Document
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
ý Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2017
¨ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ________ to ________
Commission File Number: 000-50058

PRA Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware
 
 
 
75-3078675
(State or other jurisdiction of incorporation or organization)
 
 
 
(I.R.S. Employer Identification No.)
 
 
 
 
 
120 Corporate Boulevard, Norfolk, Virginia
 
23502
 
(888) 772-7326
(Address of principal executive offices)
 
(Zip Code)
 
(Registrant's Telephone No., including area code)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $0.01 par value per share
 
NASDAQ Global Select Market
(Title of Class)
 
(Name of Exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES  þ   NO  ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act. YES  ¨   NO  þ
Indicate by check mark whether the registrant (1) has filed all reports required 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  þ   NO  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES  þ   NO  ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer  þ   Accelerated filer  ¨   Non-accelerated filer  ¨ (Do not check if a smaller reporting company)  Smaller reporting company  ¨ Emerging growth company  ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES  ¨   NO  þ
The aggregate market value of the common stock held by non-affiliates of the registrant as of June 30, 2017 was $1,657,180,835 based on the $37.90 closing price as reported on the NASDAQ Global Select Market.
The number of shares of the registrant's Common Stock outstanding as of February 23, 2018 was 45,225,425.
Documents incorporated by reference: Portions of the Registrant's definitive Proxy Statement for its 2018 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K.



Table of Contents

 
 
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
 
 
 
 
 
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 9.
Item 9A.
Item 9B.
 
 
 
 
 
 
 
 
 
 

2


Table of Contents

continued
 
 
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
 
 
 
 
 
Item 15.
Item 16.
 
 
 
Signatures
 

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Cautionary Statements Pursuant to Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995:
This report contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks, uncertainties and assumptions that could cause our results to differ materially from those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, are forward-looking statements, including statements regarding overall cash collection trends, gross margin trends, operating cost trends, liquidity and capital needs and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. The risks, uncertainties and assumptions referred to above may include the following:
a prolonged economic recovery or a deterioration in the economic or inflationary environment in the Americas or Europe, including the interest rate environment;
changes in the credit or capital markets, which affect our ability to borrow money or raise capital;
our ability to replace our nonperforming loans with additional portfolios;
our ability to purchase nonperforming loans at appropriate prices;
changes in, or interpretations of, federal, state, local, or foreign laws or the administrative practices of various bankruptcy courts, which may impact our ability to collect on our nonperforming loans;
our ability to collect sufficient amounts on our nonperforming loans;
the possibility that we could incur significant allowance charges on our finance receivables;
changes in, or interpretations of, bankruptcy or collection laws that could negatively affect our business, including by causing an increase in certain types of bankruptcy filings involving liquidations, which may cause our collections to decrease;
our ability to manage risks associated with our international operations;
changes in tax laws regarding earnings of our subsidiaries located outside of the United States ("U.S.");
the impact of the Tax Cuts and Jobs Act (the "Tax Act") including interpretations and determinations by tax authorities;
the possibility that we could incur goodwill or other intangible asset impairment charges;
adverse effects from the vote by the United Kingdom ("UK") to leave the European Union ("EU");
adverse outcomes in pending litigations or administrative proceedings;
our loss contingency accruals may not be adequate to cover actual losses;
the possibility that class action suits and other litigation could divert our management's attention and increase our expenses;
the possibility that we could incur business or technology disruptions or cyber incidents;
our ability to collect and enforce our nonperforming loans may be limited under federal, state, local and foreign laws;
our ability to comply with existing and new regulations of the collection industry, the failure of which could result in penalties, fines, litigation, damage to our reputation, or the suspension or termination of or required modification to our ability to conduct our business;
investigations or enforcement actions by governmental authorities, including the Consumer Financial Protection Bureau ("CFPB"), which could result in changes to our business practices, negatively impact our portfolio purchasing volume, make collection of account balances more difficult or expose us to the risk of fines, penalties, restitution payments, and litigation;
the possibility that compliance with foreign and U.S. laws and regulations that apply to our international operations could increase our cost of doing business in international jurisdictions;
our ability to raise the funds necessary to repurchase the convertible senior notes or to settle conversions in cash;
our ability to maintain, renegotiate or replace our credit facilities;
changes in interest or exchange rates, which could reduce our net income, and the possibility that future hedging strategies may not be successful, which could adversely affect our results of operations and financial condition, as could our failure to comply with hedge accounting principles and interpretations; and
the risk factors discussed herin and in our other filings with the Securities and Exchange Commission (the "SEC").
You should assume that the information appearing in this Annual Report on Form 10-K (this "Form 10-K") is accurate only as of the date it was issued. Our business, financial condition, results of operations and prospects may have changed since that date.
You should carefully consider the factors listed above and review the "Risk Factors" section beginning on page 9, as well as the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section beginning on page 23 and the "Business" section beginning on page 5.
Our forward-looking statements could be wrong in light of these and other risks, uncertainties and assumptions. The future events, developments or results described in, or implied by, this Form 10-K could turn out to be materially different. Except as required by law, we assume no obligation to publicly update or revise our forward-looking statements after the date of this Form 10-K and you should not expect us to do so.

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Investors should also be aware that while we do, from time to time, communicate with securities analysts and others, we do not selectively disclose to them any material nonpublic information or other confidential commercial information. Accordingly, stockholders should not assume that we agree with any statement or report issued by any analyst regardless of the content of the statement or report. We do not, by policy, confirm forecasts or projections issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.
PART I
Item 1. Business.
General
Headquartered in Norfolk, Virginia and incorporated in Delaware, we are a global financial and business services company with operations in the Americas and Europe.
Our primary business is the purchase, collection and management of portfolios of nonperforming loans. The accounts we acquire are primarily the unpaid obligations of individuals owed to credit grantors, which include banks and other types of consumer, retail, and auto finance companies. We acquire portfolios of nonperforming loans in two broad categories: Core and Insolvency. Our Core operation specializes in purchasing and collecting nonperforming loan accounts, which we purchased at a substantial discount to face value since either the credit grantor and/or other third-party collection agencies have been unsuccessful in collecting the full balance owed. Our Insolvency operation consists primarily of purchasing and collecting on nonperforming loan accounts where the customer is involved in a bankruptcy proceeding.
We also provide the following fee-based services:
Class action claims recovery services and purchases;
Servicing of consumer bankruptcy accounts in the U.S.; and
To a lesser extent, contingent collections of nonperforming loans in Europe and South America.
We sold our government services business in January 2017 and PRA Location Services, LLC ("PLS") in June 2017.
We have one reportable segment, accounts receivable management, based on similarities among the operating units, including the nature of the products and services, the nature of the production processes, the types or classes of customers for our products and services, the methods used to distribute our products and services, and the nature of the regulatory environment.
We were initially formed as Portfolio Recovery Associates, L.L.C., a Delaware limited liability company, on March 20, 1996. We formed Portfolio Recovery Associates, Inc. in August 2002 in order to become a publicly traded company and our common stock began trading on the NASDAQ Global Select Market ("NASDAQ") on November 8, 2002. We continued to diversify our business by acquiring Aktiv Kapital AS ("Aktiv"), a Norway-based company specializing in the acquisition and servicing of nonperforming loans throughout Europe and Canada, on July 16, 2014, and subsequently changed our legal name on October 23, 2014 from Portfolio Recovery Associates, Inc. to PRA Group, Inc. We expanded into South America on August 3, 2015 by acquiring 55% of the equity interest in RCB Investimentos S.A. ("RCB"), a servicing platform of nonperforming loans in Brazil, with the remaining 45% of the equity interest owned by the executive team and previous owners of RCB. On April 26, 2016, we completed our public tender offer to purchase 100% of the shares of DTP S.A. ("DTP"), a Polish-based debt collection company, further building our in-house collection efforts in Poland.
All references in this Form 10-K to the "PRA Group," "our," "we," "us," the "Company" or similar terms are to PRA Group, Inc. and its subsidiaries.
Nonperforming Loan Portfolio Purchases
To identify buying opportunities, we maintain an extensive marketing effort with our senior officers contacting known and prospective sellers of nonperforming loans. From these sellers, we have purchased a variety of nonperforming loans including Visa® and MasterCard® credit cards, private label and other credit cards, installment loans, lines of credit, deficiency balances of various types, legal judgments, and trade payables. Sellers of nonperforming loans include major banks, credit unions, consumer finance companies, telecommunication providers, retailers, utilities, automobile finance companies, student loan companies, and other debt owners. The price at which we acquire portfolios depends on the age of the portfolio, whether it is a Core or Insolvency portfolio, geographic distribution, our historical experience with a certain asset type or credit grantor and other similar factors.

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Nonperforming Loan Portfolio Purchasing Process
We acquire portfolios of nonperforming loans from credit grantors through auctions and negotiated sales. In an auction process, the seller will assemble a portfolio of nonperforming loans and will seek purchase prices from specifically invited potential purchasers. In a privately negotiated sale process, the credit grantor will contact one or more purchasers directly, receive a bid, and negotiate the terms of sale. In either case, typically, invited purchasers will have already successfully completed a qualification process that can include the seller's review of any or all of the following: the purchaser's experience, reputation, financial standing, operating procedures, business practices, and compliance oversight.
We acquire portfolios of nonperforming loans through either single portfolio transactions, referred to as spot sales, or through the pre-arranged purchase of multiple portfolios over time, referred to as forward flow sales. Under a forward flow contract, we agree to purchase nonperforming loans from credit grantors on a periodic basis, at a price equal to a set percentage of face value of the nonperforming loans over a specified time period, generally from three to twelve months.
Nonperforming Loan Portfolio Collection Operations
Call Center Operations
In higher volume markets, our collection efforts leverage internally staffed call centers. In some newer markets or in markets that have less consistent debt purchasing patterns, most notably outside the U.S., we may utilize external vendors to do some of this work. Whether the accounts are being worked internally or externally, we utilize our proprietary analysis to proportionally direct work efforts to those customers most likely to pay. The analysis driving those decisions relies on various models and variables that have the highest correlation to profitable collections from call activity.
Legal Recovery - Core Portfolios
An important component of our collections effort involves our legal recovery operations and the judicial collection of accounts of customers who we believe have the ability, but not the willingness, to resolve their obligations. There are some markets in which the collection process follows a prescribed time-sensitive and sequential set of legal actions, but in the majority of instances, we use models and analysis and select those accounts reflecting a high propensity to pay in a legal environment. Depending on the balance of the receivable and the applicable local collection laws, we determine whether to commence legal action to judicially collect on the receivable. The legal process can take an extended period of time and can be costly, but when accounts are selected properly it also usually generates net cash collections that likely would not have been realized otherwise. We use a combination of internal staff (attorney and support), and external staff to pursue legal collections under certain circumstances.
Insolvency Operations
Insolvency Operations in the U.S. manages customer filings under the U.S. Bankruptcy Code on debtor accounts derived from two sources: (1) our purchased pools of bankrupt accounts and (2) our Core purchased pools of nonperforming loans that have filed for bankruptcy or insolvency protection after being acquired by us. We file proofs of claim ("POCs") or claim transfers and actively manage these accounts through the entire life cycle of the insolvency proceeding in order to substantiate our claims and ensure that we participate in any distributions to creditors. Outside of the U.S., this work is primarily outsourced to third parties.
Insolvency accounts in the U.S. are typically those filed under Chapter 13 of the U.S. Bankruptcy Code, have an associated payment plan that generally ranges from three to five years in duration and can be acquired at any stage in the bankruptcy plan life cycle. Portfolios sold close to the filing of the bankruptcy plan will generally take months to generate cash flow; however, aged portfolios sold years after the filing of the bankruptcy plan will typically generate cash flows immediately. Non-U.S. insolvency accounts may have some slight differences, but generally operate in a similar manner. In Canada, we purchase Consumer Proposal, Consumer Credit Counseling and Bankrupt Accounts. In the UK, we purchase Individual Voluntary Arrangements, Company Voluntary Arrangements, Trust Deeds and Bankrupt Accounts. In Germany, we acquire consumer bankruptcies, which may also consist of small business loans with a personal guarantee.
Fee-Based Services
In addition to the purchase, collection and management of portfolios of nonperforming loans, we provide fee-based services including class action claims recovery purchasing and servicing through Claims Compensation Bureau, LLC ("CCB"); contingent collection of nonperforming loans through PRA Group Europe and RCB; and third-party servicing of bankruptcy accounts in the U.S.

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Seasonality
Although our business is not impacted significantly by seasonality, cash collections in the Americas tend to be higher in the first and second quarters of the year and lower in the third and fourth quarters of the year; by contrast, cash collections in Europe tend to be higher in the third and fourth quarters of the year. Customer payment patterns are affected by seasonal employment trends, income tax refunds and holiday spending habits geographically.
Competition
Purchased portfolio competition comes from both third-party contingent fee collection agencies and other purchasers of debt that manage their own nonperforming loans or outsource such servicing. Our primary competitors in our fee-for-service business are providers of outsourced receivables management services. Regulatory complexity and burdens, combined with seller preference for experienced portfolio purchasers create significant barriers to successful entry for new competitors. While both markets remain competitive, the contingent fee industry is more fragmented than the purchased portfolio industry.
We face bidding competition in our acquisition of nonperforming loans and in obtaining placements for our fee-for-service businesses. We also compete on the basis of reputation, industry experience and performance. We believe that our competitive strengths include our disciplined and proprietary underwriting process, the extensive data set we have developed as a result of reselling substantially no portfolios since 2002 and inhouse collections, our ability to bid on portfolios at appropriate prices, our reputation from previous portfolio purchase transactions, our ability to close transactions in a timely fashion, our strong relationships with grantors of receivables, our team of well-trained collectors who provide quality customer service while complying with applicable collection laws, and our ability to efficiently and effectively collect on various asset types.
Compliance
Our approach to compliance is multifaceted and comprehensive, and includes the following:
our Code of Conduct, which applies to all directors, officers and employees, is available at the Investor Relations page of our website at www.pragroup.com;
compliance and ethics training for our directors, officers and employees;
a confidential telephone and email hotline and web-based portals to report suspected compliance violations, fraud, financial reporting, accounting, and auditing matters and other acts that may be illegal and/or unethical;
regular and annual testing by our compliance and internal audit departments of controls embedded in business processes designed to foster compliance with laws, regulations and internal policy; and
regular evaluation of the legislative and regulatory environment, monitoring of statutory and regulatory changes and relevant case law, so that operations personnel are aware of and in compliance with the laws and judicial decisions that may impact their job duties.
Regulation
We are subject to a variety of federal, state, local, and foreign laws that establish specific guidelines and procedures that debt collectors must follow when collecting customer accounts, including laws relating to the collection, use, retention, security and transfer of personal information. It is our policy to comply with the provisions of all applicable federal, state, local and foreign laws in all of our activities even though there are frequent changes in these laws and regulations, in their interpretation and application and inconsistencies from jurisdiction to jurisdiction. Our failure to comply with these laws could result in enforcement action against us, the payment of significant fines and penalties, restrictions upon our operations or our inability to recover amounts owed to us. Significant laws and regulations applicable to our business include the following:
Fair Debt Collection Practices Act ("FDCPA"), which imposes certain obligations and restrictions on the practices of debt collectors, including specific restrictions regarding the time, place and manner of the communications.
Fair Credit Reporting Act ("FCRA"), which obligates credit information providers to verify the accuracy of information provided to credit reporting agencies and investigate consumer disputes concerning the accuracy of such information.
Gramm-Leach-Bliley Act, which requires that certain financial institutions, including collection agencies, develop policies to protect the privacy of consumers' private financial information and provide notices to consumers advising them of their privacy policies.

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Electronic Funds Transfer Act, which regulates electronic fund transfer transactions, including a consumer’s right to stop payments on a pre-approved fund transfer and right to receive certain documentation of the transaction.
Telephone Consumer Protection Act ("TCPA"), which, along with similar state laws, places certain restrictions on users of certain automated dialing equipment and pre-recorded messages that place telephone calls to consumers.
Servicemembers Civil Relief Act ("SCRA"), which gives U.S. military service personnel relief from credit obligations they may have incurred prior to entering military service, and may also apply in certain circumstances to obligations and liabilities incurred by a servicemember while serving on active duty.
Health Insurance Portability and Accountability Act, which provides standards to protect the confidentiality of patients' personal healthcare and financial information in the U.S.
U.S. Bankruptcy Code, which prohibits certain contacts with consumers after the filing of bankruptcy petitions and dictates what types of claims will or will not be allowed in a bankruptcy proceeding and how such claims may be discharged.
Americans with Disabilities Act, which requires that telecommunications companies operating in the U.S. take steps to ensure functionally equivalent services are available for their consumers with disabilities, and requires accommodation of consumers with disabilities, such as the implementation of telecommunications relay services.
U.S. Foreign Corrupt Practices Act ("FCPA"), United Kingdom Bribery Act ("UK Bribery Act") and Other Applicable Legislation. Our operations outside the U.S. are subject to the FCPA, which prohibits U.S. companies and their agents and employees from providing anything of value to a foreign official for the purposes of influencing any act or decision of these individuals in order to obtain an unfair advantage or help obtain or retain business. Although similar to the FCPA, the UK Bribery Act is broader in scope and covers bribes given to or received by any person with improper intent.
Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), which restructured the regulation and supervision of the financial services industry in the U.S. and created the CFPB. The CFPB has rulemaking, supervisory, and enforcement authority over larger consumer debt collectors. The Dodd-Frank Act, along with the Unfair, Deceptive, or Abusive Acts or Practices ("UDAAP") provisions included therein, and the Federal Trade Commission Act, prohibit unfair, deceptive, and/or abusive acts and practices.
Foreign data protection and privacy laws, which include relevant country specific legislation in the United Kingdom and other European countries where we operate that regulate the processing of information relating to individuals, including the obtaining, holding, use or disclosure of such information; the Personal Information Protection and Electronic Documents Act, which aims to protect personal information that is collected, used or disclosed in certain circumstances for purposes of electronic commerce in Canada; and the EU Data Protection Directive, which will be replaced by the General Data Protection Regulation, effective as of May 25, 2018, which regulates the processing and free movement of personal data within the EU and transfer of such data outside the EU.
Consumer Credit Act 1974 (and its related regulations), Unfair Terms in Consumer Contracts Regulations of 1999 and the Financial Conduct Authority's consumer credit conduct of business rules, which apply to our international operations and govern consumer credit agreements.
In addition, certain of our EU subsidiaries are subject to capital adequacy and liquidity requirements as prescribed by the Swedish Financial Supervisory Authority ("SFSA").
On September 9, 2015, Portfolio Recovery Associates, LLC ("PRA"), our wholly owned subsidiary, entered into a consent order with the CFPB, settling a previously disclosed investigation of certain debt collection practices of PRA (the "Consent Order"). PRA entered into the Consent Order for settlement purposes, without admitting the truth of the allegations, other than the jurisdictional facts. Among other things, the Consent Order required PRA to: (i) vacate 837 judgments obtained after the applicable statute of limitations, refund $860,607 in payments received on account of such judgments and waive the remaining $3.4 million in judgment balances; (ii) refund $18.2 million in Litigation Department Calls Restitution, as defined in the Consent Order; and (iii) pay an $8.0 million civil money penalty to the CFPB.
Employees
As of December 31, 2017, we employed 5,154 full-time equivalents globally. We believe that our relations with our employees are generally satisfactory. While none of our North American employees are represented by a union or covered by a collective bargaining agreement, in Europe we work closely with a number of Works Councils, and in countries where it is the customary local practice, such as Finland and Spain, we have collective bargaining agreements.

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Available Information
We make available on or through our website, www.pragroup.com, certain reports that we file with or furnish to the SEC in accordance with the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These include our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act ("SEC Filings"). We make this information available on our website free of charge as soon as reasonably practicable after we electronically file the information with or furnish it to the SEC. The information that is filed with the SEC may be read or copied at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. In addition, information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at: www.sec.gov.
The information contained on, or that can be accessed through our website, is not, and shall not be deemed to be, a part of this Form 10-K or incorporated into any other filings we make with the SEC.
Reports filed with, or furnished to, the SEC are also available free of charge upon request by contacting our corporate office at:
PRA Group, Inc.
Attn: Investor Relations
120 Corporate Boulevard, Suite 100
Norfolk, Virginia 23502
Item 1A. Risk Factors.

An investment in our Company involves risk, including the possibility that the value of the investment could fall substantially. The following are risks that could materially affect our business, results of operations, financial condition, liquidity, cash flows, and the value of, and return on, an investment in our Company.

Risks related to our operations and industry

A prolonged economic recovery or deterioration in the economic or inflationary environment in the Americas or Europe could have an adverse effect on our business and results of operations.

Our performance may be adversely affected by economic, political or inflationary conditions in any market in which we operate. These conditions could include regulatory developments, changes in global or domestic economic policy, legislative changes, the sovereign debt crises experienced in several European countries and the uncertainty on the future of the EU as a result of the United Kingdom's departure from the EU. Deterioration in economic conditions, a prolonged economic recovery, or a significant rise in inflation could cause personal bankruptcy and insolvency filings to increase, and the ability of consumers to pay their debts could be adversely affected. This may in turn adversely impact our business and financial results. Deteriorating economic conditions or a prolonged recovery could also adversely impact the businesses to which we provide fee-based services, which could reduce our fee income and cash flow.

If global credit market conditions and the stability of global banks deteriorate, it could negatively impact the generation of comprehensive receivable buying opportunities and our business, financial results and ability to succeed in foreign markets could be adversely affected. If conditions in major credit markets deteriorate, the amount of consumer or commercial lending and financing could be reduced, thus decreasing the volume of nonperforming loans available for our purchase.

Other factors associated with the economy that could influence our performance include the financial stability of the lenders on our bank loans and credit facilities and our access to capital and credit. The financial turmoil that adversely affected the banking system and financial markets in recent years resulted in the tightening of credit markets. Although there has been some improvement, a worsening of current conditions could have a negative impact on our business, including a decrease in the value of our financial investments and the insolvency of lending institutions, including the lenders on our bank loans and credit facilities, resulting in our difficulty in or inability to obtain credit. These and other economic factors could have an adverse effect on our financial condition and results of operations.


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We may not be able to continually replace our nonperforming loans with additional portfolios sufficient to operate efficiently and profitably, and/or we may not be able to purchase nonperforming loans at appropriate prices.

To operate profitably, we must acquire and service a sufficient amount of nonperforming loans to generate revenue that exceeds our expenses. Fixed costs such as salaries and other compensation expense constitute a significant portion of our overhead and, if we do not replace the nonperforming loan portfolios we service with additional portfolios, we may have to reduce the number of our collection personnel. We would then have to rehire collection staff if we subsequently obtain additional portfolios. These practices could lead to:
low employee morale;
fewer experienced employees;    
higher training costs;    
disruptions in our operations;    
loss of efficiency; and    
excess costs associated with unused space in our facilities.
    
The availability of nonperforming loan portfolios at prices that generate an appropriate return on our investment depends on a number of factors both within and outside of our control, including the following:
the continuation of high levels of consumer debt obligations;
sales of nonperforming loan portfolios by debt owners; and
competitive factors affecting potential purchasers and credit grantors of receivables.

Furthermore, heightened regulation of the credit card and consumer lending industry or changing credit origination strategies may result in decreased availability of credit to consumers, potentially leading to a future reduction in nonperforming loans available for purchase from debt owners. Conversely, lower regulatory barriers with respect to debt buyers could lead to increased participants in the debt collection industry, which could, in turn, impact the supply of nonperforming loans available for purchase. We cannot predict how our ability to identify and purchase nonperforming loans and the quality of those nonperforming loans would be affected if there were a shift in lending practices, whether caused by changes in the regulations or accounting practices applicable to debt owners or debt buyers, a sustained economic downturn or otherwise.

Moreover, there can be no assurance that debt owners will continue to sell their nonperforming loans consistent with recent levels or at all, or that we will be able to bid competitively for those portfolios. Because of the length of time involved in collecting on acquired portfolios and the variability in the timing of our collections, we may not be able to identify trends and make changes in our purchasing strategies in a timely manner. If we are unable to maintain our business or adapt to changing market needs as well as our current or future competitors, we may experience reduced access to nonperforming loan portfolios at appropriate prices and, therefore, reduced profitability.

Currently, a number of large banks that historically sold nonperforming loans in the U.S. are not selling such debt. This includes sellers of bankrupt accounts, some of whom have elected to stop selling such accounts because they believe that regulatory guidance concerning sales of bankruptcy accounts is ambiguous. Should these conditions worsen, it could negatively impact our ability to replace our nonperforming loans with additional portfolios sufficient to operate profitably.

We may not be able to collect sufficient amounts on our nonperforming loans to fund our operations.

Our principal business consists of acquiring and liquidating nonperforming loans that consumers or others have failed to pay. The debt owners have typically made numerous attempts to recover on their receivables, often using a combination of in-house recovery efforts and third-party collection agencies. These nonperforming loans are difficult to collect, and we may not collect a sufficient amount to cover our investment and the costs of running our business.


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For financial reporting purposes, we utilize the interest method of revenue recognition for determining our income recognized on finance receivables, which is based on an analysis of projected cash flows that may prove to be less than anticipated and could lead to the incurrence of allowance charges which would reduce our net finance receivables income.

We utilize the interest method to determine income recognized on finance receivables under the guidance of Financial Accounting Standards Board ("FASB") Accounting Standards Codification 310-30, "Loans and Debt Securities Acquired with Deteriorated Credit Quality" ("ASC 310-30"). Under this method, pools of receivables we acquire are modeled upon their projected cash flows. A yield is then established which, when applied to the unamortized purchase price of the receivables, results in the recognition of income at a constant yield relative to the remaining balance in the pool. Each pool is analyzed regularly to assess the actual performance compared to that derived from our models. Under ASC 310-30, rather than lowering the estimated yield if the collection estimates are not received or projected to be received, the carrying value of a pool would be written down to maintain the then current yield and is shown as a reduction in revenue in the consolidated income statements with a corresponding valuation allowance offsetting finance receivables, net, on the consolidated balance sheets. As a result, if the accuracy of the modeling process deteriorates or there is a significant decline in anticipated future cash flows, we could incur reductions in future revenues resulting from additional allowance charges, which could reduce our profitability in a given period.

Our collections may decrease if certain types of insolvency proceedings and bankruptcy filings involving liquidations increase.

Various economic trends and potential changes to existing legislation may contribute to an increase in the amount of personal bankruptcy and insolvency filings. Under certain of these filings, a debtor's assets may be sold to repay creditors, but because most of the receivables we collect through our collections operations are unsecured, we typically would not be able to collect on those receivables. Although our insolvency collections business could benefit from an increase in personal bankruptcies and insolvencies, we cannot ensure that our collections operations business would not decline with an increase in personal insolvencies or bankruptcy filings or changes in related regulations or practices. If our actual collection experience with respect to a nonperforming or insolvent bankrupt receivables portfolio is significantly lower than the total amount we projected when we purchased the portfolio, our financial condition and results of operations could be adversely impacted.

Our international operations expose us to risks which could harm our business, results of operations and financial condition.

A significant portion of our operations is conducted outside the U.S. This could expose us to adverse economic, industry and political conditions that may have a negative impact on our ability to manage our existing operations or pursue alternative strategic transactions, which could have a negative effect on our business, results of operations and financial condition.

The global nature of our operations expands the risks and uncertainties described elsewhere in this section, including the following:    
changes in local political, economic, social and labor conditions in the markets in which we operate, including Europe, Brazil and Canada;
foreign exchange controls on currency conversion and the transfer of funds that might prevent us from repatriating cash earned in countries outside the U.S. in a tax-efficient manner;
currency exchange rate fluctuations, currency restructurings, inflation or deflation, and our ability to manage these fluctuations through a foreign exchange risk management program;
different employee/employer relationships, laws and regulations and existence of employment tribunals and Works Councils;
laws and regulations imposed by foreign governments, including those governing data security, sharing and transfer;
potentially adverse tax consequences resulting from changes in tax laws in the foreign jurisdictions in which we operate or challenges to our interpretations and application of complex international tax laws;
logistical, communications and other challenges caused by distance and cultural and language differences, each making it harder to do business in certain jurisdictions;
risks related to crimes, strikes, riots, civil disturbances, terrorist attacks, wars and natural disasters;
volatility of global credit markets and the availability of consumer credit and financing in our international markets;
uncertainty as to the enforceability of contract and intellectual property rights under local laws;

11


the potential of forced nationalization of certain industries, or the impact on creditors' rights, consumer disposable income levels, flexibility and availability of consumer credit, and the ability to enforce and collect aged or charged-off debts stemming from foreign governmental actions, whether through austerity or stimulus measures or initiative, intended to control or influence macroeconomic factors such as wages, unemployment, national output or consumption, inflation, investment, credit, finance, taxation or other economic drivers;
the presence of varying levels of business corruption in international markets and the effect of various anti-corruption and other laws on our foreign operations;
the impact on our day-to-day operations and our ability to staff our international operations given our high employee turnover rates, changing labor conditions and long-term trends towards higher wages in developed and emerging international markets as well as the potential impact of union organizing efforts;
potential damage to our reputation due to non-compliance with foreign and local laws; and
the complexity and necessity of using non-U.S. representatives, consultants and other third-party vendors.
Furthermore, our future tax expense could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretation. The determination of the provision for income taxes and other tax liabilities regarding our global operations requires significant judgment. Although we believe our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in our financial statements and may adversely affect our financial results in the period(s) for which such determination is made.
Our tax filings are subject to audit by domestic and foreign tax authorities. These audits may result in assessments of additional taxes, adjustments to the timing of taxable income or deductions, or re-allocations of income among tax jurisdictions.
Any one of these factors could adversely affect our business, results of operations and financial condition.
The impact of the Tax Act, including interpretations and determinations by taxing authorities, could have an adverse effect on our financial condition and results of operations.
On December 22, 2017, the President of the United States of America signed the Tax Act, which includes a broad range of tax reform provisions affecting businesses, including a reduction in the U.S. federal corporate tax rate from 35% to 21%; a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations referred to as Global Intangible Low-Taxed Income; creating the base erosion anti-abuse tax, a new minimum tax; creating a new limitation on deductible interest expense; and increased limitations on the deductibility of executive compensation. The Tax Act will impact our effective tax rate for fiscal years 2018 and beyond. The new law makes broad and complex changes to the U.S. tax code and we expect to see future regulatory, administrative or legislative guidance. While we expect that the lowering of the U.S. federal tax rate will have a positive impact on our worldwide effective tax rate, we are analyzing the Tax Act to determine the full impact of the new tax law. To the extent any future guidance differs from our preliminary interpretation of the law, it could have a material effect on our financial position and results of operations.
In addition, many countries in the EU and around the world have adopted and/or proposed changes to current tax laws. Further, organizations such as the Organization for Economic Cooperation and Development have published actions that, if adopted by countries where we do business, could increase our tax obligations in those countries. Due to the scale of our U.S. and international business activities, many of these enacted and proposed changes to the taxation of our activities could increase our worldwide effective tax rate and harm our financial position and results of operations.
Goodwill or other intangible asset impairment charges could negatively impact our net income and stockholders' equity.
We have recorded a significant amount of goodwill as a result of our acquisitions. Goodwill is not amortized, but is tested for impairment at the reporting unit level. Goodwill is required to be tested for impairment annually and between annual tests if events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. There are numerous risks that may cause the fair value of a reporting unit to fall below its carrying amount, which could lead to the recognition of goodwill impairment. These risks include, but are not limited to, adverse changes in macroeconomic conditions, the business climate, or the market for the entity's products or services; significant variances between actual and expected financial results; negative or declining cash flows; lowered expectations of future results; failure to realize anticipated synergies from acquisitions; significant expense increases; a more likely-than-not expectation of selling or disposing all or a portion of a reporting unit; the loss of key personnel; an adverse action or assessment by a regulator; and a sustained decrease in the Company's share price.

12


Our goodwill impairment testing involves the use of estimates and the exercise of judgment, including judgments regarding expected future business performance and market conditions. Significant changes in our assessment of such factors, including the deterioration of market conditions, could affect our assessment of the fair value of one or more of our reporting units and could result in a goodwill impairment charge in a future period.
Other intangible assets, such as client and customer relationships, non-compete agreements and trademarks, are amortized. Risks such as those that could lead to the recognition of goodwill impairment, could also lead to the recognition of other intangible asset impairment.
The vote by the UK to leave the EU, and the ultimate exit of the UK from the EU, could adversely impact our business, results of operations and financial condition.

On June 23, 2016, the UK voted to leave the EU. Although the vote had no binding legal effect, it adversely impacted global markets and resulted in a decline in the value of the British pound as compared to the U.S. dollar and other currencies. The UK's exit negotiations with the EU officially began in June 2017. It is expected that the UK's actual exit from the EU, or Brexit, will take place in March 2019. However, perceptions concerning the impact of the UK's withdrawal from the EU may adversely affect business activity, political stability and economic conditions in the UK, the EU and globally, which could in turn adversely affect European or worldwide political, regulatory, economic and financial market conditions.
As of December 31, 2017, the total estimated remaining collections ("ERC") of our UK portfolios constituted approximately 17% of our consolidated ERC. We expect volatility in exchange rates in the short term as the UK negotiates its exit from the EU. A weaker British pound compared to the U.S. dollar during a reporting period could cause local currency results of our UK operations to be translated into fewer U.S. dollars. In the longer term, any impact from Brexit on our business, results of operations and financial condition will depend on the final terms negotiated by the UK and the EU, including arrangements concerning taxes and financial services regulation.
Our loss contingency accruals may not be adequate to cover actual losses.
We are involved in judicial, regulatory, and arbitration proceedings or investigations concerning matters arising from our business activities. We believe that we have adopted reasonable compliance policies and procedures and believe we have meritorious defenses in all material litigation pending against us. However, there can be no assurance as to the ultimate outcome. We establish accruals for potential liability arising from legal proceedings when it is probable that such liability has been incurred and the amount of the loss can be reasonably estimated. We may still incur legal costs for a matter even if we have not accrued a liability. In addition, actual losses may be higher than the amount accrued for a certain matter, or in the aggregate. An unfavorable resolution of a legal proceeding or claim could adversely impact our business, financial condition, results of operations, or liquidity. For more information, refer to the "Litigation and Regulatory Matters" section of Note 14 to our Consolidated Financial Statements included in Item 8 of this Form 10-K ("Note 14").
Class action suits and other litigation could divert our management's attention from operating our business and increase our expenses.
Grantors, nonperforming loan purchasers and third-party collection agencies and attorneys in the consumer credit industry are frequently subject to putative class action lawsuits and other litigation. Claims include failure to comply with applicable laws and regulations and improper or deceptive origination and servicing practices. An unfavorable outcome in a class action suit or other litigation could adversely affect our results of operations, financial condition, cash flows and liquidity. Even when we prevail or the basis for the litigation is groundless, considerable time, energy and resources may be needed to respond, and such class action lawsuits or other litigation could adversely affect our results of operations, financial condition and cash flows.
The occurrence of cyber incidents, or a deficiency in our cyber-security, could negatively impact our business by disrupting our operations, compromising or corrupting our confidential information or damaging our image, all of which could negatively impact our business and financial results.
Our business is highly dependent on our ability to process and monitor a large number of transactions across markets and in multiple currencies. As our geographical reach expands, maintaining the security of our systems and infrastructure becomes more significant. Privacy laws in the U.S., Europe and elsewhere govern the collection and transmission of personal data. As our reliance on technology has increased, so have the risks posed to our systems, both internal and those we have outsourced. Our three primary risks that could directly result from the occurrence of a cyber incident are operational interruption, damage to our image, and private data exposure. Private data may include customer information, our employees' personally identifiable information, or proprietary business information such as underwriting and collections methodologies. We have implemented solutions, processes, and procedures to help mitigate these risks, but these measures, as well as our organization's increased awareness of our risk of a cyber incident do not guarantee that our business, reputation or financial results will not be negatively impacted by such an incident.

13


However, should such a cyber incident occur, we may be required to expend significant additional resources to notify affected consumers, modify our protective measures or to investigate and remediate vulnerabilities or other exposures. Additionally, we may be subject to fines, penalties, litigation costs and settlements and financial losses that may not be fully covered by our cyber insurance.
Risks associated with governmental regulation and laws
Our ability to collect and enforce our nonperforming loans may be limited under federal, state and foreign laws, regulations and policies.
The businesses conducted by our operating subsidiaries are subject to licensing and regulation by governmental and regulatory bodies in the many jurisdictions in which we operate. Federal and state laws and the laws and regulations of the foreign countries in which we operate may limit our ability to collect on and enforce our rights with respect to our nonperforming loans regardless of any act or omission on our part. Some laws and regulations applicable to credit issuers may preclude us from collecting on nonperforming loans we purchase if the credit issuer previously failed to comply with applicable laws in generating or servicing those receivables. Collection laws and regulations also directly apply to our business. Such laws and regulations are extensive and subject to change. A variety of state, federal and international laws and regulations govern the collection, use, retention, transmission, sharing and security of consumer data. Consumer protection and privacy protection laws, changes in the ways that existing rules or laws are interpreted or enforced and any procedures that may be implemented as a result of regulatory consent orders may adversely affect our ability to collect on our nonperforming loans and may harm our business. Our failure to comply with laws or regulations applicable to us could limit our ability to collect on our receivables, which could reduce our profitability and harm our business.
Failure to comply with government regulation of the collections industry could result in penalties, fines, litigation, damage to our reputation or the suspension or termination of our ability to conduct our business.
The collections industry throughout the markets in which we operate is governed by various laws and regulations, many of which require us to be a licensed debt collector. Our industry is also at times investigated by regulators and offices of state attorneys general, and subpoenas and other requests or demands for information may be issued by governmental authorities who are investigating debt collection activities. These investigations may result in enforcement actions, fines and penalties, or the assertion of private claims and lawsuits. If any such investigations result in findings that we or our vendors have failed to comply with applicable laws and regulations, we could be subject to penalties, litigation losses and expenses, damage to our reputation, or the suspension or termination of, or required modification to, our ability to conduct collections, which would adversely affect our business, results of operations and financial condition.
In a number of jurisdictions, we must maintain licenses to perform debt recovery services and must satisfy related bonding requirements. Our failure to comply with existing licensing requirements, changing interpretations of existing requirements, or adoption of new licensing requirements, could restrict our ability to collect in certain jurisdictions, subject us to increased regulation, increase our costs, or adversely affect our ability to collect our receivables.
Some laws, among other things, also may limit the interest rate and the fees that a credit grantor may impose on our consumers, limit the time in which we may file legal actions to enforce consumer accounts, and require specific account information for certain collection activities. In addition, local requirements and court rulings in various jurisdictions also may affect our ability to collect.
Regulations and statutes applicable to our industry further provide that, in some cases, consumers cannot be held liable for, or their liability may be limited with respect to, charges to their debt or credit card accounts that resulted from unauthorized use of their credit. These laws, among others, may limit our ability to recover amounts owing with respect to the receivables, whether or not we committed any wrongful act or omission in connection with the account.
If we fail to comply with any applicable laws and regulations discussed above, such failure could result in penalties, litigation losses and expenses, damage to our reputation, or otherwise impact our ability to conduct collections efforts, which could adversely affect our business, results of operations and financial condition.
Investigations or enforcement actions by governmental authorities may result in changes to our business practices; negatively impact our receivables portfolio purchasing volume; make collection of receivables more difficult; or expose us to the risk of fines, penalties, restitution payments and litigation.
Our debt collection activities and business practices are subject to review from time to time by various governmental authorities and regulators, including the CFPB, which may commence investigations or enforcement actions or reviews targeted at businesses in the financial services industry. These reviews may involve governmental authority consideration of individual consumer complaints, or could involve a broader review of our debt collection policies and practices. Such investigations could lead to

14


assertions by governmental authorities that we are not complying with applicable laws or regulations. In such circumstances, authorities may request or seek to impose a range of remedies that could involve potential compensatory or punitive damage claims, fines, restitution payments, sanctions or injunctive relief, that if agreed to or granted, could require us to make payments or incur other expenditures that could have an adverse effect on our financial position. The CFPB has the authority to obtain cease and desist orders (which can include orders for restitution or rescission of contracts, as well as other kinds of affirmative relief), recover costs, and impose monetary penalties (ranging from $5,000 per day to over $1 million per day, depending on the nature and gravity of the violation). In addition, where a company has violated Title X of the Dodd-Frank Act or CFPB regulations implemented thereunder, the Dodd-Frank Act empowers state attorneys general and other state regulators to bring civil actions to remedy violations under state law. Government authorities could also request or seek to require us to cease certain of our practices or institute new practices. Negative publicity relating to investigations or proceedings brought by governmental authorities could have an adverse impact on our reputation, could harm our ability to conduct business with industry participants, and could result in financial institutions reducing or eliminating sales of receivables portfolios to us which would harm our business and negatively impact our results of operations. Moreover, changing or modifying our internal policies or procedures, responding to governmental inquiries and investigations and defending lawsuits or other proceedings could require significant efforts on the part of management and result in increased costs to our business. In addition, such efforts could divert management's full attention from our business operations. All of these factors could have an adverse effect on our business, results of operations, and financial condition.
The CFPB has issued civil investigative demands to many companies that it regulates, and is currently examining practices regarding the collection of consumer debt. In September 2015, we entered into the Consent Order with the CFPB settling a previously disclosed investigation of certain debt collection practices of PRA. The Consent Order resulted in the payment of $19 million in consumer refunds and an $8 million penalty. In addition, we were required to cease collection of approximately $3 million of consumer debt and modify some of our collections practices. Although we have implemented the requirements of the Consent Order, there can be no assurance that additional litigation or new industry regulations currently under consideration by the CFPB would not have an adverse effect on our business, results of operations, and financial condition. In addition, the CFPB monitors our compliance with the Consent Order and could make a determination that we have failed to adhere to our obligations. Such a determination could result in additional inquiries, penalties or liabilities, which could have an adverse effect on our business, results of operations, and financial condition.
Compliance with complex and evolving foreign and U.S. laws and regulations that apply to our international operations could increase our cost of doing business in international jurisdictions.
We operate on a global basis with offices and activities in a number of jurisdictions throughout the Americas and Europe. We face increased exposure to risks inherent in conducting business internationally, including compliance with complex foreign and U.S. laws and regulations that apply to our international operations, which could increase our cost of doing business in international jurisdictions. These laws and regulations include those related to taxation and anti-corruption laws such as the FCPA, the UK Bribery Act and other local laws prohibiting corrupt payments to governmental officials. Given the complexity of these laws, there is a risk that we may inadvertently breach certain provisions of these laws, such as through the negligent behavior of an employee or our failure to comply with certain formal documentation requirements. Violations of these laws and regulations by us, any of our employees or our third-party vendors, either inadvertently or intentionally, could result in fines and penalties, criminal sanctions, restrictions on our operations and limits on our ability to offer our products and services in one or more countries. Violations of these laws could also adversely affect our business, brand, international expansion efforts, ability to attract and retain employees and results of operations.
Risks associated with indebtedness
We utilize bank loans, credit facilities and convertible notes to finance our business activities, which could negatively impact our liquidity and business operations if we are unable to retain, renegotiate, expand or replace our bank loans and credit facilities or raise the necessary funds to repurchase the convertible notes.
As described in Note 6 to our Consolidated Financial Statements included in Item 8 of this Form 10-K, our sources of financing include a North American credit facility, a European multicurrency revolving credit facility and convertible senior notes. The credit facilities contain financial and other restrictive covenants, including restrictions on how we operate our business and our ability to pay dividends to our stockholders. Failure to satisfy any one of these covenants could result in negative consequences including the following:    
acceleration of outstanding indebtedness;
exercise by our lenders of rights with respect to the collateral pledged under certain of our outstanding indebtedness;
our inability to continue to purchase nonperforming loans needed to operate our business; or

15


our inability to secure alternative financing on favorable terms, if at all.
If we are unable to retain, renegotiate, expand or replace our credit facilities, including as a result of failure to satisfy the restrictive covenants contained in them, our liquidity and business operations could be impacted negatively.
We have additional indebtedness in the form of Convertible Senior Notes due 2020 and 2023 (collectively the "Notes") and may not have the ability to raise the funds necessary to repurchase the Notes upon a fundamental change or to settle conversions in cash. Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our indebtedness, including the Notes, or to make cash payments in connection with any conversion of the Notes depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at that time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations. In addition, in the event the conditional conversion features of the Notes are triggered, holders of the Notes are entitled to convert the Notes into shares of our common stock at any time during specified periods at their option, subject to the terms of the indenture governing the Notes. Upon conversion, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional shares of our common stock), we will be required to make cash payments in respect of the Notes. However, we may not have enough available cash or be able to obtain financing at the time we are required to repurchase Notes surrendered to settle conversions in cash, and our ability to repurchase the Notes or pay cash upon conversion may be limited by law. Any issuance of shares of our common stock upon conversion of the Notes would dilute the ownership interest of our stockholders.
We may be restricted from paying cash upon conversion of the Notes, repurchasing the Notes for cash when required and repaying the Notes at maturity or upon acceleration following an event of default under the Notes unless we repay all amounts outstanding under, and terminate, our North American Credit Agreement, and our future indebtedness may contain limitations on our ability to pay cash upon conversion of the Notes and on our ability to repurchase the Notes.
The terms of our North American Credit Agreement prohibit us from paying cash upon conversion of the Notes, repurchasing the Notes for cash when required upon the occurrence of a fundamental change and repaying the Notes at maturity or upon acceleration following an event of default under the indenture governing the Notes if a default or an event of default exists on the date of such required payment, repurchase or repayment, as applicable, or certain other conditions are not met, including pro forma compliance with the financial covenants and having “Sufficient Liquidity” (described below). As a result, we will be restricted from making such payments unless the default or event of default under our North American Credit Agreement is cured or waived, such conditions are met and/or we repay all amounts then outstanding under, and terminate, our North American Credit Agreement.
In addition, under our North American Credit Agreement our ability to settle conversions of the Notes in cash requires that immediately prior to any such conversion, our cash and cash equivalents (including our availability under our domestic and multi-currency revolving facilities under our North American Credit Agreement) be at least 115% of the sum of the principal amount of the Notes to be paid in cash (“Sufficient Liquidity”). The terms of any additional indebtedness incurred as permitted by our North American Credit Agreement may contain similar or more onerous restrictions than the foregoing.
Our failure to repurchase Notes, to pay, when due, cash upon conversion of the Notes or repay the Notes at maturity or upon acceleration following an event of default under the indenture governing the Notes would constitute a default under the indenture governing the Notes. A default under the indenture may constitute a default under our North American Credit Agreement.
Changes in interest rates could increase our interest expense and reduce our net income.
Our revolving credit facilities bear interest at variable rates. Increases in interest rates could increase our interest expense which would, in turn, lower our earnings. From time to time, we may enter into hedging transactions to mitigate our interest rate risk on all or a portion of our debt. Hedging strategies rely on assumptions and projections. If these assumptions and projections prove to be incorrect or our hedges do not adequately mitigate the impact of changes in interest rates, we may experience volatility in our earnings that could adversely affect our results of operations and financial condition.
Item 1B. Unresolved Staff Comments.
None.

16



Item 2. Properties.
Our corporate headquarters and primary domestic operations facility are located in Norfolk, Virginia. In addition, we have operational centers, all of which are leased except the facilities in Kansas and Tennessee, in the following locations in the Americas and Europe:
Americas
 
- Birmingham, Alabama
 
- Jackson, Tennessee
 
 
- Burlington, North Carolina
 
- London, Ontario, Canada
 
 
- Hampton, Virginia
 
- North Richland Hills, Texas
 
 
- Henderson, Nevada
 
- San Diego, California
 
 
- Hutchinson, Kansas
 
- São Paulo, Brazil
 
Europe
 
- Bromley, United Kingdom
 
- Madrid, Spain
 
 
- Duisburg, Germany
 
- Oslo, Norway
 
 
- Eisenstadt, Austria
 
- Padova, Italy
 
 
- Helsinki, Finland
 
- Uppsala, Sweden
 
 
- Kilmarnock, United Kingdom
 
- Warsaw, Poland
 
 
- Luxembourg, Luxembourg
 
- Zug, Switzerland
 
We also lease several less significant facilities in various locations throughout the Americas and Europe, which are not listed above. We do not consider any specific leased or owned facility to be material to our operations. We believe that equally suitable alternative facilities are available throughout our geographic market areas.
Item 3. Legal Proceedings.
We and our subsidiaries are from time to time subject to a variety of routine legal and regulatory claims, inquiries and proceedings, most of which are incidental to the ordinary course of our business. We initiate lawsuits against customers and are occasionally countersued by them in such actions. Also, customers, either individually, as members of a class action, or through a governmental entity on behalf of customers, may initiate litigation against us in which they allege that we have violated a state or federal law in the process of collecting on an account. From time to time, other types of lawsuits are brought against us.
Refer to Note 14 for information regarding legal proceedings in which we are involved.
Item 4. Mine Safety Disclosures.
Not applicable.

17


PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Price Range of Common Stock
Our common stock is traded on NASDAQ under the symbol "PRAA." The following table sets forth the high and low sales price for our common stock, as reported by NASDAQ, for the periods indicated.
 
2017
 
2016
 
High
 
Low
 
High
 
Low
Quarter ended March 31,
$42.70
 
$31.75
 
$35.98
 
$20.00
Quarter ended June 30,
$38.45
 
$30.95
 
$34.15
 
$22.51
Quarter ended September 30,
$40.15
 
$25.72
 
$34.99
 
$21.93
Quarter ended December 31,
$36.00
 
$26.85
 
$39.70
 
$23.15
Based on information provided by our transfer agent and registrar, as of February 16, 2018, there were 54 holders of record and 38,830 beneficial owners of our common stock.
Stock Performance
The following graph and subsequent table compares from December 31, 2012 to December 31, 2017, the cumulative stockholder returns assuming an initial investment of $100 in our common stock (PRAA), the stocks comprising the NASDAQ Financial 100 (IXF) and the stocks comprising the NASDAQ Global Market Composite Index (NQGM) at the beginning of the period. Any dividends paid during the five year period are assumed to be reinvested.

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12090085&doc=15
 
Ticker
 
2012
 
2013
 
2014
 
2015
 
2016
 
2017
PRA Group, Inc.
PRAA
 
$
100

 
$
148

 
$
163

 
$
97

 
$
110

 
$
93

NASDAQ Financial 100
IXF
 
$
100

 
$
142

 
$
149

 
$
159

 
$
201

 
$
232

NASDAQ Global Market Composite Index
NQGM
 
$
100

 
$
167

 
$
177

 
$
176

 
$
170

 
$
212

The comparisons of stock performance shown above are not intended to forecast or be indicative of possible future performance of our common stock. We do not make or endorse any predictions as to our future stock performance.

18



Dividend Policy
Our board of directors sets our dividend policy. We do not currently pay regular dividends on our common stock and did not pay dividends in the three years ended December 31, 2017; however, our board of directors may determine in the future to declare or pay dividends on our common stock. Under the terms of our credit facilities, cash dividends may not exceed $20 million in any fiscal year without the consent of our lenders. Any future determination as to the declaration and payment of dividends will be at the discretion of our board of directors and will depend on then existing conditions, including our results of operations, financial condition, contractual restrictions, capital requirements, business prospects and other factors that our board of directors may consider relevant.
Recent Sales of Unregistered Securities
None.
Securities Authorized for Issuance Under Equity Compensation Plans
For information regarding securities authorized for issuance under equity compensation plans see Note 9 to our Consolidated Financial Statements included in Item 8 of this Form 10-K.
Share Repurchase Programs
On October 22, 2015, our board of directors authorized a share repurchase program to purchase up to $125 million of our outstanding shares of common stock.
During the second quarter of 2017, we repurchased approximately $44.9 million of our outstanding shares of common stock which concluded the program.


19



Item 6. Selected Financial Data.
The following selected financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in Item 7 of this Form 10-K and our Consolidated Financial Statements and the related notes thereto included in Item 8 of this Form 10-K . Certain prior year amounts have been reclassified for consistency with the current period presentation.
Consolidated Income Statement, Operating and Other Financial Data
Amounts in thousands, except per share amounts
 
Years Ended December 31,
Income Statement Data:
2017
 
2016
 
2015
 
2014
 
2013
Revenues:
 
 
 
 
 
 
 
 
 
Income recognized on finance receivables, net
$
780,803

 
$
745,119

 
$
865,122

 
$
807,474

 
$
663,546

Fee income
24,916

 
77,381

 
64,383

 
65,675

 
71,532

Other revenue
7,855

 
8,080

 
12,513

 
7,820

 
57

Total revenues
813,574

 
830,580

 
942,018

 
880,969

 
735,135

Operating expenses:
 
 
 
 
 
 
 
 
 
Compensation and employee services
273,033

 
258,846

 
268,345

 
234,531

 
192,474

Legal collection expenses
119,398

 
132,202

 
129,456

 
139,161

 
124,551

Agency fees
35,530

 
44,922

 
32,188

 
16,399

 
5,901

Outside fees and services
62,792

 
63,098

 
65,155

 
55,821

 
31,615

Communication
33,132

 
33,771

 
33,113

 
33,085

 
28,161

Rent and occupancy
14,823

 
15,710

 
14,714

 
11,509

 
8,311

Depreciation and amortization
19,763

 
24,359

 
19,874

 
18,414

 
14,417

Other operating expenses
44,103

 
39,466

 
68,829

 
29,981

 
25,781

Impairment of goodwill

 

 

 

 
6,397

Total operating expenses
602,574

 
612,374

 
631,674

 
538,901

 
437,608

Income from operations
211,000

 
218,206

 
310,344

 
342,068

 
297,527

Other income and (expense):
 
 
 
 
 
 
 
 
 
Gain on sale of subsidiaries
48,474

 

 

 

 

Interest expense, net
(98,041
)
 
(80,864
)
 
(60,336
)
 
(35,226
)
 
(14,466
)
Foreign exchange gain/(loss)
(1,104
)
 
2,564

 
7,514

 
(5,829
)
 
4

Other
(2,790
)
 
(5,823
)
 

 

 

Income before income taxes
157,539

 
134,083

 
257,522

 
301,013

 
283,065

Income tax (benefit)/expense
(11,536
)
 
43,191

 
89,391

 
124,508

 
106,146

Net income
169,075

 
90,892

 
168,131

 
176,505

 
176,919

Adjustment for net income attributable to noncontrolling interest
6,810

 
5,795

 
205

 

 
1,605

Net income attributable to PRA Group, Inc.
$
162,265

 
$
85,097

 
$
167,926

 
$
176,505

 
$
175,314

Net income per common share attributable to PRA Group, Inc.:
 
 
 
 
 
 
 
 
 
Basic
$3.55
 
$1.84
 
$3.49
 
$3.53
 
$3.48
Diluted
$3.54
 
$1.83
 
$3.47
 
$3.50
 
$3.45
Weighted average number of shares outstanding:
 
 
 
 
 
 
 
 
 
Basic
45,671

 
46,316

 
48,128

 
49,990

 
50,366

Diluted
45,823

 
46,388

 
48,405

 
50,421

 
50,873

Operating and Other Financial Data:
 
 
 
 
 
 
 
 
 
Cash receipts
$
1,537,521

 
$
1,569,367

 
$
1,603,878

 
$
1,444,487

 
$
1,213,969

Operating expenses to cash receipts
39
%
 
39
%
 
39
%
 
37
%
 
36
%
Return on equity (1)
17
%
 
10
%
 
20
%
 
19
%
 
22
%
Acquisitions of finance receivables, at cost (2)
$
1,108,959

 
$
947,331

 
$
963,811

 
$
1,432,764

 
$
656,785

Full-time equivalents at period end
5,154

 
4,019

 
3,799

 
3,880

 
3,543

(1)
Calculated by dividing net income attributable to PRA Group, Inc. for each year by average monthly stockholders' equity - PRA Group, Inc. for the same year.
(2)
Represents cash paid for finance receivables through the ordinary course of business as well as the acquisition date finance receivable portfolios that were acquired through our various business acquisitions.

20



Key Balance Sheet Data
Amounts in thousands
 
As of December 31,
 
2017
 
2016
 
2015
 
2014
 
2013
Cash and cash equivalents
$
120,516

 
$
94,287

 
$
71,372

 
$
39,661

 
$
162,004

Finance receivables, net
2,771,921

 
2,307,969

 
2,202,113

 
2,001,790

 
1,239,191

Total assets
3,697,764

 
3,163,999

 
2,990,567

 
2,778,751

 
1,601,232

Borrowings
2,170,182

 
1,784,101

 
1,717,129

 
1,482,456

 
451,780

Total equity
1,137,509

 
917,163

 
839,747

 
902,215

 
869,476

Quarterly Income Statement Data
Amounts in thousands, except per share amounts
 
Dec 31, 2017
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
 
Dec 31, 2016
 
Sep 30, 2016
 
Jun 30, 2016
 
Mar 31, 2016
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income recognized on finance receivables, net
$
198,177

 
$
197,248

 
$
190,843

 
$
194,535

 
$
131,965

 
$
202,639

 
$
204,008

 
$
206,507

Fee income
6,043

 
2,671

 
6,344

 
9,858

 
21,171

 
17,597

 
22,347

 
16,266

Other revenue
1,454

 
1,091

 
3,145

 
2,165

 
2,122

 
1,748

 
2,101

 
2,109

Total revenues
205,674

 
201,010

 
200,332

 
206,558

 
155,258

 
221,984

 
228,456

 
224,882

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Compensation and employee services
69,253

 
68,541

 
66,771

 
68,468

 
61,390

 
65,898

 
64,793

 
66,765

Legal collection expenses
28,842

 
27,626

 
31,202

 
31,728

 
34,726

 
33,447

 
33,897

 
30,132

Agency fees
7,877

 
7,599

 
9,254

 
10,800

 
10,695

 
12,034

 
11,309

 
10,884

Outside fees and services
15,815

 
15,631

 
18,061

 
13,285

 
16,683

 
14,731

 
15,876

 
15,808

Communication
8,028

 
8,713

 
7,254

 
9,137

 
7,652

 
7,814

 
8,423

 
9,882

Rent and occupancy
3,985

 
3,668

 
3,387

 
3,783

 
4,001

 
3,875

 
4,038

 
3,796

Depreciation and amortization
4,666

 
4,841

 
5,041

 
5,215

 
6,020

 
6,184

 
6,085

 
6,070

Other operating expenses
12,032

 
10,140

 
11,046

 
10,885

 
7,023

 
10,513

 
11,279

 
10,651

Total operating expenses
150,498

 
146,759

 
152,016

 
153,301

 
148,190

 
154,496

 
155,700

 
153,988

Income from operations
55,176

 
54,251

 
48,316

 
53,257

 
7,068

 
67,488

 
72,756

 
70,894

Other income and (expense):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on sale of subsidiaries

 
307

 
1,322

 
46,845

 

 

 

 

Interest expense, net
(28,379
)
 
(25,899
)
 
(22,506
)
 
(21,257
)
 
(21,026
)
 
(19,310
)
 
(20,569
)
 
(19,959
)
Foreign exchange gain/(loss)
317

 
(1,084
)
 
(2,516
)
 
2,179

 
(2,619
)
 
5,004

 
2,029

 
(1,850
)
Other
(2,790
)
 

 

 

 
(5,823
)
 

 

 

Income/(loss) before income taxes
24,324

 
27,575

 
24,616

 
81,024

 
(22,400
)
 
53,182

 
54,216

 
49,085

Income tax expense/(benefit)
(64,393
)
 
10,682

 
10,766

 
31,409

 
(7,053
)
 
16,664

 
17,348

 
16,232

Net income/(loss)
88,717

 
16,893

 
13,850

 
49,615

 
(15,347
)
 
36,518

 
36,868

 
32,853

Adjustment for net income attributable to noncontrolling interests
1,847

 
1,338

 
2,177

 
1,448

 
2,301

 
2,212

 
412

 
870

Net income/(loss) attributable to PRA Group, Inc.
$
86,870

 
$
15,555

 
$
11,673

 
$
48,167

 
$
(17,648
)
 
$
34,306

 
$
36,456

 
$
31,983

Net income/(loss) per common share attributable to PRA Group, Inc.:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
1.92

 
$
0.34

 
$
0.25

 
$
1.04

 
$
(0.38
)
 
$
0.74

 
$
0.79

 
$
0.69

Diluted
$
1.92

 
$
0.34

 
$
0.25

 
$
1.03

 
$
(0.38
)
 
$
0.74

 
$
0.79

 
$
0.69

Weighted average number of shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
45,170

 
45,168

 
45,941

 
46,406

 
46,346

 
46,343

 
46,333

 
46,243

Diluted
45,318

 
45,286

 
46,060

 
46,627

 
46,346

 
46,434

 
46,402

 
46,372


21



Quarterly Balance Sheet Data
Amounts in thousands
 
Dec 31, 2017
 
Sep 30, 2017
 
Jun 30, 2017
 
Mar 31, 2017
 
Dec 31, 2016
 
Sep 30, 2016
 
Jun 30, 2016
 
Mar 31, 2016
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
120,516

 
$
113,754

 
$
92,756

 
$
82,110

 
$
94,287

 
$
91,791

 
$
117,071

 
$
79,442

Investments
78,290

 
75,512

 
76,438

 
74,055

 
68,543

 
67,050

 
66,560

 
71,413

Finance receivables, net
2,771,921

 
2,577,831

 
2,520,883

 
2,366,880

 
2,307,969

 
2,392,408

 
2,399,949

 
2,377,077

Other receivables, net
15,770

 
10,919

 
11,306

 
17,684

 
11,650

 
24,299

 
30,079

 
33,555

Income taxes receivable
21,686

 
3,877

 
2,865

 

 
9,427

 
10,673

 
13,871

 

Net deferred tax asset
57,529

 
41,183

 
37,299

 
29,090

 
28,482

 
19,453

 
15,713

 
15,571

Property and equipment, net
49,311

 
36,428

 
36,532

 
38,024

 
38,744

 
44,354

 
46,852

 
47,785

Goodwill
526,513

 
538,337

 
516,165

 
506,240

 
499,911

 
560,505

 
544,337

 
524,870

Intangible assets, net
23,572

 
25,527

 
25,878

 
27,393

 
27,935

 
31,539

 
32,655

 
32,154

Other assets
32,656

 
37,409

 
40,489

 
32,373

 
33,808

 
37,275

 
38,509

 
86,966

Assets held for sale

 

 

 

 
43,243

 

 

 

Total assets
$
3,697,764

 
$
3,460,777

 
$
3,360,611

 
$
3,173,849

 
$
3,163,999

 
$
3,279,347

 
$
3,305,596

 
$
3,268,833

Liabilities and Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$
4,992

 
$
3,605

 
$
3,694

 
$
3,924

 
$
2,459

 
$
2,808

 
$
3,719

 
$
2,377

Accrued expenses
85,993

 
82,445

 
77,869

 
82,594

 
82,699

 
86,531

 
79,202

 
95,049

Income taxes payable
10,771

 
4,069

 
19,793

 
37,960

 
19,631

 
20,242

 
20,888

 
28,114

Net deferred tax liability
171,185

 
237,044

 
250,821

 
259,330

 
258,344

 
271,152

 
276,360

 
269,201

Interest-bearing deposits
98,580

 
96,395

 
92,479

 
78,792

 
76,113

 
88,719

 
58,041

 
55,349

Borrowings
2,170,182

 
1,963,504

 
1,899,148

 
1,708,687

 
1,784,101

 
1,816,600

 
1,912,283

 
1,896,424

Other liabilities
9,018

 
1,213

 
3,094

 
13,344

 
10,821

 
5,317

 
19,922

 
13,577

Liabilities held for sale

 

 

 

 
4,220

 

 

 

Total liabilities
2,550,721

 
2,388,275

 
2,346,898

 
2,184,631

 
2,238,388

 
2,291,369

 
2,370,415

 
2,360,091

Redeemable noncontrolling interest
9,534

 
8,620

 
8,860

 
8,515

 
8,448

 

 

 

Equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock

 

 

 

 

 

 

 

Common stock
452

 
452

 
452

 
464

 
464

 
463

 
463

 
463

Additional paid-in capital
53,870

 
52,049

 
49,928

 
66,293

 
66,414

 
70,112

 
66,838

 
64,287

Retained earnings
1,211,632

 
1,124,762

 
1,109,207

 
1,097,534

 
1,049,367

 
1,067,015

 
1,032,709

 
996,253

Accumulated other comprehensive loss
(178,607
)
 
(166,397
)
 
(204,213
)
 
(233,476
)
 
(251,944
)
 
(199,888
)
 
(213,933
)
 
(196,135
)
Total stockholders' equity - PRA Group, Inc.
1,087,347

 
1,010,866

 
955,374

 
930,815

 
864,301

 
937,702

 
886,077

 
864,868

Noncontrolling interest
50,162

 
53,016

 
49,479

 
49,888

 
52,862

 
50,276

 
49,104

 
43,874

Total equity
1,137,509

 
1,063,882

 
1,004,853

 
980,703

 
917,163

 
987,978

 
935,181

 
908,742

Total liabilities and equity
$
3,697,764

 
$
3,460,777

 
$
3,360,611

 
$
3,173,849

 
$
3,163,999

 
$
3,279,347

 
$
3,305,596

 
$
3,268,833


22



Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Overview
We are a global financial and business services company with operations in the Americas and Europe. Our primary business is the purchase, collection and management of portfolios of nonperforming loans. As discussed in Note 17 to our Consolidated Financial Statements included in Item 8 of this Form 10-K ("Note 17"), we sold our government services businesses in January 2017 and Portfolio Location Services, LLC ("PLS") in June 2017.
On April 26, 2016, we completed our public tender offer to purchase 100% of the shares of DTP, a Polish-based debt collection company, for approximately $44.9 million.
On August 3, 2015, we acquired 55% of the equity interest in RCB. The remaining 45% of the equity interest in RCB is owned by the executive team and previous owners of RCB. RCB is a leading master servicing platform for nonperforming loans in Brazil. Our investment for the 55% ownership of RCB was approximately $55.2 million. As part of the investment and call option agreements, we have the right to purchase the remaining 45% of RCB at certain multiples of earnings before interest, taxes, depreciation and amortization ("EBITDA") beginning August 3, 2019 and ending August 3, 2021.
Frequently Used Terms
We use the following terminology throughout this document:
"Amortization rate" refers to cash collections applied to principal on finance receivables as a percentage of total cash collections.
"Buybacks" refers to purchase price refunded by the seller due to the return of ineligible accounts.
"Cash collections" refers to collections on our owned finance receivables portfolios.
"Cash receipts" refers to collections on our owned finance receivables portfolios plus fee income.
"Core" accounts or portfolios refer to accounts or portfolios that are nonperforming loans and are not in an insolvent status upon purchase. These accounts are aggregated separately from insolvency accounts.
"Estimated remaining collections" or "ERC" refers to the sum of all future projected cash collections on our owned finance receivables portfolios.
"Insolvency" accounts or portfolios refer to accounts or portfolios of receivables that are in an insolvent status when we purchase them and as such are purchased as a pool of insolvent accounts. These include Individual Voluntary Arrangements ("IVAs"), Trust Deeds in the UK, Consumer Proposals in Canada and bankruptcy accounts in the U.S., Canada, Germany and the UK.
"Principal amortization" refers to cash collections applied to principal on finance receivables.
"Purchase price" refers to the cash paid to a seller to acquire nonperforming loans, plus certain capitalized costs, less buybacks.
"Purchase price multiple" refers to the total estimated collections (as defined below) on owned finance receivables portfolios divided by purchase price.
"Total estimated collections" or "TEC" refers to actual cash collections, including cash sales, plus estimated remaining collections on our finance receivables portfolios.

Unless otherwise specified, references to 2017, 2016 and 2015 are to the years ended December 31, 2017, December 31, 2016 and December 31, 2015, respectively.


23



Results of Operations
The results of operations include the financial results of PRA Group and all of our subsidiaries, which are in the receivables management business. Under the guidance of the FASB ASC Topic 280 "Segment Reporting" ("ASC 280"), we have determined that we have several operating segments that meet the aggregation criteria of ASC 280, and therefore, we have one reportable segment, accounts receivables management, based on similarities among the operating units, including economic characteristics, the nature of the products and services, the nature of the production processes, the types or class of customer for their products and services, the methods used to distribute their products and services and the nature of the regulatory environment.
The following table sets forth certain operating data as a percentage of total revenues for the years indicated (dollars in thousands):
 
2017
 
2016
 
2015
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Income recognized on finance receivables, net
$
780,803

 
96.0
 %
 
$
745,119

 
89.7
 %
 
$
865,122

 
91.8
 %
Fee income
24,916

 
3.1

 
77,381

 
9.3

 
64,383

 
6.8

Other revenue
7,855

 
0.9

 
8,080

 
1.0

 
12,513

 
1.4

Total revenues
813,574

 
100.0

 
830,580

 
100.0

 
942,018

 
100.0

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Compensation and employee services
273,033

 
33.6

 
258,846

 
31.2

 
268,345

 
28.5

Legal collection expenses
119,398

 
14.7

 
132,202

 
15.9

 
129,456

 
13.8

Agency fees
35,530

 
4.4

 
44,922

 
5.4

 
32,188

 
3.4

Outside fees and services
62,792

 
7.7

 
63,098

 
7.6

 
65,155

 
6.9

Communication
33,132

 
4.1

 
33,771

 
4.1

 
33,113

 
3.5

Rent and occupancy
14,823

 
1.8

 
15,710

 
1.9

 
14,714

 
1.6

Depreciation and amortization
19,763

 
2.4

 
24,359

 
2.9

 
19,874

 
2.1

Other operating expenses
44,103

 
5.4

 
39,466

 
4.8

 
68,829

 
7.3

Total operating expenses
602,574

 
74.1

 
612,374

 
73.8

 
631,674

 
67.1

Income from operations
211,000

 
25.9

 
218,206

 
26.2

 
310,344

 
32.9

Other income and (expense):
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
(98,041
)
 
(12.1
)
 
(80,864
)
 
(9.7
)
 
(60,336
)
 
(6.4
)
Gain on sale of subsidiaries
48,474

 
6.0

 

 

 

 

Foreign exchange gain/(loss)
(1,104
)
 
(0.1
)
 
2,564

 
0.3

 
7,514

 
0.8

Other
(2,790
)
 
(0.3
)
 
(5,823
)
 
(0.7
)
 

 

Income before income taxes
157,539

 
19.4

 
134,083

 
16.1

 
257,522

 
27.3

Income tax expense/(benefit)
(11,536
)
 
(1.4
)
 
43,191

 
5.2

 
89,391

 
9.5

Net income
169,075

 
20.8

 
90,892

 
10.9

 
168,131

 
17.8

Adjustment for net income attributable to noncontrolling interests
6,810

 
0.9

 
5,795

 
0.7

 
205

 

Net income attributable to PRA Group, Inc.
$
162,265

 
19.9
 %
 
$
85,097

 
10.2
 %
 
$
167,926

 
17.8
 %

24



Revenues
Total revenues were $813.6 million in 2017, $830.6 million in 2016, and $942.0 million in 2015.
A summary of how our revenues were generated during the years indicated is as follows (amounts in thousands):
 
2017
 
2016
 
2015
Cash collections
$
1,512,605

 
$
1,491,986

 
$
1,539,495

Amortization of investment
(719,904
)
 
(648,388
)
 
(645,004
)
Net allowance charges
(11,898
)
 
(98,479
)
 
(29,369
)
Income recognized on finance receivables, net
780,803

 
745,119

 
865,122

Fee income
24,916

 
77,381

 
64,383

Other revenue
7,855

 
8,080

 
12,513

Total revenues
$
813,574

 
$
830,580

 
$
942,018

Income Recognized on Finance Receivables, net
Income recognized on finance receivables, net, was $780.8 million in 2017, an increase of $35.7 million or 4.8% compared to income recognized on finance receivables, net, of $745.1 million in 2016. The increase was primarily due to a decrease in net allowance charges on our finance receivables to $11.9 million in 2017 compared to $98.5 million in 2016, a decrease of $86.6 million or 87.9%. This was partially offset by a decrease in income generated by our Americas Core portfolios, excluding net allowances, and our Americas Insolvency portfolios. Elevated allowance charges incurred during 2016, mainly on pools acquired during 2012 to 2014, reduced the income-earning principal balances of our Americas Core portfolios. Income generated by our Americas Insolvency portfolios declined due primarily to lower volumes of purchasing during 2014 to 2016.
Income recognized on finance receivables, net, was $745.1 million in 2016, a decrease of $120.0 million or 13.9% compared to income recognized on finance receivables, net, of $865.1 million in 2015. The decrease was primarily due to an increase in net allowance charges on our finance receivables to $98.5 million in 2016 compared to $29.4 million in 2015, an increase of $69.1 million or 235.0%. Additionally, income generated by our Americas Insolvency portfolios declined due primarily to lower volumes of purchasing during 2014 to 2016.
Accretable yield represents the amount of income recognized on finance receivables we can expect to generate over the remaining life of our existing portfolios based on estimated future cash flows as of the balance sheet date. Additions from portfolio purchases represent the original expected accretable yield to be earned by us, on portfolios purchased during the period. Net reclassifications from nonaccretable difference to accretable yield primarily result from an increase in our estimate of future cash flows. Increases in future cash flows may occur as portfolios age and actual cash collections exceed those originally expected. If those cash flows are determined to be incremental to the portfolio's original forecast, future projections of cash flows are generally increased resulting in higher expected revenue and hence increases in accretable yield. During 2017 we reclassified $149.5 million from nonaccretable difference to accretable yield due primarily to increased cash collection forecasts relating mainly to certain Americas Core pools, Americas Insolvency pools and European Core pools. During 2016 we reclassified $41.1 million from nonaccretable difference to accretable yield due primarily to increased cash collection forecasts related to portfolios in Europe partially offset by reductions in cash collection forecasts on our domestic portfolios. During 2015, we reclassified $502.7 million from nonaccretable difference to accretable yield due primarily to increased cash collection forecasts related to domestic portfolios primarily acquired from 2011-2014. When applicable, net reclassifications to nonaccretable difference from accretable yield result from a decrease in our estimates of future cash flows and allowance charges that together exceed the increase in our estimate of future cash flows.
Income recognized on finance receivables, net, is shown net of changes in valuation allowances which are recorded for significant decreases in expected cash flows or a change in timing of cash flows which would otherwise require a reduction in the stated yield on a pool of accounts. In 2017, we recorded net allowance charges of $11.9 million consisting of $7.4 million on our Americas Core portfolios, $1.5 million on our Americas Insolvency portfolios, and $3.0 million on our European portfolios. In 2016 we recorded net allowance charges of $98.5 million consisting of $89.1 million on our Americas Core portfolios, $0.4 million on our Americas Insolvency portfolios, and $9.0 million on our European portfolios. During 2016, we made downward adjustments to projections of future cash collections and we adjusted amortization periods for many of our Americas Core portfolios. This was done in response to recent trends of cash collections being lower than expected. We attributed this under-performance to a variety of regulatory and operational factors that we believe adversely impacted our collection efforts and therefore cash collected. In 2015, we recorded net allowance charges of $29.4 million. On our Americas Core portfolios, we recorded net allowance charges of $21.9 million and net allowance reversals of $1.5 million on our Americas Insolvency portfolios. We also recorded a net allowance charge of $7.6 million on our Europe Core portfolios.

25



Fee Income
Fee income was $24.9 million in 2017, a decrease of $52.5 million or 67.8% compared to fee income of $77.4 million in 2016. This was primarily due to a decrease in fee income resulting from the sale of our government services businesses in January 2017 and the sale of PLS in June 2017.
Fee income was $77.4 million in 2016, an increase of $13.0 million or 20.2% compared to fee income of $64.4 million in 2015. Fee income increased primarily due to an increase in revenues generated by PLS, PRA Government Services, LLC ("PGS"), Claims Compensation Bureau, LLC ("CCB"), Recovery Management Systems Corporation ("RMSC") and RCB. This was offset by a decrease in fee income from PRA Europe, due primarily to a decline in the amount of contingent fee services provided by us for external parties.
Other Revenue
Other revenue was $7.9 million in 2017, $8.1 million in 2016, and $12.5 million in 2015. The decrease is primarily due to a decrease in revenue earned on our investments.
Operating Expenses
Total operating expenses were $602.6 million in 2017, $612.4 million in 2016, and $631.7 million in 2015.
Compensation and Employee Services
Compensation and employee service expenses were $273.0 million in 2017, an increase of $14.2 million or 5.5% compared to compensation and employee service expenses of $258.8 million in 2016. Compensation expense increased primarily as a result of larger average staff sizes, partially offset by a decrease resulting from the sale of our government services businesses in January 2017 and the sale of PLS in June 2017. In the U.S., we have hired approximately 1,100 net new collectors since December 31, 2016. Total full-time equivalents increased 28.2% to 5,154 as of December 31, 2017 from 4,019 as of December 31, 2016.
Compensation and employee service expenses were $258.8 million in 2016, a decrease of $9.5 million or 3.5% compared to compensation and employee service expenses of $268.3 million in 2015. Compensation and employee services expenses decreased primarily due to a decrease in discretionary bonus and other incentive compensation expenses, including share-based compensation expenses, offset by increases in normal salary expenses caused by an increase in employee headcount. Total full-time equivalents increased 5.8% to 4,019 as of December 31, 2016 from 3,799 as of December 31, 2015.
Legal Collection Expenses
Legal collection expenses represent costs paid to courts where a lawsuit is filed, contingent fees incurred for the cash collections generated by our independent third-party attorney network, and the cost of documents paid to sellers of nonperforming loans. Legal collection expenses were $119.4 million in 2017, a decrease of $12.8 million or 9.7% compared to $132.2 million in 2016. The decrease was primarily due to a decrease in costs paid to courts where a lawsuit is filed, mainly due to a decrease in the number of accounts brought into the legal collection process in the Americas. Our costs paid to courts were $74.7 million in 2017, a decrease of $5.1 million or 6.4% compared to $79.8 million in 2016. Additionally, our costs paid to third-party attorneys were $43.4 million in 2017, a decrease of $4.3 million or 9.0% compared to $47.7 million in 2016. The decrease was primarily due to a decrease in domestic external legal collections as a result of fewer accounts brought into the legal collection process in the Americas. Furthermore, our costs paid to sellers of nonperforming loans for documents were $1.3 million in 2017, a decrease of $3.4 million or 72.3% compared to $4.7 million in 2016. The decrease was primarily the result of sellers providing more account documents to us when we purchase portfolios, mainly as a result of regulatory requirements.
Legal collection expenses were $132.2 million in 2016, an increase of $2.7 million or 2.1% compared to $129.5 million in 2015. The increase was primarily due to additional court costs related to the expansion of the number of accounts brought into the legal channel in Europe in 2016. Our costs paid to courts were $79.8 million in 2016, an increase of $9.0 million or 12.7% compared to $70.8 million in 2015.  This was partially offset by a decrease in legal collection expenses paid to third-party attorneys, primarily as a result of a decrease in domestic external legal collections. Our costs paid to third-party attorneys were $47.7 million in 2016, a decrease of $5.7 million or 10.7% compared to $53.4 million in 2015. Our costs paid to sellers of nonperforming loans for documents were $4.7 million in 2016, a decrease of $0.5 million or 9.6% compared to $5.2 million in 2015.
Agency Fees
Agency fees primarily represent third-party collection fees. Prior to the sale of PLS in June of 2017, agency fees also included costs paid to repossession agents to repossess vehicles. Agency fees were $35.5 million in 2017, compared to $44.9 million in

26



2016, a decrease of $9.4 million or 20.9%. The decrease was primarily due to the impact of the sale of PLS in addition to a decrease in third-party collection fees incurred by our foreign operations.
Agency fees were $44.9 million in 2016, compared to $32.2 million in 2015, an increase of $12.7 million or 39.4%. This increase was mainly attributable to third-party collection fees incurred by our international operations where we utilize third-party agencies.
Outside Fees and Services
Outside fees and services expenses were $62.8 million in 2017, a decrease of $0.3 million or 0.5% compared to outside fees and services expenses of $63.1 million in 2016. The decrease was primarily the result of a $2.3 million decrease in corporate legal expenses and a $0.5 million decrease in accounting and audit related expenses. This was partially offset by a $1.2 million increase in payment processing and database fees, a $1.1 million increase in consulting fees and a $0.6 million increase in credit bureau expenses. None of the remaining variance was attributable to any significant identifiable items.
Outside fees and services expenses were $63.1 million in 2016, a decrease of $2.1 million or 3.2% compared to outside fees and services expenses of $65.2 million in 2015. The decrease was primarily due to a $6.6 million decrease in corporate legal expenses during 2016, mainly as a result of increased corporate legal expenses incurred in 2015 as a result of outstanding litigation and regulatory matters. This was partially offset by an increase of $4.1 million in consulting fees during 2016, as compared to the prior year period.
Communication
Communication expenses were $33.1 million in 2017, a decrease of $0.7 million or 2.1% compared to communication expenses of $33.8 million in 2016. Communication expenses were $33.8 million in 2016, an increase of $0.7 million or 2.1% compared to communication expenses of $33.1 million in 2015. None of the changes were attributable to any significant identifiable items.
Rent and Occupancy
Rent and occupancy expenses were $14.8 million in 2017, a decrease of $0.9 million or 5.7% compared to rent and occupancy expenses of $15.7 million in 2016. The decrease was primarily due to the impact of the sale of our government services businesses in January 2017 and the sale of PLS in June 2017.
Rent and occupancy expenses were $15.7 million in 2016, an increase of $1.0 million or 6.8% compared to rent and occupancy expenses of $14.7 million in 2015. The increase was primarily due to additional rental expenses incurred as a result of our acquisitions of RCB, RMSC and DTP as well as the additional rent expense associated with the expansion of our headquarters in Norfolk, Virginia.
Depreciation and Amortization
Depreciation and amortization expense was $19.8 million in 2017, a decrease of $4.6 million or 18.9% compared to depreciation and amortization expenses of $24.4 million in 2016. The decrease was primarily due to the impact of the sale of our government services businesses in January 2017.
Depreciation and amortization expense was $24.4 million in 2016, an increase of $4.5 million or 22.6% compared to depreciation and amortization expenses of $19.9 million in 2015. The increase was primarily due to the amortization expense incurred on intangible assets acquired in connection with the acquisitions of RCB and RMSC.
Other Operating Expenses
Other operating expenses were $44.1 million in 2017, an increase of $4.6 million or 11.6% compared to other operating expenses of $39.5 million in 2016. The increase was primarily due to an increase of $2.9 million in taxes, fee and licenses, a $1.2 million increase in doubtful account expense, a $0.9 million increase in hiring expenses and an $0.8 million increase in general office expenses. This was offset by a $0.9 million decrease in travel-related expenses and a $0.7 million decrease in dues and subscriptions. None of the remaining variance was attributable to any significant identifiable items.
Other operating expenses were $39.5 million in 2016, a decrease of $29.3 million or 42.6% compared to other operating expenses of $68.8 million in 2015. The decrease was primarily due to $28.8 million in expenses incurred during 2015 relating to the Consent Order entered into with the CFPB.

27



Interest Expense, Net
Interest expense, net was $98.0 million in 2017, an increase of $17.1 million or 21.1% compared to interest expense, net of $80.9 million in 2016. The increase was primarily due to higher levels of average borrowings outstanding, increases in interest rates, and increases in unused line fees and deferred financing costs related to our financing activities in 2017. This was partially offset by changes in interest expense (income) incurred on our interest rate swaps and an increase in interest income.
Interest expense, net was $80.9 million in 2016, an increase of $20.6 million or 34.2% compared to interest expense, net of $60.3 million in 2015. The increase was primarily the result of higher average borrowings outstanding during 2016 compared to 2015, as well as an increase in the interest rates charged on our variable rate borrowings.
Interest expense, net consisted of the following in 2017, 2016 and 2015 (amounts in thousands):
 
Twelve Months Ended December 31,
 
Variances
 
2017
 
2016
 
2015
 
2017 vs. 2016
 
2016 vs. 2015
Stated interest on debt obligations and unused line fees
$
71,656

 
$
63,475

 
$
46,661

 
$
8,181

 
$
16,814

Coupon interest on convertible debt
15,870

 
8,625

 
8,625

 
7,245

 

Amortization of convertible debt discount
8,583

 
4,472

 
4,260

 
4,111

 
212

Amortization of loan fees and other loan costs
9,569

 
8,116

 
2,328

 
1,453

 
5,788

Change in fair value on interest rate swap agreements
(2,025
)
 
1,223

 
538

 
(3,248
)
 
685

Interest income
(5,612
)
 
(5,047
)
 
(2,076
)
 
(565
)
 
(2,971
)
Interest expense, net
$
98,041

 
$
80,864

 
$
60,336

 
$
17,177

 
$
20,528

Net Foreign Currency Transaction Gain/(Loss)
Net foreign currency transaction gain/(loss) were $(1.1) million, $2.6 million, and $7.5 million in 2017, 2016, and 2015, respectively. In any given period, we may incur foreign currency transactions gains or losses from transactions in currencies other than the functional currency.
Other Expense
Other expense was $2.8 million in 2017, compared to $5.8 million in 2016 and $0 in 2015. During 2017, one of our investments in private equity funds experienced an other-than-temporary impairment which resulted in an impairment charge of $1.7 million. Additionally, we incurred a $1.0 million expense related to a performance guarantee on a Polish investment fund. During 2016, the net portfolio collections on our investments in a closed-end Polish securitization fund significantly underperformed expectations. As a result, in 2016 we recorded an other-than-temporary impairment charge of $5.8 million. For more information, refer to Note 3 to our Consolidated Financial Statements included in Item 8 of this Form 10-K ("Note 3").
Income Tax Expense/(Benefit)
On December 22, 2017, the Tax Act was signed into law by President Trump. The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to the following provisions which are most relevant to us: (1) reducing the U.S. federal corporate tax rate from 35 percent to 21 percent; (2) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations referred to as Global Intangible Low-Taxed Income (“GILTI”); (5) creating the base erosion anti-abuse tax, a new minimum tax; (6) creating a new limitation on deductible interest expense; and (7) increased limitations on the deductibility of executive compensation.
Upon our initial analysis of the impact of the Tax Act, we have provisionally recorded a one-time net tax benefit of $73.8 million in the year ended December 31, 2017 for the corporate rate reduction. We have provisionally determined that we do not owe a transition tax, due to no accumulated taxable income from foreign operations calculated under U.S. tax accounting methods.
We are still evaluating the impact of the Tax Act on our future U.S. tax expense, but we expect that the overall impact of the Tax Act on our effective tax rate will be a decrease as compared with the application of prior U.S. tax laws.  The decrease is expected due to the reduction of the federal tax rate provision that was included in the Tax Act which we expect will outweigh any increases to tax expense with respect to the aforementioned other provisions.  For more information, refer to Note 13 to our Consolidated Financial Statements included in Item 8 of this Form 10-K ("Note 13").

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Income tax benefit was $11.5 million in 2017, compared to income tax expense of $43.2 million in 2016. The change was primarily attributable to a revaluation of our net deferred tax liability due to a reduction of future domestic federal tax rates per the Tax Act. This was partially offset with a 17.5% increase in income before taxes. The effective tax rate decreased to (7.3)% in 2017 compared to 32.2% in 2016. The decrease was primarily attributable to the aforementioned revaluation of our net deferred tax liability and provision-to-return adjustments.  Excluding the impact of the Tax Act, our effective tax rate would have been 39.5% in 2017. The increase in 2017 as compared to 2016 is primarily due to changes in the mix of taxable income between tax jurisdictions caused by gains on sales of subsidiaries and other factors; increases in the estimated blended rate for U.S state taxes which was caused by changes in the mix of earnings, dispositions of subsidiaries, and other factors; and an increase in non-deductible executive compensation including stock compensation. Our effective tax rate will vary from period to period due to these types of items.
Income tax expense was $43.2 million in 2016, a decrease of $46.2 million or 51.7% compared to income tax expense of $89.4 million in 2015. The decrease was due to a decrease of 47.9% in income before taxes. The effective tax rate decreased to 32.2% in 2016 compared to 34.7% in 2015. The decrease was caused by a variety of factors, including changes in the mix of earnings, provision-to-return adjustments, and non-deductible penalties incurred during 2016, all of which caused the rate to decrease.  The impact of these factors was partially offset by tax rate changes in Europe and tax expense on a one-time intercompany transaction in 2016.



29



Supplemental Performance Data
Finance Receivables Portfolio Performance
The following tables show certain data related to our finance receivables portfolio. Certain adjustments, as noted in the footnotes to these tables, have been made to reduce the impact of foreign currency fluctuations on ERC and purchase price multiples.
These tables disclose our Americas and European Core and Insolvency portfolios. The accounts represented in the Insolvency tables are those portfolios of accounts that were in an insolvency status at the time of purchase. This contrasts with accounts in our Core portfolios that file for bankruptcy/insolvency protection after we purchase them, which continue to be tracked in their corresponding Core portfolio. Core customers sometimes file for bankruptcy/insolvency protection subsequent to our purchase of the related Core portfolio. When this occurs, we adjust our collection practices accordingly to comply with bankruptcy/insolvency rules and procedures; however, for accounting purposes, these accounts remain in the related Core portfolio. Conversely, Insolvency accounts may be dismissed voluntarily or involuntarily subsequent to our purchase of the related Insolvency portfolio. Dismissal occurs when the terms of the bankruptcy are not met by the petitioner. When this occurs, we are typically free to pursue collection outside of bankruptcy procedures; however, for accounting purposes, these accounts remain in the related Insolvency pool.
Purchase price multiples can vary over time due to a variety of factors, including pricing competition, supply levels, age of the receivables purchased, and changes in our operational efficiency. For example, increased pricing competition during the 2005 to 2008 period negatively impacted purchase price multiples of our Core portfolio compared to prior years. Conversely, during the 2009 to 2011 period, pricing disruptions occurred as a result of the economic downturn. This created unique and advantageous purchasing opportunities, particularly within the Insolvency market, relative to the prior four years. Purchase price multiples can also vary among types of finance receivables. For example, we generally incur lower collection costs on our Insolvency portfolio compared with our Core portfolio. This allows us, in general, to pay more for an Insolvency portfolio and experience lower purchase price multiples, while generating similar net income margins when compared with a Core portfolio.
When competition increases and/or supply decreases, pricing often becomes negatively impacted relative to expected collections, and yields tend to trend lower. The opposite tends to occur when competition decreases and/or supply increases.
Within a given portfolio type, to the extent that lower purchase price multiples are the result of more competitive pricing and lower yields, this will generally lead to higher amortization rates and lower profitability. As portfolio pricing becomes more favorable on a relative basis, our profitability will tend to increase. Profitability within given Core portfolio types may also be impacted by the age and quality of the receivables, which impact the cost to collect those accounts. Fresher accounts, for example, typically carry lower associated collection expenses, while older accounts and lower balance accounts typically carry higher costs and as a result require higher purchase price multiples to achieve the same net profitability as fresher paper.
Revenue recognition under Financial Accounting Standards Board ("FASB") Accounting Standards Codification 310-30, "Loans and Debt Securities Acquired with Deteriorated Credit Quality" ("ASC 310-30") is driven by estimates of total collections as well as the timing of those collections. We record new portfolio purchases based on our best estimate of the cash flows expected at acquisition, which reflects the uncertainties inherent in the purchase of nonperforming loans and the results of our underwriting process. Subsequent to the initial booking, as we gain collection experience and confidence with a pool of accounts, we regularly update ERC. As a result, our estimate of total collections has often increased as pools have aged. These processes have tended to cause the ratio of ERC to purchase price for any given year of buying to gradually increase over time. Thus, all factors being equal in terms of pricing, one would typically tend to see a higher collection to purchase price ratio from a pool of accounts that was six years from purchase than a pool that was just two years from purchase.
The numbers presented in the following tables represent gross cash collections and do not reflect any costs to collect; therefore, they may not represent relative profitability. Due to all the factors described above, readers should be cautious when making comparisons of purchase price multiples among periods and between types of receivables.
We hold a majority interest in a closed-end Polish investment fund that purchases and services nonperforming loans. Our investment in this fund is classified in our Consolidated Balance Sheets as "Investments" and as such is not included in the following tables. The equivalent of the estimated remaining collections of the portfolios held by the closed-end Polish investment fund, expected to be received by us, is $80.2 million at December 31, 2017.

30



Purchase Price Multiples
as of December 31, 2017
Amounts in thousands
Purchase Period
Purchase Price (1)(2)
Net Finance Receivables Balance (3)
ERC-Historical Period Exchange Rates (4)
Total Estimated Collections (5)
ERC-Current Period Exchange Rates (6)
Current Estimated Purchase Price Multiple
Original Estimated Purchase Price Multiple (7)
Americas-Core
 
 
 
 
 
 
 
1996-2007
$
638,461

$
7,219

$
33,725

$
2,047,118

$
33,725

321
%
240
%
2008
166,443

4,388

15,250

374,591

15,250

225
%
220
%
2009
125,155

1,061

31,648

460,268

31,648

368
%
252
%
2010
148,205

3,511

51,797

538,470

51,797

363
%
247
%
2011
209,641

13,204

71,734

724,082

71,734

345
%
245
%
2012
254,321

25,362

104,895

678,874

104,895

267
%
226
%
2013
391,380

77,559

228,470

971,627

228,470

248
%
211
%
2014
405,672

128,029

343,236

980,416

340,320

242
%
204
%
2015
444,699

192,170

422,657

951,477

424,503

214
%
205
%
2016
455,882

283,245

599,155

987,174

604,147

217
%
201
%
2017
536,889

498,896

931,168

1,038,636

930,246

193
%
193
%
Subtotal
3,776,748

1,234,644

2,833,735

9,752,733

2,836,735

 
 
Americas-Insolvency
 
 
 
 
 
 
2004-2007