================================================================================
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934

                     For the fiscal year ended July 31, 2007

                                       OR

[ ] 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 1-12006

                          FINANCIAL FEDERAL CORPORATION
             (Exact name of Registrant as specified in its charter)

       Nevada                                           88-0244792
 (State of incorporation)                  (I.R.S. Employer Identification No.)

                   733 Third Avenue, New York, New York 10017
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (212) 599-8000

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

          Title of each class            Name of exchange on which registered
      -----------------------------      ------------------------------------
      Common Stock, $0.50 par value            New York Stock Exchange

        Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the  registrant is a well-known  seasoned  issuer,  as
defined in Rule 405 of the Securities Act.                        Yes |X| No |_|

Indicate  by  check  mark if the  registrant  is not  required  to file  reports
pursuant to Section 13 or Section  15(d) of the Act.              Yes |_| No |X|

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 |X| No |_|

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K (229.405 of this Chapter) is not contained  herein,  and will
not be contained,  to the best of registrant's knowledge, in definitive proxy or
information  statements  incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.                                          |X|

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

Large accelerated filer |X|   Accelerated filer |_|    Non-accelerated filer |_|

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Act).                                           Yes |_| No |X|

The  aggregate  market  value of  common  stock  held by  non-affiliates  of the
registrant was  $726,309,784  based on the January 31, 2007 closing price of the
registrant's  common  stock on the New York  Stock  Exchange.  For  purposes  of
calculating this amount, executive officers and directors of the registrant were
deemed to be affiliates.

The number of shares  outstanding of the registrant's common  stock at September
17, 2007 was 25,818,796.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of  the registrant's  definitive Proxy  Statement for  the 2007  Annual
Meeting of  Stockholders, to  be  held  December 11, 2007, are  incorporated  by
reference into Part III of this Annual Report on Form 10-K.

================================================================================

<PAGE>

                 FINANCIAL FEDERAL CORPORATION AND SUBSIDIARIES

                           Annual Report on Form 10-K
                        for the year ended July 31, 2007


                                TABLE OF CONTENTS



Part I                                                                  Page No.
----------------------------------------------------------------------  --------
Item 1.    Business                                                         3-5

Item 1A.   Risk Factors                                                     5-7

Item 1B.   Unresolved Staff Comments                                        7

Item 2.    Properties                                                       7

Item 3.    Legal Proceedings                                                7

Item 4.    Submission of Matters to a Vote of Security Holders              8


Part II
----------------------------------------------------------------------

Item 5     Market for Registrant's Common Equity, Related Stockholder
           Matters and Issuer Purchases of Equity Securities                8-9

Item 6.    Selected Financial Data                                         10

Item 7.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations                                       10-22

Item 7A.   Quantitative and Qualitative Disclosures about Market Risk      22

Item 8.    Financial Statements and Supplementary Data                     23-41

Item 9.    Changes in and Disagreements with Accountants on Accounting
           and Financial Disclosure                                        42

Item 9A.   Controls and Procedures                                         42-43

Item 9B.   Other Information                                               43


Part III
----------------------------------------------------------------------

Item 10.   Directors, Executive Officers and Corporate Governance          44

Item 11.   Executive Compensation                                          44

Item 12.   Security Ownership of Certain Beneficial Owners and
           Management and Related  Stockholder Matters                     44

Item 13.   Certain Relationships and Related Transactions, and
           Director Independence                                           44

Item 14.   Principal Accounting Fees and Services                          44


Part IV
----------------------------------------------------------------------

Item 15.   Exhibits and Financial Statement Schedules                      45-46


Signatures                                                                 47

                                       2
<PAGE>

PART I

Item 1.   Business

         Financial Federal Corporation incorporated in Nevada in 1989. We are an
independent financial services company with $2.1 billion of assets at July 31,
2007. We provide collateralized lending, financing and leasing services
nationwide to small and medium sized businesses with annual revenues typically
below $25 million in the general construction, road and infrastructure
construction and repair, road transportation and refuse industries. We finance
new and used revenue-producing, essential-use equipment from major manufacturers
that is movable, has an economic life longer than the term financed, is not
subject to rapid technological obsolescence, can be used in more than one type
of business and has broad resale markets. We finance bulldozers, buses, cement
mixers, compactors, concrete pumps, crawler cranes, earthmovers, excavators,
hydraulic truck cranes, loaders, motor graders, pavers, personnel and material
lifts, recycling equipment, resurfacers, rough terrain cranes, sanitation
trucks, scrapers, trucks, truck tractors and trailers. Virtually all of our
finance receivables are secured by a first lien on the equipment financed. We do
not have reportable operating segments.

Available Information

         Our website is http://www.financialfederal.com. The following filings
are available in the Investor Relations section of our website under SEC Filings
after they are filed with or furnished to the Securities and Exchange
Commission: Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K, Definitive Proxy Statements and any amendments. Our
Corporate Governance Guidelines, Code of Business Conduct and Ethics, and the
charters for our Audit Committee, Executive Compensation and Stock Option
Committee, and Corporate Governance and Nominating Committee are available in
the Investor Relations section of our website under Corporate Governance. These
filings and charters are also available free to any stockholder on request to
Financial Federal Corporation, 733 Third Avenue, New York, NY 10017, Attn:
Corporate Secretary. We will satisfy the disclosure requirements of Item 5.05 of
Form 8-K by posting any amendments or waivers to our Code of Business Conduct
and Ethics on our website.

Marketing

         Our marketing activities are relationship and service oriented. We
focus on providing prompt, responsive and customized service. Our marketing and
managerial personnel average about twenty years of financing experience in the
industries they serve. We believe their experience, knowledge of equipment
values, resale markets and local economic and industry conditions, and their
relationships with current and prospective customers enable us to compete by
providing prompt, responsive and customized service. Our customer service
includes making prompt credit decisions, arranging financing terms to meet
customers' needs (and our underwriting criteria), providing customers with
direct contact to our executives with decision-making authority, and giving
prompt, knowledgeable responses to customers' inquiries and business issues.

         We have marketing personnel in over twenty locations nationwide,
including eight full-service operations centers in Texas, North Carolina, New
Jersey, Illinois and California. We originate finance receivables through
relationships with equipment dealers and, to a lesser extent, manufacturers
(collectively referred to as "vendors") and by marketing our services direct to
equipment users to buy equipment or refinance their debt. Vendors refer their
customers to us and we purchase installment sale contracts, leases and personal
property security agreements from vendors who extended credit to their
customers. We also provide capital loans and we lease equipment typically under
noncancelable full-payout leases. We do not purchase receivables from brokers.
We may also purchase portfolios of finance receivables from financial
institutions, vendors and others. Our marketing personnel are full-time
employees compensated by salary, not commissions, and most participate in our
stock plan.

         We have relationships with over 100 midsized vendors. We are not
obligated to purchase receivables from vendors and vendors are not obligated to
sell receivables to us. Our vendor relationships are nonexclusive and we are not
dependent on any vendor. We analyze and approve all transactions obtained
through vendors.

Originating, Structuring and Underwriting Finance Receivables

         We originate finance receivables generally between $50,000 and $1.5
million with fixed or floating interest rates and terms of two to five years.
Finance receivables provide for monthly payments and include prepayment premium
provisions. The average transaction size is approximately $220,000. Finance
receivables include installment sales, secured loans and leases.

         Our underwriting policies and procedures are designed to maximize
yields and minimize delinquencies and net charge-offs. We do not use computer
credit scoring. We rely on the experience of our credit officers and management
to assess creditworthiness and to evaluate collateral. Every transaction must be
approved by at least two credit officers.


                                       3
<PAGE>

         Structuring transactions involves determining the repayment schedule,
rate and other fees and charges, evaluating the equipment being financed and
determining the need for (i) liens on additional equipment collateral, accounts
receivable, inventory or real property (ii) guarantees from the customer's
principals or affiliates (iii) security deposits (iv) delayed funding or (v)
full or partial vendor recourse.

         We may require vendors and equipment users to submit a credit
application. The application includes financial and other information of the
applicant and any guarantors, and a description of the equipment. Our credit
personnel analyze the application, investigate the applicant's and potential
guarantor's credit, evaluate the collateral, investigate financial, trade and
industry references and review the applicant's payment history. We may also
obtain reports from credit reporting agencies and conduct lien, UCC, litigation,
judgment, bankruptcy and tax searches. If the application is approved and the
terms of the transaction agreed to, we purchase an installment sale contract or
lease from the vendor or enter into a finance or lease transaction with the
equipment user. We fund the transaction upon receiving all necessary documents.
Our customers are responsible for maintaining and insuring the equipment
financed or leased and for any sales, use or property taxes.

         The procedures we use to purchase portfolios of finance receivables
include reviewing and analyzing the terms of the receivables, the credit and
payment history of the obligors, the documents, the value of the collateral and
the yield.

Collection and Servicing

         We instruct our customers to mail payments to bank lockboxes. Customers
may also choose to pay electronically by wire transfer, telephone or automated
direct payment. We monitor past due accounts closely and we are diligent in
collecting past due payments. Our collection activities are performed by
experienced personnel and managers in each operations center and may involve
senior management or the legal department. Senior management reviews all past
due accounts at least monthly. Decisions regarding collateral repossession and
subsequent sale involve management and the legal department.

Competition

         Our business is competitive. We compete with banks, manufacturer-owned
and other finance and leasing companies, and other financial institutions
including GE Capital Corp., CitiCapital and Wells Fargo. Some of our competitors
may be better positioned to market their services and financing programs because
of their ability to offer more favorable rates and terms and other services.
Many of our competitors provide financing at rates lower than we may be willing
to provide because they are much larger, have greater financial and other
resources and may have lower funding costs. We compete by emphasizing a
high-level of equipment and financial expertise, customer service, flexibility
in structuring transactions, management involvement in customer relationships
and by attracting and retaining experienced managerial and marketing personnel.

Employees

         We had 230 full-time employees at July 31, 2007. All employees and
officers are salaried. We offer group health, life and disability insurance
benefits, a qualified 401(k) plan and Section 125 cafeteria plans. We do not
match employees' 401(k) contributions. There are no collective bargaining,
employment, pension or incentive compensation arrangements other than stock
option and restricted stock agreements, the 2006 Stock Incentive Plan, the
Management Incentive Plan, the Supplemental Retirement Benefit for our Chief
Executive Officer and deferred compensation agreements. The agreements have
nondisclosure and nonsolicitation terms. Our executive officers also have
excise tax restoration agreements for any golden parachute excise tax and all
of our officers have indemnification agreements. We consider our relations with
employees to be satisfactory.

Regulation

         Our commercial financing, lending and leasing activities are not
subject to the same degree of regulation as consumer finance or bank activities.
We are subject to State requirements and regulations covering motor vehicle
transactions, licensing, documentation and lien perfection. States also limit
what we can charge. Our failure to comply with these regulations and
requirements can result in loss of principal, interest, or finance charges, the
imposition of penalties and restrictions on future business activities.

Executive Officers

         Paul R. Sinsheimer, 60, has served as Chairman of the Board and Chief
Executive Officer of the Company since December 2000, as President of the
Company since September 1998, as an Executive Vice President of the Company from
its inception in 1989 to September 1998 and as a director of the Company since
its inception. From 1970 to 1989, Mr. Sinsheimer worked for Commercial Alliance
Corporation in several positions including Executive Vice President.


                                       4
<PAGE>

         John V. Golio, 46, has served as an Executive Vice President of the
Company since October 2001, as a Senior Vice President of the Company from 1997
to October 2001, as an Operations Center Manager since joining the Company in
January 1996 to October 2001 and as a Vice President of the Company's major
operating subsidiary from January 1996 to 1997. Before joining the Company, Mr.
Golio worked for Commercial Alliance Corporation and its successors in several
positions including branch operations manager.

         James H. Mayes, Jr., 38, has served as an Executive Vice President of
the Company since March 2004 and held several positions including Vice President
of the Company's major operating subsidiary and an Operations Center Manager
since joining the Company in 1992 to March 2004.

         William M. Gallagher, 58, has served as a Senior Vice President of the
Company since 1990, as Chief Credit Officer since 2002, as an Operations Center
Manager from the Company's inception in 1989 to 1999 and as a Vice President of
the Company from its inception to 1990. From 1973 to 1989, Mr. Gallagher worked
for Commercial Alliance Corporation in several positions including Vice
President and branch manager.

         Troy H. Geisser, 46, has served as a Senior Vice President and
Secretary of the Company since February 1996, as General Counsel from 1996 to
2000 and held several positions including Vice President of the Company's major
operating subsidiary and Operations Center Manager since joining the Company in
1990 to 1996. From 1986 to 1990, Mr. Geisser worked for Commercial Alliance
Corporation and its successors in several positions including Northern Division
Counsel.

         Steven F. Groth, CFA, 55, has served as a Senior Vice President and
Chief Financial Officer since joining the Company in September 2000. From 1985
to 2000, Mr. Groth was Senior Banker and Managing Director of Specialty Finance
and Transportation with Fleet Bank from 1997 to 2000 and, from 1985 to 1996, he
held several positions, including Division Head, with Fleet Bank and its
predecessor, NatWest Bank.

         Angelo G. Garubo, 47, has served as a Vice President and General
Counsel of the Company since joining the Company in April 2000. From 1990 to
2000, Mr. Garubo was a partner in the law firm Danzig, Garubo & Kaye where he
represented the Company in various legal matters.

         David H. Hamm, CPA, 42, has served as a Vice President of the Company
since October 2001, as Treasurer since March 2004 and as Controller since
joining the Company in July 1996. From 1985 to 1996, Mr. Hamm was employed in
the public accounting profession, including eight years as an audit manager.


Item 1A. Risk Factors

         The risks we discuss below are events, conditions and uncertainties we
believe could have a meaningful adverse impact on our growth, asset quality,
liquidity and net interest spread. Growth, asset quality, liquidity and net
interest spread are integral to our business, financial position and
profitability.

         Growth is important for several reasons. Increasing our size could help
us to lower our funding costs, retain and attract qualified personnel, finance
larger customers and compete more effectively. If we are unable to grow, our
funding costs could increase, we could lose personnel and it could be harder for
us to compete.

         We consider asset quality the most important aspect of our business.
Asset quality statistics, delinquencies, non-performing assets and net credit
losses, (i) gauge our success in collecting our receivables (ii) reflect the
effectiveness of our underwriting standards, skills, policies and procedures and
(iii) can indicate the direction and levels of future net charge-offs and
non-performing assets. When asset quality weakens, revenue is reduced,
provisions for credit losses increase and operating expenses increase because we
would classify more receivables to non-accrual status (suspend recognizing
income), we would incur more write-downs and we would incur more costs to
collect and manage the additional non-performing accounts. Significantly weaker
asset quality could also limit our ability to obtain or retain needed capital
and could cause our credit ratings to be lowered. We use various strategies to
manage credit risk. We discuss asset quality and how we manage credit risk in
detail in the Finance Receivables and Asset Quality section of our Management's
Discussion and Analysis of Financial Condition and Results of Operations
("MD&A").

         Liquidity (money currently available for us to borrow) and access to
capital (debt and equity) are vital to our operations and growth. We cannot
maintain or grow our finance receivables and we may not be able to repay debt if
our access to capital is limited. We discuss this in detail in the Liquidity
section of our MD&A.


                                       5
<PAGE>

         Our net interest spread (net yield of finance receivables less cost of
debt) is the key component of our profitability. Our income is reduced when our
net interest spread decreases. Our net interest spread is affected by changes in
market interest rates. We discuss this in detail in the Market Interest Rate
Risk and Sensitivity section of our MD&A.

Risks

A slowdown in the economy could reverse our growth and cause the quality of our
finance receivables to deteriorate

         A recession or less severe economic slowdown would reduce demand for
the equipment we finance. This would limit our ability to obtain new business
and lower or possibly reverse our finance receivables growth. An economic
slowdown would also weaken asset quality because significantly more of our
customers would not be able to pay us timely if at all and the value of the
equipment securing our finance receivables would decline, possibly
significantly. This would increase delinquencies, non-performing assets and net
charge-offs. Therefore, slowing economic conditions would weaken our financial
position and profitability, and depending on the severity of the impact, could
make it difficult for us to maintain our credit ratings and to obtain needed
capital. Most finance companies face this risk, but its effects can be more
pronounced on us because we only have one source of revenue and one line of
business, commercial equipment financing.

Our inability to collect our finance receivables would cause our asset quality
to deteriorate

         It is critical for finance companies to collect all amounts owed from
their customers. Asset quality weakens when customers fail to make their
payments or pay late, or when the value of the equipment securing receivables
declines. Therefore, finance companies must underwrite transactions properly and
must be diligent in collecting past due accounts. Underwriting includes
assessing the customer's creditworthiness, obtaining and assessing the value of
collateral and ensuring transactions are documented properly. Equipment values
can decline because of excess supply, reduced demand, limited availability of
parts and regulatory changes (such as higher vehicle emissions standards). Our
asset quality statistics, as discussed in the Finance Receivables and Asset
Quality section of our MD&A, have been at unexpectedly favorable low levels
and therefore could worsen significantly.

Our inability to obtain needed capital or maintain adequate liquidity would
reverse our receivables growth

         Our ability to obtain new debt or equity or to renew or refinance
credit facilities (see the Liquidity section of our MD&A for information about
maturity and expiration dates) could be limited by (i) a significant
deterioration in our asset quality (ii) a significant deterioration in our
profitability (iii) reductions of our credit ratings (iv) the poor performance
of other finance companies (v) economic conditions and (vi) the availability of
funds in capital markets. Capital markets have been reluctant to provide capital
to finance companies facing these conditions.

Rising short-term market interest rates have reduced and could continue to
reduce our net interest spread

         Rising short-term market interest rates reduce our net interest spread
(this occurred in the prior two fiscal years) because our floating rate debt
(includes short-term debt) exceeds our floating rate finance receivables
significantly (by $739.4 million at July 31, 2007). Our net interest spread
would also decrease when the differences between long and short-term rates
narrow (resulting in a "flattening yield curve") or when short-term rates exceed
long-term rates (an "inverted yield curve"). The yield curve was inverted for
most of fiscal 2007. Rising short-term interest rates could also cause an
economic slowdown, and an inverted yield curve has been a precursor to economic
downturns. Most finance companies face this risk, but its effect is more
pronounced on us because of the significant difference between our floating rate
debt and floating rate receivables.

We face increased competition because of our small size and because of the
relative ease of entry into our type of business

         Most of our competitors are significantly larger than us giving them
many competitive advantages. We compete with large national and regional banks,
manufacturer-owned finance companies (commonly called "captives") and other
finance and leasing companies. Larger competitors have greater resources,
lower-cost funding sources and offer more products and services. This enables
them to offer interest rates lower than ours and to finance larger customers.
Larger competitors could also lower the rates they offer to levels we may be
unable to match. This would make it difficult for us to maintain or grow our
finance receivables and it could reduce our net interest spread by forcing us to
lower our rates.

         It is relatively easy for a new competitor to enter our business. The
biggest barrier to entering our business is obtaining capital. The increased
availability of capital from the asset-backed securitization market, private
equity and other sources has lessened this barrier.


                                       6
<PAGE>

We may not be able to retain employees key to our operations

         We have 230 employees and we are highly dependent on a small number of
key operating personnel including our CEO. The loss of key operating personnel
(i) could impair our ability to maintain or grow our finance receivables and to
maintain asset quality because they are familiar with our operating methods and
are integral in our customer relationships, and (ii) could impair our ability to
raise capital.

         Competition for qualified people in the finance industry is fierce and
our larger competitors may offer higher salaries and better benefits. We also do
not have employment contracts with key employees. Instead, we routinely award
shares of restricted stock to them with extended vesting periods.

Our growth and asset quality are highly dependent on conditions in the
construction and road transportation industries

         Over 80% of our finance receivables are with customers in the
construction and road transportation industries. Therefore, a slowdown in or
other events or conditions negatively affecting these industries would have
similar, or worse, negative effects on us as a general economic slowdown. This
limited focus of our business could also limit our ability to grow, could make
it difficult for us to expand our business to other industries effectively and
could cause us to be affected by slowing economic conditions more severely.

Lending to small, privately owned companies exposes us to increased credit risk

         Most of our customers are small to medium sized, privately owned
businesses. They have significantly less resources than larger companies and
therefore their operations and ability to pay us can more easily be affected by
poor local economic conditions, general economic conditions, rising gasoline and
interest costs, loss of key personnel and increased competition.

Significantly higher prices and limited availability of gasoline could impact
our customers severely and weaken our asset quality

         Most of the equipment we finance uses gasoline. Therefore, gasoline is
a significant operating expense for our customers and its cost and availability
are critical to their operations. Higher than normal increases in the price of
gasoline or a disruption in its supply could hurt our customers' operations and
their ability to pay us, and could cause an economic slowdown.

Our allowance for credit losses may be insufficient to cover future net
charge-offs

         Our allowance for credit losses may be inadequate if our asset quality
unexpectedly weakens significantly. This would cause us to record large
provisions for credit losses. We discuss this in detail in the Critical
Accounting Policies section of our MD&A.

Our failure to comply with State and Federal lending and leasing regulations
could result in write-offs and litigation

         Our business activities, including amounts we can charge customers,
repossessing equipment, lien perfection and documentation, are subject to State
and Federal regulations. Our failure to comply with these regulations or changes
to these regulations could prevent us from collecting amounts owed from
customers, and could result in lawsuits, penalties and fines against us and
restrictions on our ability to do business.


Item 1B. Unresolved Staff Comments

         None


Item 2.  Properties

         Our executive office is located at 733 Third Avenue, New York, New York
and is 6,500 square feet. We also have eight full-service operations centers
(where credit analysis and approval, collection and marketing functions are
performed) in Houston, Texas (two); Lisle (Chicago), Illinois; Teaneck (New York
metropolitan area), New Jersey; Charlotte, North Carolina (three) and Irvine
(Los Angeles), California. We lease all of our office space. Our offices range
in size from 5,000 to 20,000 square feet. The leases terminate on various dates
through fiscal 2013. We believe our offices are suitable and adequate for their
present and proposed uses, and that suitable and adequate offices should be
available on reasonable terms for our future needs.


Item 3.  Legal Proceedings

         We are not involved in any legal proceedings that we believe could have
a material impact on our financial condition or results of operations.


                                       7
<PAGE>

Item 4.  Submission of Matters to a Vote of Security Holders

         None


PART II


Item 5.  Market for Registrant's Common Equity, Related Stockholder Matters and
         Issuer Purchases of Equity Securities

         Our Common Stock trades on the New York Stock Exchange under the symbol
"FIF." The quarterly high and low closing sales prices of our common stock
reported by the New York Stock Exchange and quarterly cash dividends follow:

        =======================================================================
                                                      Price Range          Cash
                                                 ----------------     Dividends
                                                   High       Low     per Share
        =======================================================================
         Fiscal 2007
         -------------------------------------
         First Quarter ended October 31, 2006    $28.59    $26.17         $0.10
         Second Quarter ended January 31, 2007   $29.94    $26.92         $0.15
         Third Quarter ended April 30, 2007      $28.75    $25.63         $0.15
         Fourth Quarter ended July 31, 2007      $30.63    $26.40         $0.15

         Fiscal 2006
         -------------------------------------
         First Quarter ended October 31, 2005    $27.18    $24.41         $0.07
         Second Quarter ended January 31, 2006   $30.07    $25.59         $0.10
         Third Quarter ended April 30, 2006      $29.87    $27.71         $0.10
         Fourth Quarter ended July 31, 2006      $29.81    $26.62         $0.10
         ======================================================================

         We initiated a quarterly cash dividend in December 2004 and raised it
by 50% in December 2005 and by 50% again in December 2006. Future cash dividends
will depend on our net income, leverage, financial condition, capital
requirements, cash flow, long-range plans, income tax laws and other factors the
Board of Directors considers relevant. We split our common stock 3-for-2
effected in the form of a stock dividend in January 2006.

         There were 67 holders of record of our Common Stock on September 17,
2007. This amount includes nominees who hold our Common Stock for investors in
"street name." We did not sell unregistered shares of our common stock during
the fourth quarter of fiscal 2007.

                      ISSUER PURCHASES OF EQUITY SECURITIES
                       For the Quarter Ended July 31, 2007
<TABLE>
<CAPTION>
         ====================================================================================
         Month      (a) Total   (b) Average   (c) Total Number of          (d) Maximum Number
                       Number    Price Paid      Shares Purchased      (or Approximate Dollar
                    of Shares     per Share   as Part of Publicly   Value) of Shares that May
                    Purchased                  Announced Plans or      Yet Be Purchased Under
                                                         Programs       the Plans or Programs
         ====================================================================================
<S>                   <C>            <C>                  <C>                     <C>
         May 2007     159,404        $26.98               159,404                 $        --
         June 2007    161,669        $29.66               161,669                 $45,205,000
         ====================================================================================
</TABLE>

         In May 2007, we completed the common stock repurchase program we
established in August 1996 and expanded in August 1998 to include repurchases of
convertible debt. We repurchased 2.9 million shares of common stock for $66.1
million and $8.8 million of convertible debt for $7.2 million during the life of
the program. We established a new $50.0 million common stock and convertible
debt repurchase program in June 2007.

                                       8
<PAGE>

                             STOCK PERFORMANCE GRAPH

         The following graph compares the percentage change in cumulative total
stockholder return on our common stock during the five-year period ending July
31, 2007 with the cumulative total return on the Russell 2000 Index and on the
S&P Financials Index. The comparison assumes $100 was invested on July 31, 2002
in each index and all dividends were reinvested. Historical stock price
performance is not indicative of future stock price performance.

                                [GRAPH OMITTED]

<TABLE>
<CAPTION>
                                  7/02     7/03     7/04     7/05     7/06     7/07
                                 -----    -----    -----    -----    -----    -----
<S>                              <C>      <C>      <C>      <C>      <C>      <C>
Financial Federal Corporation    100.0    104.4    110.9    133.8    141.9    152.7
Russell 2000                     100.0    123.1    144.1    179.8    187.5    210.2
S&P Financials                   100.0    113.8    127.2    139.6    158.3    163.3
</TABLE>

Copyright(c) 2007, Standard & Poor's, a division of The McGraw-Hill Companies,
Inc. All rights reserved. www.researchdatagroup.com/S&P.htm


                                       9
<PAGE>

Item 6.  Selected Financial Data

         The selected five-year financial data presented below (in thousands,
except per share amounts) should be read with the information in Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", and our Consolidated Financial Statements and accompanying notes in
Item 8, "Financial Statements and Supplementary Data."

<TABLE>
<CAPTION>
============================================================================================
Years Ended July 31,                2007         2006         2005         2004         2003
============================================================================================
<S>                           <C>          <C>          <C>          <C>          <C>
Finance Receivables - Net     $2,104,361   $1,967,588   $1,641,854   $1,436,828   $1,391,735
Total Assets                   2,120,074    1,988,344    1,661,845    1,463,918    1,426,082
Total Debt                     1,660,600    1,527,661    1,259,700    1,093,700    1,042,276
Stockholders' Equity             387,753      390,379      342,114      303,890      316,396
Finance Income                   191,254      162,475      126,643      118,305      130,247
Interest Expense                  84,828       67,402       43,748       33,900       43,534
Net Interest Margin              106,426       95,073       82,895       84,405       86,713
Net Income                        50,050       43,619       36,652       31,190       30,088
Earnings per Common Share,
  Diluted                           1.90         1.65         1.41         1.15         1.10
Earnings per Common Share,
  Basic                             1.94         1.68         1.44         1.17         1.12
Cash Dividends per Common
  Share                             0.55         0.37         0.20           --           --
============================================================================================
</TABLE>


Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

Overview

         Financial Federal Corporation is an independent financial services
company operating in the United States through three wholly owned subsidiaries.
We do not have any unconsolidated subsidiaries, partnerships or joint ventures.
We also do not have any off-balance sheet assets or liabilities (other than
commitments to extend credit), goodwill, other intangible assets or pension
obligations, and we are not involved in income tax shelters. We have one fully
consolidated special purpose entity we established for our on-balance-sheet
asset securitization facility.

         We have one line of business. We lend money under installment sale
agreements, secured loans and leases (collectively referred to as "finance
receivables") to small and medium sized businesses for their equipment financing
needs. Finance receivable transactions generally range between $50,000 and $1.5
million, have terms generally ranging between two and five years and provide for
monthly payments. The average transaction size is approximately $220,000. We
earn revenue solely from interest and other fees and amounts earned on our
finance receivables. We need to borrow most of the money we lend; therefore
liquidity (money currently available for us to borrow) is important. We borrow
from banks and insurance companies and we issue commercial paper to other
investors. Approximately 80% of our finance receivables were funded with debt at
July 31, 2007.

         We focus on (i) maximizing the difference between the rates we earn on
our receivables and the rates we incur on our debt ("net interest spread") (ii)
maintaining the asset quality of our receivables and (iii) managing our interest
rate risk. Interest rates on our finance receivables were 92% fixed and 8%
floating, and interest rates on our debt were 45% fixed and 55% floating at July
31, 2007. Therefore, changes in market interest rates affect our profitability
significantly. The asset quality of our finance receivables can also affect our
profitability significantly. Asset quality can affect finance income, provisions
for credit losses and operating expenses through reclassifying receivables to or
from non-accrual status, incurring write-downs and incurring costs associated
with non-performing assets. We use various strategies to manage our interest
rate risk and credit risk.

         Our main areas of focus are asset quality, liquidity and interest rate
risk. We discuss each in detail in separate sections of this discussion. These
areas are integral to our long-term profitability. Our key operating statistics
are net charge-offs, loss ratio, non-performing assets, delinquencies,
receivables growth, leverage, available liquidity, net interest margin and net
interest spread, and expense and efficiency ratios.

                                       10
<PAGE>

Significant events

         We repurchased 2.03 million shares of our common stock in fiscal 2007
for $55.0 million paying a $27.05 average price per share and we established a
new $50.0 million common stock and convertible debt repurchase program in fiscal
2007. We also increased the amount available under our former repurchase program
by $32.6 million. The shares repurchased were 8.0% of total shares outstanding
and increased our leverage to 4.3 from 3.9. This is discussed further in the
Liquidity and Capital Resources section.

Critical Accounting Policies and Estimates

         Accounting principles generally accepted in the United States require
judgments, assumptions and estimates that affect the amounts reported in the
Consolidated Financial Statements and accompanying notes. In Note 1 to the
Consolidated Financial Statements, we describe the significant accounting
policies and methods we use to prepare the Consolidated Financial Statements.
Accounting policies involving significant judgment, assumptions and estimates
are considered critical accounting policies and are described below.

Allowance for Credit Losses

         The allowance for credit losses on finance receivables is our estimate
of losses inherent in our finance receivables at the balance sheet date. The
allowance is difficult to determine and requires significant judgment. The
allowance is based on total finance receivables, net charge-off experience,
non-accrual and delinquent finance receivables and our current assessment of the
risks inherent in our finance receivables from national and regional economic
conditions, industry conditions, concentrations, the financial condition of
customers and guarantors, collateral values and other factors. We may need to
change the allowance level significantly if unexpected changes in these
conditions or factors occur. Increases in the allowance would reduce net income
through higher provisions for credit losses. The allowance was $24.0 million
(1.13% of finance receivables) at July 31, 2007 including $0.5 million
specifically allocated to impaired receivables.

         The allowance includes amounts specifically allocated to impaired
receivables and an amount to provide for losses inherent in the remainder of
finance receivables (the "general allowance"). We evaluate the fair value of an
impaired receivable and compare it to the carrying amount. The carrying amount
is the amount the receivable is recorded at when we evaluate the receivable and
may include a prior write-down or specific allowance. If our estimate of fair
value is lower than the carrying amount, we record a write-down or establish a
specific allowance depending on (i) how we determined fair value (ii) how
certain we are of our estimate and (iii) the level and type of factors and items
other than the primary collateral, such as guarantees and secondary collateral,
supporting our fair value estimate.

         To estimate the general allowance, we analyze historical write-down
activity to develop percentage loss ranges by risk profile. Risk profiles are
assigned to receivables based on past due status and the customers' industry. We
then adjust the calculated range of losses for expected recoveries and we may
also adjust the range for differences between current and historical loss trends
and other factors to arrive at the estimated allowance. We record a provision
for credit losses if the recorded allowance differs from our current estimate.
Although our method is designed to calculate probable losses, because
significant estimates are used, the adjusted calculated range of losses may
differ from actual losses significantly.

Non-Performing Assets

         We record non-accrual (impaired) finance receivables at their current
estimated fair value (if less than their carrying amount). We record repossessed
equipment (assets received to satisfy receivables) at their current estimated
fair value less selling costs (if less than their carrying amount). We estimate
fair value of these non-performing assets by evaluating the expected cash flows
of impaired receivables and the market value and condition of the collateral or
assets. We evaluate market value based on recent sales of similar equipment,
used equipment publications, our market knowledge and information from equipment
vendors. Unexpected adverse changes in or incorrect estimates of expected cash
flows, market value or the condition of collateral or assets, or time needed to
sell the equipment would require us to record a write-down. This would lower net
income. Non-performing assets totaled $21.2 million (1.0% of finance
receivables) at July 31, 2007.

Residual Values

         We record residual values on direct financing leases at the lowest of
(i) any stated purchase option (ii) the present value at the end of the initial
lease term of rentals due under any renewal options or (iii) our projection of
the equipment's fair value at the end of the lease. We may not fully realize
recorded residual values because of unexpected adverse changes in or incorrect
projections of future equipment values. This would lower net income. Residual
values totaled $42.9 million (2.0% of finance receivables) at July 31, 2007.
Historically, we have realized the recorded residual value on disposition.


                                       11
<PAGE>

Stock-Based Compensation

         We record compensation expense for stock options under SFAS No. 123R
using the Black-Scholes option pricing model. This model requires us to estimate
the expected volatility of the price of our common stock, the expected life of
options and the expected dividend rate. SFAS No. 123R also requires us to
estimate forfeitures of stock awards. Estimating volatility, expected life,
dividend rate and forfeitures requires significant judgment and an analysis of
historical data. If actual results differ from our estimates significantly,
compensation expense for options and shares of restricted stock and our results
of operations could be impacted materially.


Results of Operations

Comparison of Fiscal 2007 to Fiscal 2006

         ======================================================================
                                      Years Ended July 31,
         ($ in millions, except       --------------------
         per share amounts)                 2007      2006   $ Change  % Change
         ======================================================================
         Finance income                   $191.2    $162.5      $28.7        18%
         Interest expense                   84.8      67.4       17.4        26
         Net finance income before
           provision for credit losses     106.4      95.1       11.3        12
         Provision for credit losses          --        --         --        --
         Salaries and other expenses        24.9      23.7        1.2         5
         Provision for income taxes         31.4      27.8        3.6        13
         Net income                         50.1      43.6        6.5        15

         Diluted earnings per share         1.90      1.65       0.25        15
         Basic earnings per share           1.94      1.68       0.26        15
         ======================================================================

         Net income increased by 15% to $50.1 million in fiscal 2007 from $43.6
million in fiscal 2006. The increase resulted from receivables growth and the
higher net yield on finance receivables, partially offset by the effects of
higher short-term market interest rates.

         Finance income increased by 18% to $191.2 million in fiscal 2007 from
$162.5 million in fiscal 2006. The increase resulted from the 13% increase in
average finance receivables ($240.0 million) to $2.07 billion in fiscal 2007
from $1.83 billion in fiscal 2006 and, to a lesser extent, the higher net yield
on finance receivables. The net yield on finance receivables increased to 9.25%
in fiscal 2007 from 8.89% in fiscal 2006 as a result of higher market interest
rates.

         Interest expense (incurred on debt used to fund finance receivables)
increased by 26% to $84.8 million in fiscal 2007 from $67.4 million in fiscal
2006. The increase resulted from the 14% ($194.0 million) increase in average
debt and higher short-term market interest rates. Increases in short-term market
interest rates raised our cost of debt to 5.36% in fiscal 2007 from 4.85% in
fiscal 2006.

         Net finance income before provision for credit losses on finance
receivables increased by 12% to $106.4 million in fiscal 2007 from $95.1 million
in fiscal 2006. Net interest margin (net finance income before provision for
credit losses expressed as a percentage of average finance receivables)
decreased to 5.15% in fiscal 2007 from 5.20% in fiscal 2006.

         We did not record provisions for credit losses on finance receivables
in fiscal 2007 and 2006. The provision for credit losses is the amount needed to
change the allowance for credit losses to our estimate of losses inherent in
finance receivables. We did not need to increase the allowance because of
continued low net charge-offs and continued strong asset quality, and we did not
need to reduce it because of receivables growth. Net charge-offs (write-downs of
finance receivables less recoveries) were $108,000 in fiscal 2007 and $125,000
in fiscal 2006, and the loss ratio (net charge-offs expressed as a percentage of
average finance receivables) was less than 0.01% in fiscal 2007 and fiscal 2006.

         Salaries and other expenses increased by 5% to $24.9 million in fiscal
2007 from $23.7 million in fiscal 2006. The increase resulted from fewer
recoveries of costs associated with non-performing assets and higher salary
expense. Salary expense increased because of higher salaries. The expense ratio
(salaries and other expenses expressed as a percentage of average finance
receivables) improved to 1.21% in fiscal 2007 from 1.30% in fiscal 2006 because
the percentage increase in average receivables exceeded the percentage increase
in expenses. The efficiency ratio (expense ratio expressed as a

                                       12
<PAGE>

percentage of net interest margin) improved to 23.4% in fiscal 2007 from 24.9%
in fiscal 2006 because the percentage increase in net finance income before
provision for credit losses exceeded the percentage increase in expenses.

         The provision for income taxes increased to $31.4 million in fiscal
2007 from $27.8 million in fiscal 2006. The increase resulted from the increase
in income before income taxes, partially offset by the decrease in our effective
tax rate to 38.6% in fiscal 2007 from 38.9% in fiscal 2006. Our effective tax
rate decreased because of the new Texas income tax law effective for fiscal 2007
and the overall decrease in our state effective income tax rate.

         Diluted earnings per share increased by 15% to $1.90 per share in
fiscal 2007 from $1.65 per share in fiscal 2006, and basic earnings per share
increased by 15% to $1.94 per share in fiscal 2007 from $1.68 per share in
fiscal 2006. The percentage increases in diluted and basic earnings per share
were the same as the percentage increase in net income because the effect of the
2.0 million shares repurchased in fiscal 2007 and the effect of stock option
exercises offset.


Comparison of Fiscal 2006 to Fiscal 2005

         ======================================================================
                                      Years Ended July 31,
         ($ in millions, except       --------------------
         per share amounts)                 2006      2005   $ Change  % Change
         ======================================================================
         Finance income                   $162.5    $126.6      $35.9        28%
         Interest expense                   67.4      43.7       23.7        54
         Net finance income before
           provision for credit losses      95.1      82.9       12.2        15
         Provision for credit losses          --       1.5       (1.5)     (100)
         Salaries and other expenses        23.7      21.5        2.2        10
         Provision for income taxes         27.8      23.2        4.6        19
         Net income                         43.6      36.7        6.9        19

         Diluted earnings per share         1.65      1.41       0.24        17
         Basic earnings per share           1.68      1.44       0.24        17
         ======================================================================

         Net income increased by 19% to $43.6 million in fiscal 2006 from $36.7
million in fiscal 2005. The increase resulted from receivables growth of 18%,
the higher net yield on finance receivables and strong asset quality, partially
offset by the effects of significantly higher short-term market interest rates
and higher salary expense.

         Finance income increased by 28% to $162.5 million in fiscal 2006 from
$126.6 million in fiscal 2005. The increase resulted from the 18% increase in
average finance receivables ($282.0 million) to $1.82 billion in fiscal 2006
from $1.54 billion in fiscal 2005 and the higher net yield on finance
receivables. Higher market interest rates, an increase in non-interest finance
income (includes late charges, prepayment premiums and other fees) and lower
non-accrual receivables raised the net yield on finance receivables to 8.89% in
fiscal 2006 from 8.20% in fiscal 2005.

         Interest expense (incurred on debt used to fund finance receivables)
increased by 54% to $67.4 million in fiscal 2006 from $43.7 million in fiscal
2005. The increase resulted from higher average short-term market interest rates
and the 20% ($236.0 million) increase in average debt. Increases in short-term
market interest rates, partially offset by the lower weighted-average rate on
our fixed rate term debt and lower credit spreads (the difference between the
interest rates on our debt and the underlying market interest rates) raised our
cost of debt to 4.85% in fiscal 2006 from 3.79% in fiscal 2005.

         Net finance income before provision for credit losses on finance
receivables increased by 15% to $95.1 million in fiscal 2006 from $82.9 million
in fiscal 2005. Net interest margin decreased to 5.20% in fiscal 2006 from 5.37%
in fiscal 2005 because of the significant increase in short-term market interest
rates.

         We did not record a provision for credit losses on finance receivables
in fiscal 2006 because of low net charge-offs, continued strong asset quality
and receivables growth. The provision was $1.5 million in fiscal 2005. We did
not need to increase the allowance because of the low amount of net charge-offs
and continued strong asset quality, and we did not need to reduce it because of
the significant growth in receivables. Net charge-offs decreased to $125,000 in
fiscal 2006 from $1.4 million in fiscal 2005. The loss ratio decreased to 0.01%
in fiscal 2006 from 0.09% in fiscal 2005. Net charge-offs decreased because of
significantly fewer non-accrual receivables.


                                       13
<PAGE>

         Salaries and other expenses increased by 10% to $23.7 million in fiscal
2006 from $21.5 million in fiscal 2005. The increase resulted from increased
salary expense and, to a lesser extent, general increases in other operating
expenses from strong receivables growth, partially offset by cost savings from
significantly fewer non-performing assets. Salary expense increased because of
higher salaries, an increase in the number of employees and because SFAS No.
123R required us to record $0.7 million of compensation expense for stock
options in fiscal 2006. The expense ratio improved to 1.30% in fiscal 2006 from
1.39% in fiscal 2005 because the rate of receivables growth exceeded the
percentage increase in expenses. The efficiency ratio improved to 24.9% in
fiscal 2006 from 25.9% in fiscal 2005 because the percentage increase in net
finance income exceeded the percentage increase in expenses.

         The provision for income taxes increased to $27.8 million in fiscal
2006 from $23.2 million in fiscal 2005. The increase resulted from the increase
in income before income taxes, and to a lesser extent, the slight increase in
our effective tax rate to 38.9% in fiscal 2006 from 38.8% in fiscal 2005. Our
effective tax rate increased because tax benefits (reductions of the provision
for income taxes) cannot be recorded on the $0.6 million of expense for
incentive stock options not exercised and not sold in fiscal 2006. This was
partially offset by the $120,000 tax benefit we recorded from the change in
Texas tax law enacted in our fourth quarter of fiscal 2006. Our fiscal 2006
effective tax rate would have been 38.8% excluding the effects of these two
items.

         Diluted earnings per share increased by 17% to $1.65 per share in
fiscal 2006 from $1.41 per share in fiscal 2005, and basic earnings per share
increased by 17% to $1.68 per share in fiscal 2006 from $1.44 per share in
fiscal 2005. The percentage increases in diluted and basic earnings per share
were lower than the percentage increase in net income because the average price
of our common stock was 14% higher in fiscal 2006 and there were more shares of
common stock outstanding in fiscal 2006 from stock option exercises and awards
of restricted stock.

         Compensation expense recorded for stock options under SFAS No. 123R
reduced net income by $0.9 million, reduced diluted earnings per share by $0.03
and reduced basic earnings per share by $0.04 in fiscal 2006.


Finance Receivables and Asset Quality

         We discuss trends and characteristics of our finance receivables and
our approach to managing credit risk in this section. The key aspect is asset
quality. Asset quality statistics measure our underwriting standards, skills and
policies and procedures and can indicate the direction and levels of future net
charge-offs and non-performing assets.

<TABLE>
<CAPTION>
         =============================================================================
                                           July 31,    July 31,
         ($ in millions)                      2007*       2006*    $ Change   % Change
         =============================================================================
<S>                                        <C>         <C>           <C>           <C>
         Finance receivables               $2,128.4    $1,991.7      $136.7          7%
         Allowance for credit losses           24.0        24.1        (0.1)        --
         Non-performing assets                 21.2        14.6         6.6         45
         Delinquent finance receivables         9.9         8.6         1.3         14
         Net charge-offs                        0.1         0.1          --        (14)

         As a percentage of receivables:
         -------------------------------
         Allowance for credit losses           1.13%       1.21%
         Non-performing assets                 0.99        0.73
         Delinquent finance receivables        0.46        0.43
         Net charge-offs                       0.01        0.01
         =============================================================================
</TABLE>
         *  as of and for the year ended

         Finance receivables grew 7% ($137 million) during fiscal 2007 to $2.13
billion at July 31, 2007 from $1.99 billion at July 31, 2006. Finance
receivables comprise installment sale agreements and secured loans (collectively
referred to as loans) and direct financing leases. Loans were 90% ($1.93
billion) of finance receivables and leases were 10% ($203 million) at July 31,
2007.

         Finance receivables originated in fiscal 2007 and 2006 were $1.21
billion and $1.34 billion, respectively. Originations decreased because the
strong demand for equipment financing eased due to general economic conditions
and because the trucking industry is experiencing a significant slowdown in
sales of heavy duty trucks. Finance receivables collected in fiscal 2007 and
2006 were $1.06 billion and $998 million, respectively. Collections increased
because of higher average finance receivables.


                                       14
<PAGE>

         Our primary focus is the credit quality of our receivables. We manage
our credit risk by using disciplined and sound underwriting policies and
procedures, by monitoring our receivables closely and by handling non-performing
accounts effectively. Our underwriting policies and procedures require a first
lien on equipment financed. We focus on financing equipment with a remaining
useful life longer than the term financed, historically low levels of
technological obsolescence, use in more than one type of business, ease of
access and transporting, and broad, established resale markets. Securing our
receivables with equipment possessing these characteristics can mitigate
potential net charge-offs. We may also obtain additional equipment or other
collateral, third-party guarantees, advance payments or hold back a portion of
the amount financed. We do not finance or lease aircraft or railcars, computer
related equipment, telecommunications equipment or equipment located outside the
United States, and we do not lend to consumers.

         Our underwriting policies limit our credit exposure with any customer.
The limit was $40.0 million at July 31, 2007. Our ten largest customers
accounted for 5.9% ($126.0 million) of total finance receivables at July 31,
2007.

         Our allowance for credit losses was $24.0 million at July 31, 2007 and
$24.1 million at July 31, 2006. The allowance level declined to 1.13% of finance
receivables at July 31, 2007 from 1.21% at July 31, 2006 because of continued
low net charge-offs, favorable asset quality and receivables growth. We
determine the allowance quarterly based on our analysis of historical losses and
the past due status of receivables adjusted for expected recoveries and any
differences between current and historical loss trends and other factors.

         Net charge-offs of finance receivables (write-downs less recoveries)
were $108,000 in fiscal 2007 and $125,000 in fiscal 2006 and the loss ratios
were 0.01%. Net charge-offs remained low because of low non-performing assets.

         The net investments in non-accrual (impaired) finance receivables,
repossessed equipment (assets received to satisfy receivables), total
non-performing assets and delinquent finance receivables (transactions with more
than a nominal portion of a contractual payment 60 or more days past due) follow
($ in millions):

         =====================================================================
         July 31,                                            2007         2006
         =====================================================================
         Non-accrual finance receivables *                  $18.8        $13.8
         Repossessed equipment                                2.4          0.8
         ---------------------------------------------------------------------
              Total non-performing assets                   $21.2        $14.6
         =====================================================================
         Delinquent finance receivables                     $ 9.9        $ 8.6
         =====================================================================
         Percentage of non-accrual receivables
            not delinquent                                     69%          54%
         =====================================================================
         *  before specifically allocated allowance of $0.5 million at July 31,
            2007 and $0.3 million at July 31, 2006

         Delinquent receivables, non-accrual receivables and repossessed
equipment increased during fiscal 2007 but are still at favorable levels. We
expect continued moderate increases in these amounts. Also, because our asset
quality statistics remained below expected levels, they could worsen
significantly if receivables from our larger customers become delinquent,
impaired or repossessed even though the overall trend may remain positive.

         Our finance receivables reflect industry and geographic concentrations
of credit risk. These concentrations result from customers having similar
economic characteristics that could cause their ability to repay us to be
similarly affected by changes in economic or other conditions. At July 31, 2007,
our industry concentrations were construction related-44%, road
transportation-40% and refuse-11% and our U.S. regional geographic
concentrations were Southwest-28%, Southeast-27%, Northeast-16%, West-15% and
Central-14%.


Liquidity and Capital Resources

         We describe our need for raising capital (debt and equity), our need
for a substantial amount of liquidity (money currently available for us to
borrow), our approach to managing liquidity and our current funding sources in
this section. Key indicators are leverage (the number of times debt exceeds
equity), available liquidity, credit ratings and debt diversification. Our
leverage is low for a finance company, we have been successful in issuing debt,
we have ample liquidity available and our debt is diversified with maturities
staggered over seven years.


                                       15
<PAGE>

         Liquidity and access to capital are vital to our operations and growth.
We need continued availability of funds to originate or acquire finance
receivables and to repay debt. To ensure we have enough liquidity, we project
our financing needs based on estimated receivables growth and maturing debt, we
monitor capital markets closely and we diversify our funding sources. Funding
sources available to us include operating cash flow, private and public
issuances of term debt, conduit and term securitizations of finance receivables,
committed unsecured revolving bank credit facilities, dealer placed and direct
issued commercial paper and sales of common and preferred equity. We believe our
liquidity sources are diversified, and we are not dependent on any funding
source or provider.

         Our term notes are rated 'BBB+' by Fitch Ratings, Inc. ("Fitch", a
Nationally Recognized Statistical Ratings Organization) and our commercial paper
is rated 'F2' by Fitch. As a condition of our 'F2' credit rating, commercial
paper outstanding is limited to the unused amount of our bank credit facilities.
Fitch affirmed its investment grade ratings on our debt in January 2007 and
maintained its stable outlook. Our access to capital markets and our credit
spreads are partly dependent on these investment grade credit ratings.

         We had $240.3 million available to borrow under our bank credit
facilities (after subtracting commercial paper outstanding) at July 31, 2007.
Our asset securitization facility could also be increased by $346.0 million and
we believe we can issue more term notes. We believe, but cannot assure,
sufficient capital is available to us to sustain our future operations and
growth.

         Our major operating subsidiary's debt agreements have restrictive
covenants including limits on its indebtedness, encumbrances, investments,
dividends and other distributions to us, sales of assets, mergers and other
business combinations, capital expenditures, interest coverage and net worth. We
were in compliance with all debt covenants and restrictions at July 31, 2007.
None of the agreements have a material adverse change clause.

         Debt increased by 9% ($133 million) to $1.66 billion at July 31, 2007
from $1.53 billion at July 31, 2006 and stockholders' equity decreased by 1%
($2.6 million) to $387.8 million at July 31, 2007 from $390.4 million at July
31, 2006 because we repurchased $54.9 million of common stock in fiscal 2007.
Therefore, leverage (debt-to-equity ratio) increased to 4.3 at July 31, 2007
from 3.9 at July 31, 2006. Our leverage is still considered low allowing for
substantial asset growth and additional equity repurchases. Historically, our
leverage has not exceeded 5.5 which is also considered low for a finance
company.

         Debt comprised the following ($ in millions):

<TABLE>
<CAPTION>
         ==========================================================================
                                               July 31, 2007          July 31, 2006
                                           -----------------     ------------------
                                             Amount  Percent       Amount   Percent
         ==========================================================================
<S>                                        <C>           <C>     <C>            <C>
         Term notes                        $  723.3       43%    $  664.5        43%
         Asset securitization financings      425.0       26        425.0        28
         Convertible debentures               175.0       11        175.0        11
         Borrowings under bank credit
           facilities                          50.0        3        149.7        10
         Commercial paper                     289.7       17        118.9         8
         --------------------------------------------------------------------------
             Total principal                1,663.0      100%     1,533.1       100%
         Fair value adjustment of hedged
           debt                                (2.4)                 (5.4)
         --------------------------------------------------------------------------
                  Total debt               $1,660.6              $1,527.7
         ==========================================================================
</TABLE>

Term Notes

         We issued $125.0 million of fixed rate term notes in April 2007. The
notes comprise $75.0 million of five-year, 5.48% notes and $50.0 million of
seven-year, 5.57% notes due at maturity in April 2012 and 2014. We will pay
interest semiannually. We repaid bank and securitization borrowings and
repurchased common stock with the proceeds.

         We repaid $56.3 million of term notes at maturity with fixed rates
ranging from 5.92% and 6.23% and we converted a $10.0 million floating rate term
note due in fiscal 2008 to a $15.0 million three-year committed unsecured
revolving bank credit facility in fiscal 2007.

Asset Securitization Financings

         We have a $425.0 million asset securitization facility. We established
the facility in July 2001. The facility provides for committed revolving
financing for one year. The facility was renewed a sixth time in April 2007 and
expires in


                                       16
<PAGE>

April 2008. If the facility is not renewed again, we could convert borrowings
into term debt. The term debt would be repaid monthly from collections of
securitized receivables and would be repaid by February 2010 based on the
contractual payments of the $480.0 million of securitized receivables at July
31, 2007.

         Borrowings under the facility are limited to 94% of eligible
securitized receivables. Securitized receivables ninety or more days past due,
classified as impaired or subject to a bankruptcy, or whose terms are outside of
defined limits, are ineligible to be borrowed against. The facility also
restricts the amount of net charge-offs of securitized receivables and the
amount of delinquent securitized receivables. The facility would terminate if
these restrictions are exceeded, and borrowings outstanding would then be repaid
monthly from collections of securitized receivables.

         The unsecured debt agreements of our major operating subsidiary allow
40% of its finance receivables to be securitized ($848.0 million at July 31,
2007). Therefore, we could securitize an additional $368.0 million of finance
receivables at July 31, 2007.

Convertible Debentures

         The debentures are due at maturity in April 2034, but we can redeem
them anytime starting in April 2009 by paying the principal amount in cash and
debenture holders can require us to repurchase them on each five-year
anniversary of issuance or when a specified corporate transaction occurs by
paying the principal amount in cash. Debenture holders can also convert the
debentures into cash and common stock before maturity as discussed below. The
market value of the debentures was 110.7% of their principal amount at July 31,
2007.

         The debentures can only be converted (i) in any fiscal quarter when the
closing price of our common stock is at least 30% higher than the conversion
price for at least 20 of the last 30 trading days of the prior fiscal quarter
(the "market price condition") (ii) if the debentures are rated 'BB' or lower by
Fitch (three ratings levels lower than the initial rating) (iii) if we call the
debentures for redemption or (iv) if a specified corporate transaction occurs.
No event allowing for the debentures to be converted has occurred through July
31, 2007. The market price condition would have been met at July 31, 2007 if the
price of our common stock closed above $36.69 for the required period. The
closing price of our common stock was $28.35 on July 31, 2007.

         The debentures can only convert into shares of our common stock when
their value exceeds their principal amount because we irrevocably elected in
fiscal 2005 to pay the value of converted debentures, not exceeding the
principal amount, in cash instead of issuing shares of our common stock. Their
value equals the number of convertible shares multiplied by the market value of
our common stock. There are 6.2 million convertible (but not issuable) shares,
the adjusted conversion price is $28.22 per share and the adjusted conversion
rate is 35.43 shares for each $1,000 of principal. If the value of converted
debentures exceeds their principal amount, shares of common stock needed to pay
the value over principal would equal the difference between the conversion date
price of our common stock and the conversion price, divided by the conversion
date price and multiplied by the number of convertible shares. The conversion
rate and number of convertible shares increase and the conversion price
decreases when we pay dividends on our common stock.

Bank Credit Facilities

         We have $580.0 million of committed unsecured revolving credit
facilities from eleven banks (a $110.0 million increase from July 31, 2006).
This includes $500.0 million of facilities with original terms ranging from two
to five years and $80.0 million of facilities with an original term of one year.
These facilities range from $15.0 million to $110.0 million. In fiscal 2007,
$142.5 million of one year facilities were converted into multi-year facilities.
Borrowings under these facilities can mature between 1 and 270 days. Borrowings
outstanding at July 31, 2007 matured August 1, 2007. The multi-year facilities
expire as follows (in millions):

         =================================================================
         Fiscal:      2009        2010       2011         2012        2013
         =================================================================
                     $45.0      $110.0      $55.0       $265.0       $25.0
         =================================================================

         These committed facilities are a low-cost source of funds and support
our commercial paper program. We can borrow the full amount under each facility.
None of the facilities are for commercial paper back-up only and the facilities
do not have usage fees. These facilities may be renewed, extended or increased
before they expire.


                                       17
<PAGE>

         Bank credit facility activity is summarized below ($ in millions):

         ======================================================================
         Years Ended July 31,                       2007                   2006
         ----------------------------------------------------------------------
                                     Amount   # of Banks    Amount   # of Banks
         ======================================================================
         Total - beginning of year   $470.0            9    $395.0            9
            New                        65.0            2      50.0            1
            Expired not renewed          --           --     (15.0)           1
            Increased                  45.0            2      40.0            3
         ----------------------------------                 ------
         Total - end of year         $580.0           11    $470.0            9
         ======================================================================
         Renewed at expiration       $222.5                 $197.5
         ======================================================================
         Term extended before
            expiration               $230.0                 $152.5
         ======================================================================

Commercial Paper

         We issue commercial paper direct and through a $500.0 million program
with maturities between 1 and 270 days. We increased the program in fiscal 2007
from $350.0 million. The combined amount of commercial paper and bank borrowings
($339.7 million July 31, 2007) was limited to $580.0 million because commercial
paper outstanding can not exceed the unused amount of our bank credit
facilities. Commercial paper outstanding increased in fiscal 2007 because we
added a commercial paper dealer.

         Information on the combined amounts of bank borrowings and commercial
paper follows (in millions):

         ====================================================================
         Years Ended July 31,                      2007       2006       2005
         ====================================================================
         Maximum outstanding during the year     $393.7     $351.3     $307.0
         Average outstanding during the year      329.6      257.3      177.7
         Outstanding at end of year               339.7      268.6      307.0
         ====================================================================

Contractual Obligations

         Our long-term contractual obligations and other information at July 31,
2007 are summarized below ($ in millions):

<TABLE>
<CAPTION>
         ==============================================================================================
                                                                           Payments Due by Fiscal Years
                                 ----------------------------------------------------------------------
                                                                                         2013-
                                   2008       2009       2010       2011       2012       2014    Total
         ==============================================================================================
<S>                              <C>      <C>        <C>        <C>        <C>        <C>        <C>
         Term notes              $123.3   $     --   $  225.0   $  210.0   $   75.0   $   90.0   $723.3
         Convertible debentures      --      175.0         --         --         --         --    175.0
         Operating leases           1.3        1.4        1.1        1.1        0.5        0.1      5.5
         Other long-term
           liability reflected
           on the balance sheet
           under GAAP               0.4        0.1        0.1         --         --         --      0.6
         ----------------------------------------------------------------------------------------------
                Total payments   $125.0   $  176.4   $  226.2   $  211.1   $   75.5   $   90.1   $904.4
         ==============================================================================================
         Percentage                  14%        20%        25%        23%         8%        10%     100%
         ==============================================================================================
         Other debt              $764.7         --         --         --         --         --   $764.7
         ==============================================================================================
         Cumulative payments     $889.7   $1,066.1   $1,292.3   $1,503.4   $1,578.9   $1,669.1
         ==============================================================================================
         Cumulative scheduled
           collections of
           finance receivables   $771.2   $1,369.4   $1,797.4   $2,023.5   $2,111.9   $2,128.4
         ==============================================================================================
</TABLE>

         The weighted-average maturity of our term debt (term notes and
convertible debentures) was 3.0 years at July 31, 2007 and 3.3 years at July 31,
2006. Term notes and convertible debentures are discussed in Note 3 to the
Consolidated Financial Statements and operating leases in Note 10. The other
long-term liability is deferred compensation owed to an executive officer and
our former CEO's beneficiary. Other debt is asset securitization financings,
bank borrowings and commercial paper. As shown in the table, after one year,
cumulative scheduled collections of finance receivables exceed cumulative
payments under contractual obligations.


                                       18
<PAGE>

Stockholders' Equity

         We established a new $50.0 million common stock and convertible debt
repurchase program in fiscal 2007 after completing our former program. We also
increased the amount available under our former program by $32.6 million in
fiscal 2007. We repurchased 2.0 million shares of our common stock for $54.5
million at an average price of $27.05 per share in fiscal 2007 under these
programs. We financed the repurchases with the proceeds from the seven-year
fixed rate term notes issued in April 2007 and borrowings under bank credit
facilities. We also received 17,500 shares of common stock from employees in
fiscal 2007 at an average price of $26.70 per share for payment of income tax we
were required to withhold on vested shares of restricted stock. We retired all
shares repurchased and received in fiscal 2007. There was $45.2 million
available for future repurchases under the new program at July 31, 2007. The new
program does not have a set expiration.

         We paid $14.8 million of cash dividends and we received $9.6 million
from stock option exercises and tax benefits from stock-based awards in fiscal
2007.


Market Interest Rate Risk and Sensitivity

         We discuss how changes in market interest rates affect our net interest
spread and how we manage interest rate risk in this section. Net interest spread
(net yield of finance receivables less cost of debt) is an integral part of a
finance company's profitability and is calculated below:

         ====================================================================
         Years Ended July 31,                  2007          2006        2005
         ====================================================================
         Net yield of finance receivables      9.25%         8.89%       8.20%
         Cost of debt                          5.36          4.85        3.79
         --------------------------------------------------------------------
                  Net interest spread          3.89%         4.04%       4.41%
         ====================================================================

         Our net interest spread was 0.15% (15 basis points) lower in fiscal
2007 compared to fiscal 2006 because the effects of increases in short-term
market interest rates during fiscal 2006 on our cost of debt in fiscal 2007
exceeded the increase in the net yield of finance receivables. This is an
expected result of an inverted yield curve as discussed below.

         Our net interest spread is sensitive to changes in short-term and
long-term market interest rates (includes LIBOR, rates on U.S. Treasury
securities, money-market rates, swap rates and the prime rate). Increases in
short-term rates reduce our net interest spread (this occurred during our prior
two fiscal years and continued to affect us in fiscal 2007) and decreases in
short-term rates increase our net interest spread because our floating rate debt
(includes short-term debt) exceeds our floating rate finance receivables by a
significant amount. Interest rates on our debt change faster than the yield on
our receivables because 55% of our debt is floating rate compared to floating
rate finance receivables of only 8%. Our net interest spread is also affected
when the differences between short-term and long-term rates change. Long-term
rates normally exceed short-term rates. When this excess narrows (resulting in a
"flattening yield curve") or when short-term rates exceed long-term rates (an
"inverted yield curve"), our net interest spread should decrease and when the
yield curve widens our net interest spread should increase because the rates we
charge our customers are partially determined by long-term market interest rates
and rates on our floating rate debt are largely determined by short-term market
interest rates. We can mitigate the effects of an inverted yield curve by
issuing long-term fixed rate debt. The yield curve was inverted during most of
fiscal 2007.

         Short-term market interest rates changed little in fiscal 2007 after
rising substantially and consistently over the prior two years. As a result, our
cost of debt remained flat during the year. Long-term market interest rates
increased during the latter part of fiscal 2007 reversing the inverted yield
curve. Higher long-term market interest rates will increase the cost of future
issuances of fixed-rate term debt and could also result in higher yields on
finance receivables.

         Our income is subject to the risk of rising short-term market interest
rates and a flat or inverted yield curve at July 31, 2007 because floating rate
debt exceeded floating rate receivables by $739.4 million (see the table below).
The terms and prepayment experience of our fixed rate receivables mitigate this
risk. Finance receivables are collected monthly over short terms of two to five
years and have been accelerated by prepayments. At July 31, 2007, $694.0 million
(35%) of fixed rate finance receivables are scheduled to be collected in one
year and the weighted-average remaining life of fixed rate finance receivables
excluding prepayments is approximately twenty months. Historically, annual
collections have exceeded 50% of


                                       19
<PAGE>

average receivables. We do not match the maturities of our debt to our finance
receivables. The fixed and floating rate amounts and percentages of our finance
receivables and capital at July 31, 2007 follow ($ in millions):

<TABLE>
<CAPTION>
         ============================================================================
                                          Fixed Rate       Floating Rate
                                   -----------------     ---------------
                                     Amount  Percent     Amount  Percent        Total
         ============================================================================
<S>                                <C>           <C>     <C>         <C>     <C>
         Finance receivables       $1,959.8       92%    $168.6        8%    $2,128.4
         ============================================================================

         Debt (principal)          $  755.0       45%    $908.0       55%    $1,663.0
         Stockholders' equity         387.8      100         --       --        387.8
         ----------------------------------------------------------------------------
           Total debt and equity   $1,142.8       56%    $908.0       44%    $2,050.8
         ============================================================================
</TABLE>

         Floating rate debt comprises asset securitization financings,
commercial paper, floating rate swaps of fixed rate notes and bank borrowings,
and reprices (interest rate changes based on current short-term market interest
rates) at July 31, 2007 as follows: $718.8 million (79%) within one month,
$177.4 million (20%) in two to three months and $11.8 million (1%) in four to
six months. The repricing frequency of floating rate debt follows (in millions):

         ====================================================================
                                    Amount     Repricing Frequency
         ====================================================================
         Asset securitization
           financings               $425.0     generally daily
         Commercial paper            289.7     1 to 90 days (20 day average)
         Floating rate swaps of
           fixed rate notes          143.3     semiannually (150 day average)
         Bank borrowings              50.0     generally daily
         ====================================================================

         We quantify interest rate risk by calculating the effect on net income
of a hypothetical, immediate 100 basis point (1.0%) rise in market interest
rates. This hypothetical change in rates would reduce annual net income by
approximately $2.7 million at July 31, 2007 based on scheduled repricings of
floating rate debt, fixed rate debt maturing within one year and the expected
effects on the yield of new receivables. This amount increases to $4.3 million
excluding the expected increase in the yield of new receivables. We believe
these amounts are acceptable considering the cost of floating rate debt has been
historically lower than fixed rate debt. These hypothetical reductions of annual
net income at July 31, 2006 were $2.7 million or $4.2 million. Actual future
changes in market interest rates and the effect on net income may differ
materially from these amounts. Other factors that may accompany an actual
immediate 100 basis point rise in market interest rates were not considered in
the calculation.

         We monitor and manage our exposure to potential adverse changes in
market interest rates with derivative financial instruments and by changing the
proportion of our fixed and floating rate debt. We may use derivatives to hedge
our exposure to interest rate risk on existing debt and debt expected to be
issued. We do not speculate with or trade derivatives.

         We entered into interest rate locks (in the form of forward starting
interest rate swaps) with a total notional amount of $100.0 million with three
banks in September 2006. The rate locks had a March 2007 expiration. We
designated the rate locks as cash flow hedges of our anticipated issuance of
fixed rate term notes hedging the risk of higher interest payments on the notes
for the first five years from increases in market interest rates before the
notes were issued. We received $1.0 million when we terminated the rate locks in
January 2007.

         We entered into another interest rate lock (also a forward starting
interest rate swap) with a notional amount of $50.0 million with a bank in March
2007 with an April 2007 expiration. We designated it as a cash flow hedge of the
same anticipated fixed rate term notes issuance originally hedged in September
2006. We hedged these notes again because applicable market interest rates
declined more than 0.40% (40 basis points) after we terminated the initial rate
locks. We terminated this rate lock in April 2007 when the hedged notes were
issued and we received $169,000. All of the rate locks were determined to be
highly effective.

         The amount of the gains on these rate locks relating to hedge
ineffectiveness was $100,000. We recorded this amount as a reduction of interest
expense in fiscal 2007. We recorded the $1.1 million effective amount of these
gains in stockholders' equity as accumulated other comprehensive income net of
deferred income tax of $0.4 million. We are reclassifying this after-tax amount
into net income over five years (the term of the notes issued) by reducing
interest expense and deferred income tax. These rate locks effectively lowered
the interest rate on the fixed rate notes issued in April 2007 by 0.20% (20
basis points).

                                       20
<PAGE>

         We also have fixed to floating interest rate swaps with a total
notional amount of $143.3 million at July 31, 2007 and 2006. The swaps
effectively convert fixed rate term notes into floating rate term notes.
Semiannually, we receive fixed amounts from the swap counterparty banks equal to
the interest we pay on the hedged fixed rate notes, and we pay amounts to the
swap counterparty banks equal to the swaps' floating rates multiplied by the
swaps' notional amounts. The swaps' floating rates change semiannually to a
fixed amount over six-month LIBOR (5.33% at July 31, 2007). The swaps increased
interest expense by $3.0 million in fiscal 2007 and by $1.6 million in fiscal
2006. The weighted-average pay rate of 6.90% at July 31, 2007 exceeded the 4.88%
weighted-average receive rate by 202 basis points (2.02%). The weighted-average
remaining term of the swaps at July 31, 2007 is one year. Information for each
swap at July 31, 2007 follows:

<TABLE>
<CAPTION>
         ==============================================================================
                                                    Fixed
                                      Notional    Receive     Floating
         Issued         Expires         Amount       Rate     Pay Rate     Reprices
         ==============================================================================
<S>                     <C>              <C>         <C>          <C>       <C>
         April 2003     April 2010       $12.5       4.96%        6.51%    October 2007
         July 2003      April 2008        25.0       4.37         6.14     October 2007
         July 2003      June 2008         12.5       4.37         6.84     October 2007
         July 2003      June 2008         25.0       4.37         6.65     October 2007
         July 2003      June 2010         12.5       4.96         6.82     October 2007
         August 2003    April 2008        24.5       4.37         6.05     October 2007
         April 2004     August 2007       31.3       6.23         8.58
         ==============================================================================
</TABLE>

New Accounting Standards

         The Financial Accounting Standards Board ("FASB") issued Interpretation
No. 48, "Accounting for Uncertainty in Income Taxes - An Interpretation of FASB
109", ("FIN No. 48") in July 2006. FIN No. 48 requires companies to determine if
any tax positions taken on their income tax returns lowering the amount of tax
currently due would more likely than not be allowed by a taxing authority. If
tax positions pass the more-likely-than-not test, companies then record benefits
from them only equal to the highest amount having a greater than 50% chance of
being realized assuming the tax positions would be challenged by a taxing
authority. No benefits would be recorded for tax positions failing the
more-likely-than-not test. Tax benefits include income tax savings and the
related interest expense savings. Whether tax positions pass the test or not,
adopting FIN No. 48 could result in additional income tax provisions or expenses
for any interest and penalties on potential underpayments of income tax, or
both. FIN No. 48 is effective in the first quarter of fiscal years beginning
after December 15, 2006. We must start applying it in the first quarter of
fiscal 2008. We are still evaluating its affects on our consolidated financial
statements. The Internal Revenue Service completed their audit of our fiscal
2005 and 2004 consolidated income tax returns in July 2007 and made no changes
to the tax reported.

         The FASB issued Statement of Financial Accounting Standards ("SFAS")
No. 157, "Fair Value Measurements", ("SFAS No. 157") in September 2006. SFAS No.
157 defines fair value (replacing all prior definitions) and creates a framework
to measure fair value, but does not create any new fair value measurements. SFAS
No. 157 is effective in the first quarter of fiscal years beginning after
November 15, 2007. It will become effective for us on August 1, 2008. We are
evaluating how it may affect our consolidated financial statements.

         The FASB issued SFAS No. 159, "The Fair Value Option for Financial
Assets and Financial Liabilities - Including an amendment of FASB Statement No.
115" in February 2007. SFAS No. 159 permits companies to choose to measure many
financial instruments and certain other items at fair value at specified
election dates and to report unrealized gains and losses on these items in
earnings at each subsequent reporting date. SFAS No. 159 is effective in the
first quarter of fiscal years beginning after November 15, 2007. It will become
effective for us on August 1, 2008. We are evaluating how it may affect our
consolidated financial statements.


Forward-Looking Statements

         Statements in this report contain the words or phrases "can be,"
"expect," "anticipate," "may," "believe," "estimate," "intend," "could,"
"should," "would," "if" and similar words and phrases are "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking statements
are subject to various known and unknown risks and uncertainties and any
forward-looking information provided by us or on our behalf is not a guarantee
of future performance. Our actual results could differ from


                                       21
<PAGE>

those anticipated by forward-looking statements materially because of the
uncertainties and risks described in "Part I, Item 1A Risk Factors" and other
sections of this report. These risk factors include (i) an economic slowdown
(ii) the inability to collect finance receivables and the sufficiency of the
allowance for credit losses (iii) the inability to obtain capital or maintain
liquidity (iv) rising short-term market interest rates and adverse changes in
the yield curve (v) increased competition (vi) the inability to retain key
employees and (vii) adverse conditions in the construction and road
transportation industries. Forward-looking statements apply only as of the date
made and we are not required to update forward-looking statements for future or
unanticipated events or circumstances.


Item 7A. Quantitative and Qualitative Disclosures About Market Risk

         See Item 7, Market Interest Rate Risk and Sensitivity.


                                       22
<PAGE>

Item 8.  Financial Statements and Supplementary Data

         Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Financial Federal Corporation:

We have audited the accompanying consolidated balance sheets of Financial
Federal Corporation and subsidiaries (the "Company" or "Financial Federal") as
of July 31, 2007 and 2006, and the related consolidated statements of income,
changes in stockholders' equity and cash flows for each of the years in the
three-year period ended July 31, 2007. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Financial Federal as
of July 31, 2007 and 2006, and the results of its operations and its cash flows
for each of the years in the three-year period ended July 31, 2007, in
conformity with U.S. generally accepted accounting principles. We also have
audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), Financial Federal's internal control over
financial reporting as of July 31, 2007, based on criteria established in
Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO), and our report dated September
24, 2007 expressed an unqualified opinion on the effectiveness of the Company's
internal control over financial reporting.

/s/ KPMG LLP

New York, New York
September 24, 2007


                                       23
<PAGE>


                 FINANCIAL FEDERAL CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except par value)

<TABLE>
<CAPTION>
============================================================================================
July 31,                                                             2007               2006
============================================================================================
<S>                                                           <C>                <C>
ASSETS
Finance receivables                                           $ 2,128,353        $ 1,991,688
Allowance for credit losses                                       (23,992)           (24,100)
--------------------------------------------------------------------------------------------
     Finance receivables - net                                  2,104,361          1,967,588
Cash                                                                5,861              8,143
Other assets                                                        9,852             12,613
--------------------------------------------------------------------------------------------
        TOTAL ASSETS                                          $ 2,120,074        $ 1,988,344
============================================================================================

LIABILITIES
Debt:
   Long-term ($5,700 at July 31, 2007 and 2006 owed to
     related parties)                                         $ 1,335,850        $ 1,252,350
   Short-term                                                     324,750            275,311
Accrued interest, taxes and other liabilities                      45,953             50,593
Deferred income taxes                                              25,768             19,711
--------------------------------------------------------------------------------------------
     Total liabilities                                          1,732,321          1,597,965
--------------------------------------------------------------------------------------------

STOCKHOLDERS' EQUITY
Preferred stock - $1 par value, authorized 5,000 shares                --                 --
Common stock - $.50 par value, authorized 100,000 shares,
   shares issued and outstanding (net of 1,696 treasury
   shares):  25,760 at July 31, 2007 and 27,216 at
   July 31, 2006                                                   12,880             13,608
Additional paid-in capital                                        129,167            123,091
Retained earnings                                                 244,646            253,128
Accumulated other comprehensive income                              1,060                552
--------------------------------------------------------------------------------------------
     Total stockholders' equity                                   387,753            390,379
--------------------------------------------------------------------------------------------
        TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY            $ 2,120,074        $ 1,988,344
============================================================================================
</TABLE>

See accompanying notes to consolidated financial statements


                                       24
<PAGE>

                 FINANCIAL FEDERAL CORPORATION AND SUBSIDIARIES

                         CONSOLIDATED INCOME STATEMENTS
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>
===========================================================================================
Years Ended July 31,                                       2007          2006          2005
===========================================================================================
<S>                                                    <C>           <C>           <C>
Finance income                                         $191,254      $162,475      $126,643
Interest expense                                         84,828        67,402        43,748
-------------------------------------------------------------------------------------------
    Net finance income before provision for credit
       losses on finance receivables                    106,426        95,073        82,895

Provision for credit losses on finance receivables           --            --         1,500
-------------------------------------------------------------------------------------------
    Net finance income                                  106,426        95,073        81,395

Salaries and other expenses                              24,945        23,676        21,477
-------------------------------------------------------------------------------------------
    Income before income taxes                           81,481        71,397        59,918

Provision for income taxes                               31,431        27,778        23,266
-------------------------------------------------------------------------------------------
       NET INCOME                                      $ 50,050      $ 43,619      $ 36,652
===========================================================================================
EARNINGS PER COMMON SHARE:
       Diluted                                         $   1.90      $   1.65      $   1.41
===========================================================================================
       Basic                                           $   1.94      $   1.68      $   1.44
===========================================================================================
</TABLE>

See accompanying notes to consolidated financial statements


                                       25
<PAGE>

                 FINANCIAL FEDERAL CORPORATION AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                 (In thousands)
<TABLE>
<CAPTION>
===================================================================================================
                                                                             Accumulated
                                     Common Stock  Additional                      Other
                                 ----------------     Paid-In    Retained  Comprehensive
                                 Shares    Amount     Capital    Earnings         Income      Total
===================================================================================================
<S>                              <C>      <C>        <C>         <C>              <C>      <C>
BALANCE - JULY 31, 2004          25,903   $12,952    $101,920    $189,018         $   --   $303,890
  Net income                         --        --          --      36,652             --     36,652
  Stock repurchased (42 shares
    retired and 24 shares held
    in treasury)                    (66)      (33)     (1,024)       (599)            --     (1,656)
  Stock plan activity:
    Shares issued                   394       197       4,695         (66)            --      4,826
    Compensation recognized          --        --       2,630          --             --      2,630
    Tax benefits                     --        --       1,005          --             --      1,005
  Common stock cash dividends        --        --          --      (5,233)            --     (5,233)
---------------------------------------------------------------------------------------------------
BALANCE - JULY 31, 2005          26,231    13,116     109,226     219,772             --    342,114
  Net income                         --        --          --      43,619             --     43,619
  Unrealized gain on cash flow
    hedge, net of tax                --        --          --          --            589        589
  Reclassification adjustment
    for realized gain included
    in net income, net of tax        --        --          --          --            (37)       (37)
                                                                                             ------
  Comprehensive income                                                                       44,171
                                                                                             ------
  Stock repurchased (retired)       (28)      (14)       (527)       (266)            --       (807)
  Stock plan activity:
    Shares issued                 1,017       508       6,343         (52)            --      6,799
    Compensation recognized          --        --       6,265          --             --      6,265
    Excess tax benefits              --        --       1,784          --             --      1,784
  Common stock cash dividends        --        --          --      (9,838)            --     (9,838)
  Cash paid for fractional
    shares                           (4)       (2)         --        (107)            --       (109)
---------------------------------------------------------------------------------------------------
BALANCE - JULY 31, 2006          27,216    13,608     123,091     253,128            552    390,379
  Net income                         --        --          --      50,050             --     50,050
  Unrealized gain on cash flow
    hedge, net of tax                --        --          --          --            720        720
  Reclassification adjustment
    for realized gain included
    in net income, net of tax        --        --          --          --           (212)      (212)
                                                                                             ------
  Comprehensive income                                                                       50,558
                                                                                             ------
  Stock repurchased (retired)    (2,031)   (1,016)    (10,188)    (43,744)            --    (54,948)
  Stock plan activity:
    Shares issued                   584       292       7,869          --             --      8,161
    Shares canceled                  (9)       (4)          4          --             --         --
    Compensation recognized          --        --       6,867          --             --      6,867
    Excess tax benefits              --        --       1,524          --             --      1,524
  Common stock cash dividends        --        --          --     (14,788)            --    (14,788)
---------------------------------------------------------------------------------------------------
BALANCE - JULY 31, 2007          25,760   $12,880    $129,167    $244,646         $1,060   $387,753
===================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements


                                       26
<PAGE>

                 FINANCIAL FEDERAL CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
<TABLE>
<CAPTION>
===============================================================================================
Years Ended July 31,                                           2007          2006          2005
-----------------------------------------------------------------------------------------------
<S>                                                      <C>           <C>           <C>
Cash flows from operating activities:
  Net income                                             $   50,050    $   43,619    $   36,652
  Adjustments to reconcile net income to net cash
   provided by operating activities:
    Amortization of deferred origination costs and fees      15,951        14,626        15,400
    Stock-based compensation                                  3,992         3,338         2,630
    Provision for credit losses on finance receivables           --            --         1,500
    Depreciation and amortization                               437           798           863
    Deferred income taxes                                     5,738         1,591        (3,636)
    Decrease (increase) in other assets                       1,976        (1,938)        7,711
    Decrease (increase) in accrued interest, taxes and
      other liabilities                                        (116)        9,010        (4,061)
    Excess tax benefits from stock-based awards              (1,524)       (1,784)           --
    Tax benefits from stock plans                                --            --         1,005
-----------------------------------------------------------------------------------------------
           Net cash provided by operating activities         76,504        69,260        58,064
-----------------------------------------------------------------------------------------------
Cash flows from investing activities:
  Finance receivables originated                         (1,208,161)   (1,335,664)   (1,068,711)
  Finance receivables collected                           1,058,312       998,231       846,785
-----------------------------------------------------------------------------------------------
           Net cash used in investing activities           (149,849)     (337,433)     (221,926)
-----------------------------------------------------------------------------------------------
Cash flows from financing activities:
  Commercial paper, net increase (decrease)                 170,861        24,839        (9,600)
  Asset securitization borrowings (repayments)                   --       100,000        39,000
  Bank borrowings, net (decrease) increase                 (109,672)      (63,278)      201,000
  Proceeds from term notes                                  125,000       250,000       200,000
  Repayments of term notes                                  (56,250)      (42,500)     (263,000)
  Proceeds from settlement of interest rate locks             1,175           970            --
  Proceeds from stock option exercises                        8,116         6,799         4,104
  Excess tax benefits from stock-based awards                 1,524         1,784            --
  Common stock issued                                            45            --            --
  Common stock repurchased                                  (54,948)         (807)         (934)
  Common stock cash dividends                               (14,788)       (9,838)        5,233)
  Cash paid for fractional shares of common stock                --          (109)           --
-----------------------------------------------------------------------------------------------
           Net cash provided by financing activities         71,063       267,860       165,337
-----------------------------------------------------------------------------------------------
NET (DECREASE) INCREASE IN CASH                              (2,282)         (313)        1,475
Cash - beginning of year                                      8,143         8,456         6,981
-----------------------------------------------------------------------------------------------
CASH - END OF YEAR                                       $    5,861    $    8,143    $    8,456
===============================================================================================
Supplemental disclosures of cash flow information:
   Interest paid                                         $   82,278    $   63,560    $   41,436
===============================================================================================
   Income taxes paid                                     $   21,654    $   27,171    $   20,306
===============================================================================================
</TABLE>

See accompanying notes to consolidated financial statements


                                       27
<PAGE>

                 FINANCIAL FEDERAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (Dollars in thousands, except per share amounts)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

         Financial Federal Corporation and subsidiaries (the "Company") provide
collateralized lending, financing and leasing services nationwide to small and
medium sized businesses in the general construction, road and infrastructure
construction and repair, road transportation and refuse industries. We lend
against, finance and lease a wide range of new and used revenue-producing,
essential-use equipment including cranes, earthmovers, personnel lifts, trailers
and trucks.

Basis of Presentation and Principles of Consolidation

         We prepared the accompanying Consolidated Financial Statements
according to accounting principles generally accepted in the United States of
America (GAAP) and they include the accounts of Financial Federal Corporation
and its subsidiaries. We eliminated all significant intercompany accounts and
transactions. We do not have reportable operating segments.

         We split our common stock 3-for-2 in the form of a stock dividend in
January 2006. All prior share and per share amounts (including stock options,
restricted stock and stock units), excluding treasury shares, in the
Consolidated Financial Statements and accompanying notes were restated to
reflect the split. We did not split treasury shares.

Use of Estimates

         GAAP requires us to make significant estimates and assumptions
affecting the amounts reported in the Consolidated Financial Statements and
accompanying notes for the allowance for credit losses, non-performing assets,
residual values and stock-based compensation. Actual results could differ from
these estimates significantly.

Finance Receivables

         Finance receivables comprise loans and other financings and
noncancelable leases. All leases are accounted for as direct financing leases,
where total lease payments, plus any residual values, less the cost of the
leased equipment is recorded as unearned finance income. Residual values are
recorded at the lowest of (i) any stated purchase option (ii) the present value
at the end of the initial lease term of rentals due under any renewal options or
(iii) the estimated fair value of the equipment at the end of the lease.

Income Recognition

         Interest income earned on finance receivables is recognized over the
term of receivables using the interest method. Costs associated with originating
receivables and nonrefundable fees earned on receivables are deferred under SFAS
No. 91, "Accounting for Nonrefundable Fees and Costs Associated with Originating
or Acquiring Loans and Initial Direct Costs of Leases" ("SFAS No. 91") and
recognized in finance income over the term of receivables using the interest
method. Income recognition is suspended on finance receivables we classify as
non-accrual (full collection of principal and interest being doubtful). This
typically occurs when (i) a contractual payment is 90 days or more past due
(unless this is expected to be temporary) (ii) the customer is subject to a
bankruptcy proceeding or (iii) the collateral is being liquidated, and the value
of the collateral does not exceed our net investment. Income recognition may be
resumed when we believe full collection of all amounts contractually due is
probable.

Allowance for Credit Losses

         The allowance for credit losses on finance receivables is our estimate
of losses inherent in our finance receivables. We record a provision for credit
losses on finance receivables to adjust the allowance for credit losses to the
estimated amount. The allowance is a significant estimate we determine based on
total finance receivables, net charge-off experience, non-accrual and delinquent
finance receivables and our current assessment of the risks inherent in our
finance receivables from national and regional economic conditions, industry
conditions, concentrations, the financial condition of customers and guarantors,
collateral values and other factors. Changes in the allowance level may be
necessary based on unexpected changes in these factors.


                                       28
<PAGE>

         Impaired finance receivables are written-down to our estimate of their
fair value by a charge to the allowance for credit losses. Write-downs
subsequently recovered are credited to the allowance. Assets received to satisfy
finance receivables are initially written-down to their current estimated fair
value less selling costs by a charge to the allowance for credit losses and any
subsequent write-downs and recoveries are recorded in earnings.

Derivative Financial Instruments

         We use derivative financial instruments to manage our exposure to the
effects of changes in market interest rates on our debt. We do not speculate
with or trade derivatives. Derivatives are recorded at fair value as an asset or
liability. Derivatives may be designated as a fair value hedge or cash flow
hedge or may not be designated as a hedge.

         For derivatives designated as a fair value hedge, the hedged asset or
liability is also recorded at its fair value (to the extent of the change in the
fair value of the derivative) and any changes in the fair value of the
derivative and the hedged asset or liability from changes in the hedged risk are
recorded in earnings. The changes in the fair value of a derivative designated
as a fair value hedge and the hedged asset or liability will offset in
correlation to the effectiveness of the hedging relationship. If certain
conditions are met, these changes will offset exactly and there will be no hedge
ineffectiveness.

         For derivatives designated as a cash flow hedge, changes in the fair
value of the effective portion of the derivative are recorded in accumulated
other comprehensive income within stockholders' equity, net of tax, and
reclassified to earnings in the same future periods the hedged transaction
impacts earnings. Any ineffective portion is recorded immediately in earnings.

         For derivatives not designated as a hedge, changes in their fair value
are recorded immediately in earnings.

         Derivatives designated as a hedge must be linked to a specific asset,
liability, forecast transaction or firm commitment depending on the type of
hedge, and the risk management objective and strategy and the method to be used
to determine the effectiveness of the hedge must be documented at inception of
the hedging relationship.

Stock-Based Compensation Expense

         We started recording compensation expense for stock options on August
1, 2005 as required by Statement of Financial Accounting Standards ("SFAS") No.
123(R), "Share-Based Payment, revised 2004" ("SFAS No. 123R") and according to
the Securities and Exchange Commission's Staff Accounting Bulletin No. 107 ("SAB
No. 107") using SFAS No. 123R's modified prospective method. This method
requires us to record compensation expense for options unvested on August 1,
2005 and for options subsequently granted or modified. Prior periods were not
restated. Before August 1, 2005, we applied Accounting Principles Board Opinion
("APB") No. 25, "Accounting for Stock Issued to Employees," and related
Interpretations to account for our stock options. We did not record compensation
expense for stock options under APB No. 25. SFAS No. 123R did not change how we
determine or recognize expense for shares of restricted stock and stock units.

         We record the fair value of options as compensation expense over the
options' vesting periods using straight-line or graded-vesting (accelerated)
methods. We use the Black-Scholes option-pricing model to calculate the fair
value of stock options when they are granted. We use the graded-vesting method
(the method used for SFAS No. 123, "Accounting for Stock-Based Compensation" pro
forma disclosure) to recognize compensation expense for options unvested on
August 1, 2005 and we use the straight-line method to recognize compensation
expense for options granted after July 31, 2005.

         We record the fair value of shares of restricted stock and stock units
as compensation expense over the awards' vesting periods using the straight-line
method for awards without a performance condition and the graded-vesting method
for awards with a performance condition. The fair value of these awards is the
market value of our common stock on the date of award.

         SFAS No. 123R requires compensation expense to be recorded only for
stock-based awards expected to vest. Therefore, we must estimate how many awards
will be forfeited and periodically review our estimates based on actual
forfeitures and revise them cumulatively as necessary.

         We capitalize (defer recognizing) stock-based compensation considered a
cost of originating receivables according to SFAS No. 91. We record tax benefits
(reductions of the provision for income taxes) on compensation expense for
shares of restricted stock, stock units and non-qualified stock options, and for
incentive stock options when employees exercise and subsequently sell the shares
within one year. We record excess tax benefits when compensation expense
deducted in our income tax returns exceeds the expense recorded in our financial
statements by increasing additional paid-in capital and reducing income taxes
currently payable.


                                       29
<PAGE>

Earnings Per Common Share

         Basic earnings per share equals net income divided by the
weighted-average number of common shares outstanding during the period. Diluted
earnings per share equals net income divided by the weighted-average number of
common shares plus potential common shares from the assumed conversion of
dilutive securities. Dilutive securities are stock options, shares of restricted
stock, stock units and convertible debt.

Income Taxes

         Deferred tax assets and liabilities are recognized for the estimated
future tax effects of temporary differences between the financial statement and
tax return amounts of assets and liabilities using enacted tax rates.

New Accounting Standards

         The Financial Accounting Standards Board ("FASB") issued Interpretation
No. 48, "Accounting for Uncertainty in Income Taxes - An Interpretation of FASB
109", ("FIN No. 48") in July 2006. FIN No. 48 requires companies to determine if
any tax positions taken on their income tax returns lowering the amount of tax
currently due would more likely than not be allowed by a taxing authority. If
tax positions pass the more-likely-than-not test, companies then record benefits
from them only equal to the highest amount having a greater than 50% chance of
being realized assuming the tax positions would be challenged by a taxing
authority. No benefits would be recorded for tax positions failing the
more-likely-than-not test. Tax benefits include income tax savings and the
related interest expense savings. Whether tax positions pass the test or not,
adopting FIN No. 48 could result in additional income tax provisions or expenses
for any interest and penalties on potential underpayments of income tax, or
both. FIN No. 48 is effective in the first quarter of fiscal years beginning
after December 15, 2006. We must start applying it in the first quarter of
fiscal 2008. We are still evaluating its affects on our consolidated financial
statements.

         The FASB issued SFAS No. 157, "Fair Value Measurements", in September
2006. SFAS No. 157 defines fair value (replacing all prior definitions) and
creates a framework to measure fair value, but does not create any new fair
value measurements. SFAS No. 157 is effective in the first quarter of fiscal
years beginning after November 15, 2007. It will become effective for us on
August 1, 2008. We are evaluating how it may affect our consolidated financial
statements.

         The FASB issued SFAS No. 159, "The Fair Value Option for Financial
Assets and Financial Liabilities - Including an amendment of FASB Statement No.
115" in February 2007. SFAS No. 159 permits companies to choose to measure many
financial instruments and certain other items at fair value at specified
election dates and to report unrealized gains and losses on these items in
earnings at each subsequent reporting date. SFAS No. 159 is effective in the
first quarter of fiscal years beginning after November 15, 2007. It will become
effective for us on August 1, 2008. We are evaluating how it may affect our
consolidated financial statements.


NOTE 2 - FINANCE RECEIVABLES

         Finance receivables comprise installment sale agreements and secured
loans (including line of credit arrangements), collectively referred to as
loans, with fixed or floating (indexed to the prime rate) interest rates, and
direct financing leases as follows:

         =====================================================================
         July 31,                                         2007            2006
         =====================================================================
         Loans:
            Fixed rate                             $ 1,757,211     $ 1,662,805
            Floating rate                              168,574         131,235
         ---------------------------------------------------------------------
               Total loans                           1,925,785       1,794,040
         Direct financing leases                       202,568         197,648
         ---------------------------------------------------------------------
                  Finance receivables              $ 2,128,353     $ 1,991,688
         =====================================================================

         Direct financing leases comprised the following:

         =====================================================================
         July 31,                                         2007            2006
         =====================================================================
         Minimum lease payments receivable         $   191,723     $   187,094
         Residual values                                42,923          41,160
         Unearned finance income                       (32,078)        (30,606)
         ---------------------------------------------------------------------
                  Direct financing leases          $   202,568     $   197,648
         =====================================================================


                                       30
<PAGE>

         Line of credit arrangements contain off-balance sheet risk and are
subject to the same credit policies and procedures as other finance receivables.
The unused portion of these commitments was $31,400 at July 31, 2007 and $23,800
at July 31, 2006. The weighted-average interest rate on fixed rate loans was
9.1% at July 31, 2007 and 8.6% at July 31, 2006.

         Finance receivables generally provide for monthly installments of equal
or varying amounts over two to five years. Annual contractual maturities of
finance receivables at July 31, 2007 follow:

         =====================================================================
                                                                        Direct
                                       Fixed         Floating        Financing
         Fiscal Year Due:         Rate Loans       Rate Loans           Leases
         =====================================================================
         2008                     $  622,869         $ 77,141         $ 76,552
         2009                        495,584           43,136           58,476
         2010                        358,859           27,790           36,135
         2011                        191,474           13,104           15,789
         2012                         74,494            5,554            4,473
         Thereafter                   13,931            1,849              298
         ---------------------------------------------------------------------
                  Total           $1,757,211         $168,574         $191,723
         =====================================================================

         Allowance for credit losses activity is summarized below:

         =====================================================================
         Years Ended July 31,                   2007         2006         2005
         =====================================================================
         Allowance - beginning of year       $24,100      $24,225      $24,081
            Provision                             --           --        1,500
            Write-downs                       (2,778)      (3,355)      (5,554)
            Recoveries                         2,670        3,230        4,198
         ---------------------------------------------------------------------
         Allowance - end of year             $23,992      $24,100      $24,225
         =====================================================================
         Percentage of finance receivables      1.13%        1.21%        1.45%
         =====================================================================
         Net charge-offs *                   $   108      $   125      $ 1,356
         =====================================================================
         Loss ratio **                          0.01%        0.01%        0.09%
         =====================================================================
         *   write-downs less recoveries
         **  net charge-offs over average finance receivables

         Non-performing assets comprise finance receivables classified as
non-accrual (income recognition has been suspended and the receivables are
considered impaired) and assets received to satisfy finance receivables
(repossessed equipment, included in other assets) as follows:

         =====================================================================
         July 31,                                        2007             2006
         =====================================================================
         Finance receivables classified as
            non-accrual                               $18,817          $13,750
         Assets received to satisfy finance
            receivables                                 2,342              809
         ---------------------------------------------------------------------
                  Non-performing assets               $21,159          $14,559
         =====================================================================

         Non-accrual finance receivables included impaired loans (excludes
direct financing leases) of $18,300 at July 31, 2007 and $12,300 at July 31,
2006. The average recorded investment in impaired loans was $13,800 in fiscal
2007, $10,500 in fiscal 2006 and $19,700 in fiscal 2005. The allowance for
credit losses included $500 at July 31, 2007 and $300 at July 31, 2006
specifically allocated to $4,100 and $4,200 respectively, of impaired finance
receivables. We did not recognize any income in fiscal 2007, 2006 or 2005 on
impaired loans before collecting our net investment.

         We manage our exposure to the credit risk associated with our finance
receivables by using disciplined and established underwriting policies and
procedures. Our underwriting policies and procedures require obtaining a first
lien on equipment financed. We focus on financing equipment with an economic
life longer than the term financed, historically low levels of technological
obsolescence, use in more than one type of business, ease of access and
transporting, and broad, established resale markets. Securing our receivables
with equipment having these characteristics can mitigate potential net
charge-offs. We may also obtain additional equipment or other collateral,
third-party guarantees, advance payments or hold back a portion of the amount
financed.


                                       31
<PAGE>

         Our finance receivables reflect industry and geographic concentrations
of credit risk. Concentrations of credit risk result when customers have similar
economic characteristics that would cause their ability to meet contractual
obligations to be similarly affected by changes in economic or other conditions.
We do not have a significant concentration of credit risk with any customer. The
major concentrations of credit risk, grouped by industry and U.S. geographic
region, expressed as percentages of finance receivables, follow:

         ==================================    ================================
         July 31,               2007   2006    July 31,             2007   2006
         ==================================    ================================
         Industry:                             Geographic region:
         ---------                             ------------------
         Construction related     44%    43%   Southwest              28%    28%
         Road transportation      40     40    Southeast              27     28
         Refuse                   11     11    Northeast              16     16
         Other (none more than                 West                   15     15
           2% in 2007 and 2006)    5      6    Central                14     13
         ==================================    ================================


NOTE 3 - DEBT

         Debt is summarized below:

         =====================================================================
         July 31,                                           2007          2006
         =====================================================================
         Fixed rate term notes:
            5.00% due 2010 - 2011                     $  250,000    $  250,000
            5.45% - 5.57% due 2011 - 2014                325,000       200,000
            5.92% - 6.80% due 2007 - 2008                  5,000        61,250
         ---------------------------------------------------------------------
              Total fixed rate term notes                580,000       511,250
         Fixed rate term notes swapped to floating
            rates due 2008 - 2010                        143,250       143,250
         Floating rate term note due 2008                     --        10,000
         2.0% convertible debentures due 2034            175,000       175,000
         ---------------------------------------------------------------------
                Total term debt                          898,250       839,500
         Asset securitization financings                 425,000       425,000
         Bank borrowings                                  50,050       149,722
         Commercial paper                                289,700       118,839
         ---------------------------------------------------------------------
                  Total principal                      1,663,000     1,533,061
         Fair value adjustment of hedged debt             (2,400)       (5,400)
         ---------------------------------------------------------------------
                       Total debt                     $1,660,600    $1,527,661
         =====================================================================

Term Notes

         We issued $125,000 of fixed rate term notes in April 2007. The notes
comprise $75,000 of five-year, 5.48% notes and $50,000 of seven-year, 5.57%
notes due at maturity in April 2012 and 2014. We also converted a $10,000
floating rate term note due in fiscal 2008 to a $15,000 three-year committed
unsecured revolving bank credit facility in fiscal 2007.

         We issued $200,000 of fixed rate term notes in fiscal 2006. The notes
comprise $160,000 of five-year, 5.45% notes and $40,000 of seven-year, 5.56%
notes due at maturity in March 2011 and 2013. We issued $250,000 of five-year,
5.00% fixed rate term notes in fiscal 2005. The notes are due at maturity in May
and August 2010.

         We prepaid $185,500 of floating rate term notes with remaining
maturities between four months and five years at principal, without penalty in
fiscal 2005. As a result, we recorded $400 of unamortized deferred debt issuance
costs in interest expense.

         Interest on fixed rate notes is payable semiannually. Prepayments of
fixed rate notes are subject to a premium based on yield maintenance formulas.
The weighted-average interest rate on fixed rate notes was 5.3% at July 31, 2007
and 2006.

Convertible Debentures

         We issued $175,000 of convertible debentures in fiscal 2004. The
debentures do not contain any financial or other restrictive covenants. Our
major operating subsidiary's senior debt is effectively senior to the
debentures.


                                       32
<PAGE>

         The debentures have a 2.0% fixed annual interest rate and interest is
payable semiannually. We may incur additional interest for semiannual interest
periods starting in April 2009 if the average market value of the debentures on
the last five days of the prior interest period was at least 20% higher than
their principal amount. Additional interest would be calculated at the annual
rate of 0.25% of the average market value of the debentures during the five
days.

         The debentures are due at maturity in April 2034, but we can redeem
them anytime starting in April 2009 by paying the principal amount in cash and
debenture holders can require us to repurchase them on each five-year
anniversary of issuance or when a specified corporate transaction occurs by
paying the principal amount in cash. Debenture holders can also convert the
debentures into cash and common stock before maturity as discussed below.

         The debentures can only be converted (i) in any fiscal quarter when the
closing price of our common stock is at least 30% higher than the conversion
price for at least 20 of the last 30 trading days of the prior fiscal quarter
(the "market price condition") (ii) if the debentures are rated 'BB' or lower by
Fitch (three ratings levels lower than the initial rating) (iii) if we call the
debentures for redemption or (iv) if a specified corporate transaction occurs.
No event allowing for the debentures to be converted has occurred through July
31, 2007. The market price condition would have been met at July 31, 2007 if the
price of our common stock closed above $36.69 for the required period. The
closing price of our common stock was $28.35 on July 31, 2007.

         The debentures can only convert into shares of our common stock when
their value exceeds their principal amount because we irrevocably elected (under
the original terms of the debentures and without modifying the debentures) in
fiscal 2005 to pay the value of converted debentures, not exceeding the
principal amount, in cash instead of issuing shares of our common stock. Their
value equals the number of convertible shares multiplied by the market value of
our common stock. There are 6,200,000 convertible (but not issuable) shares, the
adjusted conversion price is $28.22 per share and the adjusted conversion rate
is 35.43 shares for each $1 (one thousand) of principal at July 31, 2007. If the
value of converted debentures exceeds their principal amount, shares of common
stock needed to pay the value over principal would equal the difference between
the conversion date price of our common stock and the conversion price, divided
by the conversion date price and multiplied by the number of convertible shares.

         The conversion rate, number of convertible shares and conversion price
change if specified corporate transactions occur including dividend payments and
stock splits. The conversion rate and number of convertible shares increased and
the conversion price decreased because we paid cash dividends on our common
stock in fiscal 2007, 2006 and 2005 and because of our 3-for-2 stock split in
fiscal 2006. The conversion rate, conversion price and number of convertible
shares were 34.75, $28.78 and 6,081,000, respectively at July 31, 2006 and were
34.29, $29.16 and 6,002,000 at July 31, 2005. Future cash dividends will cause
additional conversion rate and convertible shares increases and conversion price
decreases.

Asset Securitization Financings

         We have a $425,000 asset securitization facility. We structured the
facility to account for securitization proceeds as secured debt and not as sales
of receivables. Therefore, we do not record gains on sales of securitized
receivables and the debt and receivables remain on our balance sheet. Borrowings
are without recourse. Finance receivables included $480,000 and $487,000 of
securitized receivables at July 31, 2007 and 2006, respectively.

         The facility provides for committed revolving financing for one year.
The facility was renewed in April 2007 and expires in April 2008. If the
facility is not renewed again, we could convert borrowings into term debt. The
term debt would be repaid monthly from collections of securitized receivables
and would be fully repaid by February 2010 based on the contractual payments of
securitized receivables at July 31, 2007.

         Borrowings under the facility are limited to 94% of eligible
securitized receivables. Securitized receivables ninety or more days past due,
classified as impaired or subject to a bankruptcy, or whose terms are outside of
defined limits, are ineligible to be borrowed against. The facility also
restricts the amount of net charge-offs of securitized receivables and the
amount of delinquent securitized receivables. The facility would terminate if
these restrictions are exceeded, and borrowings outstanding would then be repaid
monthly from collections of securitized receivables.

         The unsecured debt agreements of our major operating subsidiary allow
40% of its finance receivables to be securitized ($848,000 at July 31, 2007).
Therefore, we could securitize an additional $368,000 of finance receivables at
July 31, 2007.


                                       33
<PAGE>

         The weighted-average interest rates on borrowings at July 31, 2007 and
2006 were 5.4%. The weighted-average interest rates on borrowings outstanding
during the years ended July 31, 2007, 2006 and 2005 were 5.4%, 4.6% and 2.6%,
respectively. The interest rates change daily.

Bank Borrowings

         We have $580,000 of committed unsecured revolving credit facilities
with several banks expiring as follows: $80,000 within one year and $500,000 on
various dates from September 2008 and October 2012. Borrowings under these
facilities can mature between 1 and 270 days with interest rates based on
domestic money market rates or LIBOR. We incur a fee on the unused portion of
these facilities. Borrowings outstanding at July 31, 2007 matured August 1,
2007. The weighted-average interest rates on borrowings at July 31, 2007 and
2006 were 5.8% and 5.7%, respectively. The weighted-average interest rates on
borrowings outstanding during the years ended July 31, 2007, 2006 and 2005 were
5.7%, 4.9% and 3.4%, respectively.

Commercial Paper

         We issue commercial paper direct and through a $500,000 program with
maturities between 1 and 270 days. We increased the size of our commercial paper
program in fiscal 2007 from $350,000. The weighted-average interest rates on
commercial paper at July 31, 2007 and 2006 were 5.5% and 5.4%, respectively. The
weighted-average interest rates on commercial paper outstanding during the years
ended July 31, 2007, 2006 and 2005 were 5.5%, 4.6% and 2.5%, respectively.

Other

         Our major operating subsidiary's debt agreements have restrictive
covenants including limits on its indebtedness, encumbrances, investments,
dividends and other distributions to us, sales of assets, mergers and other
business combinations, capital expenditures, interest coverage and net worth. We
were in compliance with all debt covenants and restrictions at July 31, 2007.
None of the agreements have a material adverse change clause. All of our debt is
senior.

         Long-term debt comprised the following:

         =====================================================================
         July 31,                                           2007          2006
         =====================================================================
         Term notes                                   $  599,100    $  602,850
         Bank borrowings and commercial paper
            supported by bank credit facilities
            expiring after one year                      339,750       247,500
         Asset securitization financings                 222,000       227,000
         Convertible debentures                          175,000       175,000
         ---------------------------------------------------------------------
                  Total long-term debt                $1,335,850    $1,252,350
         =====================================================================

         Long-term debt at July 31, 2007 matures as follows:

         =====================================================================
         Fiscal:     2009       2010       2011       2012      2013      2014
         =====================================================================
                 $336,000   $285,100   $259,750   $340,000   $65,000   $50,000
         =====================================================================

         The fair value adjustment of hedged debt is the difference between the
principal and fair value of the fixed rate term notes swapped to floating rates.
The adjustment represents changes in the hedged debt's fair value from changes
in the hedged risk. The adjustment reduced long-term debt and equals the fair
value of the interest rate swaps recorded as an other liability.


NOTE 4 - DERIVATIVES

         We have fixed to floating interest rate swaps with a total notional
amount of $143,250 at July 31, 2007 and 2006. The swaps effectively converted
fixed rate term notes into floating rate term notes. We designated the swaps as
fair value hedges of fixed rate term notes. The swaps expire on the notes'
maturity dates. Semiannually, we receive fixed amounts from the swap
counterparty banks equal to the interest we pay on the hedged fixed rate notes,
and we pay amounts to the swap counterparty banks equal to the swaps' floating
rates multiplied by the swaps' notional amounts. We record the differences


                                       34
<PAGE>

between these amounts in interest expense. The swaps' floating rates change
semiannually to a fixed amount over six-month LIBOR. The terms of the swaps and
related information follow:

<TABLE>
<CAPTION>
         =======================================================================================
                                                              July 31, 2007        July 31, 2006
                                                 Fixed   ------------------   ------------------
                                    Notional   Receive   Floating      Fair   Floating      Fair
         Issued        Expires        Amount      Rate   Pay Rate     Value   Pay Rate     Value
         =======================================================================================
<S>                    <C>          <C>           <C>        <C>     <C>          <C>     <C>
         April 2003    April 2010   $ 12,500      4.96%      6.51%   $  400       6.41%   $  700
         July 2003     April 2008     25,000      4.37       6.14       300       6.08       800
         July 2003     June 2008      12,500      4.37       6.84       300       6.74       600
         July 2003     June 2008      25,000      4.37       6.65       500       6.55     1,000
         July 2003     June 2010      12,500      4.96       6.82       500       6.72       800
         August 2003   April 2008     24,500      4.37       6.05       300       5.98       700
         April 2004    August 2007    31,250      6.23       8.58       100       8.84       800
         ---------------------------------------------------------------------------------------
            Totals                  $143,250                         $2,400               $5,400
         =======================================================================================
            Weighted-average rates                4.88%      6.90%                6.89%
         =======================================================================================
</TABLE>

         We entered into interest rate locks (in the form of forward starting
interest rate swaps) with a total notional amount of $100,000 with three banks
in September 2006. The rate locks had a March 2007 expiration. We designated the
rate locks as cash flow hedges of our anticipated issuance of fixed rate term
notes hedging the risk of higher interest payments on the notes for the first
five years from increases in market interest rates before the notes were issued.
We received $1,006 when we terminated the rate locks in January 2007.

         We entered into another interest rate lock (also a forward starting
interest rate swap) with a notional amount of $50,000 with a bank in March 2007
with an April 2007 expiration. We designated it as a cash flow hedge of the same
anticipated fixed rate term notes issuance originally hedged in September 2006.
We terminated this rate lock in April 2007 when the hedged notes were issued and
we received $169,000. All of the rate locks were determined to be highly
effective.

         The amount of the gains on these rate locks relating to hedge
ineffectiveness was $100. We recorded this as a reduction of interest expense in
fiscal 2007. We recorded the $1,075 effective amount of the gains in
stockholders' equity as accumulated other comprehensive income net of deferred
income tax of $417. We are reclassifying the after-tax amount into net income
over five years by reducing interest expense and deferred income tax. Interest
expense was reduced by $54 and deferred income tax was reduced by $21 in fiscal
2007. These rate locks effectively lowered the interest rate on the fixed rate
notes issued in April 2007 by 0.20% (20 basis points).

         We entered into and terminated a $100,000 (also a forward starting
interest rate swap) interest rate lock in fiscal 2006. We designated the rate
lock as a cash flow hedge of our anticipated issuance of fixed rate term notes
hedging the risk of higher interest payments on the notes from increases in
market interest rates before the notes were issued. We terminated the rate lock
when we issued the term notes and we received $970. We determined there was no
hedge ineffectiveness and therefore we recorded this gain in stockholders'
equity as accumulated other comprehensive income net of deferred income tax of
$381. We are reclassifying the after-tax amount into net income over five years
by reducing interest expense and deferred income tax. Interest expense was
reduced by $194 in fiscal 2007 and $62 in fiscal 2006, and deferred income tax
was reduced by $77 in fiscal 2007 and $25 in fiscal 2006.

         We entered into and terminated two $25,000 interest rate locks (in the
form of treasury locks) in fiscal 2005. We locked in the rate on five-year U.S.
Treasury Notes for one month. This rate determined the interest rate on our
fiscal 2005 issuance of five-year fixed rate term notes. We chose not to
designate the locks as hedging instruments. We terminated the locks when we
issued the term notes. We realized a $200 gain and recorded it by reducing
interest expense in fiscal 2005 because we did not designate the locks as
hedges.


NOTE 5 - STOCKHOLDERS' EQUITY

         We established a new $50,000 common stock and convertible debt
repurchase program in fiscal 2007 after completing our former program and we
increased the amount available under our former program by $32,617 in fiscal
2007. We repurchased 2,014,000 shares of our common stock for $54,480 at an
average price of $27.05 per share in fiscal 2007 under these programs. We also
received 17,500 shares of common stock from employees in fiscal 2007 at an
average price


                                       35
<PAGE>

of $26.70 per share for payment of income tax we were required to withhold on
vested shares of restricted stock. We retired all shares repurchased and
received in fiscal 2007. There was $45,200 available for future repurchases
under the new program at July 31, 2007. The new program does not have a set
expiration.

         We established our former common stock repurchase program in fiscal
1996 and expanded it in fiscal 1999 to include convertible debt repurchases. We
repurchased 2,924,000 shares of common stock for $66,100 and $8,800 principal
amount of convertible notes for $7,200 under the program.

         We received and retired 28,000 shares of common stock from officers in
fiscal 2006 at an average price of $28.82 per share for payment of income tax we
were required to withhold on vested shares of restricted stock. We received and
retired 30,000 shares of common stock from officers in fiscal 2005 at an average
price of $25.29 per share in exchange for their exercise of 58,000 stock
options. We also received 36,000 shares of common stock from officers in fiscal
2005 at $25.17 per share for payment of income tax we were required to withhold
on vested shares of restricted stock. We retired 12,000 shares and 24,000 shares
are included in treasury stock at July 31, 2007.

         We split our common stock 3-for-2 in the form of a stock dividend in
January 2006. Stockholders received one share for every two shares owned. We
paid $109 for fractional shares.

         We initiated a quarterly cash dividend of $0.067 per share in December
2004 and we raised it to $0.10 per share in December 2005 and to $0.15 per share
in December 2006. We paid dividends of $14,788 in fiscal 2007, $9,838 in fiscal
2006 and $5,233 in fiscal 2005. We declared a quarterly cash dividend of $0.15
per share of common stock in September 2007 payable in October 2007.


NOTE 6 - STOCK PLANS

         Our stockholders approved two stock plans in December 2006; the 2006
Stock Incentive Plan (the "2006 Plan") and the Amended and Restated 2001
Management Incentive Plan (the "Amended MIP"). The 2006 Plan provides for the
issuance of 2,500,000 incentive or non-qualified stock options, shares of
restricted stock, stock appreciation rights, stock units and common stock to
officers, other employees and directors subject to annual participant limits,
and expires in December 2016. Awards may be subject to performance goals. The
2006 Plan replaced the 1998 Stock Option/Restricted Stock Plan (the "1998
Plan"). The 1998 Plan terminated upon approval of the 2006 Plan. The exercise
price of incentive stock options granted under these plans can not be less than
the fair market value of our common stock when granted and the term of incentive
stock options is limited to ten years. There were 2,232,000 shares available for
future grants under the 2006 Plan at July 31, 2007. The Amended MIP provides for
the issuance of 1,000,000 shares of restricted stock, with an annual participant
limit of 200,000 shares, and cash or stock bonuses to be awarded to our CEO and
other selected officers subject to predetermined performance goals. The Amended
MIP expires in December 2011. There were 750,000 shares available for future
grants under the Amended MIP at July 31, 2007.

         We amended the 1998 Plan in December 2005 according to its
anti-dilution provisions to increase the number of shares available for the
January 2006 stock split. The 1998 Plan provided for the issuance of 3,750,000
incentive or non-qualified stock options or shares of restricted stock to
officers, other employees and directors. None of the options or shares of
restricted stock awarded under the 1998 Plan are performance based. There were
128,000 shares unused when we terminated the plan.

         Options granted through the first half of fiscal 2005 were mostly
incentive stock options with a six-year term vesting 25% after two, three, four
and five years. Options granted in the second half of fiscal 2005 were
non-qualified options with a four-year term vesting 33 1/3% on July 31, 2005,
2006 and 2007. Options granted after fiscal 2005 were non-qualified options with
a five-year term vesting 25% after one, two, three and four years. We granted
131,000, 155,000 and 159,000 non-qualified stock options to employees in fiscal
2007, 2006 and 2005, respectively.

         Shares of restricted stock awarded (excluding 435,000 shares awarded to
executive officers in February 2006) vest annually in equal amounts over
original periods of three to eight years (seven year weighted-average). Shares
of restricted stock awarded to executive officers in February 2006 vest when the
officer's service terminates, other than upon a non-qualifying termination,
after six months (i) after the executive officer attains age 62 or (ii) after
August 2026 if earlier (twelve year weighted-average). We awarded 120,000,
605,000 and 41,000 shares of restricted stock to employees in fiscal 2007, 2006
and 2005, respectively.


                                       36
<PAGE>

         We awarded 19,000 restricted stock units to non-employee directors in
fiscal 2007. The units vest in one year or earlier upon the sale of the Company
or the director's death or disability, and are subject to forfeiture. Each unit
represents the right to receive one share of common stock and the units earn
dividend equivalents to be paid in additional shares of common stock. Vested
units will convert into shares of common stock when a director's service
terminates. We also issued 1,500 shares of common stock as payment of annual
director retainer fees. The price of our common stock on the date we issued
these shares was $28.73.

         The Management Incentive Plan ("MIP") for our Chief Executive Officer
("CEO") was approved by stockholders in fiscal 2002. We amended it in December
2005 according to its anti-dilution provisions to increase the number of shares
for the January 2006 stock split. We awarded 41,000 shares of restricted stock
to our CEO in November 2005 as part of the fiscal 2006 bonus subject to certain
performance conditions. Shares earned vest annually in equal amounts over four
years. Our CEO earned 36,000 of these shares in September 2006 and forfeited
5,000 shares based on our fiscal 2006 performance. Our CEO earned 27,000 shares
of restricted stock in September 2005 vesting annually in equal amounts over
four years as a bonus for fiscal 2005. Our CEO earned 15,000 shares of
restricted stock in fiscal 2005 vesting annually in equal amounts over five
years as part of the fiscal 2004 bonus. No shares were awarded for fiscal 2007.
At July 31, 2007, 103,000 shares of our CEO's restricted stock awarded under the
MIP were unvested and are scheduled to vest over four years.

         We established a Supplemental Retirement Benefit ("SERP") for our CEO
in fiscal 2002. We amended it in December 2005 according to its anti-dilution
provisions to increase the number of units for the January 2006 stock split, and
we amended it in March 2006 to provide for dividend equivalent payments. We
awarded 150,000 stock units vesting annually in equal amounts over eight years.
Subject to forfeiture, our CEO will receive shares of common stock equal to the
number of stock units vested when our CEO retires. At July 31, 2007, 94,000
units were vested. Amending the SERP in fiscal 2006 to provide for dividend
equivalent payments increased the fair value of these units to $23.93 from
$22.43 and increased the total cost of the units by $225.

         All unvested shares of restricted stock and the SERP stock units would
vest immediately upon the sale of the Company or the employees' death or
disability. Unvested shares of restricted stock awarded before fiscal 2007 and
the SERP stock units would also vest immediately upon a qualifying employment
termination, but only a portion (based on the percentage of the vesting period
elapsed) of the shares awarded to executive officers in February 2006 would vest
immediately upon a qualifying employment termination. Unvested shares and units
would be forfeited upon any other employment termination. Dividends are paid on
all unvested shares of restricted stock. The restricted stock agreements and the
SERP (as amended in March 2006) also allow employees to pay income taxes
required to be withheld at vesting by surrendering a portion of the shares or
units vested.

         Stock options, shares of restricted stock and stock units are the only
incentive compensation we provide (other than a cash bonus for the CEO) and we
believe these stock-based awards further align employees' and directors'
objectives with those of our stockholders. We issue new shares when options are
exercised or when we award shares of restricted stock, and we do not have a
policy to repurchase shares in the open market when options are exercised or
when we award shares of restricted stock.

         Stock option activity and related information for fiscal 2007 are
summarized below (options and intrinsic value in thousands):

         =======================================================================
                                                     Weighted-Average
                                               ----------------------
                                               Exercise     Remaining  Intrinsic
                                      Options     Price  Term (years)     Value*
         =======================================================================
         Outstanding - August 1, 2006   1,527    $20.71
            Granted                       131     26.96
            Exercised                    (463)    17.54
            Forfeited                     (71)
         ------------------------------------
         Outstanding - July 31, 2007    1,124    $22.60           2.4     $6,500
         =======================================================================
         Exercisable - July 31, 2007      619    $20.87           1.7     $4,600
         =======================================================================
         *  number of options multiplied by the difference between the $28.35
            closing price of our common stock on July 31, 2007 and the
            weighted-average exercise price


                                       37
<PAGE>

         Information on stock option exercises follows (in thousands, except
intrinsic value per option):

         =====================================================================
         Years Ended July 31,                 2007          2006          2005
         =====================================================================
         Number of options exercised           463           410           335
         Total intrinsic value *            $4,950        $4,870        $3,350
         Intrinsic value per option          10.70         11.90         10.00
         Excess tax benefits realized        1,195         1,384           746
         =====================================================================
         *  options exercised multiplied by the difference between the closing
            prices of our common stock on the exercise dates and the exercise
            prices

         Restricted stock activity under the 2006 Plan, the 1998 Plan and the
MIP, and related information for fiscal 2007, are summarized below (shares in
thousands):

         =====================================================================
                                                              Weighted-Average
                                         Shares          Grant-Date Fair Value
         =====================================================================
         Unvested - August 1, 2006        1,081                         $24.66
            Granted                         120                          26.96
            Vested                         (142)                         21.38
            Forfeited                        (9)
         --------------------------------------
         Unvested - July 31, 2007         1,050                         $25.34
         =====================================================================

         Information on shares of restricted stock that vested follows (in
thousands, except intrinsic value per share):

         =====================================================================
         Years Ended July 31,                 2007          2006          2005
         =====================================================================
         Number of shares vested               142           109           117
         Total intrinsic value *            $3,760        $3,140        $2,880
         Intrinsic value per share           26.50         28.80         24.60
         Excess tax benefits realized          329           400           259
         =====================================================================
         *  shares vested multiplied by the closing prices of our common stock
            on the dates vested

         The weighted-average grant date fair value and exercise price of
options granted, and the significant assumptions we used to calculate fair
values follow:

         =====================================================================
         Years Ended July 31,                       2007       2006       2005
         =====================================================================
         Weighted-average grant date fair value   $ 4.75     $ 6.46     $ 5.37
         Weighted-average exercise price           26.96      28.77      24.97
         Weighted-average assumptions:
            Expected life of options (in years)      3.7        3.7        2.9
            Expected volatility                       22%        25%        28%
            Risk-free interest rate                  4.5%       4.6%       3.8%
            Dividend yield                           2.8%       1.5%       1.3%
         =====================================================================

         Our assumptions for the expected life of options granted were based on
our analysis of historical exercise behavior and the simplified method under SAB
No. 107. These two methods produced similar results. Our assumptions for
expected volatility were based on historical stock prices for periods equal to
the expected life of options granted.

         Future compensation expense (before deferral under SFAS No. 91) for
stock-based awards unvested at July 31, 2007 and expected to vest, and the
weighted-average expense recognition periods follow:

         =====================================================================
                                         Expense        Weighted-Average Years
         =====================================================================
         Restricted stock                $18,300                           5.9
         Stock options                     1,400                           2.5
         Stock units                       1,300                           2.1
         ---------------------------------------
                  Total                  $21,000                           5.4
         =====================================================================


                                       38
<PAGE>

         Total compensation recorded, compensation capitalized (deferred
recognizing) under SFAS No. 91, compensation included in salaries and other
expenses and tax benefits recorded for stock-based awards follow:

         =====================================================================
         Years Ended July 31,                       2007       2006       2005
         =====================================================================
         Compensation for stock options:
         -------------------------------
         Total recorded                           $1,090     $1,828     $   --
         Capitalized under SFAS No. 91               655      1,092         --
         ---------------------------------------------------------------------
            Included in salaries and
              other expenses                      $  435     $  736     $   --
         =====================================================================
         Tax benefits recorded                    $   68     $  108     $   --
         =====================================================================

         Compensation for shares of
         restricted stock and stock units:
         ---------------------------------
         Total recorded                           $5,777     $4,437     $2,630
         Capitalized under SFAS No. 91             2,220      1,835      1,163
         ---------------------------------------------------------------------
            Included in salaries and
              other expenses                      $3,557     $2,602     $1,467
         =====================================================================
         Tax benefits recorded                    $1,350     $1,003     $  562
         =====================================================================

         Total stock-based compensation:
         -------------------------------
         Total recorded                           $6,867     $6,265     $2,630
         Capitalized under SFAS No. 91             2,875      2,927      1,163
         ---------------------------------------------------------------------
            Included in salaries and
              other expenses                      $3,992     $3,338     $1,467
         =====================================================================
         Tax benefits recorded                    $1,418     $1,111     $  562
         =====================================================================

         If we recorded compensation expense for stock options in fiscal 2005
under SFAS No. 123, our total stock-based compensation expense determined under
fair value based methods for all awards (after-tax) would have been $3,633
compared to the $1,609 recorded, and our net income, diluted and basic earnings
per share would have been $34,628, $1.33 and $1.36, respectively, compared to
the recorded amounts of $36,652, $1.41 and $1.44, respectively.


NOTE 7 - EARNINGS PER COMMON SHARE

         Earnings per common share ("EPS") was calculated as follows (in
thousands, except per share amounts):

<TABLE>
<CAPTION>
         ===========================================================================
         Years Ended July 31,                           2007        2006        2005
         ===========================================================================
<S>                                                  <C>         <C>         <C>
         Net income                                  $50,050     $43,619     $36,652
         ===========================================================================
         Weighted-average common shares
           outstanding (used for basic EPS)           25,813      25,913      25,515
         Effect of dilutive securities:
           Stock options                                 259         346         392
           Shares of restricted stock and
             stock units                                 293         222         169
           Shares issuable upon conversion
             of convertible debt                          16          --          --
         ---------------------------------------------------------------------------
         Adjusted weighted-average common shares
           outstanding (used for diluted EPS)         26,381      26,481      26,076
         ===========================================================================
         Net income per common share:
            Diluted                                  $  1.90     $  1.65     $  1.41
         ===========================================================================
            Basic                                    $  1.94     $  1.68     $  1.44
         ===========================================================================
         Antidilutive stock options, shares of
            restricted stock and stock units *           216         176         233
         ===========================================================================
</TABLE>
         *  excluded from the calculation because they would have increased
            diluted EPS

         The convertible debentures lower diluted EPS when the quarterly average
price of our common stock exceeds the adjusted conversion price. When this
occurs, shares of common stock needed to deliver the value of the debentures
over their principal amount based on the average stock price would be included
as shares outstanding in calculating diluted EPS. Shares to be included would
equal the difference between the average stock price and the adjusted conversion
price, divided

                                       39
<PAGE>

by the average stock price and multiplied by the number of convertible shares,
currently 6,200,000 (referred to as the treasury stock method). The average
price of our common stock exceeded the adjusted conversion price for the first
time in the fourth quarter of fiscal 2007 resulting in 66,000 dilutive shares
for the quarter and 16,000 dilutive shares for fiscal 2007. The average price of
our common stock was $28.53 in the fourth quarter and the adjusted conversion
price was $28.22


NOTE 8 - INCOME TAXES

         The provision for income taxes comprised the following:

         =====================================================================
         Years Ended July 31,                       2007       2006       2005
         =====================================================================
         Currently payable:
            Federal                              $21,977    $22,342    $22,736
            State                                  3,716      3,845      4,166
         ---------------------------------------------------------------------
              Total                               25,693     26,187     26,902
         Deferred                                  5,738      1,591     (3,636)
         ---------------------------------------------------------------------
                 Provision for income taxes      $31,431     27,778    $23,266
         =====================================================================

         Tax benefits from stock options and restricted stock reduced income
taxes currently payable and increased additional paid-in capital by $1,524 in
fiscal 2007, $1,784 in fiscal 2006 and $1,005 in fiscal 2005.

         Income taxes calculated at statutory federal rates are reconciled to
the provision for income taxes as follows:

         =====================================================================
         Years Ended July 31,                       2007       2006       2005
         =====================================================================
         Federal at statutory rates              $28,518    $24,989    $20,971
         State *                                   2,664      2,589      2,205
         Nondeductible incentive stock
            options expense                          175        230         --
         Deferred tax benefit from Texas
            tax law change *                          --       (120)        --
         Other                                        74         90         90
         ---------------------------------------------------------------------
              Provision for income taxes         $31,431    $27,778    $23,266
         =====================================================================
         * net of federal benefit

         Texas changed how it taxes corporations in May 2006. Texas lowered
its income tax rate to 1.0% from 4.5% and changed how taxable income is
determined. These changes reduced our July 31, 2006 deferred income tax
liability and our fiscal 2006 provision for income taxes by $120 and lowered
our fiscal 2007 effective tax rate.

         Deferred income taxes comprised the tax effect of the following
temporary differences:

         =====================================================================
         July 31,                                            2007         2006
         =====================================================================
         Deferred tax liabilities:
            Leasing transactions                          $16,743      $14,823
            Original issue discount on convertible
              debentures                                   12,074        8,111
            Net deferred origination costs and
              nonrefundable fees                            8,046        7,358
            Other                                           1,847        1,457
         ---------------------------------------------------------------------
               Total                                       38,710       31,749
         ---------------------------------------------------------------------
         Deferred tax assets:
            Allowance for credit losses                    (9,159)      (9,209)
            Cumulative expense on unvested shares
              of restricted stock and unvested
              stock units                                  (2,995)      (1,962)
            Other                                            (788)        (867)
         ---------------------------------------------------------------------
               Total                                      (12,942)     (12,038)
         ---------------------------------------------------------------------
                    Deferred income taxes                 $25,768      $19,711
         =====================================================================


                                       40
<PAGE>



NOTE 9 - SALARIES AND OTHER EXPENSES

         Salaries and other expenses comprised the following:

         =====================================================================
         Years Ended July 31,                       2007       2006       2005
         =====================================================================
         Salaries and employee benefits          $14,403    $13,638    $11,057
         Other expenses                           10,542     10,038     10,420
         ---------------------------------------------------------------------
               Total                             $24,945    $23,676    $21,477
         =====================================================================


NOTE 10 - LEASE COMMITMENTS

         We rent office space under leases expiring through fiscal 2013.
Minimum future annual rentals due under these operating leases at July 31, 2007
are $1,300 in fiscal 2008, $1,400 in fiscal 2009, $1,100 in fiscal 2010, $1,100
in fiscal 2011, $500 in fiscal 2012 and $100 in fiscal 2013. Office rent
expense was $1,607 in fiscal 2007, $1,605 in fiscal 2006 and $1,458 in fiscal
2005.


NOTE 11 - FAIR VALUES OF FINANCIAL INSTRUMENTS

         We estimate the fair value of our financial instruments: cash, finance
receivables (excluding leases), commitments to extend credit under line of
credit arrangements, debt and interest rate swaps, as described below.

         Carrying values of cash, commercial paper, bank borrowings and asset
securitization financings approximated their fair values based on their
short-term maturities. Interest rate swaps are recorded at fair value based on
market quotes from the swap counterparty banks. Fair value of the term notes
payable was approximately $718,000 at July 31, 2007 and $650,500 at July 31,
2006, compared to their carrying amounts of $723,250 at July 31, 2007 and
$664,500 at July 31, 2006. We calculated fair value based on the notes' cash
flows discounted at current market interest rates. Fair value of the $175,000 of
2.0% convertible debentures was $193,700 at July 31, 2007 and $184,000 at July
31, 2006 based on their quoted market price.

         It is not practicable for us to estimate the fair value of our finance
receivables and commitments to extend credit. These financial instruments were
not priced according to any set formulas, were not credit-scored and are not
loan-graded. They comprise a large number of transactions with commercial
customers in different businesses, are secured by liens on various types of
equipment and may be guaranteed by third parties and cross-collateralized. Any
difference between the carrying value and fair value of each transaction would
be affected by a potential buyer's assessment of the transaction's credit
quality, collateral value, guarantees, payment history, yield, term, documents
and other legal matters, and other subjective considerations. Value received in
a fair market sale of a transaction would be based on the terms of the sale, our
and the buyer's views of economic and industry conditions, our and the buyer's
tax considerations, and other factors. Information relevant to estimating the
fair value of finance receivables is disclosed in Note 2.


NOTE 12 - SELECTED QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>

         =============================================================================
                                                                    Earnings per Share
                                                                    ------------------
                                            Revenues    Net Income    Diluted    Basic
         =============================================================================
<S>                                          <C>           <C>          <C>      <C>
         Fiscal 2007, three months ended:
         --------------------------------
            October 31, 2006                 $46,930       $12,230      $0.46    $0.47
            January 31, 2007                  47,383        12,395       0.46     0.47
            April 30, 2007                    47,490        12,710       0.48     0.49
            July 31, 2007                     49,451        12,715       0.50     0.51

         Fiscal 2006, three months ended:
         --------------------------------
            October 31, 2005                 $36,553       $10,245      $0.39    $0.40
            January 31, 2006                  39,438        10,728       0.41     0.42
            April 30, 2006                    41,429        11,152       0.42     0.43
            July 31, 2006                     45,055        11,494       0.43     0.44
         =============================================================================
</TABLE>

                                       41
<PAGE>

Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

         None


Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

         Our management (with our Chief Executive Officer's and Chief Financial
Officer's participation) evaluated our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934)
at the end of the period covered by this report. Based on this evaluation, our
Chief Executive Officer and Chief Financial Officer concluded our disclosure
controls and procedures are effective to ensure information required to be
disclosed in reports we file or submit under the Securities Exchange Act of 1934
is recorded, processed, summarized and reported timely.

Changes in Internal Control Over Financial Reporting

         There were no changes in our internal control over financial reporting
during the fourth quarter of fiscal 2007 that affected or are reasonably likely
to affect our internal control over financial reporting materially.

Management's Report on Internal Control Over Financial Reporting

         Our management is responsible for establishing and maintaining adequate
internal control over financial reporting. Internal control over financial
reporting is a process designed to provide reasonable assurance of the
reliability of financial reporting and preparing financial statements for
external purposes according to accounting principles generally accepted in the
United States of America ("GAAP"). Internal control over financial reporting
includes policies and procedures used to (i) maintain records in reasonable
detail to reflect our transactions accurately and fairly (ii) reasonably assure
that we record our transactions as necessary to permit us to prepare financial
statements according to GAAP, and that our receipts and expenditures are made
only according to authorizations of our management and directors and (iii)
reasonably assure that the unauthorized acquisition, use, or disposition of our
assets that could affect our financial statements materially is prevented or
detected timely.

         Internal control over financial reporting may not prevent or detect
misstatements because of its inherent limitations. Also, projecting the
effectiveness of internal control over financial reporting to future periods is
subject to the risk of controls becoming inadequate because of changes in
conditions or the deteriorating degree of complying with policies and
procedures.

         Our management evaluated the effectiveness of our internal control over
financial reporting based on the framework in "Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission" (commonly referred to as COSO). Based on its evaluation, our
management concluded our internal control over financial reporting was effective
at July 31, 2007. The effectiveness of our internal control over financial
reporting was audited by KPMG LLP, an independent registered public accounting
firm, as stated in their report on page 42-43.


             Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Financial Federal Corporation:

We have audited Financial Federal Corporation and subsidiaries (the "Company" or
"Financial Federal") internal control over financial reporting as of July 31,
2007, based on criteria established in Internal Control - Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). The Company's management is responsible for maintaining effective
internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting, included in the
accompanying Management Report on Internal Control Over Financial Reporting. Our
responsibility is to express an opinion on the Company's internal control over
financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk. Our audit also included

                                       42
<PAGE>


performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinion.

A company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. 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.

In our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of July 31, 2007, based on criteria
established in Internal Control - Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated balance sheets of
Financial Federal as of July 31, 2007 and 2006, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for each of
the years in the three-year period ended July 31, 2007, and our report dated
September 24, 2007 expressed an unqualified opinion on those consolidated
financial statements.


/s/ KPMG LLP

New York, New York
September 24, 2007


Item 9B. Other Information

         We issued a press release on September 24, 2007 reporting our results
for the quarter and year ended July 31, 2007. The press release is attached as
Exhibit 99.1. Exhibit 99.1 shall not be deemed "filed" for purposes of Section
18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
subject to the liabilities of that section, nor shall it be deemed incorporated
by reference in any filing under the Securities Act of 1933, as amended, or the
Exchange Act, except as shall be expressly set forth by specific reference.

         We issued a press release on September 24, 2007 announcing our Board
of Directors declared a quarterly dividend of $0.15 per share on our common
stock. The press release is attached as Exhibit 99.2. The dividend is payable
on October 26, 2007 to stockholders of record at the close of business on
October 10, 2007. The dividend rate is the same as the previous quarter.

                                       43
<PAGE>


PART III


Item 10. Directors, Executive Officers and Corporate Governance

         The information required by this Item, other than Executive Officers'
biographies in Part I, Item 1 of this report and the information about our code
of conduct discussed below, is incorporated herein by reference to the
information in the "Section 16(a) Beneficial Ownership Reporting Compliance" and
"Election of Directors" sections of our 2007 Definitive Proxy Statement to be
filed according to Regulation 14A for our Annual Meeting of Stockholders to be
held December 11, 2007.

         We adopted a code of business conduct and ethics for our principal
executive officer, principal financial officer, principal accounting officer and
other employees performing similar functions. The code is posted in the Investor
Relations section of our website, http://www.financialfederal.com, under
Corporate Governance. We will provide a copy of the code free to any stockholder
on request to Financial Federal Corporation, 733 Third Avenue, New York, NY
10017, Attn: Corporate Secretary. We will satisfy the disclosure requirements of
Item 5.05 of Form 8-K by posting any amendments or waivers to this code on our
website.


Item 11. Executive Compensation

         The information required by this Item is incorporated herein by
reference to the information in the "Election of Directors - Compensation of
Directors" and "Executive Compensation" sections of our 2007 Definitive Proxy
Statement.


Item 12. Security Ownership of Certain Beneficial Owners and Management and
         Related Stockholder Matters

                      Equity Compensation Plan Information
<TABLE>
<CAPTION>
         ====================================================================================
                                                                         Number of securities
                                               Number of                  remaining available
                                              securities      Weighted    for future issuance
                                                   to be       average           under equity
                                             issued upon      exercise           compensation
                                             exercise of      price of       plans (excluding
                                             outstanding   outstanding   securities reflected
         Equity compensation plan category   options (a)   options (b)     in column (a)) (c)
         ====================================================================================
<S>                                            <C>             <C>              <C>
         Approved by security holders          1,123,387       $ 22.60          2,982,434 (1)
         Not approved by security holders             --            --                 --
         ------------------------------------------------------------------------------------
                  Total                        1,123,387       $ 22.60          2,982,434
         ====================================================================================

         (1)   Comprises 2,232,434 stock options, shares of restricted stock,
               stock appreciation rights, stock units and common stock
               issuable under our 2006 Stock Incentive Plan and 750,000
               shares of restricted stock issuable under our Amended and
               Restated 2001 Management Incentive Plan.
</TABLE>

         Other information required under this Item is incorporated herein by
reference to the information in the "Security Ownership of Certain Beneficial
Owners and Management" section of our 2007 Definitive Proxy Statement.


Item 13. Certain Relationships and Related Transactions, and Director
         Independence

         The information required by this Item is incorporated herein by
reference to the information in the "Certain Transactions" section of our 2007
Definitive Proxy Statement.


Item 14. Principal Accounting Fees and Services

         The information required by this Item is incorporated herein by
reference to information in the "Principal Accounting Fees and Services" section
of our 2007 Definitive Proxy Statement.


                                       44
<PAGE>


PART IV


Item 15. Exhibits and Financial Statement Schedules

   (a)   Documents filed in this report:

         1. INDEX TO FINANCIAL STATEMENTS:
                                                                           Page
                                                                           -----
         Report of Independent Registered Public Accounting Firm           23
         Consolidated Balance Sheets at July 31, 2007 and 2006             24
         Consolidated Income Statements for the fiscal years ended
            July 31, 2007, 2006 and 2005                                   25
         Consolidated Statements of Changes in Stockholders' Equity
            for the fiscal years ended July 31, 2007, 2006 and 2005        26
         Consolidated Statements of Cash Flows for the fiscal years
            ended July 31, 2007, 2006 and 2005                             27
         Notes to Consolidated Financial Statements                        28-41

         2. FINANCIAL STATEMENT SCHEDULES

            All schedules were omitted because the required information is
            included in the Consolidated Financial Statements or accompanying
            notes.

         3. EXHIBITS

Exhibit No.    Description of Exhibit
-------------------------------------------------------------------------------
  3.1   (a)   Articles of Incorporation
  3.2   (b)   Certificate of Amendment of Articles of Incorporation dated
              December 9, 1998
  3.3   (c)   Amended and Restated By-laws dated March 5, 2007
  4.1   (d)   Specimen Common Stock Certificate
  4.2   (e)   Purchase Agreement, dated April 5, 2004, between Registrant
              and Banc of America Securities LLC and J.P. Morgan Securities
              Inc. for Registrant's $150 million 2.0% Convertible Senior
              Debentures due 2034
  4.3   (e)   Indenture, dated as of April 12, 2004, between Registrant
              and Deutsche Bank Trust Company Americas for Registrant's $175
              million 2.0% Convertible Senior Debentures due 2034
  4.4   (e)   Registration Rights Agreement, dated April 12, 2004, between
              Registrant and Banc of America Securities LLC and J.P. Morgan
              Securities Inc. for Registrant's $150 million 2.0% Convertible
              Senior Debentures due 2034
  4.5   (e)   Specimen 2.0% Convertible Senior Debenture due 2034
 10.1   (f)   Form of Commercial Paper Dealer Agreement
*10.2   (g)   Deferred Compensation Agreement dated March 7, 2000 between
              the Registrant and former CEO
*10.3   (h)   Form of Restricted Stock Agreement dated March 1, 2002 between
              the Registrant and its CEO
*10.4   (h)   Form of Restricted Stock Agreement between the Registrant and
              certain senior officers
*10.5   (i)   Agreement to Defer Restricted Stock dated February 26, 2004
              between the Registrant and its CEO
*10.6   (i)   Agreement to Defer Restricted Stock dated February 26, 2004
              between the Registrant and its CEO
*10.7   (j)   Restricted Stock Agreement dated October 14, 2004 between the
              Registrant and its CEO
*10.8   (k)   Restricted Stock Agreement dated September 28, 2005 between
              the Registrant and its CEO
*10.9   (k)   Restricted Stock Agreement dated November 2, 2005 between the
              Registrant and its CEO
*10.10  (l)   Amended and Restated 1998 Stock Option/Restricted Stock Plan
              (as amended and restated December 15, 2005)
*10.11  (l)   Amended and Restated Supplemental Retirement Benefit dated
              March 6, 2006 between the Registrant and its CEO (as amended
              and restated March 6, 2006)
*10.12  (l)   Form of Excise Tax Restoration Agreement between the
              Registrant and its directors and named executive officers
              dated March 6, 2006
*10.13  (l)   Form of Indemnity Agreement between the Registrant and its
              directors and named executive officers dated March 6, 2006
*10.14  (l)   Restricted Stock Agreement dated February 22, 2006 between the
              Registrant and its CEO
*10.15  (l)   Form of Restricted Stock Agreement between the Registrant and
              certain senior officers

                                    45
<PAGE>

*10.16  (c)   Amended and Restated 2001 Management Incentive Plan
*10.17  (c)   2006 Stock Incentive Plan
*10.18  (c)   2006 Stock Incentive Plan - Form of Stock Grant Agreement for
              Chief Executive Officer
*10.19  (c)   2006 Stock Incentive Plan - Form of Stock Grant Agreement for
              Executive Officers and Non-Employee Directors
*10.20  (c)   2006 Stock Incentive Plan - Form of Incentive Stock Option
              Agreement for Executive Officers
*10.21  (c)   2006 Stock Incentive Plan - Form of Nonstatutory Stock Option
              Agreement for Executive Officers
*10.22  (c)   Amended and Restated 2001 Management Incentive Plan - Form of
              Restricted Stock Agreement
*10.23  (c)   Amended and Restated 2001 Management Incentive Plan - Form of
              Stock Unit Award Agreement
*10.24  **    2006 Stock Incentive Plan - Form of Stock Unit Agreement
 12.1   **    Computation of Debt-To-Equity Ratio
 21.1   **    Subsidiaries of the Registrant
 23.1   **    Consent of Independent Registered Public Accounting Firm
 31.1   **    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
 31.2   **    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
 32.1   **    Section 1350 Certification of Chief Executive Officer
 32.2   **    Section 1350 Certification of Chief Financial Officer
 99.1   **    Press release dated September 24, 2007
 99.2   **    Press release dated September 24, 2007


Previously filed with the Securities and Exchange Commission as an exhibit to
our:
-----------------------------------------------------------------------------
  (a)         Registration Statement on Form S-1 (Registration No. 33-46662)
              filed May 28, 1992
  (b)         Form 10-Q for the quarter ended January 31, 1999
  (c)         Form 8-K dated December 6, 2006
  (d)         Registration Statement on Form S-3 (Registration No. 333-56651)
              filed June 11, 1998
  (e)         Form 8-K dated April 19, 2004
  (f)         Form 10-K for the fiscal year ended July 31, 1996
  (g)         Form 10-Q for the quarter ended January 31, 2000
  (h)         Form 10-Q for the quarter ended April 30, 2002
  (i)         Form 10-Q for the quarter ended January 31, 2003
  (j)         Form 10-Q for the quarter ended October 31, 2004
  (k)         Form 10-Q for the quarter ended October 31, 2005
  (l)         Form 10-Q for the quarter ended January 31, 2006


*   management contract or compensatory plan
**  filed with this report

                                       46
<PAGE>


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.


                                  FINANCIAL FEDERAL CORPORATION
                                  -----------------------------
                                  (Registrant)


                            By:   /s/ Paul R. Sinsheimer
                                  ----------------------------------------------
                                  Chairman of the Board, Chief Executive Officer
                                  and President (Principal Executive Officer)


                                  September 24, 2007
                                  ------------------
                                  Date


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.



/s/ Lawrence B. Fisher                                       September 24, 2007
------------------------------------------------------       ------------------
Director                                                     Date


/s/ Michael C. Palitz                                        September 24, 2007
------------------------------------------------------       ------------------
Director                                                     Date


/s/ Leopold Swergold                                         September 24, 2007
------------------------------------------------------       ------------------
Director                                                     Date


/s/ H. E. Timanus, Jr.                                       September 24, 2007
------------------------------------------------------       ------------------
Director                                                     Date


/s/ Michael J. Zimmerman                                     September 24, 2007
------------------------------------------------------       ------------------
Director                                                     Date


/s/ Steven F. Groth                                          September 24, 2007
------------------------------------------------------       ------------------
Senior Vice President and Chief Financial Officer            Date
(Principal Financial Officer)


/s/ David H. Hamm                                            September 24, 2007
------------------------------------------------------       ------------------
Vice President, Controller and Treasurer                     Date
(Principal Accounting Officer)


                                       47