-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EkKuBG2saP66fRxLyFtzKSfpPyXYremLjD5WHrdQcj7T78nAVEFHuagWylPR975d cAs2ZW/x1DUQFfCz4DwuaQ== 0001027574-02-000009.txt : 20020416 0001027574-02-000009.hdr.sgml : 20020416 ACCESSION NUMBER: 0001027574-02-000009 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20020415 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OSI PORTFOLIO SERVICES INC CENTRAL INDEX KEY: 0001029715 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT SERVICES [8741] IRS NUMBER: 510369044 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-07 FILM NUMBER: 02611299 BUSINESS ADDRESS: STREET 1: 3300 NORTHEAST EXPRESSWAY STREET 2: BUILDING 1 STE M CITY: ATLANTA STATE: GA ZIP: 30341 BUSINESS PHONE: 7704514862 MAIL ADDRESS: STREET 1: 3300 NORTHEAST EXPRESSWAY STREET 2: BUILDING 1 STE M CITY: ATLANTA STATE: GA ZIP: 30341 FORMER COMPANY: FORMER CONFORMED NAME: ACCOUNT PORTFOLIOS GP INC DATE OF NAME CHANGE: 19961227 FORMER COMPANY: FORMER CONFORMED NAME: ACCOUNT PORTFOLIOS INC /NEW DATE OF NAME CHANGE: 19990816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PAYCO AMERICAN INTERNATIONAL CORP CENTRAL INDEX KEY: 0001029391 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT SERVICES [8741] IRS NUMBER: 953850888 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-22 FILM NUMBER: 02611300 BUSINESS ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145760022 MAIL ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PROFESSIONAL RECOVERIES INC CENTRAL INDEX KEY: 0001029390 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT SERVICES [8741] IRS NUMBER: 953850888 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-21 FILM NUMBER: 02611301 BUSINESS ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145760022 MAIL ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUALINK INC CENTRAL INDEX KEY: 0001029389 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT SERVICES [8741] IRS NUMBER: 953850888 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-20 FILM NUMBER: 02611302 BUSINESS ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145760022 MAIL ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JENNIFER LOOMIS & ASSOCIATES INC CENTRAL INDEX KEY: 0001029387 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT SERVICES [8741] IRS NUMBER: 953850888 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-18 FILM NUMBER: 02611303 BUSINESS ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145760022 MAIL ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GRABLE GREINER & WOLFF INC CENTRAL INDEX KEY: 0001029386 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT SERVICES [8741] IRS NUMBER: 391758997 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-17 FILM NUMBER: 02611304 BUSINESS ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145760022 MAIL ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 FORMER COMPANY: FORMER CONFORMED NAME: FURST & FURST INC DATE OF NAME CHANGE: 19961219 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INDIANA MUTUAL CREDIT ASSOCIATION INC CENTRAL INDEX KEY: 0001029320 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT SERVICES [8741] IRS NUMBER: 391357406 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-16 FILM NUMBER: 02611305 BUSINESS ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145760022 MAIL ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASSET RECOVERY & MANAGEMENT CORP CENTRAL INDEX KEY: 0001029319 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT SERVICES [8741] IRS NUMBER: 391357406 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-15 FILM NUMBER: 02611309 BUSINESS ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145760022 MAIL ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OSI EDUCATION SERVICES INC CENTRAL INDEX KEY: 0001029318 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT SERVICES [8741] IRS NUMBER: 391357406 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-14 FILM NUMBER: 02611310 BUSINESS ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145760022 MAIL ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 FORMER COMPANY: FORMER CONFORMED NAME: UNIVERSITY ACCOUNTING SERVICE INC DATE OF NAME CHANGE: 19961218 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UCO MBA CORP CENTRAL INDEX KEY: 0001058632 IRS NUMBER: 231704744 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-37 FILM NUMBER: 02611291 BUSINESS ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145760022 MAIL ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL CONNECTOR CORP CENTRAL INDEX KEY: 0001058631 IRS NUMBER: 042428227 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-36 FILM NUMBER: 02611292 BUSINESS ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145760022 MAIL ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 FORMER COMPANY: FORMER CONFORMED NAME: GENAD CONNECTOR CORP DATE OF NAME CHANGE: 19980326 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CSN CORP CENTRAL INDEX KEY: 0001058630 IRS NUMBER: 251319485 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-35 FILM NUMBER: 02611293 BUSINESS ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145760022 MAIL ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN RECOVERY CO INC CENTRAL INDEX KEY: 0001058629 IRS NUMBER: 520937211 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-34 FILM NUMBER: 02611294 BUSINESS ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145760022 MAIL ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNION FINANCIAL SERVICES GROUP INC CENTRAL INDEX KEY: 0001058628 IRS NUMBER: 222630947 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-33 FILM NUMBER: 02611295 BUSINESS ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145760022 MAIL ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UCO PROPERTIES INC CENTRAL INDEX KEY: 0001058627 IRS NUMBER: 941728881 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-32 FILM NUMBER: 02611296 BUSINESS ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145760022 MAIL ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRANSWORLD SYSTEMS INC CENTRAL INDEX KEY: 0001058626 IRS NUMBER: 941728881 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-31 FILM NUMBER: 02611297 BUSINESS ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145760022 MAIL ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OSI OUTSOURCING SERVICES INC CENTRAL INDEX KEY: 0001058624 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT SERVICES [8741] IRS NUMBER: 133861550 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-29 FILM NUMBER: 02611298 BUSINESS ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145760022 MAIL ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 FORMER COMPANY: FORMER CONFORMED NAME: INTERACTIVE PERFORMANCE INC DATE OF NAME CHANGE: 19980326 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OSI SUPPORT SERVICES INC CENTRAL INDEX KEY: 0000076741 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-CONSUMER CREDIT REPORTING, COLLECTION AGENCIES [7320] IRS NUMBER: 391133219 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-05589 FILM NUMBER: 02611306 BUSINESS ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145760022 MAIL ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 FORMER COMPANY: FORMER CONFORMED NAME: PAYCO AMERICAN CORP DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTH SHORE AGENCY INC CENTRAL INDEX KEY: 0001067125 IRS NUMBER: 113399772 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-15867-42 FILM NUMBER: 02611307 BUSINESS ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145760022 MAIL ADDRESS: STREET 1: C/O OUTSOURCING SOLUTIONS INC STREET 2: 390 SOUTH WOODS MILL RD STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNION SPECIAL STEEL CASTING CORP CENTRAL INDEX KEY: 0001058633 IRS NUMBER: 251154811 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-15867-38 FILM NUMBER: 02611308 BUSINESS ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145760022 MAIL ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OSI COLLECTION SERVICES INC CENTRAL INDEX KEY: 0001029315 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT SERVICES [8741] IRS NUMBER: 391314048 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-12 FILM NUMBER: 02611311 BUSINESS ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145760022 MAIL ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 FORMER COMPANY: FORMER CONFORMED NAME: PAYCO GENERAL AMERICAN CREDITS INC DATE OF NAME CHANGE: 19961219 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OUTSOURCING SOLUTIONS INC CENTRAL INDEX KEY: 0001027574 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT SERVICES [8741] IRS NUMBER: 582197161 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867 FILM NUMBER: 02611312 BUSINESS ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145760022 MAIL ADDRESS: STREET 1: 390 SOUTH WOODS MILL RD STREET 2: STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNION CORP CENTRAL INDEX KEY: 0000100817 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-CONSUMER CREDIT REPORTING, COLLECTION AGENCIES [7320] IRS NUMBER: 250848970 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 002-27974 FILM NUMBER: 02611313 BUSINESS ADDRESS: STREET 1: C/O OUTSOURCING SOLUTIONS STREET 2: 390 SOUTH WOOD MILL ROAD STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145760022 MAIL ADDRESS: STREET 1: C/O OUTSOURCING SOLUTIONS STREET 2: 390 SOUTH WOODS MILL RD STE 350 CITY: CHESTERFIELD STATE: MO ZIP: 63017 FORMER COMPANY: FORMER CONFORMED NAME: SUPER ELECTRIC PRODUCTS INC DATE OF NAME CHANGE: 19661121 FORMER COMPANY: FORMER CONFORMED NAME: UNION SPRING & MANUFACTURING CO DATE OF NAME CHANGE: 19660921 10-Q/A 1 f10q_amended-093001.txt FORM 10Q AMENDED PERIOD ENDED 093001 WASHINGTON, D.C. 20549 FORM 10-Q/A (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2001 -------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to --------------------- --------------------- Commission File Number 333-16867 ------------- Outsourcing Solutions Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 58-2197161 - --------------------------------- ---------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 390 South Woods Mill Road, Suite 350 Chesterfield, Missouri 63017 - --------------------------------- ---------------------------------- (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code: (314) 576-0022 Indicate by checkmark whether the registrant: (1) has filed all reports required to be filed by Sections 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 (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. Outstanding at Class September 30, 2001 - ----------------------- -------------- Senior common stock 489,795.93 Voting common stock 6,088,479.30 Non-voting common stock 480,321.30 ------------ 7,058,596.53 ============ THE UNDERSIGNED REGISTRANT HEREBY AMENDS, AS AND TO THE EXTENT SET FORTH BELOW, THE FOLLOWING ITEMS AND FINANCIAL STATEMENTS OF ITS QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001 FILED PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934. EXCEPT FOR ITEMS 1 AND 2 OF PART I AND ITEM 3 OF PART II, NO OTHER INFORMATION INCLUDED IN THE ORIGINAL REPORT ON FORM 10-Q IS AMENDED BY THIS AMENDMENT. OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES TABLE OF CONTENTS Part I. Financial Information Page ---- Item 1. Financial Statements (unaudited) Condensed Consolidated Balance Sheets September 30, 2001, as restated and December 31, 2000, as restated............................ 3 Condensed Consolidated Statements of Operations for the three and nine months ended September, 2001, as restated and 2000............... 4 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2001, as restated and 2000.................. 5 Notes to Condensed Consolidated Financial Statements...................................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............ 14 Item 3. Quantitative and Qualitative Disclosures About Market Risk........................................ 21 Part II. Other Information.......................................... 22 OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share and per share amounts) - -------------------------------------------------------------------------------- ASSETS September 30, December 31, 2001 2000 As Restated As Restated (Notes 2 & 10) (Note 2) -------------- ------------ Cash and cash equivalents $ 6,425 $ 10,273 Cash and cash equivalents held for clients 23,479 21,970 Accounts receivable - trade, less allowance for doubtful receivables of $340 and $447 68,654 61,325 Purchased loans and accounts receivable portfolios 20,492 24,690 Property and equipment, net 45,737 46,601 Intangible assets, net 426,065 417,084 Deferred financing costs, less accumulated amortization of $7,857 and $4,538 19,777 22,934 Other assets 38,572 27,770 -------- -------- TOTAL $649,201 $632,647 ======== ======== LIABILITIES AND STOCKHOLDERS' DEFICIT Accounts payable - trade $ 14,371 $ 15,896 Collections due to clients 23,479 21,970 Accrued salaries, wages and benefits 16,326 15,195 Debt 537,198 539,463 Other liabilities 78,919 71,080 Commitments and contingencies (Note 3 and 5) Mandatorily redeemable preferred stock; redemption amount of $135,976 and $123,115 118,244 103,455 Stockholders' deficit: Senior common stock; $.01 par value; authorized 900,000 shares, 489,795.93 issued in 2001 and outstanding 5 - Voting common stock; $.01 par value; authorized 20,000,000 shares, 9,166,728.37 shares issued 92 92 Non-voting common stock; $.01 par value; authorized 2,000,000 shares, 480,321.30 issued and outstanding 5 5 Paid-in capital 223,277 200,537 Accumulated deficit (216,128) (198,372) Accumulated other comprehensive loss (9,799) - -------- -------- (2,548) 2,262 Notes receivable from management for shares sold (1,931) (1,817) Voting common stock in treasury, at cost; 3,078,249.07 shares (134,857) (134,857) -------- -------- Total stockholders' deficit (139,336) (134,412) -------- -------- TOTAL $649,201 $632,647 ======== ======== The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands) - --------------------------------------------------------------------------------
Three Months Ended Nine Months Ended September 30, September 30, ----------------------------- --------------------------- 2001 2001 As Restated As Restated (Notes 2 & 10) 2000 (Notes 2 & 10) 2000 REVENUES $ 152,902 $ 133,871 $ 461,921 $ 404,494 EXPENSES: Salaries and benefits 77,956 66,026 232,846 198,630 Service fees and other operating and administrative expenses 49,282 41,897 144,916 126,908 Amortization of purchased loans and accounts receivable portfolios 4,770 6,591 16,761 21,376 Amortization of goodwill and other intangibles 4,199 3,980 12,412 11,929 Depreciation expense 3,532 3,956 10,839 12,067 Conversion, realignment and relocation expenses - 1,742 - 2,742 --------- --------- --------- --------- Total expenses 139,739 124,192 417,774 373,652 --------- --------- --------- --------- OPERATING INCOME 13,163 9,679 44,147 30,842 INTEREST EXPENSE - Net 16,499 15,377 46,579 44,829 --------- --------- --------- --------- LOSS BEFORE INCOME TAXES (3,336) (5,698) (2,432) (13,987) PROVISION FOR INCOME TAXES 185 65 535 359 --------- --------- --------- --------- NET LOSS (3,521) (5,763) (2,967) (14,346) PREFERRED STOCK DIVIDEND REQUIREMENTS AND ACCRETION OF SENIOR PREFERRED STOCK 5,079 4,497 14,789 13,104 --------- --------- --------- --------- NET LOSS TO COMMON STOCKHOLDERS $ (8,600) $ (10,260) $ (17,756) $ (27,450) ========== ========== ========= =========
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) -------------------------------------------------------------------------------
Nine Months Ended September 30, -------------------------- 2001 As Restated (Notes 2 & 10) 2000 OPERATING ACTIVITIES AND PORTFOLIO PURCHASING: Net loss $ (2,967) $ (14,346) Adjustments to reconcile net loss to net cash from operating activities and portfolio purchasing: Depreciation and amortization 29,132 27,308 Amortization of purchased loans and accounts receivable portfolios 16,761 21,376 Non-cash compensation expense related to variable stock options 741 - Change in assets and liabilities excluding the effects of acquisitions: Purchases of loans and accounts receivable portfolios (12,563) (8,433) Accounts receivable and other assets (14,496) (10,370) Accounts payable, accrued expenses and other liabilities (5,715) 3,957 --------- --------- Net cash from operating activities and portfolio purchasing 10,893 19,492 --------- --------- INVESTING ACTIVITIES: Acquisition of property and equipment (9,493) (13,883) Payment for acquisitions, net of cash acquired (21,653) (15,150) Purchases of loans and accounts receivable portfolios for resale to FINCO (59,722) (70,721) Sales of loans and accounts receivable portfolios to FINCO 59,722 70,721 Other (3,025) (1,361) --------- --------- Net cash used by investing activities (34,171) (30,394) --------- --------- FINANCING ACTIVITIES: Borrowings under revolving credit agreement 242,400 244,350 Repayments under revolving credit agreement (232,700) (227,850) Repayments of debt (12,112) (2,512) Proceeds from issuance of common stock 22,004 401 Proceeds from term loans - 246 Deferred financing fees (162) - ---------- --------- Net cash from financing activities 19,430 14,635 --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,848) 3,733 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 10,273 6,059 --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 6,425 $ 9,792 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during period for interest $ 38,634 $ 32,230 ========= ========= Net cash paid during period for taxes $ 413 $ 241 ========= ========= SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION: Accrued dividends on mandatorily redeemable preferred stock $ 12,861 $ 11,235 ========= ========= Accretion of mandatorily redeemable preferred stock $ 1,928 $ 1,869 ========= ========= Notes receivable for common stock $ - $ 1,400 ========= =========
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (In thousands except for share and per share amounts) - -------------------------------------------------------------------------------- NOTE 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2001 are not necessarily indicative of the results that may be expected for the year ending December 31, 2001. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto contained in the Company's Form 10-K for the year ended December 31, 2000 and with the Company's Form 10-K for the year ended December 31, 2001 (to be filed as soon as practicable). NOTE 2. RESTATEMENT OF FINANCIAL RESULTS During the finalization of the Company's consolidated financial statements as of and for the year ended December 31, 2001, it was determined that the consolidated results reported in the Company's Form 10-K as of and for the year ended December 31, 2000, as well as the unaudited consolidated quarterly results reported in the Company's Report on Form 10-Q for the quarter ended September 30, 2001, would need to be restated for inaccurate financial reporting of certain transactions at one of the Company's subsidiaries, North Shore Agency, Inc. ("NSA"). The Board of Directors authorized the Audit and Compliance Committee (the "Committee") to conduct an independent investigation, with the assistance of special counsel retained by the Committee, to identify the causes of these discrepancies and to make recommendations to ensure similar issues do not recur in the future. The Committee retained Bryan Cave LLP as special counsel, and Bryan Cave LLP engaged an independent accounting firm to assist in the investigation. As a result of the investigation, it was determined that certain assets were overstated (primarily accounts receivable and prepaid postage) and trade accounts payable was understated at NSA due to the inaccurate financial reporting of certain transactions. As a result, the consolidated financial statements as of and for the year ended December 31, 2000, as well as the unaudited consolidated quarterly results as of and for the quarter ended September 30, 2001 have been restated. The consolidated financial statements as of and for the year ended December 31, 2000 have been restated and provided in the Company's Form 10-K for the year ended December 31, 2001 (to be filed as soon as practicable). The restated consolidated financial results as of September 30, 2001 and December 31, 2000 and for the three and nine months ended September 30, 2001 have been included in the consolidated financial statements included herein. For the three and nine months ended September 30, 2001, the previously reported unaudited consolidated financial statements included an understatement of revenues by $1,879 and an understatement of operating expenses by $5,339. The impact of the inaccurate financial reporting of certain transactions on previously reported operating results for the three and nine months ended September 30, 2001 was to overstate operating income by $3,460 and understate net loss and net loss to common stockholders by $3,460. A comparison of previously reported and restated unaudited, condensed consolidated financial statements as of September 30, 2001 and for the three and nine months ended September 30, 2001 are set forth in Note 10 to the unaudited, condensed consolidated financial statements included herein. NOTE 3. LITIGATION From time to time, the Company and certain of its subsidiaries are subject to various investigations, claims and legal proceedings covering a wide range of matters that arise in the normal course of business and are routine to the nature of the Company's businesses. In addition, as a result of the acquisition of The Union Corporation, certain subsidiaries of the Company are a party to several on-going environmental remediation investigations by federal and state governmental agencies and clean-ups and, along with other companies, have been named a "potentially responsible party" for certain waste disposal sites. While the results of litigation cannot be predicted with certainty, the Company has provided for the estimated uninsured amounts and costs to resolve the pending suits and management, in consultation with legal counsel, believes that reserves established for the ultimate resolution of pending matters are adequate at September 30, 2001. NOTE 4. PURCHASED LOANS AND ACCOUNTS RECEIVABLE PORTFOLIOS FINANCING OSI Funding LLC ("FINCO") is a special-purpose finance company with the Company having approximately 29% of the voting rights. An unrelated third party holds the majority voting rights of FINCO and has decision-making authority over FINCO's operations. The Company's investment in FINCO is accounted for under the equity method. FINCO entered into a revolving warehouse financing arrangement (the "Warehouse Facility") for up to $100,000 of funding capacity for the purchase of loans and accounts receivable portfolios over its five year term which expires in October 2003. In connection with the establishment of the Warehouse Facility, FINCO entered into an agreement with a subsidiary of the Company to provide certain administrative and collection services on a contingent fee basis (i.e., fee is based on a percent of amount collected). The Company believes the fee structure agreed to by FINCO is representative of a fee structure that would exist with an unrelated party. The services provided by the Company to FINCO are similar to those provided to unrelated parties. Revenue from FINCO is generally recognized by the Company as collections are received. All borrowings by FINCO under the Warehouse Facility are without recourse to the Company. The following summarizes the transactions between the Company and FINCO for the periods ended September 30: Three Months Ended Nine Months Ended September 30, September 30, ------------------ ------------------- 2001 2000 2001 2000 Sales of purchased loans and accounts receivable portfolios by the Company to FINCO $16,093 $16,415 $59,722 $70,721 Servicing fees paid by FINCO to the Company $ 9,853 $10,319 $30,022 $19,656 Sales of purchased loans and accounts receivable portfolios ("Receivables") by the Company to FINCO were in the same amount and occurred shortly after such portfolios were acquired by the Company from the various unrelated sellers. As such, the Company's Statements of Operations do not include revenues or expenses related to these loans and accounts receivable portfolios. In conjunction with an agreement to provide certain administrative and collection services to FINCO, the Company can achieve a bonus fee if amounts in excess of the original purchase price of a portfolio are recovered. Payment of any bonus is subject to certain collateral and collection sharing requirements as outlined in the agreement. Receivables from FINCO, which are included in other assets in the accompanying condensed consolidated balance sheet, were $15,524 at September 30, 2001 and were $5,612 at December 31, 2000. At September 30, 2001 and December 31, 2000, FINCO had unamortized Receivables of $87,618 and $76,908, respectively. At September 30, 2001 and December 31, 2000, FINCO had outstanding borrowings of $66,706 and $67,636, respectively, under its Warehouse Facility. See Note 11. FINCO's summarized results from operations for the periods ended September 30 are as follows: Three Months Ended Nine Months Ended September 30, September 30, ---------------------- --------------------- 2001 2000 2001 2000 Revenues $24,775 $28,940 $83,965 $55,842 Income from operations 1,999 1,126 6,630 2,989 Net income (loss) 1,156 (55) 3,593 509 NOTE 5: ACQUISITIONS On March 12, 2001, the Company through a newly formed limited liability company, Coast to Coast Consulting, LLC, acquired certain assets and assumed certain liabilities of Coast to Coast Consulting, Inc. ("CCC"), a service company providing highly skilled experts to health care clients to assist with their on-site, back office functions such as billing, collections, special projects and other areas. Total cash consideration for CCC was approximately $16,699 including transaction costs of $150. The acquisition contains a certain contingent payment obligation based on the attainment of a certain financial performance target over the next three years. The future contingent payment obligation, if any, is expected to be accounted for as additional goodwill as the payment is made. On April 30, 2001, the Company through a newly formed limited liability company, Pacific Software Consulting, LLC, acquired (i) certain assets and assumed certain liabilities of Pacific Software Consulting, Inc. ("PSC"), a service company providing highly skilled consultants to banks to assist in their back office functions, and (ii) associated patentable property. Total cash consideration for these acquisitions was approximately $4,954 including transaction costs of $45. In connection with these acquisitions, the Company agreed to certain contingent payment obligations based on the attainment of certain financial performance targets through September 2002. The future contingent payment obligations, if any, are expected to be accounted for as additional goodwill as the payments are made. The above acquisitions were accounted for under the purchase method. The excess of cost over the fair value of net assets of businesses acquired is being amortized on a straight-line basis over 30 years. The purchase price of the acquisitions was financed under the Company's revolving credit facility. Results of operations for the acquired businesses were included in the consolidated financial statements from their respective acquisition dates. NOTE 6: DERIVATIVES AND HEDGING ACTIVITIES The Company is subject to the risk of fluctuating interest rates in the normal course of business. From time to time and as required by the Company's credit agreement, the Company will employ derivative financial instruments as part of its risk management program. The Company's objective is to manage risks and exposures and not to trade such instruments for profit or loss. At September 30, 2001, the Company had interest rate swap and collared swap agreements outstanding in the notional amounts of $75,000 and $225,000, respectively. At December 31, 2000, the Company had interest rate swap and collared swap agreements outstanding in the notional amounts of $50,000 and $150,000, respectively. In September 2001, the Company accelerated the call option of an interest rate swap agreement maturing November 2006 relating to $50,000 nominal amount of its 11.0% senior subordinated notes and entered into a new interest rate swap agreement maturing November 2006 relating to $75,000 nominal amount of its 11.0% senior subordinated notes. Under this agreement, the Company pays floating three month LIBOR plus 5.50%. The financial institution has the right to call the agreement, at its discretion, after May 1, 2003. In addition, the Company entered into an interest rate collared swap agreement maturing November 2006 relating to $75,000 nominal amount of its term debt. Under the agreement, the Company pays floating three month LIBOR, capped at 6.75%, plus the applicable margin as set forth in the credit agreement. In the event, however, the three month LIBOR drops below 2.50% from November 1, 2001 to April 30, 2002, 2.85% from May 1, 2002 to April 30, 2003, or 4.10% from May 1, 2003 to November 1, 2006, the Company would be required to pay 5.50% plus the applicable margin, until such time the three month LIBOR rises above the period floor, at which time the rate returns to a variable rate. On January 1, 2001, the Company implemented Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 137 and SFAS No. 138 (collectively, the Statement). This Statement requires all derivatives to be recognized in the balance sheet at fair value, with changes in that fair value to be recorded in current earnings or deferred in other comprehensive income, depending on whether the derivative instrument qualifies as a hedge and, if so, the nature of the hedging activity. The Company's transition adjustment upon adoption of the Statement required the recording of a liability of $3,691 with an offset of the same amount to accumulated other comprehensive income. As of September 30, 2001, the liability is $12,361 and is included in other liabilities and $9,799 is included in accumulated other comprehensive income (loss). The Company is subject to the risk of fluctuating interest rates in the normal course of business. The Company's interest rate hedges are primarily classified as cash flow hedges. For a cash flow hedge of an anticipated transaction, the ineffective portion of the change in fair value of the derivative is recorded in earnings as incurred, whereas the effective portion is deferred in accumulated other comprehensive income (loss) on the balance sheet until the transaction is realized, at which time any deferred hedging gains or losses are recorded in earnings. During the quarter ended September 30, 2001, the Company recorded, as part of interest expense, a loss of $2,562 due to the hedges' ineffectiveness. For the nine months ended September 30, 2001, the net impact on interest expense is $2,562. NOTE 7: COMPREHENSIVE INCOME (LOSS) The components of total comprehensive income (loss) for the periods ended September 30 are as follows: Three Months Ended Nine Months Ended September 30, September 30, ------------------------- ------------------------ 2001 2001 As Restated As Restated (Notes 2 & 10) 2000 (Notes 2 & 10) 2000 -------------- --------- -------------- --------- Net income (loss) $ (3,521) $ (5,763) $ (2,967) $(14,346) Other comprehensive income item: Net loss on cash flow hedging instruments (3,178) - (9,799) - -------- -------- -------- -------- Total comprehensive income (loss) $ (6,699) $ (5,763) $(12,766) $(14,346) ======== ======== ======== ======== NOTE 8: STOCKHOLDERS' DEFICIT In April 2001, the Company completed a sale of 489,795.93 shares of senior common stock for $24,000 ($22,004 after all related expenses) to a private equity firm and to certain members of its existing private investor group, including Madison Dearborn Capital Partners III, L.P., the Company's majority stockholder. NOTE 9: NEW ACCOUNTING PRONOUNCEMENTS In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141, Business Combinations. SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 and establishes specific criteria for recognition of intangible assets separately from goodwill. For business combinations initiated after June 30, 2001, SFAS No. 141 also requires that unallocated negative goodwill be written off immediately as an extraordinary gain. In addition, SFAS No. 141 requires reclassifying existing intangible assets that have been reported as part of goodwill, and accounting for them separately upon adoption of SFAS No. 142 if certain criteria are met. The adoption of SFAS No. 141 did not have a material impact on the Company's consolidated financial statements as the Company has no negative goodwill or intangible assets that have been reported as part of goodwill. In July 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 142 eliminates the amortization of goodwill and instead requires goodwill to be tested for impairment annually at the reporting unit level. Also, specifically identifiable intangible assets are required to be amortized over their useful lives and reviewed for impairment in accordance with Statement of Financial Accounting Standard No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Under SFAS No. 142, if the intangible asset has an indefinite useful life, it is not amortized until its life is determined to be finite. The Company is required to adopt SFAS No. 142 on January 1, 2002. SFAS No. 142 provides a staggered timeline for completing transitional impairment testing of goodwill and indefinite-lived intangible assets. The Company does not have any indefinite-lived intangible assets. The Company will be required to reassess the useful lives of intangible assets by the end of the first quarter of 2002. The Company will be required to complete the first step of the transitional goodwill impairment by the end of the second quarter of 2002. If this first step indicates transitional goodwill impairment may exist, the second step, which results in a final determination of goodwill impairment, if any, must be completed no later than December 31, 2002. The Company is currently evaluating the impact of SFAS No. 142 on its financial statements. Goodwill, net of amortization, was $426,065 and $417,084 at September 30, 2001 and December 31, 2000, respectively. Goodwill amortization recorded for the quarter and nine months ended September 30, 2001 was $4,199 and $12,412, respectively, compared to $3,980 and $11,929 for the respective periods ended September 30, 2000. However, as previously noted, goodwill amortization will cease as of January 1, 2002. In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets, and is required to be adopted on January 1, 2002. The Company does not expect SFAS No. 144 to have a material impact on the Company's consolidated financial statements upon adoption. NOTE 10: RESTATEMENT As described in Note 2, the September 30, 2001 unaudited condensed consolidated balance sheet and the financial results for the three and nine months ended September 30, 2001 have been restated. A comparison of previously reported and restated condensed consolidated financial statements follows: CONDENSED CONSOLIDATED BALANCE SHEETS September 30, 2001 September 30, As Previously 2001 Reported As Restated ------------- ------------- ASSETS Cash and cash equivalents $ 6,425 $ 6,425 Cash and cash equivalents held for clients 23,479 23,479 Accounts receivable - trade, less allowance for doubtful receivables of $340 74,141 68,654 Purchased loans and accounts receivable portfolios 20,492 20,492 Property and equipment, net 45,737 45,737 Intangible assets, net 426,065 426,065 Deferred financing costs, less accumulated amortization of $7,857 19,777 19,777 Other assets 42,202 38,572 --------- --------- TOTAL $ 658,318 $ 649,201 ========= ========= LIABILITIES AND STOCKHOLDERS' DEFICIT Accounts payable - trade $ 14,371 $ 14,371 Collections due to clients 23,479 23,479 Accrued salaries, wages and benefits 16,326 16,326 Debt 537,198 537,198 Other liabilities 78,919 78,919 Commitments and contingencies Mandatory redeemable preferred stock; redemption amount of $135,976 118,244 118,244 Stockholders' deficit: Senior common stock; $.01 par value; authorized 900,000 shares, 489,795.93 issued in 2001 and outstanding 5 5 Voting common stock; $.01 par value; authorized 20,000,000 shares, 9,166,728.37 shares issued 92 92 Non-voting common stock; $.01 par value; authorized 2,000,000 shares, 480,321.30 issued and outstanding 5 5 Paid-in capital 223,277 223,277 Accumulated deficit (207,011) (216,128) Accumulated other comprehensive loss (9,799) (9,799) --------- --------- 6,569 (2,548) Notes receivable from management for shares sold (1,931) (1,931) Voting common stock in treasury, at cost; 3,078,249.07 shares (134,857) (134,857) --------- --------- Total stockholders' deficit (130,219) (139,336) --------- --------- TOTAL $ 658,318 $ 649,201 ========= ========= CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended Nine Months Ended September 30 September 30 -------------------------- -------------------------- 2001 2001 As 2001 As 2001 Previously As Previously As Reported Restated Reported Restated REVENUES $151,023 $152,902 $460,042 $461,921 EXPENSES Salaries and benefits 77,956 77,956 232,846 232,846 Service fees and other operating and administrative expenses 43,943 49,282 139,577 144,916 Amortization of purchased loans and accounts receivable portfolios 4,770 4,770 16,761 16,761 Amortization of goodwill and other intangibles 4,199 4,199 12,412 12,412 Depreciation expense 3,532 3,532 10,839 10,839 Nonrecurring realignment expenses - - - - -------- -------- -------- -------- Total expenses 134,400 139,739 412,435 417,774 -------- -------- -------- -------- OPERATING INCOME 16,623 13,163 47,607 44,147 INTEREST EXPENSE - Net 16,499 16,499 46,579 46,579 -------- -------- -------- -------- INCOME (LOSS) BEFORE INCOME TAXES 124 (3,336) 1,028 (2,432) PROVISION FOR INCOME TAXES 185 185 535 535 -------- -------- -------- -------- NET INCOME (LOSS) (61) (3,521) 493 (2,967) PREFERRED STOCK DIVIDEND REQUIREMENTS AND ACCRETION OF SENIOR PREFERRED STOCK 5,079 5,079 14,789 14,789 -------- -------- -------- -------- NET LOSS TO COMMON STOCKHOLDERS $ (5,140) $ (8,600) $(14,296) $(17,756) ======== ======== ======== ========
NOTE 11. SUBSEQUENT EVENT - DEBT As a result of the restatement of financial results as discussed in Note 2, the Company breached certain covenants, representations and warranties in each of its bank credit facility (the "Credit Facility") and the Warehouse Facility. In response, the Company and the lenders to the Credit Facility amended the facility effective April 10, 2002. The amendment to the Credit Facility includes provisions that amend the financial covenants, waive certain existing defaults of covenants and breaches in representations and warranties, increase the interest rate on borrowings pursuant to the facility (as discussed below), and, during 2002, reduce the Company's availability under its Credit Facility by $5,000, and limit capital expenditures, investments and acquisitions. In connection with the amendment, the Company also issued 4,150 shares of its Series B Junior Preferred Stock with attached warrants to acquire 42,347 shares of the Company's Senior Common Stock to Madison Dearborn Capital Partners III, L.P. and Madison Dearborn Special Equity III, L.P. for a total purchase price of $4,150. The proceeds of this sale were used to repay the revolving facility in the amount of $2,075 and the balance pro-rata to the Term A and B loans, as provided in the Credit Facility. From April 10, 2002 until such time as the Company delivers to the lenders a compliance certificate for the period ended December 31, 2002, borrowings under the revolving facility and Term A Loan of the Credit Facility will bear interest, at the Company's option, at (a) the lender's prime rate, plus 2.75% or (b) the Eurodollar rate plus 3.75%. Borrowings under the Term B Loan will bear interest, at the Company's option, at (a) the lenders' prime rate plus 3.50% or (b) the Eurodollar rate plus 4.50%. The amortization and maturity were not amended. Following this amendment, the Company is in compliance with the Credit Facility and, subject to the Warehouse Facility issues discussed below, expects to be in compliance throughout 2002. The Company has also received a waiver from the lender under the Warehouse Facility for certain breaches of covenants, representations and warranties with respect to periods through year-end 2001. Since the Company, on an ongoing basis, will continue to be in breach of certain financial covenants, representations and warranties, it has initiated discussions with the lender under the Warehouse Facility for the purpose of seeking to amend such facility to cure such breaches, although there can be no assurance that the Company will be successful in negotiating such an amendment. If the Company is unsuccessful in negotiating such an amendment, notwithstanding the waiver received, the Company may again breach certain covenants, representations and warranties in the Warehouse Facility and there can be no assurances that the lender will extend the waiver to cover such breaches. On an ongoing basis the Company has also been engaged in discussions with certain other providers of similar warehouse facilities. While there can be no assurances, the Company believes that other warehouse facilities would be available on economic terms and in amounts comparable to the company's existing Warehouse Facility which would allow the Company to continue its business of purchasing of loans and accounts receivable. In the event the Company is unable to amend the current Warehouse Facility and it is terminated and the Company is unable to enter a replacement warehouse facility, the Company would be in default of its Credit Facility. Under the indenture governing the 11% Series B Senior Subordinated Notes, the Company is furnishing Note holders with copies of the restated financial results discussed in Note 2 and, therefore, has cured, within any applicable cure period, any default that may have existed as a result of inaccuracies contained in any previously furnished financial information. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Restatement of Financial Results During the finalization of the Company's consolidated financial statements as of and for the year ended December 31, 2001, it was determined that the consolidated results reported in the Company's Form 10-K as of and for the year ended December 31, 2000, as well as the unaudited consolidated quarterly results reported in the Company's Report on Form 10-Q for the quarter ended September 30, 2001, would need to be restated for inaccurate financial reporting of certain transactions at one of the Company's subsidiaries, North Shore Agency, Inc. ("NSA"). The Board of Directors authorized the Audit and Compliance Committee (the "Committee") to conduct an independent investigation, with the assistance of special counsel retained by the Committee, to identify the causes of these discrepancies and to make recommendations to ensure similar issues do not recur in the future. The Committee retained Bryan Cave LLP as special counsel, and Bryan Cave LLP engaged an independent accounting firm to assist in the investigation. As a result of the investigation, it was determined that certain assets were overstated (primarily accounts receivable and prepaid postage) and trade accounts payable was understated at NSA due to the inaccurate financial reporting of certain transactions. As a result, the consolidated financial statements as of and for the year ended December 31, 2000, as well as the unaudited consolidated quarterly results as of and for the quarter ended September 30, 2001 have been restated. The consolidated financial statements as of and for the year ended December 31, 2000 have been restated and provided in the Company's Form 10-K for the year ended December 31, 2001 (to be filed as soon as practicable). The restated consolidated financial results as of September 30, 2001 and December 31, 2000 and for the three and nine months ended September 30, 2001 have been included in the consolidated financial statements included herein. For the three and nine months ended September 30, 2001, the previously reported unaudited consolidated financial statements included an understatement of revenues by approximately $1.9 million and an understatement of operating expenses by approximately $5.3 million. The impact of the inaccurate financial reporting of certain transactions on previously reported operating results for the nine months was to overstate operating income by approximately $3.4 million and understate net loss and net loss to common stockholders by approximately $3.4 million. A comparison of previously reported and restated unaudited, condensed consolidated financial statements as of September 30, 2001 and for the three and nine months ended September 30, 2001 are set forth in Note 10 to the unaudited, condensed consolidated financial statements included herein. Results of Operations Three Months Ended September 30, 2001 (Restated) Compared to Three Months Ended September 30, 2000 - -------------------------------------------------------------------------------- Revenues for the three months ended September 30, 2001 were $152.9 million compared to $133.9 million in the same period last year - an increase of 14.2%. The revenue increase of $19.0 million was due to increased collection and outsourcing services revenues offset partially by lower portfolio services revenues. The collection services revenues increased 4.1% to $88.6 million for the three months ended September 30, 2001 from $85.1 million in 2000. The increased revenues were due primarily to increased collection letter products business offset partially by lower student loan business. Revenues from outsourcing services increased 74.8% to $41.6 million for the three months ended September 30, 2001 from $23.8 million for the comparable period in 2000. The increased outsourcing services revenues of $17.8 million were due primarily to new and increased existing business and the acquisitions of RWC Consulting Group ("RWC"), Coast to Coast Consulting ("CCC") and Pacific Software Consulting ("PSC"). Revenues from portfolio services of $22.7 million compared unfavorably to $25.0 million in 2000 due primarily to the continued negative effect on revenues resulting from the shift to off-balance sheet purchased portfolios and lower strategic sales of portfolios partially offset by increased servicing fees due to increased collections from the increased level of off-balance sheet purchased loans and accounts receivable portfolios during 1999, 2000 and 2001. The Company believes that its revenues and operating income were negatively affected by the terrorist attacks of September 11, 2001. Operating expenses, inclusive of salaries and benefits, service fees and other operating and administrative expenses, were $127.2 million for the three months ended September 30, 2001 and $107.9 million for the comparable period in 2000 - an increase of 17.9%. The increase in these operating expenses resulted primarily from the RWC, CCC and PSC acquisitions, increased postage expense and the increased expenses due to the increased revenues of outsourcing services. For the three months ended September 30, 2001, amortization and depreciation charges of $12.5 million were lower than the $14.5 million for the comparable period in 2000 by $2.0 million. The lower amortization and depreciation charges resulted primarily from lower portfolio amortization as a result of lower strategic sales of portfolios and the shift towards off-balance sheet purchased loans and accounts receivable portfolios. In the three months ended September 30, 2000, the Company incurred nonrecurring conversion, realignment and relocation expenses of $1.7 million which included costs for closure of certain call centers, severance associated with these office closures and certain other one-time costs. Earnings before interest expense, taxes, depreciation and amortization (EBITDA) for the three months ended September 30, 2001 was $25.7 million compared to $24.2 million for the same period in 2000. The increase was primarily attributable to the three acquisitions, the higher outsourcing services revenues and the 2000 nonrecurring charges of $1.7 million offset partially by a change in revenue mix relating to its collection letter products from higher margin contingent fee services to lower margin fixed fee services and higher postage expense. As a result of the above, the Company's operating income of $13.2 million for the three months ended September 30, 2001 compared favorably to $9.7 million for the same period in 2000. Net interest expense for the three months ended September 30, 2001 was $16.5 million compared to $15.4 million for the comparable period in 2000. The increase was due primarily to additional interest expense of $2.6 million as a result of the Company's interest rate hedges' ineffectiveness partially offset by lower interest rates. The provision for income taxes of $0.2 million was provided for certain state and foreign income tax obligations. The net deferred tax assets at September 30, 2001 are fully offset by a valuation allowance. During the three months ended September 30, 2001, the net deferred tax assets and the valuation allowance did not change from the previous quarter. The Company generated a net taxable operating loss for federal and certain state income tax purposes for which a full valuation allowance was provided. Due to the factors stated above, the Company had a net loss for the three months ended September 30, 2001 of $3.5 million which compared favorably to the net loss of $5.8 million for the three months ended September 30, 2000. Nine Months Ended September 30, 2001 (Restated) Compared to Nine Months Ended September 30, 2000 - -------------------------------------------------------------------------------- Revenues for the nine months ended September 30, 2001 were $461.9 million compared to $404.5 million in the same period last year - an increase of 14.2 %. The revenue increase of $57.4 million was primarily due to increased outsourcing services revenues offset partially by lower portfolio services revenues. Revenues from outsourcing services increased 87.6% to $122.9 million for the nine months ended September 30, 2001 from $65.5 million for the comparable period in 2000. The increased outsourcing services revenues of $57.4 million were due primarily to new and increased existing business and the acquisitions of RWC, CCC and PSC. Revenues from portfolio services of $66.1 million compared unfavorably to $68.2 million in 2000 due to the continued negative effect on revenues resulting from the shift to off-balance sheet purchased portfolios and lower strategic portfolio sales partially offset by increased servicing fees due to increased collections from the increased level of off-balance sheet purchased loans and accounts receivable portfolios during 1999, 2000 and 2001. The collection services revenues increased slightly, 0.8%, to $272.9 million for the nine months ended September 30, 2001 from $270.8 million in 2000. The increased revenues were due primarily to increased government and collection letter products business offset by lower bank card, student loan and telecommunications business. The Company believes that its revenues and operating income were negatively affected by the terrorist attacks of September 11, 2001. Operating expenses, inclusive of salaries and benefits, service fees and other operating and administrative expenses, were $377.8 million for the nine months ended September 30, 2001 and $325.5 million for the comparable period in 2000 - an increase of 16.1%. The increase in these operating expenses resulted primarily from the RWC, CCC and PSC acquisitions, higher postage expense and the increased expenses due to the increased revenues of outsourcing services. Operating expenses for the nine months ended September 30, 2001 included non-cash compensation expense related to variable stock options of approximately $0.7 million. Included in operating expenses for the nine months ended September 30, 2000, the Company incurred approximately $0.2 million of additional compensation expense resulting from the redemption of vested stock options. For the nine months ended September 30, 2001, amortization and depreciation charges of $40.0 million were lower than the $45.4 million for the comparable period in 2000 by $5.4 million. The lower amortization and depreciation charges resulted primarily from lower portfolio amortization as a result of the shift towards off-balance sheet purchased loans and accounts receivable portfolios and lower depreciation resulting from lower current year capital expenditures and mix of current and prior years' capital expenditures. In the nine months ended September 30, 2000, the Company incurred nonrecurring conversion, realignment and relocation expenses of $2.7 million which included costs for closure of certain call centers, severance associated with these call centers and certain other one-time costs. Earnings before interest expense, taxes, depreciation and amortization (EBITDA) for the nine months ended September 30, 2001 was $84.2 million compared to $76.2 million for the same period in 2000. The increase was primarily attributable to the three acquisitions, the higher outsourcing services revenues and the 2000 nonrecurring charges of $2.7 million offset partially by higher postage expense. Adding back the non-cash stock compensation expense, EBITDA was $84.9 million for the nine months ended September 30, 2001; this compared favorably to $79.1 million for the same period in 2000 after adding back the nonrecurring charges and the additional compensation expense. As a result of the above, the Company's operating income of $44.1 million for the nine months ended September 30, 2001 compared favorably to $30.8 million for the same period in 2000. Net interest expense for the nine months ended September 30, 2001 was $46.6 million compared to $44.8 million for the comparable period in 2000. The increase was due primarily to additional interest expense of $2.6 million as a result of the Company's interest rate hedges' ineffectiveness offset partially by lower interest rates. The provision for income taxes of $0.5 million was provided for certain state and foreign income tax obligations. The net deferred tax assets at September 30, 2001 are fully offset by a valuation allowance. During the nine months ended September 30, 2001, the net deferred tax assets and the valuation allowance decreased by $0.4 million. The decrease was caused by a reduction of deductible temporary differences that exceeded the taxable net operating loss generated during the current period by $0.4 million. The Company generated a net taxable operating loss for federal and certain state income tax purposes for which a full valuation allowance was provided. Due to the factors stated above, the Company had a net loss for the nine months ended September 30, 2001 of $3.0 million which compared favorably to the net loss of $14.3 million for the nine months ended September 30, 2000. Financial Condition, Liquidity and Capital Resources At September 30, 2001, the Company had cash and cash equivalents of $6.4 million. The Company's credit agreement provides for a $75.0 million revolving credit facility, which allows the Company to borrow for working capital, general corporate purposes and acquisitions, subject to certain conditions. As of September 30, 2001, the Company had $41.7 million outstanding under the revolving credit facility leaving $24.7 million, after outstanding letters of credit, available under the revolving credit facility. In April 2001, the Company completed a sale of $24.0 million of senior common stock to a private equity firm and to certain members of its existing private investor group, including Madison Dearborn Capital Partners III, L.P., the Company's majority stockholder. The net proceeds of $22.0 million from the sale were used to repay debt under the Company's bank credit facility. Since December 31, 2000, cash and cash equivalents decreased $3.8 million primarily due to cash utilized for the CCC and PSC acquisitions of $21.7 million, debt repayments of $12.1 million, an earnout payment of $3.0 million and capital expenditures of $9.5 million offset by cash from operating activities and portfolio purchasing of $10.9 million, borrowings under the revolving credit facility of $9.7 million and net proceeds from the issuance of senior common stock of $22.0 million. The Company also held $23.5 million of cash for clients in restricted trust accounts at September 30, 2001. For the nine months ended September 30, 2000, cash and cash equivalents increased $3.7 million primarily due to cash from operating activities and portfolio purchasing of $19.5 million and net cash from financing activities of $14.6 million, primarily borrowings under the revolving credit facility, offset by the use of cash of $30.4 million primarily for capital expenditures of $13.9 million and $15.2 million for the acquisition of certain assets of RWC. In addition to the cash consideration of $15.2 million, the purchase price included voting common stock worth $2.0 million and a $5.0 million 18% unsecured, subordinated note along with a contingent payment obligation. For the first nine months in 2001, the Company made capital expenditures of $9.5 million primarily for the replacement and upgrading of equipment, expansion of facilities and expansion of the Company's information services systems. The Company anticipates capital spending of approximately $13.8 million during 2001, which the Company intends to fund from cash flow from operations and if necessary, borrowings under the revolving credit facility. As a result of the restatement of financial results as discussed above, the Company breached certain covenants, representations and warranties in each of its bank credit facility (the "Credit Facility") and the Warehouse Facility. In response, the Company and the lenders to the Credit Facility amended the facility effective April 10, 2002. The amendment to the Credit Facility includes provisions that amend the financial covenants, waive certain existing defaults of covenants and breaches in representations and warranties, increase the interest rate on borrowings pursuant to the facility (as discussed below), and, during 2002, reduce the Company's availability under its Credit Facility by $5,000, and limit capital expenditures, investments and acquisitions. In connection with the amendment, the Company also issued 4,150 shares of its Series B Junior Preferred Stock with attached warrants to acquire 42,347 shares of the Company's Senior Common Stock to Madison Dearborn Capital Partners III, L.P. and Madison Dearborn Special Equity III, L.P. for a total purchase price of $4,150. The proceeds of this sale were used to repay the revolving facility in the amount of $2,075 and the balance pro-rata to the Term A and B loans, as provided in the Credit Facility. From April 10, 2002 until such time as the Company delivers to the lenders a compliance certificate for the period ended December 31, 2002, borrowings under the revolving facility and Term A Loan of the Credit Facility will bear interest, at the Company's option, at (a) the lender's prime rate, plus 2.75% or (b) the Eurodollar rate plus 3.75%. Borrowings under the Term B Loan will bear interest, at the Company's option, at (a) the lenders' prime rate plus 3.50% or (b) the Eurodollar rate plus 4.50%. The amortization and maturity were not amended. Following this amendment, the Company is in compliance with the Credit Facility and, subject to the Warehouse Facility issues discussed below, expects to be in compliance throughout 2002. The Company has also received a waiver from the lender under the Warehouse Facility for certain breaches of covenants, representations and warranties with respect to periods through year-end 2001. Since the Company, on an ongoing basis, will continue to be in breach of certain financial covenants, representations and warranties, it has initiated discussions with the lender under the Warehouse Facility for the purpose of seeking to amend such facility to cure such breaches, although there can be no assurance that the Company will be successful in negotiating such an amendment. If the Company is unsuccessful in negotiating such an amendment, notwithstanding the waiver received, the Company may again breach certain covenants, representations and warranties in the Warehouse Facility and there can be no assurance that the lender will extend the waiver to cover such breaches. On an ongoing basis the Company has also been engaged in discussions with certain other providers of similar warehouse facilities. While there can be no assurances, the Company believes that other warehouse facilities would be available on economic terms and in amounts comparable to the company's existing Warehouse Facility which would allow the Company to continue its business of purchasing of loans and accounts receivable. In the event the Company is unable to amend the current Warehouse Facility and it is terminated and the Company is unable to enter a replacement warehouse facility, the Company would be in default of its Credit Facility. Under the indenture governing the 11% Series B Senior Subordinated Notes, the Company is furnishing Note Holders with copies of the restated financial results discussed in Note 2 and, therefore, has cured, within any applicable cure period, any default that may have existed as a result of inaccuracies contained in any previously furnished financial information. Under the indenture governing the 11% Series B Senior Subordinated Notes, the Company is furnishing Note holders with copies of the restated financial results as discussed above and, therefore, has cured within any applicable cure period, any default that may have existed as a result of inaccuracies contained in any previously furnished financial information. Recent Accounting Pronouncements In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141, Business Combinations. SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 and establishes specific criteria for recognition of intangible assets separately from goodwill. For business combinations initiated after June 30, 2001, SFAS No. 141 also requires that unallocated negative goodwill be written off immediately as an extraordinary gain. In addition, SFAS No. 141 requires reclassifying existing intangible assets that have been reported as part of goodwill, and accounting for them separately upon adoption of SFAS No. 142 if certain criteria are met. The adoption of SFAS No. 141 will not have a material impact on the Company's consolidated financial statements as the Company has no negative goodwill or intangible assets that have been reported as part of goodwill. In July 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 142 eliminates the amortization of goodwill and instead requires goodwill to be tested for impairment annually at the reporting unit level. Also, specifically identifiable intangible assets are required to be amortized over their useful lives and reviewed for impairment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Under SFAS No. 142, if the intangible asset has an indefinite useful life, it is not amortized until its life is determined to be finite. The Company is required to adopt SFAS No. 142 on January 1, 2002. SFAS No. 142 provides a staggered timeline for completing transitional impairment testing of goodwill and indefinite-lived intangible assets. The Company does not have any indefinite-lived intangible assets. The Company will be required to reassess the useful lives of intangible assets by the end of the first quarter of 2002. The Company will be required to complete the first step of the transitional goodwill impairment test by the end of the second quarter of 2002. If this first step indicates transitional goodwill impairment may exist, the second step, which results in a final determination of goodwill impairment, if any, must be completed no later than December 31, 2002. The Company is currently evaluating the impact of SFAS No. 142 on its financial statements. Goodwill, net of amortization, was $426.1 million and $417.1 million at September 30, 2001 and December 31, 2000, respectively. Goodwill amortization recorded for the quarter and nine months ended September 30, 2001 was $4.2 million and $12.4 million, respectively, and $4.0 million and $11.9 million for the respective periods ended September 30, 2000. However, as previously noted, goodwill amortization will cease as of January 1, 2002. In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets, and as required, was adopted, by the Company on January 1, 2002. The Company does not expect SFAS No. 144 to have a material impact on the Company's consolidated financial statements. Forward-Looking Statements The following statements in this entire document are or may constitute forward-looking statements made in reliance upon the safe harbor of the Private Securities Litigation Reform Act of 1995: (1) statements concerning the anticipated costs and outcome of legal proceedings and environmental liabilities, (2) statements regarding anticipated changes in the accounts receivable management industry, including but not limited to debt levels, delinquencies, industry consolidation, customer consolidation and outsourcing trends, (3) statements regarding anticipated changes in the Company's opportunities in its industry, including but not limited to acquisitions, (4) statements regarding the Company's plans to reduce costs and improve operational efficiencies, (5) statements regarding the Company's ability to fund its future operating expenses and meet its debt service requirements as they become due, (6) statements regarding the Company's expected capital expenditures and facilities, (7) any statements preceded by, followed by or that include the word "believes," "expects," "anticipates," "plans", "intends," "should," "may," or similar expressions; and (8) other statements contained or incorporated by reference in this document regarding matters that are not historical facts. Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to: (1) the demand for the Company's services, (2) the demand for accounts receivable management and the availability of portfolios to purchase generally, (3) general economic conditions, (4) changes in interest rates, (5) competition, including but not limited to pricing pressures, (6) changes in governmental regulations including, but not limited to the federal Fair Debt Collection Practices Act and comparable state statutes, (7) legal proceedings, (8) environmental investigations and clean up efforts, (9) expected synergies, economies of scale and cost savings from recent acquisitions by the Company not being fully realized or realized within the expected time frames, (10) costs of operational difficulties, including but not limited to those related to integrating the operations of recently acquired companies with the Company's operations being greater than expected, (11) unanticipated realignment costs, (12) the Company's ability to generate cash flow or obtain financing to fund its operations, service its indebtedness and continue its growth and expand successfully into new markets and services either through acquisitions or internal growth, (13) the Company's ability to amend its Warehouse Facility to cure breaches and defaults thereunder or to obtain replacements thereof on acceptable economic terms, (14) changes in circumstances or the effects of new accounting standards which may require the Company to consolidate FINCO into its financial statements, and (15) factors discussed from time to time in the Company's public filings. These forward-looking statements speak only as of the date they were made. These cautionary statements should be considered in connection with any written or oral forward-looking statements that the Company may issue in the future. The Company does not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect later events or circumstances or to reflect the occurrence of unanticipated events. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is subject to the risk of fluctuating interest rates in the normal course of business. From time to time and as required by the Company's credit agreement, the Company will employ derivative financial instruments as part of its risk management program. The Company's objective is to manage risks and exposures and not to trade such instruments for profit or loss. At December 31, 2000 (the most recent completed fiscal year), the Company had interest rate swap and collared swap agreements outstanding. In September 2001, the Company accelerated the call option of an interest rate swap agreement maturing November 2006 relating to $50.0 million nominal amount of its 11.0% senior subordinated notes and entered into a new interest rate swap agreement maturing November 2006 relating to $75.0 million nominal amount of its 11.0% senior subordinated notes. Under this agreement, the Company pays floating three month LIBOR plus 5.50% . The financial institution has the right to call the agreement, at its discretion, after May 1, 2003. In addition, the Company entered into an interest rate collared swap agreement maturing November 2006 relating to $75.0 million nominal amount of its term debt. Under the agreement, the Company pays floating three month LIBOR, capped at 6.75%, plus the applicable margin as set forth in the credit agreement. In the event, however, the three month LIBOR drops below 2.50% from November 1, 2001 to April 30, 2002, 2.85% from May 1, 2002 to April 30, 2003, or 4.10% from May 1, 2003 to November 1, 2006, the Company would be required to pay 5.50% plus the applicable margin, until such time the three month LIBOR rises above the period floor, at which time the rate returns to a variable rate. PART II. OTHER INFORMATION Item 1. Legal Proceedings From time to time, the Company and certain of its subsidiaries are involved in various investigations, claims and legal proceedings covering a wide range of matters that arise in the normal course of business and are routine to the nature of the Company's business. Other information with respect to legal proceedings appears in the Company's Annual Report on Form 10-K for the year ended December 31, 2000. Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities See Note 11 of the Condensed Consolidated Financial Statements included herein. Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a). Exhibits None (b). Reports on Form 8-K There were no reports on Form 8-K filed for the three-month period ended September 30, 2001. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. OUTSOURCING SOLUTIONS INC. (Registrant) /s/ Timothy G. Beffa ------------------------------------- Timothy G. Beffa President and Chief Executive Officer /s/ Gary L. Weller ------------------------------------- Gary L. Weller Executive Vice President and Chief Financial Officer Date: April 15, 2002 -----END PRIVACY-ENHANCED MESSAGE-----