(State or Other Jurisdiction

of Incorporation)

(IRS Employer

Identification No.)

Exhibit
Number

Description

/s/ Paul Grinberg

Executive Vice President, Chief Financial

Officer and Treasurer

Exhibit

Number

Description

Gross collections were $141.3 million, a 23% increase over the $115.2 million in the same period of the prior year.

Investment in receivable portfolios was $81.6 million, to purchase $2.1 billion in face value of debt, compared to $55.9 million, to purchase $1.3 billion in face value of debt in the same period of the prior year. Available capacity under the revolving credit facility, subject to borrowing base and applicable debt covenants, was $54.5 million as of March 31, 2010. Total debt, consisting of the revolving credit facility, convertible senior notes and capital lease obligations, was $318.0 million as of March 31, 2010, an increase from $303.1 million as of December 31, 2009.

Revenue from receivable portfolios was $82.9 million, a 15% increase over the $72.3 million in the same period of the prior year. Revenue recognized on receivable portfolios, as a percentage of portfolio collections, excluding the effects of net portfolio allowances, was 64%, compared to 67% in the same period of the prior year.

Revenue from bankruptcy servicing was $4.4 million, a 6% increase over the $4.1 million in the same period of the prior year.

Total operating expenses were $65.6 million, a 9% increase over the $60.2 million in the same period of the prior year. Operating expense (excluding stock-based compensation expense and bankruptcy servicing operating expenses) per dollar collected decreased to 42.9% compared to 48.3% 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 $82.6 million, a 29% increase over the $63.8 million in the same period of the prior year.

Total interest expense was $4.5 million, compared to $4.3 million in the same period of the prior year.

Net income was $10.9 million or $0.44 per fully diluted share, compared to net income of $9.0 million or $0.38 per fully diluted share in the same period of the prior year.

Tangible book value per share, computed by dividing total stockholders’ equity less goodwill and identifiable intangible assets by the number of diluted shares outstanding, was $9.73 as of March 31, 2010, a 5% increase over $9.23 as of December 31, 2009.

In the first quarter of 2010, the Company recorded net portfolio allowances of $7.9 million, compared to $5.4 million in the same period of the prior year.

In the first quarter of 2010, the Company expensed $8.5 million in upfront court costs, compared to $13.3 million in the same period of the prior year.

In the first quarter of 2009, the Company repurchased $25.6 million principal amount of its outstanding convertible senior notes, for a total price of $19.8 million, plus accrued interest. These repurchases resulted in a gain of $3.1 million or $0.08 per fully diluted share.

Assets

Cash and cash equivalents

Accounts receivable, net

Investment in receivable portfolios, net

Deferred court costs

Property and equipment, net

Other assets

Goodwill

Identifiable intangible assets, net

Total assets

Liabilities and stockholders’ equity

Liabilities:

Accounts payable and accrued liabilities

Income taxes payable

Deferred tax liabilities, net

Deferred revenue

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, 23,458 shares and 23,359 shares issued and outstanding as of March 31, 2010 and December 31, 2009, respectively

Additional paid-in capital

Accumulated earnings

Accumulated other comprehensive loss

Total stockholders’ equity

Total liabilities and stockholders’ equity

Revenue

Revenue from receivable portfolios, net

Servicing fees and other related revenue

Total revenue

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

Gain on repurchase of convertible notes, net

Other income (expense)

Total other expense

Income before income taxes

Provision for income taxes

Net income

Weighted average shares outstanding:

Basic

Diluted

Earnings per share:

Basic

Diluted

Operating activities:

Net income

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Amortization of loan costs and debt discount

Stock-based compensation expense

Gain on repurchase of convertible notes, net

Deferred income tax expense

Excess tax benefit from stock-based payment arrangements

Provision for allowances on receivable portfolios, net

Changes in operating assets and liabilities

Other assets

Deferred court costs

Prepaid income tax and income taxes payable

Deferred revenue

Accounts payable, accrued liabilities and other liabilities

Net cash provided by operating activities

Investing activities:

Purchases of receivable portfolios

Collections applied to investment in receivable portfolios, net

Proceeds from put-backs of receivable portfolios

Purchases of property and equipment

Net cash used in investing activities

Financing activities:

Payment of loan costs

Proceeds from notes payable and other borrowings

Repayment of notes payable and other borrowings

Repurchase of convertible notes

Proceeds from net settlement of certain call options

Proceeds from exercise of stock options

Excess tax benefit from stock-based payment arrangements

Repayment of capital lease obligations

Net cash provided by financing activities

Net decrease in cash

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplemental disclosures of cash flow information:

Cash paid for interest

Cash paid for income taxes

Supplemental schedule of non-cash investing and financing activities:

Fixed assets acquired through capital lease

GAAP net income, as reported

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

Operating expenses, excluding stock-based compensation expense and bankruptcy servicing operating expenses

GAAP total stockholders’ equity, as reported

Goodwill

Identifiable intangible assets, net

Tangible book value

Diluted shares outstanding

Tangible book value per share