SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) March 21, 2002
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Outsourcing Solutions Inc.
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(Exact Name of Registrant as Specified in Its Character)
Delaware
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State or Other Jurisdiction of Incorporation
333-16867 58-2197161
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(Commission File Number) (IRS Employer Identification Number)
390 South Woods Mill Road, Suite 350
Chesterfield, Missouri 63017
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(Address of Principal Executive Officer) (Zip Code)
(Registrant's Telephone Number, Including Area Code) (314) 576-0022
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INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events.
Outsourcing Solutions Inc. (the "Company") has determined in conjunction with
its independent auditors, that it will be necessary for the Company to restate
its financial results for the third quarter of 2001. The Company preliminarily
estimates that the restatement will increase revenue for the third quarter by
$1.2 million and increase operating expenses by $9.4 million, resulting in a
decrease of income before income taxes for the third quarter by $8.2 million. In
its Quarterly Report on Form 10-Q for the period ended September 30, 2001, filed
with the Securities Exchange Commission (the "Commission") on November 14, 2001,
the Company reported third quarter revenue of $151.0 million and third quarter
income before income taxes of $0.1 million. The Company anticipates a similar
impact on its fourth quarter 2001 financial results. The restatement will not
affect reported cash flow.
The expected restatement results from inaccurate financial reporting of certain
transactions by one of the Company's subsidiaries, North Shore Agency, Inc.
These inaccurate accounting entries were identified during the annual audit of
the Company's financial statements by its independent auditors and relate to the
overstatement of certain assets (primarily accounts receivable and prepaid
postage). The restated financial statements will be filed with the Commission
following a review by the Company and its independent auditors that is expected
to be completed within the next few weeks. The Company currently believes that
it will not be necessary to restate its financial statements for any period
other than the third quarter of 2001 because, based on its review to date, it
does not appear that the impact on its other financial statements previously
filed with the Commission will be material. The Company is providing this
preliminary estimate of the effect of the expected restatement in order to keep
all of its interested constituencies informed. There can be no assurances that
the Company's preliminary estimate of the restatements will not differ
materially from the amended results or that it will not be necessary to restate
its reported results of operations and financial condition for prior periods.
As a consequence of these events, the Company believes that it is in default
under its bank credit facility and its commercial paper conduit facility, which
would preclude the Company from borrowing additional funds under such facilities
until an amendment or waiver is obtained under each agreement. The Company is
currently in discussions with its lenders and other appropriate parties to
obtain those amendments or waivers. The Company believes that it will obtain
such amendments or waivers in the near future. There can be no assurances,
however, that it will be able to do so. Despite the current inability to borrow
under its revolving credit facility or the conduit, the Company believes that it
has sufficient cash to fund its operations over the next several months. The
Company intends to furnish copies of the restated Form 10-Q third quarter of
2001 to the holders of its 11% Senior Subordinated Notes due 2006 (the "Notes").
When it does so, the Company believes that it will be in compliance with the
Indenture, dated November 6, 1996, governing the Notes.
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 hereunto duly authorized.
OUTSOURCING SOLUTIONS INC.
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(Registrant)
Date: March 21, 2002 By: /s/ Gary L. Weller
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Gary L. Weller
Executive Vice President and
Chief Financial Officer