While the economy steadied in 2010 after more than two years of volatility, the business world continued to experience the residual  effects of the downturn. PRA, however, achieved breakthrough results due to its sustainable business model and its reliance on well-established  Operating Principles. These ideals have guided our actions through  good and bad economic times. As we have done in each of our annual  reports since going public in 2002, we present our Operating Principles  for your reference. Be honest and open with shareholders. Let them know what is going on. We operate process- and people-intensive businesses. Experienced employees are significantly more productive than newer  employees. Growing too quickly puts too  many less productive, lower margin people into the workforce mix, driving down productivity, margin and net income. We act like owners because we are. Our  senior managers have a significant portion of  their net worth invested in the Company. We  expect our senior managers to retain sub- stantial stock ownership positions—common  stock, not just options—throughout their terms  of employment. Provide and support ongoing employee skill  development to help create ever-increasing  levels of individual potential with high levels of performance for continuing personal and  Company growth. Allow room for error. Keep debt levels low.  When borrowing is required because of oppor- tunity, use low-cost, non-participating debt. Portfolio buying and collections must be under  the same roof. Develop and retain great employees. Keep  support staff as small as possible, while providing excellent service to the collection  operation. Operate fewer, larger call centers. Build a diverse portfolio. Never bet the ranch.  Make sure each investment, be it a portfolio or a business, has been reviewed, judged  objectively, and priced to achieve appropriate  profit hurdles. Disclose. Invest carefully. Employ steady, controlled growth. Management should be owners, not hired guns. Keep the business simple. Keep costs low and productivity high. Maintain a conservative capital structure. Build an integrated business. Develop and support employees. Annual Report Design by Curran & Connors, Inc. / www.curran-connors.com PRA employees were used for photographs throughout the Annual Report. OPERATING P RINCIPLES FOR THE MANAGEMENT OF P ORTFOLIO RECOVERY ASSOCIATES