1. (PRAA)
October 2011 Update

2. Key Stats
2008 2009 2010 2011E 2012
Revenue 263m 281m 373m 472m 574m
Current Price: $66.66
Y/Y %Chg 19% 7% 33% 27% 22%
Amortization Market Cap: $1.16BN
Rate 36.8% 41.4% 41.5% 40.9% 40.9%
Oper. Mar. 32.2% 28.7% 34.8% 39.1% 41.4% 6M Price Target: $85.00
Net Income 45m 44m 74m 105m 139m (14x FY2011 EPS)
Y/Y %Chg -6% -2% 67% 42% 33%
EPS $2.96 $2.87 $4.34 $6.03 $7.96 Upside 27.5%
Debt
Purchases 279m 289m 362m 390m 371m $2.83/Share through Q2
Figure 1: Stock Price & Volume Figure 2: Market Profile
$100.00 2.5mm Current Price $66.66
$95.00 Shares Outstanding (mm) 17.2
$90.00 2.0mm Market Capitalization (mm) $1,162.1
$85.00 Beta 1.45
$80.00 1.5mm 52 Week Price Range 56.76 - 90.95
$75.00 Avg. Volume - 3 mo (mm) 0.14
$70.00 1.0mm Float 16.75M
$65.00
Institutional Holding 108.20%
$60.00 0.5mm
Insider Holding 2.60%
$55.00
Short Interest 18.8%
$50.00 0.0mm
Tangible Book Value/Share $27.15
Apr-11
Apr-10
Feb-10
Sep-10
Feb-11
Jun-10
Jul-10
Mar-10
Mar-11
Dec-10
Oct-10
Oct-10
Aug-10
Jan-10
Jan-11
Nov-10
May-10
Return on Equity 17.58%
P/E (diluted) 13.03x
Source: Yahoo Finance Source: Yahoo Finance

3. Relative Performance

4. Stock Performance - LT
$100.00
23.92
24.56
$90.00
24.37
25.71
$80.00
26.67
28.88
$70.00
30.88
29.21
$60.00
28.78
27.45
$50.00
24.06
23.82
$40.00
$30.00
$20.00
$10.00
$-
1mm
1mm
1mm
mm
mm
mm

5. Non-Farm Payrolls (m/m % chg)
(USMMMNCH)

6. Personal Income (Y/Y)
(PITLYOY) Growing at a healthy clip again

7. Total Consumer Credit Outstanding
(CCOSTOT) Positive trend for debt buyers

8. Household Debt Growth
(DEGRHHLD) Good for near term payment, but a
concern for longer term growth. I have thus revised
my growth estimates down over the long-term.

9. Company Summary

10. Business Lines
• Core Business (87%) • Collections
– Non-Bankruptcy – Call Center (37%)
– Bankruptcy – Purchased Bankruptcy (39%)
• Non-Core Business (13%) – Internal Legal (9%)
– Collateral Location – External Legal (15%)
– Government Service
– Class Action Claims Recovery
250,000
Collections Mix
200,000
150,000
100,000
50,000
0
Call Center Collections Purchased Bankruptcy Collections Internal Legal Collections External Legal Collections

11. Debt Purchases
Total Debt Purchases
$450,000
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
Non Bankruptcy Purchases Bankruptcy Purchases

12. Cash Collections
$500,000
Non-Bankruptcy Collections vs. Purchases
$450,000
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
Non-Bankruptcy Collections Non Bankruptcy Purchases
$300,000
Bankruptcy Collections vs. Purchases
$250,000
$200,000
$150,000
$100,000
$50,000
$0
Bankruptcy Collections Bankruptcy Purchases

13. Differentiated From Competitors
• Integrated Business – collect own accounts
– Better control over entire process, compliance
– Capture profits that would otherwise go to outsource provider
– Better integration of collection results & underwriting models
– Growing in-house Legal Collections Department
• Low Cost Operations, Conservative Balance Sheet
– Actively seek out low cost labor and real estate markets
– Very disciplined purchase of debt and use of line of credit
– Pricing confidence from 14 tears and over 1,850 pools of data
– Track record of conservative pricing bias
• Accounts are not re-sold
– Many competitors try to quickly squeeze some value out of accounts before
re-selling them. PRAA works accounts over a MUCH longer time span.

14. Call Centers
• US Locations
– Hutchinson, Kansas (Premier Location)
– Jackson, Tennessee (91%)
– Norfolk, Virginia (88%)
– Hampton, Virginia (87%)
– Birmingham, Alabama (81%)
• International Locations
– Philippines (47%)
– Panama City (Newly Opened)
• Productivity up at ALL centers
• Continued Investment in Operational Efficiency & Automation
– Made 38% more calls in Q4 2010 vs. 2009
– Able to profitably work accounts with lower balances and lower scores
– Accounts are re-scored EVERY night

15. Key Stats

16. Historical P/E

17. Valuation
2010E 2011E 2012E 2011 Upside 2012 Upside
$4.34 $6.03 $7.96
P/E 15.4 11.1 8.4
20 $ 86.82 $ 120.61 $ 159.17 80.9% 138.8%
19.5 $ 84.65 $ 117.60 $ 155.19 76.4% 132.8%
19 $ 82.48 $ 114.58 $ 151.21 71.9% 126.8%
18.5 $ 80.31 $ 111.57 $ 147.23 67.4% 120.9%
18 $ 78.14 $ 108.55 $ 143.25 62.8% 114.9%
17.5 $ 75.97 $ 105.54 $ 139.28 58.3% 108.9%
17 $ 73.80 $ 102.52 $ 135.30 53.8% 103.0%
16.5 $ 71.63 $ 99.50 $ 131.32 49.3% 97.0%
16 $ 69.46 $ 96.49 $ 127.34 44.7% 91.0%
15.5 $ 67.29 $ 93.47 $ 123.36 40.2% 85.1%
15 $ 65.12 $ 90.46 $ 119.38 35.7% 79.1%
14.5 $ 62.94 $ 87.44 $ 115.40 31.2% 73.1%
14 $ 60.77 $ 84.43 $ 111.42 26.7% 67.1%
13.5 $ 58.60 $ 81.41 $ 107.44 22.1% 61.2%
13 $ 56.43 $ 78.40 $ 103.46 17.6% 55.2%
12.5 $ 54.26 $ 75.38 $ 99.48 13.1% 49.2%
12 $ 52.09 $ 72.37 $ 95.50 8.6% 43.3%
11.5 $ 49.92 $ 69.35 $ 91.52 4.0% 37.3%
11 $ 47.75 $ 66.34 $ 87.54 -0.5% 31.3%

18. Valuation
FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 Terminal Value
EBIT $ 184,569 $ 237,838 $ 273,514 $ 300,865 $ 315,909
Less Taxes (68,798) (88,214) (105,987) (116,585) (122,415)
Plus Depr. 301,707 368,448 375,817 368,300 360,934
Less CapEx (390,179) (370,670) (363,257) (355,992) (348,872)
Less Change in WC
Free Cash Flow 27,299 147,402 180,087 196,589 205,556
NPV $ 24,598 $ 119,678 $ 131,749 $ 129,592 $ 122,098 $ 1,575,948
DCF $ 2,103,663
Terminal Growth Rate 3.00% Less Debt (463,153)
WACC 10.98% Plus Cash 25,481
Risk Free Rate 2.15% Equity Value $ 1,665,991
Risk Premium 9.01% Diluted Shares 17,225
Beta 1.16 Price/Share $ 96.72
Upside to Current 45.09%

19. Risk Factors
• Double Dip Recession
– Looking less likely all the time, but important to monitor
• Massive influx of competitors / Material Rise in Debt Pricing
– Company has shown strong discipline in the past by reducing purchasing when
prices rise beyond acceptable levels, but this would impact revenues over the
next few years
• Long Term Reduction in Consumer Debt Levels
• My greatest concern over the next 5 years. Should not impact company over
the next 2 years, but this will likely hurt long-run profitability.
• Major Changes to US Debt Collection and/or Bankruptcy Law
– Unlikely to occur near term given current political environment. PRAA has
also always been a leader within the industry in terms of regulatory
compliance
• Major Changes to Credit Facility
– Just expanded credit facility from $365mm to $407.5mm in Q4 @ LIBOR +275,
maturing in December 2014. Currently using $300mm.