## OPERATING P RINCIPLES FOR THE MANAGEMENT OF P ORTFOLIO RECOVERY ASSOCIATES 

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. 

## Disclose. 

Be honest and open with shareholders. Let them know what is going on. 

## Invest carefully. 

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. 

## Keep the business simple. 

Operate fewer, larger call centers. 

## Keep costs low and productivity high. 

Develop and retain great employees. Keep support staff as small as possible, while providing excellent service to the collection operation. 

## Maintain a conservative capital structure. 

Allow room for error. Keep debt levels low. 

When borrowing is required because of oppor- tunity, use low-cost, non-participating debt. 

## Build an integrated business. 

Portfolio buying and collections must be under the same roof. 

## Employ steady, controlled growth. 

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. 

## Management should be owners, not hired guns. 

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. 

## Develop and support employees. 

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. 

