1022608--3/16/2006--NCO_GROUP

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{product, market, service}

{system, service, information}

{cost, contract, operation}

{competitive, industry, competition}

{capital, credit, financial}

{tax, income, asset}

{stock, price, share}

{cost, operation, labor}

{regulation, government, change}

{stock, price, operating}

{customer, product, revenue}

{personnel, key, retain}

{operation, international, foreign}

{acquisition, growth, future}

{operation, natural, condition}

{provision, law, control}

{control, financial, internal}

{condition, economic, financial}

Our business is dependent on our ability to grow internally. Implementation of our ERP system could cause business interruptions and negatively affect our profitability and cash flows. If we are not able to respond to technological changes in telecommunications and computer systems in a timely manner, we may not be able to remain competitive. We are highly dependent on our telecommunications and computer systems. An increase in communication rates or a significant interruption in communication service could harm our business. We compete with a large number of providers in the ARM and CRM industries, and other purchasers of consumer debt. This competition could have a materially adverse effect on our future financial results. Many of our clients are concentrated in the financial services, telecommunications, and healthcare sectors. If any of these sectors performs poorly or if there are any adverse trends in these sectors it could materially adversely affect us. We have international operations and utilize foreign sources of labor, and various factors relating to our international operations, including fluctuations in currency exchange rates, could adversely affect our results of operations. Our success depends on our senior management team and if we are not able to retain them, it could have a materially adverse effect on us. We may seek to make strategic acquisitions of companies. Acquisitions involve additional risks that may adversely affect us. We are dependent on our employees and a higher turnover rate would have a material adverse effect on us. The employees at one of our offices voted to join a labor union, which could increase our costs and result in a loss of customers. We may experience variations from quarter to quarter in operating results and net income that could adversely affect the price of our common stock. If we do not achieve the results projected in our public forecasts, it could have a materially adverse effect on the market price of our common stock. Goodwill and other intangible assets represented 53.5 percent of our total assets at December 31, 2005. If the goodwill or the other intangible assets, primarily our customer relationships, are deemed to be impaired, we may need to take a charge to earnings to write-down the goodwill or other intangibles to its fair value. Our stock price has been and is likely to continue to be volatile, which may make it difficult for shareholders to resell common stock when they want to and at prices they find attractive. Most of our outstanding shares are available for resale in the public market without restriction. The sale of a large number of these shares could adversely affect our stock price and could impair our ability to raise capital through the sale of equity securities or make acquisitions for stock. Anti-takeover provisions may make it more difficult for a third party to acquire control of us, even if the change in control would be beneficial to shareholders. If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential shareholders could lose confidence in our financial reporting, which could harm our business and the trading price of our common stock. Terrorist attacks, war and threats of attacks and war may adversely impact our results of operations, revenue and stock price. Risks Related to our ARM Business Decreases in our collections due to economic conditions in the United States may have an adverse effect on our results of operations, revenue and stock price. Most of our ARM contracts do not require clients to place accounts with us, may be terminated on 30 or 60 days notice, and are on a contingent fee basis. We cannot guarantee that existing clients will continue to use our services at historical levels, if at all. If we fail to comply with government regulation of the collections industry, it could result in the suspension or termination of our ability to conduct business. Risks Related to our CRM Business Consumer resistance to outbound services could harm the CRM services industry. Government regulation of the CRM industry and the industries we serve may increase our costs and restrict the operation and growth of our CRM business. The CRM division relies on a few key clients for a significant portion of its revenues. The loss of any of these clients or their failure to pay us could reduce revenues and adversely affect results of operations. A decrease in demand for CRM services in one or more of the industries to which we provide services could reduce revenues and adversely affect results of operations. Risks Related to our Purchased Accounts Receivable Business Collections may not be sufficient to recover the cost of investments in purchased accounts receivable and support operations. We use estimates to report results. If collections on portfolios are materially less than expected, we may be required to record impairment expenses that could have a materially adverse effect on us. We may be adversely affected by possible shortages of available accounts receivable for purchase at favorable prices. We may be unable to compete with other purchasers of past due accounts receivable, which may have an adverse effect on our combined financial results.

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1022608--3/16/2006--NCO_GROUP_INC