LETTER TO SHAREHOL DERS Last year was an exceptional period for our com- pany. We shattered our previous milestones for cash collections, revenue and net income, setting new  records. Cash collections in 2010 grew by 44% from  2009, revenue by 33%, and net income by 66%.  Additionally, we completed a successful equity  offering in February; acquired a great new fee-for- service business, Claims Compensation Bureau, in March; made a record $367 million in portfolio  purchases throughout the year; and closed on a  new, expanded line of credit (for $407 million) in  December. It was a year of accomplishment like  none before. larger pools of bankrupt accounts, especially after  2007. In 2008 and 2009—when the bankruptcy  market was disrupted by the global financial crisis,  and the disruption was exacerbated by lack of capital in the financial markets and concerns over  changing rules for bankrupt assets—PRA continued  to bid for bankrupt accounts by carefully analyzing  and underwriting for current and potential risks. As  a result, we won a significant amount of business  when others feared to venture forth. That business  has turned out to be very successful. Last year,  repeating what we did in 2009, we invested more in  bankrupt accounts ($217 million) than in charged-off  accounts ($150 million).  Our success in 2010 resulted from a great deal of work and investment in people, processes and  portfolios during prior years. Besides gaining opera- tional strength, we have forged an excellent team,  from our collection representatives to our statisti- cians, analysts and IT professionals to our managers,  supervisors and executives. Our team is not only  strong but deep, with an incredible bench of smart,  committed employees looking to advance our perfor- mance. With these considerable assets, we expect  to continue producing strong results in the future. Our core business—buying charged-off consumer  debt—also performed well in 2010. We increased  purchases by 19% from 2009, and achieved a 22%  increase in cash collections. Despite the economy,  our 2009 and 2010 investments look particularly  strong, while our older pools are performing nicely,  aided by ever-improving scoring and collection strat- egies. In both the bankruptcy and charged-off-debt  markets, we did see prices move up substantially  during 2010 as competition increased and available  inventory remained stable. However, we continue to  enjoy a significant competitive advantage because  of our ability to underwrite accurately and to collect  cash from portfolios efficiently. Our 2010 growth was strongly driven by our bank- ruptcy business, which increased its cash collections  by $100 million, or 116%, from 2009. This success  was no accident. Since entering the bankruptcy  market in 2004, we have invested considerable time  and resources in the business. We have made a  significant commitment to building what we believe  is one of the most robust systems in existence for  efficiently and accurately processing bankruptcy  claims. Even before starting operations in 2004, we  had spent nearly two years working on our models  and processes. We then began to purchase steadily  During 2010, we began to apply to our fee-for-service  businesses the advanced analytics and sophisticated  operating processes developed in our debt-purchase  business. Our goal is to deliver superior results to our  clients while we realize more net income from every  revenue dollar. Frankly, during 2010, the vehicle loca- tion and government services businesses did not  meet our expectations. We have made numerous  2 Portfolio Recovery Associates, Inc. — 2010 Annual Report