Gross collections from the portfolio purchasing and recovery business were $230.5 million, a 24% increase over the $185.9 million in the same period of the prior year.

Investment in receivable portfolios in the portfolio purchasing and recovery business was $153.6 million, to purchase $8.5 billion in face value of debt, compared to $136.7 million, to purchase $3.8 billion in face value of debt in the same period of the prior year.

Available capacity under the Encore Capital Group revolving credit facility, subject to borrowing base and applicable debt covenants, was $187.0 million as of December 31, 2012. Total debt, consisting of the Encore revolving credit and term loan facility, the Propel facility, the senior secured notes, and capital lease obligations, was $706.0 million as of December 31, 2012, compared to $389.0 million as of December 31, 2011.

Revenue from receivable portfolios in the portfolio purchasing and recovery business, net of allowance adjustments, was $139.6 million, a 20% increase over the $116.5 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, decreased to approximately 59% from 64% in the same period of the prior year.

Total operating expenses were $103.9 million, a 24% increase over the $83.6 million in the same period of the prior year. Adjusted operating expense per dollar collected for the portfolio purchasing and recovery business decreased to 43.2% compared to 44.1% 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 $134.7 million, a 28% increase over the $105.0 million in the same period of the prior year.

Total interest expense for the portfolio purchasing and recovery segment increased to $6.5 million, as compared to $5.0 million in the same period of the prior year.

Income from continuing operations was $20.2 million, or $0.79 per fully diluted share, compared to income from continuing operations of $17.2 million, or $0.67 per fully diluted share in the same period of the prior year.

Gross collections were $948.1 million, a 25% increase over the $761.2 million in 2011.

Investment in receivable portfolios in the portfolio purchasing and recovery business was $562.3 million, to purchase $18.5 billion in face value of debt, compared to $386.9 million, to purchase $11.7 billion in face value of debt in 2011.

Revenue from receivable portfolios in the portfolio purchasing and recovery business, net of allowance adjustments, was $545.4 million, a 22% increase over the $448.7 million in 2011.

Total operating expenses were $401.7 million, a 22% increase over the $328.6 million 2011. Adjusted operating expenses for the portfolio purchasing and recovery business per dollar collected decreased to 40.4% compared to 42.2% in 2011.

Adjusted EBITDA was $577.4 million, a 30% increase over the $443.9 million in 2011.

Income from continuing operations was $78.6 million or $3.04 per fully diluted share, compared to income from continuing operations of $60.6 million or $2.36 per fully diluted share in 2011.

Total stockholders’ equity per share, excluding the effects of discontinued operations, was $16.06 at December 31, 2012, an 11% increase over $14.45 at December 31, 2011.

Cash and cash equivalents

Investment in receivable portfolios, net

Deferred court costs, net

Property tax payment agreements receivable, net

Interest receivable

Property and equipment, net

Other assets

Goodwill

Identifiable intangible assets, net

Total assets

Liabilities:

Accounts payable and accrued liabilities

Income tax payable

Deferred tax liabilities, net

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, 23,191 shares and 24,520 shares issued and outstanding as of December 31, 2012 and December 31, 2011, respectively

Additional paid-in capital

Accumulated earnings

Accumulated other comprehensive loss

Total stockholders’ equity

Total liabilities and stockholders’ equity

Revenues

Revenue from receivable portfolios, net

Tax lien transfer

Interest income

Interest expense

Net interest income

Total revenues

Operating expenses

Salaries and employee benefits

Cost of legal collections

Other operating expenses

Collection agency commissions

General and administrative expenses

Depreciation and amortization

Total operating expenses

Income from operations

Other (expense) income

Interest expense

Other income (expense)

Total other expense

Income from continuing operations before income taxes

Provision for income taxes

Income from continuing operations

(Loss) income from discontinued operations, net of tax

Net income

Weighted average shares outstanding:

Basic

Diluted

Basic earnings (loss) per share from:

Continuing operations

Discontinued operations

Net basic earnings per share

Diluted earnings (loss) per share from:

Continuing operations

Discontinued operations

Net diluted earnings per share

Other comprehensive (loss) gain:

Unrealized (loss) gain on derivative instruments

Income tax benefit (provision) related to unrealized (loss) gain on derivative instruments

Other comprehensive (loss) gain, net of tax

Comprehensive income

Operating activities:

Net income

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

Depreciation and amortization

Impairment charge for goodwill and identifiable intangible assets

Amortization of loan costs and premium on property tax payment agreements receivable

Stock-based compensation expense

Income tax provision (less than) in excess of income tax payments

Excess tax benefit from stock-based payment arrangements

Loss on sale of discontinued operations

(Reversal) provision for allowances on receivable portfolios, net

Changes in operating assets and liabilities

Deferred court costs

Other assets

Prepaid income tax and income taxes payable

Accounts payable, accrued liabilities and other liabilities

Net cash provided by operating activities

Investing activities:

Cash paid for acquisition, net of cash acquired

Purchases of receivable portfolios

Collections applied to investment in receivable portfolios, net

Proceeds from put-backs of receivable portfolios

Originations of property tax payment agreements receivable

Collections applied to property tax payment agreements receivable, net

Purchases of property and equipment

Net cash used in investing activities

Financing activities:

Payment of loan costs

Proceeds from senior secured notes

Repayment of senior secured notes

Proceeds from revolving credit facility and term loan facility

Repayment of revolving credit facility and term loan facility

Proceeds from issuance of convertible notes

Repayment of convertible notes

Purchases of convertible hedge instruments

Proceeds from sale of warrants

Repurchase of common stock

Proceeds from net settlement of certain call options

Proceeds from exercise of stock options

Taxes paid related to net share settlement of equity awards

Excess tax benefit from stock-based payment arrangements

Repayment of capital lease obligations

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

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 from continuing operations, as reported

Adjustment:

Convertible notes non-cash interest and issuance cost amortization, net of tax

Adjusted earnings from continuing operations

GAAP net income, as reported

Adjustments:

Loss (income) from discontinued operations, net of tax

Interest expense

Provision for income taxes

Depreciation and amortization

Amount applied to principal on receivable portfolios

Stock-based compensation expense

Acquisition related expenses

Adjusted EBITDA

GAAP total operating expenses, as reported

Adjustments:

Stock-based compensation expense

Tax lien transfer segment operating expenses

Acquisition related expenses

Adjusted operating expenses for the portfolio purchasing and recovery business

GAAP stockholders’ equity, as reported

Effect of discontinued operations

Adjusted stockholders’ equity

Diluted shares outstanding

Adjusted stockholders’ equity per share