(State or Other Jurisdiction

of Incorporation)

(IRS Employer

Identification No.)

Exhibit

Number

Description

/s/ Paul Grinberg

Description

Net income was $5.4 million or $0.23 per fully diluted share, compared to net income of $5.2 million or $0.22 per fully diluted share in the same period of the prior year. Net income was reduced by the one-time impact of $2.1 million after-tax, or $0.09 per fully diluted share, related to the cost savings initiatives announced in September, including the reduction in workforce at certain sites and the exit of healthcare purchasing and collection activities. Net income includes the positive impact of a reduction in the Company’s effective tax rate by 15.2%, or $0.05 per fully diluted share, primarily due to certain beneficial changes to the Company’s effective State tax rate.

Adjusted EBITDA, defined as net income before interest, taxes, depreciation and amortization, stock-based compensation expense, and portfolio amortization, was $35.1 million, a 1% decrease compared to $35.6 million in the same period of the prior year. Excluding the $2.8 million in charges associated with the cost savings initiatives, Adjusted EBITDA increased 6% to $37.9 million.

Gross collections were $85.6 million, a 13% increase over the $75.8 million in the same period of the prior year.

Revenues from receivable portfolios were $59.4 million, a 4% increase over the $57.2 million in the same period of the prior year. Revenue recognized on receivable portfolios, as a percentage of portfolio collections, was 70%, compared to 76% in the same period of the prior year. The lower revenue recognition rate was attributable to a higher percentage of collections from more recently purchased portfolios that have lower collection multiples assigned to them, as well as a higher level of allowance charges for investment in receivable portfolios, which included the $1.4 million write-down of healthcare receivables associated with the cost savings initiatives.

Revenues from bankruptcy servicing were $3.3 million, compared to $3.4 million in the same period of the prior year.

Operating expense (excluding stock-based compensation expense, bankruptcy servicing operating expenses and costs related to the consideration of strategic alternatives) per dollar collected increased to 55.1% compared to 50.5% in the same period of the prior year. This increase was attributable to both the increase in legal costs associated with collection initiatives as well as severance and other costs associated with the cost savings initiatives. Total operating expenses were $52.0 million, a 16% increase over the $45.0 million in the same period of the prior year. Excluding the $1.4 million in severance and other costs

Total interest expense was $3.6 million, compared to $6.7 million in the same period of the prior year.

Investments in receivable portfolios were $47.9 million to purchase $1.3 billion in face value of debt, compared to $32.3 million to purchase $1.1 billion in face value of debt in the same period of the prior year.

Assets

Cash and cash equivalents

Restricted cash

Accounts receivable, net

Investment in receivable portfolios, net

Property and equipment, net

Prepaid income tax

Purchased servicing asset

Forward flow asset

Other assets

Goodwill

Identifiable intangible assets, net

Total assets

Liabilities and stockholders’ equity

Liabilities:

Accounts payable and accrued liabilities

Accrued profit sharing arrangement

Deferred tax liabilities, net

Deferred revenue

Purchased servicing obligation

Debt

Other liabilities

Total liabilities

Commitments and contingencies

Stockholders’ equity:

Convertible preferred stock, $.01 par value, 5,000 shares authorized, no shares issued and outstanding

Common stock, $.01 par value, 50,000 shares authorized, 22,988 shares and 22,781 shares issued and outstanding as of September 30, 2007 and December 31, 2006, respectively

Additional paid-in capital

Accumulated earnings

Accumulated other comprehensive (loss) income

Total stockholders’ equity

Total liabilities and stockholders’ equity

Revenues

Revenue from receivable portfolios, net

Servicing fees and other related revenue

Total revenues

Operating expenses

Salaries and employee benefits

Stock-based compensation expense

Cost of legal collections

Other operating expenses

Collection agency commissions

General and administrative expenses

Depreciation and amortization

Total operating expenses

Income before other (expense) income and income taxes

Other (expense) income

Interest expense

Contingent interest expense

Pay-off of future contingent interest

Other income

Total other expense

Income before income taxes

Provision for income taxes

Net income

Basic—Earnings per share computation:

Net income available to common stockholders

Weighted average shares outstanding

Earnings per share—Basic

Diluted—Earnings per share computation:

Net income available to common stockholders

Weighted average shares outstanding

Incremental shares from assumed conversion of stock awards

Diluted weighted average shares outstanding

Earnings per share—Diluted

Operating activities

Gross collections

Less:

Amounts collected on behalf of third parties

Amounts applied to principal on receivable portfolios

Servicing fees

Operating expenses

Interest payments

Contingent interest payments

Other income

Decrease in restricted cash

Income taxes

Excess tax benefits from stock-based payment arrangements

Net cash provided by operating activities

Investing activities

Purchases of receivable portfolios, net of forward flow allocation

Collections applied to principal of receivable portfolios

Proceeds from put-backs and recalls of receivable portfolios

Purchases of property and equipment

Net cash used in by investing activities

Financing activities

Proceeds from notes payable and other borrowings

Repayment of notes payable and other borrowings

Proceeds from exercise of common stock options

Excess tax benefits from stock-based payment arrangements

Repayment of capital lease obligations

Net cash provided by (used in) financing activities

Net (decrease) increase in cash

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

GAAP net income, as reported

Interest expense

Contingent interest expense

Provision for income taxes

Depreciation and amortization

Amount applied to principal on receivable portfolios

Stock-based compensation expense

Adjusted EBITDA

GAAP total operating expenses, as reported

Stock-based compensation expense

Bankruptcy servicing operating expenses

Costs related to the consideration of strategic alternatives

Operating expenses, excluding stock-based compensation expense, bankruptcy servicing operating expenses and costs related to the consideration of strategic alternatives