-----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, UL+rsDQxQbCyCo2sSIYD8OeezueNnexWqJ2k2175GqwXAMNVKfKw08IjR14u1KRE cT+amhiSr3dYlz3XobG0Dw== 0001027574-02-000019.txt : 20020813 0001027574-02-000019.hdr.sgml : 20020813 20020813115140 ACCESSION NUMBER: 0001027574-02-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020813 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 SEC ACT: 1934 Act SEC FILE NUMBER: 000-05589 FILM NUMBER: 02728477 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: GENERAL CONNECTOR CORP CENTRAL INDEX KEY: 0001058631 IRS NUMBER: 042428227 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-36 FILM NUMBER: 02728481 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: 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 SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-34 FILM NUMBER: 02728483 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 SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-33 FILM NUMBER: 02728484 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 SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-21 FILM NUMBER: 02728490 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 SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-14 FILM NUMBER: 02728496 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: 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 SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-20 FILM NUMBER: 02728491 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: 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 SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-16 FILM NUMBER: 02728494 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 SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-15 FILM NUMBER: 02728495 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 SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-12 FILM NUMBER: 02728497 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: UCO MBA CORP CENTRAL INDEX KEY: 0001058632 IRS NUMBER: 231704744 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-37 FILM NUMBER: 02728480 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: CSN CORP CENTRAL INDEX KEY: 0001058630 IRS NUMBER: 251319485 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-35 FILM NUMBER: 02728482 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 SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-32 FILM NUMBER: 02728485 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 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 SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-07 FILM NUMBER: 02728488 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: 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 SEC ACT: 1934 Act SEC FILE NUMBER: 333-15867-38 FILM NUMBER: 02728479 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: 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 SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867 FILM NUMBER: 02728498 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 SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-18 FILM NUMBER: 02728492 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 SEC ACT: 1934 Act SEC FILE NUMBER: 002-27974 FILM NUMBER: 02728499 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: UNION SPRING & MANUFACTURING CO DATE OF NAME CHANGE: 19660921 FORMER COMPANY: FORMER CONFORMED NAME: SUPER ELECTRIC PRODUCTS INC DATE OF NAME CHANGE: 19661121 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 SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-29 FILM NUMBER: 02728487 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: TRANSWORLD SYSTEMS INC CENTRAL INDEX KEY: 0001058626 IRS NUMBER: 941728881 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-31 FILM NUMBER: 02728486 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: 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 SEC ACT: 1934 Act SEC FILE NUMBER: 333-15867-42 FILM NUMBER: 02728478 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: 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 SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-17 FILM NUMBER: 02728493 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: 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 SEC ACT: 1934 Act SEC FILE NUMBER: 333-16867-22 FILM NUMBER: 02728489 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 10-Q 1 f10q_063002.txt 2ND QUARTER FILING SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2002 -------------------------------- 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 issuers classes of common stock as of the latest practicable date. Outstanding at Class June 30, 2002 - ----------------------- -------------- Senior common stock 489,795.93 Voting common stock 6,129,295.63 Non-voting common stock 480,321.30 ------------ 7,099,412.86 ============ PAGE 2 OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES TABLE OF CONTENTS Part I. Financial Information Page ---- Item 1. Financial Statements (unaudited) Condensed Consolidated Balance Sheets June 30, 2002 and December 31, 2001.............................. 3 Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2002 and 2001............ 4 Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2002 and 2001...................... 5 Notes to Condensed Consolidated Financial Statements............. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........................................ 12 Item 3. Quantitative and Qualitative Disclosures About Market Risk....... 18 Part II. Other Information................................................ 19 PAGE 3 OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share and per share amounts) - -------------------------------------------------------------------------------- ASSETS June 30, December 31, 2002 2001 ----------- ------------ Cash and cash equivalents $10,587 $ 9,535 Cash and cash equivalents held for clients 24,986 25,920 Accounts receivable - trade, less allowance for doubtful receivables of $1,034 and $1,080 72,402 60,100 Purchased loans and accounts receivable portfolios 17,049 17,477 Property and equipment, net 46,188 46,952 Goodwill, less accumulated amortization of $70,824 422,064 421,871 Deferred financing costs, less accumulated amortization of $11,493 and $8,844 19,915 18,665 Other assets 34,996 39,690 -------- -------- TOTAL $648,187 $640,210 ======== ======== LIABILITIES AND STOCKHOLDERS' DEFICIT Accounts payable - trade $19,257 $16,192 Collections due to clients 24,986 25,920 Accrued salaries, wages and benefits 16,161 13,325 Debt 530,877 539,020 Other liabilities 74,992 76,346 Commitments and contingencies (Notes 2 and 9) Mandatorily redeemable preferred stock; redemption amount of $157,528 and $140,560 141,773 123,482 Stockholders' deficit: Senior common stock; $.01 par value; authorized 900,000 shares, 489,795.93 issued and outstanding 5 5 Voting common stock; $.01 par value; authorized 20,000,000 shares, 9,207,544.70 and 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 225,277 223,277 Accumulated deficit (241,832) (231,754) Accumulated other comprehensive loss (6,530) (8,883) Notes receivable from management for shares sold (2,019) (1,960) Voting common stock in treasury, at cost; 3,078,249.07 shares (134,857) (134,857) -------- -------- Total stockholders' deficit (159,859) (154,075) -------- -------- TOTAL $648,187 $640,210 ======== ======== The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. PAGE 4 OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands) - -------------------------------------------------------------------------------- Three Months Ended Six Months Ended June 30, June 30, -------------------- -------------------- 2002 2001 2002 2001 REVENUES $156,426 $157,433 $317,524 $309,019 EXPENSES: Salaries and benefits 75,356 75,859 153,479 150,183 Service fees and other operating and administrative expenses 53,719 52,722 107,781 100,341 Amortization of purchased loans and accounts receivable portfolios 8,956 5,012 17,065 11,991 Amortization of goodwill - 4,161 - 8,213 Depreciation expense 3,987 3,605 7,879 7,307 Conversion, realignment and relocation expenses - - 2,500 - -------- -------- -------- -------- Total expenses 142,018 141,359 288,704 278,035 -------- -------- -------- -------- OPERATING INCOME 14,408 16,074 28,820 30,984 INTEREST EXPENSE - Net 15,410 13,819 27,232 30,080 -------- -------- -------- -------- INCOME (LOSS) BEFORE INCOME TAXES (1,002) 2,255 1,588 904 PROVISION FOR INCOME TAXES 200 175 375 350 -------- -------- -------- -------- NET INCOME (LOSS) (1,202) 2,080 1,213 554 PREFERRED STOCK DIVIDEND REQUIREMENTS AND ACCRETION OF SENIOR PREFERRED STOCK 5,887 4,928 11,291 9,710 -------- -------- -------- -------- NET LOSS TO COMMON STOCKHOLDERS $(7,089) $(2,848) $(10,078) $(9,156) ======== ======== ======== ======== The accompanying notes are an integral part of the unaudited condensed consolidated financial statements. PAGE 5 OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) - -------------------------------------------------------------------------------- Six Months Ended June 30, ----------------------- 2002 2001 OPERATING ACTIVITIES AND PORTFOLIO PURCHASING: Net income $ 1,213 $ 554 Adjustments to reconcile net income to net cash from operating activities and portfolio purchasing: Depreciation and amortization 12,251 17,727 Amortization of purchased loans and accounts receivable portfolios 17,065 11,991 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 (16,637) (6,691) Accounts receivable and other assets (8,031) (11,572) Accounts payable, accrued expenses and other liabilities 4,765 (1,943) -------- -------- Net cash from operating activities and portfolio purchasing 10,626 10,807 -------- -------- INVESTING ACTIVITIES: Acquisition of property and equipment (4,439) (5,657) Payment for acquisitions, net of cash acquired - (21,254) Purchases of loans and accounts receivable portfolios for resale to FINCO - (43,629) Sales of loans and accounts receivable portfolios to FINCO - 43,629 Other 15 (3,025) -------- -------- Net cash used by investing activities (4,424) (29,936) -------- -------- FINANCING ACTIVITIES: Borrowings under revolving credit agreement 70,300 160,800 Repayments under revolving credit agreement (66,300) (160,400) Repayments of debt (12,376) (5,126) Proceeds from issuance of preferred and common stock 7,000 22,004 Deferred financing fees (3,774) (162) -------- -------- Net cash from financing activities (5,150) 17,116 -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,052 (2,013) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 9,535 10,273 -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 10,587 $ 8,260 ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during period for interest $ 22,693 $ 28,647 ======== ======== Net cash paid during period for taxes $ 355 $ 321 ======== ======== SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION: Accrued dividends on mandatorily redeemable preferred stock $ 9,968 $ 8,430 ======== ======== Accretion of mandatorily redeemable preferred stock $ 1,323 $ 1,280 ======== ======== Capital lease obligations incurred for the purchase of equipment $ 323 $ - ======== ======== Issuance of voting common stock for the purchase of equipment $ 2,000 $ - ======== ======== 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 six months ended June 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. 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, 2001. NOTE 2. 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 in a prior year 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 June 30, 2002. NOTE 3. 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, principally bankcard receivables, 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 June 30: Three Months Ended Six Months Ended June 30, June 30, ------------------ ------------------ 2002 2001 2002 2001 Sales of purchased loans and accounts receivable portfolios by the Company to FINCO $ - $27,007 $ - $43,629 Servicing fees paid by FINCO to the Company $ 7,569 $ 9,170 $16,276 $20,169 Sales of purchased loans and accounts receivable portfolios ("Receivables") by the Company to FINCO, when such Receivables are financed by the Warehouse Facility, 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 $12,468 at June 30, 2002 and $17,014 at December 31, 2001. At June 30, 2002 and December 31, 2001, FINCO had unamortized Receivables of $45,212 and $75,921, respectively. At June 30, 2002 and December 31, 2001, FINCO had outstanding borrowings of $40,761 and $66,391, respectively, under its Warehouse Facility. See Note 11. FINCO's summarized results from operations for the periods ended June 30 are as follows: Three Months Ended Six Months Ended June 30, June 30, ------------------ ------------------ 2002 2001 2002 2001 Revenues $22,062 $32,220 $50,797 $59,190 Income from operations 2,250 3,009 4,190 4,631 Net income 1,874 1,977 3,343 2,437 NOTE 4. DERIVATIVES AND HEDGING ACTIVITIES 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 quarters ended June 30, 2002 and 2001, the Company recorded, as part of interest expense, a loss of $2,220 and a gain of $518, respectively, due to the impact of the interest rate hedges. For the six months ended June 30, 2002 and 2001, the net impact on interest expense was an increase of $1,848 and zero, respectively, as a result of the interest rate hedges. At June 30, 2002 and December 31, 2001, the related liability (included in other liabilities) is $11,429 and $11,934, respectively. At June 30, 2002 and December 31, 2001, the amount included in accumulated other comprehensive income (loss) is $6,530 and $8,883, respectively. NOTE 5. COMPREHENSIVE INCOME (LOSS) The components of total comprehensive income (loss) for the periods ended June 30 are as follows: Three Months Ended Six Months Ended June 30, June 30, ------------------- ------------------- 2002 2001 2002 2001 Net income (loss) $(1,202) $ 2,080 $ 1,213 $ 554 Other comprehensive income item: Net income (loss) on cash flow hedging instruments 105 (83) 2,353 (6,621) ------- ------- ------- ------- Total comprehensive income (loss) $(1,097) $ 1,997 $ 3,566 $(6,067) ======= ======= ======= ======= NOTE 6. CONVERSION, REALIGNMENT AND RELOCATION EXPENSES For the six months ended June 30, 2002, the Company incurred $2,500 of nonrecurring consolidation, realignment and relocation expenses. These expenses include costs resulting from closure of certain call centers, severance associated with these office closures, severance as a result of cost reductions and certain other one-time costs including certain investigative costs resulting from the inaccurate financial reporting of certain transactions during and prior to 2001 at one of the Company's subsidiaries, North Shore Agency, Inc. See further discussion in the Company's Annual Report on Form 10-K for the year ended December 31, 2001. Accrued costs at June 30, 2002 were $930, all of which should be substantially settled during 2002. NOTE 7. GOODWILL On January 1, 2002, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets. SFAS No. 142 eliminates the amortization of goodwill and instead requires goodwill be tested for impairment at least annually. Intangible assets deemed to have an indefinite life under SFAS No. 142 are no longer amortized, but instead are reviewed at least annually for impairment. Intangible assets with finite lives are amortized over their useful life. As required by SFAS No. 142, the results prior to 2002 were not restated in the condensed consolidated statements of operations. A reconciliation between net income (loss) reported by the Company and the net income (loss) as adjusted to reflect the impact of SFAS No. 142 for the periods ended June 30 is as follows: Three Months Ended Six Months Ended June 30, June 30, -------------------- ------------------- 2002 2001 2002 2001 Net income (loss), as reported $(1,202) $ 2,080 $ 1,213 $ 554 Goodwill amortization - 4,161 - 8,213 ------- ------- ------- ------- Adjusted net income (loss) $(1,202) $ 6,241 $ 1,213 $ 8,767 ======= ======= ======= ======= The provisions of SFAS No. 142 also require the completion of the first step of the transitional goodwill impairment by June 30, 2002. The Company completed the transitional impairment test of goodwill and determined that there was no goodwill impairment. NOTE 8. SEGMENT INFORMATION The Company has three reportable segments, Outsourcing Services, Portfolio Services and Recovery Services. The Outsourcing Services segment provides services such as contract management of accounts receivable, billing and teleservicing services, letter series programs and banking and financial services transaction processing. Portfolio Services involve acquiring portfolios of charged-off consumer receivables from credit grantors or other owners, servicing such portfolios and retaining all amounts collected and servicing customer owned portfolios for an agreed upon servicing fee. The Recovery Services segment collects delinquent or charged-off consumer accounts for a fixed percentage of realized collections or a fixed fee per account. The Company derives substantially all of its revenues from domestic customers. The chief operating decision maker evaluates performance of the segments based on Adjusted Operating Earnings (operating income before depreciation, amortization, corporate and shared expenses and conversion, realignment and relocation expenses, but after amortization of purchased loans and accounts receivable portfolios). Adjusted Operating Earnings includes only the costs directly attributable to the operations of the individual segment. Eliminations represent intercompany revenue. Assets are not identified by the individual segments and, therefore, are not reported by segment. The following table presents certain data by business segment for the periods ended June 30: Three Months Ended Six Months Ended June 30, June 30, --------------------- -------------------- 2002 2001 2002 2001 Revenues - -------- Outsourcing services $ 87,189 $ 88,339 $177,554 $168,842 Portfolio purchasing services 23,783 23,185 49,215 46,587 Recovery services 50,247 51,397 101,623 104,299 Eliminations (4,793) (5,488) (10,868) (10,709) -------- -------- -------- -------- Total revenues $156,426 $157,433 $317,524 $309,019 ======== ======== ======== ======== Adjusted Operating Earnings - --------------------------- Outsourcing services $ 12,443 $ 14,728 $ 25,287 $ 28,147 Portfolio purchasing services 964 5,993 3,183 9,870 Recovery services 12,621 11,616 26,441 24,801 -------- -------- -------- -------- Total adjusted operating earnings $ 26,028 $ 32,337 $ 54,911 $ 62,818 ======== ======== ======== ======== NOTE 9. COMMITMENTS AND CONTINGENCIES From time to time, the Company enters into servicing agreements with companies which service loans for others. The servicers handle the collection efforts on certain nonperforming loans and accounts receivable on the Company's behalf. Payments to the servicers vary depending on the servicing contract. Current contracts expire on the anniversary date of such contracts but are automatically renewable at the option of the Company. A subsidiary of the Company has several portfolio flow purchase agreements, whereby the subsidiary has a monthly commitment to purchase nonperforming loans meeting certain criteria for an agreed upon price subject to due diligence. The duration of these agreements do not extend beyond one year. The purchases under the portfolio flow purchase agreements were $9,445 and $1,713, which excludes amounts purchased and subsequently sold to FINCO (see Note 3), for the six months ended June 30, 2002 and 2001, respectively. NOTE 10. MANDATORILY REDEEMABLE PREFERRED STOCK In April 2002, the Company completed a sale of $7,000 of Series B junior preferred stock to certain members of its existing investor group, including Madison Dearborn Capital Partners III, L.P., the Company's majority stockholder. NOTE 11. AMENDMENT TO CREDIT AND WAREHOUSE FACILITIES During the finalization of the Company's consolidated financial statements as of and for the year ended December 31, 2001, the Company identified 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. Consequently, the Company breached certain covenants, representations and warranties of its bank credit facility (the "Credit Facility") and Warehouse Facility. The Company and the lenders to the Credit Facility amended the facility effective April 10, 2002. The amendment to the Credit Facility included provisions that amended the financial covenants, waived certain defaults of covenants and breaches in representations and warranties, increased the interest rate on borrowings pursuant to the facility (as discussed below), and, during 2002, reduced the Company's availability under its Credit Facility by $5,000, and limited capital expenditures, investments and acquisitions. In connection with the amendment, the Company also issued 7,000 shares of its Series B Junior Preferred Stock with attached warrants to acquire 71,429 shares of the Company's Senior Common Stock to certain members of its existing investor group, including Madison Dearborn Capital Partners III, L.P. and Madison Dearborn Special Equity III, L.P. for a total purchase price of $7,000. The proceeds of this sale were used to repay the Revolving Facility in the amount of $3,500 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 at (b) the Eurodollar rate plus 3.75%. Borrowings under the Term B Loan will bear interest, at the Company's option, at (a) the lender's 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, both of which were subsquently amended as discussed below. The Company, FINCO and the lenders to the Warehouse Facility amended the facility effective July 8, 2002. The amendment includes provisions that amend the financial covenants and waive prior covenant defaults and any existing Wind-Down Events, as defined in the Warehouse Facility. In addition, the amendment also places certain limitations on bonus fee payments which can be paid to OSI and its affiliates. NOTE 12: NEW ACCOUNTING PRONOUNCEMENTS In April 2002, the Financial Accounting Standards Board ("FASB") issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. SFAS No. 145 updates, clarifies and simplifies existing accounting pronouncements. Generally, the provisions apply for transactions occurring after May 15, 2002. The Company determined that the adoption of SFAS No. 145 will not have a material effect on its financial statements. The FASB issued SFAS No. 146, Accounting for Exit or Disposal Activities. SFAS No. 146 provides direction for accounting and disclosure regarding specific costs related to an exit or disposal activity. These include, but are not limited to, costs to terminate a contract that is not a capital lease, costs to consolidate facilities or relocate employees, and certain termination benefits provided to employees that are involuntarily terminated under the terms of a one-time benefit arrangement. The Company is required to adopt SFAS No. 146 for any disposal activities initiated after December 31, 2002, although early adoption is allowed. The Company is currently reviewing the impact of the adoption of SFAS No. 146 on its financial statements. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For discussion of the Company's critical accounting policies, see the Company's Annual Report on Form 10-K for the year ended December 31, 2001. Results of Operations - --------------------- Three Months Ended June 30, 2002 Compared to Three Months Ended June 30, 2001 - ----------------------------------------------------------------------------- Consolidated revenues for the three months ended June 30, 2002 were $156.4 million, a decrease of $1.0 million or 0.6% from $157.4 million for the three months ended June 30, 2001. Revenues by segment prior to the elimination of intercompany revenues are as follows (in millions): Three Months Ended ---------------------------------- June 30, 2002 June 30, 2001 -------------- -------------- Outsourcing services $ 87.2 $ 88.3 Portfolio purchasing services 23.8 23.2 Recovery services 50.2 51.4 Eliminations (4.8) (5.5) ------- ------- $ 156.4 $ 157.4 ======= ======= Outsourcing services' revenues of $87.2 million for the three months ended June 30, 2002 decreased $1.1 million, or 1.2%, from $88.3 million in 2001. The lower revenues resulted primarily from lower collection letter products business and back office services revenue offset partially by increased financial services business. Revenues from the Company's portfolio purchasing segment were up $0.6 million, or 2.6%, to $23.8 million for the three months ended June 30, 2002 from $23.2 million in 2001. The increased revenue was primarily attributable to higher strategic sales of purchased portfolios offset partially by lower servicing fee revenue resulting from lower portfolio purchasing by FINCO. Recovery services' revenues decreased by 2.3% for the three months ended June 30, 2002 on revenue of $50.2 million compared to $51.4 million in 2001 primarily as a result of lower student loan, financial services and telecommunications revenue offset by increased bank card and government revenue. Consolidated operating expenses, inclusive of salaries and benefits, service fees and other operating and administrative expenses, were $129.1 million for the three months ended June 30, 2002 compared to $128.6 million in 2001, a slight increase of 0.4%. The increase in these operating expenses resulted primarily from increased collection-related expenses and postage and supplies expenses in the letter products business. Operating expenses for the three months ended June 30, 2001 included non-cash compensation expense related to variable stock options of approximately $0.7 million. For the three months ended June 30, 2002, amortization and depreciation charges of $12.9 million were higher than the $12.8 million for the comparable period in 2001. The higher amortization and depreciation charges were due primarily to higher amortization of purchased loans and accounts receivable portfolios due to higher strategic sales of purchased portfolios and higher depreciation resulting from current and prior years' capital expenditures offset by the cessation of goodwill amortization which approximated $4.2 million in 2001. Outsourcing services' operating income before depreciation, amortization, corporate and shared expenses and conversion, realignment and relocation expenses but after amortization of purchased loans and accounts receivable portfolios ("Adjusted Operating Earnings") was $12.4 million for the three months ended June 30, 2002 compared to $14.7 million in 2001. The 15.6% decrease primarily resulted from lower collection letter products business and back office services revenue and higher postage expense offset partially by increased financial services business. Adjusted Operating Earnings for portfolio purchasing services was $1.0 million for the three months ended June 30, 2002 compared to $6.0 million in 2001. The decrease of $5.0 million was primarily attributable to the increased amortization of purchased loans and accounts receivable portfolios as a result of the higher strategic sales of purchased portfolios and lower servicing fee revenue. Recovery services' Adjusted Operating Earnings of $12.6 million for the three months ended June 30, 2002 compared favorably to prior year of $11.6 million. The favorable variance was primarily due to increased revenues and improved margins in the bank card and government industry groups offset partially by the lower student loan and telecommunications revenue. The Company's earnings before interest expense, taxes, depreciation and amortization ("EBITDA") for the three months ended June 30, 2002 was $27.4 million compared to $28.9 million for the same period in 2001. The decrease was primarily attributable to the lower outsourcing services' Adjusted Operating Earnings of $2.3 million offset partially by the higher recovery services' Adjusted Operating Earnings of $1.0 million. As a result of the above, the Company's operating income of $14.4 million for the three months ended June 30, 2002 compared unfavorably to $16.1 million for the same period in 2001. Net interest expense for the three months ended June 30, 2002 was $15.4 million compared to $13.8 million for the comparable period in 2001. The increase was due primarily to the unfavorable non-cash impact of the Company's interest rate hedges of $2.7 million offset partially 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 June 30, 2002 are fully offset by a valuation allowance. 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 June 30, 2002 of $1.2 million which compared unfavorably to the net income of $2.1 million for the three months ended June 30, 2001. Six Months Ended June 30, 2002 Compared to Six Months Ended June 30, 2001 - ------------------------------------------------------------------------- Consolidated revenues for the six months ended June 30, 2002 were $317.5 million, an increase of $8.5 million or 2.8% from $309.0 million for the six months ended June 30, 2001. Revenues by segment prior to the elimination of intercompany revenues are as follows (in millions): Six Months Ended ----------------------------------- June 30, 2002 June 30, 2001 --------------- --------------- Outsourcing services $ 177.6 $ 168.8 Portfolio purchasing services 49.2 46.6 Recovery services 101.6 104.3 Eliminations (10.9) (10.7) -------- -------- $ 317.5 $ 309.0 ======== ======== Outsourcing services' revenues of $177.6 million for the six months ended June 30, 2002 increased 5.2% from $168.8 million in 2001. The higher revenues resulted primarily from new business, increased financial services business and the effects of the acquisition of Coast to Coast Consulting ("CCC") which was acquired mid-March 2001 offset partially by lower back office services revenue. Revenues from the Company's portfolio purchasing segment were up $2.6 million, or 5.6%, to $49.2 million for the six months ended June 30, 2002 from $46.6 million in 2001. The increased revenue was primarily attributable to higher strategic sales of purchased portfolios offset partially by lower servicing fee revenue resulting from lower portfolio purchasing by FINCO. Recovery services' revenues decreased by 2.6% for the six months ended June 30, 2002 on revenue of $101.6 million compared to $104.3 million in 2001 primarily as a result of lower student loan, financial services and telecommunications revenue offset partially by increased bank card and government revenue. Consolidated operating expenses, inclusive of salaries and benefits, service fees and other operating and administrative expenses, were $261.3 million for the six months ended June 30, 2002 compared to $250.5 million in 2001, an increase of 4.3%. The increase in these operating expenses resulted primarily from the increased collection-related expenses due to the new and increased financial outsourcing services revenues, the acquisition of CCC and higher postage and supplies expenses in the letter products business. Operating expenses for the six months ended June 30, 2001 included non-cash compensation expense related to variable stock options of approximately $0.7 million. For the six months ended June 30, 2002, amortization and depreciation charges of $24.9 million were lower than the $27.5 million for the comparable period in 2001. The lower amortization and depreciation charges were due primarily to the cessation of goodwill amortization which approximated $8.2 million in 2001, offset partially by higher amortization of purchased loans and accounts receivable portfolios due to higher strategic sales of purchased portfolios. Outsourcing services' operating income before depreciation, amortization, corporate and shared expenses and conversion, realignment and relocation expenses but after amortization of purchased loans and accounts receivable portfolios ("Adjusted Operating Earnings") was $25.3 million for the six months ended June 30, 2002 compared to $28.1 million in 2001. The 10.0% decrease primarily resulted from lower back office services revenue and higher postage expense offset partially by the new business and increased financial services revenue. Adjusted Operating Earnings for portfolio purchasing services was $3.2 million for the six months ended June 30, 2002 compared to $9.9 million in 2001. The decrease of $6.7 million was primarily attributable to the increased amortization of purchased loans and accounts receivable portfolios as a result of the higher strategic sales of purchased portfolios and lower servicing fee revenue. Recovery services' Adjusted Operating Earnings of $26.4 million for the six months ended June 30, 2002 compared favorably to prior year of $24.8 million. The favorable variance was primarily due to increased bank card and government revenue and improved margins in the government business offset partially by the lower student loan and telecommunications revenue. For the six months ended June 30, 2002, the Company incurred $2.5 million of nonrecurring consolidation, realignment and relocation expenses. These expenses include costs resulting from closure of certain call centers, severance associated with these office closures, severance as a result of cost reductions and certain other one-time costs including certain investigative costs resulting from the inaccurate financial reporting of certain transactions during and prior to 2001 at one of the Company's subsidiaries, North Shore Agency, Inc. See further discussion in the Company's Annual Report on Form 10-K for the year ended December 31, 2001. The Company's earnings before interest expense, taxes, depreciation and amortization ("EBITDA") for the six months ended June 30, 2002 was $53.8 million compared to $58.5 million for the same period in 2001. The decrease was primarily attributable to the lower outsourcing services' Adjusted Operating Earnings and the nonrecurring charges of $2.5 million. Adding back the nonrecurring charges of $2.5 million, EBITDA was $56.3 million compared to $59.2 million after adding back the non-cash stock compensation expense in 2001. As a result of the above, the Company's operating income of $28.8 million for the six months ended June 30, 2002 compared unfavorably to $31.0 million for the same period in 2001. Net interest expense for the six months ended June 30, 2002 was $27.2 million compared to $30.1 million for the comparable period in 2001. The decrease was due primarily to lower interest rates offset partially by the unfavorable non-cash impact of the Company's interest rate hedges of $1.8 million. The provision for income taxes of $0.4 million was provided for certain state and foreign income tax obligations. The net deferred tax assets at June 30, 2002 are fully offset by a valuation allowance. 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 net income for the six months ended June 30, 2002 of $1.2 million which compared favorably to net income of $0.6 million for the six months ended June 30, 2001. Financial Condition, Liquidity and Capital Resources - ---------------------------------------------------- At June 30, 2002, the Company had cash and cash equivalents of $10.6 million. The Company's credit agreement currently provides for a $70.0 million revolving credit facility, which allows the Company to borrow for working capital and general corporate purposes, subject to certain conditions. As of June 30, 2002, the Company had $50.0 million outstanding under the revolving credit facility leaving $10.7 million, after outstanding letters of credit, available under the revolving credit facility. In April 2002, the Company completed a sale of $7.0 million of Series B junior preferred stock to certain members of its existing investor group, including Madison Dearborn Capital Partners III, L.P., the Company's majority stockholder. The proceeds from the sale were used to repay debt under the Company's bank credit facility. In May 2002, the Company issued 40,816.33 shares of its Voting common stock for the purchase of $2.0 million of equipment. Since December 31, 2001, cash and cash equivalents increased $1.1 million primarily due to cash from operating activities and portfolio purchasing of $10.6 million, issuance of preferred stock of $7.0 million and borrowings under the revolving credit facility of $4.0 million offset by cash utilized for debt repayments of $12.4 million, payment of deferred financing fees of $3.8 million and capital expenditures of $4.4 million. The Company also held $25.0 million of cash and cash equivalents for clients in restricted trust accounts at June 30, 2002. For the six months ended June 30, 2001, cash and cash equivalents decreased $2.0 million primarily due to cash utilized for the acquisitions of CCC and Pacific Software Consulting of $21.3 million, debt repayments of $5.1 million, an earnout payment of $3.0 million and capital expenditures of $5.7 million offset by cash from operating activities and portfolio purchasing of $10.8 million and net proceeds from the issuance of senior common stock of $22.0 million. For the first six months in 2002, the Company made capital expenditures of $4.4 million primarily for the replacement and upgrading of equipment, expansion of facilities and expansion of the Company's information services systems. The Company anticipates total capital spending of approximately $10.0 million during 2002. Subject to compliance with the provisions of its debt agreements, the Company expects to finance future capital expenditures with cash flow from operations, borrowings and capital leases. The Company will reduce its future capital expenditures to the extent it is unable to fund its capital plan. During the finalization of the Company's consolidated financial statements as of and for the year ended December 31, 2001, the Company identified 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. Consequently, the Company breached certain covenants, representations and warranties of its bank credit facility (the "Credit Facility") and Warehouse Facility. See further discussion in the Company's Annual Report on Form 10-K for the year ended December 31, 2001. The Company and the lenders to the Credit Facility amended the facility effective April 10, 2002. The amendment to the Credit Facility included provisions that amended the financial covenants, waived certain defaults of covenants and breaches in representations and warranties, increased the interest rate on borrowings pursuant to the facility (as discussed below), and, during 2002, reduced the Company's availability under its Credit Facility by $5,000, and limited capital expenditures, investments and acquisitions. In connection with the amendment, the Company also issued 7,000 shares of its Series B Junior Preferred Stock with attached warrants to acquire 71,429 shares of the Company's Senior Common Stock to certain members of its existing investor group, including Madison Dearborn Capital Partners III, L.P. and Madison Dearborn Special Equity III, L.P. for a total purchase price of $7,000. The proceeds of this sale were used to repay the Revolving Facility in the amount of $3,500 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 at (b) the Eurodollar rate plus 3.75%. Borrowings under the Term B Loan will bear interest, at the Company's option, at (a) the lender's 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. The Company, FINCO and the lenders to the Warehouse Facility amended the facility effective July 8, 2002. The amendment to the Warehouse Facility includes provisions that amend the financial covenants and waive prior covenant defaults and any existing Wind-Down Events, as defined in the Warehouse Facility. In addition, the amendment also places certain limitations on bonus fee payments which can be paid to OSI and its affiliates. FINCO is a special purpose and bankruptcy remote entity that is not consolidated by the Company. The Company accounts for its investment in FINCO under the equity method of accounting. The Company does not consolidate FINCO because an unrelated third party investor in FINCO holds the majority voting rights of FINCO, has decision-making authority over the operations of FINCO, including the authority to make all decisions and to take all actions with respect to the retention or removal of a subsidiary of the Company as a provider of collection services for FINCO's portfolios, and maintains a substantial equity investment in FINCO. The FASB is currently reviewing the rules surrounding special purpose entities. The FASB has issued a preliminary draft of proposed rules regarding the consolidation of special purpose entities. The FASB expects to finalize this project by August of 2002. If the Company were required to adopt the rules prescribed in the current FASB project, it would be required to consolidate FINCO. If required to consolidate FINCO, the Company could possibly be in violation of its debt covenants and would be required to seek a waiver or amend its debt agreements. Recent Accounting Pronouncements - -------------------------------- See discussion in Note 12 of the Condensed Consolidated Financial Statements included elsewhere herein. 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) changes in circumstances or the effects of new accounting standards which may require the Company to consolidate FINCO into its financial statements, and (14) 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 Facility, 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, 2001 (the most recent completed fiscal year), the Company had interest rate swap and collared swap agreements outstanding. Since December 31, 2001, there have been no material changes in these agreements. 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, 2001. Item 2. Changes in Securities See Note 10 of the Condensed Consolidated Financial Statements included elsewhere herein. The proceeds from the sale of Series B junior preferred stock were used to repay debt. In May 2002, the Company issued 40,816.33 shares of its Voting common stock for the purchase of $2.0 million of equipment. Item 3. Defaults Upon Senior Securities See Note 6 of the Consolidated Financial Statements and notes thereto contained in the Company's Form 10-K for the year ended December 31, 2001. 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 Exhibit 99.1 Certification of President and Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Qxley Act of 2002. Exhibit 99.2 Certification of Executive Vice President and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Qxley Act of 2002. (b). Reports on Form 8-K There were no reports on Form 8-K filed for the three-month period ended June 30, 2002. 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: August 13, 2002 EX-99 3 ex991-f10q_063002.txt CERTIFICATE OF THE SARBANES-OXLEY ACT Exhibit 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Outsourcing Solutions Inc. (the "Company") on Form 10-Q for the period ending June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Timothy G. Beffa, President and Chief Executive Officer of the Company, certifies, to the best of my knowledge, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Timothy G. Beffa --------------------------------------- Timothy G. Beffa President and Chief Executive Officer August 13, 2002 EX-99 4 ex992-f10q_063002.txt CERTIFICATE OF THE SARBANES-OXLEY ACT Exhibit 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Outsourcing Solutions Inc. (the "Company") on Form 10-Q for the period ending June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Gary L. Weller, Executive Vice President and Chief Financial Officer of the Company, certifies, to the best of my knowledge, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Gary L. Weller --------------------------------------- Gary L. Weller Executive Vice President and Chief Financial Officer August 13, 2002 -----END PRIVACY-ENHANCED MESSAGE-----