<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year ended December 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ___________ to ___________
Commission File No. 0-21639
NCO GROUP, INC.
-----------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Pennsylvania 23-2858652
- ------------------------------- --------------------------------
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
515 Pennsylvania Avenue
Fort Washington, Pennsylvania 19034
- ------------------------------ ------------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's Telephone Number, Including Area Code (215) 793-9300
--------------
Securities Registered Pursuant to Section 12(b) of the Act: None
----
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, no par value 13,394,651
--------------------------- -----------------------------
(Title of Class) (Number of Shares Outstanding
as of [April 27], 1998)
Indicate by check mark whether the Registrant (i) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (ii) has been subject to such filing
requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
The aggregate market value of voting stock held by non-affiliates of the
Registrant is $240,384,419(1).
Documents incorporated by reference are listed in the Exhibit Index.
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(1) The aggregate dollar amount of the voting stock set forth equals the
number of shares of the Company's Common Stock outstanding, reduced by
the amount of Common Stock held by officers, directors and shareholders
owning 10% or more of the Company's Common Stock, multiplied by $[ ],
the last reported sale price for the Company's Common Stock on [April
27], 1998. The information provided shall in no way be construed as an
admission that any officer, director or 10% shareholder in the Company
may be deemed an affiliate of the Company or that he is the beneficial
owner of the shares reported as being held by him, and any such
inference is hereby disclaimed. The information provided herein is
included solely for recordkeeping purposes of the Securities and
Exchange Commission.
<PAGE>
In accordance with instruction G(3) to Form 10-K, NCO Group, Inc.
("NCO" or the "Company") is amending its Annual Report on Form 10-K filed with
the Securities and Exchange Commission on March 31, 1998 to provide information
required in Part III.
<PAGE>
TABLE OF CONTENTS
Page
PART III
Item 10. Directors and Executive Officers of the Registrant................1
Item 11. Executive Compensation............................................2
Item 12. Security Ownership of Certain Beneficial Owners and Management....6
Item 13. Certain Relationships and Related Transactions....................8
Signatures.......................................................10
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
The following table sets forth information concerning the Company's
directors. Information concerning the Company's executive officers who are not
directors is set forth in Item 4.1 of the Annual Report on Form 10-K previously
filed.
<TABLE>
<CAPTION>
Director
Name Age Position Since
---- --- -------- -----
<S> <C> <C> <C>
Michael J. Barrist 37 Chairman of the Board, President and Chief Executive 1986
Officer
Charles C. Piola, Jr. 51 Executive Vice President and Director 1986
Bernard R. Miller 50 Senior Vice President, Development and Director 1996
Eric S. Siegel 41 Director 1996
Allen F. Wise 55 Director 1996
</TABLE>
The following information about the Company's directors is based, in
part, upon information supplied by such persons.
Michael J. Barrist has served as Chairman of the Board, President and
Chief Executive Officer of the Company since purchasing the Company in 1986. Mr.
Barrist was employed by U.S. Healthcare Inc. from 1984 to 1986, most recently as
Vice President of Operations, and was employed by Gross & Company, a certified
public accounting firm, from 1980 through 1984. Mr. Barrist is a certified
public accountant.
Charles C. Piola, Jr. joined the Company in 1986 as Executive Vice
President, Sales and Marketing and has served as a director since that time.
Prior to joining NCO, Mr. Piola was the Regional Sales Manager for Trans World
Systems from 1983 to 1986 and IC Systems from 1979 to 1981, both accounts
receivable management companies.
Bernard R. Miller joined the Company as Senior Vice President of
Development in 1994 when NCO acquired B. Richard Miller, Inc. ("BRM"), a
Philadelphia-based accounts receivable management company owned principally by
Mr. Miller. Mr. Miller became a director in 1996 and an Executive Vice President
in September 1997. Prior to joining the Company, Mr. Miller served as President
and Chief Executive Officer of BRM since he founded it in 1980.
Eric S. Siegel was appointed to the Board of Directors of the Company
in December 1996. Mr. Siegel has been President of Siegel Management Company, a
management consulting firm, since 1983. Mr. Siegel also is an adjunct faculty
member at the Wharton School of the University of Pennsylvania and is co-author
of The Ernst & Young Business Plan Guide.
Allen F. Wise was appointed to the Board of Directors of the Company in
December 1996. Mr. Wise has been a director and Chief Executive Officer of
Coventry Corporation, a managed care company, since October 1996. Prior thereto,
he was Executive Vice President of United Healthcare Corporation since October
1994, President of Wise Health Systems, a healthcare management company, from
September 1993 to October 1994, Chief Executive Officer of Keystone Health Plan
and Chief Operating Officer of Independence Blue Cross from September 1991 to
September 1993 and Vice President of U.S. Healthcare, Inc. from April 1985 to
September 1991. Mr. Wise is also a director of Transition Systems Inc.
<PAGE>
Board Reorganization
Following completion of the Company's initial public offering in the
fourth quarter of 1996, the Board of Directors was reorganized by increasing the
number of directors from three to five, appointing Eric S. Siegel and Allen F.
Wise as outside directors to fill the vacancies created by the increase and
dividing the Board into three classes. Class I consists of Mr. Michael J.
Barrist, whose term will expire at the Annual Meeting of Shareholders in the
year 2000; Class II consists of Messrs. Bernard R. Miller and Allen F. Wise,
whose terms will expire at the 1998 Annual Meeting of Shareholders; and Class
III consists of Messrs. Charles C. Piola and Eric S. Siegel, whose terms will
expire at the 1999 Annual Meeting of Shareholders. Directors whose terms are
expiring are elected by the shareholders to serve for three year terms.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, directors and persons who beneficially own more
than ten percent of a registered class of the Company's Common Stock to file
with the Securities and Exchange Commission ("SEC") initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. Executive officers, directors and greater than ten percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to the
Company's executive officers, directors and greater than ten percent beneficial
shareholders were complied with during the year ended December 31, 1997.
Item 11. Executive Compensation.
Summary Compensation Table
The following table sets forth the Compensation earned by the Chief
Executive Officer and the four next most highly compensated executive officers
of the Company whose aggregate salaries and bonuses exceeded $100,000 for
services rendered in all capacities to the Company during 1997.
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<PAGE>
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards (1)
--------------
Annual Compensation Securities
Name and ------------------- Underlying All Other
Principal Position Year Salary($) Bonus($) Options (#) Compensation($)(2)
------------------- ---- --------- -------- ------------- ------------------
<S> <C> <C> <C> <C> <C>
Michael J. Barrist 1997 280,288 279,648 42,500 18,681
Chairman of the Board, President 1996 208,653 53,862(3) - 5,957
and Chief Executive Officer 1995 200,000 242,641 - 5,993
Charles C. Piola, Jr. 1997 229,327 100,000 22,500 20,565
Executive Vice President and 1996 202,884 33,333(3) - 16,413
Director 1995 200,000 135,714 - 15,835
Bernard R. Miller 1997 152,885 100,000 22,500 8,328
Executive Vice President, 1996 136,730 26,448(3) 75,000 7,926
Development and Director 1995 130,000 21,645 - 5,955
Steven L. Winokur, 1997 152,885 45,000 30,000 1,541
Executive Vice President, Finance 1996 149,422 35,000 46,802 -
and Chief Financial Officer 1995 - - 49,886 -
Joseph C. McGowan 1997 138,942 45,000 30,000 10,696
Executive Vice President, and Chief 1996 117,000 18,000 62,400 3,664
Operating Officer of the Company 1995 100,000 30,000 66,516 5,088
and Chief Executive Officer of
NCO Financial Systems, Inc.
</TABLE>
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(1) The Company did not grant any restricted stock awards or stock appreciation
rights during the periods presented.
(2) For 1997, consists of premiums for disability policies paid by the Company
of $15,875, $14,607, $6,417, $0, and $8,397, a portion of the premiums for
split-dollar life insurance policies paid by the Company of $431, $3,583,
$0, $0 and $0 calculated in accordance with SEC regulations, and the
Company matching contribution under the 401(k) Profit Sharing Plan of
$2,375, $2,375, $1,911, $1,541, and $2,299, for the benefit of Messrs.
Barrist, Piola, Miller, Winokur and McGowan, respectively.
(3) These bonus amounts represent the bonuses earned by the respective officers
from September 3, 1996, the date of the Company's termination of its status
as an S Corporation under the Internal Revenue Code of 1986, as amended,
until December 31, 1996. No bonus was paid to these executive officers (who
were also shareholders) for the period while the Corporation was an S
Corporation in 1996. The total bonus amounts for 1996 for Mr. Barrist, Mr.
Piola and Mr. Miller would have been $161,587, $100,000 and $79,343,
respectively.
Option Grants in 1997
The following table sets forth certain information concerning stock
options granted during 1997 to each of the executive officers of the Company
named in the Summary Compensation Table.
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<PAGE>
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term (1)
--------------------------------------------------- --------------------
Number of Percent of
Securities Total Options
Underlying Granted to Exercise
Options Employees in Price Per Expiration
Name Granted Fiscal Year Share Date 5% 10%
- ------------------------ ----------- ------------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael J. Barrist 22,500(2) 5.4% $ 18.17 4/10/02 $ 69,858 $ 195,188
20,000(3) 4.8% 24.50 12/16/07 308,210 780,938
Charles C. Piola, Jr. 15,000(2) 3.6% 16.67 4/10/07 157,244 398,422
7,500(3) 1.8% 24.50 12/16/07 115,579 292,852
Bernard R. Miller 15,000(2) 3.6% 16.67 4/10/07 157,244 398,422
7,500(3) 1.8% 24.50 12/16/07 115,579 292,852
Steven L. Winokur 15,000(2) 3.6% 16.67 4/10/07 157,244 398,422
15,000(3) 3.6% 24.50 12/16/07 231,158 585,703
Joseph C. McGowan 15,000(2) 3.6% 16.67 4/10/07 157,244 398,422
15,000(3) 3.6% 24.50 12/16/07 231,158 585,703
</TABLE>
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(1) Represents the difference between the market value of the Common Stock for
which the option may be exercised, assuming that the market value of the
Common Stock on the date of grant appreciates in value to the end of the
ten-year option term (five-year option term with respect to certain
options granted to Mr. Barrist) at annualized rates of 5% and 10%,
respectively, and the exercise price of the option. The rates of
appreciation used in this table are prescribed by regulation of the SEC
and are not intended to forecast future appreciation of the market value
of the Common Stock.
(2) These options were granted on 4/10/97 at the fair market value of the
Common Stock on the date of grant (110% of the fair market value with
respect to options granted to Mr. Barrist) and become exercisable in three
equal annual installments beginning one year after the date of grant.
(3) These options were granted on 12/16/97 at the fair market value of the
Common Stock on the date of grant and become exercisable in three equal
annual installments beginning one year after the date of grant.
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<PAGE>
Aggregated Option Exercises in 1997 and 1997 Year-End Option Values
The following table sets forth certain information concerning stock
options exercised during 1997 and by each of the executive officers of the
Company named in the Summary Compensation Table and the number of unexercised
options and the value of unexercised options at December 31, 1997 held by each
of the executive officers of the Company named in the Summary Compensation
Table.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
Shares Acquired Value December 31, 1997 December 31, 1997(1)
Name on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
---- --------------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Michael J. Barrist - - -/42,500 -/$195,640
Charles C. Piola, Jr. - - -/22,500 -/$145,635
Bernard R. Miller - - 25,000/72,500 $360,400/$866,435
Steven L. Winokur 17,238 $289,081 31,620/77,830 $649,862/$1,085,980
Joseph C. McGowan 21,588 $362,030 43,556/93,772 $899,898/$1,396,280
</TABLE>
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(1) Represents the difference between the last sale price of the Common Stock
on December 31, 1997 ($25.75 per share), as reported on the Nasdaq National
Market, and the exercise price of in-the-money options, multiplied by the
number of exercisable or unexercisable options held, as applicable.
Employment Agreements
In September 1996, the Company entered into five-year employment
agreements with Messrs. Barrist, Piola, Miller, Winokur and McGowan pursuant to
which they are entitled to receive annual base salaries of $275,000, $225,000,
$150,000, $150,000, and $125,000, respectively, adjusted each year in accordance
with the Consumer Price Index. Mr. Barrist is entitled to receive an annual
bonus of $50,000 if the Company reaches performance goals determined by the
Board of Directors. He is also entitled to a bonus of $100,000 if the Company's
net income increases by 20% over the prior year and a bonus equal to 5% of any
increase in net income in excess of 20%, in each case adjusted for dilution. Mr.
Piola is eligible for an annual bonus of $50,000, $75,000, or $100,000 if the
Company's annual increase in net income (adjusted for dilution) over the prior
year exceeds 20%, 30%, or 40%, respectively. Mr. Miller is entitled to a bonus
equal to .00375 of the annualized revenue resulting from companies acquired
during the preceding year, subject to a maximum bonus of $100,000. Messrs.
Winokur and McGowan receive such annual bonuses as are determined by the Board
of Directors.
Each of the employment agreements provides that, in the event of the
death of the employee or the termination of employment by the Company other than
"for cause" (as defined in the agreements), the Company shall continue to pay
the employee's full compensation, including bonuses, for the balance of the
employment term. In addition to a non-disclosure covenant, each employee
agreement also contains a covenant-not-to-compete with the Company for a period
of two years following the date that the Company ceases to pay the employee any
compensation pursuant to the terms of the agreement.
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<PAGE>
Executive Salary Continuation Plan
The Company has adopted an Executive Salary Continuation Plan which
provides beneficiaries of designated participants with a salary continuation
benefit in the event of the participant's death while employed by the Company.
Participants are selected by the Board of Directors of the Company. The salary
continuation payments range from a payment of $30,000 for 10 years after the
death of the participant to a payment of 50% to 100% of a participant's salary
for five years after the death of the participant. The plan is funded by
insurance maintained by the Company on the lives of the participants. Each of
Messrs. Barrist, Piola, Miller, Winokur and McGowan is a participant in this
Plan and their respective beneficiary will be entitled to receive 100% salary
continuation payments for five years in the event of their death.
Director Compensation
Each director of the Company who is not also an employee receives an
annual fee of $5,000 and a fee of $500 for each meeting of the Board or any
committee of the Board attended, plus reimbursement of expenses incurred in
attending meetings.
Pursuant to the Company's Director Plan, as amended, each person who
was a non-employee director as of the date of the approval of amendments to the
Director Plan by the Board and each person who thereafter is first elected or
appointed to serve as a non-employee director of the Company automatically is
granted an option to purchase 15,000 shares of Common Stock at the fair market
value of the Common Stock on the date of the grant and each person who is
re-elected or continues as a non-employee director at each subsequent annual
meeting of shareholder (beginning with the 1997 Annual Meeting of Shareholders)
automatically is granted an option to purchase 3,000 shares of Common Stock at
the fair market value of the Common Stock on the date of grant. Each of Messrs.
Siegel and Wise received an option to purchase 15,000 shares of Common Stock at
an exercise price of $16.67 per share in April 1997 and an option to purchase
3,000 shares of Common Stock at an exercise price of $19.42 immediately
following the 1997 Annual Meeting of Shareholders. In addition, each of Messrs.
Siegel and Wise will receive an option to purchase 3,000 shares of Common Stock
immediately following the 1998 Annual Meeting of Shareholders, assuming, in the
case of Mr. Wise, that he is re-elected at such Meeting. All options granted
under the Director Plan are exercisable one year after the date of grant, except
that they become immediately exercisable upon a "change in control" as defined
in the Director Plan, and, unless terminated earlier by the terms of the
Director Plan, expire ten years after the date of grant.
The Company has engaged Siegel Management Company to provide advisory
and consulting services with respect to prospective acquisitions by the Company.
The Company paid fees of $0 and $250,000 to Siegel Management Company for
services rendered in 1997 and 1998, respectively. Eric S. Siegel is a director
of the Company and is the President and owner of Siegel Management Company.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth as of the April 30, 1998, certain
information regarding the beneficial ownership of the Common Stock by: (i) each
person known by the Company to own beneficially more than five percent of the
outstanding Common Stock; (ii) each of the Company's directors; (iii) each of
the executive officers of the Company named in the Summary Compensation Table;
and (iv) the Company's directors and executive officers as a group. Except as
otherwise indicated, to the knowledge of the Company, the beneficial owners of
the Common Stock listed below have sole investment and voting power with respect
to such shares.
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<PAGE>
Shares Beneficially Owned(1)
----------------------------
Name of Beneficial Owner Number Percent
------------------------- ---------- -------
Michael J. Barrist (2)(3).................... 2,632,690 19.6%
Joseph C. McGowan (4)........................ 70,728 *
Bernard R. Miller (5)........................ 211,341 1.6
Charles C. Piola, Jr. (2)(6)................. 1,193,573 8.9
PNC Bancorp, Inc. (7)........................ 1,068,401 8.0
Provident Investment Counsel, Inc. (8)....... 665,796 5.0
Eric S. Siegel (9)........................... 14,043 *
Steven L. Winokur (10)....................... 232,709 1.7
Allen F. Wise (4)............................ 6,500 *
All directors and executive officers
as a group (7 persons)(11).......... 4,361,584 32.1
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*Less than one percent.
(1) The securities "beneficially owned" by a person are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the Securities and Exchange Commission and, accordingly,
include securities owned by or for the spouse, children or certain other
relatives of such person as well as other securities as to which the person
has or shares voting or investment power or has the right to acquire within
60 days of April 30, 1998. The same shares may be beneficially owned by
more than one person. Beneficial ownership may be disclaimed as to certain
of the securities.
(2) The address of such person is c/o NCO Group, Inc., 515 Pennsylvania Avenue,
Fort Washington, Pennsylvania 19034.
(3) Includes: (i) 253,288 shares of Common Stock owned by Mrs. Annette Barrist
which Mr. Barrist has the sole right to vote pursuant to an irrevocable
proxy, (ii) 77,119 shares held in trust for the benefit of members of Mrs.
Annette Barrist's or Mr. Barrist's family for which Mr. Barrist is a
co-trustee, and (iii) 7,500 shares issuable upon the exercise of options
which are exercisable within 60 days of April 30, 1998. Excludes 179,160
shares held in trust for the benefit of Mr. Barrist's child, as to which
Mr. Barrist disclaims beneficial ownership. Mrs. Annette Barrist is the
mother of Michael J. Barrist.
(4) Represents shares issuable upon the exercise of options which are
exercisable within 60 days of April 30, 1998.
(5) Includes 30,000 shares issuable upon the exercise of options which are
exercisable within 60 days of April 30, 1998.
(6) Includes 5,000 shares issuable upon the exercise of options which are
exercisable within 60 days of April 30, 1998. Excludes 179,160 shares held
in trust for the benefit of Mr. Piola's children, as to which Mr. Piola
disclaims beneficial ownership.
(7) Based upon a Schedule 13D, dated February 13, 1998, provided to the
Company. The address of PNC Bancorp, Inc. is One PNC Plaza, 249 Fifth
Avenue, Pittsburgh, PA 15265.
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<PAGE>
(8) Based upon a Schedule 13D, dated February 10, 1998, provided to the
Company. The address of Provident Investment Counsel, Inc. is 300 N. Lake
Avenue, Suite 1001, Pasadena, CA 91101.
(9) Includes 12,043 shares issuable upon the exercise of options which are
exercisable within 60 days of April 30, 1998.
(10) Includes: (i) 179,160 shares held in trust for the benefit of Mr. Barrist's
child for which Mr. Winokur is a co-trustee; (ii) 53,249 shares issuable
upon the exercise of options which are exercisable within 60 days of April
30, 1998; and (iii) 300 shares held in custody for the benefit of Mr.
Winokur's minor children for which Mr. Winokur is custodian.
(11) Includes: (i) 253,288 shares of Common Stock owned by Mrs. Barrist which
Mr. Barrist has the sole right to vote pursuant to an irrevocable proxy,
(ii) 77,119 shares held in trust for the benefit of members of Mrs.
Barrist's and Mr. Barrist's family for which Mr. Barrist is a co-trustee,
(iii) 179,160 shares held in trust for the benefit of Mr. Barrist's child
for which Mr. Winokur is a co-trustee, (iv) an aggregate of 185,020 shares
issuable upon exercise of options which are exercisable within 60 days of
April 30, 1998, and (v) 300 shares held in custody for the benefit of Mr.
Winokur's minor children for which Mr. Winokur is custodian. Excludes
179,160 shares held in trust for the benefit of Mr. Piola's children.
Item 13. Certain Relationships and Related Transactions.
Compensation Committee Interlocks and Insider Participation
Prior to the completion of the Company's initial public offering in
November 1996, the Company did not have a Compensation Committee and
compensation decisions were made by the Board of Directors, consisting of
Messrs. Barrist, Piola and Miller, each of whom is also an executive officer of
the Company. In December 1996, the Board appointed Messrs. Siegel and Wise to
the Board and established a Compensation Committee consisting of Messrs.
Barrist, Siegel and Wise. Mr. Barrist resigned from the Compensation Committee
in 1997. Certain transactions between the Company and the foregoing persons are
described below.
Real Estate Matters
Prior to July 1997, the Company leased four facilities in Blue Bell,
Pennsylvania from limited partnerships of which Messrs. Barrist, Piola, Miller
and Mr. Barrist's mother were limited partners, except that, in certain
partnerships, an unaffiliated person was also a limited partner, and Mr. Barrist
was the sole shareholder of the corporate general partner. These leases were
terminated in July 1997. Under these leases, the Company paid the limited
partnerships owned by the persons named above approximately $231,636 for the
year ended December 31, 1997. In July 1997, the Company terminated its leases of
the Blue Bell facilities and relocated such offices to an 82,000 square foot
facility located in Ft. Washington, Pennsylvania.
-8-
<PAGE>
Distribution and Tax Indemnification Agreement
In 1996, the Company entered into a distribution and tax
indemnification agreement with its shareholders as of September 3, 1996 (the
"Termination Date"), the Company terminated its status as an S Corporation which
provided for: (i) the payment of estimated S Corporation distributions, (ii) the
adjustment of the S Corporation distributions based on the final determination
of the Company's actual undistributed S Corporation earnings through the
Termination Date, (iii) an indemnification by the Company of such shareholders
for any losses or liabilities with respect to any additional taxes (including
interest, penalties, legal and accounting fees and any additional taxes
resulting from any indemnification) resulting from the Company's operations
during the period in which it was an S Corporation (the "S Corporation Period")
and (iv) an indemnification by such shareholders of the Company for the amount
of any tax refund received by such shareholders due to a reduction in their
share of the Company's S Corporation taxable income for the S Corporation Period
less any taxes, interest or penalties imposed by any tax authority on any
distributions to such shareholders with respect to the S Corporation Period in
excess of such shareholder's share of taxable income of the Company for the S
Corporation Period.
Professional Services
The Company has engaged Siegel Management Company to provide advisory
and consulting services with respect to prospective acquisitions by the Company.
The Company paid fees of $0 and $250,000 to Siegel Management Company for
services rendered in 1997 and 1998, respectively. Eric S. Siegel is a director
of the Company and is the President and owner of Siegel Management Company.
-9-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this Amendment to its
Annual Report on Form 10-K to be signed on its behalf by the undersigned,
thereunto duly authorized.
NCO GROUP, INC.
Date: April 30, 1998 By:
--------------------------------
Steven L. Winokur, Executive
Vice President and Chief
Financial Officer
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