UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

ý Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September 30, 2017~~March 31, 2019

¨ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ________ to ________

Commission File Number: 000-50058

PRA Group, Inc.

(Exact name of registrant as specified in its charter)



Delaware		75-3078675
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

120 Corporate Boulevard, Norfolk, Virginia	23502	(888) 772-7326
(Address of principal executive offices)	(Zip Code)	(Registrant's Telephone No., including area code)

	Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO ¨

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). YES þ NO ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨ Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to h Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO þ

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	PRAA	NASDAQ Global Select Market

The number of shares of the registrant's common stock outstanding as of ~~November 3, 2017~~May 6, 2019 was ~~45,169,039.~~45,383,831.

Table of Contents



Part I. Financial Information

Item 1.	Financial Statements (Unaudited)	3
	Consolidated Balance Sheets	3
	Consolidated Income Statements	4
	Consolidated Statements of Comprehensive Income/(Loss)	5
	Consolidated Statement of Changes in Equity	6
	Consolidated Statements of Cash Flows	7
	Notes to Consolidated Financial Statements	8
	1. Organization and Business	8
	2. Finance Receivables, net	9
	3. Investments	10
	4. ~~Borrowings~~Goodwill and Intangible Assets, net	11
	5. ~~Goodwill and Intangible Assets, net~~Leases	12
	6. Borrowings	14
	~~6. Income Taxes~~7. Derivatives	15
	~~7. Earnings per Share~~	1617
	8. ~~Commitments and Contingencies~~	16
	9. Fair Value	18
	9. Accumulated Other Comprehensive Loss	20
	10. ~~Recent Accounting Pronouncements~~Earnings per Share	20
	11. ~~Sale of Subsidiaries~~Income Taxes	21
	12. Commitments and Contingencies	21
	13. Recently Issued Accounting Standards	22
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2325
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4442
Item 4.	Controls and Procedures	4543

Part II. Other Information

Item 1.	Legal Proceedings	4644
Item 1A.	Risk Factors	4644
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4644
Item 3.	Defaults Upon Senior Securities	4644
Item 4.	Mine Safety Disclosures	4644
Item 5.	Other Information	4644
Item 6.	Exhibits	4644

Signatures		4745

Part I. Financial Information

Item 1. Financial Statements (Unaudited)

PRA Group, Inc.

Consolidated Balance Sheets

~~September 30, 2017~~March 31, 2019 and December 31, ~~2016~~2018

(Amounts in thousands)


	(unaudited)						(unaudited)
	September 30, 2017			December 31, 2016			March 31, 2019			December 31, 2018
Assets
Cash and cash equivalents	$	113,754		$	94,287		$	102,102		$	98,695
Investments	75,512			68,543			85,082			45,173
Finance receivables, net	2,577,831			2,307,969			3,177,229			3,084,777
Other receivables, net	10,919			11,650			18,082			46,157
Income taxes receivable	3,877			9,427			15,472			16,809
Net deferred tax asset	41,183			28,482			61,619			61,453
Property and equipment, net	36,428			38,744			54,463			54,136
Right-of-use assets							70,550			—
Goodwill	538,337			499,911			480,518			464,116
Intangible assets, net	25,527			27,935			5,247			5,522
Other assets	37,409			33,808			35,970			32,721
Assets held for sale	—			43,243
Total assets	$	3,460,777		$	3,163,999		$	4,106,334		$	3,909,559
Liabilities and Equity
Liabilities:
Accounts payable	$	3,605		$	2,459		$	5,682		$	6,110
Accrued expenses	82,445			82,699			77,838			79,396
Income taxes payable	4,069			19,631			389			15,080
Net deferred tax liability	237,044			258,344			108,367			114,979
Interest-bearing deposits	96,395			76,113			95,314			82,666
Borrowings	1,963,504			1,784,101			2,586,409			2,473,656
Lease liabilities							74,308			—
Other liabilities	1,213			10,821			25,789			7,370
Liabilities held for sale	—			4,220
Total liabilities	2,388,275			2,238,388			2,974,096			2,779,257
Redeemable noncontrolling interest	8,620			8,448			6,199			6,333
Equity:
Preferred stock, $0.01 par value, 2,000 shares authorized, no shares issued and outstanding	—			—			—			—
Common stock, $0.01 par value, 100,000 shares authorized, 45,169 shares issued and outstanding at September 30, 2017; 100,000 shares authorized, 46,356 shares issued and outstanding at December 31, 2016	452			464
Common stock, $0.01 par value, 100,000 shares authorized, 45,384 shares issued and outstanding at March 31, 2019; 100,000 shares authorized, 45,304 shares issued and outstanding at December 31, 2018							454			453
Additional paid-in capital	52,049			66,414			59,091			60,303
Retained earnings	1,124,762			1,049,367			1,291,700			1,276,473
Accumulated other comprehensive loss	(166,397		)	(251,944		)	(248,521		)	(242,109		)
Total stockholders' equity - PRA Group, Inc.	1,010,866			864,301			1,102,724			1,095,120
Noncontrolling interest	53,016			52,862			23,315			28,849
Total equity	1,063,882			917,163			1,126,039			1,123,969
Total liabilities and equity	$	3,460,777		$	3,163,999		$	4,106,334		$	3,909,559

The accompanying notes are an integral part of these consolidated financial statements.

PRA Group, Inc.

Consolidated Income Statements

For the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018

(unaudited)

(Amounts in thousands, except per share amounts)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2019			2018
Revenues:
Income recognized on finance receivables, net	$	197,248		$	202,639		$	582,626		$	613,154
Income recognized on finance receivables													$	238,836		$	218,624
Fee income	2,671			17,597			18,873			56,210			6,374			5,327
Other revenue	1,091			1,748			6,401			5,958			667			157
Total revenues	201,010			221,984			607,900			675,322			245,877			224,108

Net allowance charges													(6,095		)	(925		)

Operating expenses:
Compensation and employee services	68,541			65,898			203,780			197,456			79,645			81,237
Legal collection expenses	27,626			33,447			90,556			97,476
Legal collection fees													13,059			10,669
Legal collection costs													35,229			22,243
Agency fees	7,599			12,034			27,653			34,227			14,032			8,278
Outside fees and services	15,631			14,731			46,977			46,415			15,248			14,158
Communication	8,713			7,814			25,104			26,119			13,201			11,557
Rent and occupancy	3,668			3,875			10,838			11,709			4,363			4,314
Depreciation and amortization	4,841			6,184			15,097			18,339			4,572			4,929
Other operating expenses	10,140			10,513			32,071			32,443			11,585			12,184
Total operating expenses	146,759			154,496			452,076			464,184			190,934			169,569
Income from operations	54,251			67,488			155,824			211,138			48,848			53,614
Other income and (expense):
Gain on sale of subsidiaries	307			—			48,474			—
Interest expense, net	(25,899		)	(19,310		)	(69,662		)	(59,838		)	(33,981		)	(25,781		)
Foreign exchange (loss)/gain	(1,084		)	5,004			(1,421		)	5,183
Foreign exchange gain													6,264			1,293
Other													(352		)	243
Income before income taxes	27,575			53,182			133,215			156,483			20,779			29,369
Provision for income taxes	10,682			16,664			52,857			50,244
Income tax expense													3,867			6,137
Net income	16,893			36,518			80,358			106,239			16,912			23,232
Adjustment for net income attributable to noncontrolling interest	1,338			2,212			4,963			3,494
Adjustment for net income attributable to noncontrolling interests													1,685			2,126
Net income attributable to PRA Group, Inc.	$	15,555		$	34,306		$	75,395		$	102,745		$	15,227		$	21,106
Net income per common share attributable to PRA Group, Inc.:
Basic	$	0.34		$	0.74		$	1.64		$	2.22		$	0.34		$	0.47
Diluted	$	0.34		$	0.74		$	1.64		$	2.21		$	0.34		$	0.47
Weighted average number of shares outstanding:
Basic	45,168			46,343			45,838			46,307			45,338			45,231
Diluted	45,286			46,434			45,991			46,403			45,419			45,370

The accompanying notes are an integral part of these consolidated financial statements.

PRA Group, Inc.

Consolidated Statements of Comprehensive Income/(Loss)

For the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018

(unaudited)

(Amounts in thousands)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net income $ 16,893
$ 36,518
$ 80,358
$ 106,239
Other comprehensive income:
Change in foreign currency translation 39,548
13,721
81,393
37,435
Total comprehensive income 56,441
50,239
161,751
143,674
Comprehensive income attributable to noncontrolling interest:
Net income attributable to noncontrolling interest 1,338
2,212
4,963
3,494
Change in foreign currency translation 1,730
(324 ) (4,156 ) 8,462
Comprehensive income attributable to noncontrolling interest 3,068
1,888
807
11,956
Comprehensive income attributable to PRA Group, Inc. $ 53,373
$ 48,351
$ 160,944
$ 131,718



	Three Months Ended March 31,
	2019			2018
Net income	$	16,912		$	23,232
Less net income attributable to noncontrolling interests	1,685			2,126
Net income attributable to PRA Group, Inc.	15,227			21,106
Other comprehensive (loss)/income, net of tax:
Currency translation adjustments	(1,173		)	29,941
Cash flow hedges	(5,715		)	—
Debt securities available-for-sale	45			—
Other comprehensive (loss)/income	(6,843		)	29,941
Less other comprehensive (loss)/income attributable to noncontrolling interests	(431		)	7,021
Other comprehensive (loss)/income attributable to PRA Group, Inc.	(6,412		)	22,920
Comprehensive income attributable to PRA Group, Inc.	$	8,815		$	44,026

The accompanying notes are an integral part of these consolidated financial statements.

PRA Group, Inc.

Consolidated Statement of Changes in Equity

For the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and 2018

(unaudited)

(Amounts in thousands)

Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Noncontrolling Interest Total Equity
Shares Amount
Balance at December 31, 2016 46,356
$ 464
$ 66,414
$ 1,049,367
$ (251,944 ) $ 52,862
$ 917,163
Components of comprehensive income:
Net income —
—
—
75,395
—
5,962
81,357
Foreign currency translation adjustment —
—
—
—
85,547
(4,379 ) 81,168
Distributions paid to noncontrolling interest —
—
—
—
—
(1,429 ) (1,429 )
Equity component of convertible debt —
—
44,910
—
—
—
44,910
Deferred taxes on equity component of convertible debt —
—
(18,213 ) —
—
—
(18,213 )
Vesting of nonvested shares 125
1
(1 ) —
—
—
—
Repurchase and cancellation of common stock (1,312 ) (13 ) (44,896 ) —
—
—
(44,909 )
Amortization of share-based compensation —
—
6,263
—
—
—
6,263
Employee stock relinquished for payment of taxes —
—
(2,428 ) —
—
—
(2,428 )
Balance at September 30, 2017 45,169
$ 452
$ 52,049
$ 1,124,762
$ (166,397 ) $ 53,016
$ 1,063,882



	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss)			Noncontrolling Interest			Total Equity
	Shares	Amount		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss)			Noncontrolling Interest			Total Equity
Balance at December 31, 2018	45,304	$	453	$	60,303		$	1,276,473		$	(242,109	)	$	28,849		$	1,123,969
Components of comprehensive income, net of tax:
Net income	—	—		—			15,227			—			1,685			16,912
Currency translation adjustments	—	—		—			—			(742		)	(431		)	(1,173		)
Cash flow hedges	—	—		—			—			(5,715		)	—			(5,715		)
Debt securities available-for-sale	—	—		—			—			45			—			45
Distributions to noncontrolling interest	—	—		—			—			—			(6,877		)	(6,877		)
Contributions from noncontrolling interest	—	—		—			—			—			89			89
Vesting of restricted stock	80	1		(1		)	—			—			—			—
Share-based compensation expense	—	—		2,314			—			—			—			2,314
Employee stock relinquished for payment of taxes	—	—		(1,437		)	—			—			—			(1,437		)
Other	—	—		(2,088		)	—			—			—			(2,088		)
Balance at March 31, 2019	45,384	$	454	$	59,091		$	1,291,700		$	(248,521	)	$	23,315		$	1,126,039

Balance at December 31, 2017	45,189	$	452	$	53,870		$	1,214,840		$	(178,607	)	$	50,162		$	1,140,717
Cumulative effect of change in accounting principle - equity securities ⁽¹⁾	—	—		—			(3,930		)	—			—			(3,930		)
Balance at January 1, 2018	45,189	452		53,870			1,210,910			(178,607		)	50,162			1,136,787
Components of comprehensive income:
Net income	—	—		—			21,106			—			2,126			23,232
Currency translation adjustments	—	—		—			—			22,920			7,021			29,941
Distributions to noncontrolling interest	—	—		—			—			—			(11,807		)	(11,807		)
Vesting of restricted stock	86	1		(1		)	—			—			—			—
Share-based compensation expense	—	—		2,415			—			—			—			2,415
Employee stock relinquished for payment of taxes	—	—		(2,013		)	—			—			—			(2,013		)
Balance at March 31, 2018	45,275	$	453	$	54,271		$	1,232,016		$	(155,687	)	$	47,502		$	1,178,555

(1) Relates to the adoption of FASB ASU 2016-01, "Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities" ("ASU 2016-01"). Refer to Note 3 for further detail.

The accompanying notes are an integral part of these consolidated financial statements.

PRA Group, Inc.

Consolidated Statements of Cash Flows

For the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018

(unaudited)

(Amounts in thousands)


	Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2019			2018
Cash flows from operating activities:
Net income	$	80,358		$	106,239		$	16,912		$	23,232
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of share-based compensation	6,263			9,468
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
Share-based compensation expense							2,314			2,415
Depreciation and amortization	15,097			18,339			4,572			4,929
Gain on sale of subsidiaries	(48,474		)	—
Amortization of debt discount and issuance costs	12,828			7,450			5,678			5,430
Deferred tax benefit	(49,974		)	(724		)	(9,994		)	(10,138		)
Net foreign currency transaction loss/(gain)	1,303			(5,489		)
Other	(3,113		)	—
Net unrealized foreign currency transaction (gain)							(6,632		)	(467		)
Fair value in earnings for equity securities							(2,139		)	(409		)
Net allowance charges							6,095			925
Changes in operating assets and liabilities:
Other assets	(274		)	3,531			550			(5,787		)
Other receivables, net	1,342			7,181			(1,289		)	1,536
Accounts payable	1,242			(1,479		)	(548		)	(2,749		)
Income taxes payable, net	(10,692		)	(13,832		)	(13,040		)	9,984
Accrued expenses	(7,198		)	(12,344		)	1,553			(1,058		)
Other liabilities	(9,628		)	565			10,888			6,799
Net cash (used in)/provided by operating activities	(10,920		)	118,905
Other, net							37			—
Net cash provided by operating activities							14,957			34,642
Cash flows from investing activities:
Purchases of property and equipment	(10,054		)	(11,542		)	(4,493		)	(7,917		)
Acquisition of finance receivables, net of buybacks	(718,553		)	(697,794		)
Acquisition of finance receivables							(264,632		)	(165,913		)
Collections applied to principal on finance receivables	553,713			530,081			222,335			207,956
Business acquisitions, net of cash acquired	—			(66,961		)
Business acquisition, net of cash acquired							(57,610		)	—
Proceeds from sale of subsidiaries, net	93,304			—			31,177			—
Purchase of investments	(3,569		)	(380		)	(82,616		)	(13,924		)
Proceeds from sales and maturities of investments	7,482			10,299			42,940			96
Net cash used in investing activities	(77,677		)	(236,297		)
Net cash (used in)/provided by investing activities							(112,899		)	20,298
Cash flows from financing activities:
Proceeds from lines of credit	905,841			858,368			537,891			101,015
Principal payments on lines of credit	(1,392,176		)	(895,161		)	(132,486		)	(147,980		)
Repurchases of common stock	(44,909		)	—
Tax withholdings related to share-based payments	(2,428		)	(2,478		)	(1,437		)	(2,013		)
Distributions paid to noncontrolling interest	(1,429		)	(934		)	(6,877		)	(12,464		)
Principal payments on long-term debt	(12,515		)	(187,264		)
Proceeds from long-term debt	310,000			297,893
Payments of debt issuance costs	(18,240		)	(17,526		)
Net increase in interest-bearing deposits	10,140			40,198
Proceeds from convertible debt	345,000			—
Net cash provided by financing activities	99,284			93,096
Principal payments on notes payable and long-term debt							(305,665		)	(2,502		)
Payments of origination costs and fees							—			(380		)
Net increase/(decrease) in interest-bearing deposits							16,126			(6,314		)
Other							(2,088		)	—
Net cash provided by/(used in) financing activities							105,464			(70,638		)
Effect of exchange rate on cash	8,780			44,715			(4,115		)	(3,400		)
Net increase in cash and cash equivalents	19,467			20,419
Net increase/(decrease) in cash and cash equivalents							3,407			(19,098		)
Cash and cash equivalents, beginning of period	94,287			71,372			98,695			120,516
Cash and cash equivalents, end of period	$	113,754		$	91,791		$	102,102		$	101,418
Supplemental disclosure of cash flow information:
Cash paid for interest	$	60,229		$	49,492		$	25,479		$	22,833
Cash paid for income taxes	114,603			59,164			27,293			12,175

The accompanying notes are an integral part of these consolidated financial statements.

PRA Group, Inc.

Notes to Consolidated Financial Statements

1. Organization and Business:

As used herein, the terms "PRA Group," "the Company," or similar terms refer to PRA Group, Inc. and its subsidiaries.

PRA Group, Inc., a Delaware corporation, ~~and its subsidiaries,~~ is a global financial and business services company with operations in the Americas and Europe. The Company's primary business is the purchase, collection and management of portfolios of nonperforming loans. The Company also provides ~~the following~~ fee-based ~~services:~~services on class action claims ~~recovery services~~recoveries and ~~purchases;~~by servicing of consumer bankruptcy accounts in the United States ("U.S.")~~; and, to a lesser extent, contingent collections of nonperforming loans in Europe and South America.~~.

The consolidated financial statements of the Company are prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and include the accounts of all of its subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Under the guidance of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 280 "Segment Reporting" ("ASC 280"), the Company has determined that it has several operating segments that meet the aggregation criteria of ASC 280, and, therefore, it has one reportable segment, accounts receivable ~~management,~~management. This conclusion is based on similarities among the operating units, including economic characteristics, the nature of the products and services, the nature of the production processes, the types or class of customer for their products and services, the methods used to distribute their products and services and the nature of the regulatory environment.

The following table shows the amount of revenue generated for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, respectively, and long-lived assets held at ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, respectively, both for the U.S., the Company's country of domicile, and outside of the U.S. (amounts in thousands):



	As of and for the				As of and for the
	Three Months Ended March 31, 2019				Three Months Ended March 31, 2018
	Revenues		Long-Lived Assets		Revenues		Long-Lived Assets
United States	$	167,576	$	110,643	$	153,402	$	46,439
United Kingdom	29,756		3,993		24,726		2,225
Other ⁽¹⁾	48,545		10,377		45,980		5,124
Total	$	245,877	$	125,013	$	224,108	$	53,788

As Of And For The As Of And For The
Three Months Ended September 30, 2017 Three Months Ended September 30, 2016
Revenues Long-Lived Assets Revenues Long-Lived Assets
United States $ 137,323
$ 28,585
$ 153,114
$ 33,898
Outside the United States 63,687
7,843
68,870
10,456
Total $ 201,010
$ 36,428
$ 221,984
$ 44,354

As Of And For The As Of And For The
Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
Revenues Long-Lived Assets Revenues Long-Lived Assets
United States $ 415,761
$ 28,585
$ 489,260
$ 33,898
Outside the United States 192,139
7,843
186,062
10,456
Total $ 607,900
$ 36,428
$ 675,322
$ 44,354
(1) None of the countries included in "Other" comprise greater than 10% of the Company's consolidated revenues or long-lived assets.

Revenues are attributed to countries based on the location of the related operations. Long-lived assets consist of net property and ~~equipment.~~equipment and right-of-use assets. The Company reports revenues earned from ~~its debt~~nonperforming loan purchasing and collection activities, fee-based services and its ~~fee-based services.~~investments. It is impracticable for the Company to report further breakdowns of revenues from external customers by product or service.

The accompanying interim financial statements have been prepared in accordance with the instructions for Quarterly Reports on Form 10-Q and, therefore, do not include all information and notes to the consolidated financial statements necessary for a complete presentation of financial position, results of operations, comprehensive ~~income~~income/(loss) and cash flows in conformity with GAAP. In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the Company's consolidated balance sheet as of ~~September 30, 2017,~~March 31, 2019, its consolidated income statements and statements of comprehensive income/(loss) for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, its consolidated statement of changes in equity for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019 and 2018, and its consolidated statements of cash flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, have been included. The consolidated income statements of the Company for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 may not be indicative of future results.

Certain prior year period amounts have been reclassified for consistency with the current period presentation. The Company revised the presentation of its consolidated income statements for the prior year period by reclassifying allowance adjustments to the valuation of its finance receivables as a line item separate from revenues. The Company also revised the presentation in its consolidated statement of cash flows for the prior year period by reclassifying allowance charges on its finance receivables from investing activities to operating activities.These presentation changes had no other impacts on the Company's consolidated financial statements.

These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's ~~2016~~ Annual Report on Form 10-K for the year ended December 31, ~~2016, filed with the Securities and Exchange Commission on March 1, 2017.~~2018 (the "2018 Form 10-K").

PRA Group, Inc.

Notes to Consolidated Financial Statements

2. Finance Receivables, net:

Changes in finance receivables, net for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 were as follows (amounts in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2019				2018
Balance at beginning of period	$	2,520,883		$	2,399,949		$	2,307,969		$	2,202,113		$	3,084,777			$	2,776,199
Acquisitions of finance receivables ⁽¹⁾	203,052			159,546			716,586			741,402			313,446				165,020
Foreign currency translation adjustment	38,482			1,974			106,989			(21,026		)	7,436				39,070
Cash collections applied to principal and net allowance charges	(184,586		)	(169,061		)	(553,713		)	(530,081		)
Cash collections													(461,171		)		(426,580		)
Income recognized on finance receivables													238,836			��	218,624
Net allowance charges													(6,095		)		(925		)
Balance at end of period	$	2,577,831		$	2,392,408		$	2,577,831		$	2,392,408		$	3,177,229			$	2,771,408

(1)

Acquisitions of finance receivables are portfolio purchases that are net of buybacks and include certain capitalized acquisition related costs. They also include the ~~acquisition date~~ finance ~~receivables~~receivable portfolios that are acquired in connection with certain business acquisitions. The buybacks and capitalized acquisition costs are netted against the acquisition of finance receivables when paid and may relate to portfolios purchased in prior periods.

During the three months ended ~~September 30, 2017,~~March 31, 2019, the Company ~~purchased~~acquired finance receivables portfolios with a face value of ~~$1.4~~$4.7 billion for ~~$210.9~~$318.8 million. During the three months ended ~~September 30, 2016,~~March 31, 2018, the Company ~~purchased~~acquired finance receivables portfolios with a face value of ~~$3.0~~$1.5 billion for $161.3 million. During the nine months ended September 30, 2017, the Company purchased finance receivables portfolios with a face value of $5.1 billion for $734.4 million. During the nine months ended September 30, 2016, the Company purchased finance receivables portfolios with a face value of $8.9 billion for $747.5$168.3 million. At ~~September 30, 2017,~~March 31, 2019, the estimated remaining collections ("ERC") on the receivables ~~purchased~~acquired during the three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 were ~~$333.2~~$541.1 million and ~~$208.5~~$232.9 million, respectively. At September 30, 2017, the ERC on the receivables purchased during the nine months ended September 30, 2017 and 2016 were $1.1 billion and $975.4 million, respectively. At September 30, 2017 and 2016, total ERC was $5.4 billion and $5.3 billion, respectively.

At the time of acquisition and each quarter thereafter, the life of each quarterly accounting pool is estimated based on projected amounts and timing of future cash ~~collections.~~collections using the proprietary models of the Company. Based upon current projections, cash collections expected to be applied to principal ~~on finance receivables as of September 30, 2017~~ are estimated to be as follows for the ~~12 months in the~~twelve-month periods ending ~~September 30,~~March 31, (amounts in thousands):


2018	$	734,967
2019	585,527
2020	454,002		$	850,955
2021	366,386		718,010
2022	230,393		562,256
2023	110,818		426,004
2024	42,604		258,793
2025	24,762		137,843
2026	17,871		77,642
2027	10,501		47,138
2028			38,084
2029			28,474
Thereafter			32,030
Total ERC expected to be applied to principal	$	2,577,831	$	3,177,229

At ~~September 30, 2017,~~March 31, 2019, the Company had aggregate net finance receivables balances in pools accounted for under the cost recovery method of ~~$109.3~~$43.5 million; at December 31, ~~2016,~~2018, the amount was ~~$105.5~~$48.0 million.

Accretable yield represents the amount of income ~~recognized~~ on finance receivables the Company can expect to ~~generate~~recognize over the remaining life of its existing portfolios based on estimated future cash flows as of the balance sheet date. Additions represent the original expected accretable yield on portfolios purchased during the period to be earned by the ~~Company.~~Company based on its proprietary analytical models. Net reclassifications from nonaccretable difference to accretable yield primarily result from the increase in the Company's estimate of future cash flows. When applicable, net reclassifications to nonaccretable difference from accretable yield result from the decrease in the Company's estimates of future cash flows and allowance charges that together exceed the increase in the Company's estimate of future cash flows.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Changes in accretable yield for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 were as follows (amounts in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2019			2018
Balance at beginning of period	$	2,803,590		$	2,931,426		$	2,740,006		$	2,727,204		$	3,058,445		$	2,927,866
Income recognized on finance receivables, net	(197,248		)	(202,639		)	(582,626		)	(613,154		)
Additions	127,829			121,643			477,018			581,583
Income recognized on finance receivables													(238,836		)	(218,624		)
Net allowance charges													6,095			925
Additions from portfolio purchases ⁽¹⁾													235,814			146,832
Reclassifications from nonaccretable difference	68,715			5,936			93,343			95,904			19,161			112,028
Foreign currency translation adjustment	43,231			673			118,376			65,502			(511		)	37,241
Balance at end of period	$	2,846,117		$	2,857,039		$	2,846,117		$	2,857,039		$	3,080,168		$	3,006,268

(1) Also includes accretable yield additions resulting from certain business acquisitions.

The following is a summary of activity within the Company's valuation allowance account, all of which relates to ~~loans~~ acquired ~~with deteriorated credit quality,~~nonperforming loans, for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 (amounts in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2019			2018
Beginning balance	$	218,775		$	136,752		$	211,465		$	114,861		$	257,148		$	225,555
Allowance charges	3,824			14,246			9,973			37,686			7,977			6,833
Reversal of previously recorded allowance charges	(412		)	(1,100		)	(561		)	(1,722		)	(1,882		)	(5,908		)
Net allowance charges	3,412			13,146			9,412			35,964			6,095			925
Foreign currency translation adjustment	678			(328		)	1,988			(1,255		)	81			495
Ending balance	$	222,865		$	149,570		$	222,865		$	149,570		$	263,324		$	226,975

3. Investments:

Investments ~~consist~~consisted of the following at ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016~~2018 (amounts in thousands):

September 30, 2017 December 31, 2016
Available-for-sale
Government bonds and mutual funds $ 3,769
$ 2,138
Held-to-maturity
Securitized assets 57,031
51,407
Other investments
Private equity funds 14,712
14,998
Total investments $ 75,512
$ 68,543



	March 31, 2019		December 31, 2018
Debt securities
Available-for-sale	$	5,088	$	5,077
Equity securities
Private equity funds	7,498		7,973
Mutual funds	62,192		21,753
Equity method investments	10,304		10,370
Total investments	$	85,082	$	45,173

~~Available-for-Sale~~Debt Securities

Available-for-sale

Government bonds ~~and mutual funds~~: The Company's investments in government bonds ~~and mutual funds~~ are classified as available-for-sale and are stated at fair value. Fair value is determined using quoted market prices. Unrealized gains and losses are included in comprehensive income and reported in equity.

~~Held-to-Maturity~~

~~Investments in securitized assets~~: The Company holds a majority interest in a closed-end Polish investment fund. The certificates, which provide a preferred return based on the expected net income of the portfolios, are accounted for as a beneficial interest in securitized financial assets and stated at amortized cost. The Company has determined it has the ability and intent to hold these certificates until maturity, which occurs when the fund terminates or liquidates its assets. The preferred return is not a guaranteed return. Income is recognized under FASB ASC Topic 325-40, "Beneficial Interest in Securitized Financial Assets" ("ASC 325-40"). Prior to April 1, 2017, income was recognized using the effective yield method. Effective April 1, 2017, the Company determined that it could not reasonably forecast the timing of future cash flows and accordingly began using the cost recovery method to recognize income.

PRA Group, Inc.

Notes to Consolidated Financial Statements

The ~~underlying~~amortized cost and estimated fair value of investments in debt securities ~~have both known principal repayment terms~~at March 31, 2019 and December 31, 2018 were as well as unknown principal repayments due to potential borrower pre-payments. Accordingly, it is difficult to accurately predict the final maturity date of these investments. Revenues recognized on these investments are recordedfollows (amounts in Other Revenue in the consolidated income statements. During the three and nine months ended September 30, 2017, revenues recognized on these investments were $0 and $1.3 million, respectively. During the three and nine months ended September 30, 2016, revenues recognized on these investments were $1.5 million and $4.7 million, respectively.thousands):

~~Other Investments~~



	March 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value
Available-for-sale
Government bonds	$	5,126	$	—	$	38	$	5,088

	December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value
Available-for-sale
Government bonds	$	5,160	$	—	$	83	$	5,077

Equity Securities

Investments in private equity ~~funds~~funds:: Investments in private equity funds represent limited partnerships in which the Company has less than a 3% ~~interest~~interest. In the first quarter of 2018, the Company adopted ASU 2016-01, "Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities" ("ASU 2016-01"), which requires that investments in equity securities be measured at fair value with changes in unrealized gains and losses reported in earnings. Upon adoption of ASU 2016-01, the investments are carried at ~~cost. Distributions received from~~ the ~~partnerships are included~~fair value reported by the Fund manager. The Company recorded a cumulative effect adjustment of $3.9 million, net of tax, to beginning retained earnings for the unrealized loss on the investments. Prior to 2018, the investments were carried at cost with income recognized in Other Revenue in the consolidated income ~~statements. Distributions~~statements when distributions, up to reported income, were received from the partnerships.

Mutual funds: The Company invests certain excess funds held in ~~excess~~Brazil in a Brazilian real denominated mutual fund benchmarked to the US dollar that invests principally in Brazilian fixed income securities. The investments are carried at fair value based on quoted market prices.

Unrealized gains and losses: Net unrealized gains were $2.1 million and $0.4 million for the three months ended March 31, 2019 and 2018, respectively, on its equity securities.

Equity Method Investments

Effective December 20, 2018, the Company has a 11.7% interest in RCB Investimentos S.A. ("RCB"), a servicing platform for nonperforming loans in Brazil. This investment is accounted for on the equity method because the Company exercises significant influence over RCB’s operating and financial activities. Accordingly, the Company’s investment in RCB is adjusted for the Company’s proportionate share of RCB’s earnings or losses.

4. Goodwill and Intangible Assets, net:

In connection with the Company's business acquisitions, the Company acquired certain tangible and intangible assets. Intangible assets resulting from these acquisitions include client and customer relationships, non-compete agreements, trademarks and technology. The Company performs a review of goodwill as of October 1 of each year or more frequently if indicators of impairment exist.

PRA Group, Inc.

Notes to Consolidated Financial Statements

The following table represents the changes in goodwill for the three months ended March 31, 2019 and 2018 (amounts in thousands):



	Three Months Ended March 31,
	2019		2018
Balance at beginning of period:
Goodwill	$	464,116	$	526,513
Accumulated impairment loss	—		—
	464,116		526,513
Changes:
Acquisition ⁽¹⁾	13,653		—
Foreign currency translation adjustment	2,749		17,780
Net change in goodwill	16,402		17,780

Goodwill	480,518		544,293
Accumulated impairment loss	—		—
Balance at end of period	$	480,518	$	544,293

(1) The $13.7 million addition to goodwill during the three months ended March 31, 2019 is the result of the acquisition of a business in Canada.

5. Leases:

In February 2016, FASB issued ASU 2016-02, "Leases (Topic 842) Section A - Leases: Amendments to the FASB Account Standards Codification" ("ASU 2016-02"). ASU 2016-02 requires that a lessee should recognize a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term on the balance sheet. The Company adopted ASU 2016-02 on January 1, 2019 using the alternative method which resulted in the recording of operating lease right-of-use ("ROU") assets and lease liabilities of $72.1 million and $75.8 million, respectively. The Company's balance sheets for reporting periods beginning on or after January 1, 2019 are presented under the new guidance, while prior periods amounts are not adjusted and continue to be reported in accordance with previous guidance.

The Company elected to apply the transition package of practical expedients permitted within the new standard, which among other things, allows it to carryforward the historical lease classification. In addition, the Company elected the practical expedient to exclude short-term leases (lease terms of less than one year) from its ROU assets and lease liabilities.

The Company's operating lease portfolio primarily includes corporate offices and call centers. The majority of its leases have remaining lease terms of 1 year to 20 years, some of which include options to extend the leases for 5 years, and others include options to terminate the leases within 1 year. The exercise of lease renewal options is typically at the Company's sole discretion and are included in its ROU assets and lease liabilities based upon whether the Company is reasonably certain of exercising the renewal options. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As most of the Company's ~~proportionate share of accumulated earnings are applied as a reduction~~leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the ~~cost~~lease payments. The Company used its incremental borrowing rate as of January 1, 2019 to calculate the present value of the ~~investment. The aggregate carrying amount~~lease payments of ~~cost-method investments~~its existing leases at adoption.

The components of lease expense for ~~which cost exceeded fair value but for which an impairment loss was not recognized was $14.7 million and $15.0 million at~~ ~~September 30, 2017~~ ~~and December 31, 2016, respectively. We evaluate the investments based on our estimated allocable share of the expected remaining cash flows of the funds as reported by the investment manager.~~ ~~Distributions received from these investments were $1.2 million and $5.1 million during~~ the three ~~and nine~~ months ended ~~September 30, 2017, respectively. Distributions received from these investments were $0.0 million and $0.6 million during the three and nine months ended September 30, 2016, respectively.~~

~~The amortized cost and estimated fair value of available-for sale and held-to-maturity investments at September 30, 2017 and December~~March 31, ~~2016~~2019 were as follows (amounts in thousands):

September 30, 2017
Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value
Available-for-sale
Government bonds and mutual funds $ 3,783
$ 37
$ 51
$ 3,769
Held-to-maturity
Securitized assets 57,031
—
14,471
42,560

December 31, 2016
Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value
Available-for-sale
Government bonds and mutual funds $ 2,161
$ —
$ 23
$ 2,138
Held-to-maturity
Securitized assets 51,407
4,147
—
55,554



	Three Months Ended March 31, 2019
Operating lease cost	$	2,863
Short-term lease cost	842
Total lease cost	$	3,705

PRA Group, Inc.

Notes to Consolidated Financial Statements

Supplemental cash flow information related to leases for the three months ended March 31, 2019 were as follows (amounts in thousands):



	Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,780

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	76,175

Lease term and discount rate information related to leases were as follows as of the dates indicated (amounts in thousands):



	March 31, 2019
Weighted-average remaining lease term (years)
Operating leases	11
Weighted-average discount rate
Operating leases	4.95	%

Maturities of lease liabilities are as follows for the following periods (amounts in thousands):



	Operating Leases
For the Nine Months Ended December 31, 2019	$	8,415
For the Year Ended December 31, 2020	11,183
For the Year Ended December 31, 2021	10,660
For the Year Ended December 31, 2022	8,797
For the Year Ended December 31, 2023	6,667
Thereafter	52,275
Total lease payments	97,997
Less imputed interest	(23,689		)
Total	$	74,308

As previously disclosed in the 2018 Form 10-K and under the previous lease accounting standard (which excludes the impact of the Company's intent to exercise renewal options as required by ASU 2016-02), future minimum lease payments for operating leases at December 31, 2018, are as follows for the years ending December 31, (amounts in thousands):



2019	$	11,470
2020	11,451
2021	10,809
2022	7,287
2023	6,189
Thereafter	7,866
Total future minimum lease payments	$	55,072

4.PRA Group, Inc.

Notes to Consolidated Financial Statements

6. Borrowings:

The Company's borrowings consisted of the following as of the dates indicated (amounts in thousands):

September 30, 2017 December 31, 2016
North American revolving credit $ 275,432
$ 695,088
Term loans 762,902
430,764
European revolving credit 373,758
401,780
Convertible senior notes 632,500
287,500
Less: Debt discount and issuance costs (81,088 ) (31,031 )
Total $ 1,963,504
$ 1,784,101

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~



	March 31, 2019			December 31, 2018
Revolving credit	$	1,571,749		$	1,160,161
Term loans	432,500			740,551
Convertible senior notes	632,500			632,500
	2,636,749			2,533,212
Less: Debt discount and issuance costs	(50,340		)	(59,556		)
Total	$	2,586,409		$	2,473,656

The following principal payments are due on the Company's borrowings as of ~~September 30, 2017~~March 31, 2019 for the ~~12 month~~12-month periods ending ~~September 30,~~March 31, (amounts in thousands):


2018	$	10,000
2019	10,000
2020	297,500		$	10,000
2021	699,160		1,203,005
2022	682,932		10,000
2023			1,068,744
2024			345,000
Thereafter	345,000		—
Total	$	2,044,592	$	2,636,749

The Company believes it was in compliance with the covenants of its ~~material~~ financing arrangements as of ~~September 30, 2017 and December~~March 31, ~~2016.~~2019.

North American Revolving Credit and Term Loan

On May 5, 2017, the Company amended and restated its existing credit agreement (as amended, and modified from time to time, the “North American Credit Agreement”) with Bank of America, N.A., as administrative agent, Bank of America, National Association, acting through its Canada branch, as the Canadian administrative agent, and a syndicate of lenders named therein. The total credit facility under the North American Credit Agreement includes an aggregate principal amount of ~~$1.2~~$1.6 billion (subject to compliance with a borrowing base and applicable debt covenants), which consists of (i) a fully-funded ~~$447.5~~$432.5 million term loan, (ii) a ~~$705.0~~$1,068.0 million domestic revolving credit facility, and (iii) a $50.0 million Canadian revolving credit facility. The facility includes an accordion feature for up to ~~$45.0~~$500.0 million in additional commitments (at the option of the lender) and also provides for up to $25.0 million of letters of credit and a $25.0 million swingline loan sublimit that would reduce amounts available for borrowing. The term and revolving loans accrue interest, at the option of the Company, at either the base rate or the Eurodollar rate (as defined in the North American Credit Agreement) for the applicable term plus 2.50% per annum in the case of the Eurodollar rate loans and 1.50% in the case of the base rate loans. The base rate is the highest of (a) the Federal Funds Rate (as defined in the North American Credit Agreement) plus 0.50%, (b) Bank of America's prime rate, or (c) the ~~one month~~one-month Eurodollar rate plus 1.00%. Canadian Prime Rate Loans will bear interest at a rate per annum equal to the Canadian Prime Rate plus 1.50%. The revolving credit facilities also bear an unused line fee of 0.375% per annum, payable quarterly in arrears. The loans under the North American Credit Agreement mature ~~as of~~ May 5, 2022. As of ~~September 30, 2017,~~March 31, 2019, the unused portion of the North American Credit Agreement was ~~$479.6~~$451.8 million. Considering borrowing base restrictions, as of ~~September 30, 2017,~~March 31, 2019, the amount available to be drawn was ~~$453.5~~$263.8 million.

The North American Credit Agreement is secured by a first priority lien on substantially all of the Company's North American assets. The North American Credit Agreement contains restrictive covenants and events of default ~~which are defined in the North American Credit Agreement,~~ including the following:

borrowings under each of the domestic revolving loan facility and the Canadian revolving loan facility are subject to separate borrowing base calculations and may not exceed 35% of the ERC of all domestic or Canadian, as applicable, core eligible asset pools, plus 55% of ERC of domestic or Canadian, as applicable, insolvency eligible asset pools, plus 75% of domestic or Canadian, as applicable, eligible accounts receivable;

the consolidated total leverage ratio cannot exceed 2.75 to 1.0 as of the end of any fiscal quarter;

the consolidated senior secured leverage ratio cannot exceed 2.25 to 1.0 as of the end of any fiscal quarter;

subject to no default or event of default, cash dividends and distributions during any fiscal year cannot exceed $20.0 million;

PRA Group, Inc.

Notes to Consolidated Financial Statements

subject to no default or event of default, stock repurchases during any fiscal year cannot exceed $100.0 million plus 50% of the prior year's net income;

permitted acquisitions during any fiscal year cannot exceed $250.0 million (with a $50.0 million per year sublimit for permitted acquisitions by non-loan parties);

indebtedness in the form of senior, unsecured convertible notes or other unsecured financings cannot exceed $750.0 million in the aggregate (without respect to the 2020 Notes (as defined below));

the Company must maintain positive consolidated income from operations during any fiscal quarter; and

restrictions on changes in control.

~~The revolving credit facility also bears an unused line fee of 0.375% per annum, payable quarterly in arrears.~~

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

European Revolving Credit Facility and Term Loan

On October 23, 2014, European subsidiaries of the Company ("PRA Europe") entered into a credit agreement with DNB Bank ASA for a Multicurrency Revolving Credit Facility (such agreement as later amended or modified, the "European Credit Agreement"). In the first quarter of 2019, the Company entered into the Fifth Amendment and Restatement Agreement to its European Credit Agreement which, among other things, merged the term loan facility with the revolving credit facility and increased all applicable margins for the interest payable under the multicurrency revolving credit facility by 5 basis points.

Under the terms of the European Credit Agreement, the credit facility includes an aggregate amount of approximately ~~$1.2~~$1.1 billion (subject to the borrowing base), ~~of which 267.0 million EURO (approximately $315.4 million) is a term loan,~~ accrues interest at the Interbank Offered Rate ("IBOR") plus ~~2.80%-3.90% under the revolving facility and 4.25%-4.50% under the term loan facility~~2.70% - 3.80% (as determined by the loan-to-value ratio ("LTV Ratio") as defined in the European Credit Agreement), bears an unused line fee, currently ~~1.26%~~1.21% per annum, of 35% of the margin, is payable monthly in arrears, and matures on February 19, 2021. The European Credit Agreement also includes an overdraft facility in the aggregate amount of $40.0 million (subject to the borrowing base), which accrues interest (per currency) at the daily rates as published by the facility agent, bears a facility line fee of 0.125% per quarter, payable quarterly in arrears, and ~~also~~ matures February 19, 2021. As of ~~September 30, 2017,~~March 31, 2019, the unused portion of the European Credit Agreement (including the overdraft facility) was ~~$566.2~~$234.5 million. Considering borrowing base restrictions and other covenants, as of ~~September 30, 2017,~~March 31, 2019, the amount available to be drawn under the European Credit Agreement (including the overdraft facility) was ~~$165.4~~$125.0 million.

The European Credit Agreement is secured by the shares of most of the Company's European subsidiaries and all intercompany loan receivables in Europe. The European Credit Agreement also contains restrictive covenants and events of default ~~which are defined in the European Credit Agreement,~~ including the following:

the LTV Ratio cannot exceed 75%;

the gross interest-bearing debt ratio in Europe cannot exceed 3.25 to 1.0 as of the end of any fiscal quarter;

interest bearing deposits in AK Nordic AB cannot exceed SEK ~~1,500,000,000;~~1.2 billion; and

PRA Europe's cash collections must ~~exceed 95% of PRA Europe's ERC for the same set of portfolios,~~meet certain thresholds, measured on a quarterly basis.

Convertible Senior Notes due 2020

On August 13, 2013, the Company completed the private offering of $287.5 million in aggregate principal amount of its 3.00% Convertible Senior Notes due 2020 (the "2020 Notes"). The 2020 Notes were issued pursuant to an Indenture, dated August 13, 2013 (the "2013 Indenture"), between the Company and ~~Wells Fargo~~Regions Bank, ~~National Association,~~ as successor trustee. The 2013 Indenture contains customary terms and covenants, including certain events of default after which the 2020 Notes may be due and payable immediately. The 2020 Notes are senior unsecured obligations of the Company. Interest on the 2020 Notes is payable semi-annually, in arrears, on February 1 and August 1 of each year, beginning on February 1, 2014. Prior to February 1, 2020, the 2020 Notes will be convertible only upon the occurrence of specified events. On or after February 1, 2020, the 2020 Notes will be convertible at any time. The Company does not have the right to redeem the 2020 Notes prior to maturity. As of ~~September 30, 2017 and December~~March 31, ~~2016, none~~2019, the Company does not believe that any of the conditions allowing holders of the 2020 Notes to convert their notes ~~had~~have occurred.

The conversion rate for the 2020 Notes is initially 15.2172 shares per $1,000 principal amount of 2020 Notes, which is equivalent to an initial conversion price of approximately $65.72 per share of the Company's common stock, and is subject to adjustment in certain circumstances pursuant to the 2013 Indenture. Upon conversion, holders of the 2020 Notes will receive cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the Company's election. The Company's ~~current~~ intent is to settle conversions through combination settlement (i.e., the 2020 Notes would be converted into cash up to the aggregate principal amount, and shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the Company's election, for the remainder). As a result and in accordance with authoritative guidance related to derivatives and hedging and earnings per share, only the conversion spread is included in the diluted earnings per share calculation, if dilutive. Under such method, the settlement of the conversion spread has a dilutive effect when the average share price of the Company's common stock during any quarter exceeds $65.72.

PRA Group, Inc.

Notes to Consolidated Financial Statements

The Company determined that the fair value of the 2020 Notes at the date of issuance was approximately $255.3 million, and designated the residual value of approximately $32.2 million as the equity component. Additionally, the Company allocated approximately $7.3 million of the $8.2 million 2020 Notes issuance cost as debt issuance cost and the remaining $0.9 million as equity issuance cost.

Convertible Senior Notes due 2023

On May 26, 2017, the Company completed the private offering of $345.0 million in aggregate principal amount of its 3.50% Convertible Senior Notes due 2023 (the "2023 Notes" and, together with the 2020 Notes, the "Notes"). The 2023 Notes were issued pursuant to an Indenture, dated May 26, 2017 (the "2017 Indenture"), between the Company and Regions Bank, as trustee. The 2017 Indenture contains customary terms and covenants, including certain events of default after which the 2023 Notes may be

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

due and payable immediately. The 2023 Notes are senior unsecured obligations of the Company. Interest on the 2023 Notes is payable semi-annually, in arrears, on June 1 and December 1 of each year, beginning on December 1, 2017. Prior to March 1, 2023, the 2023 Notes will be convertible only upon the occurrence of specified events. On or after March 1, 2023, the 2023 Notes will be convertible at any time. The Company has the right, at its election, to redeem all or any part of the outstanding ~~notes~~2023 Notes at any time on or after June 1, 2021 for cash, but only if the last reported sale price (as defined in the 2017 Indenture) exceeds 130% of the conversion price on each of at least 20 trading days during the 30 consecutive trading days ending on and including the trading day immediately before the date the Company sends the related redemption notice. As of ~~September 30, 2017, none~~March 31, 2019, the Company does not believe that any of the conditions allowing holders of the 2023 Notes to convert their notes ~~had~~have occurred.

The conversion rate for the 2023 Notes is initially 21.6275 shares per $1,000 principal amount of 2023 Notes, which is equivalent to an initial conversion price of approximately $46.24 per share of the Company's common stock, and is subject to adjustment in certain circumstances pursuant to the 2017 Indenture. Upon conversion, holders of the 2023 Notes will receive cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the Company's election. The Company's ~~current~~ intent is to settle conversions through combination settlement (i.e., the 2023 Notes would be converted into cash up to the aggregate principal amount, and shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the Company's election, for the remainder). As a result and in accordance with authoritative guidance related to derivatives and hedging and earnings per share, only the conversion spread is included in the diluted earnings per share calculation, if dilutive. Under such method, the settlement of the conversion spread has a dilutive effect when the average share price of the Company's common stock during any quarter exceeds $46.24.

The Company determined that the fair value of the 2023 Notes at the date of issuance was approximately $298.8 million, and designated the residual value of approximately $46.2 million as the equity component. Additionally, the Company allocated approximately $8.3 million of the $9.6 million 2023 Notes issuance cost as debt issuance cost and the remaining $1.3 million as equity issuance cost.

The balances of the liability and equity components of the Notes outstanding were as follows as of the dates indicated (amounts in thousands):


	September 30, 2017			December 31, 2016			March 31, 2019			December 31, 2018
Liability component - principal amount	$	632,500		$	287,500		$	632,500		$	632,500
Unamortized debt discount	(58,360		)	(17,930		)	(40,769		)	(43,812		)
Liability component - net carrying amount	$	574,140		$	269,570		$	591,731		$	588,688
Equity component	$	76,216		$	31,306		$	76,216		$	76,216

The debt discount is being amortized into interest expense over the remaining life of the 2020 Notes and the 2023 Notes using the effective interest rate, which is 4.92% and 6.20%, respectively.

Interest expense related to the Notes was as follows for the periods indicated (amounts in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2017		2016		2017		2016		2019		2018
Interest expense - stated coupon rate	$	5,175	$	2,156	$	10,695	$	6,468	$	5,175	$	5,175
Interest expense - amortization of debt discount	2,796		1,127		5,760		3,336		3,042		2,877
Total interest expense - convertible senior notes	$	7,971	$	3,283	$	16,455	$	9,804	$	8,217	$	8,052

PRA Group, Inc.

~~5. Goodwill~~Notes to Consolidated Financial Statements

7. Derivatives:

The Company periodically enters into derivative financial instruments, typically interest rate swap agreements, interest rate caps, and ~~Intangible Assets, net:~~

~~In connection~~foreign currency contracts to reduce its exposure to fluctuations in interest rates on variable-rate debt and foreign currency exchange rates. The Company does not utilize derivative financial instruments with a level of complexity or with a risk greater than the exposure to be managed nor does it enter into or hold derivatives for trading or speculative purposes. The Company periodically reviews the creditworthiness of the swap counterparty to assess the counterparty’s ability to honor its obligation. Counterparty default would expose the Company to fluctuations in interest and currency rates. Derivative financial instruments are recognized at fair value in the consolidated balance sheets, in accordance with the ~~Company's business acquisitions,~~guidance of ASC Topic 815 “Derivatives and Hedging” (“ASC 815”).

The following table summarizes the ~~Company acquired certain tangible~~fair value of derivative instruments in the consolidated balance sheets (amounts in thousands):

March 31, 2019

December 31, 2018

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments:

Interest rate contracts

Other liabilities

7,390

Other assets

Derivatives not designated as hedging instruments:

Foreign currency contracts

Other assets

950

Other assets

2,555

Foreign currency contracts

Other liabilities

748

Other liabilities

—

Interest rate contracts

Other assets

791

Other assets

735

Interest rate contracts

Other liabilities

415

Other liabilities

—

Derivatives designated as hedging instruments:

Changes in fair value of derivative contracts designated as cash flow hedging instruments are recognized in other comprehensive income ("OCI"). As of March 31, 2019 and ~~intangible assets. Intangible assets resulting from these acquisitions include client~~December 31, 2018, the notional amount of interest rate contracts designated as cash flow hedging instruments was $661.9 million and ~~customer relationships, non-compete agreements, trademarks~~$260.8 million, respectively. Derivatives designated as cash flow hedging instruments were evaluated and ~~technology.~~remain highly effective at March 31, 2019. The Company ~~performs an annual review~~estimates that approximately $1.2 million of ~~goodwill~~net derivative gain (loss) included in OCI will be reclassified into earnings within the next 12 months.

The following table summarizes the effects of derivatives designated as cash flow hedging instruments on the consolidated financial statements for the three months ended March 31, 2019 and 2018 (amounts in thousands):



	Gain or (loss) recognized in OCI, net of tax						Gain or (loss) reclassified from OCI into income
	Three Months Ended March 31,						Three Months Ended March 31,
Derivatives designated as cash flow hedging instruments	2019			2018		Location of gain or (loss) reclassified from OCI into income	2019			2018
Interest rate contracts	$	(5,795	)	$	—	Interest expense, net	$	(80	)	$	—

Derivatives not designated as hedging instruments:

Changes in fair value of ~~October 1~~derivative contracts not designated as hedging instruments are recognized in earnings. As of ~~each year or more frequently if indicators~~March 31, 2019 and December 31, 2018, the notional amount of ~~impairment exist.~~interest rate contracts not designated as hedging instruments was $172.3 million and $169.7 million, respectively. The Company also enters into foreign currency contracts to economically hedge the foreign currency re-measurement exposure related to certain balances that are denominated in currencies other than the functional currency of the entity. As of March 31, 2019 and December 31, 2018, the notional amount of foreign currency contracts that are not designated as hedging instruments was $359.0 million and $144.7 million, respectively.

PRA Group, Inc.

Notes to Consolidated Financial Statements

The following table ~~represents~~summarizes the ~~changes in goodwill~~effects of derivatives not designated as hedging instruments on the Company’s consolidated income statements for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 (amounts in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Balance at beginning of period:
Goodwill $ 516,165
$ 550,734
$ 506,308
$ 501,553
Accumulated impairment loss —
(6,397 ) (6,397 ) (6,397 )
516,165
544,337
499,911
495,156
Changes:
Acquisitions —
1,193
—
28,711
Foreign currency translation adjustment 22,172
14,975
38,426
36,638
Net change in goodwill 22,172
16,168
38,426
65,349

Goodwill 538,337
566,902
538,337
566,902
Accumulated impairment loss —
(6,397 ) —
(6,397 )
Balance at end of period: $ 538,337
$ 560,505
$ 538,337
$ 560,505

The change in accumulated impairment loss during the nine months ended September 30, 2017, is related to the June 2017 sale of PRA Location Services, LLC ("PLS"), the goodwill of which was fully impaired during 2013.

The $1.2 million addition to goodwill during the three months ended September 30, 2016, was attributable to an immaterial acquisition. The goodwill recognized from this acquisition is expected to be deductible for tax purposes.

The $28.7 million addition to goodwill during the nine months ended September 30, 2016, was mainly attributable to the acquisition of DTP S.A. ("DTP") during the second quarter of 2016 and the acquisition of Recovery Management Systems Corporation ("RMSC") in the first quarter of 2016. The goodwill recognized from the DTP acquisition is not expected to be deductible for tax purposes while the goodwill recognized from the RMSC acquisition is expected to be deductible for tax purposes.



		Amount of gain or (loss) recognized in income
		Three Months Ended March 31,
Derivatives not designated as hedging instruments	Location of gain or (loss) recognized in income	2019			2018
Foreign currency contracts	Foreign exchange gain/(loss)	$	(5,256	)	$	—
Interest rate contracts	Interest expense, net	(349		)	$	3,673

~~6. Income Taxes:~~8. Fair Value:

As defined by ASC Topic 820, "Fair Value Measurements and Disclosures" ("ASC 820"), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 requires the consideration of differing levels of inputs in the determination of fair values.

Those levels of input are summarized as follows:

Level 1: Quoted prices in active markets for identical assets and liabilities.

Level 2: Observable inputs other than Level 1 quoted prices, such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3: Unobservable inputs that are supported by little or no market activity. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques as well as instruments for which the determination of fair value requires significant management judgment or estimation.

The ~~Company follows~~level in the ~~guidance~~fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

Financial Instruments Not Required to be Carried at Fair Value

In accordance with the disclosure requirements of ~~FASB~~ ASC Topic ~~740 "Income Taxes"~~825, "Financial Instruments" ("ASC ~~740"~~825") ~~as it relates to~~, the ~~provision for income taxes and uncertainty in income taxes. The guidance prescribes a recognition threshold and measurement attribute~~table below summarizes fair value estimates for the Company's financial ~~statement recognition and measurement of a tax position taken or expected~~instruments that are not required to be ~~taken in a tax return.~~carried at fair value. The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying value of the Company.

~~For tax purposes,~~The carrying amounts of the Company utilized the cost recovery method of accounting through December 31, 2016. Under the cost recovery method, collections on finance receivables are applied first to principal to reduce the finance receivables balance to zero before taxable income is recognized. The Internal Revenue Service ("IRS") examined the Company's 2005 through 2012 tax returns and asserted that tax revenue recognition using the cost recovery method did not clearly reflect taxable income and therefore issued Notices of Deficiency to the Company for tax years ended December 31, 2005 through 2012 (the "Notices"). In response to the Notices, the Company filed petitionsfinancial instruments in the ~~U.S. Tax Court (the “Tax Court”) challenging~~following table are recorded in the deficiencies and the Tax Court set the trial to begin on May 15, 2017. On May 10, 2017, the Company reached a settlement with the IRS in regards to the Notices. Under the settlement, both parties agreed that no amounts were due for years 2005 through 2012 and the Tax Court entered decisions to that effect on June 22, 2017. Also, under the settlement, the Company will utilize a new tax accounting method to recognize net finance receivables revenue effective with tax year 2017. Under the new method, a portion of the annual collections amortize principal and the remaining portion is taxable income. The Company will not be required to pay any interest or penalties related to the prior periods. The deferred tax liability related to the difference in timing between the new method and the cost recovery method will be incorporated evenly into the Company’s tax filings over four years with no associated interest.

~~At September 30, 2017, the tax years subject to examination by the major federal, state and international taxing jurisdictions are 2013 and subsequent years.~~

The Company intends for predominantly all foreign earnings to be indefinitely reinvested in its foreign operations. If foreign earnings were repatriated, the Company would need to accrue and pay taxes, although foreign tax credits may be available to partially reduce U.S. income taxes. The amount of cash on hand related to foreign operations with indefinitely reinvested earnings was $95.3 million and $73.6 million as of September 30, 2017consolidated balance sheets at March 31, 2019 and December 31, ~~2016, respectively.~~2018 (amounts in thousands):



	March 31, 2019				December 31, 2018
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	102,102	$	102,102	$	98,695	$	98,695
Finance receivables, net	3,177,229		3,464,135		3,084,777		3,410,475
Financial liabilities:
Interest-bearing deposits	95,314		95,314		82,666		82,666
Revolving lines of credit	1,571,749		1,571,749		1,160,161		1,160,161
Term loans	432,500		432,500		740,551		740,551
Convertible senior notes	591,731		588,503		588,688		557,122

Disclosure of the estimated fair values of financial instruments often requires the use of estimates. The carrying amount and estimates of the fair value of the Company's debt obligations outlined above do not include any related debt issuance costs associated with the debt obligations. The Company uses the following methods and assumptions to estimate the fair value of financial instruments:

PRA Group, Inc.

Notes to Consolidated Financial Statements

7.Cash and cash equivalents: The carrying amount approximates fair value and quoted prices for identical assets can be found in active markets. Accordingly, the Company estimates the fair value of cash and cash equivalents using Level 1 inputs.

Finance receivables, net: The Company computed the estimated fair value of these receivables using proprietary pricing models that the Company utilizes to make portfolio purchase decisions. Accordingly, the Company's fair value estimates use Level 3 inputs as there is limited observable market data available and management is required to use significant judgment in its estimates.

Interest-bearing deposits: The carrying amount approximates fair value due to the short-term nature of the deposits and the observable quoted prices for similar instruments in active markets. Accordingly, the Company uses Level 2 inputs for its fair value estimates.

Revolving lines of credit: The carrying amount approximates fair value due to the short-term nature of the interest rate periods and the observable quoted prices for similar instruments in active markets. Accordingly, the Company uses Level 2 inputs for its fair value estimates.

Term loans: The carrying amount approximates fair value due to the short-term nature of the interest rate periods and the observable quoted prices for similar instruments in active markets. Accordingly, the Company uses Level 2 inputs for its fair value estimates.

Convertible senior notes: The fair value estimates for the Notes incorporate quoted market prices which were obtained from secondary market broker quotes and were derived from a variety of inputs including client orders, information from their pricing vendors, modeling software, and actual trading prices when they occur. Accordingly, the Company uses Level 2 inputs for its fair value estimates. Furthermore, in the table above, carrying amount represents the portion of the Notes classified as debt, while estimated fair value pertains to the face amount of the Notes.

Financial Instruments Required to be Carried at Fair Value

The carrying amounts in the following table are measured at fair value on a recurring basis in the accompanying consolidated balance sheets at March 31, 2019 and December 31, 2018 (amounts in thousands):



	Fair Value Measurements as of March 31, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale investments
Government bonds	$	5,088	$	—	$	—	$	5,088
Fair value through net income
Mutual funds	62,192		—		—		62,192
Derivative contracts (recorded in other assets)	—		1,741		—		1,741
Liabilities:
Derivative contracts (recorded in other liabilities)	—		8,553		—		8,553
	Fair Value Measurements as of December 31, 2018
	Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale investments
Government bonds	$	5,077	$	—	$	—	$	5,077
Fair value through net income
Mutual funds	21,753		—		—		21,753
Derivative contracts (recorded in other assets)	—		3,334		—		3,334

Available-for-sale

Government bonds: Fair value of the Company's investment in government bonds is estimated using quoted market prices. Accordingly, the Company uses Level 1 inputs.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Fair value through net income

Mutual funds: Fair value of the Company's investment in mutual funds is estimated using quoted market prices. Accordingly, the Company uses Level 1 inputs.

Derivative contracts: The estimated fair value of the derivative contracts is determined using industry standard valuation models. These models project future cash flows and discount the future amounts to a present value using market-based observable inputs, including interest rate curves and other factors. Accordingly, the Company uses Level 2 inputs for its fair value estimates. Effective in the second quarter of 2018, the Company began to apply hedge accounting to certain of its derivative contracts. By applying hedge accounting, changes in market value are reflected as adjustments in Other Comprehensive Income. The hedges were evaluated and remain highly effective at March 31, 2019 and have initial terms of 2 to 7 years.

Investments measured using net asset value

Private equity funds: This class of investments consists of private equity funds that invest primarily in loans and securities including single-family residential debt; corporate debt products; and financially-oriented, real-estate-rich and other operating companies in the Americas, Western Europe, and Japan. These investments are subject to certain restrictions regarding transfers and withdrawals. The investments cannot be redeemed with the funds. Instead, the nature of the investments in this class is that distributions are received through the liquidation of the underlying assets of the fund. The investments are expected to be returned through distributions as a result of liquidations of the funds' underlying assets over 1 to 6 years. The fair value of these private equity funds following the Net Asset Value ("NAV") practical expedient was $7.5 million and $8.0 million as of March 31, 2019 and December 31, 2018, respectively.

9. Accumulated Other Comprehensive Loss:

The following table represents the changes in accumulated other comprehensive loss by component, net of tax, for the three months ended March 31, 2019 (amounts in thousands):



	Debt Securities						Currency Translation			Accumulated Other
	Available-for-sale			Cash Flow Hedges			Adjustments			Comprehensive Loss ⁽¹⁾
Balance at January 1, 2019	$	(83	)	$	44		$	(242,070	)	$	(242,109	)
Other comprehensive (loss)/income before reclassifications, net ⁽¹⁾	45			(5,795		)	(742		)	(6,492		)
Amounts reclassified from other comprehensive loss:
Reclassifications	—			80			—			80
Tax effect	—			—			—			—
Amounts reclassified from other comprehensive loss, net	—			80			—			80
Net current period other comprehensive (loss)/income	45			(5,715		)	(742		)	(6,412		)
Balance at March 31, 2019	$	(38	)	$	(5,671	)	$	(242,812	)	$	(248,521	)

(1) Net of deferred taxes for unrealized losses from cash flow hedges of $1.7 million at March 31, 2019.

10. Earnings per Share:

Basic earnings per share ("EPS") are computed by dividing net income available to common stockholders of PRA Group, Inc. by weighted average common shares outstanding. Diluted EPS are computed using the same components as basic EPS with the denominator adjusted for the dilutive effect of the Notes and nonvested share awards, if dilutive. For the Notes, only the conversion spread is included in the diluted EPS calculation, if dilutive. Under such method, the settlement of the conversion spread has a dilutive effect when the average share price of the Company's common stock during any quarter exceeds $65.72 for the 2020 Notes or $46.24 for the 2023 Notes, neither of which occurred during the respective periods from which the Notes were issued through ~~September 30, 2017.~~March 31, 2019. Share-based awards that are contingent upon the attainment of performance goals are included in the computation of diluted EPS if the effect is dilutive. The dilutive effect of nonvested shares is computed using the treasury stock method, which assumes any proceeds that could be obtained upon the vesting of nonvested shares would be used to purchase common shares at the average market price for the period. ~~The assumed proceeds include the tax benefit that would be realized upon assumed exercise.~~

PRA Group, Inc.

Notes to Consolidated Financial Statements

The following table provides a reconciliation between the computation of basic EPS and diluted EPS for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 (amounts in thousands, except per share amounts):


	For the Three Months Ended September 30,											For the Three Months Ended March 31,
	2017					2016						2019					2018
	Net income attributable to PRA Group, Inc.		Weighted Average Common Shares	EPS		Net income attributable to PRA Group, Inc.		Weighted Average Common Shares	EPS			Net income attributable to PRA Group, Inc.		Weighted Average Common Shares	EPS		Net income attributable to PRA Group, Inc.		Weighted Average Common Shares	EPS
Basic EPS	$	15,555	45,168	$	0.34	$	34,306	46,343	$	0.74		$	15,227	45,338	$	0.34	$	21,106	45,231	$	0.47
Dilutive effect of nonvested share awards			118	—				91	—					81	—				139	—
Diluted EPS	$	15,555	45,286	$	0.34	$	34,306	46,434	$	0.74		$	15,227	45,419	$	0.34	$	21,106	45,370	$	0.47

	For the Nine Months Ended September 30,
	2017					2016
	Net income attributable to PRA Group, Inc.		Weighted Average Common Shares	EPS		Net income attributable to PRA Group, Inc.		Weighted Average Common Shares	EPS
Basic EPS	$	75,395	45,838	$	1.64	$	102,745	46,307	$	2.22
Dilutive effect of nonvested share awards			153	—				96	(0.01		)
Diluted EPS	$	75,395	45,991	$	1.64	$	102,745	46,403	$	2.21

There were no antidilutive options outstanding for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016.~~2018.

8.11. Income Taxes:

The Company follows the guidance of FASB ASC Topic 740 "Income Taxes" ("ASC 740") as it relates to the provision for income taxes and uncertainty in income taxes. The guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

On May 10, 2017, the Company reached a settlement with the Internal Revenue Service in regards to its assertion that tax revenue recognition using the cost recovery method did not clearly reflect taxable income. In accordance with the settlement, the Company changed its tax accounting method to recognize finance receivables revenue effective with tax year 2017. Under the new method, a portion of the annual collections amortizes principal and the remaining portion is taxable income. The deferred tax liability related to the difference in timing between the new method and the cost recovery method will be incorporated evenly into the Company’s tax filings over four years effective with tax year 2017. The Company was not required to pay any interest or penalties in connection with the settlement.

At March 31, 2019, the tax years subject to examination by the major federal, state and international taxing jurisdictions are 2013 and subsequent years.

The Company intends for predominantly all foreign earnings to be indefinitely reinvested in its foreign operations. If foreign earnings were repatriated, the Company may need to accrue and pay taxes, although foreign tax credits may be available to partially reduce U.S. income taxes. The amount of cash on hand related to foreign operations with indefinitely reinvested earnings was $83.8 million and $78.6 million as of March 31, 2019 and December 31, 2018, respectively.

12. Commitments and Contingencies:

Employment ~~Agreements:~~agreements:

The Company has entered into employment agreements, most of which expire on December 31, 2020, with all of its U.S. executive officers and with several members of its U.S. senior management group. Such agreements provide for base salary payments as well as potential discretionary bonuses that ~~are based on~~take into consideration the ~~attainment of a combination of~~Company’s overall performance against its short- and long-term financial and ~~management goals.~~strategic objectives. At ~~September 30, 2017,~~March 31, 2019, estimated future compensation under these agreements was approximately ~~$11.8~~$14.3 million. The agreements also contain confidentiality and non-compete provisions. Outside the U.S., employment agreements are in place with employees pursuant to local country regulations. Generally, these agreements do not have expiration dates and therefore it is impractical to estimate the amount of future compensation under these agreements. Accordingly, the future compensation under these agreements is not included in the ~~$11.8~~$14.3 million total above.

~~Leases:~~

~~The Company is party to various operating leases with respect to its facilities and equipment. The future minimum lease payments at September 30, 2017 totaled approximately $43.8 million.~~

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

Forward ~~Flow Agreements:~~flow agreements:

The Company is party to several forward flow agreements that allow for the purchase of nonperforming loans at pre-established prices. The maximum remaining amount to be purchased under forward flow agreements at ~~September 30, 2017~~March 31, 2019 was approximately ~~$413.6~~$351.5 million.

Finance ~~Receivables:~~receivables:

Certain agreements for the purchase of finance receivables portfolios contain provisions that may, in limited circumstances, require the Company to refund a portion or all of the collections subsequently received by the Company on particular accounts. The potential refunds as of the balance sheet date are not considered to be significant.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Litigation and ~~Regulatory Matters:~~regulatory matters:

The Company is from time to time subject to routine legal claims, proceedings and regulatory matters, most of which are incidental to the ordinary course of its business. The Company initiates lawsuits against customers and is occasionally countersued by them in such actions. Also, customers, either individually, as members of a class action, or through a governmental entity on behalf of customers, may initiate litigation against the Company in which they allege that the Company has violated a state or federal law in the process of collecting on an account. From time to time, other types of lawsuits are brought against the Company. Additionally, the Company receives subpoenas and other requests or demands for information from regulators or governmental authorities who are investigating the Company's debt collection activities.

The Company accrues for potential liability arising from legal proceedings and regulatory matters when it is probable that such liability has been incurred and the amount of the loss can be reasonably estimated. This determination is based upon currently available information for those proceedings in which the Company is involved, taking into account the Company's best estimate of such losses for those cases for which such estimates can be made. The Company's estimate involves significant judgment, given the varying stages of the proceedings (including the fact that many of them are currently in preliminary stages), the number of unresolved issues in many of the proceedings (including issues regarding class certification and the scope of many of the claims), and the related uncertainty of the potential outcomes of these proceedings. In making determinations of the likely outcome of pending litigation, the Company considers many factors, including, but not limited to, the nature of the claims, the Company's experience with similar types of claims, the jurisdiction in which the matter is filed, input from outside legal counsel, the likelihood of resolving the matter through alternative mechanisms, the matter's current status and the damages sought or demands made. Accordingly, the Company's estimate will change from time to time, and actual losses could be more than the current estimate.

The Company believes that the estimate of the aggregate range of reasonably possible losses in excess of the amount accrued for its legal proceedings outstanding at ~~September 30, 2017~~March 31, 2019, where the range of loss can be estimated, was not material.

In certain legal proceedings, the Company may have recourse to insurance or third-party contractual indemnities to cover all or portions of its litigation expenses, judgments, or settlements. Loss estimates and accruals for potential liability related to legal proceedings are typically exclusive of potential recoveries, if any, under the Company's insurance policies or third-party indemnities. ~~The Company had not recorded any potential recoveries under the Company's insurance policies or third-party indemnities as of September 30, 2017.~~

The matters described below fall outside of the normal parameters of the Company's routine legal proceedings.

Multi-State Investigation

~~The~~On November 17, 2015, the Company ~~previously~~ received ~~Civil Investigative Demands~~civil investigative demands from multiple state ~~Attorneys~~Attorney General offices ("AGOs") broadly relating to its debt collection practices in the U.S. The Company ~~which~~believes that it has fully cooperated with the ~~investigation, has~~investigations and discussed potential resolution of the ~~investigation~~investigations with ~~this coalition of Attorneys General,~~the AGOs. In these discussions, the AGOs have taken positions with which ~~could include~~the Company disagrees, including positions related to penalties, restitution and/or the adoption of new practices and controls in the conduct of the Company's business. ~~In these discussions, the state Attorneys General offices have taken positions with which the Company disagrees.~~ If the Company is unable to resolve its differences with ~~this multi-state coalition,~~the AGOs, it is possible that one or more individual state ~~Attorneys General offices~~AGOs may file claims against the Company. The range of loss, if any, cannot be estimated at this time.

~~Internal Revenue Service Audit~~Iris Pounds v. Portfolio Recovery Associates, LLC

On November 21, 2016, Iris Pounds filed suit against the Company in Durham County, North Carolina alleging violations of the North Carolina Prohibited Practices by Collection Agencies Act. The ~~IRS examined~~purported class consists of all individuals against whom the ~~Company's 2005 through 2012 tax returns and asserted that tax revenue recognition using~~Company had obtained a judgment by default in North Carolina on or after October 1, 2009. On December 9, 2016, the ~~cost recovery method did not clearly reflect taxable income and therefore issued Notices of Deficiency~~Company removed the matter to the ~~Company~~United States District Court for ~~tax years ended December 31, 2005 through 2012~~the Middle District of North Carolina (the ~~"Notices"~~"District Court"). ~~In response~~On March 28, 2018, the District Court entered an order remanding the matter to the ~~Notices,~~North Carolina state court which the Fourth Circuit Court of Appeals affirmed on May 17, 2018. On January 11, 2019, the Company filed ~~petitions in~~a motion to compel arbitration with the ~~Tax Court challenging~~North Carolina state court. The North Carolina state court denied the ~~deficiencies~~Company's motion to compel arbitration and the ~~Tax Court set the trial to begin on May 15, 2017. On May 10, 2017, the~~ Company ~~reached a settlement with the IRS in regards~~is seeking review of that decision. The range of loss, if any, cannot be estimated at this time due to the ~~Notices. Under the settlement, both parties agreed that no amounts were due for years 2005 through 2012~~uncertainty surrounding liability, class certification and the ~~Tax Court entered decisions to that effect on June 22, 2017. Also, under the settlement, the Company~~

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~agreed to utilize a new tax accounting method to recognize net finance receivables revenue effective with tax year 2017. Under the new method, a portion~~interpretation of the annual collections will amortize principal and the remaining portion will be considered taxable income. The Company will not be required to pay any interest or penalties related to the prior periods. The deferred tax liability related to the difference in timing between the new method and the prior method will be incorporated evenly into the Company’s tax filings over four years with no associated interest.statutory damages.

~~9. Fair Value:~~13. Recently Issued Accounting Standards:

As defined by FASB ASC Topic 820, "Fair Value Measurements and Disclosures" ("ASC 820"), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also requires the consideration of differing levels of inputs in the determination of fair values.

~~Those levels of input are summarized as follows:~~

~~Level 1: Quoted prices in active markets for identical assets and liabilities.~~

~~The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety.~~

~~Financial Instruments Not Required To Be Carried at Fair Value~~

In accordance with the disclosure requirements of FASB ASC Topic 825, "Financial Instruments" ("ASC 825"), the table below summarizes fair value estimates for the Company's financial instruments not required to be carried at fair value. The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying value of the Company.

~~The carrying amounts of the financial instruments in the following table are recorded in the consolidated balance sheets at September 30, 2017 and December 31, 2016 (amounts in thousands):~~

September 30, 2017 December 31, 2016
Carrying
Amount Estimated
Fair Value Carrying
Amount Estimated
Fair Value
Financial assets:
Cash and cash equivalents $ 113,754
$ 113,754
$ 94,287
$ 94,287
Held-to-maturity investments 57,031
42,559
51,407
55,554
Other investments 14,712
9,709
14,998
12,573
Finance receivables, net 2,577,831
2,884,171
2,307,969
2,708,582
Financial liabilities:
Interest-bearing deposits 96,395
96,395
76,113
76,113
Revolving lines of credit 649,190
649,190
1,096,868
1,096,868
Term loans 762,902
762,902
430,764
430,764
Convertible senior notes 574,140
579,764
269,570
270,825

~~Cash and cash equivalents:~~ The carrying amount approximates fair value and quoted prices for identical assets can be found in active markets. Accordingly, the Company estimates the fair value of cash and cash equivalents using Level 1 inputs.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Held-to-maturity investments:~~ Fair value of the Company's investment in the certificates of a closed-end Polish investment fund is estimated using proprietary pricing models that the Company utilizes to make portfolio purchase decisions. Accordingly, the Company estimates the fair value of its held-to-maturity investments using Level 3 inputs as there is little observable market data available and management is required to use significant judgment in its estimates.

~~Other investments:~~ This class of investments consists of private equity funds that invest primarily in loans and securities including single-family residential debt; corporate debt products; and financially-oriented, real-estate-rich and other operating companies in the Americas, Western Europe, and Japan. These investments are subject to certain restrictions regarding transfers and withdrawals. The investments can never be redeemed with the funds. Instead, the nature of the investments in this class is that distributions are received through the liquidation of the underlying assets of the fund. The fair value of the Company's interest is valued by the fund managers; accordingly, the Company estimates the fair value of these investments using Level 3 inputs. The investments are expected to be returned through distributions as a result of liquidations of the funds' underlying assets over 1 to 4 years.

~~Finance receivables, net:~~ The Company computed the estimated fair value of these receivables using proprietary pricing models that the Company utilizes to make portfolio purchase decisions. Accordingly, the Company's fair value estimates use Level 3 inputs as there is limited observable market data available and management is required to use significant judgment in its estimates.

~~Interest-bearing deposits:~~ The carrying amount approximates fair value due to the short-term nature of the deposits and the observable quoted prices for similar instruments in active markets. Accordingly, the Company uses Level 2 inputs for its fair value estimates.

~~Revolving lines of credit:~~ The carrying amount approximates fair value due to the short-term nature of the interest rate periods and the observable quoted prices for similar instruments in active markets. Accordingly, the Company uses Level 2 inputs for its fair value estimates.

~~Term loans:~~ The carrying amount approximates fair value due to the short-term nature of the interest rate periods and the observable quoted prices for similar instruments in active markets. Accordingly, the Company uses Level 2 inputs for its fair value estimates.

~~Convertible notes:~~ The Notes are carried at historical cost, adjusted for the debt discount. The fair value estimates for the Notes incorporate quoted market prices which were obtained from secondary market broker quotes which were derived from a variety of inputs including client orders, information from their pricing vendors, modeling software, and actual trading prices when they occur. Accordingly, the Company uses Level 2 inputs for its fair value estimates. Furthermore, in the table above, carrying amount represents the portion of the Notes classified as debt, while estimated fair value pertains to the face amount of the Notes.

~~Financial Instruments Required To Be Carried At Fair Value~~

The carrying amounts in the following table are measured at fair value on a recurring basis in the accompanying consolidated balance sheets at September 30, 2017 and December 31, 2016 (amounts in thousands):

Fair Value Measurements as of September 30, 2017
Level 1 Level 2 Level 3 Total
Assets:
Available-for-sale investments $ 3,769
$ —
$ —
$ 3,769
Liabilities:
Interest rate swap contracts (recorded in accrued expenses) —
701
—
701

Fair Value Measurements as of December 31, 2016
Level 1 Level 2 Level 3 Total
Assets:
Available-for-sale investments $ 2,138
$ —
$ —
$ 2,138
Liabilities:
Interest rate swap contracts (recorded in accrued expenses) —
2,825
—
2,825

~~Available-for-sale investments:~~ ~~Fair value of the Company's investment in government bonds and mutual funds is estimated using quoted market prices. Accordingly, the Company uses Level 1 inputs.~~

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Interest rate swap contracts:~~ The interest rate swap contracts are carried at fair value which is determined by using industry standard valuation models. These models project future cash flows and discount the future amounts to a present value using market-based observable inputs, including interest rate curves and other factors. Accordingly, the Company uses Level 2 inputs for its fair value estimates.

~~10. Recent Accounting Pronouncements:~~

~~In May 2014, FASB~~Recently issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09") that updates the principles for recognizing revenue. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance specifically excludes revenue received for servicing finance receivables. ASU 2014-09 also amends the required disclosures of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and can be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption, with early application not permitted. The Company believes that the revenue generated by its subsidiary Claims Compensation Bureau, LLC ("CCB") is within the scope of this standard. Based on the Company's evaluation, the Company believes the new standard will not impact the accounting ~~for revenue generated by CCB.~~

In January 2016, FASB issued ASU 2016-01, "Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities" ("ASU 2016-01"), which provides new guidance on the recognition, measurement, presentation, and disclosure of financial assets and liabilities. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted only for certain provisions. Under this standard, changes in fair value of the Company's investments currently classified as available-for-sale will be reported in earnings rather than as an adjustment to Other Comprehensive Income/(Loss). The Company is currently in the process of evaluating the impact of adoption of 2016-01 on its Other Investments.standards adopted:

In February 2016, FASB issued ASU 2016-02, "Leases (Topic 842) Section A - Leases: Amendments to the FASB Account Standards Codification" ("ASU 2016-02"). ASU 2016-02 requires that a lessee should recognize a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term on the balance sheet. ~~It is effective for fiscal years beginning after December 15,~~In July 2018, and interim periods within those fiscal years, using a modified retrospective approach and early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption of ASU 2016-02 on its consolidated financial statements. The Company has approximately $43.8 million in operating lease obligations as disclosed in its contractual obligations table in Part I, Item 2 of this Quarterly Report on Form 10-Q and is in the process of evaluating those contracts as well as other existing arrangements to determine if they qualify for lease accounting under the new standard. The Company does not plan to adopt the standard early.

~~In March 2016,~~ FASB ~~issued ASU 2016-06, "Derivatives and Hedging (Topic 815)~~, Contingent Put and Call Options in Debt Instruments" ("ASU 2016-06"). Topic 815 requires that embedded derivatives be separated from the host contract and accounted for separately as derivatives if certain criteria are met, including the "clearly and closely related" criterion. ASU 2016-06 clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment under the amendments is required to assess the embedded call (put) options solely in accordance with the four-step decision sequence. The amendments in ASU 2016-06 apply to all entities that are issuers of or investors in debt instruments (or hybrid financial instruments that are determined to have a debt host) with embedded call (put) options. For public entities, this update is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company adopted ASU 2016-06 in the first quarter of 2017 which had no material impact on its consolidated financial statements.

In March 2016, FASB issued ASU 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"). The guidance eliminates additional paid in capital ("APIC") pools and requires companies to recognize all excess tax benefits and tax deficiencies in the income statement when the awards vest or are settled. It also addresses the presentation of excess tax benefits and employee taxes paid on the statement of cash flows. Further, the new guidance eliminates the requirement to estimate forfeitures during the vesting period. Instead, companies can elect to account for actual forfeitures as they occur and record any previously unrecognized compensation expense for estimated forfeitures up to the period of adoption as a retrospective adjustment to beginning retained earnings. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years and early adoption is permitted. The Company prospectively adopted ASU 2016-09 in the first quarter of 2017, which increased its provision for income taxes by $0.9 million during the nine months ended September 30, 2017, as a result of the recognition of all excess tax benefits and tax deficiencies in its income statement. ASU 2016-09 requires that excess tax benefits be presented as an operating activity in the statement of cash

PRA Group, Inc.

Notes to Consolidated Financial Statements

~~flows, so with its prospective~~issued ASU 2018-10, "Codification Improvements to Topic 842, Leases" and ASU 2018-11, "Leases (Topic 842) Targeted Improvements" which among other things, allowed for an alternative transition method which eliminated the requirement to restate the earliest prior period presented in an entity's financial statements. Entities that elected this transition option still adopted the new lease standard using the modified retrospective transition method required by the standard, but they recognized a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption ~~prior periods have not been restated.~~rather than in the earliest period presented. The Company ~~also elected to use an estimated forfeiture rate, based~~adopted the new leasing standard on ~~historical data, to record its share-based compensation expense, which is consistent with its previous accounting treatment with respect to forfeitures. None~~January 1, 2019 and as a result recorded operating lease ROU assets and lease liabilities of $72.1 million and $75.8 million, respectively. The adoption of the standard did not have any other ~~provisions of ASU 2016-09 had a~~ material ~~impact~~affect on ~~its consolidated financial statements.~~

~~In June 2016, FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326)" ("ASU 2016-13"). ASU 2016-13 requires~~ the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts. The main objective of ASU 2016-13 is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years and allows for early adoption as of the beginning of an interim or annual reporting period beginning after December 15, 2018. ASU 2016-13 supersedes ASC Topic 310-30, which the Company currently follows to account for revenue on its finance receivables. ASU 2016-13 could have a significant impact on how the Company measures and records net revenue on its finance receivables. The Company is currently in the process of evaluating the impact of adoption of ASU 2016-13 on itsCompany's consolidated financial statements.

In August 2016, FASB issued ASU 2016-15, "Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments (Topic 230)" ("ASU 2016-15"). ASU 2016-15 reduces diversity in practice of how certain transactions are classified in the statement of cash flows. The new guidance clarifies the classification of cash activity related to debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate and bank-owned life insurance policies, distributions received from equity-method investments, and beneficial interests in securitization transactions. The guidance also describes a predominance principle in which cash flows with aspects of more than one class that cannot be separated should be classified based on the activity that is likely to be the predominant source or use of cash flow. ASU 2016-15 is effective for the Company for fiscal years beginning after December 15, 2018. ~~Early adoption is permitted, including adoption in an interim period, but requires all elements of the amendments to be adopted at once rather than individually.~~ The new standard must be adopted using a retrospective transition method. The Company adopted ASU 2016-15 in the first quarter of 2019 which had no material impact on its consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" ("ASU 2018-02"). Under existing U.S. GAAP, the effects of changes in tax rates and laws on deferred tax balances are recorded as a component of income tax expense in the period in which the law was enacted. When deferred tax balances related to items originally recorded in accumulated other comprehensive income are adjusted, certain tax effects become stranded in accumulated other comprehensive income. The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded income tax effects resulting from the 2017 Tax Cuts and Jobs Act. The amendments in this ASU also require certain disclosures about stranded income tax effects. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company’s provisional adjustments recorded during the year ended December 31, 2017 to account for the impact of the Tax Act did not result in stranded tax effects. The Company adopted ASU 2018-02 in the first quarter of 2019 which had no material impact on its consolidated financial statements.

Recently issued accounting standards not yet adopted:

In June 2016, FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326) ("ASU 2016-13"), which requires the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The main objective of ASU 2016-13 is to provide financial statement users with more decision-useful information about expected credit losses and recoveries on financial instruments measured at amortized cost held by a reporting entity at each reporting date. Under this model, an entity would recognize an allowance equal to its current estimate of all contractual cash flows that the entity does not expect to collect. The expected credit losses, and subsequent adjustments to such losses, will be recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the net amount expected to be collected. Revenue is recognized over the life of the portfolio at the initial effective interest rate. Subsequent changes in cash flow forecasts, on a present value basis, are adjusted through revenue. ASU 2016-13 supersedes ASC Topic 310-30, "Loans and Debt Securities Acquired with Deteriorated Credit Quality" ("ASC 310-30"), which the Company currently follows to account for income recognized on its finance receivables. Financial assets accounted for under ASC 310-30 should use a prospective transition approach where upon adoption, the amortized cost basis should be adjusted to reflect the addition of the allowance for credit losses. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years and allows for early adoption as of the beginning of an interim or annual reporting period beginning after December 15, 2018. The Company expects ASU 2016-13, including the effect of ongoing developments and amendments to the guidance, will have a significant impact on how it measures and records income recognized on its finance receivables and its balance sheet presentation. The Company is in the process of evaluating the impact of adoption ~~of ASU 2016-15~~ on its consolidated financial ~~statements.~~

In October 2016, FASB issued ASU 2016-16, "Income Taxes - Intra-Entity Transfers of Assets Other Than Inventory" ("ASU 2016-16"), which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The standard is effective for fiscal years beginning after December 15, 2017,statements including interim periods within those fiscal years. Early adoption is permitted as of the beginning of a fiscal year. The new standard must be adopted using a modified retrospective transition method which is a cumulative-effect adjustment to retained earnings as of the beginning of the first effective reporting period. The Company has determined the adoption of this standard will not have a significant impact on its consolidated financial statements.

In January 2017, FASB issued ASU-2017-01, "Business Combinations - Clarifying the Definition of a Business (Topic 805)" ("ASU 2017-01"). ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist companies with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The new guidance is expected to reduce the number of transactions that need to be further evaluated as businesses. The guidance applies to transactions that occur on or after an entity’s adoption date, the earliest of which is January 1, 2017. The Company has not completed a business combination in 2017.accounting policy and operational implementation issues.

In January 2017, FASB issued ASU ~~No.~~ 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment" ("ASU 2017-04"). ASU 2017-04 eliminates Step 2 of the goodwill impairment test. Instead, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair

PRA Group, Inc.

Notes to Consolidated Financial Statements

value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. The Company is ~~currently~~ in the process of evaluating the impact of adoption of ASU 2017-04 on its consolidated financial statements.

In ~~May 2017,~~August 2018, the FASB issued ASU ~~No. 2017-09, “Compensation–Stock Compensation~~2018-13, “Fair Value Measurement (Topic ~~718)~~820): ~~Scope of Modification Accounting” (ASU 2017-09"~~Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” ("ASU 2018-13"). ASU ~~2017-09 clarifies when a change to the terms or conditions of a share-based payment award must be accounted~~2018-13 eliminates, adds and modifies certain disclosure requirements for ~~as a modification. The new guidance requires modification accounting if the~~ fair value ~~vesting condition or the classification~~measurements as part of ~~the award is not the same immediately before and after a change to the terms and conditions of the award.~~

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

its disclosure framework project. The ~~new guidance~~standard is effective for ~~interim and annual periods beginning after December 15, 2017, with early adoption permitted. This new guidance is not expected to have an impact on the Company's consolidated~~all entities for financial ~~statements.~~

~~In August 2017, FASB~~statements issued ASU No. 2017-12, "Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities" ("ASU 2017-12"). ASU 2017-12 modifies the presentation and disclosure of hedging results. Further, it provides partial relief on the timing of certain aspects of hedge documentation and eliminates the requirement to recognize hedge ineffectiveness separately in income. The amendments in ASU 2017-12 are effective for fiscal years beginning after December 15, ~~2018~~2019, and ~~for~~ interim periods ~~therein.~~within those fiscal years. Early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption of ASU ~~2017-12~~2018-13 on its consolidated financial statements.

The Company does not expect that any other recently issued accounting pronouncements will have a material effect on its consolidated financial statements.

~~11. Sale of Subsidiaries:~~

As part of the Company’s strategy to focus on its primary business, the purchase, collection and management of portfolios of nonperforming loans, the Company decided in the fourth quarter of 2016 to sell its government services businesses: PRA Government Services, LLC; MuniServices, LLC; and PRA Professional Services, LLC. On January 24, 2017, the Company completed the sale of its government services businesses for $91.5 million in cash plus additional consideration for certain balance sheet items. The impact of the transaction was reported in the first quarter of 2017. The gain on sale was approximately $46.8 million.

During the second quarter of 2017, the Company sold its vehicle location, skip tracing and collateral recovery business, PLS, for $4.5 million which resulted in a gain on sale of approximately $1.6 million.

~~The assets and liabilities of the businesses that were sold during 2017 consisted of the following (amounts in thousands):~~

Nine Months Ended September 30, 2017
Other receivables, net $ 8,277
Property and equipment, net 4,559
Goodwill 29,683
Intangible assets, net 1,711
Other assets 772
Total assets $ 45,002

Accrued expenses $ 3,123
Total liabilities $ 3,123

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements:

This Quarterly Report on Form 10-Q (this "Quarterly Report") contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks, uncertainties and assumptions that could cause our results to differ materially from those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, are forward-looking statements, including statements regarding overall cash collection trends, gross margin trends, operating cost trends, liquidity and capital needs and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. The risks, uncertainties and assumptions referred to above may include the following:

a prolonged economic recovery or a deterioration in the economic or inflationary environment in the Americas or Europe, including the interest rate environment;

changes in the credit or capital markets, which affect our ability to borrow money or raise capital;

our ability to replace our portfolios of nonperforming loans with additional portfolios;

our ability to purchase nonperforming loans at appropriate prices;

changes in, or interpretations of, federal, state, local, or foreign laws or the administrative practices of various bankruptcy courts, which may impact our ability to collect on our nonperforming loans;

our ability to collect sufficient amounts on our nonperforming loans;

the possibility that we could incur significant allowance charges on our finance receivables;

changes in, or interpretations of, bankruptcy or collection laws that could negatively affect our business, including by causing an increase in certain types of bankruptcy filings involving liquidations, which may cause our collections to decrease;

our ability to manage risks associated with our international operations;

changes in tax laws and interpretations regarding earnings of our ~~subsidiaries located outside~~domestic and foreign operations;

the impact of the ~~United States~~Tax Cuts and Jobs Act ("~~U.S."~~Tax Act");, including interpretations and determinations by tax authorities;

the possibility that we could incur goodwill or other intangible asset impairment charges;

adverse effects from the vote by the United Kingdom ("UK") to leave the European ~~Union ("EU");~~Union;

adverse outcomes in pending ~~litigations~~litigation or administrative proceedings;

our loss contingency accruals may not be adequate to cover actual losses;

the possibility that class action suits and other litigation could divert ~~our~~ management's attention and increase our expenses;

the possibility that we could incur business or technology disruptions or cyber incidents;

our ability to collect and enforce our ~~finance receivables~~nonperforming loans may be limited under federal, state, local and foreign laws;

our ability to comply with existing and new regulations of the collection industry, the failure of which could result in penalties, fines, litigation, damage to our reputation, or the suspension or termination of or required modification to our ability to conduct our business;

investigations or enforcement actions by governmental authorities, including the Consumer Financial Protection Bureau ("CFPB"), which could result in changes to our business ~~practices;~~practices, negatively impact our portfolio purchasing ~~volume;~~volume, make collection of account balances more difficult or expose us to the risk of fines, penalties, restitution payments, and litigation;

the ability of our European operations to comply with the provisions of the General Data Protection Regulation;

the possibility that compliance with foreign and United States ("U.S.") laws and regulations that apply to our international operations could increase our cost of doing business in international jurisdictions;

our ability to raise the funds necessary to repurchase the convertible senior notes or to settle conversions in cash;

our ability to ~~maintain,~~expand, renegotiate or replace our credit ~~facilities;~~facilities and our ability to comply with the covenants under our financing arrangements;

changes in interest or exchange rates, which could reduce our net income, and the possibility that future hedging strategies may not be successful, which could adversely affect our results of operations and financial ~~condition, as~~condition;

the possibility that the adoption of, or delays in implementing, accounting standards could negatively impact our ~~failure to comply with hedge accounting principles~~results of operations and ~~interpretations;~~financial condition; and

the risk factors discussed in our filings with the Securities and Exchange Commission ~~(the "SEC"~~("SEC").

You should assume that the information appearing in this Quarterly Report is accurate only as of the date it was issued. Our business, financial condition, results of operations and prospects may have changed since that date.

You should carefully consider the factors listed above and review the following "Management's Discussion and Analysis of Financial Condition and Results of Operations," as well as the "Risk Factors" section and "Business" section of our Annual Report on Form 10-K for the year ended December 31, ~~2016, filed with the SEC on March 1, 2017~~2018 ("~~2016~~2018 Form 10-K").

Our forward-looking statements could be wrong in light of these and other risks, uncertainties and assumptions. The future events, developments or results described in, or implied by, this Quarterly Report could turn out to be materially different. Except as required by law, we assume no obligation to publicly update or revise our forward-looking statements after the date of this Quarterly Report and you should not expect us to do so.

Investors should also be aware that while we do, from time to time, communicate with securities analysts and others, we do not, by policy, selectively disclose to them any material nonpublic information or other confidential commercial information. Accordingly, investors should not assume that we agree with any statement or report issued by any analyst regardless of the content of the statement or report. We do not, by policy, confirm forecasts or projections issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.

Frequently Used Terms

We use the following terminology throughout this Quarterly Report:

"Allowance charges" refers to a reduction in income recognized on finance receivables on pools of finance receivables due to a decrease in cash collection estimates or a delay in the expected timing of the cash collections.

"Amortization rate" refers to cash collections applied to principal on finance receivables as a percentage of total cash collections.

"Buybacks" refers to purchase price refunded by the seller due to the return of ineligible accounts.

"Cash collections" refers to collections on our owned finance receivables portfolios.

"Cash receipts" refers to collections on our owned finance receivables portfolios plus fee income.

"Core" accounts or portfolios refer to accounts or portfolios that are nonperforming loans and are not in an insolvent status upon purchase. These accounts are aggregated separately from insolvency accounts.

"Estimated remaining collections" or "ERC" refers to the sum of all future projected cash collections on our owned finance receivables portfolios.

~~"Fee income" refers to revenues generated from our fee-for-service businesses.~~

~~"Income recognized on finance receivables" refers to income derived from our owned finance receivables portfolios.~~

~~"Income recognized on finance receivables, net" refers to income derived from our owned finance receivables portfolios and is shown net of allowance charges/reversals.~~

"Insolvency" accounts or portfolios refer to accounts or portfolios of receivables that are in an insolvent status when we purchase them and as such are purchased as a pool of insolvent accounts. These include Individual Voluntary Arrangements ("IVAs"), Trust Deeds in the UK, Consumer Proposals in Canada and bankruptcy accounts in the U.S., Canada, Germany and the UK.

~~"Net finance receivable balance" is recorded on our balance sheet and refers to the purchase price less principal amortization and net allowance charges/reversals.~~

~~"Nonperforming loans" refers to the loans that we purchase, which consist generally of defaulted, unpaid obligations of individuals that have been charged-off by the credit grantor.~~

"Principal amortization" refers to cash collections applied to principal on finance receivables.

"Purchase price" refers to the cash paid to a seller to acquire nonperforming loans, plus certain capitalized costs, less buybacks.

"Purchase price multiple" refers to the total estimated collections (as defined below) on owned finance receivables portfolios divided by purchase price.

"Total estimated collections" or "TEC" refers to actual cash collections, including cash sales, plus estimated remaining collections on our finance receivables portfolios.

All references in this Quarterly Report to "PRA Group," "our," "we," "us," ~~the "Company"~~"the Company" or similar terms are to PRA Group, Inc. and its subsidiaries.

Overview

We are a global financial and business services company with operations in the Americas and Europe. Our primary business is the purchase, collection and management of portfolios of nonperforming loans. ~~As discussed in Note 11, we sold our government services businesses in January 2017 and PLS in June 2017.~~

We are headquartered in Norfolk, Virginia, and as of ~~September 30, 2017 employ 4,555~~March 31, 2019 employed 5,236 full time equivalents. Our shares of common stock are traded on the NASDAQ Global Select Market under the symbol "PRAA."

~~Earnings Summary~~

During the three months ended September 30, 2017, net income attributable to PRA Group, Inc. was $15.6 million, or $0.34 per diluted share, compared with $34.3 million, or $0.74 per diluted share, in the three months ended September 30, 2016. Total revenues decreased 9.5% to $201.0 million in the three months ended September 30, 2017, compared to the three months ended September 30, 2016. Revenues in the three months ended September 30, 2017 consisted of $197.2 million in income recognized on finance receivables, net; $2.7 million in fee income; and $1.1 million in other revenue. Revenues in the three months ended September 30, 2016 consisted of $202.6 million in income recognized on finance receivables, net; $17.6 million in fee income; and $1.7 million in other revenue. Income recognized on finance receivables, net, in the three months ended September 30, 2017 decreased $5.4 million, or 2.7%, over the three months ended September 30, 2016, primarily due to a reduction in revenue generated by our Americas Insolvency portfolio which has declined due to lower volumes of purchasing during fiscal years 2014 to 2016. Cash collections were $381.8 million in the three months ended September 30, 2017, up 2.7%, or $10.1 million, as compared to the three months ended September 30, 2016.

~~A summary of the sources of our revenue during the three months ended September 30, 2017 and 2016 is presented below (amounts in thousands):~~

For the Three Months Ended September 30,
2017 2016
Cash collections $ 381,834
$ 371,700
Principal amortization (181,174 ) (155,915 )
Net allowance charges (3,412 ) (13,146 )
Income recognized on finance receivables, net 197,248
202,639
Fee income 2,671
17,597
Other revenue 1,091
1,748
Total revenues $ 201,010
$ 221,984

Operating expenses were $146.8 million for the three months ended September 30, 2017, a decrease of $7.7 million or 5.0%, as compared to the three months ended September 30, 2016. This decrease was primarily due to a decrease in legal collection expenses, mainly due to a reduction in the number of accounts brought into the legal collection process in the Americas, in addition to a decrease in agency fees, due primarily to the sale of PLS in June 2017, as well as a decrease in third-party collection fees incurred by our foreign operations.

During the three months ended September 30, 2017 and 2016, we acquired finance receivables portfolios at a cost of $210.9 million and $161.3 million, respectively. In any period, we acquire nonperforming loans that can vary dramatically in their age, type and ultimate collectability. We may pay significantly different purchase prices relative to face value for purchased receivables within any period as a result of this quality fluctuation. In addition, market forces can increase or decrease pricing, irrespective of other quality fluctuations. As a result, the average purchase price paid relative to face value for any given period can fluctuate dramatically. However, regardless of the average purchase price, we intend to target a similar net income margin in pricing our portfolio acquisitions during any given period. Therefore, the price paid relative to face value is not necessarily indicative of profitability.

Results of Operations

The results of operations include the financial results of the Company and all of its subsidiaries. The following table sets forth consolidated income statement amounts as a percentage of total revenues for the periods indicated (dollars in thousands):



	For the Three Months Ended March 31,
	2019					2018
Revenues:
Income recognized on finance receivables	$	238,836		97.1	%	$	218,624		97.6	%
Fee income	6,374			2.6		5,327			2.4
Other revenue	667			0.3		157			0.1
Total revenues	245,877			100.0		224,108			100.0

Net allowance charges	(6,095		)	(2.5	)	(925		)	(0.4	)

Operating expenses:
Compensation and employee services	79,645			32.4		81,237			36.2
Legal collection fees	13,059			5.3		10,669			4.8
Legal collection costs	35,229			14.3		22,243			9.9
Agency fees	14,032			5.7		8,278			3.7
Outside fees and services	15,248			6.2		14,158			6.3
Communication	13,201			5.4		11,557			5.2
Rent and occupancy	4,363			1.8		4,314			1.9
Depreciation and amortization	4,572			1.9		4,929			2.2
Other operating expenses	11,585			4.7		12,184			5.4
Total operating expenses	190,934			77.7		169,569			75.7
Income from operations	48,848			19.9		53,614			23.9
Other income and (expense):
Interest expense, net	(33,981		)	(13.8	)	(25,781		)	(11.5	)
Foreign exchange gain	6,264			2.5		1,293			0.6
Other	(352		)	(0.1	)	243			0.1
Income before income taxes	20,779			8.5		29,369			13.1
Income tax expense	3,867			1.6		6,137			2.7
Net income	16,912			6.9		23,232			10.4
Adjustment for net income attributable to noncontrolling interests	1,685			0.7		2,126			0.9
Net income attributable to PRA Group, Inc.	$	15,227		6.2	%	$	21,106		9.4	%

Cash Collections

Cash collections were as follows for the periods indicated:

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2017 2016 2017 2016
Revenues:
Income recognized on finance receivables, net 98.1 % 91.3 % 95.8 % 90.8 %
Fee income 1.3 % 7.9 % 3.1 % 8.3 %
Other revenue 0.6 % 0.8 % 1.1 % 0.9 %
Total revenues 100.0 % 100.0 % 100.0 % 100.0 %
Operating expenses:
Compensation and employee services 34.1 % 29.7 % 33.5 % 29.2 %
Legal collection expenses 13.7 % 15.1 % 14.9 % 14.4 %
Agency fees 3.8 % 5.4 % 4.5 % 5.1 %
Outside fees and services 7.9 % 6.6 % 7.8 % 6.9 %
Communication 4.3 % 3.5 % 4.1 % 3.9 %
Rent and occupancy 1.8 % 1.7 % 1.8 % 1.7 %
Depreciation and amortization 2.4 % 2.8 % 2.5 % 2.7 %
Other operating expenses 5.0 % 4.7 % 5.3 % 4.8 %
Total operating expenses 73.0 % 69.6 % 74.4 % 68.7 %
Income from operations 27.0 % 30.4 % 25.6 % 31.3 %
Other income and (expense):
Gain on sale of subsidiaries 0.2 %
— % 8.0 % — %
Interest expense, net (12.9 )% (8.7 )% (11.5 )% (8.9 )%
Foreign exchange (loss)/gain (0.6 )% 2.3 % (0.2 )% 0.8 %
Income before income taxes 13.7 % 24.0 % 21.9 % 23.2 %
Provision for income taxes 5.3 % 7.5 % 8.7 % 7.4 %
Net income 8.4 % 16.5 % 13.2 % 15.7 %
Adjustment for net income attributable to noncontrolling interest 0.7 % 1.0 % 0.8 % 0.5 %
Net income attributable to PRA Group, Inc. 7.7 % 15.5 % 12.4 % 15.2 %



	For the Three Months Ended March 31,				Variance
(Amounts in thousands)	2019		2018		2019 vs. 2018
Americas-Core	$	290,723	$	246,237	$	44,486
Americas-Insolvency	44,613		55,280		(10,667		)
Europe-Core	116,858		118,109		(1,251		)
Europe-Insolvency	8,977		6,954		2,023
Total cash collections	$	461,171	$	426,580	$	34,591

Cash collections adjusted ⁽¹⁾	$	461,171	$	414,902	$	46,269
Cash collections on fully amortized pools	12,084		15,622		(3,538		)
Cash collections on cost recovery pools	3,653		17,524		(13,871		)
Net finance receivables on cost recovery at period-end	43,479		149,179		(105,700		)

(1) Cash collections adjusted refers to 2018 cash collections remeasured using 2019 exchange rates.

~~Three Months Ended September 30, 2017~~ ~~Compared To~~ ~~Three Months Ended September 30, 2016~~

~~Revenues~~

~~Total revenues~~Cash collections were ~~$201.0~~$461.2 million for the three months ended ~~September 30, 2017, a decrease~~March 31, 2019, an increase of ~~$21.0~~$34.6 million or ~~9.5%~~8.1%, compared to $426.6 million for the three months ended March 31, 2018. The increase was largely due to our U.S. legal collections increasing $22.1 million, or 30.6%, due primarily to the increase in the number of accounts qualifying for the legal channel, and our U.S. call center collections increasing $14.3 million, or 9.2%, due primarily to record U.S. Core portfolio purchasing in 2018. These increases were partially offset by a decline of $10.7 million, or 19.3%, in Americas Insolvency cash collections caused mainly by a decline in Americas Insolvency portfolio purchasing in 2018 not offsetting the continued runoff of the older portfolios.

Revenues

Total revenues were $245.9 million for the three months ended March 31, 2019, an increase of $21.8 million, or 9.7%, compared to total revenues of ~~$222.0~~$224.1 million for the three months ended ~~September 30, 2016.~~March 31, 2018.

A summary of our revenue generation during the three months ended March 31, 2019 and 2018 is as follows (amounts in thousands):



	For the Three Months Ended March 31,
	2019			2018
Cash collections	$	461,171		$	426,580
Principal amortization	(222,335		)	(207,956		)
Income recognized on finance receivables	238,836			218,624
Fee income	6,374			5,327
Other revenue	667			157
Total revenues	$	245,877		$	224,108

Income ~~Recognized~~recognized on ~~Finance Receivables, net~~finance receivables

Income recognized on finance receivables ~~net~~ was ~~$197.2~~$238.8 million for the three months ended ~~September 30, 2017, a decrease~~March 31, 2019, an increase of ~~$5.4~~$20.2 million or ~~2.7%,~~9.2% compared to income recognized on finance receivables ~~net,~~ of ~~$202.6~~$218.6 million for the three months ended ~~September 30, 2016.~~March 31, 2018. The ~~decrease~~increase was ~~due to a variety~~primarily the result of factors. Income generated by our Americas Insolvency portfolios declined due primarily to lower volumes of purchasing during fiscal years 2014 to 2016. Income generated by our European portfolios declined due primarily to the impact of the current competitive pricing environment which has resulted in lower yields on new portfolios. Also, elevated allowance charges incurred during 2016 reduced the income-earning principal balances of our portfolios, particularly therecord Americas Core ~~portfolios. This was offset by~~purchasing in 2018 and the impact of overperformance on select Americas Core and ~~European~~Europe Core portfolios which resulted in yield increases on certain ~~pools, as well as~~pools. This was partially offset by a decline in our Americas Insolvency revenue caused mainly by reduced Americas Insolvency portfolio purchasing in 2018 not offsetting the continued runoff of our older portfolios.

We have revised the presentation of our consolidated income statements for the prior year reporting period by reclassifying net allowance charges ~~which were $3.4 million for~~on our finance receivables as a line item separate from revenues. As a result, we no longer include net allowance charges as part of "Income recognized on finance receivables, net" on the ~~three months ended September 30, 2017, compared to $13.1 million for the three months ended September 30, 2016.~~face of our consolidated income statements and report income recognized on finance receivables gross of valuation allowances.

~~Cash collections were $381.8~~

Fee income

Fee income was $6.4 million in the three months ended ~~September 30, 2017, up $10.1~~March 31, 2019, an increase of $1.1 million or ~~2.7%~~20.8%, as compared to the three months ended September 30, 2016. The increase in cash collections was mainly caused by increases in our European Core and Americas Core portfolio collections, which increased $6.7 million and $2.2 million, respectively. Cash collections on fully amortized pools were $14.1$5.3 million in the three months ended ~~September 30, 2017, up $6.4~~March 31, 2018. The increase is primarily attributable to settlement timing in our claims processing company, Claims Compensation Bureau.

Other revenue

Other revenue was $0.7 million ~~or 83.1%, compared to $7.7~~and $0.2 million in the three months ended September 30, 2016. Cash collections on pools on cost recovery were $8.1 million in the three months ended September 30, 2017, up $1.4 million or 20.9%, compared to $6.7 million in the three months ended September 30, 2016.March 31, 2019 and 2018, respectively.

~~Income recognized on finance receivables, net, is shown net of changes in valuation allowances which~~Net Allowance Charges

Net allowance charges are recorded for significant decreases in expected cash flows or a change in timing of cash flows which would otherwise require a reduction in the stated yield on a pool of accounts. For the three months ended ~~September 30, 2017,~~March 31, 2019, we recorded net allowance charges of ~~$3.4~~$6.1 million consisting of ~~$2.4~~$4.8 million on our Americas Core portfolios, primarily on vintages purchased between 2013-2015, and ~~$1.0~~$1.3 million on our European portfolios. For the three months ended ~~September 30, 2016,~~March 31, 2018, we recorded net allowance charges of ~~$13.1~~$0.9 million, consisting of ~~$12.4~~net allowance reversals of $0.7 million on our Americas Core portfolios and ~~$0.7~~net allowance charges of $0.2 million and $1.4 million on our ~~European portfolios.~~

During the three months ended September 30, 2017, we reclassified $68.7 million from nonaccretable difference to accretable yield primarily due to increased cash collection forecasts relating mainly to certain Americas ~~Core~~Insolvency and our European Core pools. During the three months ended September 30, 2016, we reclassified $5.9 million from nonaccretable difference to accretable yield primarily due to increased cash collection forecasts relating mainly to certain European Core pools, partially offset by decreases in cash collection forecasts relating mainly to certain Americas Core pools.

~~Fee Income~~

Fee income was $2.7 million in the three months ended September 30, 2017, a decrease of $14.9 million or 84.7%, compared to $17.6 million in the three months ended September 30, 2016. This was primarily due to a decrease in fee income resulting from the sale of our government services businesses in January 2017 and the sale of PLS in June 2017.

~~Other Revenue~~

Other revenue decreased to $1.1 million in the three months ended September 30, 2017 from $1.7 million in the three months ended September 30, 2016, primarily due to a decrease in revenue generated by our investments.portfolios, respectively.

Operating Expenses

Total operating expenses were ~~$146.8~~$190.9 million for the three months ended ~~September 30, 2017, a decrease~~March 31, 2019, an increase of ~~$7.7~~$21.3 million or ~~5.0%~~12.6%, compared to operating expenses of ~~$154.5~~$169.6 million for the three months ended ~~September 30, 2016.~~March 31, 2018.

Compensation and ~~Employee Services~~employee services

Compensation and employee services expenses were ~~$68.5~~$79.6 million for the three months ended ~~September 30, 2017, an increase~~March 31, 2019, a decrease of ~~$2.6~~$1.6 million, or ~~3.9%~~2.0%, compared to ~~compensation and employee services expenses of $65.9~~$81.2 million for the three months ended ~~September 30, 2016.~~March 31, 2018. Compensation expense ~~increased~~decreased primarily as a result of ~~larger average staff sizes, partially~~the impact of the deconsolidation of RCB Investimentos S.A. ("RCB") in December 2018. Additionally, U.S. call centers compensation expenses declined compared to the first quarter of 2018 as the total number of collectors decreased, but this was offset by a decrease resulting from the sale of our government services businesses in January 2017 and the sale of PLS in June 2017. In the U.S., we have hired approximately 700 net new collectors since September 30, 2016.higher medical costs. Total full-time equivalents ~~increased~~decreased to ~~4,555~~5,236 as of ~~September 30, 2017,~~March 31, 2019, compared to ~~3,859~~5,639 as of ~~September 30, 2016.~~

~~Legal Collection Expenses~~March 31, 2018.

Legal collection ~~expenses~~fees

Legal collection fees represent contingent fees incurred for the cash collections generated by our independent third-party attorney network. Legal collection fees were $13.1 million for the three months ended March 31, 2019, an increase of $2.4 million or 22.4%, compared to legal collection fees of $10.7 million for the three months ended March 31, 2018. The increase was primarily due to an increase in external legal cash collections in the U.S.

Legal collection costs

Legal collection costs primarily consist of costs paid to courts where a lawsuit is ~~filed, contingent fees incurred for the cash collections generated for us by independent third-party attorneys, and the cost of documents paid to sellers of portfolios.~~filed. Legal collection ~~expenses~~costs were ~~$27.6~~$35.2 million for the three months ended ~~September 30, 2017, a decrease~~March 31, 2019, an increase of ~~$5.8~~$13.0 million or ~~17.4%~~58.6%, compared to legal collection ~~expenses~~costs of ~~$33.4~~$22.2 million for the three months ended ~~September 30, 2016.~~March 31, 2018. The ~~decrease~~increase was primarily due to ~~a decrease in~~additional court costs ~~paid~~related to ~~courts where a lawsuit is filed, mainly due to a decrease in~~the expansion of the number of accounts ~~brought into~~qualifying for the legal ~~collection process~~channel in the ~~Americas. Our costs paid to courts were $17.3 million for the three months ended September 30, 2017,~~U.S. partially offset by a decrease of $6.1 million or 26.1% compared to $23.4 million for the three months ended September 30, 2016. Additionally, our costs paid to sellers of nonperforming loans for documents were $0.3 million for the three months ended September 30, 2017, a decrease of $0.4 million or 57.1% compared to $0.7 million for the three months ended September 30, 2016. The decrease was primarilyreduction in Europe. This expansion is the result of ~~sellers providing more account documents to us when we purchase portfolios, mainly as~~ a ~~result~~change in the nature of the accounts purchased, the regulatory requirements. This was partially offset by an increase in legal collection expenses paid to third-party attorneys. Our costs paid to third-party attorneys were $10.1 million for the three months ended September 30, 2017, an increase of $0.8 million or 8.6% compared to $9.3 million for the three months ended September 30, 2016.

environment and consumer behavior.

Agency ~~Fees~~fees

Agency fees primarily represent third-party collection fees ~~and costs paid to repossession agents to repossess vehicles.~~incurred mainly outside the U.S. Agency fees were ~~$7.6~~$14.0 million for the three months ended ~~September 30, 2017,~~March 31, 2019, an increase of $5.7 million or 68.7%, compared to ~~$12.0~~$8.3 million for the three months ended ~~September 30, 2016.~~March 31, 2018. The ~~decrease~~increase was primarily ~~due~~the result of higher volumes of servicing activity in areas where we utilize third party agencies to ~~the impact of~~collect. Additionally, with the sale of ~~PLS~~the RCB operating platform, certain expenses in ~~June 2017 in addition~~other line items shifted from fixed to ~~a decrease in third-party collection~~variable and are now recorded on the agency fees ~~incurred by our foreign operations.~~line.

Outside ~~Fees~~fees and ~~Services~~services

Outside fees and services expenses were ~~$15.6~~$15.2 million for the three months ended ~~September 30, 2017,~~March 31, 2019, an increase of ~~$0.9~~$1.0 million or ~~6.1%~~7.0%, compared to outside fees and services expenses of ~~$14.7~~$14.2 million for the three months ended ~~September 30, 2016. This increase was primarily due to a $1.7 million increase in consulting fees, partially offset by a $0.8 million decrease in corporate legal and other professional fees.~~March 31, 2018.

Communication

Communication expenses were ~~$8.7~~$13.2 million for the three months ended ~~September 30, 2017,~~March 31, 2019, an increase of ~~$0.9~~$1.6 million or ~~11.5%~~13.8%, compared to communication expenses of ~~$7.8~~$11.6 million for the three months ended ~~September 30, 2016. This increase was~~March 31, 2018. These increases are primarily ~~due to a $1.0 million increase~~the result of increased letter and call volume associated with record portfolio purchases in ~~postage expenses. This was partially offset by a $0.1 million decrease~~Americas Core in ~~telephone expense.~~2018.

Rent and ~~Occupancy~~occupancy

Rent and occupancy expenses were ~~$3.7~~$4.4 million for the three months ended ~~September 30, 2017, a decrease~~March 31, 2019, an increase of ~~$0.2~~$0.1 million or ~~5.1%~~2.3%, compared to rent and occupancy expense of ~~$3.9~~$4.3 million for the three months ended ~~September 30, 2016. The decrease was primarily due to the impact of the sale of our government services businesses in January 2017 and the sale of PLS in June 2017.~~March 31, 2018.

Depreciation and ~~Amortization~~amortization

Depreciation and amortization expenses were ~~$4.8~~$4.6 million for the three months ended ~~September 30, 2017,~~March 31, 2019, a decrease of ~~$1.4~~$0.3 million or ~~22.6%~~6.1% , compared to depreciation and amortization expenses of ~~$6.2~~$4.9 million for the three months ended ~~September 30, 2016. The decrease was primarily due to the impact of the sale of our government services businesses in January 2017 and the sale of PLS in June 2017.~~March 31, 2018.

Other ~~Operating Expenses~~operating expenses

Other operating expenses were ~~$10.1~~$11.6 million for the three months ended ~~September 30, 2017,~~March 31, 2019, a decrease of ~~$0.4~~$0.6 million, or ~~3.8%~~4.9%, compared to other operating expenses of ~~$10.5~~$12.2 million for the three months ended ~~September 30, 2016.~~

~~Gain on Sale of Subsidiaries~~

Gain on sale of subsidiaries was $0.3 million for the three months ended September 30, 2017 compared to $0 for the three months ended September 30, 2016. The amount relates to a purchase price true-up on the sale of PLS.March 31, 2018.

Interest Expense, Net

Interest expense, net was ~~$25.9~~$34.0 million during the three months ended ~~September 30, 2017,~~March 31, 2019, an increase of ~~$6.6~~$8.2 million or ~~34.2%~~31.8%, compared to ~~$19.3~~$25.8 million for the three months ended ~~September 30, 2016.~~March 31, 2018. The increase was primarily due to ~~the additional interest incurred as a result of the issuance of our new convertible senior notes, which we issued and sold on May 26, 2017, as well as increases in~~higher average interest rates ~~and unused line fees. This was partially offset by a decrease in interest expense caused by our interest rate swaps and a decrease in the~~paired with higher levels of average borrowings outstanding on our ~~revolving credit facilities and term loans.~~

debt obligations in addition to the impact of the changes in the fair value of interest rate swap agreements not designated as hedging instruments.

Interest expense, net consisted of the following for the three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 (amounts in thousands):


	Three Months Ended September 30,									Three Months Ended March 31,
	2017			2016			Change			2019			2018			Change
Stated interest on debt obligations and unused line fees	$	17,945		$	16,600		$	1,345		$	23,397		$	20,043		$	3,354
Coupon interest on convertible debt	5,175			2,156			3,019			5,175			5,175			—
Amortization of convertible debt discount	2,796			1,127			1,669			3,042			2,877			165
Amortization of loan fees and other loan costs	2,505			1,647			858			2,636			2,553			83
Interest rate swap agreements	(1,025		)	(669		)	(356		)
Change in fair value on derivatives										349			(3,673		)	4,022
Interest income	(1,497		)	(1,551		)	54			(618		)	(1,194		)	576
Interest expense, net	$	25,899		$	19,310		$	6,589		$	33,981		$	25,781		$	8,200

Net Foreign Currency Transaction Gains/(Losses)~~/Gains~~

Net foreign currency transaction ~~losses~~gains were ~~$1.1~~$6.3 million for the three months ended ~~September 30, 2017~~March 31, 2019, compared to ~~net foreign currency transaction gains of $5.0~~$1.3 million for the three months ended ~~September 30, 2016.~~March 31, 2018. In any given period, ~~our~~we may incur foreign ~~entities conduct operations~~currency transactions gains or losses from transactions in currencies ~~different from their~~other than the functional ~~currency which generate foreign currency transaction gains~~currency.

Other Expense

Other expense was $0.4 million and ~~losses.~~$0.2 million during the three months ended March 31, 2019 and March 31, 2018, respectively.

~~Provision for~~ Income ~~Taxes~~Tax Expense

~~Provision for income taxes~~Income tax expense was ~~$10.7~~$3.9 million for the three months ended ~~September 30, 2017,~~March 31, 2019, a decrease of ~~$6.0~~$2.2 million, or ~~35.9%~~36.1%, compared to provision for income taxes of ~~$16.7~~$6.1 million for the three months ended ~~September 30, 2016.~~March 31, 2018. The decrease was primarily due to ~~a $25.6 million decrease~~decreases in income before income taxes ~~for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016, partially offset by an increase in~~and our effective tax rate. During the three months ended ~~September 30, 2017,~~March 31, 2019, our income before income taxes was $20.8 million, compared to $29.4 million for the three months ended March 31, 2018. During the three months ended March 31, 2019, our effective tax rate was ~~38.7%~~18.6%, compared to ~~32.2%~~20.9% for ~~full-year 2016.~~the three months ended March 31, 2018. The ~~increase~~decrease was due ~~primarily~~ to changes in the mix of projected taxable income between tax jurisdictions and an increase in the estimated blended rate for U.S. state taxes. The blended rate for U.S. state taxes increase was due to changes in the mix of earnings, dispositions of subsidiaries, and other factors.

~~Nine Months Ended September 30, 2017 Compared To Nine Months Ended September 30, 2016~~

~~Revenues~~

~~Total revenues were $607.9 million for the nine months ended September 30, 2017,~~including a decrease ~~of $67.4 million, or 10.0%, compared to total revenues of $675.3 million for the nine months ended September 30, 2016.~~

~~Income Recognized on Finance Receivables, net~~

Income recognized on finance receivables, net was $582.6 million for the nine months ended September 30, 2017, a decrease of $30.6 million, or 5.0%, compared to income recognized on finance receivables, net, of $613.2 million for the nine months ended September 30, 2016. The decrease was due to a variety of factors. Income generated by our Americas Insolvency portfolios declined due primarily to lower volumes of purchasing during fiscal years 2014 to 2016. Income generated by our European portfolios declined due primarily to the impact of the current competitive pricing environment which has resulted in lower yields on new portfolios. Also, elevated allowance charges incurred during 2016 reduced the income-earning principal balances of our portfolios, particularly the Americas Core portfolios. This was offset by overperformance on select Americas Core and European Core portfolios which resulted in yield increases on certain pools, as well as a decline in net allowance charges, which were $9.4 million for the nine months ended September 30, 2017, compared to $36.0 million for the nine months ended September 30, 2016.

Cash collections were $1,136.3 million for the nine months ended September 30, 2017, compared to $1,143.2 million for the nine months ended September 30, 2016, a decrease of $6.9 million, or 0.6%. The decrease in cash collections was mainly caused by a decrease in our Americas Insolvency portfolio collections, which decreased $33.4 million or 17.0%, due primarily to lower volumes of purchasing during 2014 to 2016. This was partially offset by increases in our Americas Core and European cash collections. Cash collections on fully amortized pools were $40.2 million in the nine months ended September 30, 2017, up $15.1 million or 60.2%, compared to $25.1 million in the nine months ended September 30, 2016. Cash collections on pools on cost recovery were $25.0 million in the nine months ended September 30, 2017, up $3.2 million or 14.7%, compared to $21.8 million in the nine months ended September 30, 2016.

For the nine months ended September 30, 2017, we recorded net allowance charges of $9.4 million, consisting of $4.8 million on our Americas Core portfolios and $1.1 million on our Americas Insolvency portfolios. We also recorded net allowance charges of $3.5 million on our European portfolios. For the nine months ended September 30, 2016, we recorded net allowance charges of $36.0 million, consisting of $32.3 million on our Americas Core portfolios and $0.3 million on our Americas Insolvency portfolios. We also recorded net allowance charges of $3.4 million on our European portfolios.

During the nine months ended September 30, 2017 and 2016, the Company reclassified $93.3 million and $95.9 million, respectively, from nonaccretable difference to accretable yield due primarily to increased cash collection forecasts relating mainly to certain Americas Core pools, Americas Insolvency pools and European Core pools during the nine months ended September 30, 2017, and certain Americas Insolvency pools and European Core pools during the nine months ended September 30, 2016.

~~Fee Income~~

Fee income was $18.9 million in the nine months ended September 30, 2017, a decrease of $37.3 million or 66.4%, compared to $56.2 million in the nine months ended September 30, 2016. This was primarily due to a decrease in fee income resulting from the sale of our government services businesses in January 2017 and the sale of PLS in June 2017.

~~Other Revenue~~

Other revenue increased to $6.4 million in the nine months ended September 30, 2017 from $6.0 million in the nine months ended September 30, 2016, primarily due to an increase in revenue generated by our investments.

~~Operating Expenses~~

Operating expenses were $452.1 million for the nine months ended September 30, 2017, a decrease of $12.1 million or 2.6%, compared to operating expenses of $464.2 million for the nine months ended September 30, 2016.

~~Compensation and Employee Services~~

Compensation and employee services expenses were $203.8 million for the nine months ended September 30, 2017, an increase of $6.3 million, or 3.2% compared to compensation and employee services expenses of $197.5 million for the nine months ended September 30, 2016. Compensation expense increased primarily as a result of larger average staff sizes, partially offset by a decrease resulting from the sale of our government services businesses in January 2017 and the sale of PLS in June 2017. In the U.S., we have hired approximately 700 net new collectors since September 30, 2016. Total full-time equivalents increased to 4,555 as of September 30, 2017, compared to 3,859 as of September 30, 2016.

~~Legal Collection Expenses~~

Legal collection expenses were $90.6 million for the nine months ended September 30, 2017, a decrease of $6.9 million, or 7.1%, compared to legal collection expenses of $97.5 million for the nine months ended September 30, 2016. The decrease was primarily due to a decrease in legal collection expenses paid to third-party attorneys, primarily as a result of a decrease in domestic external legal collections. Our costs paid to third-party attorneys were $33.3 million for the nine months ended September 30, 2017, a decrease of $4.1 million or 11.0% compared to $37.4 million for the nine months ended September 30, 2016. Additionally, our costs paid to sellers of nonperforming loans for documents were $1.0 million for the nine months ended September 30, 2017, a decrease of $3.0 million or 75.0% compared to $4.0 million for the nine months ended September 30, 2016. The decrease was primarily the result of sellers providing more account documents to us when we purchase portfolios, mainly as a result of regulatory requirements. This was offset by an increase in costs paid to courts where a lawsuit is filed mainly related to the expansion of the number of accounts brought into the legal channel in Europe during the nine months ended September 30, 2017. Our costs paid to courts were $56.3 million for the nine months ended September 30, 2017, an increase of $0.2 million or 0.4% compared to $56.1 million for the nine months ended September 30, 2016.

~~Agency Fees~~

Agency fees were $27.7 million for the nine months ended September 30, 2017, compared to $34.2 million for the nine months ended September 30, 2016. The decrease was primarily due to the impact of the sale of PLS in June 2017 and a decrease in third-party collection fees incurred by our foreign operations.

~~Outside Fees and Services~~

Outside fees and services expenses were $47.0 million for the nine months ended September 30, 2017, an increase of $0.6 million, or 1.3%, compared to outside fees and services expenses of $46.4 million for the nine months ended September 30,

2016. The increase was primarily the result of a $1.1 million increase in payment processing fees and database fees. This was partially offset by a $0.5 million decrease in consulting and other outside professional fees.

~~Communication~~

Communication expenses were $25.1 million for the nine months ended September 30, 2017, a decrease of $1.0 million, or 3.8%, compared to communication expenses of $26.1 million for the nine months ended September 30, 2016. This decrease was primarily due to the impact of the sale of our government services businesses in January 2017.

~~Rent and Occupancy~~

Rent and occupancy expenses were $10.8 million for the nine months ended September 30, 2017, a decrease of $0.9 million, or 7.7%, compared to rent and occupancy expenses of $11.7 million for the nine months ended September 30, 2016. The decrease was primarily due to the impact of the sale of our government services businesses in January 2017 and the sale of PLS in June 2017.

~~Depreciation and Amortization~~

Depreciation and amortization expenses were $15.1 million for the nine months ended September 30, 2017, a decrease of $3.2 million, or 17.5%, compared to depreciation and amortization expenses of $18.3 million for the nine months ended September 30, 2016. The decrease was primarily due to the impact of the sale of our government services businesses in January 2017.

~~Other Operating Expenses~~

Other operating expenses were $32.1 million for the nine months ended September 30, 2017, a decrease of $0.3 million, or 0.9%, compared to other operating expenses of $32.4 million for the nine months ended September 30, 2016.

~~Gain on Sale of Subsidiaries~~

Gain on sale of subsidiaries was $48.5 million for the nine months ended September 30, 2017 compared to $0 for the nine months ended September 30, 2016. During the nine months ended September 30, 2017, we sold our government services businesses and PLS which resulted in gains of $46.9 million and $1.6 million, respectively.

~~Interest Expense, Net~~

Interest expense, net was $69.7 million for the nine months ended September 30, 2017, an increase of $9.9 million or 16.6%, compared to $59.8 million for the nine months ended September 30, 2016. The increase was primarily due to the additional interest incurred as a result of the issuance of our new convertible senior notes, which we issued and sold on May 26, 2017, as well as increases in interest rates and unused line fees. This was partially offset by a decrease in interest expense caused by our interest rate swaps and a decrease in the average borrowings outstanding on our revolving credit facilities and term loans.

~~Interest expense, net consisted of the following for the nine months ended September 30, 2017 and 2016 (amounts in thousands):~~

Nine months ended September 30,
2017 2016 Change
Stated interest on debt obligations and unused line fees $ 52,863
$ 45,429
$ 7,434
Coupon interest on convertible debt 10,695
6,468
4,227
Amortization of convertible debt discount 5,760
3,336
2,424
Amortization of loan fees and other loan costs 7,068
6,187
881
Interest rate swap agreements (2,445 ) 2,287
(4,732 )
Interest income (4,279 ) (3,869 ) (410 )
Interest expense, net $ 69,662
$ 59,838
$ 9,824

~~Net Foreign Currency Transaction (Losses)/Gains~~

Net foreign currency transaction losses were $1.4 million for the nine months ended September 30, 2017 compared to net foreign currency transaction gains of $5.2 million for the nine months ended September 30, 2016. In any given period, our foreign entities conduct operations in currencies different from their functional currency which generate foreign currency transaction gains and losses.

~~Provision for Income Taxes~~

Provision for income taxes was $52.9 million for the nine months ended September 30, 2017, an increase of $2.7 million, or 5.4%, compared to provision for income taxes of $50.2 million for the nine months ended September 30, 2016. The increase was primarily due to an increase in our effective tax rate. During the nine months ended September 30, 2017, our effective tax rate was 39.7%, compared to 32.2% for full year 2016. The increase was due primarily to changes in the mix of projected taxable income between tax jurisdictions caused in large part by gains on sales of subsidiaries and to an increase in the estimated blended rate for U.S. state taxes which was caused by changes in the mix of earnings, dispositions of subsidiaries, and other factors. This was partially offset by a decrease in income before income taxes of $23.3 million, or 14.9%, for the nine months ended September 30, 2017, compareddue to ~~the nine months ended September 30, 2016.~~state apportionment.

Supplemental Performance Data

Finance ~~Receivables Portfolio Performance~~receivables portfolio performance

The following tables show certain data related to our finance receivables ~~portfolio.~~portfolios. Certain adjustments, as noted in the footnotes to these tables, have been made to reduce the impact of foreign currency fluctuations on ERC and purchase price multiples.

~~These tables disclose our Americas and European Core and Insolvency portfolios.~~ The accounts represented in the ~~Insolvency~~insolvency tables are those portfolios of accounts that were in an insolvency status at the time of purchase. This contrasts with accounts in our Core portfolios that file for bankruptcy/insolvency protection after we purchase them, which continue to be tracked in their corresponding Core portfolio. Core customers sometimes file for bankruptcy/insolvency protection subsequent to our purchase of the related Core portfolio. When this occurs, we adjust our collection practices ~~accordingly~~ to comply with bankruptcy/insolvency rules and procedures; however, for accounting purposes, these accounts remain in the ~~related~~original Core ~~portfolio. Conversely,~~pool. Insolvency accounts may be dismissed voluntarily or involuntarily subsequent to our purchase of the ~~related~~ Insolvency portfolio. Dismissal occurs when the terms of the bankruptcy are not met by the petitioner. When this occurs, we are typically free to pursue collection outside of bankruptcy procedures; however, for accounting purposes, these accounts remain in the ~~related~~original Insolvency pool.

Purchase price multiples can vary over time due to a variety of factors, including pricing competition, supply levels, age of the receivables purchased, and changes in our operational efficiency. For example, increased pricing competition during the 2005 to 2008 period negatively impacted purchase price multiples of our Core portfolio compared to prior years. Conversely, during the 2009 to 2011 period, ~~pricing disruptions~~additional supply occurred as a result of the economic downturn. This created unique and advantageous purchasing opportunities, particularly within the Insolvency market, relative to the prior four years. Purchase price multiples can also vary among types of finance receivables. For example, we generally incur lower collection costs on our Insolvency portfolio compared with our Core portfolio. This allows us, in general, to pay more for an Insolvency portfolio and experience lower purchase price multiples, while generating similar net income margins when compared with a Core portfolio.

When competition increases and/or supply decreases, pricing often becomes negatively impacted relative to expected collections, and yields tend to trend lower. The opposite tends to occur when competition decreases and/or supply increases.

Within a given portfolio type, to the extent that lower purchase price multiples are the result of more competitive pricing and lower net yields, this will generally lead to higher amortization rates and lower profitability. As portfolio pricing becomes more favorable on a relative basis, our profitability will tend to increase. Profitability within given Core portfolio types may also be impacted by the age and quality of the receivables, which impact the cost to collect those accounts. Fresher accounts, for example, typically carry lower associated collection expenses, while older accounts and lower balance accounts typically carry higher costs and, as a result, require higher purchase price multiples to achieve the same net profitability as fresher accounts.

Revenue recognition under ~~Financial Accounting Standards Board ("FASB") Accounting Standards Codification~~ASC Topic 310-30, "Loans and Debt Securities Acquired with Deteriorated Credit Quality" ("ASC 310-30") is driven by estimates of ~~total~~the amount and timing of collections as well as the timing of those collections. We record new portfolio purchases based on our best estimate of the cash flows expected at acquisition, which reflects the uncertainties inherent in the purchase of nonperforming loans and the results of our underwriting process. Subsequent to the initial booking, as we gain collection experience and confidence with a pool of accounts, we regularly update ERC. As a result, our estimate of total collections has often increased as pools have aged. These processes have tended to cause the ratio of ERC to purchase price for any given year of buying to gradually increase over time. Thus, all factors being equal in terms of pricing, one would typically tend to see a higher collection to purchase price ratio from a pool of accounts that was six years from purchase than a pool that was just two years from purchase.

We hold a beneficial interest in certain pools of finance receivables in Europe. Revenue is recognized under ASC Topic 310-20, "Receivables - Nonrefundable Fees and Other Costs" where we compute a life-to-date yield on a retrospective basis and apply it to the ERC of the portfolio. Revenue on these pools is included in income recognized on finance receivables. In addition, these pools are included in the following tables as they perform economically similar to finance receivables accounted for under ASC 310-30.

The numbers presented in the following tables represent gross cash collections and do not reflect any costs to collect; therefore, they may not represent relative profitability. Due to all the factors described above, readers should be cautious when making comparisons of purchase price multiples among periods and between types of receivables.

We hold a majority interest in a ~~closed-end~~ Polish investment fund that ~~purchases and services finance receivables. Our investment in this fund is~~was previously classified in our ~~consolidated balance sheets~~Consolidated Balance Sheets as "Investments" and ~~as such is not~~previously excluded from the following tables. Effective July 1, 2018, we assumed servicing responsibilities for approximately 50% of the portfolios held by the Polish investment fund which led to an accounting reconsideration event and the consolidation of this investment. The finance receivables recorded at the consolidation date and the related portfolio performance information are included in the ~~following tables. The equivalent~~Supplemental Performance Data section in the Europe-Core 2018 line unless otherwise indicated. On March 29, 2019, we signed an agreement making PRA Group the servicer of ~~the estimated remaining collections~~effectively 100% of the portfolios ~~expected to be received~~held by ~~us, was $61.3 million at September 30, 2017.~~

the Polish investment fund effective April 1, 2019.

Purchase Price Multiples as of September 30, 2017 Amounts in thousands
Purchase Price Multiples as of March 31, 2019 Amounts in thousands															Purchase Price Multiples as of March 31, 2019 Amounts in thousands

Purchase Period	Purchase Price ⁽¹⁾⁽³⁾		Net Finance Receivables ⁽⁴⁾		ERC-Historical Period Exchange Rates ⁽⁵⁾		Total Estimated Collections ⁽⁶⁾		ERC-Current Period Exchange Rates ⁽⁷⁾		Current Estimated Purchase Price Multiple		Original Estimated Purchase Price Multiple ⁽²⁾		Purchase Price ⁽¹⁾⁽²⁾		Net Finance Receivables ⁽³⁾		ERC-Historical Period Exchange Rates ⁽⁴⁾		Total Estimated Collections ⁽⁵⁾		ERC-Current Period Exchange Rates ⁽⁶⁾		Current Estimated Purchase Price Multiple		Original Estimated Purchase Price Multiple ⁽⁷⁾
Americas-Core
1996-2006	$	458,635	$	2,948	$	16,991	$	1,605,551	$	16,991	350	%	246	%
2007	179,826		4,862		20,426		442,487		20,426		246	%	227	%
2008	166,444		5,088		16,869		374,936		16,869		225	%	220	%
1996-2008															$	804,882	$	8,460	$	32,757	$	2,424,133	$	32,757	301	%	236	%
2009	125,156		1,089		35,328		461,678		35,328		369	%	252	%	125,153		642		20,893		459,594		20,893		367	%	252	%
2010	148,210		4,720		55,421		539,054		55,421		364	%	247	%	148,199		4,239		34,123		534,384		34,123		361	%	247	%
2011	209,654		14,337		77,717		723,855		77,717		345	%	245	%	209,606		9,231		57,522		736,144		57,522		351	%	245	%
2012	254,447		28,508		112,688		678,461		112,688		267	%	226	%	254,118		18,385		74,305		681,435		74,305		268	%	226	%
2013	391,612		82,257		244,721		971,832		244,721		248	%	211	%	390,979		44,602		129,076		939,654		129,076		240	%	211	%
2014	405,910		133,709		366,519		980,208		363,541		241	%	204	%	405,398		73,574		193,729		931,183		190,424		230	%	204	%
2015	445,198		209,558		460,239		951,890		463,015		214	%	205	%	443,992		122,428		288,967		970,072		288,804		218	%	205	%
2016	456,426		309,426		632,022		964,260		639,433		211	%	201	%	453,575		176,337		428,963		1,054,922		423,406		233	%	201	%
2017	377,203		356,961		668,675		728,881		668,889		193	%	193	%	534,185		330,760		657,395		1,119,849		653,959		210	%	193	%
2018															656,699		588,009		1,108,027		1,323,983		1,105,245		202	%	202	%
2019															169,526		166,465		335,384		345,455		335,384		204	%	204	%
Subtotal	3,618,721		1,153,463		2,707,616		9,423,093		2,715,039						4,596,312		1,543,132		3,361,141		11,520,808		3,345,898
Americas-Insolvency	Americas-Insolvency														Americas-Insolvency
1996-2006	54,396		—		404		91,147		404		168	%	145	%
2007	78,524		79		305		106,067		305		135	%	150	%
2008	108,578		469		979		168,971		979		156	%	163	%
2004-2008															241,465		—		582		365,645		582		151	%	155	%
2009	155,996		—		3,604		471,952		3,604		303	%	214	%	155,988		—		1,084		470,628		1,084		302	%	214	%
2010	208,963		—		5,017		548,234		5,017		262	%	184	%	208,942		—		1,915		547,132		1,915		262	%	184	%
2011	180,479		—		508		366,720		508		203	%	155	%	180,433		—		262		368,873		262		204	%	155	%
2012	251,471		—		4,504		386,491		4,504		154	%	136	%	251,418		—		163		390,297		163		155	%	136	%
2013	227,999		13,703		29,349		347,301		29,349		152	%	133	%	227,903		—		4,024		355,004		4,024		156	%	133	%
2014	148,769		33,306		49,021		210,471		48,975		141	%	124	%	148,710		5,226		12,734		216,687		12,701		146	%	124	%
2015	63,223		36,365		45,053		81,445		45,053		129	%	125	%	63,181		12,929		18,623		84,083		18,623		133	%	125	%
2016	92,486		57,870		69,697		112,436		70,216		122	%	123	%	92,280		26,671		34,798		114,224		34,741		124	%	123	%
2017	236,201		215,968		269,794		294,724		269,795		125	%	125	%	275,287		139,471		178,661		346,306		178,661		126	%	125	%
2018															98,102		90,015		112,373		124,694		112,373		127	%	127	%
2019															48,230		47,935		59,136		60,056		59,136		125	%	125	%
Subtotal	1,807,085		357,760		478,235		3,185,959		478,709						1,991,939		322,247		424,355		3,443,629		424,265
Total Americas	5,425,806		1,511,223		3,185,851		12,609,052		3,193,748						6,588,251		1,865,379		3,785,496		14,964,437		3,770,163
Europe-Core
2012	20,451		—		2,388		37,126		1,966		182	%	187	%	20,423		—		1,028		39,353		824		193	%	187	%
2013	20,365		668		1,596		22,933		1,290		113	%	119	%	20,346		8		615		24,356		483		120	%	119	%
2014	797,808		349,722		1,112,324		2,072,020		1,003,317		260	%	208	%	796,860		225,367		873,647		2,177,579		744,656		273	%	208	%
2015	423,412		255,365		497,625		720,188		468,229		170	%	160	%	420,576		181,626		393,001		742,543		355,328		177	%	160	%
2016	348,867		302,569		488,745		587,387		516,385		168	%	167	%	348,370		215,547		380,638		582,463		379,792		167	%	167	%
2017	97,295		94,865		140,656		150,084		147,488		154	%	154	%	247,719		181,807		270,435		354,772		264,864		143	%	144	%
2018 ⁽⁸⁾															345,892		310,988		465,042		514,378		466,881		149	%	148	%
2019															93,270		92,656		137,193		138,379		137,193		148	%	148	%
Subtotal	1,708,198		1,003,189		2,243,334		3,589,738		2,138,675						2,293,456		1,207,999		2,521,599		4,573,823		2,350,021
Europe-Insolvency	Europe-Insolvency														Europe-Insolvency
2014	10,876		2,529		6,608		18,393		6,223		169	%	129	%	10,876		692		2,064		18,029		1,841		166	%	129	%
2015	19,418		8,994		16,654		28,872		15,044		149	%	139	%	19,393		4,621		9,165		29,219		8,027		151	%	139	%
2016	42,222		30,030		41,601		57,791		42,764		137	%	130	%	42,190		17,448		26,534		61,144		26,416		145	%	130	%
2017	21,402		21,866		26,793		27,142		27,643		127	%	127	%	38,787		30,359		39,064		50,550		38,307		130	%	128	%
2018															45,633		43,606		53,453		56,077		53,283		123	%	123	%
2019															7,125		7,125		9,360		9,393		9,360		132	%	132	%
Subtotal	93,918		63,419		91,656		132,198		91,674						164,004		103,851		139,640		224,412		137,234
Total Europe	1,802,116		1,066,608		2,334,990		3,721,936		2,230,349						2,457,460		1,311,850		2,661,239		4,798,235		2,487,255
Total PRA Group	$	7,227,922	$	2,577,831	$	5,520,841	$	16,330,988	$	5,424,097					$	9,045,711	$	3,177,229	$	6,446,735	$	19,762,672	$	6,257,418


(1)	The amount reflected in ~~the~~ Purchase Price also includes the acquisition date finance receivables portfolios that were acquired through our various business acquisitions.


(2)	~~The Original Estimated Purchase Price Multiple represents the purchase price multiple at the end of the year of acquisition.~~


~~(3)~~	For our international amounts, Purchase Price is presented at the exchange rate at the end of the quarter in which the pool was purchased. In addition, any purchase price adjustments that occur throughout the life of the pool are presented at the period-end exchange rate for the respective quarter of purchase.


~~(4)~~(3)	For our international amounts, Net Finance Receivables are presented at the ~~September 30, 2017~~March 31, 2019 exchange rate.


~~(5)~~(4)	For our international amounts, ERC-Historical Period Exchange Rates is presented at the period-end exchange rate for the respective quarter of purchase.


~~(6)~~(5)	For our international amounts, TEC is presented at the period-end exchange rate for the respective quarter of purchase.


~~(7)~~(6)	For our international amounts, ERC-Current Period Exchange Rates is presented at the ~~September 30, 2017~~March 31, 2019 exchange rate.


(7)	The Original Purchase Price Multiple represents the purchase price multiple at the end of the year of acquisition.


(8)	The Europe-Core purchases include a $34.9 million finance receivables portfolio addition in the third quarter of 2018 relating to the consolidation of a Polish investment fund.

Portfolio Financial Information Year-to-date as of September 30, 2017 Amounts in thousands
Portfolio Financial Information Year-to-date as of March 31, 2019 Amounts in thousands																Portfolio Financial Information Year-to-date as of March 31, 2019 Amounts in thousands

Purchase Period	Purchase Price ⁽¹⁾⁽³⁾		Cash Collections ⁽²⁾		Gross Revenue ⁽²⁾		Amortization ⁽²⁾		Allowance ⁽²⁾			Net Revenue ⁽²⁾		Net Finance Receivables as of September 30, 2017⁽⁴⁾		Purchase Price ⁽¹⁾⁽²⁾		Cash Collections ⁽³⁾		Gross Revenue ⁽³⁾		Amortization ⁽³⁾		Net Allowance Charges/(Reversals) ⁽³⁾			Net Revenue ⁽³⁾⁽⁴⁾		Net Finance Receivables as of March 31, 2019 ⁽⁵⁾
Americas-Core
1996-2006	$	458,635	$	6,116	$	4,608	$	1,508	$	—		$	4,608	$	2,948
2007	179,826		4,539		2,997		1,542		330			2,667		4,862
2008	166,444		4,757		2,647		2,110		145			2,502		5,088
1996-2008																$	804,882	$	3,551	$	2,353	$	1,198	$	(550	)	$	2,903	$	8,460
2009	125,156		8,724		7,000		1,724		200			6,800		1,089		125,153		1,900		1,789		111		(100		)	1,889		642
2010	148,210		12,546		8,813		3,733		—			8,813		4,720		148,199		2,448		2,204		244		160			2,044		4,239
2011	209,654		25,782		20,386		5,396		285			20,101		14,337		209,606		4,653		4,025		628		575			3,450		9,231
2012	254,447		31,838		20,292		11,546		—			20,292		28,508		254,118		5,355		3,821		1,534		(300		)	4,121		18,385
2013	391,612		62,833		43,993		18,840		1,605			42,388		82,257		390,979		10,972		7,576		3,396		2,505			5,071		44,602
2014	405,910		90,971		61,881		29,090		1,114			60,767		133,709		405,398		16,884		10,884		6,000		1,533			9,351		73,574
2015	445,198		148,469		73,109		75,360		814			72,295		209,558		443,992		25,966		14,919		11,047		494			14,425		122,428
2016	456,426		199,942		107,138		92,804		288			106,850		309,426		453,575		41,916		23,291		18,625		505			22,786		176,337
2017	377,203		60,165		39,831		20,334		—			39,831		356,961		534,185		74,211		33,808		40,403		—			33,808		330,760
2018																656,699		92,768		52,025		40,743		—			52,025		588,009
2019																169,526		10,099		7,023		3,076		—			7,023		166,465
Subtotal	3,618,721		656,682		392,695		263,987		4,781			387,914		1,153,463		4,596,312		290,723		163,718		127,005		4,822			158,896		1,543,132
Americas-Insolvency	Americas-Insolvency															Americas-Insolvency
1996-2006	54,396		113		113		—		—			113		—
2007	78,524		148		77		71		—			77		79
2008	108,578		251		105		146		100			5		469
2004-2008																241,465		68		68		—		—			68		—
2009	155,996		1,284		1,284		—		—			1,284		—		155,988		151		151		—		—			151		—
2010	208,963		1,966		1,913		53		20			1,893		—		208,942		189		189		—		—			189		—
2011	180,479		3,135		3,135		—		—			3,135		—		180,433		224		224		—		—			224		—
2012	251,471		26,053		16,825		9,228		—			16,825		—		251,418		579		579		—		—			579		—
2013	227,999		37,763		10,210		27,553		—			10,210		13,703		227,903		1,061		1,061		—		—			1,061		—
2014	148,769		28,976		7,818		21,158		(12		)	7,830		33,306		148,710		5,313		3,051		2,262		—			3,051		5,226
2015	63,223		15,106		3,141		11,965		—			3,141		36,365		63,181		4,261		959		3,302		—			959		12,929
2016	92,486		23,686		4,679		19,007		1,030			3,649		57,870		92,280		4,987		1,052		3,935		—			1,052		26,671
2017	236,201		24,931		4,697		20,234		—			4,697		215,968		275,287		21,239		5,108		16,131		—			5,108		139,471
2018																98,102		5,622		1,727		3,895		—			1,727		90,015
2019																48,230		919		625		294		—			625		47,935
Subtotal	1,807,085		163,412		53,997		109,415		1,138			52,859		357,760		1,991,939		44,613		14,794		29,819		—			14,794		322,247
Total Americas	5,425,806		820,094		446,692		373,402		5,919			440,773		1,511,223		6,588,251		335,336		178,512		156,824		4,822			173,690		1,865,379
Europe-Core
2012	20,451		1,501		1,501		—		—			1,501		—		20,423		402		402		—		—			402		—
2013	20,365		911		627		284		62			565		668		20,346		271		178		93		—			178		8
2014	797,808		165,299		91,086		74,213		1,070			90,016		349,722		796,860		45,432		30,356		15,076		(250		)	30,606		225,367
2015	423,412		64,096		24,264		39,832		1,387			22,877		255,365		420,576		17,889		7,932		9,957		(333		)	8,265		181,626
2016	348,867		58,373		20,856		37,517		840			20,016		302,569		348,370		15,303		7,261		8,042		1,392			5,869		215,547
2017	97,295		9,703		2,877		6,826		—			2,877		94,865		247,719		11,524		4,058		7,466		576			3,482		181,807
2018 ⁽⁶⁾																345,892		24,843		6,571		18,272		—			6,571		310,988
2019																93,270		1,194		576		618		—			576		92,656
Subtotal	1,708,198		299,883		141,211		158,672		3,359			137,852		1,003,189		2,293,456		116,858		57,334		59,524		1,385			55,949		1,207,999
Europe-Insolvency	Europe-Insolvency															Europe-Insolvency
2014	10,876		2,464		1,117		1,347		—			1,117		2,529		10,876		555		268		287		—			268		692
2015	19,418		3,875		1,014		2,861		134			880		8,994		19,393		1,104		482		622		(72		)	554		4,621
2016	42,222		9,669		1,859		7,810		—			1,859		30,030		42,190		2,961		1,106		1,855		(40		)	1,146		17,448
2017	21,402		354		145		209		—			145		21,866		38,787		2,359		605		1,754		—			605		30,359
2018																45,633		1,964		495		1,469		—			495		43,606
2019																7,125		34		34		—		—			34		7,125
Subtotal	93,918		16,362		4,135		12,227		134			4,001		63,419		164,004		8,977		2,990		5,987		(112		)	3,102		103,851
Total Europe	1,802,116		316,245		145,346		170,899		3,493			141,853		1,066,608		2,457,460		125,835		60,324		65,511		1,273			59,051		1,311,850
Total PRA Group	$	7,227,922	$	1,136,339	$	592,038	$	544,301	$	9,412		$	582,626	$	2,577,831	$	9,045,711	$	461,171	$	238,836	$	222,335	$	6,095		$	232,741	$	3,177,229


(1)	The amount reflected in ~~the~~ Purchase Price also includes the acquisition date finance receivables portfolios that were acquired through our various business acquisitions.


~~(2)~~	~~For our international amounts, Cash Collections are presented using the average exchange rates during the current reporting period.~~


~~(3)~~(2)	For our international amounts, Purchase Price is presented at the exchange rate at the end of the quarter in which the pool was purchased. In addition, any purchase price adjustments that occur throughout the life of the pool are presented at the period-end exchange rate for the respective quarter of purchase.


~~(4)~~(3)	For our international amounts, amounts are presented using the average exchange rates during the current reporting period.


(4)	Net ~~Finance Receivables~~Revenue refers to income recognized on finance receivables, net of allowance charges/(reversals).


(5)	For our international amounts, net finance receivables are presented at the ~~September 30, 2017~~March 31, 2019 exchange rate.


(6)	The Europe-Core purchases include a $34.9 million finance receivables portfolio addition in the third quarter of 2018 relating to the consolidation of a Polish investment fund.

The following table, which excludes any proceeds from cash sales of finance receivables, ~~illustrate~~illustrates historical cash collections, by year, on our portfolios.

Cash Collections by Year, By Year of Purchase ⁽²⁾ as of September 30, 2017 Amounts in thousands
Cash Collections by Year, By Year of Purchase ⁽¹⁾ as of March 31, 2019 Amounts in thousands																													Cash Collections by Year, By Year of Purchase ⁽¹⁾ as of March 31, 2019 Amounts in thousands

			Cash Collections																												Cash Collections
Purchase Period	Purchase Price ⁽¹⁾⁽³⁾		1996- 2006		2007		2008		2009		2010		2011		2012		2013		2014		2015		2016		2017		Total		Purchase Price ⁽²⁾⁽³⁾		1996- 2008		2009		2010		2011		2012		2013		2014		2015		2016		2017		2018		2019		Total
Americas-Core	Americas-Core																												Americas-Core
1996-2006	$	458,635	$	861,003	$	195,738	$	135,589	$	99,674	$	77,459	$	64,555	$	49,820	$	35,711	$	25,488	$	18,293	$	11,862	$	6,116	$	1,581,308
2007	179,826		—		39,412		87,039		69,175		60,230		50,996		39,585		28,244		19,759		14,198		8,883		4,539		422,060
2008	166,444		—		—		47,253		72,080		62,363		53,654		42,850		31,307		21,027		13,786		8,989		4,757		358,066
1996-2008																													$	804,882	$	1,366,034	$	240,929	$	200,052	$	169,205	$	132,255	$	95,262	$	66,274	$	46,277	$	29,734	$	19,458	$	15,092	$	3,551	$	2,384,123
2009	125,156		—		—		—		40,703		95,627		84,339		69,385		51,121		35,555		24,896		16,000		8,724		426,350		125,153		—		40,703		95,627		84,339		69,385		51,121		35,555		24,896		16,000		10,994		8,180		1,900		438,700
2010	148,210		—		—		—		—		47,076		113,554		109,873		82,014		55,946		38,110		24,515		12,546		483,634		148,199		—		—		47,076		113,554		109,873		82,014		55,946		38,110		24,515		15,587		11,140		2,448		500,263
2011	209,654		—		—		—		—		—		61,971		174,461		152,908		108,513		73,793		48,711		25,782		646,139		209,606		—		—		—		61,971		174,461		152,908		108,513		73,793		48,711		31,991		21,622		4,653		678,623
2012	254,447		—		—		—		—		—		—		56,901		173,589		146,198		97,267		59,981		31,838		565,774		254,118		—		—		—		—		56,901		173,589		146,198		97,267		59,981		40,042		27,797		5,355		607,130
2013	391,612		—		—		—		—		—		—		—		101,614		247,849		194,026		120,789		62,833		727,111		390,979		—		—		—		—		—		101,614		247,849		194,026		120,789		78,880		56,449		10,972		810,579
2014	405,910		—		—		—		—		—		—		—		—		92,660		253,448		170,311		90,971		607,390		405,398		—		—		—		—		—		—		92,660		253,448		170,311		114,219		82,244		16,884		729,766
2015	445,198		—		—		—		—		—		—		—		—		—		116,951		228,432		148,469		493,852		443,992		—		—		—		—		—		—		—		116,951		228,432		185,898		126,605		25,966		683,852
2016	456,426		—		—		—		—		—		—		—		—		—		—		138,723		199,942		338,665		453,575		—		—		—		—		—		—		—		—		138,723		256,531		194,605		41,916		631,775
2017	377,203		—		—		—		—		—		—		—		—		—		—		—		60,165		60,165		534,185		—		—		—		—		—		—		—		—		—		107,327		278,733		74,211		460,271
2018																													656,699		—		—		—		—		—		—		—		—		—		—		122,712		92,768		215,480
2019																													169,526		—		—		—		—		—		—		—		—		—		—		—		10,099		10,099
Subtotal	3,618,721		861,003		235,150		269,881		281,632		342,755		429,069		542,875		656,508		752,995		844,768		837,196		656,682		6,710,514		4,596,312		1,366,034		281,632		342,755		429,069		542,875		656,508		752,995		844,768		837,196		860,927		945,179		290,723		8,150,661
Americas-Insolvency	Americas-Insolvency																												Americas-Insolvency
1996-2006	54,396		34,138		24,166		14,822		8,212		4,518		2,141		1,023		678		437		302		193		113		90,743
2007	78,524		—		2,850		27,972		25,630		22,829		16,093		7,551		1,206		714		500		270		148		105,763
2008	108,578		—		—		14,024		35,894		37,974		35,690		28,956		11,650		1,884		1,034		635		251		167,992
2004-2008																													241,465		117,972		69,736		65,321		53,924		37,530		13,534		3,035		1,836		1,098		653		356		68		365,063
2009	155,996		—		—		—		16,635		81,780		102,780		107,888		95,725		53,945		5,781		2,531		1,284		468,349		155,988		—		16,635		81,780		102,780		107,888		95,725		53,945		5,781		2,531		1,581		747		151		469,544
2010	208,963		—		—		—		—		39,486		104,499		125,020		121,717		101,873		43,649		5,008		1,966		543,218		208,942		—		—		39,486		104,499		125,020		121,717		101,873		43,649		5,008		2,425		1,352		189		545,218
2011	180,479		—		—		—		—		—		15,218		66,379		82,752		85,816		76,915		35,996		3,135		366,211		180,433		—		—		—		15,218		66,379		82,752		85,816		76,915		35,996		3,726		1,584		224		368,610
2012	251,471		—		—		—		—		—		—		17,388		103,610		94,141		80,079		60,715		26,053		381,986		251,418		—		—		—		—		17,388		103,610		94,141		80,079		60,715		29,337		4,284		579		390,133
2013	227,999		—		—		—		—		—		—		—		52,528		82,596		81,679		63,386		37,763		317,952		227,903		—		—		—		—		—		52,528		82,596		81,679		63,386		47,781		21,948		1,061		350,979
2014	148,769		—		—		—		—		—		—		—		—		37,045		50,880		44,313		28,976		161,214		148,710		—		—		—		—		—		—		37,045		50,880		44,313		37,350		28,759		5,313		203,660
2015	63,223		—		—		—		—		—		—		—		—		—		3,395		17,892		15,106		36,393		63,181		—		—		—		—		—		—		—		3,395		17,892		20,143		19,769		4,261		65,460
2016	92,486		—		—		—		—		—		—		—		—		—		—		18,869		23,686		42,555		92,280		—		—		—		—		—		—		—		—		18,869		30,426		25,047		4,987		79,329
2017	236,201		—		—		—		—		—		—		—		—		—		—		—		24,931		24,931		275,287		—		—		—		—		—		—		—		—		—		49,093		97,315		21,239		167,647
2018																													98,102		—		—		—		—		—		—		—		—		—		—		6,700		5,622		12,322
2019																													48,230		—		—		—		—		—		—		—		—		—		—		—		919		919
Subtotal	1,807,085		34,138		27,016		56,818		86,371		186,587		276,421		354,205		469,866		458,451		344,214		249,808		163,412		2,707,307		1,991,939		117,972		86,371		186,587		276,421		354,205		469,866		458,451		344,214		249,808		222,515		207,861		44,613		3,018,884
Total Americas	5,425,806		895,141		262,166		326,699		368,003		529,342		705,490		897,080		1,126,374		1,211,446		1,188,982		1,087,004		820,094		9,417,821		6,588,251		1,484,006		368,003		529,342		705,490		897,080		1,126,374		1,211,446		1,188,982		1,087,004		1,083,442		1,153,040		335,336		11,169,545
Europe-Core	Europe-Core																												Europe-Core
2012	20,451		—		—		—		—		—		—		11,604		8,995		5,641		3,175		2,198		1,501		33,114		20,423		—		—		—		—		11,604		8,995		5,641		3,175		2,198		2,038		1,996		402		36,049
2013	20,365		—		—		—		—		—		—		—		7,068		8,540		2,347		1,326		911		20,192		20,346		—		—		—		—		—		7,068		8,540		2,347		1,326		1,239		1,331		271		22,122
2014	797,808		—		—		—		—		—		—		—		—		153,180		291,980		246,365		165,299		856,824		796,860		—		—		—		—		—		—		153,180		291,980		246,365		220,765		206,255		45,432		1,163,977
2015	423,412		—		—		—		—		—		—		—		—		—		45,760		100,263		64,096		210,119		420,576		—		—		—		—		—		—		—		45,760		100,263		86,156		80,858		17,889		330,926
2016	348,867		—		—		—		—		—		—		—		—		—		—		40,368		58,373		98,741		348,370		—		—		—		—		—		—		—		—		40,368		78,915		72,603		15,303		207,189
2017	97,295		—		—		—		—		—		—		—		—		—		—		—		9,703		9,703		247,719		—		—		—		—		—		—		—		—		—		17,894		56,033		11,524		85,451
2018 ⁽⁴⁾																													345,892		—		—		—		—		—		—		—		—		—		—		24,326		24,843		49,169
2019																													93,270		—		—		—		—		—		—		—		—		—		—		—		1,194		1,194
Subtotal	1,708,198		—		—		—		—		—		—		11,604		16,063		167,361		343,262		390,520		299,883		1,228,693		2,293,456		—		—		—		—		11,604		16,063		167,361		343,262		390,520		407,007		443,402		116,858		1,896,077
Europe-Insolvency	Europe-Insolvency																												Europe-Insolvency
2014	10,876		—		—		—		—		—		—		—		—		5		4,297		3,921		2,464		10,687		10,876		—		—		—		—		—		—		5		4,297		3,921		3,207		2,620		555		14,605
2015	19,418		—		—		—		—		—		—		—		—		—		2,954		4,366		3,875		11,195		19,393		—		—		—		—		—		—		—		2,954		4,366		5,013		4,783		1,104		18,220
2016	42,222		—		—		—		—		—		—		—		—		—		—		6,175		9,669		15,844		42,190		—		—		—		—		—		—		—		—		6,175		12,703		12,856		2,961		34,695
2017	21,402		—		—		—		—		—		—		—		—		—		—		—		354		354		38,787		—		—		—		—		—		—		—		—		—		1,233		7,862		2,359		11,454
2018																													45,633		—		—		—		—		—		—		—		—		—		—		642		1,964		2,606
2019																													7,125		—		—		—		—		—		—		—		—		—		—		—		34		34
Subtotal	93,918		—		—		—		—		—		—		—		—		5		7,251		14,462		16,362		38,080		164,004		—		—		—		—		—		—		5		7,251		14,462		22,156		28,763		8,977		81,614
Total Europe	1,802,116		—		—		—		—		—		—		11,604		16,063		167,366		350,513		404,982		316,245		1,266,773		2,457,460		—		—		—		—		11,604		16,063		167,366		350,513		404,982		429,163		472,165		125,835		1,977,691
Total PRA Group	$	7,227,922	$	895,141	$	262,166	$	326,699	$	368,003	$	529,342	$	705,490	$	908,684	$	1,142,437	$	1,378,812	$	1,539,495	$	1,491,986	$	1,136,339	$	10,684,594	$	9,045,711	$	1,484,006	$	368,003	$	529,342	$	705,490	$	908,684	$	1,142,437	$	1,378,812	$	1,539,495	$	1,491,986	$	1,512,605	$	1,625,205	$	461,171	$	13,147,236


(1)	For our international amounts, cash collections are presented using the average exchange rates during the cash collection period.


(2)	The amount reflected in ~~the~~ Purchase Price also includes the acquisition date finance receivables portfolios that were acquired through our various business acquisitions.


~~(2)~~	~~For our international amounts, Cash Collections are presented using the average exchange rates during the cash collection period.~~


(3)	For our international amounts, Purchase Price is presented at the exchange rate at the end of the quarter in which the portfolio was purchased. In addition, any purchase price adjustments that occur throughout the life of the pool are presented at the period end exchange rate for the respective quarter of purchase.


(4)	The Europe-Core purchases include a $34.9 million finance receivables portfolio addition in the third quarter of 2018 relating to the consolidation of a Polish investment fund.

Estimated ~~Remaining Collections~~remaining collections

The following chart shows our total ERC of $6,257.4 million at March 31, 2019 by geographical region ~~at September 30, 2017~~ (amounts in millions).

Seasonality

Cash collections in the Americas tend to be higher in the first ~~and second quarters~~quarter of the year ~~and lower~~due to income tax refunds received by individuals in the ~~third~~U.S., and ~~fourth quarters of~~trend lower as the ~~year; cash collections in Europe tend to be higher in the third and fourth quarters of the year.~~year progresses. Customer payment patterns ~~are~~in all of the countries in which we operate can be affected by seasonal employment trends, income tax refunds, ~~and~~ holiday spending habits, ~~geographically.~~and other factors.

Cash collections

The following table displays our quarterly cash collections by geography and portfolio type, for the periods indicated.

Cash Collections by Geography and Type Amounts in thousands	Cash Collections by Geography and Type Amounts in thousands																Cash Collections by Geography and Type Amounts in thousands

	2017						2016								2015		2019		2018								2017
	Q3		Q2		Q1		Q4		Q3		Q2		Q1		Q4		Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2
Americas-Core	$	212,756	$	217,020	$	226,906	$	193,360	$	210,524	$	213,741	$	219,571	$	195,835	$	290,723	$	233,937	$	231,253	$	233,752	$	246,237	$	204,245	$	212,756	$	217,020
Americas-Insolvency	60,436		53,163		49,813		52,988		60,429		67,745		68,646		73,842		44,613		48,000		48,518		56,063		55,280		59,103		60,436		53,163
Europe-Core	102,681		99,121		98,081		97,429		96,028		102,972		94,091		97,149		116,858		113,154		102,780		109,359		118,109		107,124		102,681		99,121
Europe-Insolvency	5,961		5,371		5,030		4,974		4,719		2,744		2,025		2,545		8,977		7,618		6,731		7,460		6,954		5,794		5,961		5,371
Total Cash Collections	$	381,834	$	374,675	$	379,830	$	348,751	$	371,700	$	387,202	$	384,333	$	369,371	$	461,171	$	402,709	$	389,282	$	406,634	$	426,580	$	376,266	$	381,834	$	374,675

The following ~~tables~~table provides additional details on the composition of our U.S. Core cash collections for the periods indicated.

Domestic Portfolio Core Cash Collections by Source Amounts in thousands
U.S. Core Portfolio Cash Collections by Source Amounts in thousands																	U.S. Core Portfolio Cash Collections by Source Amounts in thousands

	2017						2016								2015		2019		2018								2017
	Q3		Q2		Q1		Q4		Q3		Q2		Q1		Q4		Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2
Call Center and Other Collections	$	123,009	$	122,780	$	127,368	$	103,595	$	115,454	$	119,568	$	127,851	$	108,979	$	169,753	$	134,543	$	137,325	$	143,527	$	155,448	$	120,349	$	123,009	$	122,780
External Legal Collections	35,042		37,863		40,267		35,231		36,415		40,369		43,203		42,432		57,419		47,410		41,935		40,631		38,891		31,960		35,042		37,863
Internal Legal Collections	31,761		32,511		34,937		31,458		33,206		34,505		39,080		38,998		37,018		30,724		32,064		32,532		33,423		31,154		31,761		32,511
Total Domestic Core Cash Collections	$	189,812	$	193,154	$	202,572	$	170,284	$	185,075	$	194,442	$	210,134	$	190,409
Total US-Core Cash Collections																	$	264,190	$	212,677	$	211,324	$	216,690	$	227,762	$	183,463	$	189,812	$	193,154

Collections ~~Productivity (Domestic Portfolio)~~productivity (U.S. portfolio)

The following tables display certain collections productivity ~~measures that we track.~~measures.

Cash Collections per Collector Hour Paid Domestic Portfolio
Cash Collections per Collector Hour Paid U.S. Portfolio											Cash Collections per Collector Hour Paid U.S. Portfolio

	Total domestic core cash collections ⁽¹⁾										Total U.S. core cash collections ⁽¹⁾
	2017		2016		2015		2014		2013		2019		2018		2017		2016		2015
First Quarter	$	254	$	274	$	247	$	223	$	193	$	215	$	176	$	254	$	274	$	247
Second Quarter	202		269		245		220		190		—		152		202		269		245
Third Quarter	191		281		250		217		191		—		163		191		281		250
Fourth Quarter	—		248		239		203		190		—		163		170		248		239

	Call center and other cash collections ⁽²⁾										Call center and other cash collections ⁽²⁾
	2017		2016		2015		2014		2013		2019		2018		2017		2016		2015
First Quarter	$	161	$	168	$	143	$	119	$	107	$	139	$	121	$	161	$	168	$	143
Second Quarter	129		167		141		107		104		—		101		129		167		141
Third Quarter	125		177		145		112		104		—		107		125		177		145
Fourth Quarter	—		153		139		110		100		—		104		112		153		139

(1)

Represents total cash collections less Insolvency cash collections from trustee-administered accounts. This metric includes cash collections from Insolvency accounts administered by the Core call centers as well as cash collections generated by our internal staff of legal collectors. This calculation does not include hours paid to our internal staff of legal collectors or to employees processing the required notifications to trustees on Insolvency accounts.


(2)	Represents total cash collections less internal legal cash collections, external legal cash collections, and Insolvency cash collections from trustee-administered accounts.

Portfolio ~~Purchasing~~purchasing

The following graph shows the purchase price of our portfolios by year since ~~2007.~~2009. It also includes the acquisition date finance receivable portfolios that were acquired through our various business acquisitions.

Our ability to profitably purchase and liquidate pools of Insolvency accounts provides diversity to our nonperforming loan purchasing business. Although we generally purchase Insolvency portfolios from many of the same consumer lenders from whom we acquire Core customer portfolios, the volumes and pricing characteristics as well as the competitors are different. Based upon market dynamics, the profitability of portfolios purchased in the Insolvency and Core markets may differ over time. We have found periods when Insolvency accounts were more profitable and other times when Core accounts were more profitable. When pricing becomes more competitive due to reduced portfolios available for purchase or increased demand from competitors entering or increasing their presence in the market, prices tend to go up, driving down the purchase price multiples and lowering the overall expected returns. When pricing relaxes due to market dynamics, purchase price multiples tend to increase, thereby increasing the expected returns.

In order to collect our Core portfolios, we generally need to employ relatively higher amounts of labor and incur additional collection costs to generate each dollar of cash collections as compared with Insolvency portfolios. In order to achieve acceptable levels of net return on investment (after direct expenses), we are generally targeting a higher Total Estimated Collections to purchase price multiple for Core portfolios. On the other hand, Insolvency accounts generate the majority of their cash collections The 2019 totals represent portfolio purchases through the ~~efforts~~first quarter of ~~insolvency courts and trustees. In this process, cash is remitted to our Company with no corresponding cost other than~~2019 while the ~~cost of filing claims at~~prior years totals are for the time of purchase, court fees associated with the filing of ownership claim transfers and general administrative costs for monitoring the progress of each account through the insolvency process. As a result, collection costs are much lower for us when liquidating a pool of Insolvency accounts as compared to a pool of Core accounts, but conversely the price we pay for Insolvency accounts is generally higher than Core accounts. We generally target similar net income margins for Insolvency and Core portfolios at any given point in the market cycles. However, because of the lower related collection costs, we can pay more for Insolvency portfolios, which causes the Total Estimated Collections to purchase price multiples of Insolvency pools generally to be lower. In summary, compared to a similar investment in a pool of Core accounts, to the extent both pools had identical targeted net income margins, the Insolvency pool would be expected to generate less revenue, less direct expenses, similar operating income, and a higher operating margin. From time to time, especially in Europe, we purchase Core portfolios which consist of a majority of previously charged-off accounts which are now paying based on established payment plans. These portfolios have some of the same financial dynamics as Insolvency accounts, with lower collection costs and lower purchase price multiples.full year.

We utilize a long-term approach to collecting our receivables. This approach has historically caused us to realize significant cash collections and revenues from purchased portfolios of finance receivables years after they are originally acquired. As a result, we have in the past been able to temporarily reduce our level of current period acquisitions without a material negative current period impact on cash collections and revenue.

The following table displays our quarterly portfolio purchases for the periods indicated.

Portfolio Purchases by Geography and Type Amounts in thousands	Portfolio Purchases by Geography and Type Amounts in thousands																Portfolio Purchases by Geography and Type Amounts in thousands

	2017						2016								2015		2019		2018								2017
	Q3		Q2		Q1		Q4		Q3		Q2		Q1		Q4		Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2
Americas-Core	$	115,572	$	144,871	$	115,166	$	91,800	$	95,452	$	130,529	$	136,057	$	120,554	$	169,189	$	172,511	$	170,426	$	182,768	$	131,427	$	160,278	$	115,572	$	144,871
Americas-Insolvency	73,497		100,040		67,123		20,929		16,760		33,723		22,952		20,589		48,243		52,871		17,151		16,651		13,436		44,195		73,497		100,040
Europe-Core(1)	14,695		42,876		39,505		80,129		34,240		68,835		171,038		79,735		94,283		231,810		45,754		19,403		18,000		152,417		14,695		42,876
Europe-Insolvency	7,146		7,860		6,020		6,943		14,803		16,410		6,731		4,976		7,134		33,661		4,159		2,577		5,392		17,698		7,146		7,860
Total Portfolio Purchases	$	210,910	$	295,647	$	227,814	$	199,801	$	161,255	$	249,497	$	336,778	$	225,854
Total Portfolio Purchasing																	$	318,849	$	490,853	$	237,490	$	221,399	$	168,255	$	374,588	$	210,910	$	295,647


(1)	The Europe-Core purchases in the above table and graph exclude a $34.9 million finance receivables portfolio addition in the third quarter of 2018 relating to the consolidation of a Polish investment fund.

Portfolio ~~Purchases~~purchases by ~~Stratifications (Domestic Only)~~stratifications (U.S. only)

The following table categorizes our quarterly ~~domestic~~U.S. portfolio purchases for the periods indicated into major asset type and delinquency category. Over the past 20 plus years, we have acquired more than 4651 million customer accounts in the U.S. ~~alone.~~

Domestic Portfolio Purchases by Major Asset Type Amounts in thousand
U.S. Portfolio Purchases by Major Asset Type Amounts in thousands																	U.S. Portfolio Purchases by Major Asset Type Amounts in thousands

	2017						2016								2015		2019		2018								2017
	Q3		Q2		Q1		Q4		Q3		Q2		Q1		Q4		Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2
Major Credit Cards	$	54,892	$	65,177	$	57,615	$	35,306	$	38,858	$	48,471	$	68,072	$	32,734	$	43,440	$	65,025	$	78,864	$	100,160	$	84,858	$	87,895	$	54,892	$	65,177
Consumer Finance	3,308		7,354		7,987		5,678		1,309		1,616		2,533		2,616		2,424		2,619		2,248		4,098		3,558		2,360		3,308		7,354
Private Label Credit Cards	78,609		101,162		73,473		56,681		54,969		86,331		62,104		93,660		84,515		100,633		100,517		82,406		47,962		90,332		78,609		101,162
Auto Related	49,741		67,701		30,191		6,104		—		831		411		7,032		30,358		31,892		330		427		613		21,219		49,741		67,701
Total	$	186,550	$	241,394	$	169,266	$	103,769	$	95,136	$	137,249	$	133,120	$	136,042	$	160,737	$	200,169	$	181,959	$	187,091	$	136,991	$	201,806	$	186,550	$	241,394

Domestic Portfolio Purchases by Delinquency Category Amounts in thousand
U.S. Portfolio Purchases by Delinquency Category Amounts in thousands																	U.S. Portfolio Purchases by Delinquency Category Amounts in thousands

	2017						2016								2015		2019		2018								2017
	Q3		Q2		Q1		Q4		Q3		Q2		Q1		Q4		Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2
Fresh ⁽¹⁾	$	67,540	$	73,813	$	43,786	$	30,919	$	30,114	$	42,048	$	37,036	$	37,450	$	51,212	$	61,730	$	61,882	$	80,976	$	71,067	$	76,910	$	67,540	$	73,813
Primary ⁽²⁾	1,623		4,314		726		2,672		1,568		29,990		26,240		37,994		19,725		39,690		37,670		34,166		3,290		23,100		1,623		4,314
Secondary ⁽³⁾	43,366		52,217		49,794		48,005		51,630		51,019		43,841		36,804		35,857		45,878		63,525		55,299		49,198		48,865		43,366		52,217
Tertiary ⁽³⁾	524		—		1,111		557		—		—		1,843		2,298		4,435		—		—		—		—		8,736		524		—
Insolvency	73,497		100,040		67,123		20,930		11,145		13,702		22,952		20,589		48,243		52,871		17,151		16,650		13,436		44,195		73,497		100,040
Other ⁽⁴⁾	—		11,010		6,726		686		679		490		1,208		907		1,265		—		1,731		—		—		—		—		11,010
Total	$	186,550	$	241,394	$	169,266	$	103,769	$	95,136	$	137,249	$	133,120	$	136,042	$	160,737	$	200,169	$	181,959	$	187,091	$	136,991	$	201,806	$	186,550	$	241,394


(1)	Fresh accounts are typically past due 120 to 270 days, charged-off by the credit originator and are either being sold prior to any post-charge-off collection activity or placement with a third-party for the first time.


(2)	Primary accounts are typically 360 to 450 days past due and charged-off and have been previously placed with one contingent fee servicer.


(3)	Secondary and tertiary accounts are typically more than 660 days past due and charged-off and have been placed with two or three contingent fee servicers.


(4)	Other accounts are typically two to three years or more past due and charged-off and have previously been worked by four or more contingent fee servicers.

Liquidity and Capital Resources

We manage our liquidity to help provide access to sufficient funding to meet our business needs and financial obligations. As of ~~September 30, 2017,~~March 31, 2019, cash and cash equivalents totaled ~~$113.8~~$102.1 million. Of the cash and cash equivalent balance as of ~~September 30, 2017, $95.3~~March 31, 2019, $83.8 million consisted of cash on hand related to foreign operations with indefinitely reinvested earnings. See the "Undistributed Earnings of Foreign Subsidiaries" section below for more information.

At ~~September 30, 2017,~~March 31, 2019, we had approximately ~~$2.0~~$2.6 billion in borrowings outstanding with ~~$1.0 billion~~$686.3 million of availability under all our credit facilities (subject to the borrowing base and applicable debt covenants). Considering borrowing base restrictions, as of ~~September 30, 2017,~~March 31, 2019, the amount available to be drawn was ~~$618.8~~$388.8 million. Of the ~~$1.0 billion~~$686.3 million of borrowing availability, ~~$566.2~~$234.5 million was available under our European credit facility and ~~$479.6~~$451.8 million was available under our North American credit facility. Of the ~~$618.8~~$388.8 million available considering borrowing base restrictions, ~~$165.4~~$125.0 million was available under our European credit facility and ~~$453.5~~$263.8 million was available under our North American credit facility. ~~The primary borrowing base under both credit facilities is ERC of the respective finance receivables portfolios.~~ For more information, see Note 4.6 to our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report.

An additional funding source for our Europe operations is interest-bearing ~~deposits generated in Europe.~~deposits. Per the terms of our European credit facility, we are permitted to obtain interest-bearing deposit funding of up to SEK ~~1.5~~1.2 billion (approximately ~~$183.9~~$129.0 million as of ~~September 30, 2017)~~March 31, 2019). Interest-bearing deposits as of ~~September 30, 2017~~March 31, 2019 were ~~$96.4~~$95.3 million.

We believe we were in compliance with the covenants of our ~~material~~ financing arrangements as of ~~September 30, 2017.~~

As discussed in Note 11, we sold our government services business in January 2017 for approximately $91.5 million and our vehicle location, skip tracing and collateral recovery business in June 2017 for approximately $4.5 million.March 31, 2019.

We have the ability to slow the purchasing of finance receivables if necessary, with low impact to current year cash collections. For example, ~~the~~we invested $1.1 billion in portfolio purchases in 2018. The portfolios purchased in ~~2016~~2018 generated ~~$204.1~~$154.4 million of cash collections, representing only ~~13.7%~~9.5% of ~~2016~~2018 cash collections.

Contractual obligations over the next year are primarily related to debt maturities and purchase commitments. Our North American credit facility expires in May 2022. Our European credit facility expires in February 2021. Of our ~~$762.9~~$432.5 million in ~~long-term debt~~term loans outstanding at ~~September 30, 2017,~~March 31, 2019, $10.0 million is due within one year.

We have in place forward flow commitments for the purchase of nonperforming loans ~~over the next 12 months~~ with a maximum purchase price of ~~$413.6~~$351.5 million as of ~~September 30, 2017.~~March 31, 2019. We may also enter into new or renewed flow commitments and close on spot transactions in addition to the aforementioned flow agreements.

~~For tax purposes,~~On May 10, 2017, we ~~utilized~~reached a settlement with the ~~cost recovery method of accounting through December 31, 2016. The~~ Internal Revenue Service ~~("IRS") examined our 2005 through 2012 tax returns and asserted~~in regards to its assertion that tax revenue recognition using the cost recovery method did not clearly reflect taxable ~~income and therefore issued Notices of Deficiency to us for tax years ended December 31, 2005 through 2012 (the "Notices").~~income. In response to the Notices, we filed petitions in the U.S. Tax Court (the "Tax Court") challenging the deficiencies and the Tax Court set the trial to begin on May 15, 2017. On May 10, 2017, we reached a settlementaccordance with the ~~IRS in regards to the Notices. Under the~~ settlement, ~~both parties agreed that no amounts were due for years 2005 through 2012 and the Tax Court entered decisions to that effect on June 22, 2017. Also, under the settlement, we agreed to utilize a new~~our tax accounting method to recognize ~~net~~ finance receivables revenue changed effective with tax year 2017. Under the new method, a portion of the annual collections ~~will amortize~~amortizes principal and the remaining portion ~~will be considered~~is taxable income. ~~We will not be required to pay any interest or penalties related to the prior periods.~~ The deferred tax liability related to the difference in timing between the new method and the ~~prior~~cost recovery method will be incorporated evenly into our tax filings

over four years effective with ~~no associated interest. Based on current~~ tax ~~rates, we~~year 2017. We estimate the related tax payments for future years to be approximately ~~$14.5~~$9.3 million per quarter.

On October 22, 2015, our board of directors authorized a share repurchase program to purchase up to $125.0 million of our outstanding shares of common stock. Repurchases depend on prevailing market conditions and other factors. The repurchase program may be suspended or discontinued at any time. During the second quarter of 2017, we repurchased approximately $44.9 million of our outstanding shares of common stock. At September 30, 2017, the maximum remaining purchase price for share repurchases under the program was approximately $0.1 million.

We believe that funds generated from operations and from cash collections on finance receivables, together with existing cash and available borrowings under our revolving credit facilities will be sufficient to finance our operations, planned capital expenditures, forward flow purchase commitments, and additional portfolio purchasing during the next 12 months. Business acquisitions, adverse outcomes in pending litigation or higher than expected levels of portfolio purchasing could require additional financing from other sources.

Cash Flows Analysis

Our operating activities ~~used cash of $10.9 million and~~ provided cash of ~~$118.9~~$15.0 million and $34.6 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, respectively. Key drivers of the ~~change~~changes included cash collections recognized as revenue, income tax payments, ~~changes in accrued expenses~~ and ~~other liabilities, and interest payments.~~operating expenses. Cash collections recognized as revenue ~~declined $30.6~~increased $20.2 million, as previously described in the revenues discussion and ~~analysis. Cash~~analysis, and cash paid for income taxes increased ~~$55.4 million, and included $23.4 million~~$15.1 million. In addition, changes in other accounts related to ~~the sale of~~ our government services business. Income tax payments also included $43.8 million related to payment of the deferred tax liability discussed earlier in this section. Accrued expenses decreased $7.2 million and $12.3 million for the nine months ended September 30, 2017 and 2016, respectively. Decreases in accrued expenses for both periods were due to various factors including litigation settlement payments. Other liabilities decreased $9.6 million for the nine months ended September 30, 2017, compared to an increase of $0.6 million for the nine months ended September 30, 2016. The decrease in other liabilities during the nine months ended September 30, 2017, was mainly due to deferred payments for portfolio purchases. The increase in other liabilities during the nine months ended September 30, 2016, was mainly due to the timing of client remittances inoperating activities impacted our fee-based businesses. Interest payments increased $10.7 million due primarily to increased borrowings including the 2023 Notes issued in May 2017, and to increases in interest rates and unused line fees.cash from operations.

Our investing activities used cash of ~~$77.7~~$112.9 million and ~~$236.3~~provided cash of $20.3 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, respectively. Cash used in investing activities is primarily driven by acquisitions of nonperforming loans and corporate acquisitions. Cash provided by investing activities is primarily driven by cash collections applied to principal on finance ~~receivables. Cash used in investing activities is primarily driven by acquisitions~~receivables and proceeds from sale of ~~nonperforming loans.~~subsidiaries. The ~~decrease~~change in net cash used in investing activities is primarily due to the sale of subsidiaries during the nine months ended September 30, 2017, which provided us with net proceeds of $93.3 million; a decrease in business acquisitions, which totaled $0.0 million during the nine months ended September 30, 2017, compared to $67.0 million during the nine months ended September 30, 2016; and an increase in the amounts of acquisitions of finance receivables, which totaled ~~$718.6~~$264.6 million during the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, compared to ~~$697.8~~$165.9 million during ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2018. In addition, we had $57.6 million in corporate acquisitions during the three months ended March 31, 2019, compared to $0 in the prior year comparable period. This was partially offset by an increase in collections applied to principal on finance receivables which totaled $222.3 million during the three months ended March 31, 2019, compared to $208.0 million during the three months ended March 31, 2018. We were also provided cash of $31.2 million during the three months ended March 31, 2019 related to the sale of a subsidiary in the fourth quarter of 2018, of which we received 25% of the proceeds on December 20, 2018 and the remaining 75% in the first quarter of 2019.

Our financing activities provided cash of ~~$99.3~~$105.5 million and ~~$93.1~~used cash of $70.6 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, respectively. Cash for financing activities is normally provided by draws on our lines of ~~credit.~~credit and proceeds from debt offerings. Cash used in financing activities is primarily driven by principal payments on our lines of credit and long-term debt. The change in cash provided by financing activities for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 compared to ~~nine~~three months ended ~~September 30, 2016~~March 31, 2018 was primarily due to an increase in ~~the rate~~net draws on our lines of ~~growth of our borrowings, offset partially by repurchases of our common stock.~~credit and long-term debt. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, net ~~proceeds from~~draws on our borrowing activities ~~was $156.1~~totaled $99.7 million compared to ~~$73.8~~net repayments of $49.5 million during the ~~nine~~three months ended ~~September 30, 2016. Repurchases of our common stock~~March 31, 2018. Cash used in financing activities was also impacted by distributions paid to noncontrolling interests. Distributions paid to noncontrolling interests totaled ~~$44.9~~$6.9 million ~~during~~and $12.5 million for the ~~nine~~three months ended ~~September 30, 2017, compared to $0.0 million during the nine months ended September 30, 2016.~~March 31, 2019 and 2018, respectively. Additionally, during the ~~the nine~~three months ended ~~September 30, 2017~~March 31, 2019 we had aan increase in interest bearing deposits of ~~$10.1~~$16.1 million, compared to ~~$40.2~~a decrease of $6.3 million during the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2018.

We have revised the presentation of our consolidated statements of cash flows for the prior reporting period by reclassifying allowance charges on our finance receivables from investing activities to operating activities during 2018.

Undistributed Earnings of Foreign Subsidiaries

We intend to use predominantly all of our accumulated and future undistributed earnings of foreign subsidiaries to expand operations outside the U.S.; therefore, such undistributed earnings of foreign subsidiaries are considered to be indefinitely reinvested outside the U.S. Accordingly, no provision for ~~federal~~income tax and ~~state income~~withholding tax has been provided thereon. If management's intentions change and eligible undistributed earnings of foreign subsidiaries are repatriated, we ~~would~~could be subject to additional ~~U.S.~~ income taxes and withholding ~~taxes payable to various foreign jurisdictions, where applicable.~~taxes. This could result in a higher effective tax rate in the period in which such a decision is made to repatriate accumulated or future undistributed foreign earnings. The amount of cash on hand related to foreign operations with indefinitely reinvested earnings was ~~$95.3~~$83.8 million and ~~$73.6~~$78.6 million as of ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016,~~2018, respectively. Refer to ~~the Note 6~~Note11 to our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report for further information related to our income taxes and undistributed foreign earnings.

~~Contractual Obligations~~

~~Our contractual obligations as of September 30, 2017 were as follows (amounts in thousands):~~

Payments due by period
Contractual Obligations Total Less than 1 year 1 - 3 years 3 - 5 years More than 5 years
Operating leases $ 43,807
$ 11,305
$ 14,179
$ 9,243
$ 9,080
Revolving credit ⁽¹⁾
804,782
40,749
80,176
682,530
1,327
Long-term debt ⁽²⁾
1,714,142
61,660
409,299
886,108
357,075
Purchase commitments ⁽³⁾
413,570
413,570
—
—
—
Employment agreements 11,794
6,419
4,250
1,125
—
Total $ 2,988,095
$ 533,703
$ 507,904
$ 1,579,006
$ 367,482


~~(1)~~	This amount includes estimated interest and unused line fees due on our revolving credit and assumes that the outstanding balances on the revolving credit remain constant from the September 30, 2017 balances to maturity.


~~(2)~~	~~This amount includes scheduled interest and principal payments on our term loans and convertible senior notes.~~


~~(3)~~	~~This amount includes the maximum remaining amount to be purchased under forward flow and other contracts for the purchase of nonperforming loans in the amount of approximately $413.6 million.~~

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements as defined by Item 303(a)(4) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

Recent Accounting Pronouncements

For a summary of recent accounting pronouncements and the anticipated effects on our consolidated financial statements see Note ~~10.~~13 to our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles. Our significant accounting policies are discussed in Note 1 to our ~~consolidated financial statements~~Consolidated Financial Statements included in Part II, Item 8 of our ~~2016~~2018 Form 10-K. Our significant accounting policies are fundamental to understanding our results of operations and financial condition because they require that we use estimates, assumptions and judgments that affect the reported amounts of revenues, expenses, assets, and liabilities.

Three of these policies are considered to be critical because they are important to the portrayal of our financial condition and results, and because they require management to make judgments and estimates that are difficult, subjective, and complex regarding matters that are inherently uncertain.

We base our estimates on historical experience, current trends and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. If these estimates differ significantly from actual results, the impact on our consolidated financial statements may be material.

Management has reviewed these critical accounting policies with the Audit Committee of our board of directors.

Revenue ~~Recognition~~recognition - ~~Finance Receivables~~finance receivables

We account for the vast majority of our investment in finance receivables under the guidance of ASC 310-30. Revenue recognition for finance receivables accounted for under ASC 310-30 involves the use of estimates and the exercise of judgment on the part of management. These estimates include projections of the quantity and timing of future cash flows and economic lives of our pools of finance receivables. Significant changes in such estimates could result in increased revenue via yield increases which are recognized prospectively or increased allowance charges resulting from decreased ~~revenue through the incurrence of allowance charges.~~cash flow estimates which are recognized immediately.

We implement the accounting for income recognized on finance receivables under ASC 310-30 as follows:

We create each accounting pool using our projections of estimated cash flows and expected economic life. We then compute the effective yield that fully amortizes the pool over a reasonable expectation of its economic life based on the current projections of estimated cash flows. As actual cash flow results are recorded, we ~~balance those results to the data contained in our proprietary models to ensure accuracy, then~~ review each pool watching for trends, actual performance versus projections and curve shape (a graphical depiction of the timing of cash flows)~~, regularly re-forecasting~~. We then re-forecast future cash flows utilizing our ~~statistical~~proprietary analytical models. The review process is primarily performed by our finance staff; however, our operational and statistical staff are also involved, providing updated statistical input and cash projections to the finance staff.

Significant judgment is used in evaluating whether ~~overperformance is~~variances in actual performance are due to ~~an increase~~changes in ~~projected cash flows~~the total amount or ~~an acceleration~~changes in the timing of ~~cash flows (a timing difference). If determined to be a significant increase in~~ expected cash ~~flows, we will recognize~~flows. Significant changes in either may result in yield increases or allowance charges if necessary for the effect of the increase prospectively first through an adjustment to any previously recognized valuation allowance for that pool and then through an increase in yield. If the overperformance is determined to be due to a timing difference, we will: a) adjust estimated future cash flows downward which effectively extends thepool's amortization period to fall within a reasonable expectation of the pool's economic life; b) adjust future cash flow projections as noted previously coupled with an increase in yield in order for the amortization period to fall within a reasonable expectation of the pool's economic life; or c) take no action at all if the amortization period falls within a reasonable expectation of the pool's expected economic life. To the extent there is underperformance, we will record an allowance if the underperformance is significant and causes us to significantly decrease estimated future cash flows or delay the expected timing of the cash flows, or take no action if the pool's amortization period is reasonable and falls within the currently projectedits economic life.

Valuation of ~~Acquired Intangibles~~acquired intangibles and ~~Goodwill~~goodwill

In accordance with FASB ASC Topic 350, "Intangibles-Goodwill and Other" ("ASC 350"), we amortize intangible assets over their estimated useful lives. Goodwill, pursuant to ASC 350, is not amortized but rather evaluated for impairment annually and more frequently if indicators of potential impairment exist. Goodwill is reviewed for potential impairment at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment.

Goodwill is evaluated for impairment either under the qualitative assessment option or the two-step test approach depending on facts and circumstances of a reporting unit, including the excess of fair value over carrying amount in the last valuation or changes in business environment. If we qualitatively determine it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, the two-step impairment test is unnecessary. Otherwise, goodwill is evaluated for impairment using the two-step test, where the carrying amount of a reporting unit is compared to its fair value in Step 1; if the fair value exceeds the carrying amount, Step 2 is unnecessary. If the carrying amount exceeds the reporting unit’s fair value, this could indicate potential impairment and Step 2 of the goodwill evaluation process is required to determine if goodwill is impaired and to measure the amount of impairment loss to recognize, if any. When Step 2 is necessary, the fair value of individual assets and liabilities is determined using valuations (which in some cases may be based in part on third-party valuation reports), or other

observable sources of fair value, as appropriate. If the carrying amount of goodwill exceeds its implied fair value, the excess is recognized as an impairment loss.

We determine the fair value of a reporting unit by applying the approaches prescribed under the fair value measurement accounting framework: the income approach and the market approach. Depending on the availability of public data and suitable comparables, we may or may not use the market approach or we may emphasize the results from the approach differently. Under the income approach, we estimate the fair value of a reporting unit based on the present value of estimated future cash flows and a residual terminal value. Cash flow projections are based on management's estimates of revenue growth rates, operating margins, necessary working capital, and capital expenditure requirements, taking into consideration industry and market conditions. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the reporting unit's ability to execute on the projected cash flows. Under the market approach, we estimate fair value based on prices and other relevant market transactions involving comparable publicly-traded companies with operating and investment characteristics similar to the reporting unit.

Income ~~Taxes~~taxes

We are subject to the income tax laws of the various jurisdictions in which we operate, including U.S. federal, state, local, and international jurisdictions. These tax laws are complex and are subject to different interpretations by the taxpayer and the relevant government taxing authorities. When determining our domestic and foreign income tax expense, we must make judgments about the application of these inherently complex laws.

We follow the guidance of FASB ASC Topic 740 "Income Taxes" ("ASC 740") as it relates to the provision for income taxes and uncertainty in income taxes. Accordingly, we record a tax provision for the anticipated tax consequences of the reported results of operations. In accordance with ASC 740, the provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, and for operating losses and tax credit carry-forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. The evaluation of a tax position in accordance with the guidance is a two-step process. The first step is recognition: the ~~enterprise~~Company determines whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, the ~~enterprise~~Company should presume that the position will be examined by the appropriate taxing authority that would have full knowledge of all relevant information. The second step is measurement: a tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. We record interest and penalties related to unrecognized tax benefits as a component of income tax expense.

In the event that all or part of the deferred tax assets are determined not to be realizable in the future, a valuation allowance would be established and charged to earnings in the period such determination is made. If we subsequently realize deferred tax assets that were previously determined to be unrealizable, the respective valuation allowance would be reversed, resulting in a positive adjustment to earnings in the period such determination is made. The establishment or release of a valuation allowance does not have an impact on cash, nor does such an allowance preclude the use of loss carry-forwards or other deferred tax assets in future periods. The calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of complex tax laws. Resolution of these uncertainties in a manner inconsistent with our expectations could have a material impact on our results of operations and financial position.

~~Our international operations require the use of material estimates and interpretations of complex tax laws in multiple jurisdictions, and increases the complexity of our accounting for income taxes.~~

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our activities are subject to various financial risks including market risk, currency and interest rate risk, credit risk, liquidity risk and cash flow risk. Our financial risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on our financial performance. We may periodically enter into derivative financial instruments, typically interest rate and currency derivatives, to reduce our exposure to fluctuations in interest rates on variable-rate debt, fluctuations in currency rates and their impact on earnings and cash flows. We do not utilize derivative financial instruments with a level of complexity or with a risk greater than the exposure to be managed nor do we enter into or hold derivatives for trading or speculative purposes. Derivative instruments involve, to varying degrees, elements of non-performance, or credit risk. We do not believe that we currently face a significant risk of loss in the event of non-performance by the counterparties associated with these instruments, as these transactions were executed with a diversified group of major financial institutions with an investment-grade or better credit rating. Our credit risk exposure is managed through the periodic monitoring of our exposures to such counterparties.

Interest Rate Risk

We are subject to interest rate risk from outstanding borrowings on our variable rate credit facilities. As such, our consolidated financial results are subject to fluctuations due to changes in the market rate of interest. We assess this interest rate risk by estimating the increase or decrease in interest expense that would occur due to a change in short-term interest rates. The borrowings on our variable rate credit facilities were approximately ~~$1.4~~$2.0 billion as of ~~September 30, 2017. Assuming~~March 31, 2019. Based on our current debt structure, assuming a 50 basis point decrease in interest rates, for example, interest expense over the following 12 months would decrease by an estimated ~~$5.3~~$6.7 million. Assuming a 50 basis point increase in interest rates, interest expense over the following 12 months would increase by an estimated ~~$5.3~~$6.4 million.

To reduce the exposure to changes in the market rate of interest and to be in compliance with the terms of our European credit facility, we have entered into interest rate ~~swap agreements~~derivative contracts for a portion of our borrowings under our floating rate financing arrangements. ~~The terms~~Further, effective in the second quarter of 2018, we began to apply hedge accounting to certain of our interest rate derivative contracts. By applying hedge accounting, changes in market value are reflected as adjustments in Other Comprehensive Income. All derivatives to which we have applied hedge accounting were evaluated and remain highly effective at March 31, 2019. Terms of the interest rate ~~swap agreements~~derivative contracts require us to receive a variable interest rate and pay a fixed interest rate. ~~For the majority of our floating rate financing arrangements, we have no interest rate swap agreements in place.~~ The sensitivity calculations above consider the impact of our interest rate ~~swap agreements.~~derivative contracts.

The fair value of our interest rate ~~swap~~derivative agreements that are not in a hedge accounting relationship was a net ~~liability~~asset of ~~$0.7~~$0.4 million at ~~September 30, 2017.~~March 31, 2019. A hypothetical 50 basis point decrease in interest rates would cause a decrease in the estimated fair value of ~~our~~these interest rate ~~swap~~derivative agreements and the resulting estimated fair value would be a liability of ~~$6.0~~$1.1 million at ~~September 30, 2017.~~March 31, 2019. Conversely, a hypothetical 50 basis point increase in interest rates would cause an increase in the estimated fair value of ~~our~~these interest rate ~~swap~~derivative agreements and the resulting estimated fair value would be an asset of ~~$4.1~~$2.6 million at ~~September 30, 2017.~~

March 31, 2019.

Currency Exchange Risk

We operate internationally and enter into transactions denominated in various foreign ~~currencies, including the European Union euro, the Great British pound, the Canadian dollar, Norwegian kroner, Swiss franc, Danish kroner, Swedish kroner, Polish zloty, and Brazilian real. In~~currencies. During the three months ended ~~September 30, 2017,~~March 31, 2019, we generated ~~$63.7~~$78.3 million of revenues from operations outside the U.S. and used ~~eight~~11 functional currencies. Weakness in one particular currency might be offset by strength in other currencies over time.

As a result of our international operations, fluctuations in foreign currencies could cause us to incur foreign currency exchange gains and losses, and could adversely affect our comprehensive income and stockholders' equity. Additionally, our reported financial results could change from period to period due solely to fluctuations between currencies.

Foreign currency ~~exchange~~ gains and losses are primarily the result of the re-measurement of ~~account balances~~transactions in certain other currencies into an entity's functional currency. Foreign currency gains and losses are included as a component of other income and (expense) in our consolidated income statements. From time to time we may elect to enter into foreign exchange derivative contracts to reduce these variations in our consolidated income statements.

When an entity's functional currency is different than the reporting currency of its parent, foreign currency translation adjustments may occur. Foreign currency translation adjustments are included as a component of other comprehensive income/(loss) in our consolidated statements of comprehensive income and as a component of equity in our consolidated balance sheets.

We have taken measures to mitigate the impact of foreign currency fluctuations. We have ~~restructured~~organized our European operations so that portfolio ownership and collections generally occur within the same entity. Our European credit facility is a multi-currency facility, allowing us to better match funding and portfolio investments by currency. We ~~strive to maintain~~actively monitor the ~~distribution of our European borrowings within defined thresholds based on the currency composition~~value of our finance receivables ~~portfolios. When those thresholds~~by currency. In the event adjustments are ~~exceeded,~~required to our liability composition by currency we ~~engage in~~may, from time to time, execute re-balancing foreign exchange ~~spot transactions~~contracts to ~~mitigate our risk.~~more closely align funding and portfolio investments by currency.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. We maintain disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. We conducted an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based on this evaluation, the principal executive officer and principal financial officer have concluded that, as of ~~September 30, 2017,~~March 31, 2019, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting. There was no change in our internal control over financial reporting that occurred during the quarter ended ~~September 30, 2017~~March 31, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

For information regarding legal proceedings as of ~~September 30, 2017,~~March 31, 2019, refer to Note 8.12 to our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in our ~~2016~~2018 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits



3.1	Fourth Amended and Restated Certificate of Incorporation of PRA Group, Inc. (Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K (File No. 000-50058) filed on October 29, 2014).
3.2	Amended and Restated By-Laws of PRA Group, Inc. (Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K (File No. 000-50058) filed on May 22, 2015).
4.1	Form of Common Stock Certificate (Incorporated by reference to Exhibit 4.1 of Amendment No. 1 to the Registration Statement on Form S-1 (Registration No. 333-99225) filed on October 15, 2002).
4.2	Form of Warrant (Incorporated by reference to Exhibit 4.2 of Amendment No. 2 to the Registration Statement on Form S-1 (Registration No. 333-99225) filed on October 30, 2002).
4.3	Indenture dated August 13, 2013 between Portfolio Recovery Associates, Inc. and Wells Fargo Bank, National Association, as trustee (Incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K (File No. 000-50058) filed on August 14, 2013).
4.4	Indenture dated May 26, 2017 between PRA Group, Inc. and Regions Bank, as trustee (Incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K (File No. 000-50058) filed on May 26, 2017).
10.1	Fifth Amendment and Restatement Agreement to the Multicurrency Revolving Credit Facility Agreement, dated as of March 25, 2019, by and among PRA Group Europe Holding S.à r.l., PRA Group Europe Holding S.à r.l., Luxembourg, Zug Branch and DNB Bank ASA.
31.1	Certification of the Chief Executive Officer pursuant to Section 302 ~~Certifications~~ of ~~Chief Executive Officer.~~the Sarbanes Oxley Act of 2002 (filed herewith).
31.2	Certification of the Chief Financial Officer pursuant to Section 302 ~~Certifications~~ of ~~Chief Financial Officer.~~the Sarbanes Oxley Act of 2002 (filed herewith).
32.1	~~Section 906~~ Certifications of Chief Executive Officer and Chief Financial ~~Officer.~~Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (filed herewith).
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkable Document
101.LAB	XBRL Taxonomy Extension Label Linkable Document
101.PRE	XBRL Taxonomy Extension Presentation Linkable Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.




	PRA Group, Inc.
	(Registrant)

~~November 8, 2017~~May 9, 2019	By:	/s/ Kevin P. Stevenson
		Kevin P. Stevenson
		President and Chief Executive Officer
		(Principal Executive Officer)





~~November 8, 2017~~May 9, 2019	By:	/s/ Peter M. Graham
		Peter M. Graham
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

4745



	As Of And For The				As Of And For The
	Three Months Ended September 30, 2017				Three Months Ended September 30, 2016
	Revenues		Long-Lived Assets		Revenues		Long-Lived Assets
United States	$	137,323	$	28,585	$	153,114	$	33,898
Outside the United States	63,687		7,843		68,870		10,456
Total	$	201,010	$	36,428	$	221,984	$	44,354

	As Of And For The				As Of And For The
	Nine Months Ended September 30, 2017				Nine Months Ended September 30, 2016
	Revenues		Long-Lived Assets		Revenues		Long-Lived Assets
United States	$	415,761	$	28,585	$	489,260	$	33,898
Outside the United States	192,139		7,843		186,062		10,456
Total	$	607,900	$	36,428	$	675,322	$	44,354



	September 30, 2017			December 31, 2016
North American revolving credit	$	275,432		$	695,088
Term loans	762,902			430,764
European revolving credit	373,758			401,780
Convertible senior notes	632,500			287,500
Less: Debt discount and issuance costs	(81,088		)	(31,031		)
Total	$	1,963,504		$	1,784,101



	Nine Months Ended September 30, 2017
Other receivables, net	$	8,277
Property and equipment, net	4,559
Goodwill	29,683
Intangible assets, net	1,711
Other assets	772
Total assets	$	45,002

Accrued expenses	$	3,123
Total liabilities	$	3,123



	Payments due by period
Contractual Obligations	Total		Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years
Operating leases	$	43,807	$	11,305	$	14,179	$	9,243	$	9,080
Revolving credit ⁽¹⁾	804,782		40,749		80,176		682,530		1,327
Long-term debt ⁽²⁾	1,714,142		61,660		409,299		886,108		357,075
Purchase commitments ⁽³⁾	413,570		413,570		—		—		—
Employment agreements	11,794		6,419		4,250		1,125		—
Total	$	2,988,095	$	533,703	$	507,904	$	1,579,006	$	367,482