Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 333-16867
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Outsourcing Solutions Inc.
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(Exact name of registrant as specified in its charter)
Delaware 58-2197161
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
390 South Woods Mill Road, Suite 350
Chesterfield, Missouri 63017
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 576-0022
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Check here whether the issuer (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
----- -----
As of June 30, 1998, the following shares of the Registrant's common stock were
issued and outstanding:
Voting common stock 3,477,126.01
Class A convertible nonvoting common stock 391,740.58
Class B convertible nonvoting common stock 400,000.00
Class C convertible nonvoting common stock 1,040,000.00
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5,308,866.59
============
Transitional Small Disclosure (check one): Yes [ ] No [ X ]
----- --- ---
<PAGE>
OUTSOURCING SOLUTIONS INC.
AND SUBSIDIARIES
INDEX
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
June 30, 1998 (unaudited) and
December 31, 1997....................................... 3
Condensed Consolidated Statements of
Operations for the three and six months
ended June 30, 1998 and 1997 (unaudited)................ 4
Condensed Consolidated Statements of Cash
Flows for the six months ended June 30, 1998
and 1997 (unaudited).................................... 5
Notes to Condensed Consolidated Financial
Statements (unaudited).................................. 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........... 9
Part II. Other Information.......................................... 12
<PAGE>
<TABLE>
OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share amounts)
<CAPTION>
June 30, December 31,
1998 1997
Unaudited Audited
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 14,818 $ 3,217
Cash and cash equivalents held for clients 27,212 20,762
Current portion of purchased loans
and accounts receivable portfolios 40,537 42,915
Accounts receivable - trade, less allowance
for doubtful receivables of $1,385 and $438 39,220 27,192
Other current assets 7,540 2,119
---------- ----------
Total current assets 129,327 96,205
PURCHASED LOANS AND ACCOUNTS RECEIVABLE PORTFOLIOS 23,009 19,537
PROPERTY AND EQUIPMENT, net 45,334 32,563
INTANGIBLE ASSETS, net 426,581 219,795
DEFERRED FINANCING COSTS, net 14,100 12,517
OTHER ASSETS 453 1,073
---------- ----------
TOTAL $ 638,804 $ 381,690
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable - trade $ 7,347 $ 6,977
Collections due to clients 27,212 20,762
Accrued compensation 13,834 8,332
Other current liabilities 50,792 26,131
Current portion of long-term debt 16,713 15,445
---------- ----------
Total current liabilities 115,898 77,647
LONG-TERM DEBT 510,222 309,521
OTHER LONG-TERM LIABILITIES 23,903 -
STOCKHOLDERS' EQUITY (DEFICIT):
8% nonvoting cumulative redeemable
exchangeable preferred stock; authorized
1,000,000 shares, 973,322.32 and 935,886.85
shares, respectively, issued and outstanding,
at liquidation value of $12.50 per share 12,167 11,699
Voting common stock; $.01 par value; authorized
7,500,000 shares, 3,477,126.01 shares issued
and outstanding 35 35
Class A convertible nonvoting common stock;
$.01 par value; authorized 7,500,000 shares,
391,740.58 shares issued and outstanding 4 4
Class B convertible nonvoting common stock;
$.01 par value; authorized 500,000 shares,
400,000 shares issued and outstanding 4 4
Class C convertible nonvoting common stock;
$.01 par value; authorized 1,500,000 shares,
1,040,000 shares issued and outstanding 10 10
Paid-in capital 66,958 66,958
Retained deficit (90,397) (84,188)
---------- ----------
Total stockholders' equity (deficit) (11,219) (5,478)
---------- ----------
TOTAL $ 638,804 $ 381,690
========== ==========
</TABLE>
See notes to the unaudited condensed consolidated financial statements.
<PAGE>
<TABLE>
OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
REVENUES $123,905 $ 66,284 $238,731 $130,126
EXPENSES:
Salaries and benefits 58,601 32,538 113,153 64,800
Service fees and other operating
and administrative expenses 34,317 16,315 69,970 33,568
Amortization of loans and accounts
receivable purchased 13,318 9,490 22,358 18,036
Amortization of goodwill and other
intangibles 4,048 7,965 7,543 15,976
Depreciation expense 3,350 2,533 6,477 5,057
--------- --------- --------- --------
Total expenses 113,634 68,841 219,501 137,437
--------- --------- --------- --------
OPERATING INCOME (LOSS) 10,271 (2,557) 19,230 (7,311)
INTEREST EXPENSE - Net 13,166 7,274 24,390 13,797
--------- --------- --------- --------
LOSS BEFORE INCOME TAXES
AND MINORITY INTEREST (2,895) (9,831) (5,160) (21,108)
INCOME TAX BENEFIT - (3,333) - (6,829)
MINORITY INTEREST - - 572 -
--------- --------- --------- --------
NET LOSS (2,895) (6,498) (5,732) (14,279)
PREFERRED STOCK DIVIDEND REQUIREMENTS 243 225 477 420
--------- --------- --------- --------
NET LOSS TO COMMON STOCKHOLDERS $ (3,138) $ (6,723) $ (6,209) $(14,699)
========= ========= ========= =========
</TABLE>
See notes to the unaudited condensed consolidated financial statements.
<PAGE>
<TABLE>
OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands except share amounts)
<CAPTION>
Six Months Ended
June 30,
-------------------------
1998 1997
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (5,732) $(14,279)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 15,400 21,945
Amortization of loans and accounts receivable
purchased 22,358 18,036
Deferred taxes - (6,829)
Minority interest 572 -
Change in assets and liabilities:
Other current assets 6,490 (2,971)
Accounts payable and other current liabilities (8,411) (10,053)
--------- ---------
Net cash provided by operating activities 30,677 5,849
--------- ---------
INVESTING ACTIVITIES:
Payments for acquisitions, net of cash acquired (167,208) -
Purchase of loans and accounts receivable
portfolios (23,258) (24,928)
Acquisition of property and equipment (7,145) (3,597)
--------- ---------
Net cash used in investing activities (197,611) (28,525)
--------- ---------
FINANCING ACTIVITIES:
Proceeds from term loans 225,469 21,450
Borrowings under revolving credit agreement 116,500 5,000
Repayments under revolving credit agreement (132,350) (5,000)
Repayments of debt (28,121) (4,816)
Deferred financing fees (2,963) (420)
---------- ---------
Net cash provided by financing activities 178,535 16,214
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 11,601 (6,462)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,217 14,497
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 14,818 $ 8,035
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during period for interest $ 18,823 $ 8,609
========= =========
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES - During
the six months ended June 30, 1998 and 1997, the Company paid preferred stock
dividends of $468 and $433, respectively, through the issuance of 37,435.47
shares and 34,611.20 shares of preferred stock, respectively.
See notes to the unaudited condensed consolidated financial statements.
<PAGE>
OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles 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 generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six months ended June 30,
1998 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1998. For purposes of comparability, certain prior year
and prior quarter amounts have been reclassified to conform with current quarter
and year to date presentation. 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, 1997.
NOTE 2. ACQUISITION
On January 23, 1998, the Company acquired through a tender offer approximately
77% of the outstanding shares of The Union Corporation's ("Union") common stock
for $31.50 per share. The merger was completed on March 31, 1998. The aggregate
purchase price of the Union acquisition was approximately $230,000 including
transaction fees, assumed liabilities, and certain adjustments to conform to the
Company's accounting policies. The Company financed the acquisition with funds
provided by the Second Amended and Restated Credit Agreement (as defined
herein). Union furnishes a broad range of credit and receivables management
outsourcing services as well as management and collection of accounts
receivable. The acquisition was accounted for under the purchase method of
accounting. Accordingly, the purchase price has been preliminarily allocated
based upon the estimated fair value of the net assets acquired. This treatment
resulted in approximately $214,025 of goodwill that will be amortized over 30
years using the straight-line method. Union's operating results have been
included in the Company's consolidated results since January 23, 1998,
recognizing the minority interest through the completion date of the merger.
The unaudited proforma consolidated financial data presented below gives effect
to the Union acquisition as well as the North Shore Agency and Accelerated
Bureau of Collections acquisitions that occurred in the fourth quarter of 1997,
as if such acquisitions had occurred as of the beginning of each period
presented. The pro forma adjustments are based upon available information and
certain assumptions that management believes are reasonable. The unaudited pro
forma consolidated financial data does not purport to represent what the
Company's financial position or results of operations would have been if
consummation of the acquisitions of Union, North Shore Agency and Accelerated
Bureau of Collections had occurred on the date indicated or what may be achieved
in the future. Except for the elimination of costs associated with duplicative
administrative functions and facilities based upon actions actually taken as of
the close of the transactions, anticipated cost savings have not been reflected
in this presentation. The unaudited pro forma consolidated financial data should
be read in conjunction with the historical consolidated financial statements and
accompanying notes for the Company, Union, North Shore Agency and Accelerated
Bureau of Collections.
<PAGE>
<TABLE>
<CAPTION>
For the three months For the six months
Ended June 30, Ended June 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenues $123,905 $114,220 $246,085 $228,321
======== ======== ======== ========
Net loss $(2,895) $(7,238) $(6,853) $(15,920)
======== ======== ======== ========
</TABLE>
NOTE 3. DEBT
On January 26, 1998, the Company entered into a Second Amended and Restated
Credit Agreement ("Agreement") with a group of banks to fund the Union
acquisition. This Agreement amended the Company's existing credit agreement. The
Agreement consists of a $412,422 term loan facility and a $58,000 revolving
credit facility.
The term loan facility consists of a term loan of $62,500 ("Term Loan A"), a
term loan of $124,922 ("Term Loan B") and a term loan of $225,000 ("Term Loan
C"), which mature on October 15, 2001, 2003 and 2004, respectively. The Company
is required to make quarterly principal repayments on each term loan. Term Loan
A bears interest, at the Company's option, (a) at a base rate equal to the
greater of the federal funds rate plus 0.5% or the lender's customary base rate,
plus 1.5% or (b) at the reserve adjusted Eurodollar rate plus 2.5%. Term Loans B
and C bear interest, at the Company's option, (a) at a base rate equal to the
greater of the federal funds rate plus 0.5% or the lender's customary base rate,
plus 2.0% or (b) at the reserve adjusted Eurodollar rate plus 3.0%.
The revolving credit facility has a term of five years and is fully revolving
until October 15, 2001. The revolving credit facility bears interest, at the
Company's option, (a) at a base rate equal to the greater of the federal funds
rate plus 0.5% or the lender's customary base rate, plus 1.5% or (b) at the
reserve adjusted Eurodollar rate plus 2.5%.
The Agreement is guaranteed by all of the Company's present domestic
subsidiaries and is secured by all of the stock of the Company's present
domestic subsidiaries and by substantially all of the Company's domestic
property assets. The Agreement contains certain covenants the more significant
of which limit dividends, asset sales, acquisitions and additional indebtedness,
as well as requires the Company to satisfy certain financial performance ratios.
On April 17, 1998 and May 27, 1998, as required by the Agreement, the Company
entered into interest rate collar agreements with a notional principal value of
$35,000 and $33,000, respectively, for the purpose of managing interest rate
risk on a portion of floating-rate long-term debt. The collar agreements fix the
interest rate on certain variable-rate debt to a range of 6.50% to 8.58%. The
contracts have a maturity date of April 17, 2001 and February 27, 2001,
respectively. The Company is exposed to credit loss in the event of
nonperformance by counterparties to the collar agreements.
NOTE 4. LITIGATION
The Company is 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 business. In addition, as a result of
the Union acquisition, the Company is a party to several on-going environmental
remediation investigations by federal and state governmental agencies and
clean-ups and, along with other companies, has been named a "potentially
<PAGE>
responsible party" for certain waste disposal sites. Each of these matters is
subject to various uncertainties, and it is possible that some of these matters
will be decided unfavorably against the Company. The Company has established,
with input from environmental and legal experts, accruals for matters that are
in its view probable and reasonably estimable. Based on information presently
available, management believes that existing accruals are sufficient to satisfy
any known environmental liabilities.
NOTE 5. COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income," which established standards
for the reporting and display of comprehensive income and its components. The
adoption of this statement did not affect the Company's consolidated financial
statements for the three month and six month periods ended June 30, 1998 and
1997. Comprehensive loss for the three month and six month periods ended June
30, 1998 and 1997 were equal to the Company's net loss.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Three Months Ended June 30, 1998 Compared to Three Months Ended June 30, 1997
Revenues for the three months ended June 30, 1998 were $123.9 million compared
with $66.3 million in the same period last year - an increase of 86.9%. The
revenue increase of $57.6 million was due to increased fee services and
portfolio sales revenues of $5.3 million - an increase of 7.9% over last year,
and $52.3 million from the acquisitions of Union, North Shore Agency and
Accelerated Bureau of Collections. Revenues from fee services were $87.7 million
for the three months ended June 30, 1998 compared to $38.8 million in the
comparable period in 1997. The increase in fee revenues was due to a 7.2%
increase in existing business and $46.1 million from the three acquisitions.
Revenues from purchased portfolios increased to $21.3 million for the quarter
ended June 30, 1998 compared to $17.5 million in 1997 - an increase of 22.1%.
The increased revenue resulted from both higher collection revenue and strategic
sales of portfolios. The outsourcing revenue of $14.9 million compared favorably
to prior year of $10.0 million due primarily to the Union acquisition.
Operating expenses for the three months ended June 30, 1998 were $113.6 million
compared to $68.8 million for the comparable period in 1997 - an increase of
$44.8 million. Operating expenses, exclusive of amortization and depreciation
charges, were $92.9 million for the three months ended June 30, 1998 and $48.9
million for the comparable period in 1997. The increase in operating expenses,
exclusive of amortization and depreciation charges, resulted from the three
acquisitions. Of the $113.6 million in operating expenses for the three months
ended June 30, 1998, $20.7 million was attributable to amortization and
depreciation charges compared to $19.9 million for the same period last year.
The higher amortization and depreciation charges were due to increased portfolio
amortization resulting from increased portfolio revenue as well as increased
depreciation and amortization of goodwill related to the three acquisitions
offset partially by no account placement inventory amortization in 1998 since
account placement inventory was fully amortized as of December 31, 1997.
As a result of the above, the Company generated operating income of $10.3
million for the three months ended June 30, 1998 compared to an operating loss
of $2.5 million for the comparable period in 1997.
Earnings before interest expense, taxes, depreciation and amortization (EBITDA)
for the quarter ended June 30, 1998 was $31.0 million compared to $17.4 million
in 1997. The increase of $13.6 million consisted of $8.9 million as a result of
the three acquisitions and $4.7 million primarily from the increased fee and
portfolio revenues of $5.3 million.
Interest expense, net for the three months ended June 30, 1998 was $13.2 million
compared to $7.3 million for the comparable period in 1997. The increase was
primarily due to additional indebtedness incurred to finance the Union, North
Shore Agency and Accelerated Bureau of Collections acquisitions.
Consistent with management's assessment made in the fourth quarter of 1997, the
potential tax benefits generated by additional net operating loss carryovers or
the future reversal of the net deductible temporary differences for the three
months ended June 30, 1998 were fully offset by valuation allowances of $1.2
million.
Due to the factors stated above, the net loss for the quarter ended June 30,
1998 was $2.9 million compared to $6.5 million for the comparable period in 1997
- - an improvement of $3.6 million.
<PAGE>
Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997
Revenues for the six months ended June 30, 1998 were $238.7 million compared
with $130.1 million in the same period last year - an increase of 83.5%. The
revenue increase of $108.6 million was due to increased fee services and
portfolio sales revenues of $9.2 million - an increase of 7.0% over last year,
and $99.4 million from the acquisitions of Union, North Shore Agency and
Accelerated Bureau of Collections. Revenues from fee services were $170.5
million for the six months ended June 30, 1998 compared to $77.2 million in the
comparable period in 1997. The increase in fee revenues was due to a 6.5%
increase in existing business and $88.3 million from the three acquisitions.
Revenues from purchased portfolios increased to $39.8 million for the six months
ended June 30, 1998 compared to $33.2 million in 1997 - up 20.2%. The increased
revenue resulted from both higher collection revenue and strategic sales of
portfolios. The outsourcing revenue of $28.4 million compared favorably to prior
year of $19.7 million due primarily to the Union acquisition.
Operating expenses for the six months ended June 30, 1998 were $219.5 million
compared to $137.4 million for the comparable period in 1997. Operating
expenses, exclusive of amortization and depreciation charges, were $183.1
million for the six months ended June 30, 1998 and $98.4 million for the
comparable period in 1997. The increase in operating expenses, exclusive of
amortization and depreciation charges, resulted primarily from the three
acquisitions as well as higher collection-related expenses due to the increased
revenues. Of the $219.5 million in operating expenses for the six months ended
June 30, 1998, $36.4 million was attributable to amortization and depreciation
charges compared to $39.1 million for the same period last year. The lower
amortization and depreciation charges resulted from no account placement
inventory amortization in 1998 ($12.1 million in 1997) since account placement
inventory was fully amortized as of December 31, 1997 offset partially by
depreciation and amortization of goodwill related to the three acquisitions and
increased portfolio amortization resulting from increased portfolio revenue.
As a result of the above, the Company generated operating income of $19.2
million for the six months ended June 30, 1998 compared to an operating loss of
$7.3 million for the comparable period in 1997.
Earnings before interest expense, taxes, depreciation and amortization (EBITDA)
for the six months ended June 30, 1998 was $55.6 million compared to $31.7
million in 1997. The increase of $23.9 million consisted of $17.6 million as a
result of the three acquisitions and $6.3 million primarily from the increased
fee and portfolio revenues of $9.2 million.
Interest expense, net for the six months ended June 30, 1998 was $24.4 million
compared to $13.8 million for the comparable period in 1997. The increase was
primarily due to additional indebtedness incurred to finance the Union, North
Shore Agency and Accelerated Bureau of Collections acquisitions.
Consistent with management's assessment made in the fourth quarter of 1997, the
potential tax benefits generated by additional net operating loss carryovers or
the future reversal of the net deductible temporary differences for the six
months ended June 30, 1998 were fully offset by valuation allowances of $2.1
million.
Minority interest in earnings in 1998 resulted from the Union acquisition. On
January 23, 1998, the Company acquired approximately 77% of the outstanding
common stock of Union through a tender offer. The purchase of all outstanding
common stock of Union was completed on March 31, 1998. The Company recognized
minority interest in earnings of Union during the period from January 23, 1998
to March 31, 1998.
<PAGE>
Due to the above, the net loss for the six months ended June 30, 1998 was $5.7
million compared to $14.3 million for the comparable period in 1997 - an
improvement of $8.6 million.
Financial Condition, Liquidity and Capital Resources
At June 30, 1998, the Company had cash and cash equivalents of $14.8 million. In
addition, the Company has a $58.0 million revolving credit facility, which
allows the Company to borrow for working capital, general corporate purposes and
acquisitions, subject to certain conditions. As of June 30, 1998, the Company
had outstanding $16.0 million under the revolving credit facility leaving $40.4
million, after outstanding letters of credit, available under the revolving
credit facility.
Since December 31, 1997, cash and cash equivalents increased $11.6 million
primarily due to cash provided by operations and financing activities of $30.7
million and $178.5 million, respectively, offset by cash utilized for the Union
acquisition of $164.7 million, purchases of loans and accounts receivable
portfolios of $23.3 million and capital expenditures of $7.1 million. The
Company also held $27.2 million of cash for clients in restricted trust accounts
at June 30, 1998.
For the first six months in 1998, the Company made capital expenditures of $7.1
million primarily for the replacement and upgrading of equipment and expansion
of the Company's information services systems. The Company anticipates spending
approximately $18.0 million for 1998.
All of the statements in this document other than historical facts are
forward-looking statements made in reliance upon the safe harbor of the Private
Securities Litigation Reform Act of 1995. There can be no assurances that the
Company's actual results will be materially consistent with such forward-looking
information. Factors and uncertainties that could affect the outcome of such
forward-looking statements include, among others, market and industry
conditions, increased competition, changes in governmental regulations, general
economic conditions, pricing pressures, and the Company's ability to continue
its growth and expand successfully into new markets and services. The Company
disclaims any intention or obligation to update publicly or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is 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 business.
As described in the Company's March 31, 1997 10-Q and December 31, 1997 10-K
filings, Transamerica Business Credit Corporation ("Transamerica") filed a
cross-claim against the Company's wholly-owned subsidiary, Payco-General
American Credits, Inc. seeking judgment against them for any liability, loss
cost or expense Transamerica has or will occur in connection with alleged
violations of the Fair Debt Collection Practices Act and Alabama State law by
Payco-General American Credits, Inc. in performing collection services on behalf
of Transamerica. Payco-General American Credits, Inc. in turn, filed a similar
claim against Transamerica. On July 1, 1998, Payco-General American Credits,
Inc. and Transamerica entered into a settlement agreement whereby each party
released the other from any claims and pursuant to which Payco-General American
Credits, Inc. paid $1.5 million.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
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 27 Financial Date Schedule (Unaudited)
(b). Reports on Form 8-K
Form 8-K/A filed April 8, 1998 amending the Form 8-K filed
February 6, 1998. The Form 8-K/A amended Item 7 and included pro
forma financial information reflecting the Union acquisition.
<PAGE>
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/ DANIEL J. DOLAN
-------------------------------
Daniel J. Dolan
Executive Vice President
and Chief Financial Officer
/s/ DANIEL T. PIJUT
-------------------------------
Daniel T. Pijut
Vice President, Corporate Controller
and Chief Accounting Officer
Date: August 13, 1998
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES
Exhibit 27
FINANCIAL DATA SCHEDULE
Note: This schedule contains summary financial information extracted from the
Form 10-Q for the Quarter Ended June 30, 1998 and is qualified in its entirety
by reference to such financial statements.
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 42,030
<SECURITIES> 0
<RECEIVABLES> 40,605
<ALLOWANCES> 1,385
<INVENTORY> 40,537
<CURRENT-ASSETS> 129,327
<PP&E> 84,502
<DEPRECIATION> 39,168
<TOTAL-ASSETS> 638,804
<CURRENT-LIABILITIES> 115,898
<BONDS> 0
0
12,167
<COMMON> 53
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 638,804
<SALES> 0
<TOTAL-REVENUES> 238,731
<CGS> 0
<TOTAL-COSTS> 219,501
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,390
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