8875 Aero Drive, Suite 200,

San Diego, California

Exhibit

Number

Description

Paul Grinberg

Executive Vice President, Chief Financial

Officer and Treasurer

Exhibit
Number

Description

Gross collections were $85.4 million, a 10% decrease compared to $94.5 million in the same period of the prior year.

Investments in receivable portfolios were $74.6 million, to purchase $1.8 billion in face value of debt, compared to $63.6 million, to purchase $1.4 billion in face value of debt in the same period of the prior year.

Revenues from receivable portfolios were $55.8 million, a 14% decrease compared to $64.9 million in the same period of the prior year. Revenue recognized on receivable portfolios, as a percentage of portfolio collections, was 65%, compared to 69% in the same period of the prior year.

Revenues from bankruptcy servicing were $2.9 million, compared to $3.2 million in the same period of the prior year.

Total operating expenses were $47.4 million, a 2% decrease compared to $48.2 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 50.7% compared to 44.9% in the same period of the prior year.

Adjusted EBITDA, defined as net income before interest, taxes, depreciation and amortization, stock-based compensation expense and portfolio amortization, was $34.9 million, a 32% decrease compared to $51.2 million in the same period of the prior year.

Total interest expense was $4.0 million, compared to $9.0 million in the same period of the prior year.

Net income was $4.8 million or $0.21 per fully diluted share, compared to net income of $6.6 million or $0.28 per fully diluted share in the same period of the prior year.

Gross collections were $355.2 million, a 5% increase over $337.1 million in 2006.

Total revenues were $254.0 million, consistent with the $255.1 million in 2006.

Adjusted EBITDA was $163.0 million, a decline of 8% from the $177.4 million in 2006.

Net income was $15.0 million or $0.64 per fully diluted share, compared to net income of $24.0 million or $1.03 per fully diluted share in 2006.

In the fourth quarter of 2006, the Company sold accounts amounting to approximately $1.9 billion in face value financed under its previous credit facility for $13.9 million, which included $3.4 million in zero-basis collection.

In the second quarter of 2007, the Company entered into an agreement with the lender under its previous credit facility to eliminate all future contingent interest for a one-time payment of $16.9 million. Accordingly, after May 7, 2007, the Company no longer incurred any contingent interest expense.

In the third quarter of 2007, the Company announced certain cost savings initiatives aimed at reducing its overall operating expenses. The Company recorded one-time charges of $1.4 million related to the reduction in workforce.

In the fourth quarter of 2007, the Company recorded a net impairment provision of $8.7 million, compared to $0.7 million in the same period of the prior year. In 2007, the Company recorded a net impairment provision of $11.2 million, including $1.4 million to write-down healthcare receivables, compared to $1.4 million in the prior year.

In the fourth quarter of 2007, the Company expensed $6.3 million in upfront court costs, compared to $5.3 million in the same period of the prior year. In 2007, the Company expensed $28.0 million in upfront court costs, compared to $15.5 million in the prior year.

In the fourth quarter of 2007, the Company changed its court cost reserve methodology, which resulted in an increase in the deferred court cost asset and a reduction in operating expenses of $0.8 million.

Assets

Cash and cash equivalents

Restricted cash

Accounts receivable, net

Investment in receivable portfolios, net

Deferred court costs

Property and equipment, net

Prepaid income tax

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 and 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, 22,992 shares and 22,781 shares issued and outstanding as of December 31, 2007, and 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 (excluding stock-based compensation expense)

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

Interest expense on convertible notes, net of tax

Income available to common stockholders

assuming conversion of convertible notes

Weighted average shares outstanding

Incremental shares from assumed conversion of warrants and stock awards

Incremental shares from assumed conversion of convertible notes

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 (increase) in restricted cash

Income taxes

Excess tax benefits from stock-based payment arrangements

Net cash provided by operating activities

Investing activities

Cash paid for Jefferson Capital

Cash paid for Ascension Capital Group

Escrow deposit on employee retention contract

Cash paid for India membership interest

Purchases of receivable portfolios, net of forward flow allocation

Collections applied to principal of receivable portfolios

Proceeds from the sale of marketable securities

Proceeds from put-backs and recalls of receivable portfolios

Purchases of property and equipment

Net cash used in investing activities

Financing activities

Proceeds from notes payable and other borrowings

Proceeds from convertible note borrowings

Proceeds from sale of warrants associated with convertible notes

Purchase of call options associated with convertible notes

Repayment of notes payable and other borrowings

Capitalization of loan fees

Proceeds from exercise of common stock options and warrants

Excess tax benefits from stock-based payment arrangements

Net (repayment) borrowing of capital lease obligations

Net cash provided by financing activities

Net (decrease) increase in cash

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

GAAP net income, as reported

Interest expense

Contingent interest expense

Pay-off of future contingent interest

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