PRECISION RESPONSE CORP, 424B1, 1997-01-30

PRECISION RESPONSE CORP
424B1, 1997-01-30
BUSINESS SERVICES, NEC

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<PAGE> 1
FILED PURSUANT TO RULE 424(B)(1)
REGISTRATION STATEMENT NO. 333-18823

4,740,000 SHARES

PRECISION RESPONSE CORPORATION LOGO

COMMON STOCK
(PAR VALUE $.01 PER SHARE)

Of the 4,740,000 shares of Common Stock offered hereby, 1,500,000 shares
are being sold by the Company and 3,240,000 shares are being sold by the Selling
Shareholders. See "Principal and Selling Shareholders". The Company will not
receive any of the proceeds from the sale of the shares being sold by the
Selling Shareholders.

The last reported sale price of the Common Stock, which is quoted under the
symbol "PRRC", on the Nasdaq National Market on January 29, 1997, was $36.00 per
share. See "Price Range of Common Stock".

SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE COMMON STOCK.

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.

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

<TABLE>
<CAPTION>
PROCEEDS TO
INITIAL PUBLIC UNDERWRITING PROCEEDS TO SELLING
OFFERING PRICE DISCOUNT(1) COMPANY(2) SHAREHOLDERS
-------------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Per Share......................... $35.125 $1.75 $33.375 $33.375
Total(3).......................... $166,492,500 $8,295,000 $50,062,500 $108,135,000
</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.
(2) Before deducting estimated expenses of $650,000, payable by the Company.
(3) The Selling Shareholders have granted the Underwriters an option for 30 days
to purchase up to an additional 710,000 shares at the initial public
offering price per share, less the underwriting discount, solely to cover
over-allotments, if any. If such option is exercised in full, the total
initial public offering price, underwriting discount, proceeds to Company
and proceeds to selling shareholders will be $191,431,250, $9,537,500,
$50,062,500 and $131,831,250, respectively. See "Underwriting".

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

The shares offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that certificates
for the shares will be ready for delivery in New York, New York, on or about
February 4, 1997, against payment therefor in immediately available funds.

GOLDMAN, SACHS & CO.
DAIN BOSWORTH
Incorporated
MERRILL LYNCH & CO.

FURMAN SELZ

The date of this Prospectus is January 29, 1997.
<PAGE> 2

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

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

TELESERVICES

Most of PRC's teleservicing activities involve responding
to inbound calls from its clients' customers. PRC
currently operates approximately 3,200 workstations in
eight call centers capable of handling 46 million calls
per month.

[Photograph depicting PRC customer service
representatives]

[Photograph depicting PRC On-Line
screen]

<TABLE>
<S> <C>
DATABASE
MARKETING AND
MANAGEMENT [Photograph depicting fulfillment operations]
The Company helps its clients more effectively target FULFILLMENT
marketing programs and designs customer service
programs which capture information useful in the Fulfillment services include high-speed laser and
client's marketing efforts. PRC On-Line, the electronic document printing, lettershop and mechanical
Company's proprietary software application, allows inserting, sorting, packaging and mailing capabilities.
PRC clients to review their programs' progress on These services enable PRC to support its clients' customer
line, in real time. service and marketing programs.
</TABLE>

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

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

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS (IF ANY) OR THEIR RESPECTIVE AFFILIATES MAY ENGAGE IN PASSIVE MARKET
MAKING TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN
ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED. SEE "UNDERWRITING".
<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 assumes no
exercise of the Underwriters' over-allotment option. See "Underwriting".

THE COMPANY

PRC is a leading full-service provider of telephone-based customer service
and marketing 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. ("AT&T"), British Airways,
DirecTV, Lucent Technologies, Pizza Hut, Ryder Truck Rental, Taco Bell and UPS.
These clients collectively accounted for 87.2% of the Company's revenues for the
first nine months of 1996. AT&T is the only client that accounted for more than
10% of the Company's revenues in such period. New clients expected to contribute
to revenues include American Express Travel Related Services Company, Ameritech,
Cox Communications, John Hancock and The College Entrance Examination Board.

Since 1993, the Company has focused primarily on attracting large corporate
clients that have significant customer service needs, including database design
and management and substantial ongoing teleservicing needs. Typically, the
Company's customer service representatives are dedicated to a specific PRC
client. Most of the Company's teleservicing activities involve inbound
(customer-initiated) calls. In almost all cases, outbound (PRC-initiated) calls
are made to existing customers of a PRC client or to respond to
customer-initiated inquiries. For the first nine months of 1996, approximately
75.5% of the Company's teleservicing revenues were from inbound calls.

PRC's revenues for 1995 increased 101.4% to $30.2 million from $15.0
million for 1994, while its pro forma net income for 1995 increased to $0.8
million from a loss of $0.3 million for 1994. For the first nine months of 1996,
revenues increased 211.1% to $63.6 million from $20.4 million for the comparable
period of 1995, while pro forma net income increased 569.1% to $3.8 million from
$0.6 million for the comparable period of 1995. PRC's operating margin for the
first nine months of 1996 was 10.9% of revenues compared to 6.1% of revenues for
the comparable period of 1995. The Company currently operates approximately
3,200 workstations in eight telephone call centers capable of handling up to 46
million calls per month. The Company anticipates that it will open two
additional call centers of approximately 500 workstations each during the first
quarter of 1997.

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 $81
billion in 1995. The Company believes that only a small percentage of those 1995
expenditures was for outsourced services. The Company expects that large
companies increasingly will outsource telephone-based customer service and
marketing activities in order to focus internal resources on their core
competencies and to improve the quality and cost-effectiveness of their customer
service and marketing 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.

3
<PAGE> 4

STRATEGY

PRC's objective is to become the premier full-service provider of
telephone-based customer service and marketing solutions. The Company's strategy
for achieving this objective is to offer high-quality, fully integrated services
to its clients that are customized to address each client's unique needs, and to
improve the quality and cost-effectiveness of the client's customer service and
marketing operations. The Company seeks to implement this strategy through the
following:

I. "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 customer service
and direct marketing needs. The Company is typically involved in all stages of
formulating, designing and implementing its clients' customer service and
marketing programs.

II. INFORMATION SERVICES CAPABILITIES. Through the efforts of its
information services group, which is currently comprised of over 200 information
systems specialists, the Company is able to rapidly design, develop and
implement application software for each client's unique customer service and
marketing programs. PRC offers a wide array of services, including formulating,
designing and customizing teleservicing applications, programming, and
demographic and psychographic profiling. The Company believes that the services
provided by its information systems specialists attract clients with long-term,
complex teleservicing needs.

III. ADVANCED TECHNOLOGY. The Company's sophisticated use of advanced
technology enables it to develop and deliver solutions to its clients' complex
customer service and marketing needs. CCPro, a call management software program,
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.

IV. RAPID DEPLOYMENT OF CALL CENTERS. PRC has the ability to have a
call center fully operational in approximately 60 days, as demonstrated by the
openings of two call centers in April 1996 and a call center in each of June,
September and December 1996. This ability to rapidly expand its capacity has
enabled the Company to timely respond to its clients' needs and to compete
effectively for new business opportunities.

V. LONG-TERM CLIENT RELATIONSHIPS. The Company seeks to develop
long-term client relationships by becoming an integral part of its clients'
overall customer service and marketing efforts. Dedicated account services
teams, comprised of representatives of the teleservices, information services
and fulfillment departments, are assigned to and work closely with each client
to formulate, design, implement, and operate the client's program throughout its
term. In addition, the Company's customer service representatives typically are
trained for and work on only one client's program. This close working
relationship and continuity of personnel positions PRC as a strategic partner
with its clients.

VI. STRONG COMMITMENT TO QUALITY. PRC strives to achieve the highest
quality standards in the industry. Approximately 97% of PRC's customer service
representatives currently 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.

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.

4
<PAGE> 5

THE OFFERING

Common Stock offered by the Company... 1,500,000 shares

Common Stock offered by the Selling
Shareholders.......................... 3,240,000 shares

Common Stock to be outstanding after
this offering......................... 21,500,000 shares(1)

Nasdaq National Market Symbol......... PRRC

Use of proceeds by the Company........ Call center expansion, other capital
expenditures necessary to support
growth, working capital and other
general corporate purposes.
- ---------------

(1) Excludes 1,104,750 shares of Common Stock issuable upon exercise of stock
options granted under the Company's Stock Plans as of January 2, 1997, of
which options for 21,000 shares have exercise prices of $0.01 per share and
options for 1,083,750 shares have exercise prices equal to the fair market
value per share of the Common Stock on the date of grant of the options,
with a weighted average exercise price of $28.76 per share. Also excludes
923,518 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.
5
<PAGE> 6

SUMMARY FINANCIAL AND OPERATING DATA

The following table presents certain summary financial and operating data
as of and for each of the periods indicated. The financial data for the five
years ended December 31, 1991, 1992, 1993, 1994 and 1995 have been derived from
the audited financial statements of the Company. The financial data for the nine
months ended September 30, 1995 and 1996 are derived from the Company's
unaudited financial statements which, in the opinion of management, include all
adjustments (which consist only of normal recurring accruals) necessary for a
fair presentation of the financial position and results of operations of the
Company for such interim periods. Such unaudited financial statements have been
reviewed by Coopers & Lybrand L.L.P. The following information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Financial Statements of the Company included
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
------------------------
ACTUAL AS ADJUSTED(5)
------- --------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital........................................... $28,488 $ 77,901
Total assets.............................................. 76,334 125,747
Short-term obligations(6)................................. 1,644 1,644
Long-term obligations, less current maturities............ 5,749 5,749
Shareholders' equity...................................... 50,353 99,766
</TABLE>

(1) Prior to the Company's initial public offering of Common Stock (the "Initial
Public Offering"), the Company was an S corporation and not subject to
Federal and Florida corporate income taxes. On July 16, 1996, the Company
revoked its S election and changed its tax status from an S corporation to a
C corporation, recorded deferred income taxes totaling $90,000 and began
providing for Federal and Florida corporate income taxes from and after that
date. 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 numbers of common shares outstanding for the
year ended December 31, 1995 and the nine months ended September 30, 1996
were 16,400,000 and 17,345,985, respectively; however, as required by
generally accepted accounting principles, the weighted average number of
common shares outstanding has been increased by 127,061 shares (weighted for
the applicable period), which shares are not actually outstanding. This
number is equal to the number of shares which, when multiplied by $14.50 per
share (the price in the Initial Public Offering), would have been sufficient
to replace the amount of the Dividend (see "Distribution of S
6
<PAGE> 7

Corporation Earnings") in excess of pro forma earnings for the twelve months
ended June 30, 1996. See Note 10 of Notes to Financial Statements.

(3) Supplemental pro forma net income per common share would have been $0.06 per
share and $0.22 per share for the year ended December 31, 1995 and the nine
months ended September 30, 1996, respectively, giving effect to the use of a
portion of the net proceeds of the Initial Public Offering to repay the
Company's bank borrowings at January 1, 1995, and assuming an increase in
the weighted average number of common shares outstanding to 16,729,131 and
17,641,728, respectively (based on the price in the Initial Public Offering
of $14.50 per share).

(4) Does not include approximately 600 additional workstations that the Company
added in late December 1996.

(5) Adjusted to give effect to 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".

(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.

7
<PAGE> 8

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. This Prospectus contains certain forward-looking statements that involve
substantial risks and uncertainties. When used in this Prospectus, or in the
documents incorporated by reference herein, the words "anticipate", "believe",
"estimate", "intend" and "expect" and similar expressions are intended to
identify such forward-looking statements. The Company's actual results,
performance or achievements could differ materially from the results expressed
in or implied by these forward-looking statements. Factors that could cause or
contribute to such differences include those discussed in this section.

FACTORS AFFECTING ABILITY TO MANAGE AND SUSTAIN GROWTH

The Company has experienced rapid growth over the last year and in
particular since the second quarter of 1996. This rapid growth may be expected
to place a strain on the Company's operational and administrative resources. The
Company's 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 customer service and
marketing 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 (including call centers located
outside of Florida), 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 82.6% and 76.2%, respectively, of the
Company's total revenues for the first nine months of 1996. The Company's
largest client in 1995 and the first nine 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 71.6% of the Company's total revenues during 1995 and
the first three quarters of 1996, respectively. As of December 31, 1995 and
September 30, 1996, accounts receivable from the Company's five largest clients
represented approximately 77.1% and 90.5%, 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 use of, outsourced
telephone-based customer service, marketing, 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

8
<PAGE> 9

services and 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 customer service or marketing 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 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, has a high degree of
part-time employees and has experienced high personnel turnover. Many of the
Company's employees receive modest hourly wages. Although the Company believes
that its percentage of part-time employees is relatively low and its turnover
rate is low compared to that of its competitors, there can be no assurance that
the Company will be able to maintain these employment conditions. A higher
turnover rate among the Company's employees or an increase in the percentage of
part-time employees would increase the Company's recruiting and training costs
and decrease operating efficiencies and productivity. Some of the Company's
services, particularly its technical help desk, the frequent flyer program and
its 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 have a material
adverse effect on 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".

9
<PAGE> 10

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 pricing 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.

POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS; SEASONALITY

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
and preoperating costs 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".

POTENTIAL VOLATILITY OF STOCK PRICE

The market price for the Common Stock has risen substantially since the
Initial Public Offering in July 1996. The Common Stock is quoted on the Nasdaq
National Market, which has experienced, and is likely to experience in the
future, significant price and volume fluctuations which could adversely affect
the market price of the Common Stock without regard to the operating performance
of the Company. In addition, 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. 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. See "Price Range of Common Stock" and "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 and the proceeds
from the Initial Public Offering, together with the net proceeds of this
offering and available borrowings, will be sufficient to

10
<PAGE> 11

meet working capital and capital expenditure 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".

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 33.9% and 22.1%, respectively, of the outstanding Common Stock
(32.0% and 20.7% 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. Mr. Gordon and Mr. Epstein are also Selling Shareholders in this
offering. See "Management" and "Principal and Selling Shareholders".

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".

SHARES ELIGIBLE FOR FUTURE SALE

Sales 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 (and assuming no exercise of any stock options), the
Company will have a total of 21,500,000 shares of Common Stock outstanding, of
which 9,340,000 (10,050,000 if the Underwriters' over-allotment option is
exercised in full) will be freely tradeable without restriction under the
Securities Act of 1933, as amended (the "Securities Act"). All of the remaining
12,160,000 shares are "restricted securities" as defined by

11
<PAGE> 12

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, 10,970,000 of these shares will be available for sale in the
public market subject to compliance with Rule 144 volume and other requirements.
The remaining 1,190,000 shares of restricted securities will be eligible for
sale beginning in February 1998, in compliance with Rule 144 volume and other
requirements. The Company has registered for issuance or resale the 2,028,268
shares of Common Stock reserved for issuance under the Stock Plans. As of
January 2, 1997, options to purchase 1,104,750 shares had been granted and are
outstanding under the Stock Plans, of which options to purchase 5,000 shares
were then currently exercisable, options to purchase 19,000 shares became
exercisable in January 1997, and options to purchase the remaining 1,080,750
shares become exercisable at varying times thereafter. In connection with their
employment agreements with the Company, Messrs. Gordon, Epstein, Mondre and
Murray and their affiliates 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 and their affiliates 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".

CERTAIN FLORIDA STATUTORY PROVISIONS

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 Articles of
Incorporation (the "Articles") and Bylaws (the "Bylaws") with such an indemnity
provision 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 Articles and 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".

12
<PAGE> 13

DISTRIBUTION OF S CORPORATION EARNINGS

Prior to the Initial Public 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 were taxed for Federal and Florida income tax
purposes directly to the shareholders of the Company, rather than to the
Company. In connection with the Initial Public Offering, the Company was
converted from an S corporation to a C corporation under the Code. The Company's
Board of Directors declared a cash dividend payable to the Company's
shareholders of record prior to the Initial Public Offering (which included
certain affiliates of the Selling Shareholders) (the "Dividend"). The Dividend
was intended to be equal to the Company's accumulated taxable income prior to
conversion to a C corporation, to the extent such taxable income had not
previously been distributed. The actual amount of the Dividend was $5.2 million.
A portion of the net proceeds received by the Company from the Initial Public
Offering was used to pay the Dividend.

The Company and its shareholders who received the Dividend 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 such 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
the Initial Public 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 the Initial Public
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 received
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.

13
<PAGE> 14

USE OF PROCEEDS

The net proceeds to be received by the Company from this offering are
estimated to be approximately $49.4 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 additional capital
needed to support the Company's continued expansion and growth. The Company will
use the net proceeds for call center expansion, other capital expenditures
necessary to support growth, working capital and other general corporate
purposes. The Company's capital expenditures for the fourth quarter of 1996 were
approximately $20.3 million, including approximately $7.0 million for the new
600 workstation call center the Company opened in its new Miami facility in late
December 1996. The Company expects its capital expenditures for 1997 to be
approximately $45.0 million, including approximately $31.0 million to be used
for the five call centers the Company expects to open in 1997. Each such call
center is expected to have approximately 500 workstations and cost approximately
$6.2 million, primarily for telecommunications equipment, computer hardware and
cabling, software, furniture and leasehold improvements. It is also expected
that during 1997 the Company will spend approximately $14.0 million for computer
hardware, software and furniture to support operations. The balance of the net
proceeds, if any, will be used for working capital. Pending such uses, the
Company intends to invest the net proceeds of this offering in short-term
interest-bearing instruments.

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 paid by the Company in 1996, see
"Distribution of S Corporation Earnings".

PRICE RANGE OF COMMON STOCK

Since the Initial Public Offering, the Company's Common Stock has been
quoted on the Nasdaq National Market under the symbol "PRRC". Prior to the
Initial Public Offering, the Common Stock was not listed or quoted on any
organized market system. The following table sets forth for the periods
indicated the high and low closing sales prices of the Common Stock as reported
on the Nasdaq National Market during such period:

<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
Third Quarter of 1996 (from July 17, 1996)................ $38 1/2 $16 3/4
Fourth Quarter of 1996.................................... 44 1/2 34 1/2
First Quarter of 1997 (through January 29, 1997).......... 36 34 1/16
</TABLE>

On January 29, 1997, the last reported sale price of the Common Stock
reported on the Nasdaq National Market was $36.00 per share. As of December 31,
1996, there were approximately 50 holders of record of the Common Stock and the
Company estimates, based upon information provided by brokers, that it has in
excess of 700 beneficial owners of its Common Stock.

14
<PAGE> 15

CAPITALIZATION

The following table sets forth the cash and cash equivalents, short-term
obligations and capitalization of the Company at September 30, 1996 and as
adjusted to reflect the application of the net proceeds from the issuance and
sale by the Company of 1,500,000 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>
SEPTEMBER 30, 1996
------------------------
(UNAUDITED)
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents(1)................................ $10,946 $ 60,359
======= ========
Short-term obligations(2)................................... $ 1,644 $ 1,644
======= ========
Long-term obligations, less current maturities.............. $ 5,749 $ 5,749
------- --------
Shareholders' equity:
Preferred stock, $0.01 par value per share, 25,000,000
shares authorized, none issued and outstanding......... -- --
Common stock, $0.01 par value per share, 100,000,000
shares authorized; 20,000,000 shares issued and
outstanding actual; and 21,500,000 shares issued and
outstanding as adjusted(3)............................. 200 215
Additional paid-in capital.................................. 47,715 97,113
Retained earnings........................................... 2,681 2,681
Unearned compensation(4).................................... (243) (243)
------- --------
Total shareholders' equity........................ 50,353 99,766
------- --------
Total capitalization.............................. $56,102 $105,515
======= ========
</TABLE>

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

(1) Does not include amounts available for use by the Company under its
three-year, $15 million revolving credit facility. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources".
(2) Consists of current maturities of long-term obligations, which includes
notes payable, installment loans and capital leases.
(3) Excludes 1,104,750 shares of Common Stock issuable upon exercise of stock
options granted under the Company's Stock Plans as of January 2, 1997, of
which options for 21,000 shares have exercise prices of $0.01 per share and
options for 1,083,750 shares have exercise prices equal to the fair market
value per share of the Common Stock on the date of grant of the options,
with a weighted average exercise price of $28.76 per share. Also excludes
923,518 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) Represents the unamortized portion of the difference between the fair
market value on the date of grant of an option to purchase 21,000 shares of
Common Stock and the total exercise price of such option. See Note 11 of
Notes to Financial Statements.

15
<PAGE> 16

SELECTED FINANCIAL AND OPERATING DATA

The following selected financial and operating data are qualified by
reference to and should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Company's
Financial Statements and notes thereto included elsewhere in this Prospectus.
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
1993 and 1994 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 1991 and 1992 and the Balance Sheet Data as
of December 31, 1991, 1992 and 1993 have been derived from audited financial
statements not included herein. The Statement of Operations Data for each of the
nine-month periods ended September 30, 1995 and 1996 and the Balance Sheet Data
as of September 30, 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 necessary for a fair presentation of the results for such
periods. The selected financial and operating data for the nine months ended
September 30, 1996 are not necessarily indicative of the results to be expected
for 1996.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------------------- --------------------
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- ------- ---------- ------- ----------
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues...................................... $16,206 $16,107 $18,218 $14,998 $ 30,204 $20,439 $ 63,592
------- ------- ------- ------- ---------- ------- ----------
Cost of services.............................. 8,712 7,759 10,675 9,070 18,372 12,620 41,021
Preoperating costs............................ -- -- -- -- 573 76 1,048
Selling, general and administrative
expenses.................................... 5,539 7,623 7,278 6,009 9,431 6,487 14,619
------- ------- ------- ------- ---------- ------- ----------
Total operating expenses...................... 14,251 15,382 17,953 15,079 28,376 19,183 56,688
------- ------- ------- ------- ---------- ------- ----------
Operating income (loss)....................... 1,955 725 265 (81) 1,828 1,256 6,904
Other income (expense):
Interest income............................. -- -- -- -- 19 19 223
Interest expense............................ (106) (150) (197) (292) (391) (287) (783)
Gain (loss) on disposal of assets........... -- (36) (314) 1 -- -- --
------- ------- ------- ------- ---------- ------- ----------
Income (loss) before income taxes............. 1,849 539 (246) (372) 1,456 988 6,344
Income taxes.................................. -- -- -- -- -- -- 1,207
------- ------- ------- ------- ---------- ------- ----------
Net income (loss)............................. $ 1,849 $ 539 $ (246) $ (372) $ 1,456 $ 988 $ 5,137
======= ======= ======= ======= ========== ======= ==========
Pro forma data (unaudited):
Income (loss) before pro forma income
taxes..................................... $ 1,849 $ 539 $ (246) $ (372) $ 1,456 $ 988 $ 6,344
Pro forma provision (benefit) for income
taxes relating to S Corporation(1)........ 717 247 (46) (86) 619 420 2,544
------- ------- ------- ------- ---------- ------- ----------
Pro forma net income (loss)(1).............. $ 1,132 $ 292 $ (200) $ (286) $ 837 $ 568 $ 3,800
======= ======= ======= ======= ========== ======= ==========
Pro forma net income per common
share(1)(2)(3)............................ $ 0.05 $ 0.22
========== ==========
Weighted average number of common shares
outstanding(2)............................ 16,527,061 17,439,658
========== ==========
NUMBER OF WORKSTATIONS (AT END OF PERIOD)....... 120 320 320 320 550 550 2,610(4)
</TABLE>

16
<PAGE> 17

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30, 1996
-------------------------------------------- ------------------------
1991 1992 1993 1994 1995 ACTUAL AS ADJUSTED(5)
------ ------ ------ ------- ------- ------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit).................. $ 961 $ (11) $ 160 $(1,423) $ 1,365 $28,488 $ 77,901
Total assets............................... 5,148 6,392 7,933 7,737 12,713 76,334 125,747
Short-term obligations(6).................. 296 1,128 2,084 2,499 1,182 1,644 1,644
Long-term obligations, less current
maturities............................... 737 776 1,565 1,020 3,924(7) 5,749 5,749
Shareholders' equity....................... 2,147 2,186 1,940 1,474 2,816 50,353 99,766
</TABLE>

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

(1) Prior to the Initial Public Offering, the Company was an S corporation and
not subject to Federal and Florida corporate income taxes. On July 16,
1996, the Company revoked its S election and changed its tax status from an
S corporation to a C corporation, recorded deferred income taxes totaling
$90,000 and began providing for Federal and Florida corporate income taxes
from and after that date. 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 numbers of common shares outstanding for the
year ended December 31, 1995 and the nine months ended September 30, 1996
were 16,400,000 and 17,345,985, respectively; however, as required by
generally accepted accounting principles, the weighted average number of
common shares outstanding has been increased by 127,061 shares (weighted
for the applicable period), which shares are not actually outstanding. This
number is equal to the number of shares which, when multiplied by $14.50
per share (the price in the Initial Public Offering), 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 June 30, 1996. See Note 10 of Notes to Financial Statements.
(3) Supplemental pro forma net income per common share would have been $0.06
per common share and $0.22 per share for the year ended December 31, 1995
and the nine months ended September 30, 1996, respectively, giving effect
to the use of a portion of the net proceeds of the Initial Public Offering
to repay the Company's bank borrowings at January 1, 1995, and assuming an
increase in the weighted average number of common shares outstanding to
16,729,131 and 17,641,728, respectively (based on the price in the Initial
Public Offering of $14.50 per share).
(4) Does not include approximately 600 additional workstations that the Company
added in late December 1996.
(5) Adjusted to give effect to 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".
(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.
(7) Includes outstanding balance of revolving credit loan.

17
<PAGE> 18

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 customer service and marketing 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, primarily as a result of the
Company's work with The Upjohn Company and its national marketing program for
its Rogaine product. This 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 customer service and marketing
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. From
1993 through September 30, 1996, investments in systems, facilities and
equipment, including the value of all leased equipment, have amounted to
approximately $34 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 and to
$63.6 million for the first nine months of 1996.

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 62.2% of PRC's overall revenues) were derived from inbound calls.
For the first nine months of 1996, approximately 75.5% of the Company's
teleservicing revenues (and approximately 51.2% of the Company's overall
revenues) were derived from inbound calls.

Prior to the Initial Public Offering, the Company elected for Federal and
Florida income tax purposes to be treated as an S corporation under the Code and
comparable state tax laws. As a result, earnings of the Company were taxed for
Federal and Florida income tax purposes directly to the shareholders of the
Company, rather than to the Company. Immediately prior to the Initial Public
Offering, the Company revoked its S election and converted from an S corporation
to a C corporation. 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.

18
<PAGE> 19

RESULTS OF OPERATIONS

The following table sets forth Statement of Operations data as a percentage
of revenues for the periods indicated:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------- ---------------
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 61.8 64.5
Preoperating costs................................. -- -- 1.9 0.4 1.6
Selling, general and administrative expenses....... 40.0 40.1 31.2 31.7 23.0
----- ----- ----- ----- -----
Operating income (loss).......................... 1.4 (0.6) 6.1 6.1 10.9
Interest income.................................... -- -- 0.1 0.1 0.3
Interest expense................................... (1.1) (1.9) (1.3) (1.4) (1.2)
Gain (loss) on disposal of assets.................. (1.7) -- -- -- --
----- ----- ----- ----- -----
Income (loss) before income taxes................ (1.4) (2.5) 4.9 4.8 10.0
Income taxes..................................... -- -- -- -- 1.9
----- ----- ----- ----- -----
Net income (loss)(1)............................... (1.4)% (2.5)% 4.9% 4.8% 8.1%
===== ===== ===== ===== =====
PRO FORMA DATA:
Income (loss) before pro forma income taxes...... (1.4)% (2.5)% 4.9% 4.8% 10.0%
Pro forma provision (benefit) for income
taxes(1)....................................... (0.3) (0.6) 2.1 2.0 4.0
----- ----- ----- ----- -----
Pro forma net income (loss)(1)................... (1.1)% (1.9)% 2.8% 2.8% 6.0%
===== ===== ===== ===== =====
</TABLE>

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

(1) Prior to the Initial Public 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.

NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1995

Revenues. Revenues increased $43.2 million, or 211.1%, to $63.6 million
for the nine months ended September 30, 1996 from $20.4 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 $29.2 million, or 210.1%, to $43.1 million for the nine months ended
September 30, 1996 from $13.9 million for the comparable period of 1995. Growth
in teleservicing revenues resulted primarily from the addition of several new
programs for existing clients in the telecommunications industry as well as the
addition of new clients in the telecommunications equipment and transportation
industries. For the nine months ended September 30, 1996, revenues for
information services in conjunction with teleservicing activities increased
$11.8 million, or 310.0%, to $15.6 million from $3.8 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. The
large increase in information services revenues resulted primarily from
increased development of systems for use in client programs. Included in
information services revenues for the nine months ended September 30, 1996 was
$8.0 million related to a special client project. This project was much larger
in scope than the traditional services performed in connection with
teleservicing activity and is not expected to recur.

Cost of Services. Cost of services represents labor and telephone expenses
directly related to revenue generating activities, each department's management
salaries and equipment depreciation, and amortization of capitalized software
development costs. Cost of services increased to $41.0 million for

19
<PAGE> 20

the nine months ended September 30, 1996 from $12.6 million for the comparable
period of 1995, an increase of $28.4 million, or 225.1%. The increase in cost of
services resulted primarily from the addition of new employees to staff expanded
operations and increased telecommunications costs related to new teleservicing
programs. As a percentage of revenues, cost of services increased to 64.5% for
the nine months ended September 30, 1996 from 61.8% for the comparable period of
1995. The increase in cost of services as a percentage of revenues was
attributable primarily to volume pricing for large teleservicing programs, and
was partially offset by a special client project in the first nine months of
1996 that generated higher margins than the Company's overall business.

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 $8.1 million, or 125.3%, to $14.6
million for the nine months ended September 30, 1996 from $6.5 million for the
comparable period of 1995. The increase in selling, general and administrative
expenses resulted primarily from costs associated with additional personnel and
operating leases necessary to support the Company's growth, as well as increased
commission expenses related to the increase in revenues. As a percentage of
revenues, selling, general and administrative expenses decreased to 23.0% for
the nine months ended September 30, 1996 from 31.7% for the comparable period of
1995. The decrease in selling, general and administrative expenses as a
percentage of revenues resulted from the Company's overhead being absorbed by an
increased base of revenues.

Preoperating Costs. Preoperating costs include certain incremental costs
incurred at a facility prior to the commencement of operations, including rent,
new-hire salaries and expenses for utilities, equipment leases and security.
Preoperating costs increased to $1,047,000, or 1.6% of revenues, for the nine
months ended September 30, 1996, from $76,000, or 0.4% of revenues for the
comparable period of 1995. For the nine months ended September 30, 1996,
preoperating costs primarily related to the opening of five call centers
totaling approximately 2,100 workstations.

Interest Income. Interest income increased to $223,000, or 0.3% of
revenues, for the nine months ended September 30, 1996 from $20,000, or 0.1% of
revenues, for the comparable period of 1995. The increase in interest income
resulted from the investment of a portion of the proceeds from the Initial
Public Offering.

Interest Expense. Interest expense increased to $783,000, or 1.2% of
revenues, for the nine months ended September 30, 1996 from $287,000, or 1.4% of
revenues, for the comparable period of 1995. The increase in interest expense
reflected higher average outstanding borrowings prior to completion of the
Initial Public Offering (which were used to finance working capital needs, to
open new facilities and to purchase related equipment) partially offset by lower
interest rates on credit facility borrowings.

Income Taxes. Prior to the Initial Public Offering, the Company included
its income and expenses with those of its shareholders for Federal and state
income tax purposes (an S corporation election). Accordingly, the statements of
operations for the nine months ended September 30, 1995, and the period from
January 1, 1996 through July 16, 1996 do not include a provision for Federal or
state income taxes.

Pro Forma Net Income. Pro forma net income increased 569.1% to $3.8
million, or 6.0% of revenues, for the nine months ended September 30, 1996
compared to pro forma net income of $568,000, or 2.8% of revenues, for the
comparable period of 1995. Pro forma net income includes a pro forma provision
for Federal and state income taxes. See Note 10 of Notes to Financial
Statements.

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<PAGE> 21

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. Growth in teleservicing revenues 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
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 the addition 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 a high
level of management and related costs 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 call center in January 1996 originally containing 430
workstations.

Interest Expense. Interest expense, net of interest income, 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 a pro forma net loss of $286,000, or 1.9% of
revenues, for 1994. Pro forma net income (loss) includes a pro forma 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. This decrease was 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 The Upjohn
Company's 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 Company increased $1.1 million, or 17.1%, to $7.3
million for 1994 from $6.2 million for 1993. The growth in teleservicing
revenues 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 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

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<PAGE> 22

decrease in compensation paid to shareholders in their capacities as employees
of the Company in 1994 and a decrease in 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 the
hiring of 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 from a pro forma net loss of $200,000, or 1.1% of
revenues, for 1993. Pro forma net loss includes a pro forma benefit for Federal
and state income taxes. See Note 10 of Notes to Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

Prior to the Initial Public Offering, the Company's primary sources of
liquidity were 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 expenditures to no more than $45 million in 1996, $60 million
in 1997 and $23 million per year thereafter 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. All amounts
outstanding under this credit facility were repaid with a portion of the
proceeds from the Initial Public Offering. For information about the Company's
previous and existing facilities, see Notes 4 and 5 of Notes to Financial
Statements.

In connection with the Initial Public Offering, the Company received net
proceeds of approximately $47.4 million. As of September 30, 1996, $13.4 million
of the net proceeds had been used to purchase and install machinery and
equipment, $13.8 million to repay indebtedness, $5.2 million to pay the
Dividend, and $4.3 million for working capital. The balance of $10.7 million of
the proceeds is being used to support the Company's growth.

Capital expenditures, including capital lease financings, were $1.6
million, $2.0 million and $2.6 million for 1993, 1994 and 1995, respectively.
The Company expects capital expenditures to approximate $45.0 million for 1996,
including approximately $7.0 million for the new 600 workstation call center the
Company opened in its new Miami facility in late December 1996. Capital
expenditures, including capital lease financings, for the nine months ended
September 30, 1996 were approximately $24.7 million and were primarily related
to the addition of five call centers totaling approximately 2,100 workstations.
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 the Initial Public Offering and this offering, availability under its
revolving credit facility and lease financing will be sufficient to finance its
current and anticipated operations and planned capital expenditures at least
through 1997.

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<PAGE> 23

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>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------- -------------------
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 $ 800 $ (9,285)
Net cash used in investing
activities....................... (1,230) (1,474) (1,578) (1,024) (16,882)
Net cash provided by (used in)
financing activities............. 1,755 (223) 458 210 36,846
</TABLE>

Cash used in operating activities was $9.3 million for the nine months
ended September 30, 1996, reflecting $17.9 million of changes in operating
assets and liabilities, offset by $8.6 million of income before depreciation and
amortization and other non-cash charges. The additional working capital was
principally related to an increase in accounts receivable, offset by an increase
in accounts payable, resulting from the growth in operations over the same
period. Cash used in investing activities for the nine months ended September
30, 1996 was $16.9 million, primarily related to the purchase of
telecommunications equipment, computer equipment and leasehold improvements in
connection with call center expansion. Cash provided by financing activities for
the nine months ended September 30, 1996 was $36.8 million, reflecting the net
proceeds from the Initial Public Offering which were used to fund working
capital needs, capital requirements, to repay indebtedness and to pay the
Dividend.

Cash provided by operating activities was $800,000 for the nine months
ended September 30, 1995, reflecting $2.0 million of income before depreciation
and amortization and other non-cash charges, offset by $1.2 million of changes
in operating assets and liabilities. The additional working capital was
principally related to an increase in accounts receivable, offset by an increase
in liabilities, resulting from the growth in operations over the same period.
Cash used in investing activities for the nine months ended September 30, 1995
was $1.0 million, primarily related to the purchase of telecommunications
equipment and, to a lesser extent, computer equipment and leasehold
improvements. Cash provided by financing activities for the nine months ended
September 30, 1995 was $210,000, reflecting the net borrowing from the revolving
credit loan, offset by repayments of long-term obligations, which were used to
fund working capital needs and capital requirements.

Cash provided by operating activities was $600,000 for 1995, reflecting
$3.0 million of income before depreciation and amortization and other non-cash
charges, offset by $2.4 million of changes in operating assets and liabilities.
The additional working capital was principally related to an increase in
accounts receivable resulting from an 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
$528,000 of income before depreciation and amortization and other non-cash
charges, plus $1.8 million of changes in operating assets and liabilities. The
working capital change was principally related to a decrease in accounts
receivable resulting from a 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

23
<PAGE> 24

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 $734,000 of
income before depreciation and amortization and other non-cash charges. The
additional working capital was principally related to an increase in accounts
receivable resulting from an 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.

INFLATION

To date, inflation has not had a material impact upon PRC's 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' customer service programs and marketing campaigns, 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 as client customer service and marketing 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". Based on the Company's current operating results and
circumstances, FAS 121 is not expected to impact its financial position or
results of operations. 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> 25

BUSINESS

GENERAL

PRC is a leading full-service provider of telephone-based customer service
and marketing 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, British Airways, DirecTV, Lucent
Technologies, Pizza Hut, Ryder Truck Rental, Taco Bell and UPS. These clients
collectively accounted for 87.2% of the Company's revenues for the first nine
months of 1996. AT&T is the only client that accounted for more than 10% of the
Company's revenues in such period. New clients expected to contribute to
revenues include American Express Travel Related Services Company, Ameritech,
Cox Communications, John Hancock and The College Entrance Examination Board.

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 $81
billion in 1995. 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 allow 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 $81 billion in
teleservicing expenditures in 1995 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 customer service and marketing 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
telecommuni-

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<PAGE> 26

cations 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.

STRATEGY

PRC's objective is to become the premier full-service provider of
telephone-based customer service and marketing solutions. The Company's strategy
for achieving this objective is to offer high-quality, fully integrated services
to its clients that are customized to address each client's unique needs and to
improve the quality and cost-effectiveness of the client's customer service and
marketing operations. The Company seeks to implement this strategy through the
following:

I. "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
customer service and direct marketing needs. The Company is typically involved
in all stages of formulating, designing and implementing its clients' customer
service and marketing 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.

II. INFORMATION SERVICES CAPABILITIES

Through the efforts of its information services group, which is currently
comprised of over 200 information systems specialists, the Company is able to
rapidly design, develop and implement application software for each client's
unique customer service and marketing programs. PRC offers a wide array of
services, including formulating, designing and customizing teleservicing
applications, programming, and demographic and psychographic profiling. The
information services group also integrates the Company's centrally managed wide
area network with the client's management information systems, thereby enabling
clients to access real-time program information and obtain comprehensive trend
analyses. As the needs of a client evolve, PRC's information systems specialists
work with the client to modify the program. The Company believes that the
services provided by its information systems specialists attract clients with
long-term, complex teleservicing needs.

III. ADVANCED TECHNOLOGY

The Company's sophisticated use of advanced technology enables it to
develop and deliver solutions to its clients' complex customer service and
marketing needs. PRC has developed specialized software programs, CCPro and PRC
On-Line, which 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.

IV. RAPID DEPLOYMENT OF CALL CENTERS

PRC has the ability to have a call center fully operational in
approximately 60 days, as demonstrated by the openings of two call centers in
April 1996 and a call center in each of June, September and December 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

26
<PAGE> 27

suitable labor pool. This ability to rapidly expand its capacity has enabled the
Company to timely respond to its clients' needs and to compete effectively for
new business opportunities.

V. LONG-TERM CLIENT RELATIONSHIPS

The Company seeks to develop long-term client relationships by becoming an
integral part of its clients' overall customer service and marketing efforts.
Dedicated account services teams, comprised of representatives of the
teleservices, information services and fulfillment departments, are assigned to
and work closely with each client to formulate, design, implement, and operate
the client's program throughout its term. In addition, the Company's customer
service representatives typically are trained for and work on only one client's
program. This close working relationship and continuity of personnel positions
PRC as a strategic partner with its clients.

VI. STRONG COMMITMENT TO QUALITY

PRC strives to achieve the highest quality standards in the industry.
Approximately 97% of PRC's customer service representatives currently 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 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

PRC's operations are organized to effectively provide one-stop solutions to
its clients' customer service and marketing needs.

MANAGEMENT OF CLIENTS THROUGH ACCOUNT SERVICES TEAM. 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 customer service or marketing 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
believes that its integrated team approach and solution-oriented focus provide
PRC with a distinct competitive advantage.

PROGRAM FORMULATION AND DESIGN. PRC's account services team works with the
client to formulate a customer service and marketing 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
nine months of 1996, account services and information services were 23.4% and
27.4% 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 customer
service and/or marketing 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 nine months of

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<PAGE> 28

1996, teleservices accounted for 67.8% of the Company's total revenues, of which
75.5% 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. The majority of PRC's outbound services result from the
Company's provision of inbound services. Almost all outbound calls are in
response to customer-initiated inquiries or are made to a client's existing
customers. 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 that 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 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
December 31, 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 customer
service and marketing 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
nine months of 1996, fulfillment accounted for 9.3% and 4.8%, 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

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<PAGE> 29

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 online.

TECHNOLOGY

PRC's sophisticated use of advanced technology enables it to develop and
deliver solutions to its clients' complex customer service and marketing needs.
The Company's information services group, which currently includes over 200
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. From 1993 through September 30, 1996, investments in these systems,
including the value of leased equipment, have amounted to approximately $28
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" 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,

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<PAGE> 30

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 that of 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
customer service and telephone sales 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 December 1, 1996, the Company had
3,108 full-time employees and 128 part-time personnel, of which 2,327 of the
full-time employees and 65 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 that of 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.

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 customer service departments or
marketing programs. PRC believes that its clients view it as a strategic partner
and a valuable resource in formulating, designing and implementing their
customer service and marketing programs. As of December 1, 1996, the Company
provided its services to approximately 40 clients in industries such as
telecommunications, transportation, consumer products, financial services and
food and beverage. The Company's ongoing clients include several divisions of
AT&T, British Airways, DirecTV, Lucent Technologies, Pizza Hut, Ryder Truck
Rental, Taco Bell, and UPS. New clients expected to contribute to revenues
include American Express Travel Related Services Company, Ameritech, Cox
Communications, John Hancock and The College Entrance Examination Board. The
Company's five and two largest clients accounted for 77.0% and 59.4%,
respectively, of its total revenues for 1995, and 82.6% and 76.2%, respectively,
of total revenues for the nine months ended September 30, 1996. Revenues
generated by the various divisions of AT&T, the Company's largest client,
accounted for 42.1% of revenues for 1995 and 71.6% of revenues for the nine
months ended September 30, 1996. Revenues from Ryder Truck Rental accounted for
17.3% of total revenues for 1995, and no client other than AT&T accounted for
10% or more of total revenues for the nine months ended September 30, 1996.

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<PAGE> 31

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 primarily based on a fixed hourly fee for
dedicated service. A small percentage of such charges are based 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, ITI Marketing Services, MATRIXX Marketing,
SITEL, TeleServices Resources, TeleTech Holdings and West TeleServices. 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 customer service and
marketing needs. The Company believes that it competes favorably with other
companies with respect to the foregoing factors for large-scale, ongoing
customer service and marketing 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 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.

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<PAGE> 32

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 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. Except for 12,331 square feet of
office space as to which the primary lease terminates in January 1998 (and as to
which the Company holds options to extend for an additional two-year term and an
additional three-year term thereafter), the primary leases terminate in January
2000, with the Company holding the option to extend for one additional
three-year term. The sublease also terminates in January 2000, with the Company
holding the option to renew for two 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.

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

<TABLE>
<CAPTION>
APPROXIMATE
CURRENT
NUMBER
LOCATION OPENING DATE OF WORKSTATIONS
-------- --------------- ----------------
<S> <C> <C>
4300 N.W. 135th St., Miami......................... May 1988 100
1505 N.W. 167th St., Miami (site of
headquarters).................................... July 1992 410
14261 Industrial Way, Miami Lakes.................. January 1996 540
1525 N.W. 167th St., Miami......................... April 1996 100
11975 S.W. 140th Terrace, Miami.................... April 1996 390
5166 E. Colonial Dr., Orlando...................... June 1996 570
2000 N. State Rd. 7, Margate....................... September 1996 510
1313 N.W. 167th St., Miami......................... December 1996 600
-------
Total............................................ 3,220
=======
</TABLE>

Of the total number of workstations listed above, approximately 3,000 are
universal workstations which can be used for both inbound and outbound calls. In
addition to the facilities listed above, the

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<PAGE> 33

Company anticipates that it will open two additional call centers of
approximately 500 workstations each during the first quarter of 1997.

The leases for these facilities generally expire between 1999 and 2006, 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. See "Management -- Compensation Committee
Interlocks and Insider Participation" and Note 7 of Notes to Financial
Statements.

The Company recently entered into a lease for a 138,047 square foot
facility in Miami to be used in part as a call center, in part to house the
Company's information services personnel and possibly in part for the relocation
of the Company's fulfillment operations from their present facilities. The call
center in this facility opened in late December 1996. A final determination on
relocation of the fulfillment operations has not yet been made. This lease, the
term of which commenced on December 1, 1996, terminates in November 2006, with
two additional five-year renewal options. The Company has a purchase option on
the facility exercisable during the first three years of the lease term, and has
the right to terminate the lease in August 2001.

An affiliate of Mark Gordon and David Epstein is currently expected to
purchase a 42,500 square foot office building located in Sunrise, Florida. It is
anticipated that the building will be leased to the Company at a fair market
value rental rate commencing in March 1997 and used by the Company at some point
thereafter as a call center containing approximately 500 workstations.

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.

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<PAGE> 34

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................. 49 Chairman of the Board and Chief Executive Officer
David L. Epstein............... 32 President and Director
James F. Murray................ 44 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
Paul M. O'Hara................. 50 Senior Vice President -- Finance and Chief Financial Officer
Derek J. Reynolds.............. 47 Senior Vice President -- Information Services
James R. Weber................. 48 Senior Vice President -- Telemarketing Operations
Colleen J. Williams............ 46 Senior Vice President -- Account Services
Bernard J. Kosar, Jr........... 33 Senior Vice President -- Client Relations and Director
Thomas C. Teper................ 35 Vice President -- Facilities Acquisition and Development
Joseph E. Gillis............... 39 Treasurer
Christian Mustad............... 58 Director
Neil A. Natkow................. 49 Director
</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.

Paul M. O'Hara joined the Company in August 1996 as its Senior Vice
President -- Finance and Chief Financial Officer. From March 1994 until
joining the Company, Mr. O'Hara was Executive Vice President and Chief
Financial Officer of Sunbeam Corp., a consumer products company. From April
1988 to March 1994, Mr. O'Hara was Executive Vice President and Chief
Financial Officer of Fruit of the Loom, an apparel manufacturer.

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<PAGE> 35

Derek J. Reynolds joined the Company in October 1996 as Senior Vice
President -- Information Services. From March 1993 until joining the
Company, Mr. Reynolds was the Chief Information Officer and Senior Vice
President of GC Services L.P., a financial services and information
processing company. Prior to that position, Mr. Reynolds spent over ten
years with Equifax, a diverse information services company, most recently
as Senior Vice President, Information and Communication Services.

James R. Weber joined the Company in June 1996, and was formally
appointed Senior Vice President -- Telemarketing Operations in November
1996. From August 1994 until joining the Company, Mr. Weber was Senior Vice
President -- Operations for SafeCard Services, Inc., a credit card
protection company. From June 1992 to August 1994, Mr. Weber worked with
MCI Telecommunications, a telecommunications company, initially as a Center
Director and then as Regional Director for the western region. From March
1985 to May 1992, Mr. Weber held a number of positions with American
Express Company, a financial services company, including that of Director
for its telephone service center and card issuance division.

Colleen J. Williams joined the Company in October 1994 as its Account
Services Director and was appointed Senior Vice President -- Account
Services in November 1996. From November 1993 until joining the Company,
Ms. Williams was an Assistant Vice President with PNC Mortgage Corp. of
America, a national mortgage bank. From June 1986 to November 1993, Ms.
Williams served as Vice President for a number of divisions of Citibank
(Florida), N.A., a national banking association.

Bernard J. Kosar, Jr. was appointed a director of the Company in
October 1996 and on January 2, 1997, Mr. Kosar joined the Company as its
Senior Vice President -- Client Relations. From January 1995 until joining
the Company, Mr. Kosar had served as a consultant to the Company. Since
July 1985, Mr. Kosar has been a quarterback in the National Football League
and most recently with the Miami Dolphins. Mr. Kosar is also a director and
majority owner of Tidewater Management Group, Inc., a franchisee for a
national food chain, and Bernie Kosar Greeting Card Company, a distributor
of greeting cards.

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 and continues to serve as 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.

Christian Mustad was appointed a director of the Company in October
1996. For the past twenty-three years, Mr. Mustad has been a managing
director of The Mustad Group, which owns and/or manages thirty-five
companies in seventeen countries. The Mustad Group businesses and
activities range from manufacturing of horseshoe nails, level gauging for
the shipping industry, precision parts, paper cores, machinery for the
cardboard industry and fasteners to oil recycling.

Neil A. Natkow was appointed a director of the Company in October
1996. From December 1993 until his retirement in October 1995, Dr. Natkow
served as an executive officer of PCA Health Plans of Florida, a health
maintenance organization, most recently as its Chief Executive Officer.
From July 1992 to December 1993, Dr. Natkow was the President and Chief
Executive Officer of Family Health Plan, a health maintenance organization,
and, from June 1987 to July 1992, Dr. Natkow was the Vice President for
Professional Affairs at Southeastern University for Health Sciences. Dr.
Natkow is also a director of Sheridan Healthcare, Inc., a publicly traded
company.

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<PAGE> 36

INDEPENDENT DIRECTORS; COMMITTEES

The Company's Board of Directors has an Audit Committee and a Compensation
Committee, each of which is comprised of Mr. Mustad and Dr. Natkow, independent
directors of the Company. The Audit Committee recommends the annual engagement
of the Company's auditors, with whom the Audit Committee reviews 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 determines executive officers' salaries and bonuses and administers
the Company's Stock Plans.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Prior to October 1996, the Company's Compensation Committee was not
comprised of independent directors. The compensation of the Company's executive
officers was determined either by Mr. Gordon, as the Company's sole director, or
the Company's Board of Directors comprised of Messrs. Gordon, Epstein, Mondre
and Murray, all executive officers of the Company.

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. 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 rent for these three properties is
approximately $24,000. The Company believes that the rents payable under these
leases are no less favorable to it than could be obtained from unaffiliated
parties. Rent expenses for these facilities amounted to approximately $345,000,
$211,000, $194,000 and $264,000 for 1993, 1994, 1995 and 1996, respectively. 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 December 31, 1996, the outstanding principal
balances on these three loans were approximately $876,000, $162,000 and
$143,000, 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, 1995 and 1996 were $1.4 million, $1.4 million, $1.3
million and $1.2 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 $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 aggregate
rental expenses with respect to the subleases in 1996 for each of the two
aforementioned facilities were $112,000 and $18,000, respectively. The Company
has also entered into a net lease with the aforementioned partnership for an
additional parking area which became effective when the partnership acquired the
parking area. The term of the lease expires five years from the date of the
acquisition (which occurred in June 1996) and the monthly rental obligation is
approximately $2,500. The aggregate rental expenses with respect to the lease of
the additional parking area in 1996 was $20,000. The Company believes that the
rents paid and that are

36
<PAGE> 37

payable under these subleases and the net lease are 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 facilities. Mr.
Gordon is licensed to act as a real estate salesperson for Nu World and has
received a portion of the commissions payable to Nu World. From January 1, 1993
to December 31, 1996, Nu World had earned approximately $160,400 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 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 expired
on May 30, 1996, and a bank note payable in the approximate outstanding amount
of $250,000 which, at the time of repayment, was 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 the Initial Public Offering was used to repay the approximately
outstanding amount of $800,000 under various installment loans guaranteed by
Messrs. Gordon and/or Epstein. See Notes 4 and 5 of Notes to Financial
Statements.

For information concerning the Dividend paid by the Company in 1996 to its
shareholders of record prior to the Initial Public Offering and the Tax
Agreement entered into between the Company and such 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, 1995 and 1996, the largest amount of such advances to Mr. Gordon was
approximately $78,000, $105,000, $216,000 and $295,000, respectively. The
largest amount of advances to Mr. Epstein during 1993, 1994, 1995 and 1996 was
approximately $126,000, $105,000, $127,000 and $206,000, respectively. In 1996,
the Company was indebted to Mr. Gordon and Mr. Epstein for approximately $32,000
and $105,000, respectively, representing the largest amount outstanding during
such period. 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 was
repaid at the time of the closing of the Initial Public 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, 1995 and 1996 were approximately $59,000, $76,000, $92,000 and
$100,000, respectively.

DIRECTOR COMPENSATION

Directors who are not employees or officers of the Company receive a
quarterly retainer of $1,500 and receive $500 for attendance at each meeting of
the Board of Directors or committee thereof. Such directors 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".

37
<PAGE> 38

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 thereafter subject to automatic annual renewal,
absent notice from either party of its desire not to renew. 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 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 of Mr. Gordon and Mr. Epstein has waived both their annual
bonus and stock option grants with respect to the year ended December 31, 1996.
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. Pursuant to
his employment agreement, on July 16, 1996, Mr. Ferry was granted an option to
purchase 36,000 shares of Common Stock at an exercise price per share equal to
$14.50 (the price in the Initial Public Offering), and an option to purchase
21,000 shares at an exercise price of $0.01 per share. These options vest one
third on January 5, 1997, 1998 and 1999, and terminate seven years from the date
of grant. On October 7, 1996, Mr. Ferry was granted an additional option to
purchase 100,000 shares at an exercise price of $39.88, the fair market value of
such shares on the date of grant. These options vest 20% per year and terminate
seven years from the date of grant. 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.

Paul M. O'Hara. Mr. O'Hara's employment agreement extends for three years
to August 8, 1999 and provides for a base annual salary of $250,000, plus, for
the 1996 calendar year, a guaranteed bonus of $25,000. For each year thereafter,
a performance bonus in an amount up to $100,000 is payable, based upon and
subject to the Company's achievement of projected quarterly earnings per share.

38
<PAGE> 39

Pursuant to his employment agreement, on August 9, 1996, Mr. O'Hara was granted
an option to purchase 200,000 shares of Common Stock at an exercise price equal
to $23.88, the fair market value of such shares on the date of grant of the
option. The option vests in varying amounts over six years and terminates eight
years from the date of grant. If Mr. O'Hara's employment is terminated by the
Company during the term of the contract without cause, he will be entitled to
severance equal to either $350,000, payable over twelve months, plus his
benefits for one year from the date of termination, or, if the termination
occurs during the final year of his contract, the salary, bonus and other
benefits which would have been earned for the balance of the contract term.

Derek J. Reynolds. Mr. Reynolds' employment agreement extends for three
years to October 27, 1999 and provides for a base annual salary of $250,000,
plus, for the 1996 calendar year, a guaranteed bonus of $15,000. An annual bonus
is payable thereafter based on Mr. Reynolds' performance. Pursuant to his
employment agreement, on October 28, 1996, Mr. Reynolds was granted an option to
purchase 200,000 shares of Common Stock at an exercise price equal to $39.38,
the fair market value of such shares on the date of grant of the option. The
option vests in varying amounts over six years and terminates eight years from
the date of grant. If Mr. Reynolds' employment is terminated by the Company
during the term of the contract without cause, he will be entitled to severance
equal to his compensation for one year from the date of termination or until
expiration of his employment term, whichever is shorter.

James R. Weber. Mr. Weber has an oral understanding with the Company with
respect to his employment. Mr. Weber has a base annual compensation of $176,218
and, for the 1996 calendar year, is guaranteed a prorated bonus of 40% of his
base annual compensation. In connection with his employment, on July 16 and
August 26, 1996, Mr. Weber was granted two options, each to purchase 20,000
shares, at exercise prices of $14.50 and $27.00, respectively, the fair market
value of such shares on their respective date of grant of the options. These
options each vest one-third on the first three anniversaries of their respective
date of grant, and each terminates seven years from the date of grant. If Mr.
Weber's employment is terminated by the Company without cause, he will be
entitled to severance equal to one year's compensation.

Bernard J. Kosar, Jr. On January 2, 1997, Mr. Kosar agreed to join the
Company as an executive officer. Mr. Kosar will be entering into a one-year
employment agreement with the Company providing for a base annual salary of
$150,000 and a discretionary bonus. In connection with his employment, on
January 2, 1997, Mr. Kosar was granted options to purchase 200,000 shares of
Common Stock at an exercise price of $35.38 per share, the fair market value of
such shares on the date of grant. These options vest one-third on the third,
fifteenth and twenty-seventh month anniversaries of the date of grant, and
terminate seven years from the date of grant.

39
<PAGE> 40

EXECUTIVE COMPENSATION

The following table sets forth information with respect to all compensation
paid or earned for services rendered to the Company in 1994, 1995 and 1996 by
the chief executive officer and the Company's four other most highly compensated
executive officers whose aggregate annual compensation exceeded $100,000 and who
were executive officers of the Company at December 31, 1996 (together, the
"Named Executive Officers"). 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 appreciation rights prior to this offering. The Company has
granted stock options as of and since the Initial Public Offering. See
"-- Employee Stock Plan and Director Stock Plan". 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.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL ------------
COMPENSATION SECURITIES
FISCAL ------------------ UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(1)
- ------------------------------------------- ------ -------- ------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Mark J. Gordon............................. 1996 $358,554 -- -- $ 13,301
Chief Executive Officer 1995 281,496 -- -- 15,194
1994 318,235 -- -- 16,897
David L. Epstein........................... 1996 358,554 -- -- --
President 1995 276,635 -- -- --
1994 254,510 -- -- --
Richard D. Mondre.......................... 1996 271,884 $40,000(2) -- --
Executive Vice President, General Counsel 1995 -- -- -- --
and Secretary 1994 -- -- -- --
James F. Murray............................ 1996 185,577 (3) -- --
Chief Operating Officer 1995 148,185 -- -- --
1994 120,609 -- -- --
Richard N. Ferry, Jr....................... 1996 153,461 32,000 157,000(4) --
Senior Vice President -- Business 1995 122,294 -- -- --
Development 1994 8,877 -- -- --
</TABLE>

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

(1) Consists of premiums paid for three split-dollar life insurance policies
for the benefit of the Mark Gordon Family Trust.
(2) Represents bonus amounts earned in 1996 to be paid in 1997.
(3) Mr. Murray is entitled to an annual bonus equal to 1% of the Company's
pre-tax net income for 1996, which will be calculated and paid in 1997. See
"-- Employee Agreements".
(4) See "Option Grants and Holdings" below for a description of Mr. Ferry's
options.

40
<PAGE> 41

OPTION GRANTS AND HOLDINGS

1996 Option Grants. The following table summarizes the options which were
granted during the fiscal year ended December 31, 1996 to the Named Executive
Officers:

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT VALUE AT ASSUMED
--------------------------------------------------- GRANT- ANNUAL RATES
NUMBER OF % OF TOTAL DATE OF STOCK PRICE
SECURITIES OPTIONS MARKET APPRECIATION
UNDERLYING GRANTED TO EXERCISE PRICE FOR OPTION TERM(1)(2)
OPTIONS EMPLOYEES PRICE EXPIRATION -------- -----------------------
NAME GRANTED IN FISCAL YEAR ($/SH) DATE(2) 0%($) 5%($) 10%($)
- --------------------- ---------- -------------- -------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Mark J. Gordon....... -- -- -- -- -- -- --
David L. Epstein..... -- -- -- -- -- -- --
Richard D. Mondre.... -- -- -- -- -- -- --
James F. Murray...... -- -- -- -- -- -- --
Richard N. Ferry,
Jr. ............... 36,000 4.32 14.50 7/15/03 0 212,506 495,230
21,000 2.55 0.01 7/15/03 304,290 428,252 593,174
100,000 12.00 39.88 10/06/03 0 1,623,516 3,783,484
</TABLE>

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

(1) Potential realizable value is based on the assumption that the Common Stock
price appreciates at the annual rate shown (compounded annually) from the
date of grant until the end of the option term. The amounts have been
calculated based on the requirements promulgated by the Securities and
Exchange Commission. The actual value, if any, a Named Executive Officer
may realize will depend on the excess of the stock price over the exercise
price on the date the option is exercised (if the executive were to sell
the shares on the date of exercise). Accordingly, there is no assurance
that the value realized will be at or near the potential realizable value
as calculated in this table.
(2) These options have a term of seven years from the date of grant.

1996 Option Exercises and Year-end Values. The following table provides
information regarding the value of all unexercised options held at December 31,
1996 by the Named Executive Officers. No Named Executive Officer exercised any
stock options during the 1996 fiscal year.

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1996 DECEMBER 31, 1996(1)
--------------------------- ---------------------------
NAME UNEXERCISABLE EXERCISABLE UNEXERCISABLE EXERCISABLE
- ------------------------------------------ ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Mark J. Gordon............................ -- -- -- --
David L. Epstein.......................... -- -- -- --
Richard D. Mondre......................... -- -- -- --
James F. Murray........................... -- -- -- --
Richard N. Ferry, Jr. .................... 157,000 -- $ 1,479,915 $ 0
</TABLE>

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

(1) Based on a per share price of $35 1/8 on December 31, 1996. Options to
purchase 100,000 shares out of the total options held by Mr. Ferry were not
in-the-money as of December 31, 1996.

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, after giving effect to
the stock splits by way of share dividends completed prior to the Initial Public
Offering, and subject to further antidilution adjustments.

The Employee Stock Plan is administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company, whose members are
currently "nonemployee directors" (as such term is defined under Rule 16b-3 of
the Securities Exchange Act of 1934, as amended). The Board of Directors or
Committee is authorized to determine, among other things, the key employees to
whom, and

41
<PAGE> 42

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 for incentive stock options, the exercise price shall not
be less than 100% of the fair market value of the Common Stock on the date of
grant; and provided further that, for nonqualified stock options, 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 the fair market value of
the Common Stock on the date of grant). The Committee also determines 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.

As of January 2, 1997, options to purchase 1,099,750 shares had been
granted under the Employee Stock Plan (exclusive of options to purchase 18,250
shares which have been cancelled), of which options to purchase 907,000 shares
had been granted to executive officers of the Company (including options to
purchase 60,000 shares which had been granted to Bernard J. Kosar, Jr. in his
former capacity as a consultant to the Company). Except for an option to
purchase 21,000 shares granted to Richard N. Ferry, Jr., the Company's Senior
Vice President -- Business Development, which has an exercise price of $0.01 per
share, all options granted under the Employee Stock Plan have exercise prices
equal to the fair market value of the Common Stock on the date of grant of the
option. All options granted under the Employee Stock Plan vest at the rate of
20% per year and have a total term of seven years, except for the options
granted to Mr. Ferry, Paul M. O'Hara, the Company's Senior Vice
President -- Finance and Chief Financial Officer, Derek J. Reynolds, the
Company's Senior Vice President -- Information Services, James R. Weber, the
Company's Senior Vice President -- Telemarketing Operations, and Mr. Kosar in
his capacity as an employee and Senior Vice President -- Client Relations of the
Company, all of which are subject to the terms set forth under
"Management -- Employment Agreements", the options granted to Mr. Kosar in his
former capacity as a consultant, which vest at the rate of one-half per year and
have a term of three years, options to purchase 5,000 shares granted to an
employee of the Company which vested on the date of grant, and options to
purchase 25,000 shares granted to a consultant to the Company which vest at the
rate of one-half per year and have a term of three years.

The Director Stock Plan provides for annual grants of a nonqualified stock
option to each nonemployee director of the Company. The option allows 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.
The Company has reserved 96,584 shares of Common Stock for issuance under the
Director Stock Plan, after giving effect to the stock splits by way of share
dividends completed prior to the Initial Public Offering, and subject to further
antidilution adjustments. As of January 2, 1997, options to purchase 2,500
shares had been granted to each of Christian Mustad and Neil A. Natkow at an
exercise price of $43.00 per share.

Exclusive of Mr. Ferry's option to purchase 21,000 shares at an exercise
price of $0.01 per share, the options to purchase 1,083,750 shares granted under
the Stock Plans outstanding as of January 2, 1997, have a weighted average
exercise price of $28.76 per share.

The Board of Directors has the power to amend each of 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.

42
<PAGE> 43

PROFIT SHARING PLAN

The Board of Directors of the Company has adopted a standard 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 years ended December 31, 1995 and 1996.

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,
or for any transaction from which the director derived an improper personal
benefit. 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 maintains liability insurance for its directors and officers.

In addition to the indemnification provided for in the Company's Articles
and Bylaws, the Company has entered into agreements to indemnify its directors
and its executive officers. These agreements, among other things, indemnify the
Company's directors and executive 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.

43
<PAGE> 44

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 paid by the Company in
1996 to its shareholders of record prior to the Initial Public Offering and the
Tax Agreement entered into between the Company and such 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 1996 were
approximately $171,000, $191,000, $210,000 and $653,000, 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.

Bernard J. Kosar, Jr., a director of the Company, had performed consulting
services for the Company prior to joining the Company as its Senior Vice
President -- Client Relations on January 2, 1997. On July 26, 1996, Mr. Kosar
had entered into an Independent Contractor Agreement with the Company which had
a term of one year. Prior to its termination upon Mr. Kosar becoming an employee
and executive officer of the Company, that agreement provided for Mr. Kosar to
be paid a monthly fee of $5,833. During 1995 and 1996, total commissions and
fees earned by Mr. Kosar amounted to approximately $115,000 and $75,000,
respectively. The Company believes that the commissions and fees earned by Mr.
Kosar were no less favorable than could have been obtained from unaffiliated
parties. In conjunction with entering into his Independent Contractor Agreement,
Mr. Kosar was granted an option to purchase 60,000 shares of Common Stock at an
exercise price per share of $16.75, the fair market value of such shares on the
date of grant of the option. These options vest one-half per year and terminate
three years from the date of grant. See also "Management -- Employment
Agreements".

44
<PAGE> 45

PRINCIPAL AND SELLING SHAREHOLDERS

BENEFICIAL OWNERSHIP

The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of December 31, 1996, and as adjusted for the sale
of the shares offered hereby by (i) each shareholder of the Company who
beneficially owns more than 5% of the Common Stock; (ii) each director of the
Company; (iii) each Named Executive Officer; and (iv) all directors and
executive officers of the Company as a group. 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 person who beneficially
owns more than 5% of the Common Stock is the Company's principal executive
office. For an indication of the number of shares to be sold by the Selling
Shareholders, see the Pecuniary Ownership table below.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
SHARES BENEFICIALLY OWNED OWNED
PRIOR TO OFFERING AFTER OFFERING(1)
------------------------- -----------------------
NAME NUMBER PERCENT(2) NUMBER PERCENT(2)
- -------------------------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Mark J. Gordon(3)........................... 9,160,783(4) 45.8% 7,293,283 33.9%
David L. Epstein (3)........................ 6,119,251(5) 30.6 4,746,751 22.1
Richard D. Mondre(3)........................ 5,028,283(6) 25.1 4,263,283 19.8
Stacy Lynn Gordon PRC Trust................. 1,615,000(7) 8.1 1,435,000 6.7
Jason Howard Gordon PRC Trust............... 1,615,000(8) 8.1 1,435,000 6.7
James F. Murray(3).......................... 820,000(9) 4.1 595,000 2.8
Bernard J. Kosar, Jr........................ 72,500 * 72,500 *
Christian Mustad............................ 49,000 * 49,000 *
Neil A. Natkow.............................. 20,000 * 20,000 *
Richard N. Ferry, Jr.(10)................... 19,000 * 19,000 *
All executive officers and directors
as a group (14 persons)(11)................. 15,590,200 77.9% 12,350,200 57.4%
</TABLE>

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

* Less than 1%.

(1) Assumes no exercise of the Underwriters' over-allotment option to purchase
up to an aggregate of 710,000 additional shares from the Selling
Shareholders. If the over-allotment option is exercised in full, Mr. Gordon
could sell an additional 420,000 shares beneficially owned by him, Mr.
Epstein could sell an additional 290,000 shares beneficially owned by him,
Mr. Mondre could sell an additional 110,000 shares beneficially owned by
him, each of the Stacy Lynn Gordon PRC Trust and the Jason Howard Gordon
PRC Trust could sell an additional 20,000 shares beneficially owned by
them, and Mr. Murray could sell an additional 50,000 shares beneficially
owned by him, decreasing the percentage of shares beneficially owned by
Messrs. Gordon, Epstein and Mondre, the Stacy Lynn Gordon PRC Trust, the
Jason Howard Gordon PRC Trust, Mr. Murray and all executive officers and
directors as a group to 32.0%, 20.7%, 19.3%, 6.6%, 6.6%, 2.5% and 54.1%,
respectively. Any shares sold pursuant to the over-allotment option will be
sold pro rata by each of the Selling Shareholders selling shares pursuant
to the Underwriters' over-allotment option.
(2) Percentage of beneficial ownership is based on 20,000,000 shares of Common
Stock outstanding as of the date of this Prospectus and 21,500,000 shares
of Common Stock to be outstanding after completion of this offering, except
that, in the case of Mr. Ferry and all executive officers and directors as
a group, the number of options held by Mr. Ferry which are exercisable
within 60 days of the date of this Prospectus are also included in such
calculations, as applicable.
(3) 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. The foregoing rights will cease
to apply to shares offered hereby upon the sale thereof in this offering.
For a more detailed description of these rights, see "Description of
Capital Stock -- Shareholder and Voting Trust Agreements".
(4) Includes 5,212,000 shares held by a Texas limited partnership in which Mr.
Gordon is a 49% limited partner, Mark J. Gordon 1996 Grantor Retained
Annuity Trust #1 ("MJGGRAT1") is a 49% limited

45
<PAGE> 46

partner, Mr. Gordon's wife is a 1% limited partner and a Texas
corporation, which is wholly owned by Mr. Gordon, is a 1% general
partner. The MJGGRAT1 provides an annuity to Mr. Gordon for five years,
and thereafter Mr. Gordon's wife and the lineal descendants of Mr.
Gordon's parents have an income interest in the remainder and Mr.
Gordon's lineal descendants, subject to a further trust, have a
principal interest in the remainder. Also includes (i) 1,575,000 shares
held by a Texas limited partnership (the "Gordon Selling Shareholder")
in which Mr. Gordon is a 98% limited partner, Mr. Gordon's wife is a 1%
limited partner and a Texas corporation, which is wholly owned by Mr.
Gordon, is a 1% general partner; and (ii) 577,500 shares beneficially
owned by Mr. Mondre (held as described in footnote 6 below) and 565,000
shares beneficially owned by Mr. Murray (held as described in footnote 9
below), but as to which, pursuant to voting trust agreements currently
between a Texas corporation owned and controlled by Mr. Gordon and each
of the limited partnerships owned and controlled by Messrs. Mondre and
Murray, respectively, Mr. Gordon has voting control. Such voting trust
agreements continue until February 2006, subject to earlier termination
in certain circumstances (including, with respect to those shares of
Common Stock being offered hereby by Messrs. Mondre and Murray, the
termination upon the sale of such shares in this offering), and give Mr.
Gordon absolute discretion in voting the shares. See "Description of
Capital Stock -- Shareholder and Voting Trust Agreements". Also includes
(i) 50,000 shares held by the David L. Epstein 1996 Grantor Retained
Annuity Trust #2 ("DEGRAT2") as to which Mr. Gordon shares the voting
and dispositive duties with respect to these shares as co-trustee under
the trust which provides an annuity to Mr. Epstein for five years and
with family members having the remainder interest; (ii) 828,283 shares
beneficially owned by the David Epstein 1995 Grantor Trust (held as
described in footnote (7) to the Pecuniary Ownership table below) as to
which Mr. Gordon shares the voting and dispositive duties with respect
to the shares as co-trustee under this trust, which was created by Mr.
Epstein for the benefit of his children; (iii) 3,000 shares held by The
Mark J. Gordon 1996 Family Limited Partnership, a limited partnership
for which Mr. Gordon is the sole 1% general partner and trusts for the
benefit of his nieces and nephews are the limited partners; and (iv)
200,000 and 150,000 shares owned by The Gordon Family Charitable
Remainder Unitrust and The Gordon Family Foundation, Inc., respectively,
both of which are controlled by Mr. Gordon and his spouse (see footnotes
(10) and (11) to the Pecuniary Ownership table below).
(5) Includes 1,033,417 shares held by a Texas limited partnership in which
Mr. Epstein is a 49% limited partner, the David L. Epstein Grantor
Retained Annuity Trust #1 ("DEGRAT1") is a 49% limited partner, Mr.
Epstein's wife is a 1% limited partner and a Texas corporation, which is
wholly owned by Mr. Epstein, is the 1% general partner. The DEGRAT1
provides an annuity to Mr. Epstein for five years, and his wife, his
parents and their lineal descendants and others have an income interest
in the remainder and his lineal descendants, subject to a further trust,
have a principal interest in the remainder. Also includes (i) 1,345,000
shares held by a Texas limited partnership (the "Epstein Selling
Shareholder") in which Mr. Epstein is a 98% limited partner, Mr.
Epstein's wife is a 1% limited partner and a Texas corporation, which is
wholly owned by Mr. Epstein, is the 1% general partner; (ii) 1,615,000
shares beneficially owned by the Jason Howard Gordon PRC Trust (held as
described in footnote 8 below) and 1,615,000 shares beneficially owned
by the Stacy Lynn Gordon PRC Trust (held as described in footnote 7
below), as to which Mr. Epstein shares the voting and dispositive duties
as co-trustee under these trusts which were created by Mr. Gordon for
the benefit of his children; (iii) 192,500 shares beneficially owned by
Mr. Mondre (held as described in footnote 6 below) and 188,334 shares
beneficially owned by Mr. Murray (held as described in footnote 9
below), but as to which, pursuant to voting trust agreements currently
between a Texas corporation owned and controlled by Mr. Epstein and each
of the limited partnerships owned and controlled by Messrs. Mondre and
Murray, respectively, Mr. Epstein has voting control. Such voting trust
agreements continue until February 2006, subject to earlier termination
in certain circumstances (including, with respect to those shares of
Common Stock being offered hereby by Messrs. Mondre and Murray, the
termination upon the sale of such shares in this offering), and give Mr.
Epstein absolute discretion in voting the shares. See "Description of
Capital Stock -- Shareholder and Voting Trust Agreements". Also includes
(i) 100,000 shares held by the Mark J. Gordon 1996 Grantor Retained
Annuity Trust #2 ("MJGGRAT2") as to which Mr. Epstein shares the voting
and dispositive duties with respect to these shares as co-trustee under
the trust, which provides an annuity to Mr. Gordon for five years and
with family members having the remainder interest; and (ii) 30,000
shares owned by The David and Jodi Epstein Family Foundation, Inc.,

46
<PAGE> 47

which is controlled by Mr. Epstein and his spouse (see footnote (12) to the
Pecuniary Ownership table below).
(6) Includes 495,000 shares held by a Texas limited partnership in which Mr.
Mondre is a 65% limited partner, the Richard D. Mondre 1996 Grantor
Retained Annuity Trust #1 ("RDMGRAT") is a 33% limited partner, Mr.
Mondre's wife is a 1% limited partner and a Texas corporation, which is
wholly owned by Mr. Mondre, is the 1% general partner. The RDMGRAT provides
an annuity to Mr. Mondre for five years, after which his wife and his son
have an income interest in the remainder and Mr. Mondre's wife and/or
lineal descendants, subject to a further trust, have a principal interest
in the remainder. Also includes 275,000 shares held by a Texas limited
partnership (the "Mondre Selling Shareholder") in which Mr. Mondre is a 98%
limited partner, Mr. Mondre's wife is a 1% limited partner and a Texas
corporation, which is wholly owned by Mr. Mondre, is the 1% general
partner. All such shares are subject to voting trust agreements described
in footnotes (4) and (5) above. Also includes (i) 100,000 shares held by
the MJGGRAT2 as to which Mr. Mondre shares the voting and dispositive
duties as co-trustee under the trust; (ii) 1,615,000, 1,615,000 and 828,283
shares 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, respectively (see
footnotes (4) and (5) above and (7) and (8) below); (iii) 50,000 shares
held by the DEGRAT2 as to which Mr. Mondre shares the voting and
dispositive duties with respect to the shares as co-trustee under the trust
(see footnote (4) above); and (iv) 50,000 shares held by a Texas limited
partnership in which a Texas corporation, which is wholly owned by Mr.
Mondre, is the 1% general partner and Mr. Mondre's son is a 99% limited
partner.
(7) All of these shares are held by two Texas limited partnerships in which the
trust is a 98% limited partner, Stacy Lynn Gordon is a 1% limited partner
and a Texas limited liability company is the 1% general partner. The
general partner is owned by the trust as a 99% member and by a Texas
corporation, which is wholly owned by the trust, as a 1% managing member.
Messrs. Epstein and Mondre share the voting and dispositive duties with
respect to these shares as co-trustees under this trust, which was created
by Mr. Gordon for the benefit of his daughter, Stacy Lynn Gordon, and as
directors of the Texas corporation.
(8) All of these shares are held by two Texas limited partnerships in which the
trust is a 98% limited partner, Jason Howard Gordon is a 1% limited partner
and a Texas limited liability company is the 1% general partner. The
general partner is owned by the trust as a 99% member and by a Texas
corporation, which is wholly owned by the trust, as a 1% managing member.
Messrs. Epstein and Mondre share the voting and dispositive duties with
respect to these shares as co-trustees under this trust, which was created
by Mr. Gordon for the benefit of his son, Jason Howard Gordon, and as
directors of the Texas corporation.
(9) Includes 478,334 shares held by a Texas limited partnership in which Mr.
Murray is a 65% limited partner, the James F. Murray 1996 Grantor Retained
Annuity Trust #1 ("JFMGRAT") is a 33% limited partner, Mr. Murray's wife is
a 1% limited partner and a Texas corporation, which is wholly owned by Mr.
Murray, is the 1% general partner. The JFMGRAT provides an annuity to Mr.
Murray for five years, after which his wife and lineal descendants have an
income interest in the remainder and his lineal descendants, subject to a
further trust, have a principal interest in the remainder. Also includes
275,000 shares held by a Texas limited partnership (the "Murray Selling
Shareholder") in which Mr. Murray is a 98% limited partner, Mr. Murray's
wife is a 1% limited partner and a Texas corporation, which is wholly owned
by Mr. Murray, is the 1% general partner. All of the foregoing shares are
subject to the voting trust agreements described in footnotes (4) and (5)
above. Also includes 66,666 shares held by a Texas limited partnership in
which a Texas corporation, which is jointly owned by Mr. Murray and his
wife, is the 2% general partner and three trusts for Mr. Murray's three
children are each a 32 2/3% limited partner.
(10) Includes 19,000 shares of Common Stock issuable upon the exercise of
options within 60 days of the date of this Prospectus. See
"Management -- Employee Stock Plan and Director Stock Plan".
(11) See other footnotes above. Also includes 500 shares held by James R. Weber,
the Company's Senior Vice President -- Telemarketing Operations, and 32,500
shares held by Thomas C. Teper, the Company's Vice President -- Facilities
Acquisition and Development. Does not include options held by officers and
directors which are not exercisable within 60 days of the date of this
Prospectus.

47
<PAGE> 48

PECUNIARY OWNERSHIP

The following table sets forth certain information regarding the pecuniary
ownership of Common Stock as of December 31, 1996, and as adjusted for the sale
of the shares offered hereby by the Selling Shareholders. The table also
reflects the number of shares to be sold by the Selling Shareholders. As used in
this paragraph and as reflected in the table, "pecuniary ownership" means that
the person and/or his immediate family members or the entity and/or the trust
beneficiaries thereof and/or their immediate family members derive economic
benefit from ownership of the shares, such as the ability to receive dividends
distributed with respect to, and proceeds derived from the sale of, such shares.

<TABLE>
<CAPTION>
SHARES PECUNIARILY NUMBER SHARES PECUNIARILY
OWNED PRIOR TO OF OWNED AFTER
OFFERING SHARES OFFERING(1)
----------------------- BEING -----------------------
NAME NUMBER PERCENT(2) OFFERED(1) NUMBER PERCENT(2)
- ------------------------------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Mark J. Gordon(3)................... 6,887,030 34.4% 1,000,000 5,887,030 27.4%
David L. Epstein(4)................. 2,428,417 12.1 870,000 1,558,417 7.2
Stacy Lynn Gordon PRC Trust(5)...... 1,615,000 8.1 180,000 1,435,000 6.7
Jason Howard Gordon PRC Trust(6).... 1,615,000 8.1 180,000 1,435,000 6.7
David Epstein 1995 Grantor
Trust(7).......................... 828,283 4.1 180,000 648,283 3.0
Richard D. Mondre(8)................ 820,000 4.1 225,000 595,000 2.8
James F. Murray(9).................. 820,000 4.1 225,000 595,000 2.8
The Gordon Family Charitable
Remainder Unitrust(10)............ 200,000 1.0 200,000 0 0
The Gordon Family Foundation,
Inc.(11).......................... 150,000 * 150,000 0 0
The David and Jodi Epstein Family
Foundation, Inc.(12).............. 30,000 * 30,000 0 0
All Selling Shareholders as a
group(13)......................... 15,393,730 77.0% 3,240,000 12,153,730 56.5%
</TABLE>

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

* Less than 1%.

(1) Assumes no exercise of the Underwriters' over-allotment option to purchase
up to an aggregate of 710,000 additional shares from the Selling
Shareholders. If the over-allotment option is exercised in full, Mr. Gordon
could sell an additional 325,000 shares pecuniarily owned by him, Mr.
Epstein could sell an additional 225,000 shares pecuniarily owned by him,
each of the Stacy Lynn Gordon PRC Trust, the Jason Howard Gordon PRC Trust
and the David Epstein 1995 Grantor Trust could sell an additional 20,000
shares pecuniarily owned by them and each of Mr. Mondre and Mr. Murray
could sell an additional 50,000 shares pecuniarily owned by them,
decreasing the percentage of shares pecuniarily owned by Mr. Gordon, Mr.
Epstein, the Stacy Lynn Gordon PRC Trust, the Jason Howard Gordon PRC
Trust, the David Epstein 1995 Grantor Trust, Mr. Mondre, Mr. Murray and all
Selling Shareholders as a group to 25.9%, 6.2%, 6.6%, 6.6%, 2.9%, 2.5%,
2.5% and 53.2%, respectively. Any shares sold pursuant to the
over-allotment option will be sold pro rata by each of the foregoing
Selling Shareholders.
(2) Percentage of pecuniary ownership is based on 20,000,000 shares of Common
Stock outstanding as of the date of this Prospectus and 21,500,000 of
Common Stock to be outstanding after completion of this offering.
(3) See footnote (4) to the Beneficial Ownership table above, which includes a
description of the Gordon Selling Shareholder.
(4) See footnote (5) to the Beneficial Ownership table above, which includes a
description of the Epstein Selling Shareholder.
(5) See footnote (7) to the Beneficial Ownership table above.
(6) See footnote (8) to the Beneficial Ownership table above.
(7) All of these shares are held of record by two Texas limited partnerships in
which each trust is a 98% limited partner, Mr. Epstein's wife is a 1%
limited partner and a Texas corporation, which is wholly

48
<PAGE> 49

owned by the trust, is the 1% general partner. Messrs. Gordon and Mondre
share the voting and dispositive duties with respect to these shares as
co-trustees under the trust, which was created by Mr. Epstein for the
benefit of his children, and as the directors of the Texas corporation
which is the general partner of each Texas limited partnership.
(8) See footnote (6) to the Beneficial Ownership table above, which includes a
description of the Mondre Selling Shareholder.
(9) See footnote (9) to the Beneficial Ownership table above, which includes a
description of the Murray Selling Shareholder.
(10) Mr. Gordon and his wife are the trustees of this trust which provides
income to them during their lifetimes, with the remainder going to the
charity of their choice upon their death.
(11) Mr. Gordon and his wife are the sole directors and officers of this
not-for-profit corporation.
(12) Mr. Epstein and his wife are the sole directors and officers of this
not-for-profit corporation.
(13) See other footnotes above.

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 December
31, 1996, there were 20,000,000 shares of Common Stock outstanding held of
record by approximately 50 shareholders, and no preferred stock outstanding. See
"Principal and Selling Shareholders". After completion of this offering and
assuming no exercise of any stock options, 21,500,000 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,

49
<PAGE> 50

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. The rights of Messrs. Gordon and Epstein will cease to apply
to all such shares offered hereby upon the sale thereof in this offering.
References throughout this section to individuals' share ownership mean the
family limited partnerships, grantor retained annuity trusts and other entities
which are the record owners of such shares. See "Principal and Selling
Shareholders" for a description of the shares which are pecuniarily owned by
each of Messrs. Gordon, Epstein, Mondre and Murray and their respective
immediate family members.

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, the Initial
Public Offering and significant new business from new and existing clients. See
"Risk Factors -- Factors Affecting Ability to Manage and Sustain Growth" and
" -- Reliance on 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, for a period
extending through April 1, 1999, 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 acquired by Mr. Mondre and Mr. Murray 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 or those shares of Common Stock permitted to be sold by
Mr. Mondre and Mr. Murray, including those shares being sold by them in this
offering. 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). Excluding
those shares being sold hereby, 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. Excluding those shares
being sold hereby, 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

50
<PAGE> 51

Mr. Murray until February 16, 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 (including the sale of the shares by them in this
offering) and terminate completely upon the death of the voting trustee or upon
a change in control. As of December 31, 1996, each of Mr. Gordon and Mr. Epstein
exercises such voting rights through a separate Texas corporation owned and
controlled by him.

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 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 at
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.

SHARES ELIGIBLE FOR FUTURE SALE

Upon the closing of this offering (and assuming no exercise of any stock
options), the Company will have 21,500,000 shares of Common Stock outstanding,
of which 9,340,000 (10,050,000 if the Underwriters' over-allotment option is
exercised in full) will be freely tradeable 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 12,160,000 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

51
<PAGE> 52

Underwriters (described below), 10,970,000 of these shares will be available for
sale subject to compliance with Rule 144 volume and other requirements. The
remaining 1,190,000 shares of restricted securities will be eligible for sale
beginning in February 1998, in compliance with Rule 144 volume and other
requirements.

The Company and the Selling Shareholders have agreed for a period of 180
days after the date of this Prospectus that they will not offer, sell, contract
to sell or otherwise dispose of any securities of the Company (other than
pursuant to the Stock Plans or on the conversion or exchange of convertible or
exchangeable securities outstanding on the date of this Prospectus) which are
substantially similar to the shares of Common Stock or which are convertible or
exchangeable into securities which are substantially similar to the shares of
Common Stock without the prior written consent of Goldman, Sachs & Co., except
for the shares of Common Stock offered in connection with this offering. See
"Underwriting".

In general, under Rule 144 as currently in effect, 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 (215,000 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. As of January 2, 1997, options to purchase 1,104,750
shares had been granted and were outstanding under the Stock Plans, of which
options to purchase 5,000 shares were then currently exercisable, options to
purchase 19,000 shares became exercisable in January 1997, and options to
purchase the remaining 1,080,750 shares become exercisable at varying times
thereafter. See "Management -- Employee Stock Plan and Director Stock Plan". The
Company has filed a registration statement under the Securities Act covering the
issuance or resale of these shares of Common Stock. 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. The
foregoing registration rights relate to the 16,400,000 shares owned by Messrs.
Gordon, Epstein, Mondre and Murray and their affiliates at the time of the
Initial Public Offering to the extent such shares were not sold in the Initial
Public Offering.

52
<PAGE> 53

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Company and the Selling Shareholders have agreed to sell to each of the
Underwriters named below, and each of such Underwriters, for whom Goldman, Sachs
& Co., Dain Bosworth Incorporated, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Furman Selz LLC are acting as representatives, has severally
agreed to purchase from the Company and the Selling Shareholders, the respective
number of shares of Common Stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERWRITER OF COMMON STOCK
----------- ----------------
<S> <C>
Goldman, Sachs & Co. ....................................... 973,000
Dain Bosworth Incorporated.................................. 973,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................... 973,000
Furman Selz LLC ............................................ 321,000
Alex. Brown & Sons Incorporated............................. 130,000
J.P. Morgan Securities Inc.................................. 130,000
Morgan Stanley & Co. Incorporated........................... 130,000
Oppenheimer & Co., Inc. .................................... 130,000
Robertson, Stephens & Company LLC........................... 130,000
Advest, Inc. ............................................... 85,000
Robert W. Baird & Co. Incorporated.......................... 85,000
George K. Baum & Company.................................... 85,000
William Blair & Company, L.L.C. ............................ 85,000
GS(2) Securities, Inc. ..................................... 85,000
Edward D. Jones & Co., L.P. ................................ 85,000
Kirkpatrick, Pettis, Smith, Polian Inc...................... 85,000
Raymond James & Associates, Inc. ........................... 85,000
Sands Brothers & Co., Ltd. ................................. 85,000
Sutro & Co. Incorporated.................................... 85,000
---------
Total............................................. 4,740,000
=========
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the shares offered hereby,
if any are taken.

The Underwriters propose to offer the shares of Common Stock in part
directly to the public at the public offering price set forth on the cover page
of this Prospectus and in part to certain securities dealers at such price less
a concession of $1.05 per share. The Underwriters may allow, and such dealers
may reallow, a concession not in excess of $.10 per share to certain brokers and
dealers. After the shares of Common Stock are released for sale to the public,
the offering price and other selling terms may from time to time be varied by
the representatives.

Certain of 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 710,000 additional shares of Common Stock (325,000 shares
pecuniarily owned by Mr. Gordon, 225,000 shares pecuniarily owned by Mr.
Epstein, 50,000 shares pecuniarily owned by each of Messrs. Mondre and Murray,
and 20,000 shares pecuniarily owned by each of the Stacy Lynn Gordon PRC Trust,
the Jason Howard Gordon PRC Trust and the David Epstein 1995 Grantor Trust), to
cover over-allotments, if any. If the Underwriters exercise their overallotment
option, the Underwriters have severally agreed, subject to certain conditions,
to purchase approximately the same percentage thereof that the number of shares
to be purchased by each of them, as shown in the foregoing table, bears to the
4,740,000 shares of Common Stock offered.

The Company and the Selling Shareholders have agreed that, during the
period beginning from the date of this Prospectus and continuing to and
including the date 180 days after the date of the Prospectus, they will not
offer, sell, contract to sell or otherwise dispose of any securities of the
Company

53
<PAGE> 54

(other than pursuant to the Stock Plans or on the conversion or exchange of
convertible or exchangeable securities outstanding on the date of this
Prospectus) which are substantially similar to the shares of Common Stock or
which are convertible or exchangeable into securities which are substantially
similar to the shares of Common Stock without the prior written consent of
Goldman, Sachs & Co., except for the shares of Common Stock offered in
connection with this offering.

The Company and the Selling Shareholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933.

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, 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". Cravath, Swaine & Moore, New York, New York, is
acting as counsel for the Underwriters in connection with certain legal matters
relating to the sale of the Common Stock offered hereby.

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 nine-month periods ended
September 30, 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 is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith files reports,
proxy statements and other information with the Commission. Such reports, proxy
statements and other information may be inspected and copied, at prescribed
rates, at the public reference facilities of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, Room 1024, and at the Commission's New York
Regional Office at 75 Park Place, New York, New York 10007 and at the
Commission's Chicago Regional Office at Northwest Atrium

54
<PAGE> 55

Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
material also can be obtained at prescribed rates by writing to the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. Such reports, proxy statements and other information concerning the
Company are also available for inspection at the offices of the Nasdaq National
Market, Reports Section, 1735 K Street, N.W., Washington, D.C. 20006.

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. The Registration Statement and the
exhibits thereto may also be accessed through the EDGAR terminals in the
Commission's public reference facilities in Washington, D.C. or through the
World Wide Web at http://www.sec.gov.

55
<PAGE> 56

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 September 30, 1996................ F-5
Statements of Operations for the years ended December 31, 1993, 1994 and 1995 and the
nine-month periods ended September 30, 1995 and 1996................................ F-6
Statements of Shareholders' Equity for the years ended December 31, 1993, 1994 and
1995 and the nine-month period ended September 30, 1996............................. F-7
Statements of Cash Flows for the years ended December 31, 1993, 1994 and 1995 and the
nine-month periods ended September 30, 1995 and 1996................................ F-8
Notes to Financial Statements......................................................... F-9
</TABLE>

F-1
<PAGE> 57

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 paragraphs one and two of Note 11 as to
which the date is June 20, 1996

F-2
<PAGE> 58

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> 59

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 September 30, 1996 and the related statements of operations,
shareholders' equity, and cash flows for the nine-month periods ended September
30, 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
November 14, 1996

F-4
<PAGE> 60

PRECISION RESPONSE CORPORATION

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ SEPTEMBER 30,
1994 1995 1996
---------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................... $ 787,609 $ 266,794 $ 10,945,621
Accounts receivable, less allowance for doubtful
accounts and sales allowances of $97,000,
$60,000 and $1,104,000, respectively............ 2,616,030 6,616,844 33,760,896
Prepaid expenses and other current assets.......... 417,810 454,867 2,506,311
Deferred income taxes.............................. -- -- 399,247
---------- ----------- -----------
Total current assets....................... 3,821,449 7,338,505 47,612,075
Property and equipment, net.......................... 3,834,129 5,283,832 26,379,509
Other assets......................................... 81,788 90,925 2,342,478
---------- ----------- -----------
Total assets............................... $7,737,366 $12,713,262 $ 76,334,062
========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Revolving credit loan.............................. $1,500,000 $ -- $ --
Current maturities of long-term obligations........ 999,013 1,181,846 1,643,565
Accounts payable................................... 1,411,666 2,130,808 12,002,592
Accrued compensation expenses...................... 601,178 1,326,960 1,987,203
Income taxes payable............................... -- -- 498,643
Other accrued expenses............................. 313,210 777,104 1,929,694
Customer deposits and other........................ 419,071 556,388 1,062,649
---------- ----------- -----------
Total current liabilities.................. 5,244,138 5,973,106 19,124,346
Revolving credit loan................................ -- 2,995,593 --
Long-term obligations, less current maturities....... 1,019,665 928,542 5,749,468
Deferred income taxes................................ -- -- 1,107,167
---------- ----------- -----------
Total liabilities.......................... 6,263,803 9,897,241 25,980,981
---------- ----------- -----------
Commitments (Notes 7 and 9)
Shareholders' equity:
Common stock, $0.01 par value; 100,000,000 shares
authorized, 16,400,000, 16,400,000 and
20,000,000 shares, respectively, issued and
outstanding..................................... 164,000 164,000 200,000
Additional paid-in capital......................... 72,095 72,095 47,715,314
Retained earnings.................................. 1,331,309 2,786,996 2,681,196
Due from shareholders, net......................... (93,841) (207,070) --
Unearned compensation.............................. -- -- (243,429)
---------- ----------- -----------
Total shareholders' equity................. 1,473,563 2,816,021 50,353,081
---------- ----------- -----------
Total liabilities and shareholders'
equity................................... $7,737,366 $12,713,262 $ 76,334,062
========== =========== ===========
</TABLE>

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

F-5
<PAGE> 61

PRECISION RESPONSE CORPORATION

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE
FOR THE YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
--------------------------------------- -------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues............................ $18,218,377 $14,997,663 $30,203,989 $20,438,673 $63,591,807
----------- ----------- ----------- ----------- -----------
Operating expenses:
Cost of services.................. 10,674,980 9,070,327 18,371,577 12,619,733 41,020,866
Preoperating costs................ -- -- 573,081 75,683 1,047,428
Selling, general and
administrative expenses......... 7,278,748 6,008,741 9,431,551 6,487,593 14,619,400
----------- ----------- ----------- ----------- -----------
Total operating expenses........ 17,953,728 15,079,068 28,376,209 19,183,009 56,687,694
----------- ----------- ----------- ----------- -----------
Operating income (loss)......... 264,649 (81,405) 1,827,780 1,255,664 6,904,113
Other income (expense):
Interest income................... -- -- 19,650 19,650 222,940
Interest expense.................. (197,216) (292,146) (391,743) (287,102) (783,437)
Gain (loss) on disposal of
assets.......................... (313,743) 1,251 -- -- --
----------- ----------- ----------- ----------- -----------
Income (loss) before income
taxes......................... (246,310) (372,300) 1,455,687 988,212 6,343,616
Income taxes........................ -- -- -- -- 1,206,563
----------- ----------- ----------- ----------- -----------
Net income (loss)............... $ (246,310) $ (372,300) $ 1,455,687 $ 988,212 $ 5,137,053
=========== =========== =========== =========== ===========
Pro forma data (unaudited) (Note
10):
Income (loss) before pro forma
income taxes.................... $ (246,310) $ (372,300) $ 1,455,687 $ 988,212 $ 6,343,616
Pro forma provision (benefit) for
income taxes relating to S
Corporation..................... (45,907) (86,018) 618,931 420,223 2,543,266
----------- ----------- ----------- ----------- -----------
Pro forma net income (loss)....... $ (200,403) $ (286,282) $ 836,756 $ 567,989 $ 3,800,350
=========== =========== =========== =========== ===========
Pro forma net income per common
share........................... $ 0.05 $ 0.22
=========== ===========
Weighted average number of
common shares outstanding....... 16,527,061 17,439,658
=========== ===========
</TABLE>

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

F-6
<PAGE> 62

PRECISION RESPONSE CORPORATION

STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
-------------------- PAID-IN RETAINED DUE FROM UNEARNED
SHARES AMOUNT CAPITAL EARNINGS SHAREHOLDERS, NET COMPENSATION TOTAL
---------- -------- ----------- ----------- ----------------- ------------ -----------
<S> <C> <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
Payment of dividend
(unaudited)................ -- -- -- (5,242,853) -- -- (5,242,853)
Net repayment from
shareholders (unaudited)... -- -- -- -- 207,070 -- 207,070
Issuance of common stock
(unaudited)................ 3,600,000 36,000 47,338,929 -- -- -- 47,374,929
Stock option grant
(unaudited)................ -- -- 304,290 -- -- (304,290) --
Amortization of unearned
compensation (unaudited)... -- -- -- -- -- 60,861 60,861
Net income (unaudited)....... -- -- -- 5,137,053 -- -- 5,137,053
---------- -------- ----------- ---------- -------- --------- ------------
Balance at September 30, 1996
(unaudited).................. 20,000,000 $200,000 $47,715,314 $ 2,681,196 $ -- $ (243,429) $50,353,081
========== ======== =========== ========== ======== ========= ============
</TABLE>

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

F-7
<PAGE> 63

PRECISION RESPONSE CORPORATION

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE NINE MONTHS
FOR THE YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
--------------------------------------- --------------------------
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 $ 988,212 $ 5,137,053
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization............ 657,585 795,124 1,145,099 831,043 1,829,701
Loss on disposal of assets............... 313,743 -- -- --
Provision for bad debts and sales
allowance.............................. 8,000 105,000 365,000 228,000 875,000
Deferred income tax expense.............. -- -- -- -- 707,920
Amortization of unearned compensation.... -- -- -- -- 60,861
Changes in operating assets and
liabilities:
Accounts receivable...................... (1,414,620) 1,162,639 (4,365,814) (2,385,749) (28,019,052)
Prepaid expenses and other current
assets................................. (118,512) 66,627 (37,057) 88,137 (2,051,444)
Other assets............................. (113,071) 107,105 (9,137) (6,048) (514,934)
Accounts payable......................... 317,783 247,798 719,142 208,857 9,871,784
Accrued compensation expenses............ 77,774 93,178 725,782 443,752 660,243
Income taxes payable..................... -- -- -- -- 498,643
Other accrued expenses................... 142,071 38,806 463,894 61,287 1,152,588
Customer deposits and other.............. (504,659) 20,058 137,317 342,137 506,263
----------- ----------- ----------- ----------- ------------
Net cash provided by (used in)
operating activities................. (880,216) 2,264,035 599,913 799,628 (9,285,374)
----------- ----------- ----------- ----------- ------------
Cash flows from investing activities:
Purchase of property and equipment......... (1,230,442) (1,473,783) (1,578,344) (1,024,229) (15,145,494)
Software development costs................. -- -- -- -- (1,736,619)
----------- ----------- ----------- ----------- ------------
Net cash used in investing
activities........................... (1,230,442) (1,473,783) (1,578,344) (1,024,229) (16,882,113)
----------- ----------- ----------- ----------- ------------
Cash flows from financing activities:
Proceeds from revolving credit loan........ 450,000 300,000 2,995,593 2,575,593 25,595,424
Payments on revolving credit loan.......... -- -- (1,500,000) (1,500,000) (28,591,017)
Proceeds from long-term obligations........ 1,865,795 516,700 250,000 -- --
Payments on long-term obligations.......... (561,020) (946,328) (1,174,748) (782,057) (2,497,239)
Proceeds from issuance of common stock..... -- -- -- -- 47,374,929
Dividend paid.............................. -- -- -- -- (5,242,853)
Net payments from (advances to)
shareholders............................. -- (93,841) (113,229) (83,955) 207,070
----------- ----------- ----------- ----------- ------------
Net cash provided by (used in)
financing activities................. 1,754,775 (223,469) 457,616 209,581 36,846,314
----------- ----------- ----------- ----------- ------------
Net increase (decrease) in cash and cash
equivalents................................ (355,883) 566,783 (520,815) (15,020) 10,678,827
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 $ 772,589 $ 10,945,621
=========== =========== =========== =========== ============
Supplemental cash flow information:
Cash paid for interest..................... $ 202,949 $ 292,146 $ 372,093 $ 253,900 $ 783,437
=========== =========== =========== =========== ============
Supplemental schedule of noncash investing
and financing activities:
Installment loans and capital lease
obligations.............................. $ 388,905 $ 516,700 $ 1,016,458 $ 851,940 $ 7,779,884
=========== =========== =========== =========== ============
</TABLE>

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

F-8
<PAGE> 64

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 nine months ended September 30, 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 nine months ended September 30, 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 is 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.

F-9
<PAGE> 65

PRECISION RESPONSE CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

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

Software Development Costs

Certain software development costs are capitalized when incurred in
accordance with Statement of Financial Accounting Standards No. 86 (SFAS 86).
Capitalization of these software development costs begins when technological
feasibility has been established and ends when the product is available for
general use in the Company's teleservicing programs. The establishment of
technological feasibility and the ongoing assessment of recoverability of
capitalized software development costs require considerable judgment by
management with respect to certain external factors, including, but not limited
to, anticipated future revenues, estimated economic life and changes in software
and hardware technologies.

As of September 30, 1996, capitalized software development costs were
approximately $1,736,000 (included in other assets), all of which was incurred
during the third quarter of 1996. Amortization is computed on an individual
product basis using the straight-line method over the estimated economic life of
the product. Currently, the Company is using an estimated economic life of three
years for all capitalized software costs. Amortization of these costs will
commence in the fourth quarter of 1996.

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

Prior to the initial public offering of 3,600,000 shares of the Company's
common stock at $14.50 per share completed in July 1996 (the "Initial Public
Offering"), the Company included its income and expenses with those of its
shareholders for Federal and state income tax purposes (an S corporation
election). Accordingly, the Statements of Operations for the years ended
December 31, 1993, 1994 and 1995, the nine months ended September 30, 1995 and
the period from January 1, 1996 through July 15, 1996 do not include a provision
for Federal or state income taxes.

In connection with the Initial Public Offering the Company revoked its S
corporation election and accordingly recorded a deferred income tax liability
and corresponding income tax expense of $90,000, arising from a change in the
Company's tax status. Beginning July 16, 1996, the Company provides for deferred
income taxes under the asset and liability method of accounting. This method
requires the recognition of deferred income taxes based upon the tax
consequences of "temporary differences" by applying enacted statutory tax rates
applicable to future years to differences between the financial statements
carrying amounts and the tax bases of existing assets and liabilities.

F-10
<PAGE> 66

PRECISION RESPONSE CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The provision for income taxes for the nine-month period ended September
30, 1996 consisted of the following:

<TABLE>
<S> <C>
Current:
Federal............................................................... $ 425,773
State................................................................. 72,870
----------
498,643
----------
Deferred:
Federal............................................................... 604,450
State................................................................. 103,470
----------
707,920
----------
Provision for income taxes.............................................. $1,206,563
==========
</TABLE>

The significant components of the net deferred tax liability at September
30, 1996 were as follows:

<TABLE>
<S> <C>
Deferred tax assets:
Accrued options..................................................... $ 23,700
Allowance for doubtful accounts..................................... 46,813
Sales allowance and reserves........................................ 328,734
-----------
399,247
Deferred tax liability:
Property and equipment.............................................. (1,107,167)
-----------
Net deferred tax liability............................................ $ (707,920)
===========
</TABLE>

The reconciliation between the statutory provision for income taxes and the
actual provision for income taxes for the nine-month period ended September 30,
1996 is as follows:

<TABLE>
<S> <C>
Income tax at federal statutory rate.................................. $ 2,220,266
State income taxes net of federal benefit............................. 114,946
Nondeductible expenses................................................ 37,958
Deferred income taxes recorded due to change in tax status............ 90,000
Income not subject to federal and state tax at the corporate level due
to S corporation election........................................... (1,256,607)
-----------
Provision for income taxes............................................ $ 1,206,563
===========
</TABLE>

F-11
<PAGE> 67

PRECISION RESPONSE CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- SEPTEMBER 30,
1994 1995 1996
---------- ---------- -------------
<S> <C> <C> <C>
Telecommunications equipment.................. $1,111,878 $2,187,254 $ 9,310,179
Production equipment.......................... 683,384 707,014 739,432
Computer equipment............................ 2,496,956 3,076,808 14,438,159
Leasehold improvements........................ 924,960 1,463,913 4,002,886
Furniture and fixtures........................ 619,342 985,778 2,876,260
Automobiles................................... 134,470 140,126 175,318
---------- ---------- -----------
5,970,990 8,560,893 31,542,234
Accumulated depreciation and amortization..... (2,136,861) (3,277,061) (5,162,725)
---------- ---------- -----------
$3,834,129 $5,283,832 $ 26,379,509
========== ========== ===========
</TABLE>

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

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- SEPTEMBER 30,
1994 1995 1996
---------- ---------- -------------
<S> <C> <C> <C>
Telecommunications equipment.................. $ 633,519 $1,363,238 $ 4,547,663
Computer equipment............................ 590,525 1,090,265 4,448,294
Furniture and fixtures........................ 30,325 30,325 126,688
--------- ---------- -----------
1,254,369 2,483,828 9,122,645
Accumulated amortization...................... (431,163) (877,861) (1,002,604)
--------- ---------- -----------
$ 823,206 $1,605,967 $ 8,120,041
========= ========== ===========
</TABLE>

4. REVOLVING CREDIT LOAN AGREEMENT

The Company had a bank revolving credit loan agreement which provided for
maximum borrowings of $4,250,000 at December 31, 1995, subject to collateral
availability, with principal due on May 30, 1996. At December 31, 1995, the
unused portion of the line of credit was approximately $769,000, based upon
available collateral. Interest, payable monthly, accrued on borrowings under the
revolving line of credit at 1 to 1 1/2% over the prime rate (9.25% at December
31, 1995). The line of credit was collateralized by accounts receivable,
equipment and other assets of the Company and was guaranteed by certain of the
Company's shareholders. The agreement contained restrictive covenants which,
among other things, required the maintenance of certain financial ratios,
restricted future indebtedness and limited capital expenditures and the amount
of compensation and distributions to the Company's shareholders. The limitation
on distributions was 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, and, prior to the
amendment described below, to limit capital expenditures to no more than $11

F-12
<PAGE> 68

PRECISION RESPONSE CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

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 have been reflected as a long-term liability in the
accompanying financial statements. The Company repaid all outstanding borrowings
under this credit facility with part of the proceeds of the Initial Public
Offering (see Note 10). Since September 30, 1996, the Company's loan and
security agreement was amended to increase capital expenditure limitations to
$45 million for the year ending December 31, 1996, $60 million for the year
ending December 31, 1997 and $23 million for each year thereafter.

5. OTHER LONG-TERM OBLIGATIONS

Other long-term obligations consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ SEPTEMBER 30,
1994 1995 1996
---------- ----------- -------------
<S> <C> <C> <C>
Capital lease obligations, interest rates
ranging from 8.3% to 13.2%; payable through
2000....................................... $ 793,768 $ 1,246,183 $ 7,393,033
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 --
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 --
---------- ----------- -----------
2,018,678 2,110,388 7,393,033
Current maturities of long-term
obligations................................ (999,013) (1,181,846) (1,643,565)
---------- ----------- -----------
$1,019,665 $ 928,542 $ 5,749,468
========== =========== ===========
</TABLE>

F-13
<PAGE> 69

PRECISION RESPONSE CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

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 and
lease financings with similar terms and average maturities, the fair value of
long-term obligations 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 nine-month periods ended September 30, 1995 and 1996, there were no
contributions.

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 nine-month periods ended September 30, 1995
and 1996, rent expense amounted to $145,000 and $184,000, 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 $288,000. 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 and leases an
additional parking lot from a partnership owned jointly by certain of its
shareholders. The term of these subleases expires in January 1999 and the lease
expires in June 2001, with annual rentals aggregating approximately $222,000.

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 September 30, 1996, the outstanding balance on the loans were $1,309,258,
$1,222,362 and $1,191,443, 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 and
$343,070 as of December 31, 1994 and 1995, respectively) offset by notes payable
to shareholders of $136,000 as of December 31, 1995. 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. The shareholders repaid the
net amounts due to the Company during the third quarter of 1996.

The Company elected the majority owner of one of its customers to its Board
of Directors in October 1996. The Company has a receivable from this customer of
approximately $29,000 and $43,000

F-14
<PAGE> 70

PRECISION RESPONSE CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

as of December 31, 1995 and September 30, 1996, respectively. In addition, sales
commissions on revenues generated from various other customers were paid to this
director. On July 26, 1996, the director entered into a one-year independent
contractor agreement with the Company providing for a monthly fee of $5,833.
Total commissions and fees earned amounted to approximately $115,000 and $60,000
for the year ended December 31, 1995 and for the nine-month period ended
September 30, 1996, respectively.

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
nine-month periods ended September 30, 1995 and 1996, the five largest clients
accounted for approximately 63%, 50%, 77%, 76% and 83% of revenues,
respectively. As of December 31, 1994 and 1995 and September 30, 1996,
approximately 27%, 77% and 91%, 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
nine-month periods ended September 30, 1995 and 1996, certain clients
individually accounted for more than 10% of the Company's revenues:

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
---------------------- -------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
(% OF TOTAL REVENUES)
<S> <C> <C> <C> <C> <C>
Company A....................................... 37% * * * *
Company B....................................... * 12% 42% 34% 72%
Company C....................................... * * 17 20 *
Company D....................................... * 13 * * *
Company E....................................... * 11 * * *
</TABLE>

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

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>

F-15
<PAGE> 71

PRECISION RESPONSE CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Rent expense for these operating leases totaled $516,000, $622,000 and
$776,000 for 1993, 1994 and 1995, respectively. For the nine-month periods ended
September 30, 1995 and 1996, rent expense totaled $535,000 and $2,295,000,
respectively.

10. PRO FORMA DISCLOSURES (UNAUDITED)

Pro Forma Income Taxes

As described in Note 2, the Company was previously taxed as an S
corporation under the provisions of the Internal Revenue Code. Immediately prior
to the Initial Public Offering, the Company revoked its S corporation election
and accordingly became subject to federal and state income taxes. 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 NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
------------------------------- ---------------------
1993 1994 1995 1995 1996
-------- --------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Income tax at federal statutory rate................ $(86,209) $(130,305) $509,490 $345,874 $2,220,266
State taxes, net of federal benefit................. (4,361) (8,172) 58,800 35,329 226,785
Nondeductible expenses.............................. 44,663 52,459 50,641 39,020 96,215
-------- --------- -------- -------- ----------
Pro forma provision (benefit) for income taxes...... $(45,907) $ (86,018) $618,931 $420,223 $2,543,266
========= ========== ========= ========= ==========
</TABLE>

The Company and its shareholders prior to the Initial Public Offering 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 such 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
the Initial Public Offering, unless such adjustments result in or are related to
a corresponding decrease in such 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 such 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 the Initial Public
Offering.

Prior to consummation of the Initial Public Offering, the Company's Board
of Directors declared a cash dividend payable to the shareholders of the Company
at such time (the "Dividend"). The Dividend was 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 was not previously distributed. 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.

F-16
<PAGE> 72

PRECISION RESPONSE CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Pro Forma Net Income Per Share

Pro forma net income per share amounts have been computed based upon the
weighted average number of common shares outstanding during each period and
gives effect through the date of the Initial Public Offering to the increase in
the number of shares which, when multiplied by the offering price of $14.50 per
share, would have been sufficient to replace the amount of the Dividend in
excess of pro forma earnings for the twelve months ended June 30, 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 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 previously described stock splits by way of share
dividends, and subject in each case to further antidilution adjustments.

During the third quarter of 1996, an executive of the Company was granted
an option to purchase 21,000 shares of common stock at an exercise price of
$0.01 per share. The difference between the fair market value of the common
stock and the exercise price, which amounted to $304,290, has been reflected as
unearned compensation, and is shown as a separate component of shareholders'
equity. Amortization of unearned compensation expense is being recognized over
the three-year vesting period and amounted to $60,861 for the period from the
date of grant to September 30, 1996. During the third quarter of 1996, the
Company also granted additional options to purchase 540,500 shares of common
stock under the Employee Stock Plan. These options were granted at the fair
market value of the stock at the date of grant at prices ranging from
$14.50 -- $27.25 per share. No options were exercised during the third quarter
of 1996 and, of such options granted, options covering 12,250 shares were
cancelled. Options to purchase 5,000 shares are exercisable as of September 30,
1996, and outstanding options to purchase the remaining 523,250 shares become
exercisable at varying times beginning in 1997.

F-17
<PAGE> 73

PRECISION RESPONSE CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The Director Stock Plan provides for annual grants of non-qualified stock
options to each nonemployee director of the Company. The options 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. No stock options were granted under the Director Stock Plan during
the third quarter of 1996.

Prior to the establishment of a Compensation Committee (the "Committee") of
the Board of Directors, the Employee Stock Plan was administered by the Board of
Directors of the Company. The Board of Directors or the Committee are 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 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.

The Company measures 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" ("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 annual
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-18
<PAGE> 74

PRECISION RESPONSE CORPORATION LOGO

[8 PHOTOGRAPH MONTAGE OF PRC EMPLOYEES ENGAGED IN VARIOUS ACTIVITIES]
<PAGE> 75

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

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES
IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. 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 THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................... 3
Risk Factors............................. 8
Distribution of S Corporation Earnings... 13
Use of Proceeds.......................... 14
Dividend Policy.......................... 14
Price Range of Common Stock.............. 14
Capitalization........................... 15
Selected Financial and Operating Data.... 16
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................. 18
Business................................. 25
Management............................... 34
Certain Transactions..................... 44
Principal and Selling Shareholders....... 45
Description of Capital Stock............. 49
Shares Eligible for Future Sale.......... 51
Underwriting............................. 53
Legal Matters............................ 54
Independent Public Accountants........... 54
Additional Information................... 54
Index to Financial Statements............ F-1
</TABLE>

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

4,740,000 SHARES

PRECISION
RESPONSE
CORPORATION

COMMON STOCK
(PAR VALUE $.01 PER SHARE)

PRECISION RESPONSE CORPORATION LOGO

GOLDMAN, SACHS & CO.

DAIN BOSWORTH
Incorporated

MERRILL LYNCH & CO.

FURMAN SELZ
REPRESENTATIVES OF THE UNDERWRITERS

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