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PRA Group Reports Fourth Quarter and Full Year 2015 Results

NORFOLK, Va., Feb. 25, 2016 (GLOBE NEWSWIRE) -- PRA Group (Nasdaq:PRAA), a global leader in acquiring and collecting nonperforming loans, today reported its financial results for the fourth quarter and full year of 2015. The company reported diluted earnings per share of $0.86 and non-GAAP diluted earnings per share of $1.03 for the fourth quarter of 2015. For the full year, the company reported diluted earnings per share of $3.47 and non-GAAP diluted earnings per share of $4.30. Non-GAAP financial results are presented in constant currency with the third and fourth quarter of 2014 and exclude items unrelated to normal operations. A reconciliation of all non-GAAP financial measures to the most directly comparable GAAP financial measure can be found at the end of this press release.

The company also announced the acquisition of certain assets of Recovery Management Systems Corporation (RMSC). The transaction also includes the hiring of most RMSC employees. Mike Petit, president of PRA Insolvency Investment Services, said, “We are extremely impressed with RMSC’s technology platform supporting its bankrupt account processing and recovery management business. This acquisition strengthens and broadens our ability to offer bankruptcy processing services to our clients and complements our existing Insolvency business.”

Fourth Quarter Highlights

  • Cash collections of $369.4 million, non-GAAP cash collections of $380.3 million.
  • Revenues of $230.2 million, non-GAAP revenues of $236.7 million.
  • Income from operations of $71.2 million, non-GAAP income from operations of $87.4 million.
  • Net income of $41.0 million, non-GAAP net income of $49.0 million.
  • Return on average equity, annualized, of 19.8%, non-GAAP return on average equity, annualized, of 27.5%.
  • $225.9 million in investments.

Full Year Highlights

  • Cash collections of $1.54 billion, non-GAAP cash collections of $1.56 billion.
  • Revenues of $942.0 million, non-GAAP revenues of $954.4 million.
  • Income from operations of $310.3 million, non-GAAP income from operations of $363.0 million.
  • Net income of $167.9 million, non-GAAP net income of $207.9 million.
  • Return on average equity of 19.9%, non-GAAP return on average equity of 24.6%.
  • $963.8 million in investments.

“One thing remains evident for our future long term results, the industry consolidation in the U.S. Core market remains a critical positive for us,” said Steve Fredrickson, chairman and chief executive officer, PRA Group. “When any of the events decreasing supply in the U.S. change, PRA will be there to win our fair share and our results should begin to show the effects soon thereafter. We feel confident that with our industry low leverage, we will be ready and able to purchase portfolios that are within our return profile both now and when volume inevitably picks up. In the meantime, we are highly profitable, producing strong results for shareholders, while we grow rapidly in Europe and South America, and improve our operating effectiveness consistently.”

REVENUES AND CASH COLLECTIONS

  • Total revenues of $230.2 million in the fourth quarter included finance receivables income net of principal amortization and net allowance charges. Non-GAAP total revenues for the quarter were $236.7 million versus $250.7 million in year-ago quarter. For the full year, total revenues were $942.0 million. Non-GAAP total revenues for the full year were $954.4 million versus $881.0 million in 2014.
  • Cash collections were $369.4 million. Non-GAAP cash collections were $380.3 million, an increase of 2% over the year-ago quarter. Cash collections for the year were $1.54 billion and non-GAAP cash collections were $1.56 billion. Both GAAP and non-GAAP cash collections are reported below and included collections from these finance receivables sources:

Cash Collection Source ($ in thousands)Q4-2015Q3-2015Q2-2015Q1-2015Q4-2014
Americas-Core$ 195,834 $ 210,725 $ 218,838 $ 219,371 $ 185,921
Americas-Insolvency 73,843 81,865 92,974 95,533 103,104
Europe-Core 97,149 85,635 76,602 83,876 84,398
Europe-Insolvency 2,545 2,528 1,210 967 5
Total Cash Collections$ 369,371 $ 380,753 $ 389,624 $ 399,747 $ 373,428
Cash Collection Source - Constant Currency Adjusted
($ in thousands)
Q4-2015YTD-2015 Q4-2014YTD-2014
Americas-Core$ 196,967 $ 846,703 $ 185,921 $ 752,995
Americas-Insolvency 73,843 344,215 103,104 458,451
Europe-Core 106,899 363,557 84,398 167,361
Europe-Insolvency 2,546 7,252 5 5
Total Cash Collections$ 380,255 $ 1,561,727 $ 373,428 $ 1,378,812


  • Principal amortization of finance receivables in the fourth quarter was $160.9 million or 43.6% of cash collections, compared with 40.4% in the year-ago quarter. Principal amortization included a net allowance charge of $11.5 million recorded against certain pools of finance receivables in the quarter, compared with a net allowance charge of $1.0 million recorded in the year-ago quarter. Non-GAAP principal amortization was $166.5 million in the fourth quarter of 2015. Full year principal amortization of finance receivables was $674.4 million or 43.8% of cash collections, including a net allowance charge of $29.4 million. Non-GAAP principal amortization for the full year was $685.4 million.
  • Revenues in the fourth quarter also included income from PRA Group’s fee-based businesses of $19.6 million, compared with $22.8 million in the year-ago quarter, and other income of $2.1 million compared with $5.3 million in the year-ago quarter. For the full year, fee revenue was $64.4 million and other income was $12.5 million.

EXPENSES AND OPERATING INCOME

  • Operating expenses were $159.0 million in the fourth quarter, compared with $140.9 million a year ago. Operating expenses include an accrual to reflect the fact that the company has signed an agreement in principle with the opposing parties in its TCPA lawsuit and is seeking final judicial approvals. Non-GAAP operating expenses were $149.4 million versus $137.8 million a year ago. For the full year, operating expenses were $631.7 million, compared with $538.9 million in 2014. Non-GAAP operating expenses for the full year were $591.5 million versus $520.6 million in 2014.
  • Operating income in the fourth quarter was $71.2 million, compared with $109.9 million in the year-ago quarter. Non-GAAP operating income was $87.4 million in the fourth quarter versus $112.9 million a year ago. For the full year, operating income was $310.3 million versus $342.1 million in 2014. Non-GAAP operating income for the full year was $363.0 million versus $360.4 million in 2014. The operating margin was 30.9% in the fourth quarter and the non-GAAP operating margin was 36.9%. For the full year, the operating margin was 32.9% and the non-GAAP operating margin was 38.0%.
  • The provision for income taxes was $15.2 million in the fourth quarter compared to $46.5 million in the year-ago quarter. PRA Group’s provision for income taxes was 27.0% of income before taxes in the fourth quarter, compared with 49.7% in the year-ago quarter. Non-GAAP provision for income taxes in the fourth quarter was $20.3 million versus $47.5 million a year ago. For the full year, the provision for income taxes was $89.4 million or 34.7% of income before taxes. Non-GAAP provision for income taxes for the full year was $105.2 million or 33.6% of income before taxes.

PORTFOLIO ACQUISITIONS

  • PRA Group invested $225.9 million in new finance receivables in the fourth quarter.

Portfolio Purchase Source
($ in thousands)
Q42015Q32015Q22015Q12015Q42014
Americas-Core$ 120,554 $ 90,912 $ 98,317 $ 138,498 $ 119,714
Americas-Insolvency 20,589 9,300 19,111 16,437 24,949
Europe-Core (1) 79,735 240,385 88,499 21,579 123,194
Europe-Insolvency 4,976 3,959 2,450 8,510 11,625
Total Portfolio Purchasing$ 225,854 $ 344,556 $ 208,377 $ 185,024 $ 279,482
(1) Excludes the $27.9 million and $34.7 million investment in the securitized fund in Poland during the three months ended March 31, 2015 and December 31, 2014, respectively.

BALANCE SHEET

  • Borrowings totaled $1,723.3 million as of December 31, 2015, consisting of $541.8 million drawn on the domestic and Canadian revolver, $576.4 million drawn on the multi-currency revolver, $265.1 million in convertible senior notes, $170.0 million in other long-term debt and $169.9 million in notes payable. Total borrowings were $1,482.5 million as of December 31, 2014.
  • Cash and cash equivalents were $71.4 million as of December 31, 2015, compared with $39.7 million as of December 31, 2014.
  • Net deferred tax liabilities were $261.5 million as of December 31, 2015, compared with $255.6 million as of December 31, 2014.
  • Equity was $800.5 million as of December 31, 2015, compared with $902.2 million as of December 31, 2014.

Conference Call Information
PRA Group will hold a conference call today at 5:00 p.m. ET to discuss results with institutional investors and stock analysts. To listen to a webcast of the call, visit http://ir.pragroup.com/events.cfm. To listen by phone, call 888-695-7639 in the U.S. or 970-315-0482 outside the U.S. The conference ID is 50970357. A question-and-answer session on the call will be open only to analysts or investors. To listen to a replay of the call until March 3, 2016, call 855-859-2056 in the U.S. or 404-537-3406 outside the U.S. and use conference ID 50970357.

About PRA Group
As a global leader in acquiring and collecting nonperforming loans, PRA Group (Nasdaq:PRAA) returns capital to banks and other creditors to help expand financial services for consumers in the Americas and Europe. PRA Group companies collaborate with customers to help them resolve their debt and provide a broad range of additional revenue and recovery services to business and government clients.

PRA has been recognized as one of Fortune's 100 Fastest-Growing Companies for three years and one of Forbes' Best Small Companies in America for eight consecutive years since 2007. For more information, please visit www.pragroup.com.

About Forward Looking Statements
Statements made herein which are not historical in nature, including PRA Group’s or its management's intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

The forward-looking statements in this press release are based upon management's current beliefs, estimates, assumptions and expectations of PRA Group’s future operations and economic performance, taking into account currently available information. These statements are not statements of historical fact or guarantees of future performance, and there can be no assurance that anticipated events will transpire or that our expectations will prove to be correct. Forward-looking statements involve risks and uncertainties, some of which are not currently known to PRA Group. Actual events or results may differ materially from those expressed or implied in any such forward-looking statements as a result of various factors, including risk factors and other risks that are described from time to time in PRA Group’s filings with the Securities and Exchange Commission including but not limited to PRA Group’s annual reports on Form 10-K, its quarterly reports on Form 10-Q and its current reports on Form 8-K, filed with the Securities and Exchange Commission and available through PRA Group's website, which contain a detailed discussion of PRA Group's business, including risks and uncertainties that may affect future results.

Due to such uncertainties and risks, you are cautioned not to place undue reliance on such forward-looking statements, which speak only as of today. Information in this press release may be superseded by recent information or statements, which may be disclosed in later press releases, subsequent filings with the Securities and Exchange Commission or otherwise. Except as required by law, PRA assumes no obligation to publicly update or revise its forward-looking statements contained herein to reflect any change in PRA Group’s expectations with regard thereto or to reflect any change in events, conditions or circumstances on which any such forward-looking statements are based, in whole or in part.


PRA Group, Inc.
Unaudited Consolidated Income Statements
(in thousands, except per share amounts)
Three Months EndedTwelve Months Ended
December 31,December 31,
2015 2014 2015 2014
Revenues:
Income recognized on finance receivables, net$ 208,471 $ 222,660 $ 865,122 $ 807,474
Fee income 19,649 22,800 64,383 65,675
Other revenue 2,065 5,271 12,513 7,820
Total revenues 230,185 250,731 942,018 880,969
Operating expenses:
Compensation and employee services 68,670 65,448 268,345 234,531
Legal collection fees 11,873 15,125 53,393 51,107
Legal collection costs 16,774 15,725 76,063 88,054
Agency fees 8,182 7,497 32,188 16,399
Outside fees and services 27,309 15,707 65,155 55,821
Communication 6,601 7,715 33,113 33,085
Rent and occupancy 3,991 3,477 14,714 11,509
Depreciation and amortization 4,935 5,307 19,874 18,414
Other operating expenses 10,678 4,870 68,829 29,981
Total operating expenses 159,013 140,871 631,674 538,901
Income from operations 71,172 109,860 310,344 342,068
Other income and (expense):
Interest expense (15,321) (13,493) (60,336) (35,226)
Foreign exchange gain/(loss) 301 (2,898) 7,514 (5,829)
Income before income taxes 56,152 93,469 257,522 301,013
Provision for income taxes 15,164 46,478 89,391 124,508
Net income$ 40,988 $ 46,991 $ 168,131 $ 176,505
Adjustment for net income attributable to noncontrolling interest 18 - 205 -
Net income attributable to PRA Group, Inc.$ 40,970 $ 46,991 $ 167,926 $ 176,505
Net income per common share attributable to PRA Group, Inc.:
Basic$ 0.87 $ 0.94 $ 3.49 $ 3.53
Diluted$ 0.86 $ 0.93 $ 3.47 $ 3.50
Weighted average number of shares outstanding:
Basic 47,197 49,892 48,128 49,990
Diluted 47,539 50,444 48,405 50,421

PRA Group, Inc.
Unaudited Consolidated Balance Sheets
(in thousands)
December 31,
ASSETS 2015 2014
Cash and cash equivalents$ 71,372 $ 39,661
Investments 73,799 89,703
Finance receivables, net 2,202,113 2,001,790
Other receivables, net 30,771 12,959
Income taxes receivable 1,717 -
Net deferred tax asset 13,068 6,126
Property and equipment, net 45,394 48,258
Goodwill 495,156 527,445
Intangible assets, net 23,788 10,933
Other assets 39,528 41,876
Total assets$2,996,706 $2,778,751
LIABILITIES AND EQUITY
Liabilities:
Accounts payable$ 4,190 $ 4,446
Accrued expenses 95,380 89,361
Income taxes payable 21,236 11,020
Net deferred tax liability 261,498 255,587
Interest-bearing deposits 46,991 27,704
Borrowings 1,723,268 1,482,456
Other liabilities 4,396 5,962
Total liabilities 2,156,959 1,876,536
Equity:
Preferred stock, par value $0.01, authorized shares, 2,000, issued and outstanding shares, 0 - -
Common stock, par value $0.01, authorized shares, 100,000, issued and outstanding shares, 46,173 at December 31, 2015; 100,000 authorized shares, 49,577 issued and outstanding shares at December 31, 2014 462 496
Additional paid-in capital 64,622 111,659
Retained earnings 964,270 906,010
Accumulated other comprehensive loss (228,861) (115,950)
Total stockholders' equity - PRA Group, Inc. 800,493 902,215
Noncontrolling interest 39,254 -
Total equity 839,747 902,215
Total liabilities and total equity$2,996,706 $2,778,751


PRA Group, Inc.
FINANCIAL HIGHLIGHTS
As of and for theAs of and for the
Three Months Ended December 31,Twelve Months Ended December 31,
2015 2014 Change 2015 2014 Change
EARNINGS (in thousands)
Income recognized on finance receivables, net$ 208,471 $ 222,660 -6%$ 865,122 $ 807,474 7%
Fee income 19,649 22,800 -14% 64,383 65,675 -2%
Other revenue 2,065 5,271 -61% 12,513 7,820 60%
Total revenues 230,185 250,731 -8% 942,018 880,969 7%
Operating expenses 159,013 140,871 13% 631,674 538,901 17%
Income from operations 71,172 109,860 -35% 310,344 342,068 -9%
Net interest expense 15,321 13,493 14% 60,336 35,226 71%
Net income 40,988 46,991 -13% 168,131 176,505 -5%
Net income attributable to PRA Group, Inc. 40,970 46,991 -13% 167,926 176,505 -5%
PERIOD-END BALANCES (in thousands)
Cash and cash equivalents$ 71,372 $ 39,661 80%$ 71,372 $ 39,661 80%
Finance receivables, net 2,202,113 2,001,790 10% 2,202,113 2,001,790 10%
Goodwill and intangible assets, net 518,944 538,378 -4% 518,944 538,378 -4%
Total assets 2,996,706 2,778,751 8% 2,996,706 2,778,751 8%
Borrowings 1,723,268 1,482,456 16% 1,723,268 1,482,456 16%
Total liabilities 2,156,959 1,876,536 15% 2,156,959 1,876,536 15%
Total equity - PRA Group, Inc. 800,493 902,215 -11% 800,493 902,215 -11%
FINANCE RECEIVABLE INCOME (dollars in thousands)
Cash collections$ 369,371 $ 373,428 -1%$ 1,539,495 $ 1,378,812 12%
Cash collections on fully amortized pools 8,280 17,785 -53% 52,202 68,349 -24%
Principal amortization without allowance (reversals)/charges 149,381 149,753 0% 645,004 576,273 12%
Allowance (reversal)/charge 11,519 1,015 1035% 29,369 (4,935) -695%
Principal amortization with allowance (reversals)/charges 160,900 150,768 7% 674,373 571,338 18%
Principal amortization w/ allowance charges as % of cash collections:
Including fully amortized pools 43.6% 40.4% 8% 43.8% 41.4% 6%
Excluding fully amortized pools 44.6% 42.4% 5% 45.3% 43.6% 4%
Allowance (reversal)/charge to period-end net finance receivables 0.5% 0.1% 932% 1.3% (0.2%) -641%
PURCHASES OF FINANCE RECEIVABLES (dollars in thousands)
Purchase price - Americas core$ 120,554 $ 119,714 1%$ 448,281 $ 408,721 10%
Purchase price - Americas insolvency 20,589 24,949 -17% 65,437 151,674 -57%
Purchase price - Europe core 79,735 123,194 -35% 430,198 860,744 -50%
Purchase price - Europe insolvency 4,976 11,625 -57% 19,895 11,625 71%
Purchase price - total 225,854 279,482 -19% 963,811 1,432,764 -33%
Number of portfolios - total 139 142 -2% 542 456 19%
ESTIMATED REMAINING COLLECTIONS (in thousands)
Estimated remaining collections - Americas core$ 2,558,529 $ 2,229,403 15%$ 2,558,529 $ 2,229,403 15%
Estimated remaining collections - Americas insolvency 448,652 642,552 -30% 448,652 642,552 -30%
Estimated remaining collections - Europe core 1,964,763 1,478,738 33% 1,964,763 1,478,738 33%
Estimated remaining collections - Europe insolvency 34,878 15,021 132% 34,878 15,021 132%
Estimated remaining collections - total 5,006,822 4,365,714 15% 5,006,822 4,365,714 15%
Adjusted estimated remaining collections (7) 5,114,923 4,437,264 15% 5,114,923 4,437,264 15%
SHARE DATA (share amounts in thousands)
Net income per common share - diluted$ 0.86 $ 0.93 -7%$ 3.47 $ 3.50 -1%
Weighted average number of shares outstanding - diluted 47,539 50,444 -6% 48,405 50,421 -4%
Shares repurchased 2,072 574 261% 3,683 574 542%
Average price paid per share repurchased (including acquisitions costs)$ 38.60 $ 57.79 -33%$ 44.94 57.79 -22%
Closing market price$ 34.69 $ 57.93 -40%$ 34.69 $ 57.93 -40%
RATIOS AND OTHER DATA (dollars in thousands)
Return on average equity (1) 19.8% 20.2% -2% 19.9% 18.9% 5%
Return on revenue (2) 17.8% 18.7% -5% 17.8% 20.0% -11%
Return on average assets (3) 5.5% 6.9% -20% 5.9% 8.0% -26%
Operating margin (4) 30.9% 43.8% -29% 32.9% 38.8% -15%
Operating expense to cash receipts (5) 40.9% 35.6% 15% 39.4% 37.3% 6%
Debt to stockholders'equity (6) 215.3% 164.3% 31% 215.3% 164.3% 31%
Number of full-time equivalent collectors 2,173 2,457 -12% 2,173 2,457 -12%
Number of full-time equivalent employees 3,799 3,880 -2% 3,799 3,880 -2%
Cash receipts (5)$ 389,020 $ 396,228 -2%$ 1,603,878 $ 1,444,487 11%
Line of credit - unused portion at period end 446,769 352,926 27% 446,769 352,926 27%
(1) Calculated as annualized net income divided by average equity for the period
(2) Calculated as net income divided by total revenues
(3) Calculated as annualized net income divided by average assets for the period
(4) Calculated as income from operations divided by total revenues
(5) "Cash receipts" is defined as cash collections plus fee income
(6) For purposes of this ratio, "debt" equals borrowings
(7) Equals total estimated remaining collections on our owned finance receivable portfolios plus the estimated remaining collections on certain of our other investments.


PRA Group, Inc.
FINANCIAL HIGHLIGHTS
For the Quarter Ended
December 31September 30June 30March 31December 31
2015 2015 2015 2015 2014
EARNINGS (in thousands)
Income recognized on finance receivables, net$ 208,471 $ 208,184 $ 220,064 $ 228,403 $ 222,660
Fee income 19,649 17,803 13,878 13,053 22,800
Other revenue 2,065 3,443 3,255 3,750 5,271
Total revenues 230,185 229,430 237,197 245,206 250,731
Operating expenses 159,013 175,303 148,318 149,040 140,871
Income from operations 71,172 54,127 88,879 96,166 109,860
Net interest expense 15,321 16,787 13,452 14,776 13,493
Net income 40,988 17,583 51,425 58,135 46,991
Net income attributable to PRA Group, Inc. 40,970 17,396 51,425 58,135 46,991
PERIOD-END BALANCES (in thousands)
Cash and cash equivalents$ 71,372 $ 69,111 $ 56,811 $ 40,542 $ 39,661
Finance receivables, net 2,202,113 2,167,178 2,012,552 1,954,772 2,001,790
Goodwill and intangible assets, net 518,944 526,841 512,451 506,695 538,378
Total assets 2,996,706 2,984,550 2,783,756 2,700,613 2,778,751
Borrowings 1,723,268 1,654,457 1,503,363 1,479,262 1,482,456
Total liabilities 2,156,959 2,083,131 1,885,880 1,883,295 1,876,536
Total equity - PRA Group, Inc. 800,493 863,517 897,876 817,318 902,215
FINANCE RECEIVABLE COLLECTIONS (dollars in thousands)
Cash collections$ 369,371 $ 380,753 $ 389,624 $ 399,747 $ 373,428
Cash collections on fully amortized pools 8,280 11,453 15,162 17,307 17,785
Principal amortization without allowance (reversals)/charges 149,381 161,234 164,675 169,714 149,753
Allowance (reversal)/charge 11,519 11,335 4,885 1,630 1,015
Principal amortization with allowance (reversals)/charges 160,900 172,569 169,560 171,344 150,768
Principal amortization w/ allowance charges as % of cash collections:
Including fully amortized pools 43.6% 45.3% 43.5% 42.9% 40.4%
Excluding fully amortized pools 44.6% 46.7% 45.3% 44.8% 42.4%
Allowance (reversal)/charge to period-end net finance receivables 0.5% 0.5% 0.2% 0.1% 0.1%
PURCHASES OF FINANCE RECEIVABLES (dollars in thousands)
Purchase price - North America core$ 120,554 $ 90,912 $ 98,317 $ 138,498 $ 119,714
Purchase price - North America insolvency 20,589 9,300 19,111 16,437 24,949
Purchase price - Europe core 79,735 240,385 88,499 21,579 123,194
Purchase price - Europe insolvency 4,976 3,959 2,450 8,510 11,625
Purchase price - total 225,854 344,556 208,377 185,024 279,482
Number of portfolios - total 139 128 136 139 142
ESTIMATED REMAINING COLLECTIONS (in thousands)
Estimated remaining collections - Americas core$ 2,558,529 $ 2,421,506 $ 2,384,698 $ 2,370,086 $ 2,229,403
Estimated remaining collections - Americas insolvency 448,652 474,097 529,892 577,319 642,552
Estimated remaining collections - Europe core 1,964,763 1,903,226 1,685,694 1,619,454 1,478,738
Estimated remaining collections - Europe insolvency 34,878 30,081 26,807 24,838 15,021
Estimated remaining collections - total 5,006,822 4,828,910 4,627,091 4,591,697 4,365,714
Adjusted estimated remaining collections (7) 5,114,923 4,945,609 4,747,552 4,716,230 4,437,264
SHARE DATA (share amounts in thousands)
Net income per common share - diluted$ 0.86 $ 0.36 $ 1.06 $ 1.19 $ 0.93
Weighted average number of shares outstanding - diluted 47,539 48,498 48,529 49,052 50,444
Shares repurchased 2,072 133 - 1,478 574
Average price paid per share repurchased (including acquisitions costs)$ 38.60 $ 58.08 $ - $ 52.65 $ 57.79
Closing market price$ 34.69 $ 52.92 $ 62.31 $ 54.32 $ 57.93
RATIOS AND OTHER DATA (dollars in thousands)
Return on average equity (1) 19.8% 7.8% 23.5% 30.1% 20.2%
Return on revenue (2) 17.8% 7.7% 21.7% 23.7% 18.7%
Return on average assets (3) 5.5% 2.3% 7.4% 8.7% 6.9%
Operating margin (4) 30.9% 23.6% 37.5% 39.2% 43.8%
Operating expense to cash receipts (5) 40.9% 44.0% 36.8% 36.1% 35.6%
Debt to stockholders'equity (6) 215.3% 191.6% 167.4% 181.0% 164.3%
Number of collectors 2,173 2,159 2,317 2,395 2,457
Number of full-time equivalent employees 3,799 3,715 3,820 3,847 3,880
Cash receipts (5)$ 389,020 $ 398,556 $ 403,502 $ 412,800 $ 396,228
Line of credit - unused portion at period end 446,769 393,246 547,017 323,812 352,926
(1) Calculated as annualized net income divided by average equity for the period
(2) Calculated as net income divided by total revenues
(3) Calculated as annualized net income divided by average assets for the period
(4) Calculated as income from operations divided by total revenues
(5) "Cash receipts" is defined as cash collections plus fee income
(6) For purposes of this ratio, "debt" equals borrowings
(7) Equals total estimated remaining collections on our owned finance receivable portfolios plus the estimated remaining collections on certain of our other investments.

Use of Non-GAAP Financial Measures

PRA Group, Inc. reports financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, the Company believes certain non-GAAP performance measures and ratios which exclude penalty and fees associated with the CFPB consent order, expenses associated with acquisitions, one-time tax items, legal costs not associated with normal operations, and constant currency adjustments may provide additional meaningful comparisons between current year results and prior periods. Reconciliations from non-GAAP to the most directly comparable GAAP financial measures are provided below. These non-GAAP financial measures should be viewed in addition to, not as an alternative for reported GAAP results.

The constant currency results assume that foreign revenues and expenses are translated from foreign currencies to the U.S. Dollar at rates consistent with the prior year, and that any benefit or loss caused by foreign currency fluctuations would be consistent with the prior year. To do this the company translates the current year’s income statements into U.S. Dollars using the prior year’s average exchange rates and then replaces the foreign exchange gain or loss for the current year with the balance from the prior year. Finally, the company calculates the tax impact of the constant currency results to reflect the current effective tax rate of the reporting period.

Three Months Ended December 31, 2015
Cash
Collections
AmortizationIncome
Recognized on
Finance
Receivables
Fee
Income
Other
Income
Total
Revenues
ExpensesIncome
from
Operations
Income
before
Taxes
Net
Income
Diluted
EPS
As Reported$ 369,371 $ 160,900 $ 208,471 $ 19,649 $ 2,065 $ 230,185 $ 159,013 $ 71,172 $ 56,152 $ 40,970 $ 0.86
Adjustments:
CFPB expenses including penalty and redress - - - - - - (111) 111 111 68 -
Acquisition and other expenses - - - - - - (1,639) 1,639 1,639 1,005 0.02
Legal costs not associated with normal operations - - - - - - (12,045) 12,045 12,045 7,383 0.16
Constant currency adjustments 10,884 5,603 5,281 558 725 6,564 4,143 2,421 (596) (439) (0.01)
Subtotal of adjustments 10,884 5,603 5,281 558 725 6,564 (9,652) 16,216 13,199 8,016 0.17
As Adjusted 380,255 166,503 213,752 20,207 2,790 236,749 149,361 87,388 69,351 48,986 1.03
Twelve Months Ended December 31, 2015
Cash
Collections
AmortizationIncome
Recognized on
Finance
Receivables
Fee
Income
Other
Income
Total
Revenues
ExpensesIncome
from
Operations
Income
before
Taxes
Net
Income
Diluted
EPS
As Reported$ 1,539,495 $ 674,373 $ 865,122 $ 64,383 $ 12,513 $ 942,018 $ 631,674 $ 310,344 $ 257,522 $ 167,926 $ 3.47
Adjustments:
CFPB expenses including penalty and redress - - - - - - (28,807) 28,807 28,807 19,641 0.41
Acquisition and other expenses - - - - - - (5,628) 5,628 5,628 3,837 0.08
One-time tax items - - - - - - - - - 2,026 0.04
Legal costs not associated with normal operations - - - - - - (13,824) 13,824 13,824 9,426 0.19
Constant currency adjustments 22,232 10,984 11,248 759 424 12,431 8,038 4,393 7,323 5,078 0.10
Subtotal of adjustments 22,232 10,984 11,248 759 424 12,431 (40,221) 52,652 55,582 40,008 0.83
As Adjusted 1,561,727 685,357 876,370 65,142 12,937 954,449 591,453 362,996 313,104 207,934 4.30
Three Months Ended December 31, 2014
Cash
Collections
AmortizationIncome
Recognized on
Finance
Receivables
Fee
Income
Other
Income
Total
Revenues
ExpensesIncome
from
Operations
Income
before
Taxes
Net
Income
Diluted
EPS
As Reported$ 373,428 $ 150,768 $ 222,660 $ 22,800 $ 5,271 $ 250,731 $ 140,871 $ 109,860 $ 93,469 $ 46,991 $ 0.93
Adjustments:
Acquisition and other expenses - - - - - - (3,040) 3,040 3,040 2,049 0.04
Legal costs not associated with normal operations - - - - - - (15) 15 15 10 -
Subtotal of adjustments - - - - - - (3,055) 3,055 3,055 2,059 0.04
As Adjusted 373,428 150,768 222,660 22,800 5,271 250,731 137,816 112,915 96,524 49,050 0.97
Twelve Months Ended December 31, 2014
Cash
Collections
AmortizationIncome
Recognized on
Finance
Receivables
Fee
Income
Other
Income
Total
Revenues
ExpensesIncome
from
Operations
Income
before
Taxes
Net
Income
Diluted
EPS
As Reported$ 1,378,812 $ 571,338 $ 807,474 $ 65,675 $ 7,820 $ 880,969 $ 538,901 $ 342,068 $ 301,013 $ 176,505 $ 3.50
Adjustments:
Acquisition and other expenses - - - - - - (17,905) 17,905 17,905 11,094 0.22
One-time tax items - - - - - - - - - (1,232) (0.02)
Loss on foreign currency exchange contracts - - - - - - - - 8,240 5,105 0.10
Legal costs not associated with normal operations - - - - - - (426) 426 426 264 0.01
Subtotal of adjustments - - - - - - (18,331) 18,331 26,571 15,231 0.30
As Adjusted 1,378,812 571,338 807,474 65,675 7,820 880,969 520,570 360,399 327,584 191,736 3.80


Investor Contact: Darby Schoenfeld Director of Investor Relations (757) 431-7913 DCSchoenfeld@PRAGroup.com News Media Contact: Nancy Porter Vice President, Corporate Communications (757) 431-7950 NAPorter@PRAGroup.com

Source:PRA Group