WASHINGTON, D.C. 20549

                                    FORM 10-Q/A

(Mark One)

[X]                 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                        OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended         September 30, 2001
                                --------------------------------

OR

[   ]               TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                         OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                         to
                                ---------------------      ---------------------

                        Commission File Number  333-16867
                                              -------------

                           Outsourcing Solutions Inc.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

             Delaware                                     58-2197161
---------------------------------             ----------------------------------
 (State or other jurisdiction of                       (I.R.S. Employer
  incorporation or organization)                     Identification Number)

390 South Woods Mill Road, Suite 350
      Chesterfield, Missouri                                 63017
---------------------------------             ----------------------------------
(Address of principal executive office)                    (Zip Code)

Registrant's telephone number, including area code:  (314) 576-0022

Indicate by checkmark whether the registrant: (1) has filed all reports required
to be filed by  Sections  13 or 15(d)  of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. Yes   X    No
                                       -----     -----

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock as of the latest practicable date.

                                                             Outstanding at
        Class                                              September 30, 2001
-----------------------                                      --------------
Senior common stock                                             489,795.93
Voting common stock                                           6,088,479.30
Non-voting common stock                                         480,321.30
                                                              ------------
                                                              7,058,596.53
                                                              ============


THE UNDERSIGNED  REGISTRANT HEREBY AMENDS, AS AND TO THE EXTENT SET FORTH BELOW,
THE  FOLLOWING  ITEMS AND FINANCIAL  STATEMENTS OF ITS QUARTERLY  REPORT ON FORM
10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001 FILED PURSUANT TO SECTION
13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934. EXCEPT FOR ITEMS 1 AND 2 OF
PART I AND ITEM 3 OF PART II,  NO OTHER  INFORMATION  INCLUDED  IN THE  ORIGINAL
REPORT ON FORM 10-Q IS AMENDED BY THIS AMENDMENT.
<PAGE>



                           OUTSOURCING SOLUTIONS INC.
                                AND SUBSIDIARIES



                                TABLE OF CONTENTS


Part I.    Financial Information                                          Page
                                                                          ----

  Item 1.    Financial Statements (unaudited)

             Condensed Consolidated Balance Sheets
             September 30, 2001, as restated and
             December 31, 2000, as restated............................     3


             Condensed Consolidated Statements of
             Operations for the three and nine months
             ended September, 2001, as restated and 2000...............     4


             Condensed Consolidated Statements of
             Cash Flows for the nine months ended
             September 30, 2001, as restated and 2000..................     5


             Notes to Condensed Consolidated
             Financial Statements......................................     6


  Item 2.    Management's Discussion and Analysis of
             Financial Condition and Results of Operations............     14


  Item 3.    Quantitative and Qualitative Disclosures
             About Market Risk........................................     21


Part II.   Other Information..........................................     22

<PAGE>

OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share and per share amounts)
--------------------------------------------------------------------------------


ASSETS                                            September 30,     December 31,
                                                      2001              2000
                                                  As Restated        As Restated
                                                 (Notes 2 & 10)       (Note 2)
                                                 --------------    ------------

Cash and cash equivalents                          $   6,425          $ 10,273

Cash and cash equivalents held for clients            23,479            21,970

Accounts receivable - trade, less allowance
  for doubtful receivables of  $340 and $447          68,654            61,325

Purchased loans and accounts receivable
  portfolios                                          20,492            24,690

Property and equipment, net                           45,737            46,601

Intangible assets, net                               426,065           417,084

Deferred financing costs, less accumulated
  amortization of $7,857 and $4,538                   19,777            22,934

Other assets                                          38,572            27,770
                                                    --------          --------

             TOTAL                                  $649,201          $632,647
                                                    ========          ========

LIABILITIES AND STOCKHOLDERS' DEFICIT

Accounts payable - trade                            $ 14,371          $ 15,896

Collections due to clients                            23,479            21,970

Accrued salaries, wages and benefits                  16,326            15,195

Debt                                                 537,198           539,463

Other liabilities                                     78,919            71,080

Commitments and contingencies (Note 3 and 5)

Mandatorily redeemable preferred stock;
  redemption amount of $135,976 and $123,115         118,244           103,455

Stockholders' deficit:
  Senior common stock; $.01 par value;
    authorized 900,000 shares, 489,795.93
    issued in 2001 and outstanding                         5                 -
  Voting common stock; $.01 par value;
    authorized 20,000,000 shares,
    9,166,728.37 shares issued                            92                92
  Non-voting common stock; $.01 par value;
    authorized 2,000,000 shares, 480,321.30
    issued and outstanding                                 5                 5
  Paid-in capital                                    223,277           200,537
  Accumulated deficit                               (216,128)         (198,372)
  Accumulated other comprehensive loss                (9,799)                -
                                                    --------          --------
                                                      (2,548)            2,262
  Notes receivable from management for
    shares sold                                       (1,931)           (1,817)
  Voting common stock in treasury, at cost;
    3,078,249.07 shares                             (134,857)         (134,857)
                                                    --------          --------
        Total stockholders' deficit                 (139,336)         (134,412)
                                                    --------          --------
               TOTAL                                $649,201          $632,647
                                                    ========          ========





     The accompanying notes are an integral part of the unaudited condensed
                       consolidated financial statements.

<PAGE>

OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                         Three Months Ended              Nine Months Ended
                                                           September 30,                   September 30,
                                                    -----------------------------    ---------------------------
                                                         2001                             2001
                                                      As Restated                     As Restated
                                                    (Notes 2 & 10)      2000         (Notes 2 & 10)     2000
<S>                                                 <C>                 <C>          <C>                <C>

REVENUES                                             $ 152,902        $ 133,871       $ 461,921       $ 404,494

EXPENSES:
      Salaries and benefits                             77,956           66,026         232,846         198,630
      Service fees and other operating
        and administrative expenses                     49,282           41,897         144,916         126,908
      Amortization of purchased loans and
      accounts receivable portfolios                     4,770            6,591          16,761          21,376
      Amortization of goodwill and other
        intangibles                                      4,199            3,980          12,412          11,929
      Depreciation expense                               3,532            3,956          10,839          12,067
      Conversion, realignment and
        relocation expenses                                  -            1,742               -           2,742
                                                     ---------        ---------       ---------       ---------
          Total expenses                               139,739          124,192         417,774         373,652
                                                     ---------        ---------       ---------       ---------

OPERATING INCOME                                        13,163            9,679          44,147          30,842

INTEREST EXPENSE - Net                                  16,499           15,377          46,579          44,829
                                                     ---------        ---------       ---------       ---------
LOSS BEFORE INCOME TAXES                                (3,336)          (5,698)         (2,432)        (13,987)

PROVISION FOR INCOME TAXES                                 185               65             535             359
                                                     ---------        ---------       ---------       ---------
NET LOSS                                                (3,521)          (5,763)         (2,967)        (14,346)

PREFERRED STOCK DIVIDEND REQUIREMENTS
   AND ACCRETION OF SENIOR PREFERRED STOCK               5,079            4,497          14,789          13,104
                                                     ---------        ---------       ---------       ---------

NET LOSS TO COMMON STOCKHOLDERS                      $  (8,600)       $ (10,260)      $ (17,756)      $ (27,450)
                                                     ==========       ==========      =========       =========
</TABLE>















     The accompanying notes are an integral part of the unaudited condensed
                       consolidated financial statements.
<PAGE>

OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
 -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                    Nine Months Ended
                                                                                      September 30,
                                                                                --------------------------
                                                                                     2001
                                                                                  As Restated
                                                                                (Notes 2 & 10)     2000
<S>                                                                             <C>                <C>

OPERATING ACTIVITIES AND PORTFOLIO PURCHASING:
  Net loss                                                                        $  (2,967)    $ (14,346)
  Adjustments to reconcile net loss to net cash from
   operating activities and portfolio purchasing:
    Depreciation and amortization                                                    29,132        27,308
    Amortization of purchased loans and accounts receivable portfolios               16,761        21,376
    Non-cash compensation expense related to variable stock options                     741             -
    Change in assets and liabilities excluding the effects of acquisitions:
      Purchases of loans and accounts receivable portfolios                         (12,563)       (8,433)
      Accounts receivable and other assets                                          (14,496)      (10,370)
      Accounts payable, accrued expenses and other liabilities                       (5,715)        3,957
                                                                                  ---------     ---------

        Net cash from operating activities and portfolio purchasing                  10,893        19,492
                                                                                  ---------     ---------

INVESTING ACTIVITIES:
  Acquisition of property and equipment                                              (9,493)      (13,883)
  Payment for acquisitions, net of cash acquired                                    (21,653)      (15,150)
  Purchases of loans and accounts receivable portfolios for resale to FINCO         (59,722)      (70,721)
  Sales of loans and accounts receivable portfolios to FINCO                         59,722        70,721
  Other                                                                              (3,025)       (1,361)
                                                                                  ---------     ---------

        Net cash used by investing activities                                       (34,171)      (30,394)
                                                                                  ---------     ---------

FINANCING ACTIVITIES:
  Borrowings under revolving credit agreement                                       242,400       244,350
  Repayments under revolving credit agreement                                      (232,700)     (227,850)
  Repayments of debt                                                                (12,112)       (2,512)
  Proceeds from issuance of common stock                                             22,004           401
  Proceeds from term loans                                                                -           246
  Deferred financing fees                                                              (162)            -
                                                                                  ----------    ---------

           Net cash from financing activities                                        19,430        14,635
                                                                                  ---------     ---------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                 (3,848)        3,733

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                       10,273         6,059
                                                                                  ---------     ---------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                          $   6,425     $   9,792
                                                                                  =========     =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during period for interest                                            $  38,634     $  32,230
                                                                                  =========     =========
  Net cash paid during period for taxes                                           $     413     $     241
                                                                                  =========     =========

SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION:
  Accrued dividends on mandatorily redeemable preferred stock                     $  12,861     $  11,235
                                                                                  =========     =========
  Accretion of mandatorily redeemable preferred stock                             $   1,928     $   1,869
                                                                                  =========     =========
  Notes receivable for common stock                                               $       -     $   1,400
                                                                                  =========     =========
</TABLE>
          The accompanying notes are an integral part of the unaudited
                  condensed consolidated financial statements.
<PAGE>


OUTSOURCING SOLUTIONS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands except for share and per share amounts)
--------------------------------------------------------------------------------


NOTE 1.  BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States for interim  financial  information  and with the  instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information  and footnotes  required by accounting  principles  generally
accepted in the United States for complete financial statements.  In the opinion
of management, all adjustments (consisting of normal recurring items) considered
necessary for a fair presentation have been included.  Operating results for the
three and nine months ended September 30, 2001 are not necessarily indicative of
the results  that may be expected for the year ending  December 31, 2001.  These
Condensed  Consolidated  Financial Statements should be read in conjunction with
the  Consolidated  Financial  Statements  and  notes  thereto  contained  in the
Company's  Form 10-K for the year ended December 31, 2000 and with the Company's
Form  10-K  for the  year  ended  December  31,  2001  (to be  filed  as soon as
practicable).


NOTE 2.  RESTATEMENT OF FINANCIAL RESULTS

During the finalization of the Company's consolidated financial statements as of
and  for  the  year  ended  December  31,  2001,  it  was  determined  that  the
consolidated  results reported in the Company's Form 10-K as of and for the year
ended December 31, 2000, as well as the unaudited consolidated quarterly results
reported in the Company's  Report on Form 10-Q for the quarter  ended  September
30,  2001,  would need to be restated  for  inaccurate  financial  reporting  of
certain transactions at one of the Company's  subsidiaries,  North Shore Agency,
Inc.  ("NSA").  The Board of  Directors  authorized  the  Audit  and  Compliance
Committee (the  "Committee") to conduct an independent  investigation,  with the
assistance of special counsel retained by the Committee,  to identify the causes
of these  discrepancies and to make  recommendations to ensure similar issues do
not recur in the  future.  The  Committee  retained  Bryan  Cave LLP as  special
counsel, and Bryan Cave LLP engaged an independent  accounting firm to assist in
the  investigation.  As a result of the  investigation,  it was determined  that
certain  assets  were  overstated  (primarily  accounts  receivable  and prepaid
postage) and trade accounts payable was understated at NSA due to the inaccurate
financial reporting of certain transactions.

As a result, the consolidated  financial statements as of and for the year ended
December 31, 2000, as well as the unaudited consolidated quarterly results as of
and  for  the  quarter  ended  September  30,  2001  have  been  restated.   The
consolidated financial statements as of and for the year ended December 31, 2000
have been  restated and provided in the  Company's  Form 10-K for the year ended
December  31,  2001  (to  be  filed  as  soon  as  practicable).   The  restated
consolidated  financial  results as of September  30, 2001 and December 31, 2000
and for the three and nine months ended September 30, 2001 have been included in
the consolidated financial statements included herein.

For the three and nine months ended September 30, 2001, the previously  reported
unaudited  consolidated  financial  statements  included  an  understatement  of
revenues by $1,879 and an  understatement of operating  expenses by $5,339.  The
impact  of  the  inaccurate  financial  reporting  of  certain  transactions  on
previously  reported  operating  results  for the  three and nine  months  ended
September 30, 2001 was to overstate  operating  income by $3,460 and  understate
net loss and net loss to common stockholders by $3,460.

A  comparison  of  previously   reported  and  restated   unaudited,   condensed
consolidated financial statements as of September 30, 2001 and for the three and
nine months ended  September 30, 2001 are set forth in Note 10 to the unaudited,
condensed consolidated financial statements included herein.


NOTE 3.  LITIGATION

From time to time,  the Company and certain of its  subsidiaries  are subject to
various  investigations,  claims and legal proceedings  covering a wide range of
matters  that  arise in the normal  course of  business  and are  routine to the
nature of the Company's businesses.  In addition, as a result of the acquisition
of The Union  Corporation,  certain  subsidiaries  of the Company are a party to
several on-going environmental  remediation  investigations by federal and state
governmental  agencies and clean-ups and, along with other companies,  have been
named a "potentially  responsible party" for certain waste disposal sites. While
the results of litigation  cannot be predicted with  certainty,  the Company has
provided for the  estimated  uninsured  amounts and costs to resolve the pending
suits and management, in consultation with legal counsel, believes that reserves
established  for the  ultimate  resolution  of pending  matters are  adequate at
September 30, 2001.


NOTE 4.  PURCHASED LOANS AND ACCOUNTS RECEIVABLE PORTFOLIOS FINANCING

OSI Funding LLC ("FINCO") is a special-purpose  finance company with the Company
having  approximately  29% of the voting rights.  An unrelated third party holds
the  majority  voting  rights of FINCO and has  decision-making  authority  over
FINCO's operations. The Company's investment in FINCO is accounted for under the
equity method.  FINCO entered into a revolving warehouse  financing  arrangement
(the  "Warehouse  Facility")  for up to  $100,000  of funding  capacity  for the
purchase of loans and  accounts  receivable  portfolios  over its five year term
which  expires in October  2003. In  connection  with the  establishment  of the
Warehouse  Facility,  FINCO  entered into an agreement  with a subsidiary of the
Company  to  provide  certain   administrative  and  collection  services  on  a
contingent fee basis (i.e., fee is based on a percent of amount collected).  The
Company believes the fee structure agreed to by FINCO is representative of a fee
structure that would exist with an unrelated party. The services provided by the
Company to FINCO are similar to those  provided to  unrelated  parties.  Revenue
from FINCO is generally  recognized by the Company as collections  are received.
All borrowings by FINCO under the Warehouse Facility are without recourse to the
Company.

The following  summarizes the transactions between the Company and FINCO for the
periods ended September 30:

                                     Three Months Ended       Nine Months Ended
                                        September 30,            September 30,
                                     ------------------      -------------------
                                       2001      2000         2001        2000
Sales of purchased loans
  and accounts receivable
  portfolios by the
  Company to FINCO                   $16,093    $16,415     $59,722     $70,721

Servicing fees paid by
  FINCO to the Company               $ 9,853    $10,319     $30,022     $19,656


Sales of purchased loans and accounts receivable  portfolios  ("Receivables") by
the Company to FINCO were in the same  amount and  occurred  shortly  after such
portfolios were acquired by the Company from the various unrelated  sellers.  As
such, the Company's Statements of Operations do not include revenues or expenses
related to these loans and accounts receivable  portfolios.  In conjunction with
an agreement to provide certain administrative and collection services to FINCO,
the  Company  can  achieve a bonus  fee if  amounts  in  excess of the  original
purchase price of a portfolio are recovered.  Payment of any bonus is subject to
certain  collateral  and  collection  sharing  requirements  as  outlined in the
agreement.  Receivables  from FINCO,  which are  included in other assets in the
accompanying condensed consolidated balance sheet, were $15,524 at September 30,
2001 and were $5,612 at December 31, 2000.

At September 30, 2001 and December 31, 2000,  FINCO had unamortized  Receivables
of $87,618 and $76,908,  respectively.  At  September  30, 2001 and December 31,
2000,  FINCO had  outstanding  borrowings of $66,706 and $67,636,  respectively,
under its Warehouse Facility. See Note 11.

FINCO's  summarized  results from  operations for the periods ended September 30
are as follows:

                                Three Months Ended          Nine Months Ended
                                   September 30,              September 30,
                              ----------------------      ---------------------
                                2001         2000           2001         2000

Revenues                      $24,775      $28,940        $83,965      $55,842
Income from operations          1,999        1,126          6,630        2,989
Net income (loss)               1,156          (55)         3,593          509


NOTE 5:  ACQUISITIONS

On March 12, 2001, the Company through a newly formed limited liability company,
Coast to Coast  Consulting,  LLC,  acquired  certain assets and assumed  certain
liabilities  of Coast to Coast  Consulting,  Inc.  ("CCC"),  a  service  company
providing  highly  skilled  experts to health care  clients to assist with their
on-site,  back office functions such as billing,  collections,  special projects
and other areas.  Total cash  consideration  for CCC was  approximately  $16,699
including  transaction  costs  of  $150.  The  acquisition  contains  a  certain
contingent  payment  obligation  based on the attainment of a certain  financial
performance  target over the next three  years.  The future  contingent  payment
obligation,  if any, is expected to be accounted for as  additional  goodwill as
the payment is made.

On April 30, 2001, the Company through a newly formed limited liability company,
Pacific  Software  Consulting,  LLC,  acquired  (i)  certain  assets and assumed
certain  liabilities of Pacific Software  Consulting,  Inc.  ("PSC"),  a service
company  providing  highly skilled  consultants to banks to assist in their back
office  functions,   and  (ii)  associated   patentable  property.   Total  cash
consideration  for  these   acquisitions  was  approximately   $4,954  including
transaction  costs of $45. In connection  with these  acquisitions,  the Company
agreed to certain  contingent  payment  obligations  based on the  attainment of
certain  financial  performance  targets  through  September  2002.  The  future
contingent  payment  obligations,  if any, are  expected to be accounted  for as
additional goodwill as the payments are made.

The above  acquisitions were accounted for under the purchase method. The excess
of cost  over the fair  value of net  assets  of  businesses  acquired  is being
amortized on a  straight-line  basis over 30 years.  The  purchase  price of the
acquisitions was financed under the Company's revolving credit facility. Results
of operations  for the acquired  businesses  were  included in the  consolidated
financial statements from their respective acquisition dates.


NOTE 6:  DERIVATIVES AND HEDGING ACTIVITIES

The Company is subject to the risk of  fluctuating  interest rates in the normal
course of business.  From time to time and as required by the  Company's  credit
agreement,  the Company will employ derivative financial  instruments as part of
its risk  management  program.  The  Company's  objective is to manage risks and
exposures and not to trade such instruments for profit or loss.

At September  30, 2001,  the Company had  interest  rate swap and collared  swap
agreements  outstanding  in  the  notional  amounts  of  $75,000  and  $225,000,
respectively.  At December  31,  2000,  the Company had  interest  rate swap and
collared  swap  agreements  outstanding  in the notional  amounts of $50,000 and
$150,000, respectively.

In September  2001, the Company  accelerated the call option of an interest rate
swap agreement  maturing November 2006 relating to $50,000 nominal amount of its
11.0%  senior  subordinated  notes and  entered  into a new  interest  rate swap
agreement maturing November 2006 relating to $75,000 nominal amount of its 11.0%
senior subordinated notes. Under this agreement, the Company pays floating three
month  LIBOR plus 5.50%.  The  financial  institution  has the right to call the
agreement,  at its  discretion,  after May 1, 2003.  In  addition,  the  Company
entered into an interest  rate collared swap  agreement  maturing  November 2006
relating to $75,000  nominal amount of its term debt.  Under the agreement,  the
Company pays floating  three month LIBOR,  capped at 6.75%,  plus the applicable
margin as set forth in the credit agreement.  In the event,  however,  the three
month LIBOR drops below  2.50% from  November 1, 2001 to April 30,  2002,  2.85%
from May 1, 2002 to April 30,  2003,  or 4.10% from May 1, 2003 to  November  1,
2006,  the Company  would be required to pay 5.50% plus the  applicable  margin,
until such time the three month LIBOR  rises  above the period  floor,  at which
time the rate returns to a variable rate.

On January 1, 2001, the Company  implemented  Statement of Financial  Accounting
Standards  (SFAS) No. 133,  Accounting  for Derivative  Instruments  and Hedging
Activities,  as  amended by SFAS No.  137 and SFAS No.  138  (collectively,  the
Statement).  This  Statement  requires all  derivatives  to be recognized in the
balance  sheet at fair value,  with changes in that fair value to be recorded in
current earnings or deferred in other comprehensive income, depending on whether
the  derivative  instrument  qualifies  as a hedge and, if so, the nature of the
hedging  activity.  The  Company's  transition  adjustment  upon adoption of the
Statement  required the recording of a liability of $3,691 with an offset of the
same amount to accumulated other comprehensive income. As of September 30, 2001,
the  liability  is $12,361 and is included  in other  liabilities  and $9,799 is
included  in  accumulated  other  comprehensive  income  (loss).  The Company is
subject  to the risk of  fluctuating  interest  rates in the  normal  course  of
business.  The Company's  interest rate hedges are primarily  classified as cash
flow  hedges.  For  a  cash  flow  hedge  of  an  anticipated  transaction,  the
ineffective portion of the change in fair value of the derivative is recorded in
earnings as incurred,  whereas the effective  portion is deferred in accumulated
other comprehensive  income (loss) on the balance sheet until the transaction is
realized,  at which time any  deferred  hedging  gains or losses are recorded in
earnings.  During the quarter ended September 30, 2001, the Company recorded, as
part of interest expense,  a loss of $2,562 due to the hedges'  ineffectiveness.
For the nine months ended September 30, 2001, the net impact on interest expense
is $2,562.


NOTE 7:  COMPREHENSIVE INCOME (LOSS)

The  components  of total  comprehensive  income  (loss) for the  periods  ended
September 30 are as follows:

                                Three Months Ended          Nine Months Ended
                                   September 30,              September 30,
                             -------------------------  ------------------------
                                  2001                       2001
                              As Restated                As Restated
                             (Notes 2 & 10)    2000     (Notes 2 & 10)   2000
                             -------------- ---------   -------------- ---------
Net income (loss)             $ (3,521)     $ (5,763)     $ (2,967)    $(14,346)
Other comprehensive
income item:
  Net loss on cash flow
  hedging instruments           (3,178)            -        (9,799)           -
                              --------      --------      --------     --------
Total comprehensive
income (loss)                 $ (6,699)     $ (5,763)     $(12,766)    $(14,346)
                              ========      ========      ========     ========


NOTE 8:  STOCKHOLDERS' DEFICIT

In April 2001,  the  Company  completed  a sale of  489,795.93  shares of senior
common  stock for  $24,000  ($22,004  after all related  expenses)  to a private
equity  firm and to certain  members of its  existing  private  investor  group,
including  Madison Dearborn  Capital Partners III, L.P., the Company's  majority
stockholder.


NOTE 9:  NEW ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 141, Business Combinations.  SFAS
No. 141 requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001 and establishes specific criteria for
recognition  of  intangible  assets  separately  from  goodwill.   For  business
combinations  initiated  after June 30, 2001,  SFAS No. 141 also  requires  that
unallocated  negative  goodwill be written off  immediately as an  extraordinary
gain.  In addition,  SFAS No. 141  requires  reclassifying  existing  intangible
assets that have been  reported as part of  goodwill,  and  accounting  for them
separately  upon  adoption  of SFAS No. 142 if  certain  criteria  are met.  The
adoption  of SFAS  No.  141 did not  have a  material  impact  on the  Company's
consolidated  financial  statements  as the Company has no negative  goodwill or
intangible assets that have been reported as part of goodwill.

In July 2001,  the FASB  issued  SFAS No.  142,  Goodwill  and Other  Intangible
Assets.  SFAS No. 142  eliminates  the  amortization  of  goodwill  and  instead
requires  goodwill to be tested for  impairment  annually at the reporting  unit
level.  Also,  specifically  identifiable  intangible  assets are required to be
amortized over their useful lives and reviewed for impairment in accordance with
Statement  of  Financial   Accounting  Standard  No.  144,  Accounting  for  the
Impairment  or  Disposal  of  Long-Lived  Assets.  Under  SFAS No.  142,  if the
intangible  asset has an indefinite  useful life, it is not amortized  until its
life is determined  to be finite.  The Company is required to adopt SFAS No. 142
on January 1, 2002.  SFAS No. 142 provides a staggered  timeline for  completing
transitional  impairment  testing of goodwill  and  indefinite-lived  intangible
assets.  The Company does not have any  indefinite-lived  intangible assets. The
Company will be required to reassess the useful  lives of  intangible  assets by
the end of the first  quarter of 2002.  The Company will be required to complete
the first step of the transitional  goodwill impairment by the end of the second
quarter of 2002. If this first step indicates  transitional  goodwill impairment
may exist, the second step,  which results in a final  determination of goodwill
impairment,  if any,  must be  completed no later than  December  31, 2002.  The
Company is  currently  evaluating  the  impact of SFAS No. 142 on its  financial
statements.  Goodwill,  net  of  amortization,  was  $426,065  and  $417,084  at
September 30, 2001 and December 31, 2000,  respectively.  Goodwill  amortization
recorded for the quarter and nine months ended September 30, 2001 was $4,199 and
$12,412, respectively, compared to $3,980 and $11,929 for the respective periods
ended September 30, 2000.  However, as previously noted,  goodwill  amortization
will cease as of January 1, 2002.

In October 2001, the FASB issued SFAS No. 144,  Accounting for the Impairment or
Disposal of Long-Lived Assets. SFAS No. 144 addresses  financial  accounting and
reporting for the impairment or disposal of long-lived  assets,  and is required
to be adopted on January 1, 2002.  The  Company  does not expect SFAS No. 144 to
have a material impact on the Company's  consolidated  financial statements upon
adoption.


<PAGE>


NOTE 10:  RESTATEMENT

As described in Note 2, the September 30, 2001 unaudited condensed  consolidated
balance  sheet and the  financial  results for the three and nine  months  ended
September 30, 2001 have been restated.  A comparison of previously  reported and
restated condensed consolidated financial statements follows:


CONDENSED CONSOLIDATED BALANCE SHEETS
                                                  September 30,
                                                      2001         September 30,
                                                  As Previously         2001
                                                    Reported        As Restated
                                                  -------------    -------------
ASSETS

Cash and cash equivalents                          $   6,425        $   6,425
Cash and cash equivalents held for clients            23,479           23,479
Accounts receivable - trade, less allowance
  for doubtful receivables of $340                    74,141           68,654
Purchased loans and accounts receivable
  portfolios                                          20,492           20,492
Property and equipment, net                           45,737           45,737
Intangible assets, net                               426,065          426,065
Deferred financing costs, less accumulated
  amortization of $7,857                              19,777           19,777
Other assets                                          42,202           38,572
                                                   ---------        ---------
         TOTAL                                     $ 658,318        $ 649,201
                                                   =========        =========

LIABILITIES AND STOCKHOLDERS' DEFICIT

Accounts payable - trade                           $  14,371        $  14,371
Collections due to clients                            23,479           23,479
Accrued salaries, wages and benefits                  16,326           16,326
Debt                                                 537,198          537,198
Other liabilities                                     78,919           78,919
Commitments and contingencies
Mandatory redeemable preferred stock;
  redemption amount of $135,976                      118,244          118,244
Stockholders' deficit:
  Senior common stock; $.01 par value;
    authorized 900,000 shares, 489,795.93
    issued in 2001 and outstanding                         5                5
  Voting common stock; $.01 par value;
    authorized 20,000,000 shares,
    9,166,728.37 shares issued                            92               92
  Non-voting common stock; $.01 par value;
    authorized 2,000,000 shares, 480,321.30
    issued and outstanding                                 5                5
  Paid-in capital                                    223,277          223,277
  Accumulated deficit                               (207,011)        (216,128)
  Accumulated other comprehensive loss                (9,799)          (9,799)
                                                   ---------        ---------
                                                       6,569           (2,548)
  Notes receivable from management for
    shares sold                                       (1,931)          (1,931)
  Voting common stock in treasury, at cost;
    3,078,249.07 shares                             (134,857)        (134,857)
                                                   ---------        ---------
      Total stockholders' deficit                   (130,219)        (139,336)
                                                   ---------        ---------
         TOTAL                                     $ 658,318        $ 649,201
                                                   =========        =========

<PAGE>

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
                                                             Three Months Ended             Nine Months Ended
                                                                September 30                   September 30
                                                          --------------------------    --------------------------
                                                              2001                          2001
                                                               As          2001              As           2001
                                                           Previously       As           Previously        As
                                                            Reported     Restated         Reported      Restated
<S>                                                       <C>            <C>            <C>             <C>
REVENUES                                                    $151,023     $152,902         $460,042      $461,921

EXPENSES
  Salaries and benefits                                       77,956       77,956          232,846       232,846
  Service fees and other operating
    and administrative expenses                               43,943       49,282          139,577       144,916
  Amortization of purchased loans
    and accounts receivable portfolios                         4,770        4,770           16,761        16,761
  Amortization of goodwill and other intangibles               4,199        4,199           12,412        12,412
  Depreciation expense                                         3,532        3,532           10,839        10,839
  Nonrecurring realignment expenses                                -            -                -             -
                                                            --------     --------         --------      --------
         Total expenses                                      134,400      139,739          412,435       417,774
                                                            --------     --------         --------      --------
OPERATING INCOME                                              16,623       13,163           47,607        44,147

INTEREST EXPENSE - Net                                        16,499       16,499           46,579        46,579
                                                            --------     --------         --------      --------
INCOME (LOSS) BEFORE INCOME TAXES                                124       (3,336)           1,028        (2,432)

PROVISION FOR INCOME TAXES                                       185          185              535           535
                                                            --------     --------         --------      --------
NET INCOME (LOSS)                                                (61)      (3,521)             493        (2,967)

PREFERRED STOCK DIVIDEND REQUIREMENTS AND
  ACCRETION OF SENIOR PREFERRED STOCK                          5,079        5,079           14,789        14,789
                                                            --------     --------         --------      --------
NET LOSS TO COMMON STOCKHOLDERS                             $ (5,140)    $ (8,600)        $(14,296)     $(17,756)
                                                            ========     ========         ========      ========
</TABLE>

NOTE 11. SUBSEQUENT EVENT - DEBT

As a result of the restatement of financial  results as discussed in Note 2, the
Company breached certain  covenants,  representations  and warranties in each of
its bank credit facility (the "Credit Facility") and the Warehouse Facility.  In
response,  the  Company  and the  lenders to the  Credit  Facility  amended  the
facility effective April 10, 2002. The amendment to the Credit Facility includes
provisions that amend the financial  covenants,  waive certain existing defaults
of  covenants  and  breaches in  representations  and  warranties,  increase the
interest rate on borrowings  pursuant to the facility (as discussed below), and,
during 2002,  reduce the  Company's  availability  under its Credit  Facility by
$5,000,  and  limit  capital  expenditures,  investments  and  acquisitions.  In
connection  with the  amendment,  the Company  also issued  4,150  shares of its
Series B Junior Preferred Stock with attached  warrants to acquire 42,347 shares
of the Company's  Senior Common Stock to Madison  Dearborn Capital Partners III,
L.P. and Madison Dearborn Special Equity III, L.P. for a total purchase price of
$4,150.  The proceeds of this sale were used to repay the revolving  facility in
the  amount of $2,075 and the  balance  pro-rata  to the Term A and B loans,  as
provided  in the Credit  Facility.  From  April 10,  2002 until such time as the
Company  delivers to the lenders a compliance  certificate  for the period ended
December 31, 2002,  borrowings  under the revolving  facility and Term A Loan of
the Credit  Facility will bear  interest,  at the Company's  option,  at (a) the
lender's  prime  rate,  plus  2.75%  or (b)  the  Eurodollar  rate  plus  3.75%.
Borrowings under the Term B Loan will bear interest, at the Company's option, at
(a) the lenders'  prime rate plus 3.50% or (b) the  Eurodollar  rate plus 4.50%.
The  amortization and maturity were not amended.  Following this amendment,  the
Company is in compliance with the Credit Facility and,  subject to the Warehouse
Facility issues discussed below, expects to be in compliance throughout 2002.

The  Company  has also  received a waiver  from the lender  under the  Warehouse
Facility for certain breaches of covenants,  representations and warranties with
respect to periods  through  year-end  2001.  Since the  Company,  on an ongoing
basis,  will  continue  to  be  in  breach  of  certain   financial   covenants,
representations  and warranties,  it has initiated  discussions  with the lender
under the  Warehouse  Facility for the purpose of seeking to amend such facility
to cure such breaches,  although there can be no assurance that the Company will
be successful in negotiating  such an amendment.  If the Company is unsuccessful
in  negotiating  such an amendment,  notwithstanding  the waiver  received,  the
Company may again breach certain  covenants,  representations  and warranties in
the  Warehouse  Facility  and there can be no  assurances  that the lender  will
extend the waiver to cover such  breaches.  On an ongoing  basis the Company has
also been  engaged  in  discussions  with  certain  other  providers  of similar
warehouse  facilities.  While there can be no assurances,  the Company  believes
that other  warehouse  facilities  would be available  on economic  terms and in
amounts  comparable to the company's  existing  Warehouse  Facility  which would
allow the Company to continue its business of  purchasing  of loans and accounts
receivable.  In the event the Company is unable to amend the  current  Warehouse
Facility and it is  terminated  and the Company is unable to enter a replacement
warehouse facility, the Company would be in default of its Credit Facility.

Under the indenture  governing the 11% Series B Senior  Subordinated  Notes, the
Company is furnishing Note holders with copies of the restated financial results
discussed  in Note 2 and,  therefore,  has  cured,  within any  applicable  cure
period, any default that may have existed as a result of inaccuracies  contained
in any previously furnished financial information.

<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS


Restatement of Financial Results

During the finalization of the Company's consolidated financial statements as of
and  for  the  year  ended  December  31,  2001,  it  was  determined  that  the
consolidated  results reported in the Company's Form 10-K as of and for the year
ended December 31, 2000, as well as the unaudited consolidated quarterly results
reported in the Company's  Report on Form 10-Q for the quarter  ended  September
30,  2001,  would need to be restated  for  inaccurate  financial  reporting  of
certain transactions at one of the Company's  subsidiaries,  North Shore Agency,
Inc.  ("NSA").  The Board of  Directors  authorized  the  Audit  and  Compliance
Committee (the  "Committee") to conduct an independent  investigation,  with the
assistance of special counsel retained by the Committee,  to identify the causes
of these  discrepancies and to make  recommendations to ensure similar issues do
not recur in the  future.  The  Committee  retained  Bryan  Cave LLP as  special
counsel, and Bryan Cave LLP engaged an independent  accounting firm to assist in
the  investigation.  As a result of the  investigation,  it was determined  that
certain  assets  were  overstated  (primarily  accounts  receivable  and prepaid
postage) and trade accounts payable was understated at NSA due to the inaccurate
financial reporting of certain transactions.

As a result, the consolidated  financial statements as of and for the year ended
December 31, 2000, as well as the unaudited consolidated quarterly results as of
and  for  the  quarter  ended  September  30,  2001  have  been  restated.   The
consolidated financial statements as of and for the year ended December 31, 2000
have been  restated and provided in the  Company's  Form 10-K for the year ended
December  31,  2001  (to  be  filed  as  soon  as  practicable).   The  restated
consolidated  financial  results as of September  30, 2001 and December 31, 2000
and for the three and nine months ended September 30, 2001 have been included in
the consolidated financial statements included herein.

For the three and nine months ended September 30, 2001, the previously  reported
unaudited  consolidated  financial  statements  included  an  understatement  of
revenues by  approximately  $1.9  million  and an  understatement  of  operating
expenses by approximately $5.3 million.  The impact of the inaccurate  financial
reporting of certain  transactions on previously  reported operating results for
the nine months was to overstate  operating income by approximately $3.4 million
and understate  net loss and net loss to common  stockholders  by  approximately
$3.4 million.

A  comparison  of  previously   reported  and  restated   unaudited,   condensed
consolidated financial statements as of September 30, 2001 and for the three and
nine months ended  September 30, 2001 are set forth in Note 10 to the unaudited,
condensed consolidated financial statements included herein.


Results of Operations

Three Months Ended September 30, 2001 (Restated)  Compared to Three Months Ended
September 30, 2000
--------------------------------------------------------------------------------

Revenues  for the three  months  ended  September  30, 2001 were $152.9  million
compared to $133.9  million in the same period last year - an increase of 14.2%.
The  revenue  increase  of $19.0  million was due to  increased  collection  and
outsourcing  services  revenues  offset  partially by lower  portfolio  services
revenues.  The collection  services revenues increased 4.1% to $88.6 million for
the three  months  ended  September  30,  2001 from $85.1  million in 2000.  The
increased  revenues were due primarily to increased  collection  letter products
business  offset  partially  by  lower  student  loan  business.  Revenues  from
outsourcing services increased 74.8% to $41.6 million for the three months ended
September 30, 2001 from $23.8  million for the  comparable  period in 2000.  The
increased  outsourcing  services revenues of $17.8 million were due primarily to
new and increased existing business and the acquisitions of RWC Consulting Group
("RWC"),  Coast to Coast  Consulting  ("CCC")  and Pacific  Software  Consulting
("PSC").  Revenues from portfolio services of $22.7 million compared unfavorably
to $25.0  million in 2000 due  primarily  to the  continued  negative  effect on
revenues resulting from the shift to off-balance sheet purchased  portfolios and
lower strategic sales of portfolios partially offset by increased servicing fees
due to increased  collections  from the  increased  level of  off-balance  sheet
purchased loans and accounts  receivable  portfolios during 1999, 2000 and 2001.
The Company  believes  that its revenues and  operating  income were  negatively
affected by the terrorist attacks of September 11, 2001.

Operating expenses,  inclusive of salaries and benefits,  service fees and other
operating and administrative  expenses, were $127.2 million for the three months
ended September 30, 2001 and $107.9 million for the comparable  period in 2000 -
an  increase  of  17.9%.  The  increase  in these  operating  expenses  resulted
primarily from the RWC, CCC and PSC acquisitions,  increased postage expense and
the increased  expenses due to the increased  revenues of outsourcing  services.
For the three months ended  September 30, 2001,  amortization  and  depreciation
charges of $12.5  million were lower than the $14.5  million for the  comparable
period in 2000 by $2.0 million.  The lower amortization and depreciation charges
resulted  primarily  from  lower  portfolio  amortization  as a result  of lower
strategic sales of portfolios and the shift towards  off-balance sheet purchased
loans and accounts receivable portfolios.

In the three months ended September 30, 2000, the Company incurred  nonrecurring
conversion,  realignment and relocation  expenses of $1.7 million which included
costs for  closure of certain  call  centers,  severance  associated  with these
office closures and certain other one-time costs.

Earnings before interest expense, taxes,  depreciation and amortization (EBITDA)
for the three  months ended  September  30, 2001 was $25.7  million  compared to
$24.2  million  for  the  same  period  in  2000.  The  increase  was  primarily
attributable to the three acquisitions, the higher outsourcing services revenues
and the 2000  nonrecurring  charges of $1.7 million offset partially by a change
in revenue mix relating to its  collection  letter  products  from higher margin
contingent  fee services to lower  margin fixed fee services and higher  postage
expense.

As a result of the above,  the Company's  operating  income of $13.2 million for
the three months ended September 30, 2001 compared favorably to $9.7 million for
the same period in 2000.

Net interest  expense for the three months  ended  September  30, 2001 was $16.5
million  compared  to $15.4  million  for the  comparable  period  in 2000.  The
increase was due primarily to additional  interest  expense of $2.6 million as a
result of the Company's interest rate hedges'  ineffectiveness  partially offset
by lower interest rates.

The  provision  for income taxes of $0.2 million was provided for certain  state
and foreign income tax obligations. The net deferred tax assets at September 30,
2001 are fully  offset by a valuation  allowance.  During the three months ended
September 30, 2001, the net deferred tax assets and the valuation  allowance did
not change  from the  previous  quarter.  The  Company  generated  a net taxable
operating  loss for federal and certain  state  income tax  purposes for which a
full valuation allowance was provided.

Due to the factors stated above, the Company had a net loss for the three months
ended  September  30, 2001 of $3.5 million which  compared  favorably to the net
loss of $5.8 million for the three months ended September 30, 2000.


Nine Months Ended  September 30, 2001  (Restated)  Compared to Nine Months Ended
September 30, 2000
--------------------------------------------------------------------------------

Revenues  for the nine months  ended  September  30,  2001 were  $461.9  million
compared to $404.5 million in the same period last year - an increase of 14.2 %.
The revenue increase of $57.4 million was primarily due to increased outsourcing
services  revenues  offset  partially  by  lower  portfolio  services  revenues.
Revenues from  outsourcing  services  increased  87.6% to $122.9 million for the
nine  months  ended  September  30, 2001 from $65.5  million for the  comparable
period in 2000.  The increased  outsourcing  services  revenues of $57.4 million
were due primarily to new and increased  existing  business and the acquisitions
of RWC, CCC and PSC. Revenues from portfolio  services of $66.1 million compared
unfavorably  to $68.2  million in 2000 due to the continued  negative  effect on
revenues resulting from the shift to off-balance sheet purchased  portfolios and
lower strategic portfolio sales partially offset by increased servicing fees due
to increased collections from the increased level of off-balance sheet purchased
loans and  accounts  receivable  portfolios  during  1999,  2000 and  2001.  The
collection services revenues increased slightly, 0.8%, to $272.9 million for the
nine months ended  September 30, 2001 from $270.8 million in 2000. The increased
revenues  were due  primarily  to increased  government  and  collection  letter
products business offset by lower bank card, student loan and telecommunications
business.  The Company  believes  that its  revenues and  operating  income were
negatively affected by the terrorist attacks of September 11, 2001.

Operating expenses,  inclusive of salaries and benefits,  service fees and other
operating and administrative  expenses,  were $377.8 million for the nine months
ended September 30, 2001 and $325.5 million for the comparable  period in 2000 -
an  increase  of  16.1%.  The  increase  in these  operating  expenses  resulted
primarily from the RWC, CCC and PSC acquisitions, higher postage expense and the
increased  expenses  due to the  increased  revenues  of  outsourcing  services.
Operating  expenses  for the nine  months  ended  September  30,  2001  included
non-cash compensation expense related to variable stock options of approximately
$0.7 million. Included in operating expenses for the nine months ended September
30,  2000,  the  Company  incurred  approximately  $0.2  million  of  additional
compensation  expense resulting from the redemption of vested stock options. For
the nine months ended September 30, 2001,  amortization and depreciation charges
of $40.0 million were lower than the $45.4 million for the comparable  period in
2000 by $5.4 million.  The lower amortization and depreciation  charges resulted
primarily  from lower  portfolio  amortization  as a result of the shift towards
off-balance sheet purchased loans and accounts  receivable  portfolios and lower
depreciation  resulting from lower current year capital  expenditures and mix of
current and prior years' capital expenditures.

In the nine months ended September 30, 2000, the Company  incurred  nonrecurring
conversion,  realignment and relocation  expenses of $2.7 million which included
costs for closure of certain call centers,  severance associated with these call
centers and certain other one-time costs.

Earnings before interest expense, taxes,  depreciation and amortization (EBITDA)
for the nine months ended September 30, 2001 was $84.2 million compared to $76.2
million for the same period in 2000. The increase was primarily  attributable to
the three  acquisitions,  the higher outsourcing  services revenues and the 2000
nonrecurring charges of $2.7 million offset partially by higher postage expense.
Adding back the non-cash stock  compensation  expense,  EBITDA was $84.9 million
for the nine months ended September 30, 2001;  this compared  favorably to $79.1
million for the same period in 2000 after adding back the  nonrecurring  charges
and the additional compensation expense.

As a result of the above,  the Company's  operating  income of $44.1 million for
the nine months ended September 30, 2001 compared favorably to $30.8 million for
the same period in 2000.

Net  interest  expense for the nine months  ended  September  30, 2001 was $46.6
million  compared  to $44.8  million  for the  comparable  period  in 2000.  The
increase was due primarily to additional  interest  expense of $2.6 million as a
result of the Company's interest rate hedges'  ineffectiveness  offset partially
by lower interest rates.

The  provision  for income taxes of $0.5 million was provided for certain  state
and foreign income tax obligations. The net deferred tax assets at September 30,
2001 are fully  offset by a valuation  allowance.  During the nine months  ended
September  30, 2001,  the net deferred  tax assets and the  valuation  allowance
decreased by $0.4 million.  The decrease was caused by a reduction of deductible
temporary  differences  that exceeded the taxable net operating  loss  generated
during the current period by $0.4 million.  The Company  generated a net taxable
operating  loss for federal and certain  state  income tax  purposes for which a
full valuation allowance was provided.

Due to the factors stated above,  the Company had a net loss for the nine months
ended  September  30, 2001 of $3.0 million which  compared  favorably to the net
loss of $14.3 million for the nine months ended September 30, 2000.


Financial Condition, Liquidity and Capital Resources

At  September  30,  2001,  the  Company  had cash and cash  equivalents  of $6.4
million.  The Company's credit agreement  provides for a $75.0 million revolving
credit facility, which allows the Company to borrow for working capital, general
corporate  purposes  and  acquisitions,  subject  to certain  conditions.  As of
September  30,  2001,  the  Company  had  $41.7  million  outstanding  under the
revolving credit facility leaving $24.7 million,  after  outstanding  letters of
credit, available under the revolving credit facility.

In April 2001,  the Company  completed a sale of $24.0  million of senior common
stock to a private  equity firm and to certain  members of its existing  private
investor  group,  including  Madison  Dearborn  Capital  Partners III, L.P., the
Company's majority stockholder.  The net proceeds of $22.0 million from the sale
were used to repay debt under the Company's bank credit facility.

Since  December  31,  2000,  cash and cash  equivalents  decreased  $3.8 million
primarily  due to cash  utilized  for the CCC  and  PSC  acquisitions  of  $21.7
million,  debt  repayments of $12.1 million,  an earnout payment of $3.0 million
and  capital  expenditures  of  $9.5  million  offset  by  cash  from  operating
activities  and portfolio  purchasing  of $10.9  million,  borrowings  under the
revolving  credit facility of $9.7 million and net proceeds from the issuance of
senior  common stock of $22.0  million.  The Company also held $23.5  million of
cash for clients in restricted trust accounts at September 30, 2001.

For the nine  months  ended  September  30,  2000,  cash  and  cash  equivalents
increased  $3.7 million  primarily  due to cash from  operating  activities  and
portfolio  purchasing of $19.5 million and net cash from financing activities of
$14.6 million,  primarily borrowings under the revolving credit facility, offset
by the use of cash of $30.4 million primarily for capital  expenditures of $13.9
million  and $15.2  million  for the  acquisition  of certain  assets of RWC. In
addition to the cash consideration of $15.2 million, the purchase price included
voting  common  stock  worth $2.0  million  and a $5.0  million  18%  unsecured,
subordinated note along with a contingent payment obligation.

For the first nine months in 2001, the Company made capital expenditures of $9.5
million  primarily for the replacement and upgrading of equipment,  expansion of
facilities  and expansion of the Company's  information  services  systems.  The
Company anticipates capital spending of approximately $13.8 million during 2001,
which  the  Company  intends  to fund from  cash  flow  from  operations  and if
necessary, borrowings under the revolving credit facility.

As a result of the  restatement  of financial  results as discussed  above,  the
Company breached certain  covenants,  representations  and warranties in each of
its bank credit facility (the "Credit Facility") and the Warehouse Facility.  In
response,  the  Company  and the  lenders to the  Credit  Facility  amended  the
facility effective April 10, 2002. The amendment to the Credit Facility includes
provisions that amend the financial  covenants,  waive certain existing defaults
of  covenants  and  breaches in  representations  and  warranties,  increase the
interest rate on borrowings  pursuant to the facility (as discussed below), and,
during 2002,  reduce the  Company's  availability  under its Credit  Facility by
$5,000,  and  limit  capital  expenditures,  investments  and  acquisitions.  In
connection  with the  amendment,  the Company  also issued  4,150  shares of its
Series B Junior Preferred Stock with attached  warrants to acquire 42,347 shares
of the Company's  Senior Common Stock to Madison  Dearborn Capital Partners III,
L.P. and Madison Dearborn Special Equity III, L.P. for a total purchase price of
$4,150.  The proceeds of this sale were used to repay the revolving  facility in
the  amount of $2,075 and the  balance  pro-rata  to the Term A and B loans,  as
provided  in the Credit  Facility.  From  April 10,  2002 until such time as the
Company  delivers to the lenders a compliance  certificate  for the period ended
December 31, 2002,  borrowings  under the revolving  facility and Term A Loan of
the Credit  Facility will bear  interest,  at the Company's  option,  at (a) the
lender's  prime  rate,  plus  2.75%  or (b)  the  Eurodollar  rate  plus  3.75%.
Borrowings under the Term B Loan will bear interest, at the Company's option, at
(a) the lenders'  prime rate plus 3.50% or (b) the  Eurodollar  rate plus 4.50%.
The  amortization and maturity were not amended.  Following this amendment,  the
Company is in compliance with the Credit Facility and,  subject to the Warehouse
Facility issues discussed below, expects to be in compliance throughout 2002.

The  Company  has also  received a waiver  from the lender  under the  Warehouse
Facility for certain breaches of covenants,  representations and warranties with
respect to periods  through  year-end  2001.  Since the  Company,  on an ongoing
basis,  will  continue  to  be  in  breach  of  certain   financial   covenants,
representations  and warranties,  it has initiated  discussions  with the lender
under the  Warehouse  Facility for the purpose of seeking to amend such facility
to cure such breaches,  although there can be no assurance that the Company will
be successful in negotiating  such an amendment.  If the Company is unsuccessful
in  negotiating  such an amendment,  notwithstanding  the waiver  received,  the
Company may again breach certain  covenants,  representations  and warranties in
the Warehouse Facility and there can be no assurance that the lender will extend
the waiver to cover such breaches. On an ongoing basis the Company has also been
engaged in  discussions  with  certain  other  providers  of  similar  warehouse
facilities.  While there can be no assurances,  the Company  believes that other
warehouse  facilities  would be  available  on  economic  terms  and in  amounts
comparable to the company's  existing  Warehouse  Facility which would allow the
Company to continue its business of purchasing of loans and accounts receivable.
In the event the Company is unable to amend the current  Warehouse  Facility and
it is  terminated  and the  Company is unable to enter a  replacement  warehouse
facility,  the  Company  would be in default of its Credit  Facility.  Under the
indenture  governing the 11% Series B Senior  Subordinated Notes, the Company is
furnishing Note Holders with copies of the restated  financial results discussed
in Note 2 and,  therefore,  has cured,  within any applicable  cure period,  any
default  that may have  existed  as a result of  inaccuracies  contained  in any
previously furnished financial information.

Under the indenture  governing the 11% Series B Senior  Subordinated  Notes, the
Company is furnishing Note holders with copies of the restated financial results
as discussed above and, therefore,  has cured within any applicable cure period,
any default that may have existed as a result of  inaccuracies  contained in any
previously furnished financial information.


Recent Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 141, Business Combinations.  SFAS
No. 141 requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001 and establishes specific criteria for
recognition  of  intangible  assets  separately  from  goodwill.   For  business
combinations  initiated  after June 30, 2001,  SFAS No. 141 also  requires  that
unallocated  negative  goodwill be written off  immediately as an  extraordinary
gain.  In addition,  SFAS No. 141  requires  reclassifying  existing  intangible
assets that have been  reported as part of  goodwill,  and  accounting  for them
separately  upon  adoption  of SFAS No. 142 if  certain  criteria  are met.  The
adoption  of SFAS  No.  141 will not have a  material  impact  on the  Company's
consolidated  financial  statements  as the Company has no negative  goodwill or
intangible assets that have been reported as part of goodwill.

In July 2001,  the FASB  issued  SFAS No.  142,  Goodwill  and Other  Intangible
Assets.  SFAS No. 142  eliminates  the  amortization  of  goodwill  and  instead
requires  goodwill to be tested for  impairment  annually at the reporting  unit
level.  Also,  specifically  identifiable  intangible  assets are required to be
amortized over their useful lives and reviewed for impairment in accordance with
SFAS No. 144,  Accounting for the  Impairment or Disposal of Long-Lived  Assets.
Under SFAS No. 142, if the intangible asset has an indefinite useful life, it is
not amortized until its life is determined to be finite. The Company is required
to adopt SFAS No. 142 on January  1,  2002.  SFAS No. 142  provides a  staggered
timeline  for  completing   transitional  impairment  testing  of  goodwill  and
indefinite-lived   intangible   assets.   The   Company   does   not   have  any
indefinite-lived intangible assets. The Company will be required to reassess the
useful lives of intangible  assets by the end of the first quarter of 2002.  The
Company will be required to complete the first step of the transitional goodwill
impairment  test by the end of the second  quarter  of 2002.  If this first step
indicates  transitional  goodwill  impairment may exist,  the second step, which
results  in a final  determination  of  goodwill  impairment,  if  any,  must be
completed no later than December 31, 2002.  The Company is currently  evaluating
the  impact  of SFAS  No.  142 on its  financial  statements.  Goodwill,  net of
amortization,  was $426.1  million and $417.1  million at September 30, 2001 and
December 31, 2000, respectively.  Goodwill amortization recorded for the quarter
and nine months ended  September  30, 2001 was $4.2  million and $12.4  million,
respectively,  and $4.0  million and $11.9  million for the  respective  periods
ended September 30, 2000.  However, as previously noted,  goodwill  amortization
will cease as of January 1, 2002.

In October 2001, the FASB issued SFAS No. 144,  Accounting for the Impairment or
Disposal of Long-Lived Assets. SFAS No. 144 addresses  financial  accounting and
reporting for the impairment or disposal of long-lived  assets, and as required,
was adopted, by the Company on January 1, 2002. The Company does not expect SFAS
No.  144 to have a  material  impact  on the  Company's  consolidated  financial
statements.


Forward-Looking Statements

The  following  statements  in  this  entire  document  are  or  may  constitute
forward-looking  statements made in reliance upon the safe harbor of the Private
Securities  Litigation  Reform  Act  of  1995:  (1)  statements  concerning  the
anticipated   costs  and  outcome  of  legal   proceedings   and   environmental
liabilities,  (2)  statements  regarding  anticipated  changes  in the  accounts
receivable  management  industry,  including  but not  limited  to debt  levels,
delinquencies,  industry  consolidation,  customer consolidation and outsourcing
trends,  (3)  statements   regarding   anticipated   changes  in  the  Company's
opportunities in its industry,  including but not limited to  acquisitions,  (4)
statements regarding the Company's plans to reduce costs and improve operational
efficiencies,  (5) statements regarding the Company's ability to fund its future
operating  expenses and meet its debt service  requirements  as they become due,
(6)  statements  regarding  the  Company's  expected  capital  expenditures  and
facilities, (7) any statements preceded by, followed by or that include the word
"believes," "expects,"  "anticipates,"  "plans",  "intends," "should," "may," or
similar  expressions;  and (8) other  statements  contained or  incorporated  by
reference in this document regarding matters that are not historical facts.

Because such statements are subject to risks and  uncertainties,  actual results
may differ  materially from those  expressed or implied by such  forward-looking
statements.  Factors  that  could  cause  actual  results  to differ  materially
include, but are not limited to: (1) the demand for the Company's services,  (2)
the demand for accounts receivable management and the availability of portfolios
to purchase generally, (3) general economic conditions,  (4) changes in interest
rates,  (5)  competition,  including but not limited to pricing  pressures,  (6)
changes in governmental  regulations  including,  but not limited to the federal
Fair Debt  Collection  Practices Act and comparable  state  statutes,  (7) legal
proceedings, (8) environmental investigations and clean up efforts, (9) expected
synergies,  economies of scale and cost savings from recent  acquisitions by the
Company not being fully  realized or realized  within the expected  time frames,
(10)  costs of  operational  difficulties,  including  but not  limited to those
related to integrating  the operations of recently  acquired  companies with the
Company's operations being greater than expected, (11) unanticipated realignment
costs,  (12) the Company's  ability to generate cash flow or obtain financing to
fund its operations, service its indebtedness and continue its growth and expand
successfully  into new markets  and  services  either  through  acquisitions  or
internal growth,  (13) the Company's ability to amend its Warehouse  Facility to
cure  breaches  and defaults  thereunder  or to obtain  replacements  thereof on
acceptable  economic terms,  (14) changes in circumstances or the effects of new
accounting standards which may require the Company to consolidate FINCO into its
financial  statements,  and  (15)  factors  discussed  from  time to time in the
Company's public filings.

These forward-looking statements speak only as of the date they were made. These
cautionary  statements  should be considered  in connection  with any written or
oral  forward-looking  statements that the Company may issue in the future.  The
Company does not undertake any  obligation to release  publicly any revisions to
such  forward-looking  statements to reflect later events or circumstances or to
reflect the occurrence of unanticipated events.

<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is subject to the risk of  fluctuating  interest rates in the normal
course of business.  From time to time and as required by the  Company's  credit
agreement,  the Company will employ derivative financial  instruments as part of
its risk  management  program.  The  Company's  objective is to manage risks and
exposures and not to trade such instruments for profit or loss.

At December 31, 2000 (the most recent  completed  fiscal year),  the Company had
interest rate swap and collared swap agreements outstanding.  In September 2001,
the  Company  accelerated  the call option of an  interest  rate swap  agreement
maturing  November 2006 relating to $50.0  million  nominal  amount of its 11.0%
senior  subordinated  notes and entered into a new interest rate swap  agreement
maturing  November 2006 relating to $75.0  million  nominal  amount of its 11.0%
senior subordinated notes. Under this agreement, the Company pays floating three
month  LIBOR plus 5.50% . The  financial  institution  has the right to call the
agreement,  at its  discretion,  after May 1, 2003.  In  addition,  the  Company
entered into an interest  rate collared swap  agreement  maturing  November 2006
relating to $75.0 million nominal amount of its term debt.  Under the agreement,
the  Company  pays  floating  three  month  LIBOR,  capped  at  6.75%,  plus the
applicable margin as set forth in the credit agreement.  In the event,  however,
the three month LIBOR drops below 2.50% from November 1, 2001 to April 30, 2002,
2.85% from May 1, 2002 to April 30, 2003,  or 4.10% from May 1, 2003 to November
1, 2006, the Company would be required to pay 5.50% plus the applicable  margin,
until such time the three month LIBOR  rises  above the period  floor,  at which
time the rate returns to a variable rate.




<PAGE>


PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings

          From time to time,  the Company and  certain of its  subsidiaries  are
          involved  in  various  investigations,  claims  and legal  proceedings
          covering a wide range of  matters  that arise in the normal  course of
          business  and are  routine  to the nature of the  Company's  business.
          Other  information  with respect to legal  proceedings  appears in the
          Company's  Annual Report on Form 10-K for the year ended  December 31,
          2000.


Item 2.   Changes in Securities

          None


Item 3.   Defaults Upon Senior Securities

          See  Note  11  of  the  Condensed  Consolidated  Financial  Statements
          included herein.


Item 4.   Submission of Matters to a Vote of Security Holders

          None


Item 5.   Other Information

          None

Item 6.   Exhibits and Reports on Form 8-K

          (a). Exhibits

               None

          (b). Reports on Form 8-K

               There  were no  reports  on Form 8-K  filed  for the  three-month
               period ended September 30, 2001.


<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/ Gary L. Weller
                                        -------------------------------------
                                        Gary L. Weller
                                        Executive Vice President and
                                         Chief Financial Officer


Date:    April 15, 2002