<PAGE>
As filed with the Securities and Exchange Commission on , 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
--------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------------
NCO GROUP, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2858652
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
515 Pennsylvania Avenue
Fort Washington, Pennsylvania, 19034
(215) 793-9300
------------------------------------------------------------------------
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Michael J. Barrist
Chairman of the Board, President and Chief Executive Officer
NCO Group, Inc.
515 Pennsylvania Avenue
Fort Washington, Pennsylvania, 19034
(215) 793-9300 Facsimile (215) 793-2908
------------------------------------------------------------------------
(Address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:
Lawrence R. Wiseman
Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, Pennsylvania 19103-6998
(215) 569-5500
Facsimile (215) 569-5555
----------
Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after the Registration Statement becomes
effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. | |
If any of the securities registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. | |
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box, and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. | |
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. | |
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of each class Amount to be Proposed maximum Proposed maximum Amount of
of securities to be registered offering price per unit aggregate offering price registration
registered fee
<S> <C> <C> <C> <C>
Common Stock, no 673,659 (1) $ 41.657 (2) $ 28,062,612.963 (2) $ 7,802
par value
</TABLE>
<PAGE>
(1) This Registration Statement covers 250,000 shares of NCO common stock
issuable upon exercise of warrants held by certain selling shareholders
and 423,659 shares of NCO common stock owned by certain selling
shareholders of which shares may be offered from time to time by the
selling shareholders.
(2) Based upon the average of the bid and asked price of NCO's common stock
on the Nasdaq National Market on August 30 1999, estimated solely for
the purpose of calculating the registration fee in accordance with Rule
467(c) under the Securities Act of 1933, as amended.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(A) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(A), may
determine.
<PAGE>
The information contained in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED ______________, 1999
PROSPECTUS
[NCO LOGO]
673,659 Shares
Common Stock
The shareholders of NCO Group, Inc. listed in this prospectus under the
title "Selling Shareholders" are offering and selling 673,659 shares of NCO
common stock pursuant to this prospectus. 423,659 of the shares of common stock
being sold pursuant to this prospectus are currently issued and outstanding.
250,000 of the shares of common stock being sold pursuant to this prospectus are
issuable upon exercise of warrants which were granted to a number of the selling
shareholders in connection with the acquisition by NCO of Co-Source Corporation
on May 21, 1999. NCO may receive proceeds upon exercise of these warrants;
however, NCO will not receive any proceeds from the sale of its common stock by
the selling shareholders.
Prospective purchasers should consider the "Risk Factors" beginning on
page 2.
The selling shareholders may sell their shares of NCO common stock in
one or more transactions on the Nasdaq National Market at market prices
prevailing at the time of sale or in private transactions at negotiated prices
through Merrill Lynch & Co. and/or another broker which is reasonably acceptable
to NCO.
NCO's common stock trades on the Nasdaq National Market under the
symbol "NCOG."
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is ____________________________, 1999.
<PAGE>
Table of Contents
Page
----
Forward-Looking Statements.....................................................1
The Company....................................................................1
Risk Factors...................................................................2
Where You Can Find More Information............................................9
Use of Proceeds...............................................................10
Selling Shareholders..........................................................10
Plan of Distribution..........................................................11
Legal Matters.................................................................12
Experts .....................................................................12
You should rely only on the information incorporated by reference or
provided in this prospectus. NCO has not authorized anyone else to provide you
with different information. The selling shareholders will not make an offer of
these shares in any state where the offer is not permitted. You should not
assume that the information in this prospectus is accurate as of any date other
than the date on the front page of this prospectus.
i
<PAGE>
Forward-Looking Statements
Some of the information in this prospectus may contain forward-looking
statements. Forward-looking statements can be identified by the use of
forward-looking language such as "will likely result," "may," "are expected to,"
"is anticipated," "estimate," "projected," "intends to" or other similar words.
These forward-looking statements are subject to certain risks and uncertainties,
including but not limited to the risks described below. See "Risk Factors" on
page 2. When considering the forward-looking statements, you should keep in mind
these risk factors and other cautionary statements in this prospectus. You
should not place undue reliance on any forward-looking statement which speaks
only as of the date made.
The Company
Background
NCO is the largest provider of accounts receivable collection services
in the world. NCO provides services to clients in the financial services,
healthcare, retail, commercial, education, telecommunications, utilities and
government sectors.
Address and Telephone Number of NCO
NCO's executive offices are located at 515 Pennsylvania Avenue, Fort
Washington, PA 19034 and the telephone number for NCO is (215) 793-9300.
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Risk Factors
In considering whether to acquire NCO common stock, you should consider
carefully the risks associated with the ownership of NCO common stock. These
risks are described in detail below.
The businesses acquired by NCO in the fourth quarter of 1998 and in
1999 had combined pro forma revenues of $307.0 million in 1998 which was 171.5%
of NCO's revenue of $179.0 million in 1998, prior to the restatement to reflect
the JDR Holdings, Inc. acquisition. If NCO is unable to successfully integrate
these new businesses into NCO's operations, NCO may not be able to realize
expected operating efficiencies, eliminate redundant costs or operate the
businesses profitably.
The businesses acquired by NCO in the fourth quarter of 1998 and in
1999 had combined pro forma revenues of $307.0 million in 1998 which was 171.5%
of NCO's revenue of $179.0 million in 1998, prior to the restatement to reflect
the JDR acquisition. If NCO is unable to successfully integrate these new
businesses into NCO's operations, NCO may not be able to realize expected
operating efficiencies, eliminate redundant costs or operate the businesses
profitably. The integration of these businesses is subject to a number of risks,
including risks that:
o These acquisitions could divert management's attention from
the daily operations of NCO and otherwise require additional
management, operational and financial resources;
o the conversion of the acquired companies computer and
operating systems into NCO's systems may take longer or cost
more than expected;
o NCO may be unable to retain clients or key employees of the
acquired companies; and
o the acquired companies might have additional liabilities and
problems that NCO did not anticipate at the time of the
acquisitions.
Historically, NCO's growth strategy has included acquisitions. NCO
recently announced that it would not make any acquisitions during the balance of
1999 and the first half of 2000 to allow it to complete the integration of
companies which have been acquired. After that period, NCO intends to consider
acquisitions on an opportunistic basis. As a result of this change in growth
strategy, the price of NCO's stock may be adversely affected.
Historically, NCO's growth strategy has included acquisitions. NCO
recently announced that it would not make any acquisitions during the balance of
1999 and the first half of 2000 to allow it to complete the integration of
companies which have been acquired. Because of the change in its acquisition
strategy, if NCO is unable to maintain its internal growth, it may not be able
to meet or exceed historical levels of growth and earnings. As a result, NCO's
stock price may be adversely affected.
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<PAGE>
NCO's significant internal growth may be difficult to manage and
continue. If NCO is not able to manage or continue that growth, it could have a
materially adverse effect on NCO's business, results of operations and financial
condition.
NCO has experienced significant internal growth over the past several
years and intends to continue its internal growth. Future internal growth is
subject to a number of risks, including the risks that:
o NCO may not be able to develop and maintain new clients;
o by focusing on new clients, NCO may lose existing clients
through inattention or because it fails to maintain the
quality of services it provides to its clients; and
o NCO may have difficulty hiring, training and retaining new
employees to handle the increased workload.
NCO's internal growth has placed significant demands on NCO's
administrative, operational and financial resources. To continue its future
growth, NCO will be required to improve its operational and financial systems
and obtain additional management, operational and financial resources. These
additional costs may outweigh the benefits NCO expects to obtain from internal
growth.
Goodwill represents 75.4% of NCO's pro forma total assets at June 30,
1999. If management has incorrectly overestimated the length of the amortization
period for goodwill, earnings reported in periods immediately following the
acquisition would be overstated. In later years, NCO would be burdened by a
continuing charge against earnings.
The NCO balance sheets include amounts designated as "goodwill."
Goodwill represents the excess of purchase price over the fair market value of
the net assets of the acquired businesses based on their respective fair values
at the date of acquisition. GAAP requires that this and all other intangible
assets be amortized over the period benefitted. Management has determined that
period to range from 15 to 40 years based on the attributes of each acquisition.
As of June 30, 1999, the pro forma balance sheet of NCO included
goodwill that represented 75.4% of total assets and 173.0% of total
shareholders' equity.
If management has incorrectly overestimated the length of the
amortization period for goodwill, earnings reported in periods immediately
following the acquisition would be overstated. In later years, NCO would be
burdened by a continuing charge against earnings without the associated benefit
to income valued by management in arriving at the consideration paid for the
business. Earnings in later years also could be significantly affected if
management determined then that the remaining balance of goodwill was impaired.
Management has concluded that the anticipated future cash flows
associated with intangible assets recognized in the acquisitions will continue
indefinitely, and there is no persuasive evidence that any material portion will
dissipate over a period shorter than the respective amortization period.
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<PAGE>
The number of shares of NCO's common stock that is traded daily on the
Nasdaq National Market averages less than 2.0% of the outstanding common stock.
As a result, the market price of NCO common stock may be volatile.
As a result of NCO's trading volume, the market price for NCO common
stock may be volatile and may be affected by many factors, including the
following:
o announcements of fluctuations in NCO's or its competitors'
operating results;
o the timing and announcement of acquisitions by NCO or its
competitors; and
o government regulatory action.
In addition, the stock market in recent years has experienced
significant price and volume fluctuations that often have been unrelated or
disproportionate to the operating performance of companies. These broad
fluctuations may materially adversely affect the market price of NCO common
stock.
Approximately 83.3% of NCO's outstanding shares are available for
resale in the public market without restriction, except for any shares held by
affiliates of Compass or JDR which may be sold in compliance with Rule 145
adopted by the SEC. The sale of a large number of these shares could adversely
affect NCO's stock price and could impair NCO's ability to raise capital through
the sale of equity securities or make acquisitions for stock.
Sales of NCO's common stock could adversely affect the market price of
NCO's common stock and could impair NCO's future ability to raise capital
through the sale of equity securities or make acquisitions for stock. There are
approximately 25.1 million shares of NCO common stock outstanding. Of these
shares, approximately 20.9 million shares, or 83.3% of the total outstanding
shares, are available for resale in the public market without restriction,
except for any shares held by affiliates of Compass or JDR, which may be sold in
compliance with Rule 145 adopted by the SEC.
Approximately 4.2 million shares of NCO common stock, or 16.7% of the
total outstanding shares, are held by affiliates of NCO. Generally, NCO
affiliates may either sell their shares under a registration statement or in
compliance with the volume limitations and other requirements imposed by Rule
144 adopted by the SEC.
In addition, NCO has the authority to issue up to approximately 4.0
million shares of its common stock under its stock option plans of which 2.6
million shares have been granted. NCO also has outstanding warrants to purchase
625,000 shares of its common stock.
NCO may experience variations from quarter to quarter in operating
results and net income which could adversely affect the price of NCO common
stock.
Factors which could cause quarterly fluctuations include the following:
o the timing of NCO's clients' accounts receivable management
programs and the commencement of new contracts;
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<PAGE>
o customer contracts may require NCO to incur costs in periods
prior to recognizing revenue under those contracts;
o the effect of the change of business mix on profit margins;
o the timing of additional selling, general and administrative
expenses to support new business;
o the costs and timing of completion and integration of
acquisitions; and
o NCO's business tends to be slower in the third and fourth
quarters of the year due to the summer and holiday seasons.
NCO's business is dependent on clients in the healthcare, commercial
and retail, and financial services sectors. If any of these sectors performs
poorly or if there are any trends in these sectors to reduce or eliminate the
use of third-party accounts receivable management services provided by companies
like NCO, it could have a materially adverse effect on NCO's business, financial
condition and results of operations.
For the year ended December 31, 1998, after giving pro forma effect to
the acquisitions completed in 1998 and 1999, not including the acquisition of
Compass, as if they had occurred on January 1, 1998, NCO derived approximately
38.2% of its revenues from clients in the healthcare sector, approximately 21.6%
of its revenues from clients in the commercial and retail sector and
approximately 21.4% of its revenues from clients in the financial services
sector. If any of these sectors performs poorly, clients in these sectors may
have fewer or smaller accounts to refer to NCO or they may elect to perform
accounts receivable management services in-house. If there are any trends in any
of these sectors to reduce or eliminate the use of third-party accounts
receivable management services, the volume of referrals to NCO would decrease.
Most of NCO's contracts do not require clients to place accounts with
NCO, may be terminated on 30 or 60 days notice and are on a contingent fee
basis. Accordingly, NCO can not predict whether existing clients will continue
to use NCO's services at historical levels, if at all.
Under the terms of most of NCO's contracts, clients are not required to
give accounts to NCO for collection and usually have the right to terminate
NCO's services on 30 or 60 days notice. In addition, most of these contracts
provide that NCO is entitled to be paid only when it collects accounts.
Accordingly, NCO can not predict whether existing clients will continue to use
NCO's services at historical levels, if at all.
NCO competes with approximately 6,500 providers in the accounts
receivable management industry. This competition could have a materially adverse
effect on NCO's future financial results.
NCO competes with approximately 6,500 providers in providing accounts
receivable management services. NCO is a national provider of accounts
receivable management services. NCO competes with other large national
corporations such as Outsourcing Solutions, Inc., GC Services, Inc., and
IntelliRisk Inc., as well as many regional and local firms. NCO may also lose
business to regional or local firms who are able to use their proximity to or
contacts at local clients as a marketing advantage. Because of the large numbers
of providers, in the future NCO may have to reduce its collection fees to remain
competitive. Many larger clients retain multiple accounts receivable management
providers which exposes NCO to continuous competition in order to remain a
preferred vendor.
5
<PAGE>
If NCO is not able to respond to technological changes in
telecommunications and computer systems in a timely manner, it may not be able
to remain competitive.
NCO's success depends in large part on its sophisticated
telecommunications and computer systems. NCO uses these systems to identify and
contact large numbers of account debtors and to record the results of the
collection effort. If NCO is not able to respond to technological changes in
telecommunications and computer systems in a timely manner, it may not be able
to remain competitive. NCO has made a significant investment in technology to
remain competitive and anticipates that it will be necessary to continue to do
so in the future. Computer and telecommunication technologies are changing
rapidly and are characterized by short product life cycles, so that NCO must
anticipate technological developments. If NCO is not successful in anticipating,
managing or adopting any technological changes on a timely basis or if NCO does
not have the capital resources available to invest in new technologies, its
business would be materially adversely affected.
If NCO's telecommunications and computer systems fail or become
unavailable, it could have a materially adverse effect on NCO's business.
As noted above, NCO's business is highly dependent on its
telecommunications and computer systems. These systems could be interrupted by
natural disasters, power losses, or similar events. NCO's business also is
materially dependent on service provided by various local and long distance
telephone companies. If NCO's equipment or systems cease to work or become
unavailable, or if there is any significant interruption in telephone services,
NCO may be prevented from providing services. Because NCO generally recognizes
income only as accounts are collected, any failure or interruption of services
would mean that NCO would continue to incur payroll and other expenses without
any corresponding income.
Our systems or those of our clients or suppliers may not be Year 2000
compliant. This means that we might be unable to provide accounts receivable
management services or engage in similar normal business activities for a period
of time after January 1, 2000 which could have a material adverse effect on our
business, operating results and financial position.
As noted above, we rely on our telephone and computer systems, software
and other systems in operating and monitoring all aspects of our business. We
also rely heavily on the systems of our clients and suppliers. If our present
efforts to address the Year 2000 compliance issues are not successful, or if the
systems of our clients and suppliers and other organizations with which we do
business are not Year 2000 compliant, we may be unable to provide accounts
receivable management services or engage in similar normal business activities
for a period of time after January 1, 2000. As a result, we would be unable to
recognize income. We also may lose existing or potential clients and our
reputation in the industry might be damaged.
NCO's success depends on its senior management team and if it is not
able to retain them, it could have a materially adverse effect on NCO.
NCO is highly dependent upon the continued services and experience of
its senior management team, including Michael J. Barrist, Chairman of the
Board, President and Chief Executive Officer. NCO depends on the services of Mr.
Barrist and the other members of NCO's senior management team to, among other
things:
6
<PAGE>
o successfully integrate the operations of Medaphis, JDR,
Co-Source Corporation and Compass;
o continue NCO's growth strategy; and
o maintain and develop NCO's client relationships.
NCO is dependent on its employees and a higher turnover rate would
materially adversely affect NCO.
The accounts receivable management industry is very dependent upon
employees and experiences high turnover rate. Many of NCO's employees receive
modest hourly wages and a portion of these employees are employed on a part-time
basis. A higher turnover rate among NCO's employees would increase NCO's
recruiting and training costs and could materially adversely impact the quality
of services NCO provides to its clients. If NCO were unable to recruit and
retain a sufficient number of employees, it would be forced to limit its growth
or possibly curtail its operations. Growth in NCO's business will require it to
recruit and train qualified personnel at an accelerated rate from time to time.
We cannot assure you that NCO will be able to continue to hire, train and retain
a sufficient number of qualified employees. Additionally, an increase in hourly
wages, costs of employee benefits or employment taxes also could materially
adversely affect NCO.
"Anti-takeover" provisions may make it more difficult for a third party
to acquire control of NCO, even if the change in control would be beneficial to
shareholders.
NCO is a Pennsylvania corporation. Anti-takeover provisions in
Pennsylvania law and NCO's charter and bylaws could make it more difficult for a
third party to acquire control of NCO. These provisions could adversely affect
the market price of NCO common stock and could reduce the amount that
shareholders might receive if NCO is sold. For example, NCO's charter provides
that NCO's board of directors may issue preferred stock without shareholder
approval. In addition, NCO's bylaws provide for a classified board, with each
board member serving a staggered three year term. Directors may be removed only
for cause and only with the approval of the holders of at least 65% of NCO's
common stock.
If NCO fails to comply with government regulation of accounts
receivable management and telemarketing industries, it could result in the
suspension or termination of NCO's ability to conduct business which would have
a materially adverse effect on NCO.
The accounts receivable management and telemarketing industries are
regulated under various United States federal and state, Canadian and United
Kingdom laws and regulations. Many states, as well as the Canada and the United
Kingdom, require that NCO be licensed as a debt collection company. If NCO fails
to comply with applicable laws and regulations, it could result in the
suspension or termination of NCO's ability to conduct accounts receivable
management or telemarketing services which would have a materially adverse
effect on NCO. In addition, new federal, state or foreign laws or regulations,
or changes in the ways these rules or laws are interpreted or enforced, could
limit the activities of NCO in the future or significantly increase the cost of
regulatory compliance. If NCO expands its international operations, it may
become subject to additional government controls and regulations in other
countries, which may be stricter or more burdensome than those in the United
States.
Several of the industries served by NCO are also subject to varying
degrees of government
7
<PAGE>
regulation. Although NCO's clients are generally responsible for complying with
these regulations, NCO could be subject to a variety of enforcement or private
actions for its failure or the failure of its clients to comply with these
regulations.
8
<PAGE>
Where You Can Find More Information
NCO files annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any reports, statements
and other information NCO files with the SEC at the SEC's Public Reference Room
at 450 Fifth Street, NW, Washington, D.C., 20549. You may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
NCO's SEC filings are also available on the SEC's Internet site
(http://www.sec.gov).
NCO has filed a registration statement on Form S-3 to register the
shares of NCO common stock offered under this prospectus. This prospectus is a
part of such registration statement on Form S-3 and constitutes a prospectus of
NCO. As allowed by SEC rules, this prospectus does not contain all the
information you can find in the registration statement on Form S-3 or the
exhibits to the registration statement on Form S-3.
The SEC also allows NCO to "incorporate by reference" the information
it files with the SEC, which means NCO can disclose information to you by
referring you to another document filed separately with the SEC. Information
incorporated by reference is deemed to be part of this prospectus. Later
information filed by NCO with the SEC updates and supersedes this prospectus.
This prospectus incorporates important business and financial
information about NCO that is not included in or delivered with this prospectus.
Copies of any such information are available without charge to any person to
whom this prospectus is delivered, upon written or oral request. Written
requests for such documents should be directed to Steven L. Winokur, Executive
Vice President and Chief Financial Officer, NCO Group, Inc., 515 Pennsylvania
Avenue, Fort Washington, Pennsylvania, 19034, and telephone requests may be
directed to Mr. Winokur at (215) 793-9300.
The following documents previously filed by NCO with the SEC pursuant
to the Exchange Act are incorporated in this prospectus by this reference:
<TABLE>
<S> <C>
SEC Filings Period
- --------------------------------------------------------------- -----------------------------------------
Annual Report on Form 10-K (including those portions of Year ended December 31, 1998
NCO's proxy statement for its 1998 annual meeting of
shareholders incorporated by reference to the Annual Report
on Form 10-K)
Quarterly Reports on Form 10-Q (as amended) Quarters ended March 31, 1999 and
June 30, 1999
Current Reports on Form 8-K February 16, 1999, April 15, 1999, May
28, 1999, June 4, 1999, June 11, 1999,
August 4, 1999, and September 1, 1999
Registration Statement on Form 8-A filed pursuant to Section Filed on October 29, 1996
12(g) of the Exchange Act
</TABLE>
All documents filed by NCO pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this prospectus and prior to
the termination of the offering will be deemed to be incorporated by reference
in this prospectus and to be a part of this prospectus from the date any such
document is filed.
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<PAGE>
Use of Proceeds
All net proceeds from the sale of NCO common stock will go to the
selling shareholders. Accordingly, NCO will not receive any proceeds from the
sale of the shares by the selling shareholders.
Selling Shareholders
The following table provides certain information as of the date of this
prospectus regarding each selling shareholder's beneficial ownership of NCO
common stock prior to and after the sale of the shares offered under this
prospectus. Beneficial ownership is determined in accordance with the rules of
the SEC, and generally includes voting or investment power with respect to
securities. In accordance with SEC rules, shares which may be acquired upon
exercise of warrants which are currently exercisable or which become exercisable
within sixty days of the date of this prospectus are deemed to be beneficially
owned by the warrant holder.
All of the shares being offered by HIG-DCI, Investments, L.P., Antares
Capital Corporation, Thomas V. Cefalu, III, Louis A. Molettiere, Edward J.
Trahan, Sanderson Children's Trust, David Israel and Michale Mahne, collectively
referred to as the Co-Source selling shareholders, are issuable upon exercise of
warrants which were granted to the Co-Source selling shareholders in connection
with the acquisition by NCO of Co-Source Corporation. On May 21, 1999, Co-Source
Funding, Inc., a wholly-owned subsidiary of NCO, purchased all of the
outstanding capital stock of Co-Source Corporation, including its wholly-owned
subsidiaries, Milliken & Michaels, Inc., Metropolitan Consumer Collection
Services, Inc., and International Account Systems, Inc., for $122.7 million in
cash and warrants to purchase an aggregate of 250,000 shares of NCO's common
stock at an exercise price of $32.97 per share. In addition, these warrants
provide each warrant holder a cashless exercise option, as each warrant holder
can authorize NCO to withhold from issuance a number of shares of common stock
issuable upon the exercise of their warrant which when multiplied by the market
price of NCO common stock would equal the aggregate exercise price of their
warrant. Unless the Co-Source selling shareholders utilize the cashless exercise
option, upon exercise of each of the warrants, NCO will receive $32.97 per share
of common stock. Assuming that each Co-Source selling shareholder exercises
their respective warrants, does not utilize the cashless exercise option and
sells all of the shares issuable to them upon that exercise, after the offering
the Co-Source selling shareholders will own less than one percent of the
outstanding NCO common stock.
All of the shares being offered by David E. D'Anna were acquired by him
as a result of NCO's acquisition of JDR Holdings, Inc. Mr. D'Anna was the
President and Chief Executive Officer of JDR Holdings, Inc. and is currently an
Executive Vice President; Divisional CEO, Technology-based Outsourcing and a
director of NCO.
All of the shares being offered by Louis J. Lombardo were acquired by
him upon the exercise of an option dated July 18, 1997 to purchase shares of NCO
common stock from David E. D'Anna. Assuming that Mr. Lombardo sells all of his
shares being offered hereby, after the offering Mr. Lombardo will own less than
one percent of the outstanding NCO common stock.
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<TABLE>
<CAPTION>
# of Shares
Owned # of Shares # of Shares
Prior to Being Offered Owned After
the Offering for Sale the Offering
---------------- ------------------ -------------------
<S> <C> <C> <C>
HIG-DCI Investments, L.P. 168,050 168,050 -0-
Antares Capital Corporation 15,453 15,453 -0-
Thomas V. Cefalu, III 39,304 39,304 -0-
Louis A. Molettiere 2,629 2,629 -0-
Edward J. Trahan 1,999 1,999 -0-
Sanderson Children's Trust 20,884 20,884 -0-
David Israel 1,254 1,254 -0-
Michael Mahne 427 427 -0-
David E. D'Anna 468,861 391,122 77,739
Louis J. Lombardo 32,537 32,537 -0-
</TABLE>
Plan of Distribution
The selling shareholders may offer their shares of NCO common stock at
various times in one or more of the following transactions:
o on the Nasdaq National Market;
o in the over-the-counter market;
o in negotiated transactions through Merrill Lynch & Co. and/or
another broker which is reasonably acceptable to NCO;
o in connection with short sales of the NCO common stock;
o by engaging in transactions using options to buy or sell
shares of NCO common stock;
o in a combination of any of the above transactions.
The selling shareholders may sell their shares at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices.
The selling shareholders may use broker-dealers to sell their shares.
If this happens, broker-dealers will either receive discounts or commission from
the selling shareholders, or they will receive commission from purchasers of
shares for whom they acted as agents. NCO has agreed to indemnify each selling
shareholder against certain liabilities, including liabilities arising under the
Securities Act.
11
<PAGE>
Because the selling shareholders may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act, the selling
shareholders will be subject to the prospectus delivery requirements of the
Securities Act. NCO has informed the selling shareholders that the
anti-manipulative provisions of Regulation M promulgated under the Exchange Act
may apply to their sales in the market.
Upon NCO being notified by a selling shareholder that any material
arrangement has been entered into with a broker-dealer for the sale of shares of
NCO common stock through a block trade, special offering, exchange distribution
or secondary distribution or a purchase by a broker-dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act disclosing:
o the name of each selling shareholder and of the participating
broker-dealer(s);
o the number of shares involved;
o the price at which such shares were sold;
o the commissions paid or discounts or concessions allowed to
such broker-dealer(s), where applicable;
o that such broker-dealer(s) did not conduct any investigation
to verify the information set out or incorporated by reference
in this prospectus; and
o other facts material to the transaction.
In addition, upon the company being notified by a selling shareholder
that a donee or pledgee intends to sell more than 500 shares, a supplement to
this prospectus will be filed.
Legal Matters
An opinion has been rendered by the law firm of Blank Rome Comisky &
McCauley, LLP, Philadelphia, Pennsylvania to the effect that the shares of NCO
common stock offered by the selling shareholders hereby are legally issued,
fully paid and non-assessable.
Experts
The audited financial statements of NCO Group, Inc. incorporated in
this prospectus by reference to the Current Report on Form 8-K dated June 11,
1999, except as they related to JDR Holdings Inc., have been audited by
PricewaterhouseCoopers LLP, independent accountants, and, insofar as they
related to JDR Holdings Inc., by other independent accountants, whose reports
thereon are also incorporated in this prospectus by reference. Such financial
statements have been so included in reliance on the reports of such independent
accountants given on the authority of such firms as experts in auditing and
accounting.
The consolidated financial statements of Compass International Services
Corporation and its subsidiaries at December 31, 1998 and 1997 and the results
of their operations and their cash flows for the year ended December 31, 1998
incorporated by reference in this prospectus by reference to the Current Report
on Form 8-K dated August 20, 1999 have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The consolidated financial statements of Medaphis Services Corporation
as of December 31, 1997 and 1996 and for each of the three years in the period
ended December 31, 1997 incorporated by reference in this prospectus, have been
incorporated in this document in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority said
firm as experts in auditing and accounting.
The consolidated financial statements of FCA International Ltd. at June
30, 1996 and 1997 and FCA International Ltd.'s consolidated statements of
income, shareholders' equity and cash flows for each of the three years in the
period ended June 30, 1997 incorporated by reference in this prospectus have
been audited by Arthur Andersen & Co., independent public accountants, as stated
in their report, and are incorporated by reference in this document in reliance
upon their report given upon the authority of Arthur Andersen & Co. as experts
in accounting and auditing.
The financial statements of MedSource, Inc. and Subsidiaries as of
December 31, 1997 and for the year ended December 31, 1997, incorporated by
reference in this prospectus have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect to
those financial statements and are incorporated by reference in this document in
reliance upon the authority of Arthur Andersen LLP as experts in giving said
report.
12
<PAGE>
The financial statements of JDR Holdings, Inc. and Subsidiaries as of
December 31, 1998 and for the year ended December 31, 1998, incorporated by
reference in this prospectus have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect to
those financial statements, and are incorporated by reference in this document
in reliance upon the authority of Arthur Andersen LLP as experts in giving said
report.
The consolidated financial statements of Co-Source Corporation and
Subsidiaries for the year ended December 31, 1998 included in Form 8-K/A dated
August 4, 1999 of NCO Group, Inc., have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
13
<PAGE>
PART II
Information not Required in the Prospectus
Item 14. Other Expenses of Issuance and Distribution.
The following table shows the estimated expenses of the issuance and
distribution of the securities offered.
SEC Registration Fee.................................................$ 7,802 *
Legal fees and expenses.............................................. 10,000 **
Accounting fees and expenses......................................... 20,000 **
Miscellaneous........................................................ 5,000 **
---------
TOTAL................................................................$ 42,802
=========
- ------------------
* Actual
** Estimated.
Item 15. Indemnification of Directors and Officers
Sections 1741 through 1750 of Subchapter D, Chapter 17, of the
Pennsylvania Business Corporation Law of 1988, as amended, contain provisions
for mandatory and discretionary indemnification of a corporation's directors,
officers and other personnel and related matters.
Under Section 1741, subject to certain limitations, a corporation has
the power to indemnify directors and officers under certain prescribed
circumstances against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred in connection with
an action or proceeding, whether civil, criminal, administrative or
investigative, to which any of them is a party by reason of his being a
representative, director or officer of the corporation or serving at the request
of the corporation as a representative of another corporation, partnership,
joint venture, trust or other enterprise, if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the corporation and, with respect to any criminal proceeding, had no reasonable
cause to believe his conduct was unlawful. Under Section 1743, indemnification
is mandatory to the extent that the officer or director has been successful on
the merits or otherwise in defense of any action or proceeding if the
appropriate standards of conduct are met.
Section 1742 provides for indemnification in derivative actions except
in respect of any claim, issue or matter as to which the person has been
adjudged to be liable to the corporation unless and only to the extent that the
proper court determines upon application that, despite the adjudication of
liability but in view of all the circumstances of temnity for the expenses that
the court deems proper. Section 1744 provides that, unless ordered by a court,
any indemnification under Section 1741 or 1742 shall be made by the corporation
only as authorized in the specific case upon a determination that the
representative met the applicable standard of conduct, and such determination
will be made by the board of directors (i) by a majority vote of a quorum of
directors not parties to the action or proceeding; (ii) if a quorum is not
obtainable, or if obtainable and a majority of disinterested directors so
directs, by independent legal counsel; or (iii) by the shareholders.
Section 1745 provides that expenses (including attorney's fees)
incurred by an officer, director, employee or agent in defending a civil or
criminal action or proceeding may be paid by the corporation in advance of the
final disposition of such action or proceeding upon receipt of an undertaking by
or on
<PAGE>
behalf of such person to repay such amount if it shall ultimately be determined
that he or she is not entitled to be indemnified by the corporation.
Section 1746 provides generally that, except in any case where the act
or failure to act giving rise to the claim for indemnification is determined by
a court to have constituted willful misconduct or recklessness, the
indemnification and advancement of expenses provided by Subchapter 17D of the
BCL shall not bee deemed exclusive of any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under any bylaw,
agreement, vote of shareholders or disinterested directors or otherwise, both as
to action in his or her official capacity and as to action in another capacity
while holding that office.
Section 1747 grants to a corporation the power to purchase and maintain
insurance on behalf of any director or officer against any liability incurred by
him or her in his or her capacity as officer of director, whether or not the
corporation would have the power to Subchapter 17D of the BCL. Sections 1748 and
1749 extend the indemnification and advancement of expenses provisions contained
in Subchapter 17D of the BCL to successor corporations in fundamental changes
and to representatives serving as fiduciaries of employee benefit plans.
Section 1750 provides that the indemnification and advancement of
expenses provided by, or granted pursuant to, Subchapter 17D of the BCL, shall,
unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs and personal representative of such person.
For information regarding provisions under which a director or officer
of the NCO may be insured or indemnified in any manner against any liability
which he or she may incur in his or her capacity as such, reference is made to
the NCO's Articles of Incorporation and Bylaws, copies of which are incorporated
herein by reference, which provide in general that the NCO shall indemnify its
officers and directors to the fullest extent authorized by law.
Item 16. Exhibits
4.1 Specimen Stock Certificate (incorporated by reference to Exhibit 4.1 of
NCO's Registration Statement on Form S-1 (No. 333-11745) filed with the
SEC on September 11, 1996).
4.2 Form of Warrant issued in connection with NCO's acquisition of
Co-Source Corporation (incorporated by reference to Exhibit 4.1 of
NCO's Current Report on Form 8-K filed with the SEC on June 4, 1999).
5.1 Opinion of Blank Rome Comisky & McCauley LLP.
23.1 Consent of PricewaterhouseCoopers LLP for NCO Group, Inc.
23.2 Consent of PricewaterhouseCoopers LLP for Compass International
Services Corporation.
23.3 Consent of PricewaterhouseCoopers LLP for Medaphis Services
Corporation.
II-1
<PAGE>
23.4 Consent of Arthur Andersen & Co. for FCA International Ltd.
23.5 Consent of Arthur Andersen LLP for MedSource, Inc.
23.6 Consent of Arthur Andersen LLP for JDR Holdings, Inc.
23.7 Consent of Ernst & Young LLP for Co-Source Corporation.
23.8 Consent of Blank Rome Comisky & McCauley LLP (included in Exhibit 5.1
to this Registration Statement).
24 Powers of Attorney. (Included on the Signature Page.)
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high and of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective amendment
by those clauses is contained in periodic reports filed with or furnished to the
Commission by the Company pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in this Registration Statement;
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the
II-2
<PAGE>
securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Fort Washington, Pennsylvania, as of September 2, 1999.
NCO GROUP, INC.
/s/ Michael J. Barrist
By:___________________________________
Michael J. Barrist
Chairman of the Board, President
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Michael J. Barrist and Steven L. Winokur,
and each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities to sign any and all amendments (including,
without limitation, post-effective amendments) to this Registration Statement
and any registration statement filed under Rule 462 under the Securities Act of
1933, as amended, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons as of September
2, 1999 in the capacities indicated:
Signatures Title
---------- -----
/s/ Michael J. Barrist Chairman of the Board, President and
- ------------------------------- Chief Executive Officer
Michael J. Barrist (principal executive officer)
/s/ Charles C. Piola Executive Vice President, Business
- ------------------------------- Development and Director
Charles C. Piola
/s/ Steven L. Winokur Executive Vice President, Finance;
- ------------------------------- Chief Financial Officer; and Treasurer
Steven L. Winokur (principal financial officer and
principal accounting officer)
/s/ Bernard R. Miller Executive Vice President; Divisional Chief
- ------------------------------- Executive Officer, Healthcare Services;
Bernard R. Miller and Director
II-4
<PAGE>
/s/ David E. D'Anna
- ------------------------------- Executive Vice President; Divisional CEO,
David E. D'Anna Technology-based Outsourcing; and
Director
/s/ Stuart Wolf Director
- -------------------------------
Stuart Wolf
/s/ Eric S. Siegel Director
- -------------------------------
Eric S. Siegel
/s/ Allen F. Wise Director
- -------------------------------
Allen F. Wise
II-5
<PAGE>
EXHIBIT 5.1
Blank Rome Comisky & McCauley LLP
Counselors at Law
One Logan Square
Philadelphia, Pennsylvania 19103-6998
215-569-5500
Fax 215-569-5555
September 2, 1999
NCO Group, Inc.
515 Pennsylvania Avenue
Ft. Washington, Pennsylvania 19422
Re: NCO Group, Inc.
Registration Statement on Form S-3
Gentlemen:
We have acted as counsel to NCO Group, Inc. (the "Company") in
connection with the Registration Statement on Form S-3 (the "Registration
Statement") filed by the Company with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended, relating to the offer and
sale of up to 673,659 shares of common stock, no par value (the "Common Stock"),
by the selling shareholders named in the Registration Statement (the "Selling
Shareholders"). This opinion is furnished pursuant to the requirements of Item
601(b)(5) of Regulation S-K.
In rendering this opinion, we have examined only the following
documents: (i) the Company's Amended and Restated Articles of Incorporation and
Bylaws, (ii) resolutions adopted by the Board of Directors of the Company and
(iii) the Registration Statement. We have not performed any independent
investigation other than the document examination described. Our opinion is
therefore qualified in all respects by the scope of that document examination.
We have assumed and relied, as to questions of fact and mixed questions of law
and fact, on the truth, completeness, authenticity and due authorization of all
certificates, documents and records examined and the genuineness of all
signatures. This opinion is limited to the laws of the Commonwealth of
Pennsylvania.
Based upon and subject to the foregoing, we are of the opinion that the
shares of Common Stock of the Company which are being offered and sold by the
Selling Shareholders pursuant to the Registration Statement, when sold in the
manner and for the consideration contemplated by the Registration Statement,
will be legally issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus, which is part of the Registration Statement.
Sincerely,
/s/ BLANK ROME COMISKY & McCAULEY LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated February 18, 1999 relating to the
consolidated financial statements and financial statement schedules, which
appears in NCO Group, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1998. We also consent to the incorporation by reference of our
report dated February 18, 1999, except as to the information presented in Note 3
related to the pooling of interests with JDR Holdings, Inc., for which the date
is March 31, 1999 relating to the consolidated financial statements as restated
for the pooling of interests with JDR Holdings Inc., which appears in the
Current Report on Form 8-K dated June 11, 1999. We also consent to the reference
to us under the heading "Experts" in such Registration Statement.
/s/ PRICEWATERHOUSECOOPERS LLP
September 1, 1999
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of NCO Group, Inc. ("NCO") of our report dated March 3,
1999 relating to the consolidated financial statements of Compass International
Services Corporation (the "Company"), which appears in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998 and is incorporated by
reference in NCO's Current Report on Form 8-K dated August 20, 1999. We also
consent to the reference to us under the heading "Experts" in such Registration
Statement.
/S/ PRICEWATERHOUSECOOPERS LLP
New York, New York
August 31, 1999
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of NCO Group, Inc. of our report dated October 28, 1998 on
our audits of the financial statements of Medaphis Services Corporation as of
December 31, 1997 and 1996, and for the years ended December 31, 1997, 1996 and
1995. We also consent to the references to us under the heading "Experts" in
such Registration Statement.
/s/ PRICEWATERHOUSECOOPERS LLP
Atlanta, Georgia
September 3, 1999
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement on
Form S-3 of NCO Group, Inc. of our report dated September 2, 1997, on our audits
of the consolidated financial statements of FCA International Ltd. as of June
30, 1997 and 1996, and for each of the three years in the period ended June 30,
1997, which report is included in the NCO Group, Inc.'s Form 8-K dated March 24,
1998. We also consent to the reference to our firm under the caption "Experts".
/s/ Arthur Andersen & Co.
Montreal, Quebec
August 30, 1999
<PAGE>
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-3 of our report dated May 5,
1998 on the December 31, 1997 MedSource, Inc. financial statements included in
NCO Group, Inc.'s Form 8-K dated May 4, 1998 and to all references to our Firm
included in this Registration Statement on Form S-3.
/s/ Arthur Andersen LLP
Philadelphia, Pa.,
August 30, 1999
<PAGE>
EXHIBIT 23.6
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-3 of our report dated January
29, 1999 on the financial statements of JDR Holdings, Inc. and Subsidiaries for
the year ended December 31, 1998 included in NCO Group, Inc.'s Form 8-K dated
March 31, 1999 and to all references to our Firm included in this Registration
Statement.
/s/ Arthur Andersen LLP
Philadelphia, Pa.,
August 30, 1999
<PAGE>
EXHIBIT 23.7
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and the related prospectus of NCO Group, Inc.
for the registration of 673,659 shares of NCO Group, Inc. common stock and to
the incorporation by reference therein of our report dated April 2, 1999 (except
for Note 12, as to which the date is May 21, 1999), with respect to the
consolidated financial statements of Co-Source Corporation and Subsidiaries
included in Form 8-K/A, dated August 4, 1999, of NCO Group, Inc., filed with the
Securities and Exchange Commission.
/S/ ERNST & YOUNG LLP
New Orleans, Louisiana
August 30, 1999
