SOURCE: Portfolio Recovery Associates, Inc.

Portfolio Recovery Associates, Inc.

February 16, 2012 16:00 ET

Portfolio Recovery Associates Reports Fourth Quarter and Full Year 2011 Results

NORFOLK, VA--(Marketwire - Feb 16, 2012) - Portfolio Recovery Associates, Inc. (NASDAQ: PRAA), a specialized financial and business services company and market leader in the consumer debt purchase and collection industry, today reported its fourth quarter and full year 2011 results.

Fourth Quarter Highlights

  • Record net income of $26.6 million, an increase of 29% over the fourth quarter of 2010
  • Record diluted EPS of $1.54, compared with $1.20 in the fourth quarter of 2010
  • Record revenue of $118.1 million, up 17% from the year-earlier quarter
  • Cash collections of $180.3 million, up 25% from the fourth quarter of 2010
  • Annualized return on average equity of 18.2% for the quarter

The Company's earnings for the full year 2011 totaled $100.8 million, or $5.85 per diluted share, compared with $73.5 million, or $4.35 per diluted share, for the full year 2010. Full year 2011 revenues were $458.9 million, compared to $372.7 million for the full year 2010.

"In 2011, PRA again experienced significant growth in revenues and net income, as well as improved operating efficiencies and a strengthened capital structure," said Steven D. Fredrickson, chairman, president and chief executive officer. "Our steadfast adherence to our core principles, our ability to evaluate and purchase high-value portfolios and our unwavering commitment to best practices for our industry helped to drive net income crossing the $100 million threshold for the first time in our history. We believe PRA has never been better positioned for long-term growth, and we intend to continue investing in our future through organic growth and select merger and acquisition opportunities. This is best illustrated through our acquisition of Mackenzie Hall in January 2012."

FINANCIAL AND OPERATING REVIEW

Revenues

  • Total revenues were $118.1 million for the quarter, up 17% when compared with the same period a year ago. This was driven by cash receipts of $195.7 million in the fourth quarter, up 22% from $160.3 million a year earlier. The Company defines cash receipts as the total of cash collections and fee income.

Finance Receivable Income

  • Cash collections from finance receivables rose 25% to $180.3 million in the fourth quarter of 2011 from $144.4 million in the year-ago period. Cash collections reflected the seasonal weakness typically experienced in the fourth quarter. The table below displays cash collections by source, by quarter for the past five quarters:
Cash Collection Source ($ in thousands) Q42011 Q32011 Q22011 Q12011 Q42010
Call Center & Other Collections $ 61,227 $ 63,967 $ 64,566 $ 67,377 $ 53,775
External Legal Collections 26,316 27,245 27,329 25,378 21,446
Internal Legal Collections 17,615 16,444 16,007 15,598 12,841
Purchased Bankruptcy Collections 75,166 74,512 68,379 58,364 56,301
Total Cash Collections $ 180,324 $ 182,168 $ 176,281 $ 166,717 $ 144,363
  • Internal legal collections, in which the Company uses its own staff attorneys, continue to represent an important, developing collections channel. Internal legal collections increased to $17.6 million in the fourth quarter of 2011 from $12.8 million in the year-ago quarter.

  • During the quarter, the Company applied 43.0% of cash collections to reduce the carrying value of its owned debt portfolios, up from 41.3% in the fourth quarter of 2010. The fourth quarter 2011 principal amortization rate included $3.1 million in net allowance charges against certain pools of finance receivables accounts.

  • Cash collections produced income on finance receivables of $102.7 million in the fourth quarter of 2011, net of allowance charges of $3.1 million. Income on finance receivables, net of allowance charges, increased 21% from the fourth quarter of 2010.

  • For the fourth quarter of 2011, Core portfolio income was $63.9 million, net of allowance charges of $2.1 million. Net Core portfolio income increased 21% over the fourth quarter of 2010. Net Bankruptcy portfolio revenue for the fourth quarter of 2011 was $38.9 million, net of allowance charges of $1.0 million. Net Bankruptcy portfolio income increased 22% over the fourth quarter of 2010.

  • The Company purchased $1.21 billion of face-value finance receivables during the fourth quarter of 2011 for $88.9 million. These receivables were acquired in 83 portfolios from 12 different sellers.

Fee Income

  • The Company's fee-for-service businesses generated revenue of $15.3 million in the fourth quarter of 2011, a decline of 4% from the same period a year ago due largely to a decrease in revenues generated by PRA Location Services. Together, the fee-for-service businesses accounted for 13% of the Company's overall revenues in the fourth quarter of 2011, down from 16% in the fourth quarter of 2010. Compared with the third quarter of 2011, fee income increased by $3.9 million or 35%, due primarily to seasonal increases in the Government Services business along with an increase in fee income generated by CCB.

Efficiency and Productivity

  • Operating income was $46.0 million in the fourth quarter of 2011, compared with $36.3 million in the fourth quarter of 2010, representing an increase of 27%. The operating margin increased from 36.0% in the year-earlier quarter, to 38.9% in the recently completed quarter.

  • The Company measures finance receivable collections productivity in a variety of ways, due to the varying nature of the Company's collections channels. All measurements of collections productivity improved over the fourth quarter of 2010, and are presented in the accompanying Financial Highlights.

Balance Sheet

  • Cash balances were $26.7 million as of December 31, 2011.

  • During the fourth quarter of 2011, the Company had net repayments of $40 million on its line of credit, which had a balance outstanding of $220 million at year-end. Remaining borrowing availability, subject to normal borrowing and collateral provisions, under the line was $187.5 million as of December 31, 2011.

Subsequent Events

  • On January 16, 2012, the Company announced the acquisition of Mackenzie Hall Holdings Limited, a leading UK debt collection and purchase group.

  • Under the terms of the transaction, PRA purchased 100% of the equity interest in Mackenzie Hall, for approximately GBP 33.1 million (approximately $51 million) in cash. PRA anticipates the acquisition will be immediately accretive to earnings.

  • Based in Kilmarnock, Scotland, Mackenzie Hall offers outsourced and contingent consumer debt recovery on behalf of banks, credit providers and debt purchasers, as well as distressed and dormant niche portfolio purchasing. Mackenzie Hall employs approximately 170 people at its headquarters and contact center in Kilmarnock.

  • The Board of Directors has authorized a share repurchase program of up to $100 million of the Company's outstanding shares of common stock. The program will be administered by a special committee of the Board. Repurchases would depend on prevailing market conditions and other factors. The repurchase program may be suspended or discontinued at any time.

Conference Call Information
The Company will hold a conference call with investors this evening at 5:30 p.m. EST, Thursday, February 16, 2012, to discuss its fourth-quarter and full year results. Investors can access the call by dialing 888-713-4211 for domestic callers or 617-213-4864 for international callers using the pass code 25454734. A replay will be available approximately one hour after the call ends and will remain available for seven days. Investors can access the replay of the call by dialing 888-286-8010 for domestic callers or 617-801-6888 for international callers using the pass code 35636577.

Investors also may listen to the conference call via webcast, both live and archived, at the company's website, www.portfoliorecovery.com at the Investor Relations main page.

About Portfolio Recovery Associates, Inc.
Portfolio Recovery Associates, Inc. (PRA) is a specialized financial and business services company. A market leader in the consumer debt purchase and collection industry, PRA also provides a broad range of fee-based services, including revenue enhancement for local governments; vehicle location, skip-tracing and collateral recovery for auto lenders, governments, and law enforcement; contingent consumer debt recovery on behalf of banks, credit providers, and debt purchasers; and filing of class action claims on behalf of institutional investors, manufacturers, and retailers. PRA has a longstanding culture of compliance, engaging collaboratively with its customers to create realistic, affordable repayment plans. The Company has more than 2,800 employees in 10 U.S. states and the United Kingdom.

PRA has been named to the Forbes 100 Best Small Companies in America annual rankings list for five consecutive years (2007 - 2011). It was ranked as one of BusinessWeek's 100 Hot Growth Companies in 2003, 2005 and 2007, and was recognized by Fortune as one of America's Top Small Businesses in 2006 and 2007. The Company's shares are publicly traded on the NASDAQ Global Select Market under the symbol "PRAA." Additional information about Portfolio Recovery Associates is available at www.portfoliorecovery.com.

Statements herein which are not historical, including Portfolio Recovery Associates' or management's intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future, including future revenue and earnings growth, statements with respect to future contributions of its subsidiaries to earnings and future portfolio-purchase opportunities, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include references to Portfolio Recovery Associates' presentations and web casts. The forward-looking statements in this press release are based upon management's beliefs, assumptions and expectations of the Company's future operations and economic performance, taking into account currently available information. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties, some of which are not currently known to us. Actual events or results may differ from those expressed or implied in any such forward-looking statements as a result of various factors, including the risk factors and other risks that are described from time to time in the Company's filings with the Securities and Exchange Commission including but not limited to its annual reports on Form 10-K, its quarterly reports on Form 10-Q and its current reports on Form 8-K, filed with the Securities and Exchange Commission and available through the Company's website, which contain a more detailed discussion of the Company's business, including risks and uncertainties that may affect future results. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Information in this press release may be superseded by more recent information or statements, which may be disclosed in later press releases, subsequent filings with the Securities and Exchange Commission or otherwise. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or to reflect any change in events, conditions or circumstances on which any such forward-looking statements are based, in whole or in part.

Portfolio Recovery Associates, Inc.
Unaudited Consolidated Income Statements
(in thousands, except per share amounts)
Three Months Three Months Year Year
Ended Ended Ended Ended
December 31, December 31, December 31, December 31,
2011 2010 2011 2010
Revenues:
Income recognized on finance receivables, net $ 102,743 $ 84,783 $ 401,895 $ 309,680
Fee income 15,344 15,972 57,040 63,026
Total revenues 118,087 100,755 458,935 372,706
Operating expenses:
Compensation and employee services 35,759 32,350 138,202 124,077
Legal collection fees 5,940 4,819 23,621 17,599
Legal collection costs 9,711 9,932 38,659 31,330
Agent fees 1,647 2,616 7,653 12,012
Outside fees and services 5,608 3,100 19,310 12,554
Communications 5,488 4,066 23,372 17,226
Rent and occupancy 1,538 1,402 5,891 5,313
Depreciation and amortization 3,188 3,387 12,943 12,437
Other operating expenses 3,255 2,808 12,416 10,296
Total operating expenses 72,134 64,480 282,067 242,844
Gain on sale of property - - 1,157 -
Income from operations 45,953 36,275 178,025 129,862
Other income and (expense):
Interest income - 29 7 65
Interest expense (2,512 ) (2,517 ) (10,569 ) (9,052 )
Income before income taxes 43,441 33,787 167,463 120,875
Provision for income taxes 16,775 13,156 66,319 47,004
Net income $ 26,666 $ 20,631 $ 101,144 $ 73,871
Less net income/(loss) attributable to redeemable noncontrolling interest 76 (14 ) 353 417
Net income attributable to Portfolio Recovery Associates, Inc. $ 26,590 $ 20,645 $ 100,791 $ 73,454
Net income per common share:
Basic $ 1.55 $ 1.21 $ 5.89 $ 4.37
Diluted $ 1.54 $ 1.20 $ 5.85 $ 4.35
Weighted average number of shares outstanding:
Basic 17,121 17,063 17,110 16,820
Diluted 17,269 17,165 17,230 16,885
Portfolio Recovery Associates, Inc.
Unaudited Condensed Consolidated Balance Sheets
(in thousands, except per share amounts)
December 31, December 31,
ASSETS 2011 2010
Cash and cash equivalents $ 26,697 $ 41,094
Finance receivables, net 926,734 831,330
Accounts receivable, net 7,862 8,932
Property and equipment, net 25,727 24,270
Goodwill 61,678 61,678
Intangible assets, net 14,596 18,466
Other assets 7,829 10,138
Total assets $ 1,071,123 $ 995,908
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued liabilities $ 42,660 $ 23,576
Net deferred tax liability 193,898 164,971
Line of credit 220,000 300,000
Long-term debt 1,246 2,396
Total liabilities 457,804 490,943
Redeemable noncontrolling Interest 17,831 14,449
Stockholders' equity:
Preferred stock, par value $0.01, authorized shares, 2,000, issued and outstanding shares - 0 - -
Common stock, par value $0.01, authorized shares, 60,000, 17,134 issued and outstanding shares at December 31, 2011, and 17,064 issued and outstanding shares at December 31, 2010 171 171
Additional paid-in capital 167,719 163,538
Retained earnings 427,598 326,807
Total stockholders' equity 595,488 490,516
Total liabilities and stockholders' equity $ 1,071,123 $ 995,908
Portfolio Recovery Associates, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Year Year
Ended Ended
December 31, December 31,
2011 2010
Cash flows from operating activities:
Net income $ 101,144 $ 73,871
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of share-based compensation 7,759 4,203
Depreciation and amortization 12,943 12,437
Deferred tax expense 28,927 47,493
Gain on sale of property (1,157 ) -
Changes in operating assets and liabilities:
Other assets (54 ) 1,204
Accounts receivable 1,070 237
Accounts payable and accrued liabilities 6,921 2,039
Income taxes 15,472 2,097
Net cash provided by operating activities 173,025 143,581
Cash flows from investing activities:
Purchases of property and equipment (9,634 ) (9,546 )
Proceeds from sale of property 1,267 -
Acquisition of finance receivables, net of buybacks (398,999 ) (357,530 )
Collections applied to principal on finance receivables 303,595 219,662
Business acquisitions, net of cash acquired (985 ) (23,000 )
Contingent payment made for business acquisition - (117 )
Net cash used in investing activities (104,756 ) (170,531 )
Cash flows from financing activities:
Proceeds from exercise of options 150 57
Income tax benefit from share-based compensation 641 256
Payment of liability-classified contingent consideration - (2,000 )
Proceeds from line of credit 32,000 177,500
Principal payments on line of credit (112,000 ) (196,800 )
Payments of line of credit origination costs and fees - (3,819 )
Proceeds from stock offering, net of offering costs - 71,688
Proceeds from long-term debt - 1,569
Distributions paid to noncontrolling interest (2,307 ) -
Principal payments on long-term debt (1,150 ) (672 )
Net cash (used in)/provided by financing activities (82,666 ) 47,779
Net (decrease)/increase in cash and cash equivalents (14,397 ) 20,829
Cash and cash equivalents, beginning of year 41,094 20,265
Cash and cash equivalents, end of year $ 26,697 $ 41,094
Supplemental disclosure of cash flow information:
Cash paid for interest $ 10,280 $ 9,398
Cash paid for income taxes 23,641 107
Noncash investing and financing activities:
Adjustment of the noncontrolling interest measurement amount $ (4,112 ) $ -
Common stock issued for acquisition - 4,950
Net unrealized change in fair value of derivative instrument - 701
Distributions payable relating to noncontrolling interest 67 1,291
Employee stock relinquished for payment of taxes (257 ) -
FINANCIAL HIGHLIGHTS
Three Months Ended Year Ended
December 31, % December 31, %
(dollars in thousands) 2011 2010 Change 2011 2010 Change
EARNINGS
Income recognized on finance receivables, net $ 102,743 $ 84,783 21 % $ 401,895 $ 309,680 30 %
Fee income 15,344 15,972 -4 % 57,040 63,026 -9 %
Total revenues 118,087 100,755 17 % 458,935 372,706 23 %
Operating expenses 72,134 64,480 12 % 282,069 242,844 16 %
Income from operations 45,953 36,275 27 % 178,023 129,862 37 %
Net interest expense 2,512 2,488 1 % 10,562 8,987 18 %
Net income 26,666 20,631 29 % 101,143 73,871 37 %
Net income attributable to Portfolio Recovery Associates, Inc. 26,590 20,645 29 % 100,791 73,454 37 %
PERIOD-END BALANCES
Cash and cash equivalents $ 26,697 $ 41,094 -35 % $ 26,697 $ 41,094 -35 %
Finance receivables, net 926,734 831,330 11 % 926,734 831,330 11 %
Goodwill and intangible assets, net 76,274 80,144 -5 % 76,274 80,144 -5 %
Total assets 1,071,123 995,908 8 % 1,071,123 995,908 8 %
Line of credit 220,000 300,000 -27 % 220,000 300,000 -27 %
Total liabilities 457,804 490,943 -7 % 457,804 490,943 -7 %
Total equity 595,488 490,516 21 % 595,488 490,516 21 %
FINANCE RECEIVABLE COLLECTIONS
Cash collections $ 180,324 $ 144,363 25 % $ 705,490 $ 529,342 33 %
Principal amortization without allowance charges 74,481 54,139 38 % 293,431 194,510 51 %
Principal amortization with allowance charges 77,581 59,580 30 % 303,595 219,662 38 %
Principal amortization w/ allowance charges as % of cash collections:
Including fully amortized pools 43.0 % 41.3 % 4 % 43.0 % 41.5 % 4 %
Excluding fully amortized pools 44.9 % 44.3 % 1 % 45.4 % 44.8 % 1 %
Estimated remaining collections - core $ 1,159,086 $ 974,108 19 % $ 1,159,086 $ 974,108 19 %
Estimated remaining collections - bankruptcy 794,262 749,410 6 % 794,262 749,410 6 %
Estimated remaining collections - total 1,953,348 1,723,518 13 % 1,953,348 1,723,518 13 %
ALLOWANCE FOR FINANCE RECEIVABLES
Balance at period-end $ 86,571 $ 76,407 13 % $ 86,571 $ 76,407 13 %
Allowance charge $ 3,100 $ 5,442 -43 % $ 10,164 $ 25,152 -60 %
Allowance charge to period-end net finance receivables 0.33 % 0.65 % -49 % 1.10 % 3.03 % -64 %
Allowance charge to net finance receivable income 3.02 % 6.42 % -53 % 2.53 % 8.12 % -69 %
Allowance charge to cash collections 1.72 % 3.77 % -54 % 1.44 % 4.75 % -70 %
PURCHASES OF FINANCE RECEIVABLES
Purchase price - core $ 42,532 $ 44,852 -5 % $ 213,389 $ 149,998 42 %
Face value - core 829,232 1,357,301 -39 % 7,900,761 3,424,313 131 %
Purchase price - bankruptcy 46,360 40,671 14 % 195,019 217,445 -10 %
Face value - bankruptcy 376,094 511,588 -26 % 1,891,595 3,380,639 -44 %
Purchase price - total 88,892 85,523 4 % 408,407 367,443 11 %
Face value - total 1,205,326 1,868,889 -36 % 9,792,356 6,804,952 44 %
Number of portfolios - total 83 75 11 % 333 305 9 %
PER SHARE DATA
Net income per common share - diluted $ 1.54 $ 1.20 28 % $ 5.85 $ 4.35 34 %
Weighted average number of shares outstanding - diluted 17,269 17,165 1 % 17,230 16,885 2 %
Closing market price $ 67.52 $ 75.20 -10 % $ 67.52 $ 75.20 -10 %
RATIOS AND OTHER DATA
Return on average equity (1) 18.18 % 17.09 % 6 % 18.62 % 16.56 % 12 %
Return on revenue (2) 22.58 % 20.48 % 10 % 22.04 % 19.82 % 11 %
Operating margin (3) 38.91 % 36.00 % 8 % 38.79 % 34.84 % 11 %
Operating expense to cash receipts (4) 36.87 % 40.22 % -8 % 36.99 % 41.00 % -10 %
Debt to equity (5) 37.15 % 61.65 % -40 % 37.15 % 61.65 % -40 %
Cash collections per collector hour paid:
Core cash collections $ 137 $ 129 6 % $ 151 $ 129 17 %
Total cash collections $ 228 $ 204 12 % $ 240 $ 194 24 %
Excluding external legal collections $ 194 $ 174 30 % $ 204 $ 165 29 %
Excluding bankruptcy and external legal collections $ 103 $ 98 39 % $ 114 $ 100 23 %
Number of collectors 1,658 1,472 13 % 1,658 1,472 13 %
Number of employees 2,641 2,473 7 % 2,641 2,473 7 %
Cash receipts (4) $ 195,668 $ 160,335 22 % $ 762,530 $ 592,368 29 %
Line of credit - unused portion at period end 187,500 107,500 74 % 187,500 107,500 74 %
Notes:
(1) Calculated as annualized net income divided by average equity for the period
(2) Calculated as net income divided by total revenues
(3) Calculated as income from operations divided by total revenues
(4) "Cash receipts" is defined as cash collections plus fee income
(5) For purposes of this ratio, "debt" equals the line of credit balance plus long-term debt
FINANCIAL HIGHLIGHTS
For the Quarter Ended
December 31 September 30 June 30 March 31 December 31
(dollars in thousands) 2011 2011 2011 2011 2010
EARNINGS
Income recognized on finance receivables, net $ 102,743 $ 102,875 $ 100,303 $ 95,974 $ 84,783
Fee income 15,344 11,401 14,492 15,803 15,972
Total revenues 118,087 114,276 114,795 111,777 100,755
Operating expenses 72,134 70,447 70,415 69,073 64,480
Income from operations 45,953 43,830 45,536 42,704 36,275
Net interest expense 2,512 2,548 2,635 2,867 2,488
Net income 26,666 25,193 25,575 23,709 20,631
Net income attributable to Portfolio Recovery Associates, Inc. 26,590 25,506 25,574 23,121 20,645
PERIOD-END BALANCES
Cash and cash equivalents $ 26,697 $ 30,035 $ 25,481 $ 35,443 $ 41,094
Finance receivables, net 926,734 919,478 879,515 866,992 831,330
Goodwill and intangible assets, net 76,274 76,426 77,643 78,893 80,144
Total assets 1,071,123 1,064,104 1,021,617 1,020,099 995,908
Line of credit 220,000 260,000 250,000 290,000 300,000
Total liabilities 457,804 478,915 463,153 489,136 490,943
Total equity 595,488 568,305 542,396 515,710 490,516
FINANCE RECEIVABLE COLLECTIONS
Cash collections $ 180,324 $ 182,168 $ 176,281 $ 166,717 $ 144,363
Principal amortization without allowance 74,481 78,552 73,695 66,703 54,139
Principal amortization with allowance 77,581 79,293 75,978 70,743 59,580
Principal amortization w/ allowance as % of cash collections:
Including fully amortized pools 43.0 % 43.5 % 43.1 % 42.4 % 41.3 %
Excluding fully amortized pools 44.9 % 45.7 % 45.7 % 45.3 % 44.3 %
Estimated remaining collections - core $ 1,159,086 $ 1,154,406 $ 1,072,777 $ 1,040,140 $ 974,108
Estimated remaining collections - bankruptcy 794,262 770,886 743,228 753,130 749,410
Estimated remaining collections - total 1,953,348 1,925,292 1,816,005 1,793,270 1,723,518
ALLOWANCE FOR FINANCE RECEIVABLES
Balance at period-end $ 86,571 $ 83,471 $ 82,730 $ 80,447 $ 76,407
Allowance charge $ 3,100 $ 741 $ 2,283 $ 4,040 $ 5,442
Allowance charge to period-end net finance receivables 0.33 % 0.08 % 0.26 % 0.47 % 0.65 %
Allowance charge to net finance receivable income 3.02 % 0.72 % 2.28 % 4.21 % 6.42 %
Allowance charge to cash collections 1.72 % 0.41 % 1.30 % 2.42 % 3.77 %
PURCHASES OF FINANCE RECEIVABLES
Purchase price - core $ 42,532 $ 57,240 $ 52,323 $ 61,294 $ 44,852
Face value - core 829,232 5,027,874 1,034,898 1,008,758 1,357,301
Purchase price - bankruptcy 46,360 64,848 37,204 46,607 40,671
Face value - bankruptcy 376,094 654,508 378,051 482,941 511,588
Purchase price - total 88,892 122,088 89,527 107,901 85,523
Face value - total 1,205,326 5,682,382 1,412,949 1,491,699 1,868,889
Number of portfolios - total 83 95 76 79 75
PER SHARE DATA
Net income per common share - diluted $ 1.54 $ 1.48 $ 1.48 $ 1.34 $ 1.20
Weighted average number of shares outstanding - diluted 17,269 17,228 17,225 17,199 17,165
Closing market price $ 67.52 $ 62.22 $ 84.79 $ 85.13 $ 75.20
RATIOS AND OTHER DATA
Return on average equity (1) 18.18 % 18.27 % 19.20 % 18.25 % 17.09 %
Return on revenue (2) 22.58 % 22.05 % 22.28 % 21.21 % 20.48 %
Operating margin (3) 38.91 % 38.35 % 39.67 % 38.20 % 36.00 %
Operating expense to cash receipts (4) 36.87 % 36.39 % 36.91 % 37.84 % 40.22 %
Debt to equity (5) 37.15 % 46.02 % 46.43 % 56.64 % 61.65 %
Cash collections per collector hour paid:
Core cash collections $ 137 $ 152 $ 154 $ 162 $ 129
Total cash collections $ 228 $ 249 $ 243 $ 241 $ 204
Excluding external legal collections $ 194 $ 212 $ 205 $ 204 $ 174
Excluding bankruptcy and external legal collections $ 103 $ 115 $ 116 $ 125 $ 98
Number of collectors 1,658 1,520 1,517 1,486 1,472
Number of employees 2,641 2,504 2,504 2,482 2,473
Cash receipts (4) $ 195,668 $ 193,569 $ 190,773 $ 182,520 $ 160,335
Line of credit - unused portion at period end 187,500 147,500 157,500 117,500 107,500
Notes:
(1) Calculated as annualized net income divided by average equity for the period
(2) Calculated as net income divided by total revenues
(3) Calculated as income from operations divided by total revenues
(4) "Cash receipts" is defined as cash collections plus fee income
(5) For purposes of this ratio, "debt" equals the line of credit balance plus long-term debt
Purchase Price Multiples at December 31, 2011, Entire Portfolio
($ in thousands)
Net Finance Actual Cash
Total Receivables Collections Estimated Total Estimated
Purchase Purchase Estimated Balance at Including Cash Remaining Collections to
Period Price Collections December 31, 2011 Sales Collections Purchase Price
1996 $ 3,080 $ 10,243 $ - $ 10,144 $ 99 333 %
1997 7,685 25,491 - 25,310 181 332 %
1998 11,089 37,370 - 36,938 432 337 %
1999 18,898 69,145 - 68,162 983 366 %
2000 25,020 116,040 - 113,388 2,652 464 %
2001 33,481 173,637 - 170,464 3,173 519 %
2002 42,325 194,756 - 190,276 4,480 460 %
2003 61,448 259,458 - 252,397 7,061 422 %
2004 59,177 194,439 - 187,150 7,289 329 %
2005 143,169 309,213 11,267 287,884 21,329 216 %
2006 107,696 217,424 17,505 187,156 30,268 202 %
2007 258,382 508,433 62,197 402,226 106,207 197 %
2008 275,154 530,607 103,508 358,932 171,675 193 %
2009 281,436 779,837 131,700 421,864 357,973 277 %
2010 358,185 805,126 229,011 304,614 500,512 225 %
2011 402,803 816,224 371,546 77,190 739,034 203 %
Total $ 2,089,028 $ 5,047,443 $ 926,734 $ 3,094,095 $ 1,953,348 242 %
Purchase Price Multiples at December 31, 2011, Purchased Bankruptcy Portfolio
($ in thousands)
Net Finance Actual Cash
Total Receivables Collections Estimated Total Estimated
Purchase Purchase Estimated Balance at Including Cash Remaining Collections to
Period Price Collections December 31, 2011 Sales Collections Purchase Price
1996-2003 $ - $ - $ - $ - $ - 0 %
2004 7,468 14,384 - 14,294 90 193 %
2005 29,301 43,351 68 43,222 129 148 %
2006 17,645 31,191 83 30,481 710 177 %
2007 78,547 109,962 12,111 95,373 14,589 140 %
2008 108,609 184,106 44,172 123,582 60,524 170 %
2009 156,057 392,928 85,227 201,195 191,733 252 %
2010 209,246 393,518 146,596 143,984 249,534 188 %
2011 189,027 292,171 184,316 15,218 276,953 155 %
Total $ 795,900 $ 1,461,611 $ 472,573 $ 667,349 $ 794,262 184 %

Purchase Price Multiples at December 31, 2011, Core Portfolio
($ in thousands)
Net Finance Actual Cash
Total Receivables Collections Estimated Total Estimated
Purchase Purchase Estimated Balance at Including Cash Remaining Collections to
Period Price Collections December 31, 2011 Sales Collections Purchase Price
1996 $ 3,080 $ 10,243 $ - $ 10,144 $ 99 333 %
1997 7,685 25,491 - 25,310 181 332 %
1998 11,089 37,370 - 36,938 432 337 %
1999 18,898 69,145 - 68,162 983 366 %
2000 25,020 116,040 - 113,388 2,652 464 %
2001 33,481 173,637 - 170,464 3,173 519 %
2002 42,325 194,756 - 190,276 4,480 460 %
2003 61,448 259,458 - 252,397 7,061 422 %
2004 51,709 180,055 - 172,856 7,199 348 %
2005 113,868 265,862 11,199 244,662 21,200 233 %
2006 90,051 186,233 17,422 156,675 29,558 207 %
2007 179,835 398,471 50,086 306,853 91,618 222 %
2008 166,545 346,501 59,336 235,350 111,151 208 %
2009 125,379 386,909 46,473 220,669 166,240 309 %
2010 148,939 411,608 82,415 160,630 250,978 276 %
2011 213,776 524,053 187,230 61,972 462,081 245 %
Total $ 1,293,128 $ 3,585,832 $ 454,161 $ 2,426,746 $ 1,159,086 277 %
Net Allowance Charges, Entire Portfolio
($ in thousands)
Purchase Period
Allowance Period 1996-2003 2004 2005 2006 2007 2008 2009-2011 Total
2005 $ 200 $ - $ - $ - $ - $ - $ - $ 200
2006 275 - 825 - - - - 1,100
2007 235 470 1,885 340 - - - 2,930
2008 (110 ) 1,290 3,040 7,170 7,380 620 - 19,390
2009 (600 ) (375 ) 4,190 4,860 3,435 16,125 - 27,635
Q1 10 - - 2,795 1,175 2,900 - - 6,870
Q2 10 - (80 ) 1,600 2,100 700 2,000 - 6,320
Q3 10 - (80 ) 1,650 2,050 2,750 150 - 6,520
Q4 10 - (10 ) 832 1,720 1,150 1,750 - 5,442
Q1 11 - (15 ) 455 (100 ) 400 3,300 - 4,040
Q2 11 - - (217 ) - - 2,500 - 2,283
Q3 11 - - 641 100 (500 ) 500 - 741
Q4 11 - - 250 1,000 1,250 600 - 3,100
Total $ - $ 1,200 $ 17,946 $ 20,415 $ 19,465 $ 27,545 $ - $ 86,571
Portfolio Purchases, net $ 203,026 $ 59,177 $ 143,169 $ 107,696 $ 258,382 $ 275,154 $ 1,042,424 $ 2,089,028

Net Allowance Charges, Purchased Bankruptcy Portfolio
($ in thousands)
Purchase Period
Allowance Period 1996-2003 2004 2005 2006 2007 2008 2009-2011 Total
2007 $ - $ 470 $ 160 $ 150 $ - $ - $ - $ 780
2008 - 770 375 1,210 - - - 2,355
2009 - 45 265 120 110 - - 540
Q1 10 - - 95 50 1,200 - - 1,345
Q2 10 - (30 ) 25 - - - - (5 )
Q3 10 - (30 ) - (100 ) 600 - - 470
Q4 10 - (10 ) (18 ) (30 ) 950 - - 892
Q1 11 - (15 ) (95 ) (100 ) 1,150 1,300 - 2,240
Q2 11 - - (17 ) - - 500 - 483
Q3 11 - - (59 ) (100 ) - - - (159 )
Q4 11 - - (50 ) - 1,100 - - 1,050
Total $ - $ 1,200 $ 681 $ 1,200 $ 5,110 $ 1,800 $ - $ 9,991
Portfolio Purchases, net $ - $ 7,468 $ 29,301 $ 17,645 $ 78,547 $ 108,609 $ 554,330 $ 795,900

Net Allowance Charges, Core Portfolio
($ in thousands)
Purchase Period
Allowance Period 1996-2003 2004 2005 2006 2007 2008 2009-2011 Total
2005 $ 200 $ - $ - $ - $ - $ - $ - $ 200
2006 275 - 825 - - - - 1,100
2007 235 - 1,725 190 - - - 2,150
2008 (110 ) 520 2,665 5,960 7,380 620 - 17,035
2009 (600 ) (420 ) 3,925 4,740 3,325 16,125 - 27,095
Q1 10 - - 2,700 1,125 1,700 - - 5,525
Q2 10 - (50 ) 1,575 2,100 700 2,000 - 6,325
Q3 10 - (50 ) 1,650 2,150 2,150 150 - 6,050
Q4 10 - - 850 1,750 200 1,750 - 4,550
Q1 11 - - 550 - (750 ) 2,000 - 1,800
Q2 11 - - (200 ) - - 2,000 - 1,800
Q3 11 - - 700 200 (500 ) 500 - 900
Q4 11 - - 300 1,000 150 600 - 2,050
Total $ - $ - $ 17,265 $ 19,215 $ 14,355 $ 25,745 $ - $ 76,580
Portfolio Purchases, net $ 203,026 $ 51,709 $ 113,868 $ 90,051 $ 179,835 $ 166,545 $ 488,094 $ 1,293,128