<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                              FORM 10-Q (MARK ONE)

[x]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED 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 NO. 0-21107
                           TELESPECTRUM WORLDWIDE INC.

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

            DELAWARE                                            23-2845501

(STATE OR OTHER JURISDICTION OF                              (I.R.S. EMPLOYER
 INCORPORATION OR ORGANIZATION)                           IDENTIFICATION NUMBER)

                 443 SOUTH GULPH ROAD, KING OF PRUSSIA, PA 19406
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

Indicate by check mark whether the Registrant (1) has filed all reports to be
filed by Section 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

The number of outstanding shares of the Registrant's Common Stock on November
14, 2001, was 33,076,073.


<PAGE>
                  TeleSpectrum Worldwide Inc. and Subsidiaries


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                           PAGES
<S>                                                                        <C>
PART I -- FINANCIAL INFORMATION

Item 1.  Financial Statements (unaudited):

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

   Condensed Consolidated Statements of Operations
      For the Three Months Ended September 30, 2001 and 2000 and
      For the Nine Months Ended September 30, 2001 and 2000                  4

   Condensed Consolidated Statements of Cash Flows
      For the Nine Months Ended September 30, 2001 and 2000                  5

   Notes to Condensed Consolidated Financial Statements                    6-13

Item 2.  Management's Discussion and Analysis of Results of Operations     14-25

Item 3.  Quantitative and Qualitative Disclosures About Market Risk         26


PART II - OTHER INFORMATION

Item 3.  Defaults Upon Senior Securities                                    27

Item 6.  Exhibits and Reports on Form 8-K                                   27
</TABLE>


                                       2
<PAGE>

ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)

                  TeleSpectrum Worldwide Inc. and Subsidiaries
                      Condensed Consolidated Balance Sheets
                                   (Unaudited)
                    (In Thousands - Except Per Share Amounts)

<TABLE>
<CAPTION>
                                                                                     September 30,            December 31,
                                                                                         2001                    2000
                                                                                     -------------            ------------
<S>                                                                                  <C>                      <C>
                                     ASSETS
CURRENT ASSETS:
   Cash and cash equivalents                                                               7,728               $   5,258
   Accounts receivable, net                                                               38,240                  54,745
   Prepaid expenses and other                                                              4,221                   6,173
                                                                                       ---------               ---------
      Total current assets                                                                50,189                  66,176

PROPERTY AND EQUIPMENT, net                                                               28,034                  39,967

INTANGIBLES AND GOODWILL, net                                                             14,136                  15,003

OTHER NONCURRENT ASSETS                                                                    2,043                   3,721
                                                                                       ---------               ---------
      Total Assets                                                                     $  94,402               $ 124,867
                                                                                       =========               =========
                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
   Current maturities of long-term debt                                                $ 138,780               $   3,844
   Accounts payable                                                                       11,235                  15,457
   Accrued expenses                                                                       26,476                  34,339
   Other current liabilities                                                              18,753                   1,086
                                                                                       ---------               ---------
      Total current liabilities                                                          195,244                  54,726
                                                                                       ---------               ---------

LONG-TERM DEBT                                                                             7,673                 132,413
                                                                                       ---------               ---------

OTHER NONCURRENT LIABILITIES                                                                 127                   2,001
                                                                                       ---------               ---------

STOCKHOLDERS' DEFICIT:
   Preferred stock, $.01 par value, 5,000,000 shares
      authorized, no shares issued or outstanding                                             --                      --
   Common stock, $.01 par value, 200,000,000 shares
      authorized, 40,022,656 shares issued and 33,076,073
      shares outstanding at September 30, 2001 and December 31, 2000                         400                     400
Additional paid-in capital                                                               339,113                 339,099
Common stock purchase warrants                                                             7,840                   7,840
Treasury stock, 6,946,583 shares at cost                                                 (48,810)                (48,810)
Accumulated deficit                                                                     (404,442)               (360,524)
Due from stockholders                                                                       (952)                   (952)
Cumulative currency translation adjustment                                                (1,791)                 (1,326)
                                                                                       ---------               ---------
   Total stockholders' deficit                                                          (108,642)                (64,273)
                                                                                       ---------               ---------
   Total liabilities and stockholders' deficit                                         $  94,402               $ 124,867
                                                                                       =========               =========
</TABLE>


            See Notes to Condensed Consolidated Financial Statements


                                       3
<PAGE>

                  TeleSpectrum Worldwide Inc. and Subsidiaries
                 Condensed Consolidated Statements of Operations
                                   (Unaudited)
                    (In Thousands - Except Per Share Amounts)


<TABLE>
<CAPTION>
                                                            Three Months Ended                   Nine Months Ended
                                                      ------------------------------      -------------------------------
                                                      September 30,     September 30,     September 30,      September 30,
                                                          2001              2000               2001               2000
                                                      ------------      ------------      ------------       ------------
<S>                                                   <C>               <C>               <C>                <C>
REVENUES                                                $ 52,349          $ 73,119          $ 172,687          $ 231,057
                                                        --------          --------          ---------          ---------

OPERATING EXPENSES:
   Cost of services                                       42,406            57,541            133,676            179,128
   Selling, general and administrative                    11,682            18,605             39,503             52,489
   Restructuring charge and other                          2,493                --              6,531                 --
   Goodwill amortization                                     301             2,488                879              6,429
                                                        --------          --------          ---------          ---------

      Total operating expenses                            56,882            78,634            180,589            238,046
                                                        --------          --------          ---------          ---------

      Operating income (loss)                             (4,533)           (5,515)            (7,902)            (6,989)

INTEREST EXPENSE, net                                     (4,623)           (4,137)           (15,729)           (11,513)
                                                        --------          --------          ---------          ---------

Loss before income taxes, minority interest and
extraordinary loss                                        (9,156)           (9,652)           (23,631)           (18,502)

MINORITY INTEREST                                             --               960                 --              1,966

INCOME TAXES                                                  --                --                 --                 --

EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT OF
DEBT, net of tax effect of $0                                 --                --            (20,286)                --
                                                        --------          --------          ---------          ---------

Net Loss                                                $ (9,156)         $ (8,692)         $ (43,917)         $ (16,536)
                                                        ========          ========          =========          =========

Loss Per Share (Basic and Diluted)
  Before Extraordinary Loss                             $   (.28)         $  (0.27)         $    (.74)         $   (0.52)
  Extraordinary Loss                                          --                --               (.63)                --
                                                        --------          --------          ---------          ---------
  Net Loss                                              $   (.28)         $  (0.27)         $   (1.37)         $   (0.52)
                                                        ========          ========          =========          =========

Weighted-Average Shares Outstanding
   Basic                                                  32,714            31,764             32,105             31,764
                                                        ========          ========          =========          =========
   Diluted                                                32,714            31,764             32,105             31,764
                                                        ========          ========          =========          =========
</TABLE>


            See Notes to Condensed Consolidated Financial Statements


                                       4
<PAGE>
                  TeleSpectrum Worldwide Inc. and Subsidiaries
                 Condensed Consolidated Statements of Cash Flow
                                   (unaudited)
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                                              Nine Months Ended
                                                                                        ------------------------------
                                                                                        September 30,     September 30,
                                                                                            2001               2000
                                                                                        ------------      ------------
<S>                                                                                     <C>               <C>
Cash Flows From Operating Activities:
   Net loss                                                                               $(43,917)         $(16,536)
   Adjustments to reconcile net loss to net cash
      flows from operating activities:
         Depreciation and amortization                                                      11,442            13,712
         Provision for bad debts                                                             1,433             2,346
         Restructuring charge and other                                                      5,480             6,429
         Extraordinary loss                                                                 20,286                --
         Minority interest                                                                      --            (1,966)
         Gain on sale of assets and other                                                     (172)              163
         Changes in operating assets and liabilities
            net of acquisitions:
               Accounts receivable                                                          15,106             7,938
               Prepaid expenses and other                                                    2,616            (1,593)
               Accounts payable                                                             (4,222)            3,833
               Accrued and other liabilities                                                (4,689)           (5,339)
                                                                                          --------          --------

                  Net cash provided by operating activities                                  3,363             8,987
                                                                                          --------          --------

Cash Flows From Investing Activities:
   Purchases of property and equipment                                                      (1,303)          (18,217)
   Proceeds from disposal of assets                                                          1,120                71
                                                                                          --------          --------

                  Net cash used in investing activities                                       (183)          (18,146)
                                                                                          --------          --------

Cash Flows From Financing Activities:
   Exercise of stock options and sale of common stock                                           --             1,725
   Debt issuance costs                                                                      (1,538)           (5,668)
   Net borrowings on credit facilities                                                       1,247            13,733
   Net payments of capital lease obligations                                                  (419)             (588)
                                                                                          --------          --------
                  Net cash provided by (used in) financing activities                         (710)            9,202
                                                                                          --------          --------

Net increase in cash and cash equivalents                                                    2,470                43
Cash and cash equivalents, beginning of period                                               5,258                --
                                                                                          --------          --------

Cash and cash equivalents, end of period                                                  $  7,728          $     43
                                                                                          ========          ========

SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid during the period                                                           $  7,175          $ 10,001
                                                                                          ========          ========
Income taxes paid during the period                                                       $     --          $     --
                                                                                          ========          ========
</TABLE>

            See Notes to Condensed Consolidated Financial Statements


                                       5
<PAGE>
                  TeleSpectrum Worldwide Inc. and Subsidiaries
              Notes to Condensed Consolidated Financial Statements

1.  BASIS OF PRESENTATION:

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles (GAAP) for
interim financial information and the rules and regulations of the Securities
and Exchange Commission. Accordingly, they do not include all the information
and footnotes required by GAAP for complete financial statements. In the opinion
of management, all adjustments (consisting only of normal recurring adjustments)
considered necessary for a fair presentation have been reflected in these
condensed consolidated financial statements. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Annual Report on Form 10-K for the year ended December 31, 2000.

These condensed consolidated financial statements include the accounts of
TeleSpectrum Worldwide Inc. and its subsidiaries (the "Company"). All material
intercompany balances and transactions have been eliminated. Certain prior
period amounts have been reclassified to conform to the current period
presentation.

The Condensed Consolidated Financial Statements of the Company have been
prepared on the basis of accounting principles applicable to a going concern,
which contemplate the realization of assets and the satisfaction of liabilities
in the normal course of business. At September 30, 2001, the Company had a
stockholders' deficit of $108.6 million, and incurred a net loss of
approximately $43.9 million during the nine-month period then ended. Prior to
amending its credit agreement on April 16, 2001 (see Note 5), the Company was
unable to meet required debt service payments with its lenders, requiring a
number of amendments to its loan agreements, financial covenant waivers and
deferral of scheduled principal and interest payments. The amended agreement,
which matures on July 1, 2002, allowed partial interest deferrals and required
compliance with stipulated covenants, including revenue, EBITDA (earnings before
interest, income taxes, depreciation, amortization and charges for nonrecurring
items) and interest coverage targets based on the Company's business plan for
2001. Due to recent downward revisions to that plan for the second half of 2001,
the Company amended the Credit Agreement effective July 31, 2001 to defer a
greater percentage of the interest payable, waive future compliance with certain
non-financial provisions of the agreement, and modify certain financial
covenants. This amendment stipulates that if the Company fails to maintain
compliance with any such covenants, or otherwise experiences an event of
default, all amounts outstanding would become due and payable upon demand.

The Company failed to maintain compliance with the terms of the amended credit
agreement by not meeting the EBITDA financial covenant for September 2001. The
Company also did not make the interest payment due to the lenders for October
2001. As a result, the Company is now in default and the amounts outstanding are
currently due and payable upon demand. The Company is currently in negotiations
with the lenders in order to restructure the Company's highly leveraged debt
position, which likely will result in a restructuring of the Company's debt.

                                       6
<PAGE>
                 TeleSpectrum Worldwide Inc. and Subsidiaries
         Notes to Condensed Consolidated Financial Statements (con't)

Beginning in the fourth quarter of 2000 and continuing into 2001, the Company
has focused on reducing costs, primarily through closing under utilized customer
contact centers, reducing overhead, and reducing telecommunications costs. In
connection with these initiatives, during the fourth quarter of 2000 and through
September 30, 2001, the Company has recorded an aggregate of $16.8 million in
restructuring charges. Through September 30, 2001, the Company has identified
approximately $25.0 million in annualized savings of which management estimates
approximately $16.3 million has been realized during the first nine months of
2001.

Management believes that, assuming there is a favorable settlement with the
lenders, the working capital needs of the Company through July 1, 2002 will be
provided by the cash generated from these costs reduction initiatives and
ongoing operations. There can be no assurance that the Company will be able to
come to a settlement in negotiations with the lenders in regard to the amended
credit agreement. Therefore, these factors raise substantial doubt concerning
the ability of the Company to continue as a going concern. The condensed
consolidated financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying values or the amount and
classification of liabilities that might result should the Company be unable to
continue as a going concern. Based on the maturity date and the recent default
under the credit agreement, the Company has classified amounts related to such
credit facilities as current maturities of long-term debt in the accompanying
condensed consolidated balance sheets.


2.  NEW ACCOUNTING PRONOUNCEMENTS:

Effective January 1, 2001, the Company adopted Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (SFAS 133), as amended, which requires that all derivative
instruments be reported on the balance sheet at fair value and establishes
criteria for designation and effectiveness of hedging relationships. The effect
of adopting SFAS 133 as of January 1, 2001 was not material to the Company's
financial statements.

In June 2001, Statement of Financial Accounting Standards No. 141, "Business
Combinations," and Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets," were issued. These standards change the
accounting principles governing business combinations, goodwill and other
intangible assets by, among other things, requiring the use of the purchase
method in accounting for business combinations and eliminating the requirement
to amortize goodwill. These standards will become effective for the Company
beginning in the first quarter of 2002. At September 30, 2001, the Company had
$1.5 million of goodwill related to its e-Satisfy segment. Other than
discontinuing goodwill amortization, which amounted to $163 for the nine months
ended September 30, 2001, the Company has not determined the effect of these new
standards on its financial statements.

In August 2001, Statement of Financial Accounting Standards No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets" was issued effective for
fiscal years beginning after December 15, 2001. This Statement addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets. This Statement supersedes FASB Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed

                                        7
<PAGE>
                 TeleSpectrum Worldwide Inc. and Subsidiaries
         Notes to Condensed Consolidated Financial Statements (con't)

Of, and the accounting and reporting provisions of APB Opinion No. 30, Reporting
the Results of Operations, Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions, for the disposal of a segment of a business (as previously defined
in that Opinion). This Statement also amends ARB No. 51, Consolidated Financial
Statements, to eliminate the exception to consolidation for a subsidiary for
which control is likely to be temporary. This Statement retains the requirements
of Statement 121 to (a) recognize an impairment loss only if the carrying amount
of a long-lived asset is not recoverable from its undiscounted cash flows and
(b) measure an impairment loss as the difference between the carrying amount and
fair value of the asset. This Statement also removes goodwill from its scope
and, therefore, eliminates the requirement of Statement 121 to allocate goodwill
to long-lived assets to be tested for impairment. This Statement retains the
basic provisions of Opinion 30 for the presentation of discontinued operations
in the income statement but broadens that presentation to include a component of
an entity (rather than a segment of a business). The Company does not anticipate
any material impact from the adoption of this statement.


3.  LOSS PER SHARE:

Basic loss per share assumes no dilution and is computed by dividing net loss by
the weighted average number of shares of common stock outstanding for the
period. Diluted loss per share reflects the effect of common shares issuable
upon the exercise of stock options and warrants, but only if the effect is
dilutive. The loss per share was calculated separately for the extraordinary
item.

On July 26, 2001, the 1,280,676 shares of common stock that were held in escrow
in connection with the IDRC merger were released. Therefore those shares, which
were previously excluded from the basic loss per share calculation, are now
included.

                                       8
<PAGE>
                 TeleSpectrum Worldwide Inc. and Subsidiaries
         Notes to Condensed Consolidated Financial Statements (con't)

4.  RESTRUCTURING CHARGES AND OTHER:

During the fourth quarter of 2000, as part of its continuing analysis of the
Company's operational strategies, the Board of Directors of the Company approved
a restructuring plan designed to streamline operations, enhance results of
operations and improve cash flow, by closing underutilized customer contact
centers and reducing overhead costs. As a result, the Company recorded a pre-tax
charge of $10.3 million in 2000 for costs associated with exiting certain
facilities, terminating employees and recognizing related asset impairments.
During the nine months ended September 30, 2001, the Company's new management
team expanded the restructuring plan on two occasions to include the closure or
consolidation of additional facilities and identification of additional
workforce reductions. As a result, the Company recorded a similar pre-tax charge
of $6.5 million during that period. The following summarizes the costs and
liabilities associated with the Company's restructuring plan through September
30, 2001 (in thousands):

<TABLE>
<CAPTION>
                                    Balance as                            Balance as
                                        of                                   of
                                     December   Additional                September
                                     31, 2000    Charge      Payments     30, 2001
                                  ------------  ----------   ----------  ------------

<S>                                  <C>        <C>           <C>        <C>
Obligations assumed on
   closed leased facilities, net     $5,659     $1,851        $1,765     $5,745


Severance and employee
   related costs                      1,670      2,151         3,121        700

Other                                   125        551           260        416
                                     ------     ------        ------     ------

Total Restructuring Accrual          $7,454     $4,553(1)     $5,146     $6,861
                                     ======     ======        ======     ======
</TABLE>

(1) Excludes a $1,978 charge relating to the write-off of fixed assets idled as
    a result of call center and overhead office closures, including owned
    equipment, furniture, computer hardware and software and leasehold
    improvements. No cash payments will be made in connection with this charge.

Accrued liabilities for closed facilities of $5.7 million as of September 30,
2001 relate to leased customer contact center locations that have been or will
be closed in connection with the Company's restructuring plan. The amount is
computed as the remaining contractual obligations in each closed center, net of
estimated income from subletting.

Employee separation costs relate to both administrative personnel at the closed
customer contact centers and corporate personnel, affecting all functional
areas. Approximately 428 employees have been separated as part of the Company's
restructuring plan through September 30, 2001. The accrual of $0.7 million as of
September 30, 2001 relates to ongoing severance payments in accordance with the
severance obligations for these employees.

The restructuring charge during the nine months ended September 30, 2001
impacted our Teleservices segment by $4.7 million, with the balance affecting
the Company's general corporate operations.

                                       9
<PAGE>
                 TeleSpectrum Worldwide Inc. and Subsidiaries
         Notes to Condensed Consolidated Financial Statements (con't)

5.  CREDIT FACILITIES:

Borrowings from Senior Bank Group

On April 16, 2001, the Company signed an amended and restated credit agreement
(the "Credit Agreement") with its bank group whereby all amounts outstanding
under the former agreement's term notes (Notes A, B and C), $35.0 million of the
working capital revolver, and accrued incremental interest and waiver fees were
converted into one term loan, totaling $120.6 million. The term loan bears
interest at a base rate plus an applicable margin, as defined (8.29% at
September 30, 2001), and matures July 1, 2002. The remaining $10.0 million
commitment under the former agreement's working capital revolver carries forward
to the Credit Agreement; however, borrowings cannot exceed 65% of eligible
receivables, as defined. As of September 30, 2001, there was no availability
under the revolver.

Borrowings under the Credit Agreement are collateralized by substantially all of
the assets of the Company. The Credit Agreement contains covenants that require
the maintenance of an interest coverage ratio, impose minimum revenue and EBITDA
targets, restrict future indebtedness, limit capital expenditures and prohibit
cash dividends.

The Credit Agreement allowed the Company to convert 50% of the $2.7 million in
accrued interest at April 16, 2001 into a deferred interest note, which bears
the same interest rate and maturity date as the term loan. Interest payments
under the Credit Agreement are due monthly; however, at the discretion of the
Company, 25% of the monthly interest payments through December 31, 2001 may be
deferred and converted into deferred interest notes. To the extent interest is
deferred, a like amount will be paid and applied against the working capital
revolver, and this portion of the revolver can only be used to pay down
specified categories of trade payables.

Under certain circumstances, the Company may be required to make mandatory
principal payments. In general, mandatory prepayments are required upon certain
triggering events, such as the sale of assets, issuance of debt or equity
securities, or the receipt of insurance proceeds or similar events. In addition,
when the Company generates excess cash flow, as defined, such amounts, exceeding
certain thresholds, must be used to repay amounts outstanding under the Credit
Agreement.

The Credit Agreement requires that the Company pay certain fees periodically
through maturity or termination of the agreement. The unused portion of the
working capital revolver is subject to an annual commitment fee of 25 basis
points payable quarterly. An agent's fee of 25 basis points of the aggregate
amount of the facilities was incurred upon signing the Credit Agreement, will be
incurred annually thereafter, and is payable at maturity or termination of the
agreement. The Company was also charged a restructuring fee of 15% of the
aggregate amount of the facilities on April 16, 2001, payable at maturity or
termination of the agreement. In the event the Company repays in full all
obligations due under the Credit Agreement prior to maturity, the restructuring
fee will be reduced to 12.5% if the early payoff is prior to December 31, 2001.

                                       10
<PAGE>
                 TeleSpectrum Worldwide Inc. and Subsidiaries
         Notes to Condensed Consolidated Financial Statements (con't)

The Credit Agreement results in substantially different terms and cash flows
than the previous agreement. As a result, the amendment was accounted for and
reported in the same manner as a debt extinguishment. A $20.3 million
extraordinary loss on the early extinguishment of debt was recorded in April
2001, reflecting the write-off of deferred issuance costs related to the
previous agreement and the recognition of restructuring and other fees charged
by the bank group related to the Credit Agreement, as described above. In
addition, approximately $1.6 million in third party fees were paid relating to
the Credit Agreement, which have been deferred and are being amortized using the
effective interest method through maturity.

The Credit Agreement requires compliance with stipulated covenants based on the
Company's business plan for 2001. Due to recent downward revisions to that plan
for the second half of 2001, the Company amended the Credit Agreement effective
on July 31, 2001, (the "Amended Agreement"). The Amended Agreement permits the
Company to defer 100% of the total interest otherwise due during the third
quarter of 2001 and 50% of the interest otherwise due during the fourth quarter
of 2001. Any amounts so deferred will be converted to deferred interest notes.
The Amended Agreement also waives future compliance with certain non-financial
provisions of the agreement, modifies certain financial covenants, and requires
the Company to deliver to the bank group a new cost reduction plan to be
implemented by September 30, 2001, which was delivered. In addition, the Amended
Agreement removes the provision that required an amount equal to the deferred
interest to be paid and applied against the working capital revolver and that
required that this portion of the revolver be used only to pay down specified
categories of trade payables.

The Company incurred a waiver fee of 25 basis points of the aggregate amount of
the facilities upon signing the Amended Agreement, payable at maturity or
termination of the Amended Agreement. This fee was charged to interest expense
during the three month period ended September 30, 2001.

The Company failed to maintain compliance with the terms of the amended credit
agreement by not meeting the EBITDA financial covenant for September 2001. The
Company also did not make the interest payment due to the lenders for October
2001. As a result, the Company is now in default and the amounts outstanding are
currently due and payable upon demand. The Company is currently in negotiations
with the lenders in order to restructure the Company's highly leveraged debt
position, which likely will result in a restructuring of the Company's debt.

Note Payable to Stockholder

On April 16, 2001, the Company amended its $4.9 million term note payable to the
former majority stockholders of an acquired business. The amended note matures
June 30, 2004, bears interest at 10% for the year ending December 31, 2001, 15%
for the two years ending December 31, 2003 and 20% for the six months ending
June 30, 2004. The agreement requires prepayment in the event more than 90% of
the Company's common stock is acquired or substantially all of the assets are
sold. Under certain circumstances, as defined in the agreement, if prior to
December 31, 2002, the Company issues debt or equity securities of $10.0 million
or more, the holders have the right to purchase a pro-rata share, as defined, of
the securities issued with up to one half of the total amount due such holders
under similar terms.

                                       11
<PAGE>
                 TeleSpectrum Worldwide Inc. and Subsidiaries
         Notes to Condensed Consolidated Financial Statements (con't)

e-Satisfy Debt

On April 9, 2001, the Company amended its $2.2 million non-interest bearing note
payable to the former principals of e-Satisfy. The amended notes bear interest
at 10% from June 30, 2000 and require principal payments of $50,000 per month
through March 2002 and $40,000 per month through August 2002, at which time the
remaining balance of $1.5 million is payable in full.


6.  COMPREHENSIVE LOSS:

The Company's comprehensive loss includes net loss and unrealized losses from
foreign currency translation. Total comprehensive loss for the nine months ended
September 30, 2001 and 2000 was $44.4 million and $17.0 million, respectively,
and for the three months ended September 30, 2001 and 2000 was $9.4 million and
$8.9 million, respectively.


7.  SEGMENTS:

The Company redefined its segments during the second quarter 2001 and restated
all prior periods to conform with the current presentation.

The Company now classifies its continuing operations into two segments:
Teleservices and e-Satisfy. These two operating segments are managed separately
because each operating segment represents a strategic business unit that offers
different services. The business segments are described in further detail below.
Segment assets include amounts specifically identified with the Teleservices and
e-Satisfy segments. Corporate assets consist primarily of property and equipment
and the goodwill and other intangibles related to business combinations.

The Teleservices Segment provides both business-to-consumer and
business-to-business telemarketing services, which are primarily direct sales
initiated by the Company on behalf of its clients, as well as customer service
expertise to its clients. The Company's customer service expertise includes the
more traditional inbound services of customer care support, typically through
toll-free telephone numbers, for activities such as responses to clients'
customer service inquiries, catalogue sales and electronic order processing and
consulting services to a wide range of clients.

The e-Satisfy segment performs baseline and tracking customer satisfaction
surveys for both Internet and traditional companies.

Corporate operations include the selling, general and administrative functions
of the Company.

                                       12
<PAGE>
                 TeleSpectrum Worldwide Inc. and Subsidiaries
         Notes to Condensed Consolidated Financial Statements (con't)

Business segment information is as follows (in thousands):

<TABLE>
<CAPTION>
                         Three Months Ended         Nine Months Ended
                    --------------------------- ---------------------------
                    September 30, September 30, September 30, September 30,
                       2001           2000         2001          2000
                    ------------- ------------- ------------- -------------

Revenues:
<S>                  <C>           <C>           <C>            <C>
   Teleservices      $ 51,193      $ 71,652      $ 168,618      $ 226,348
   e-Satisfy            1,156         1,467          4,069          4,709
                     --------      --------      ---------      ---------

      Total          $ 52,349      $ 73,119      $ 172,687      $ 231,057
                     ========      ========      =========      =========


Operating income
   (loss):
   Teleservices      $  8,316      $ 13,498      $  32,062      $  44,993
   e-Satisfy             (139)         (408)          (230)           507
   Corporate          (12,710)      (18,605)       (39,734)       (52,489)
                     --------      --------      ---------      ---------

      Total          $ (4,533)     $ (5,515)     $  (7,902)     $  (6,989)
                     ========      ========      =========      =========
</TABLE>


<TABLE>
<CAPTION>
                September 30,  December 31,
                    2001           2000
                -------------  ------------

<S>             <C>         <C>
Total assets:
   Teleservices     $72,197     $101,605
   e-Satisfy          1,232        5,216
   Corporate         20,973       18,046
                    -------     --------

      Total         $94,402     $124,867
                    =======     ========
</TABLE>


Information About Major Customers

The following table summarizes those customers from which the Company derived
revenues in excess of 10% of total revenue for the three months ended September
30, 2001 and 2000 and the nine months ended September 30, 2001 and 2000:

<TABLE>
<CAPTION>
                           Three Months Ended                Nine Months Ended
                     ------------------------------    -----------------------------
                     September 30,    September 30,    September 30,   September 30,
                          2001            2000              2001            2000
                     -------------    -------------    -------------   -------------

<S>                   <C>             <C>              <C>             <C>
Customer 1                16.4%           10.7%            14.3%           10.6%
Customer 2                14.7%           12.0%            12.2%           7.5%
</TABLE>

                                       13
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

This Management's Discussion and Analysis of Financial Condition and Results of
Operations and other sections of this Quarterly Report contain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. These statements address, among other things, the Company's business
strategy, including its use of cash and cash equivalents; reliance on certain
customers; projected capital expenditures; liquidity; increased sales in future
periods; the continuation of fluctuations in results of operations, as well as
information contained elsewhere in this report where statements are preceded by,
followed by or include the words such as "believes," "expects," "anticipates,"
"plans" or similar expressions. These statements are based on a number of
assumptions concerning future events, and are subject to a number of
uncertainties and other factors, many of which are outside the Company's
control, that could cause actual results to differ materially from such
statements. The Company undertakes no obligation to update or revise
forward-looking statements, whether as a result of new information, future
events or otherwise. For those statements, we claim the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. You should understand that the following
important factors, in addition to those discussed elsewhere in this document
could affect our future results and could cause those results to differ
materially from those expressed in our forward-looking statements:

-   our significant debt service obligations;

-   our need to obtain additional financing to pursue our business objectives;

-   our increased debt restricting our ability to obtain financing or pursue
    other business objectives;

-   our results of operations are sometimes dependent on one or more significant
    clients;

-   adverse effects on results of operations if we do not maintain sufficient
    capacity utilization;

-   adverse effects on our Company if we do not obtain and implement new or
    enhanced technology;

-   adverse effects on our results of operations if we do not avoid high
    personnel turnover;

-   our reliance on telecommunications companies;

-   changes in laws regulating our industry;

-   fluctuations in quarterly operating results causing our stock price to
    change; and

-   events directly or indirectly relating to our Company causing
    our stock price to be volatile.


BASIS OF PRESENTATION

The Condensed Consolidated Financial Statements of the Company have been
prepared on the basis of accounting principles applicable to a going concern,
which contemplate the realization of assets and the satisfaction of liabilities
in the normal course of business. At September 30, 2001, the Company had a
stockholders' deficit of $108.6 million, and incurred a net loss of
approximately $43.9 million during the nine-month period then ended.

The factors discussed in "Amended and Restated Credit Facilities" raise
substantial doubt concerning the ability of the Company to continue as a going
concern. The condensed consolidated financial statements do not include any
adjustments relating to the recoverability and classification of asset carrying
values or the amount and classification of liabilities that might result should
the

                                       14
<PAGE>
Company be unable to continue as a going concern. Based on the maturity date
and the recent default under the credit agreement, the Company has classified
amounts related to such credit facilities as current maturities of long-term
debt in the accompanying condensed consolidated balance sheets.


RECENT DEVELOPMENTS AND OVERVIEW


New Management

On January 3, 2001, the Company announced that J. Peter Pierce had joined the
Company as Chairman and Chief Executive Officer.  Mr. Pierce was formerly the
President and Chief Operating Officer of Iron Mountain, Inc. following its
merger in February 2000 with Pierce Leahy Corp., where he had held the
position of President and CEO.  Also joining the Company at that time were
Christopher J. Williams as Chief Operating Officer and Joseph A. Nezi as
Executive Vice President of Business Development.  Both were former members
of Iron Mountain's and Pierce Leahy's senior management teams where they held
similar positions.


Restructuring Program

During the fourth quarter of 2000, as part of its continuing analysis of the
Company's operational strategies, the Board of Directors of the Company approved
a restructuring plan (cost reduction plan) designed to streamline operations,
enhance results of operations and improve cash flow, by closing underutilized
customer contact centers and reducing overhead costs. During the nine months
ended September 30, 2001, the Company expanded this cost reduction plan. In
total, management has identified approximately $25.0 million in annualized
savings. In connection with the cost reduction plan, the Company recorded a
pre-tax charge in the fourth quarter of 2000 and through the nine months ended
September 30, 2001 of $16.8 million in restructuring charges. During the nine
months ended September 30, 2001, management estimates that approximately $16.3
million in savings have been realized. (See Note 4 to the Condensed Consolidated
Financial Statements included elsewhere in this report.)


Amended and Restated Credit Facilities

On April 16, 2001, the Company signed an amended and restated credit agreement
(the "Credit Agreement") with its bank group whereby all amounts outstanding
under the former agreement's term notes (Notes A, B and C), $35.0 million of the
working capital revolver, and accrued incremental interest and waiver fees were
converted into one term loan, totaling $120.6 million. The term loan bears
interest at a base rate plus an applicable margin, as defined (8.29% as of
September 30, 2001), and matures July 1, 2002. The remaining $10.1 million
commitment under the former agreement's working capital revolver carries forward
to the Credit Agreement; however, borrowings cannot exceed 65% of eligible
receivables, as defined. As of September 30, 2001, there was no availability
under the revolver.

                                       15
<PAGE>
Borrowings under the Credit Agreement are collateralized by substantially all of
the assets of the Company. The Credit Agreement contains covenants that require
the maintenance of an interest coverage ratio, impose minimum revenue and EBITDA
targets, restrict future indebtedness, limit capital expenditures and prohibit
cash dividends.

The Credit Agreement allowed the Company to convert 50% of the $2.7 million in
accrued interest at April 16, 2001 into a deferred interest note, which bears
the same interest rate and maturity date as the term loan. Interest payments
under the Credit Agreement are due monthly; however, at the discretion of the
Company, 25% of the monthly interest payments through December 31, 2001 may be
deferred and converted into deferred interest notes. To the extent interest is
deferred, a like amount will be paid and applied against the working capital
revolver, and this portion of the revolver can only be used to pay down
specified categories of trade payables.

Under certain circumstances, the Company may be required to make mandatory
principal payments. In general, mandatory prepayments are required upon certain
triggering events, such as the sale of assets, issuance of debt or equity
securities, or the receipt of insurance proceeds or similar events. In addition,
when the Company generates excess cash flow, as defined, such amounts, exceeding
certain thresholds, must be used to repay amounts outstanding under the Credit
Agreement.

The Credit Agreement requires that the Company pay certain fees periodically
through maturity or termination of the agreement. The unused portion of the
working capital revolver is subject to an annual commitment fee of 25 basis
points payable quarterly. An agent's fee of 25 basis points of the aggregate
amount of the facilities was incurred upon signing the Credit Agreement, will be
incurred annually thereafter, and is payable at maturity or termination of the
agreement. The Company was also charged a restructuring fee of 15% of the
aggregate amount of the facilities on April 16, 2001, payable at maturity or
termination of the agreement. In the event the Company repays in full all
obligations due under the Credit Agreement prior to maturity, the restructuring
fee will be reduced to 12.5% if the early payoff is prior to December 31, 2001.

The Credit Agreement results in substantially different terms and cash flows
than the previous agreement. As a result, the amendment was accounted for and
reported in the same manner as a debt extinguishment. A $20.3 million
extraordinary loss on the early extinguishment of debt was recorded in April
2001, reflecting the write-off of deferred issuance costs related to the
previous agreement and the recognition of restructuring and other fees charged
by the bank group related to the Credit Agreement, as described above. In
addition, approximately $1.5 million in third party fees were paid relating to
the Credit Agreement, which have been deferred and are being amortized using the
effective interest method through maturity.

The Credit Agreement requires compliance with stipulated covenants based on the
Company's business plan for 2001. Due to recent downward revisions to that plan
for the second half of 2001, the Company amended the Credit Agreement effective
on July 31, 2001, (the "Amended Agreement"). The Amended Agreement permits the
Company to defer 100% of the total interest otherwise due during the third
quarter of 2001 and 50% of the interest otherwise due during the fourth quarter
of 2001. Any amounts so deferred will be converted to deferred interest notes.
The

                                       16
<PAGE>
Amended Agreement also waives future compliance with certain non-financial
provisions of the agreement, modifies certain financial covenants, and requires
the Company to deliver to the bank group a new cost reduction plan to be
implemented by September 30, 2001, which was delivered. In addition, the Amended
Agreement removes the provision that required an amount equal to the deferred
interest to be paid and applied against the working capital revolver and that
required that this portion of the revolver be used only to pay down specified
categories of trade payables.

The Company incurred a waiver fee of 25 basis points of the aggregate amount of
the facilities upon signing the Amended Agreement, payable at maturity or
termination of the Amended Agreement. This fee was charged to interest expense
during the three month period ended September 30, 2001.

The events of September 11th had a significant impact on the Company's operating
results and liquidity. Revenues, which impact collections, were reduced as the
Company refrained from providing outbound service during the four days that
followed September 11th, due to customer sensitivity concerns. However, expenses
were not proportionately reduced because the Company continued to compensate
production employees although they were not producing revenue. As a result, the
Company failed to maintain compliance with the terms of the amended credit
agreement by not meeting the EBITDA financial covenant for September 2001. The
Company also did not make the interest payment due to the lenders for October
2001. As a result, the Company is now in default and the amounts outstanding are
currently due and payable upon demand. The Company is currently in negotiations
with the lenders in order to restructure to the Company's highly leveraged debt
position, which likely will result in a restructuring of the Company's debt.

                                       17
<PAGE>
RESULTS OF OPERATIONS

The following discussions should be read in connection with the Condensed
Consolidated Financial Statements contained elsewhere within this report. A
comparison of the results of operations follows:

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000



<TABLE>
<CAPTION>
                             Three Months      As a     Three Months       As a
                                Ended       Percentage     Ended        Percentage
   (Dollars in Millions)     September 30,     of       September 30,      of
                                2001         Revenues      2000          Revenues
                             ------------   ---------   ------------  --------------
                                              (Dollars in Millions)
Revenues:
<S>                          <C>            <C>         <C>           <C>
   Teleservices              $  51.2          97.7%      $  71.6          97.9%
   e-Satisfy                     1.2           2.3%          1.5           2.1%
                             -------         ------      -------         -------
Total Revenue                   52.4         100.0%         73.1         100.0%

Cost of services:
   Teleservices                 41.9          81.8%         55.9          78.1%
   e-Satisfy                     0.5          41.7%          1.6         107.7%
                             -------         ------      -------         -------
Total cost of services          42.4          80.9%         57.5          78.7%

Selling, general and
  administrative                11.7          22.3%         18.6          25.4%
Restructuring charge             2.5           4.2%         --             0.0%
Goodwill amortization            0.3           0.6%          2.5           3.4%
                             -------         ------      -------         -------
Total operating expenses        56.8         108.0%         78.6         107.5%
                             -------         ------      -------         -------
Operating profit (loss)      $  (4.5)         (8.0)%     $  (5.5)         (7.5)%
                             =======         =======     =======         =======
</TABLE>

REVENUES

Total revenues for the three months ended September 30, 2001 were $52.4 million,
representing a $20.7 million or 28.3% decline in comparison to the prior year
period total of $73.1 million. The decrease resulted from several factors,
including the current economic climate and the impact of the events of September
11th. These factors contributed to the 54.2% reduction in overall production
volumes as compared to the three months ended September 30, 2000. Revenue per
hour for the periods was comparable.

Management does not anticipate that the effects of the events of September 11th
will impede future operating results.

                                       18
<PAGE>
Teleservices Segment

Teleservices revenues for the three months ended September 30, 2001 were $51.2
million, representing a $20.4 million or 28.5% decline in comparison to the
prior year period total of $71.6 million. The decrease is primarily the result
of a 28.8% reduction in production volumes, caused by customer in-sourcing, the
end of certain customer programs, and the impact of the events of September
11th.

e-Satisfy Segment

e-Satisfy revenues for the three months ended September 30, 2001 were $1.2
million, which decreased 20.0% from $1.5 million for the three months ended
September 30, 2000.


COST OF SERVICES

Cost of services for the three months ended September 30, 2001 were $42.4
million, representing a $15.1 million or 26.3% decline in comparison to the
prior year period total of $57.5 million. As a percentage of total revenues,
cost of services increased from 78.7% during the third quarter of 2000 to 80.9%
during the third quarter of 2001.

Teleservices Segment

Teleservices cost of services for the three months ended September 30, 2001 were
$41.9 million, representing a $14.0 million or 25.0% decline in comparison to
the prior year period total of $55.9 million. Total cost of services in this
segment increased from 78.1% to 81.8% of revenues. This increase as percentage
of revenue primarily reflects the impact of the events of September 11th as the
Company continued to pay employees while no revenues were being generated in the
four days that followed.

That impact on variable production costs was partially offset by the effects of
the cost reduction program. The Company estimates that it realized approximately
$6.6 million in cost savings during the third quarter of 2001 related to the
cost reduction plan, resulting from lower fixed center costs due to the closures
of customer contact centers this year. Fixed customer contact center as a
percentage of revenues decreased slightly despite the lower revenue base.

e-Satisfy Segment

e-Satisfy cost of services decreased as a percentage of revenues from 107.7% for
the third quarter 2000 to 41.7% for the same period in 2001 due primarily to
salary reductions related to the restructuring of this segment during the fourth
quarter of 2000.

                                       19
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses were $11.7 million for the three
months ended September 30, 2001, representing a $6.9 million or 37.1% decrease
from the $18.6 million total recorded during the same period last year. While a
portion of the decline is attributed to the drop in sales volumes, resulting in
lower commission expense, the majority of the reduction reflects the effects of
the Company's cost reduction plan. During the third quarter of 2001, the Company
estimates that it realized approximately $1.1 million in savings related to the
cost reduction plan, from lower payroll related costs due to the reduction in
overhead personnel, as well as reductions in discretionary spending areas such
as consulting, recruiting, and travel expenses.


RESTRUCTURING CHARGE

During the three months ended September 30, 2001, the Company's new management
team expanded the restructuring program initiated in the fourth quarter of 2000
to include the closure or consolidation of additional facilities and the
identification of additional workforce reductions. As a result, the Company
recorded a pre-tax charge of $2.5 million during the third quarter. (See Note 4
to the Condensed Consolidated Financial Statements included elsewhere in this
report.)


GOODWILL AMORTIZATION

The reduction in goodwill amortization in comparison to the three months ended
September 30, 2000 reflects the write-off of goodwill recorded in the fourth
quarter of 2000.


INTEREST EXPENSE, net

The Company incurred net interest expense of $4.6 million for the three months
ended September 30, 2001, an increase of $0.5 million in comparison to interest
expense during the same period last year. This increase is due primarily to the
increase in principal on the Company's debt.

                                       20
<PAGE>
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000


<TABLE>
<CAPTION>
                                Nine Months       As a       Nine Months         As a
                                   Ended       Percentage      Ended          Percentage
   (Dollars in Millions)        September 30,     Of         September 30,       of
                                   2001         Revenues        2000           Revenues
                               ------------   ----------    -------------    ----------
                                              (Dollars in Millions)
<S>                             <C>           <C>           <C>              <C>
Revenues:
   Teleservices                   $168.6          97.6%         $226.4          98.0%
   e-Satisfy                         4.1           2.4%            4.7           2.0%
                                   -----          ----           -----          ----
Total Revenue                      172.7         100.0%          231.1         100.0%

Cost of services:
   Teleservices                    132.3          78.5%          175.7          77.6%
   e-Satisfy                         1.4          34.1%            3.4          72.3%
                                   -----          ----           -----          ----
Total cost of services             133.7          77.4%          179.1          77.5%

Selling, general and
  administrative                    39.5          22.9%           52.5          22.7%
Restructuring charge                 6.5           3.6%           --             0.0%
Goodwill amortization                0.9           0.5%            6.4           2.8%
                                   -----          ----           -----          ----
Total operating expenses           180.6         104.4%          238.0         103.0%
                                   -----          ----           -----          ----
Operating loss                    $ (7.9)         (4.4)%        $ (6.9)         (3.0)%
                                   =====          ====           =====          ====
</TABLE>



REVENUES

Total revenues for the nine months ended September 30, 2001 were $172.7 million,
representing a $58.4 million or 25.3% decrease in comparison to the prior year
period total of $231.1 million. The decrease resulted from several factors,
including the current economic climate, which resulted in a 24.1% decrease in
overall production volumes. Revenue per hour for the periods was comparable.

Teleservices Segment

Teleservices revenues for the nine months ended September 30, 2001 were $168.6
million, representing a $57.8 million or 25.5% decrease in comparison to the
prior year period total of $226.4 million. The decrease is primarily the result
of a 24.1% decrease in production volumes, caused by customer in-sourcing and
the end of certain customer programs.

                                       21
<PAGE>
e-Satisfy Segment

e-Satisfy revenues for the nine months ended September 30, 2001 were $4.1
million, which decreased 12.8% from $4.7 million for the nine months ended
September 30, 2000.


COST OF SERVICES

Cost of services for the nine months ended September 30, 2001 were $133.7
million, representing a $45.4 million or 25.3% decreased in comparison to the
prior year period total of $179.1 million. As a percentage of total revenues,
cost of services remained consistent at approximately 77.4%.

Teleservices Segment

Teleservices cost of services for the nine months ended September 30, 2001 were
$132.3 million, representing a $43.4 million or 24.7% decline in comparison to
the prior year period total of $175.7 million. Total cost of services in this
segment increased slightly from 77.6% for the nine months ended September 30,
2000 to 78.5% of revenues. This increase as percentage of revenue primarily
reflects the impact of the events of September 11th as the Company continued to
pay employees while no revenues were being generated in the days that followed.

That impact on variable production costs was partially offset by the effects of
the cost reduction program. The Company estimates that it realized approximately
$12.6 million in cost savings during the first nine months of 2001 related to
the cost reduction plan, resulting from lower fixed center costs due to the
closures of customer contact centers this year. Fixed customer contact center
costs as a percentage of revenues decreased slightly despite the lower revenue
base.

e-Satisfy Segment

e-Satisfy cost of services decreased as a percentage of revenues from 72.3% for
the third quarter of 2000 to 34.1% for the same period in 2001 due primarily to
salary reductions related to the restructuring of this segment during the fourth
quarter of 2000.


SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses were $39.5 million for the nine
months ended September 30, 2001, representing a $13.0 million or 24.8% decreased
from the $52.5 million total recorded during the same period last year. While a
portion of the decrease is attributed to the drop in sales volumes, resulting in
lower commission expense, the majority of the reduction reflects the initial
effects of the Company's cost reduction plan. During the first nine months of
2001, the Company estimates it realized approximately $3.7 million in cost
savings related to the cost reduction plan, from lower payroll related costs,
resulting from the reduction in overhead personnel, as well as reductions in
discretionary spending areas such as consulting, recruiting, and travel
expenses.

                                       22
<PAGE>
RESTRUCTURING CHARGE

During the nine months ended September 30, 2001, the Company's new management
team expanded the restructuring program initiated in the fourth quarter of 2000
on two occasions to include the closure or consolidation of additional
facilities and the identification of additional workforce reductions. As a
result, the Company recorded a pre-tax charge totaling $6.5 million during the
first nine months of 2001. (See Note 4 to the Condensed Consolidated Financial
Statements included elsewhere in this report.)

GOODWILL AMORTIZATION

The reduction in goodwill amortization in comparison to the nine months ended
September 30, 2000 reflects the write-off of goodwill recorded in the fourth
quarter of 2000.

INTEREST EXPENSE, net

The Company incurred net interest expense of $15.7 million for the nine months
ended September 30, 2001, an increase of $4.2 million in comparison to interest
expense during the same period last year. That increase is due primarily to
default and waiver fees charged by the Company's senior lenders and the increase
in principal on the Company's debt.

EXTRAORDINARY ITEM

In connection with the amended Credit Agreement, the Company recorded a $20.3
million extraordinary loss on the early extinguishment of debt, reflecting the
write-off of deferred issuance costs related to the previous agreement and the
recognition of fees charged by the bank group related to the Credit Agreement.

                                       23
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

Cash flows provided by (used in) (dollars in thousands):

<TABLE>
<CAPTION>
                                            Nine Months Ended
                                       -----------------------------
                                       September 30,  September 30,
                                           2001           2000
                                       -------------  --------------

<S>                                         <C>            <C>
            Operating activities            $ 3,363        $  8,987
            Investing activities            $  (183)       $ (18,146)
            Financing activities            $  (710)       $  9,202
</TABLE>



NINE MONTHS ENDED SEPTEMBER 30, 2001

The Company's cash flows from operations provided $3.4 million of cash. The net
loss of $43.9 million for the period was impacted by $38.9 million in non-cash
charges for depreciation and amortization, the restructuring charge, the
provision for bad debts, and the extraordinary loss. Working capital during the
period resulted in an $8.4 million increase representing the net effect of the
changes in current assets and liabilities, primarily the reduction in accounts
receivable.

Cash used in investing activities reflects capital expenditures for property and
equipment, primarily technology related, net of proceeds from disposals.

Cash used in financing activities reflects the Company's net borrowings under
its credit facilities, net or repayments and the third party costs associated
with the modifications to the Credit Agreement.

On April 16, 2001, the Company signed an amended and restated credit agreement
with its bank group, which matures on July 1, 2002 and replaces the former
agreement, dated June 30, 1999 (see Note 5 to the Condensed Consolidated
Financial Statements included elsewhere in this report). This agreement was
further amended effective July 31, 2001 as discussed in "Amended and Restated
Credit Facilities." Based on the maturity date and the recent default under the
credit agreement, the Company has classified related amounts outstanding as
current maturities of long-term debt.

The events of September 11th had a significant impact on the Company's operating
results and liquidity. Revenues, which impact collections, were reduced as the
Company refrained from providing outbound service during the four days that
followed September 11th, due to customer sensitivity concerns. However, expenses
were not proportionately reduced because the Company continued to compensate
production employees although they were not producing revenue. As a result, the
Company failed to maintain compliance with the amended credit agreement by not
meeting the EBITDA financial covenant for September 2001. The Company also did
not make the

                                       24
<PAGE>
interest payment due to the lenders for October 2001. As a result, the Company
is now in default and the amounts outstanding are currently due and payable upon
demand. The Company is currently in negotiations with the lenders in order to
restructure the Company's highly leveraged debt position, which likely will
result in a restructuring of the Company's debt.

Management does not anticipate that the effects of September 11th will impede
future operating results.

During the fourth quarter of 2000, the Company initiated a cost reduction plan
designed to reduce costs by approximately $15.0 million annually, through
closing under utilized customer contact centers, reducing overhead, and reducing
telecommunications costs. During the first nine months of 2001, the new
management team expanded upon that initiative on two occasions by identifying
another approximately $10.0 million in annual savings through further
closure/consolidation of customer contact centers and overhead reductions.
During the first nine months of 2001, management estimates that approximately
$16.3 million of savings were realized in connection with these initiatives.

Although the steps management has taken through various costs reduction programs
have reduced costs, the Company must restructure the Company's highly leveraged
debt position in order for the cash generated from ongoing operations to satisfy
the Company's working capital needs. If a restructure is consummated, it is very
likely the investment of the Company's current equity holders will be severely
diluted.


NINE MONTHS ENDED SEPTEMBER 30, 2000

The $9.0 million of cash provided by operating activities consisted of a $16.5
million net loss offset by non-cash items including depreciation and
amortization and bad debts of $22.5 million. Working capital requirements which
positively effected cash flow included a decrease in accounts receivable of $7.9
million, a $3.8 million increase in accounts payable, offset by a $1.6 million
increase in prepaid expenses, a $5.3 million decrease in other liabilities and a
$2.0 million decrease in minority interest.

The $18.1 million of cash used in investing activities primarily consisted of
property and equipment purchases attributable to maintaining and enhancing our
technology platforms particularly as it relates to Teleservices.

The $9.2 million of net cash provided by financing activities consisted
primarily of $8.1 million of net borrowings related to long-term debt.

                                       25
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

As of September 30, 2001, the Company had approximately $136.1 million
outstanding under term and working capital advances with its senior bank group.
Interest on those facilities was based on a floating interest rate, either the
prime rate or LIBOR. Based on the outstanding balance under the facilities at
September 30, 2001, the Company would be required to pay an additional $1.4
million in interest annually for every 1.0% increase in the average prime rate
or LIBOR. To reduce the risk associated with a large increase in interest rates,
the Company has placed two derivative financial instruments known as interest
rate caps each with notional amounts of $24.2 million as of September 30, 2001.
Under the terms of the interest rate cap agreements, the Company would receive
quarterly cash payments when the 3-month LIBOR rate at the end of any quarter
exceeded 7.5%. The payment would be determined by multiplying the difference
between the actual LIBOR rate and 7.5% by the notional amounts. Due to the
current low interest rate environment, the interest rate cap agreements
currently have no recorded value. The interest rate cap agreements expire on
September 30, 2002. These interest rate caps were required under the terms of
the former credit facilities. The three-month LIBOR interest rate was
approximately 2.957% at September 30, 2001. (See Note 5 of the Condensed
Consolidated Financial Statements included elsewhere in this report.)

The Credit Agreement bears interest at a base rate that varies (6.75% at
September 30, 2001), plus a margin of 1.54%. As defined in the Credit Agreement,
the base rate is the higher of the bank's prime rate or 50 basis points above
the Federal Funds Rate.

Foreign Currency Risk

The Company has subsidiaries in Canada and the United Kingdom, which are subject
to foreign currency fluctuations. As currency rates change, translation of
income statements of these subsidiaries from local currencies to US dollars
affects year-over-year comparability of our operating results. Gains and losses
on translation are recorded as a separate component of stockholders' equity.

Approximately $9.7 million has been loaned to our Canadian subsidiary. The loan
proceeds have been converted to Canadian dollars. Under the terms of the Credit
Agreement, large principal payments due in 2002 may require conversion of all or
a portion of our Canadian dollar loan to US dollars. An unfavorable change in
the Canadian dollar exchange rate at the time of the conversion could cause a
foreign currency exchange loss. At this time, the Company does not believe that
such a conversion would be required. The other foreign subsidiaries are limited
in their operations and the level of investment by the parent company so that
risk of foreign currency fluctuations is not expected to be material.

                                       26
<PAGE>
PART II - OTHER INFORMATION

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        See Note 1 and Note 5 of the Condensed Consolidated Financial Statements
        included elsewhere in this report.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

        (a) EXHIBITS
                  None

        (b) FORM 8-K
                  None

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<PAGE>
                                   SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                             TeleSpectrum Worldwide Inc.
                                          ----------------------------------
                                                    (Registrant)



Date:  November 19, 2001                         /s/ J. Peter Pierce
                                          ----------------------------------
                                                   J. Peter Pierce
                                             TeleSpectrum Worldwide Inc.
                                             Chairman & Chief Executive
                                                       Officer



Date:  November 19, 2001                        /s/ Kurt Dinkelacker
                                          ----------------------------------
                                                  Kurt Dinkelacker
                                             TeleSpectrum Worldwide Inc.
                                               Chief Financial Officer

                                       28