby are being passed upon for the Company by Rubin Baum Levin
Constant Friedman & Bilzin ("Rubin Baum"), Miami, Florida. Richard D. Mondre,
the Company's Executive Vice President, General Counsel and Secretary and a
director, is currently "Of Counsel" to Rubin Baum and was previously a Partner
at that firm. See "Certain Transactions." Certain Partners at Rubin Baum
currently intend to purchase up to an aggregate of 40,000 shares in this
offering at the initial public offering price. Sherman & Howard L.L.C., Denver,
Colorado, is acting as counsel for the Underwriters in connection with certain
legal matters relating to the sale of the Common Stock offered hereby.

44
<PAGE> 45

INDEPENDENT PUBLIC ACCOUNTANTS

The balance sheet as of December 31, 1995, and the statements of
operations, shareholders' equity, and cash flows for the year ended December 31,
1995, included in this Prospectus, have been included herein in reliance on the
report of Coopers & Lybrand L.L.P., independent public accountants, given on the
authority of that firm as experts in auditing and accounting. With respect to
the unaudited interim financial information for the three-month periods ended
March 31, 1996 and 1995, included in this Prospectus, the independent
accountants have reported that they have applied limited procedures in
accordance with professional standards for a review of such information.
However, their separate report included herein states that they did not audit
and they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their report on such information should
be restricted in light of the limited nature of the review procedures applied.
The accountants are not subject to the liability provisions of Section 11 of the
Securities Act for their report on the unaudited interim financial information
because that report is not a "report" or a "part" of the registration statement
prepared or certified by the accountants within the meaning of Sections 7 and 11
of the Securities Act.

The financial statements of the Company as of December 31, 1993 and 1994
and for each of the two years in the period ended December 31, 1994 included in
this Prospectus have been audited by Gurland & Goldberg, P.A., independent
public accountants, as indicated in their report with respect thereto, and are
included in reliance upon the authority of said firm as experts in accounting
and auditing.

On December 27, 1995, the Company changed its accountants from Gurland &
Goldberg, P.A. to Coopers & Lybrand L.L.P. The decision to dismiss its former
accountants was approved by the Board of Directors in anticipation of the
Company's initial public offering. The reports of the Company's accountants have
never contained an adverse report or disclaimer of opinion, and have never been
qualified as to uncertainty, audit scope or accounting principles. The Company
has never had any disagreements with its former accountants.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 (together with all amendments, schedules and exhibits thereto, the
"Registration Statement") under the Securities Act with respect to the shares of
Common Stock offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and the Common Stock offered hereby, reference is made to
the Registration Statement. Statements made in the Prospectus as to the contents
of any contract, agreement or other document are not necessarily complete; with
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference. The Registration Statement
and the exhibits thereto may be inspected, without charge, at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
at 500 West Madison Street, Chicago, IL 60661, and 7 World Trade Center, New
York, New York 10048. Copies of such material can also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.

45
<PAGE> 46

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 47

PRECISION RESPONSE CORPORATION

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGES
-----
<S> <C>
Report of Independent Accountants -- Coopers & Lybrand L.L.P.......................... F-2
Independent Auditors' Report -- Gurland & Goldberg, P.A............................... F-3
Review Report of Independent Accountants -- Coopers & Lybrand L.L.P................... F-4
Balance Sheets as of December 31, 1994 and 1995 and March 31, 1996.................... F-5
Statements of Operations for the years ended December 31, 1993, 1994 and 1995 and the
three-month periods ended March 31, 1995 and 1996................................... F-6
Statements of Shareholders' Equity for the years ended December 31, 1993, 1994 and
1995 and the three-month period ended March 31, 1996................................ F-7
Statements of Cash Flows for the years ended December 31, 1993, 1994 and 1995 and the
three-month periods ended March 31, 1995 and 1996................................... F-8
Notes to Financial Statements......................................................... F-9
</TABLE>

F-1
<PAGE> 48

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
Precision Response Corporation

We have audited the balance sheet of Precision Response Corporation as of
December 31, 1995 and the related statements of operations, shareholders'
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Precision Response
Corporation as of December 31, 1995, and the results of its operations and its
cash flows for the year then ended, in conformity with generally accepted
accounting principles.

/s/ Coopers & Lybrand L.L.P

COOPERS & LYBRAND L.L.P.

Miami, Florida
March 11, 1996, except for the second paragraph
of Note 4 as to which the date is May 1, 1996
and Note 11 as to which the date is June 20, 1996

F-2
<PAGE> 49

INDEPENDENT AUDITORS' REPORT

Board of Directors
Precision Response Corporation
Miami, Florida

We have audited the balance sheet of Precision Response Corporation as of
December 31, 1994 and the related statements of operations, shareholders'
equity, and cash flows for the years ended December 31, 1993 and 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Precision Response
Corporation as of December 31, 1994, and the results of its operations and its
cash flows for the years ended December 31, 1993 and 1994, in conformity with
generally accepted accounting principles.

/s/ Gurland & Goldberg, P.A.

GURLAND & GOLDBERG, P.A.

Hallandale, Florida
March 17, 1995, except for paragraphs one and two
of Note 11 as to which the date is June 20, 1996

F-3
<PAGE> 50

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
Precision Response Corporation

We have reviewed the accompanying balance sheet of Precision Response
Corporation as of March 31, 1996 and the related statements of operations,
shareholders' equity, and cash flows for the three-month periods ended March 31,
1995 and 1996. These financial statements are the responsibility of the
Company's management.

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.

/s/ Coopers & Lybrand L.L.P.

COOPERS & LYBRAND L.L.P.

Miami, Florida
April 29, 1996, except for the second paragraph
of Note 4 as to which the date is May 1, 1996
and Note 11 as to which the date is June 20, 1996

F-4
<PAGE> 51

PRECISION RESPONSE CORPORATION

BALANCE SHEETS

<TABLE>
<CAPTION>
PRO FORMA
DECEMBER 31, MARCH 31,
------------------------ MARCH 31, 1996
1994 1995 1996 (NOTE 10)
---------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................. $ 787,609 $ 266,794 $ 51,393 $ 51,393
Accounts receivable, less allowance for
doubtful accounts of $97,000, $60,000,
$75,000 and $75,000, respectively....... 2,616,030 6,616,844 9,588,723 9,588,723
Prepaid expenses and other current
assets.................................. 417,810 454,867 300,905 300,905
---------- ----------- ----------- -----------
Total current assets............... 3,821,449 7,338,505 9,941,021 9,941,021
Property and equipment, net.................. 3,834,129 5,283,832 5,845,347 5,845,347
Other assets................................. 81,788 90,925 135,360 135,360
---------- ----------- ----------- -----------
Total assets....................... $7,737,366 $12,713,262 $15,921,728 $15,921,728
========== =========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Revolving credit loan...................... $1,500,000 $ -- $ -- $ --
Current maturities of long-term
obligations............................. 999,013 1,181,846 1,028,669 1,028,669
Accounts payable........................... 1,411,666 2,130,808 3,007,979 3,007,979
Accrued compensation expenses.............. 601,178 1,326,960 1,165,037 1,165,037
Other accrued expenses..................... 313,210 777,104 744,400 744,400
Customer deposits and other................ 419,071 556,388 667,500 667,500
Distribution payable to shareholders....... -- -- -- 2,553,895
---------- ----------- ----------- -----------
Total current liabilities.......... 5,244,138 5,973,106 6,613,585 9,167,480
Revolving credit loan...................... -- 2,995,593 4,745,593 4,745,593
Long-term obligations, less current
maturities.............................. 1,019,665 928,542 1,148,840 1,148,840
Deferred income taxes...................... -- -- -- 211,000
---------- ----------- ----------- -----------
Total liabilities.................. 6,263,803 9,897,241 12,508,018 15,272,913
---------- ----------- ----------- -----------
Commitments (Notes 7 and 9)
Shareholders' equity:
Common stock, $0.01 par value;
100,000,000 shares authorized,
16,400,000 issued and outstanding..... 164,000 164,000 164,000 164,000
Additional paid-in capital.............. 72,095 72,095 72,095 72,095
Retained earnings....................... 1,331,309 2,786,996 3,540,720 412,720
Due from shareholders, net.............. (93,841) (207,070) (363,105) --
---------- ----------- ----------- -----------
Total shareholders' equity......... 1,473,563 2,816,021 3,413,710 648,815
---------- ----------- ----------- -----------
Total liabilities and shareholders'
equity........................... $7,737,366 $12,713,262 $15,921,728 $15,921,728
========== =========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-5
<PAGE> 52

PRECISION RESPONSE CORPORATION

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE
FOR THE YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
--------------------------------------- ------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues......................... $18,218,377 $14,997,663 $30,203,989 $5,909,824 $11,648,811
----------- ----------- ----------- ---------- -----------
Operating expenses:
Cost of services............... 10,674,980 9,070,327 18,371,577 3,465,352 7,119,857
Preoperating costs............. -- -- 573,081 -- 174,112
Selling, general and
administrative expenses..... 7,278,748 6,008,741 9,431,551 1,912,854 3,464,683
----------- ----------- ----------- ---------- -----------
Total operating
expenses............. 17,953,728 15,079,068 28,376,209 5,378,206 10,758,652
----------- ----------- ----------- ---------- -----------
Operating income (loss).......... 264,649 (81,405) 1,827,780 531,618 890,159
Interest expense................. 197,216 292,146 372,093 80,551 136,435
Gain (loss) on disposal of
assets......................... (313,743) 1,251 -- -- --
----------- ----------- ----------- ---------- -----------
Net income (loss)................ $ (246,310) $ (372,300) $ 1,455,687 $ 451,067 $ 753,724
========== ========== ========== ========= ==========
Pro Forma Data (Unaudited)
(Note 10):
Net income (loss) per above.... $ (246,310) $ (372,300) $ 1,455,687 $ 451,067 $ 753,724
Pro forma provision (benefit)
for income taxes relating to
S Corporation............... (45,907) (86,018) 618,931 183,926 312,253
----------- ----------- ----------- ---------- -----------
Pro forma net income (loss).... $ (200,403) $ (286,282) $ 836,756 $ 267,141 $ 441,471
========== ========== ========== ========= ==========
Pro forma net income per common
share....................... $ 0.05 $ 0.03
========== ==========
Weighted average number of
common shares outstanding... 16,527,061 16,527,061
========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-6
<PAGE> 53

PRECISION RESPONSE CORPORATION

STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
--------------------- PAID-IN RETAINED DUE FROM
SHARES AMOUNT CAPITAL EARNINGS SHAREHOLDERS, NET TOTAL
---------- -------- ------- ---------- ----------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1992.................... 16,400,000 $164,000 $72,095 $1,949,919 $ -- $2,186,014
Net loss.................. (246,310) (246,310)
---------- -------- ------- ---------- ----------------- ----------
Balance at December 31,
1993.................... 16,400,000 164,000 72,095 1,703,609 -- 1,939,704
Net advances to
shareholders............ (93,841) (93,841)
Net loss.................. (372,300) (372,300)
---------- -------- ------- ---------- ----------------- ----------
Balance at December 31,
1994.................... 16,400,000 164,000 72,095 1,331,309 (93,841) 1,473,563
Net advances to
shareholders............ (113,229) (113,229)
Net income................ 1,455,687 1,455,687
---------- -------- ------- ---------- ----------------- ----------
Balance at December 31,
1995.................... 16,400,000 164,000 72,095 2,786,996 (207,070) 2,816,021
Net advances to
shareholders
(Unaudited)............. (156,035) (156,035)
Net income (Unaudited).... 753,724 753,724
---------- -------- ------- ---------- ----------------- ----------
Balance at March 31, 1996
(Unaudited)............. 16,400,000 $164,000 $72,095 $3,540,720 $(363,105) $3,413,710
========= ======== ======= ========= ============= =========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-7
<PAGE> 54

PRECISION RESPONSE CORPORATION

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
--------------------------------------- -------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)....................... $ (246,310) $ (372,300) $ 1,455,687 $ 451,067 $ 753,724
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Depreciation and amortization......... 657,585 795,124 1,145,099 262,973 325,175
Loss on disposal of assets............ 313,743 -- -- -- --
Changes in operating assets and
liabilities:
Accounts receivable................... (1,406,620) 1,267,639 (4,000,814) (1,474,478) (2,971,879)
Prepaid expenses and other current
assets.............................. (118,512) 66,627 (37,057) 137,666 153,962
Other assets.......................... (113,071) 107,105 (9,137) 16,131 (44,435)
Accounts payable...................... 317,783 247,798 719,142 770,723 877,171
Accrued compensation expenses......... 77,774 93,178 725,782 (47,055) (161,923)
Other accrued expenses................ 142,071 38,806 463,894 256,811 (32,704)
Customer deposits and other........... (504,659) 20,058 137,317 (64,526) 111,112
----------- ----------- ----------- ----------- -----------
Net cash provided by (used in)
operating activities........... (880,216) 2,264,035 599,913 309,312 (989,797)
----------- ----------- ----------- ----------- -----------
Cash flows from investing activities:
Purchase of property and equipment...... (1,230,442) (1,473,783) (1,578,344) (356,039) (479,354)
----------- ----------- ----------- ----------- -----------
Net cash used in investing
activities..................... (1,230,442) (1,473,783) (1,578,344) (356,039) (479,354)
----------- ----------- ----------- ----------- -----------
Cash flows from financing activities:
Proceeds from revolving credit loan..... 450,000 300,000 1,495,593 40,000 1,750,000
Proceeds from long-term obligations..... 1,865,795 516,700 250,000 -- --
Payments on long-term obligations....... (561,020) (946,328) (1,174,748) (264,453) (340,215)
Net advances to shareholders............ -- (93,841) (113,229) (97,442) (156,035)
----------- ----------- ----------- ----------- -----------
Net cash provided by (used in)
financing activities........... 1,754,775 (223,469) 457,616 (321,895) 1,253,750
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents............................. (355,883) 566,783 (520,815) (368,622) (215,401)
Cash and cash equivalents at beginning of
period.................................. 576,709 220,826 787,609 787,609 266,794
----------- ----------- ----------- ----------- -----------
Cash and cash equivalents at end of
period.................................. $ 220,826 $ 787,609 $ 266,794 $ 418,987 $ 51,393
============ ============ ============ ============ ============
Supplemental cash flow information:
Cash paid for interest.................. $ 202,949 $ 292,146 $ 372,093 $ 80,551 $ 136,435
============ ============ ============ ============ ============
Supplemental schedule of noncash investing
and financing activities:
Installment loans and capital lease
obligations........................... $ 388,905 $ 516,700 $ 1,016,458 $ -- $ 407,336
============ ============ ============ ============ ============
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-8
<PAGE> 55

PRECISION RESPONSE CORPORATION

NOTES TO FINANCIAL STATEMENTS

1. OPERATIONS AND ORGANIZATION

Precision Response Corporation (the "Company") is a full-service provider
of teleservicing, database marketing and management, and fulfillment services on
an outsourced basis to large corporations.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed in
the preparation of these financial statements:

Interim Financial Statements

The financial statements for the three-months ended March 31, 1995 and
1996, and all related footnote information for those periods, are unaudited and
reflect all normal and recurring adjustments which are, in the opinion of
management, necessary for a fair presentation of the financial position,
operating results and cash flows for the interim periods. The results of
operations for the three months ended March 31, 1996 are not necessarily
indicative of the results to be achieved for the entire fiscal year ending
December 31, 1996.

Accounting Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. The Company places
its temporary cash investments with high credit quality financial institutions.
At times, such investments may be in excess of the federally insured limits.

Revenue Recognition

The Company recognizes revenues as services are performed. The Company's
teleservicing charges are usually based either on a fixed hourly fee for
dedicated service or on a transaction (i.e., number of calls completed) basis
for shared environments. Charges for database marketing and management services
are based on an hourly rate or on the volume of information stored. Fulfillment
service charges are typically assessed on a transaction basis, with an
additional charge for warehousing products.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and
amortization. Major renewals and improvements are capitalized and charged to
expense through depreciation. Depreciation is determined using the straight-line
method over the estimated useful lives of the respective assets. Equipment
recorded under capital leases and leasehold improvements are amortized on a
straight-line basis over the shorter of the estimated useful life of the assets
or the lease term. Estimated useful lives are principally five years. Upon sale
or retirement, the related cost and accumulated depreciation are removed from
the accounts, and any gain or loss is recorded in the statement of operations.

Depreciation of property and equipment has been computed using the
straight-line method since 1994. Depreciation of property and equipment in prior
years was computed using accelerated methods. The new method of depreciation is
a generally accepted method used in the industry, and it is believed the new
method

F-9
<PAGE> 56

PRECISION RESPONSE CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

will cause the Company's operating results to be more comparable with operating
results of other companies in the industry. In connection with the proposed
filing of a registration of the Company's securities, all prior periods have
been retroactively restated to reflect this accounting change.

Preoperating Costs

The Company expenses as incurred certain incremental costs incurred prior
to opening facilities used in its operations. The costs include certain rent,
new-hire salaries and expenses for utilities, equipment leases and security
incurred at a facility prior to the actual commencement of operations.

Income Taxes

During the period covered by these financial statements, the Company
elected to be treated as an S corporation under the Internal Revenue Code. In
lieu of corporate income taxes, the shareholders of an S corporation are taxed
on the Company's taxable income. Therefore, no provision or liability for
federal and state income taxes has been included in the financial statements.
See Note 10 of Notes to Financial Statements for a discussion of the Company's
termination of its S Corporation election in connection with a proposed public
offering of its common stock and the related unaudited pro forma data.

3. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------- MARCH 31,
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Telecommunications equipment................ $ 1,111,878 $ 2,187,254 $ 2,274,548
Production equipment........................ 683,384 707,014 713,644
Computer equipment.......................... 2,496,956 3,076,808 3,091,166
Leasehold improvements...................... 924,960 1,463,913 1,924,325
Furniture and fixtures...................... 619,342 985,778 1,305,411
Automobiles................................. 134,470 140,126 142,297
----------- ----------- -----------
5,970,990 8,560,893 9,451,391
Accumulated depreciation and amortization... (2,136,861) (3,277,061) (3,606,044)
----------- ----------- -----------
$ 3,834,129 $ 5,283,832 $ 5,845,347
========== ========== ==========
</TABLE>

Property and equipment includes the following leased property under capital
leases:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- MARCH 31,
1994 1995 1996
---------- ---------- -----------
<S> <C> <C> <C>
Telecommunications equipment.................. $ 633,519 $1,363,238 $ 1,363,220
Computer equipment............................ 590,525 1,090,265 1,119,169
Furniture and fixtures........................ 30,325 30,325 30,325
---------- ---------- -----------
1,254,369 2,483,828 2,512,714
Accumulated amortization...................... (431,163) (877,861) (1,296,088)
---------- ---------- -----------
$ 823,206 $1,605,967 $ 1,216,626
========= ========= ==========
</TABLE>

4. REVOLVING CREDIT LOAN AGREEMENT

The Company has a bank revolving credit loan agreement which provides for
maximum borrowings of $5,750,000 at March 31, 1996 ($4,250,000 and $2,500,000 at
December 31, 1995 and 1994, respectively), subject to collateral availability,
with principal due on May 30, 1996. At December 31, 1995 and March 31,

F-10
<PAGE> 57

PRECISION RESPONSE CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

1996, the unused portion of the line of credit was approximately $769,000 and
$1,004,000, respectively, based upon available collateral. Interest, payable
monthly, accrues on borrowings under the revolving line of credit at 1 to 1 1/2%
over the prime rate (9.5% at December 31, 1994, 9.25% at December 31, 1995 and
9.75% at March 31, 1996). The line of credit is collateralized by accounts
receivable, equipment and other assets of the Company and is guaranteed by
certain of the Company's shareholders. The agreement contains restrictive
covenants which, among other things, require the maintenance of certain
financial ratios, restrict future indebtedness and limit capital expenditures
and the amount of compensation and distributions to the Company's shareholders.
The limitation on distributions is based upon the amount of income taxes payable
by the shareholders on the Company's income.

On May 1, 1996, the Company entered into a new three-year senior revolving
credit facility in the aggregate principal amount of $15 million. Borrowing
availability is based upon a percentage of eligible accounts receivable. The
facility also allows the Company to borrow an amount not to exceed $2.5 million
in excess of the borrowing base (the "overformula advance") for a period of one
year from the closing date of the loan subject to the $15 million aggregate
limit. The facility accrues interest at the Company's option based on the prime
rate plus .5% or the LIBOR rate plus 3%; the overformula advance accrues
interest at the prime rate plus 1%. The facility is primarily collateralized by
accounts receivable. The Company is required to maintain certain financial
covenants, including minimum tangible net worth and earnings, to limit capital
expenditures to no more than $11 million per year and to limit additional
indebtedness. The Company is also restricted from paying dividends except for
tax distributions to its shareholders in connection with S corporation earnings
and distributions in connection with the termination of S corporation status
(see Note 10). A portion of the borrowings available to the Company pursuant to
this agreement were used to retire the Company's existing short-term bank
revolving credit loan. Accordingly, the amounts outstanding under the bank
revolving credit loan as of December 31, 1995 and March 31, 1996 have been
reflected as a long-term liability in the accompanying financial statements.

F-11
<PAGE> 58

PRECISION RESPONSE CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5. OTHER LONG-TERM OBLIGATIONS

Other long-term obligations consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ MARCH 31,
1994 1995 1996
---------- ----------- -----------
<S> <C> <C> <C>
Capital lease obligations, interest rates ranging
from 7.5% to 11.2%; payable through 2000....... $ 793,768 $ 1,246,183 $ 1,108,403
Note payable, interest rate at the bank's prime
rate plus one-half of one percent; payable in
monthly installments of principal and interest
of $41,667 through 1996; collateralized by
certain property and equipment. In addition,
the Company must meet certain reporting
requirements and restrictive debt covenants,
including, but not limited to a pre-established
tangible net worth and a funded debt to
tangible net worth ratio. The note is also
guaranteed by the Company's majority
shareholder.................................... 916,667 416,667 291,667
Installment loans, interest rates of 9.75% to
12%; payable in monthly installments through
1997; collateralized by certain property and
equipment. These loans are guaranteed by one or
both of the Company's majority shareholders.... 308,243 447,538 777,439
---------- ----------- -----------
2,018,678 2,110,388 2,177,509
Current maturities of long-term obligations...... (999,013) (1,181,846) (1,028,669)
---------- ----------- -----------
$1,019,665 $ 928,542 $ 1,148,840
========= ========== ==========
</TABLE>

Other long-term obligations, as of December 31, 1995, mature as follows:

<TABLE>
<CAPTION>
NOTE
PAYABLE AND
CAPITAL INSTALLMENT
YEAR ENDING DECEMBER 31, LEASES LOANS TOTAL
--------------------------------------------------- ---------- ----------- ----------
<S> <C> <C> <C>
1996............................................... $ 683,733 $ 600,023 $1,283,756
1997............................................... 322,057 184,514 506,571
1998............................................... 261,917 79,668 341,585
1999............................................... 153,631 -- 153,631
2000............................................... 20,942 -- 20,942
---------- ----------- ----------
Total minimum payments................... 1,442,280 864,205 2,306,485
Less amount representing interest.................. 196,097 -- 196,097
---------- ----------- ----------
Present value of net minimum payments.............. $1,246,183 $ 864,205 $2,110,388
========= ========= =========
</TABLE>

Based on the borrowing rates available to the Company for bank loans with
similar terms and average maturities, the fair value of debt approximates
carrying value.

6. PROFIT SHARING PLAN

The Company has adopted a profit sharing plan which covers substantially
all employees who have been employed for at least two years. The contributions,
determined at the discretion of the Board of Directors, were $20,000 and $15,000
for 1993 and 1994, respectively. For the year ended December 31, 1995 and for
the three-month periods ended March 31, 1995 and 1996, there were no
contributions.

F-12
<PAGE> 59

PRECISION RESPONSE CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

7. RELATED PARTY TRANSACTIONS

The Company leases certain real property, on a month-to-month basis, from a
corporation that is wholly owned by the Company's majority shareholder. Rent
expense under this lease amounted to $345,000, $211,000 and $194,000 for 1993,
1994 and 1995, respectively. For the three-month periods ended March 31, 1995
and 1996, rent expense amounted to $48,000 and $52,000, respectively. Subsequent
to December 31, 1995, the Company entered into various lease agreements with the
related party corporation for this real property providing for aggregate annual
rentals of approximately $272,000. The primary lease term is five years with a
renewal option for an additional five-year period. The Company also subleases
another facility and a parking lot from a partnership owned jointly by certain
of its shareholders. The term of these subleases expires in January, 1999 with
annual rentals aggregating approximately $185,000.

The Company has guaranteed mortgage loans of the corporate affiliate along
with the guarantees of its majority shareholder. At December 31, 1994 and 1995
and March 31, 1996, the outstanding balance on the loans were $1,309,258,
$1,222,362 and $1,208,079, respectively. Subsequent to December 31, 1995, the
Company's majority shareholder agreed to indemnify the Company as to its
guarantee obligation on the loans.

Amounts shown as due from shareholders represent advances ($93,841,
$343,070 and $500,055 as of December 31, 1994 and 1995 and March 31, 1996,
respectively) offset by notes payable to shareholders ($136,000 and $136,950 as
of December 31, 1995 and March 31, 1996, respectively). Advances are non-
interest bearing and are due by December 31, 1996. Notes payable to shareholders
bear interest at six percent and are payable on demand.

8. SIGNIFICANT CLIENTS

A significant portion of the Company's business is dependent upon several
large clients. For the years ended December 31, 1993, 1994 and 1995 and the
three-month periods ended March 31, 1995 and 1996, the five largest clients
accounted for approximately 63%, 50%, 77%, 72%, and 77% of revenues,
respectively. As of December 31, 1994 and 1995 and March 31, 1996, approximately
27%, 77% and 76%, respectively, of the Company's accounts receivable were from
these clients. Accounts receivable represents the Company's greatest
concentration of credit risk and is subject to the financial conditions of its
largest clients. The Company does not require collateral or other security to
support clients' receivables. The Company conducts periodic reviews of its
clients' financial conditions and vendor payment practices to minimize
collection risks on trade accounts receivable.

During the years ended December 31, 1993, 1994, and 1995, and the
three-month periods ended March 31, 1995 and 1996, certain clients individually
accounted for more than 10% of the Company's revenue:

<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED ENDED
DECEMBER 31, MARCH 31,
---------------------- -------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
(% OF TOTAL REVENUES)
<S> <C> <C> <C> <C> <C>
Company A......................................... 37% * * * *
Company B ........................................ * 12% 42% 24% 61%
Company C ........................................ * * 17 24 *
Company D......................................... * 13 * 13 *
Company E ........................................ * 11 * * *
</TABLE>

- ---------------

* Accounted for less than 10% of total revenues for the period indicated

F-13
<PAGE> 60

PRECISION RESPONSE CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

9. COMMITMENTS

The Company operates primarily in leased facilities with terms ranging from
two to 10 years. Minimum future annual rentals on noncancelable operating
leases, including the annual rentals due on the related party leases referred to
in Note 7, for the five years subsequent to 1995 and in the aggregate are as
follows:

<TABLE>
<S> <C>
1996.................................................................... $ 2,037,000
1997.................................................................... 1,585,000
1998.................................................................... 1,529,000
1999.................................................................... 1,220,000
2000.................................................................... 942,000
Thereafter.............................................................. 3,198,000
-----------
$10,511,000
==========
</TABLE>

Rent expense for these operating leases totaled $516,000, $622,000 and
$776,000 for 1993, 1994 and 1995, respectively. For the three-month periods
ended March 31, 1995 and 1996, rent expense totaled $169,000 and $620,000,
respectively.

10. PRO FORMA DISCLOSURES (UNAUDITED)

Pro Forma Income Taxes

The Company has filed a Registration Statement on Form S-1 with the
Securities and Exchange Commission covering a proposed initial public offering
of common stock (the "Offering") at an estimated offering price of $15.00 per
share.

As described in Note 2, the Company has elected to be taxed as an S
corporation under the provisions of the Internal Revenue Code. Assuming the
completion of the Offering, the Company will terminate its S corporation
election and will accordingly become subject to federal and state income taxes.
Upon termination of the S corporation election, deferred income taxes reflecting
the tax effect of temporary differences between the Company's financial
statement and tax bases of certain assets and liabilities will become a net
liability of the Company and will be reflected on the balance sheet with a
corresponding nonrecurring expense in the statement of operations for the first
calendar quarter following the Offering. Deferred taxes relate primarily to
accounts receivable, accrued expenses and property and equipment. The amount of
such deferred tax liability computed using the asset and liability method of
accounting for deferred income taxes approximates $157,000 and $211,000 at
December 31, 1995 and March 31, 1996, respectively.

The pro forma data in the statement of operations provides information as
if the Company had been treated as a C corporation for income tax purposes for
all periods presented. The following unaudited pro forma information reflects
the reconciliation between the statutory provision for income taxes and the
actual provision relating to the incremental income tax expense that the Company
would have incurred if it had been subject to federal and state income taxes.

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------------------- -------------------
1993 1994 1995 1995 1996
-------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Income tax at federal statutory rate....... $(86,209) $(130,305) $509,490 $157,873 $263,803
State taxes, net of federal benefit........ (4,361) (8,172) 58,800 17,473 29,665
Nondeductible expenses..................... 44,663 52,459 50,641 8,580 18,785
-------- --------- -------- -------- --------
Pro forma provision (benefit) for income
taxes.................................... $(45,907) $ (86,018) $618,931 $183,926 $312,253
======== ========= ======== ======== ========
</TABLE>

F-14
<PAGE> 61

PRECISION RESPONSE CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The pro forma provision for income taxes, as calculated above, assumed
combined federal and state income tax rates of 37.6%.

Prior to consummation of the Offering, the Company's Board of Directors
intends to declare a cash dividend payable to the current shareholders of the
Company (the "Dividend"). The Dividend will be equal to the Company's estimate
of its cumulative taxable income prior to the conversion to a C corporation, to
the extent such taxable income has not previously been distributed. The Company
currently estimates that if the Company had been converted to a C corporation as
of March 31, 1996, the Dividend would have equaled $2,917,000. The Tax Agreement
also provides that to the extent such undistributed taxable income of the
Company, as subsequently established in connection with the filing of the
Company's tax return for the Company's short S corporation tax year, is less
than the Dividend, such shareholders will make a payment equal to such
difference to the Company, and if such undistributed taxable income is greater
than the Dividend, the Company will make an additional distribution equal to
such difference to such shareholders, in either case with interest thereon.

Any payment made by the Company to the shareholders pursuant to the Tax
Agreement may be considered by the Internal Revenue Service or the state taxing
authorities to be nondeductible by the Company for income tax purposes.

The pro forma data in the Balance Sheet provides information as if the
Company had terminated its S corporation election, declared the Dividend and
recorded the deferred income tax liability as of March 31, 1996. The Dividend
amount of $2,917,000 has been reflected as a distribution payable to
shareholders in the amount of $2,553,895 net of a repayment by shareholders of
$363,105 due to the Company. The pro forma data does not give effect to the
receipt of any proceeds from the Offering or earnings from March 31, 1996
through the date of termination of the S corporation election.

Pro Forma Net Income (Loss) Per Share

Pro forma net income (loss) per share amounts have been computed based upon
the weighted average number of common shares outstanding during each period and
gives effect to the increase in the number of shares which, when multiplied by
an assumed offering price of $15.00 per share, would have been sufficient to
replace the amount of the Dividend in excess of pro forma earnings for the
twelve months ended March 31, 1996.

11. COMMON STOCK, PREFERRED STOCK AND STOCK OPTION PLANS

On May 1, 1996, the Company's shareholders approved an increase in the
number of authorized shares of common stock from 100 shares to 100 million
shares and a reduction in the par value per share of common stock from $1 to
$0.01. The Company also authorized 25 million shares, par value $0.01, of
preferred stock.

On May 31, 1996, the Company declared a share dividend of an aggregate of
12,734,900 shares of common stock, $0.01 par value, immediately payable to its
shareholders of record in order to effect the

F-15
<PAGE> 62

PRECISION RESPONSE CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

equivalent of a 127,350-for-1 stock split to increase the number of shares of
common stock outstanding from 100 shares to 12,735,000 shares. On June 20, 1996,
the Company declared a share dividend of an aggregate of 3,665,000 shares of
common stock, $0.01 par value, immediately payable to its shareholders of record
in order to effect the equivalent of a 1.287789556-for-1 stock split to increase
the number of shares of common stock outstanding from 12,735,000 shares to
16,400,000 shares. Shareholders' equity has been restated to give retroactive
recognition to the stock splits in prior periods by reclassifying from retained
earnings to common stock the par value of the additional shares arising from the
splits. All applicable share and per share data have been adjusted for the stock
splits.

On February 16, 1996, the Company's principal shareholders sold 10% of
their shares of Common Stock to two of the Company's executive officers for
$0.55 per share, the then fair market value of such shares.

On May 31, 1996, the Company adopted the 1996 Incentive Stock Plan (the
"Employee Stock Plan") and the 1996 Nonemployee Director Stock Option Plan (the
"Director Stock Plan"; together with the Employee Stock Plan, the "Stock
Plans"). Officers, key employees and nonemployee consultants may be granted
stock options, stock appreciation rights, stock awards, performance shares and
performance units under the Employee Stock Plan. The Company has reserved
1,931,684 shares of Common Stock for issuance under the Employee Stock Plan and
96,584 shares of Common Stock for issuance under the Director Stock Plan, after
giving effect to the recently completed stock splits by way of share dividends,
and subject in each case to further antidilution adjustments.

The Director Stock Plan will provide for annual grants of non-qualified
stock options to each nonemployee director of the Company. The options will
allow such directors to annually purchase up to 2,500 shares of Common Stock at
an exercise price equal to the fair market value of the Common Stock on the date
of grant. These options will have a term of ten years and vest in equal
installments over three years.

Prior to the establishment of a Compensation Committee (the "Committee") of
the Board of Directors, the Employee Stock Plan will be administered by the
Board of Directors of the Company. The Board of Directors or the Committee will
be authorized to determine, among other things, the key employees to whom, and
the times at which, options and other benefits are to be granted, the number of
shares subject to each option, the applicable vesting schedule and the exercise
price. The Board of Directors or the Committee will also determine the treatment
to be afforded to a participant in the Employee Stock Plan in the event of
termination of employment for any reason, including death, disability or
retirement. Under the Employee Stock Plan the maximum term of an incentive stock
option is ten years and the maximum term of a nonqualified stock option is
fifteen years.

No options have been granted under the Company's Stock Plans prior to the
Offering. Upon consummation of the Offering, an executive officer of the Company
will be granted two options to purchase 36,000 and 21,000 shares, respectively,
under the Employee Stock Plan. The options granted to the executive officer
mentioned above will vest in equal installments on January 5, 1997, 1998 and
1999 and will have a total term of seven years. The option for 21,000 shares
will have an exercise price of $0.01 per share and the option for 36,000 shares
will have an exercise price equal to the initial public offering price. Options
to purchase an aggregate of 215,000 shares will be granted under the Employee
Stock Plan to 139 other employees of the Company. These options will have an
exercise price equal to the initial public offering price of the Common Stock
offered hereby, will vest at the rate of 20% per year and will have a total term
of seven years.

The Company will measure compensation expense for the Stock Plans using the
intrinsic value method prescribed in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees"

F-16
<PAGE> 63

PRECISION RESPONSE CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

("APB 25"). Under this method, compensation expense is measured as the
difference between the quoted market price of the stock and the amount to be
paid for the stock.

In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("FAS 123") which became effective January 1, 1996. Under the
provisions of FAS 123, companies can elect to account for stock-based
compensation plans using a fair-value-based method or continue measuring
compensation expense for those plans using the intrinsic value method prescribed
in APB 25. FAS 123 requires that companies electing to continue using the
intrinsic value method must make pro forma disclosures of net income and
earnings per share as if the fair-value-based method of accounting had been
applied. The adoption of FAS 123 will be reflected in the Company's 1996
financial statements.

As the Company expects to account for stock-based compensation using the
intrinsic value method, FAS 123 will not have an impact on the Company's results
of operations or financial position.

F-17
<PAGE> 64

PRECISION RESPONSE LOGO

[8 PHOTOGRAPH MONTAGE OF PRC EMPLOYEES ENGAGED IN VARIOUS ACTIVITIES]
<PAGE> 65

---------------------------------------------------
---------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING SHAREHOLDERS OR THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.
---------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary...................... 3
Risk Factors............................ 6
Distribution of S Corporation
Earnings.............................. 11
Use of Proceeds......................... 12
Dividend Policy......................... 12
Capitalization.......................... 13
Dilution................................ 14
Selected Financial and Operating Data... 15
Management's Discussion and Analysis
of Financial Condition and Results
of Operations......................... 17
Business................................ 23
Management.............................. 31
Certain Transactions.................... 37
Principal and Selling Shareholders...... 37
Description of Capital Stock............ 39
Shares Eligible for Future Sale......... 42
Underwriting............................ 43
Legal Matters........................... 44
Independent Public Accountants.......... 45
Additional Information.................. 45
Index to Financial Statements........... F-1
</TABLE>

---------------------

UNTIL AUGUST 11, 1996 (25 DAYS FROM THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT
IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING
AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

4,000,000 SHARES

PRECISION RESPONSE LOGO

COMMON STOCK

---------------
PROSPECTUS
---------------

DAIN BOSWORTH

INCORPORATED

FURMAN SELZ

JULY 16, 1996

---------------------------------------------------
---------------------------------------------------