Exhibit 99.2

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

OVERVIEW

     Financial Federal Corporation ("FFC") is an independent financial services
holding company operating in the United States primarily through one subsidiary.
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 two fully
consolidated special purpose entities for our on-balance-sheet asset
securitization facilities.

     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 between two and five years and require monthly payments. The
average transaction size is approximately $250,000. 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 very important. We borrow from banks and
insurance companies and we issue commercial paper to other investors.
Approximately 70% of our finance receivables were funded with debt at July 31,
2009.

     Our main areas of focus are (i) asset quality (ii) liquidity (iii) net
interest spread (the difference between the rates we earn on our receivables and
the rates we incur on our debt) and (iv) interest rate risk. Changes in the
asset quality of our finance receivables can affect our profitability
significantly. Classifying receivables as impaired, incurring write-downs and
incurring costs associated with non-performing assets can have an adverse affect
on our finance income, provisions for credit losses and operating expenses.
Changes in market interest rates can also affect our profitability significantly
because the interest rates on our finance receivables were 92% fixed and 8%
floating, and the interest rates on our debt were 62% fixed and 38% floating at
July 31, 2009. We use various strategies to manage our credit risk and interest
rate risk. These four areas are integral to our long-term profitability and we
discuss them in detail in separate sections of this discussion.

     Our key operating statistics are net charge-offs, loss ratio,
non-performing assets, delinquencies, leverage, available liquidity, receivables
growth, return on equity, net interest margin and net interest spread, and
expense and efficiency ratios.

Significant events

     We obtained a new $100.0 million asset securitization facility in April
2009. The facility provides for committed revolving financing through April
2010. We also renewed our existing $325.0 million securitization facility for
one year in June 2009. This facility now expires in June 2010. We discuss these
facilities in the Liquidity and Capital Resources section.

     We repaid the entire $175.0 million of 2.0% convertible debentures in
fiscal 2009. We repaid $132.7 million at their principal amount in April 2009
because all holders chose to exercise their first five-year put option as we
expected and we purchased $42.3 million of the debentures in the open market in
the second quarter of fiscal 2009 for $40.6 million. This resulted in a $1.3
million debt retirement gain (net of $0.3 million of unamortized deferred debt
issuance costs and debt discount).

     In July 2009, we offered to prepay, for their principal amount, (i) the
$25.0 million of seven-year 4.96% term notes maturing in April and June 2010 and
(ii) the $250.0 million of five-year 5.00% term notes maturing in May and August
2010. All holders of the seven-year 4.96% term notes accepted the offer and we
repaid the notes in July 2009, and holders of $168.6 million of the five-year
5.00% term notes accepted the offer and we repaid $168.6 million of the notes in
August 2009. There was no gain or loss on these prepayments. The note holders
accepted our offer to prepay these notes at principal even though they were
entitled to a prepayment premium.

     We decided to prepay these term notes because (i) their rates were
significantly higher than the rates on borrowings available under our unused
bank credit and asset securitization facilities (ii) they had short maturities
of nine and twelve months and (iii) we had over $580.0 million of available
liquidity. Based on this liquidity level, our outlook for the economy and the
level of receivables originations expected for fiscal 2010, and the relatively
small amount of credit facilities expiring in fiscal 2010, we determined we did
not need this debt. We financed the prepayment with borrowings under our
committed bank credit facilities. The interest rates on these bank borrowings
were 425 bps (4.25%) lower than the rates on the term notes.

                                       1
<PAGE>

     It is still difficult and expensive for finance companies to obtain or
renew financing because of the crisis in credit markets that began approximately
two years ago, although conditions appear to be improving. Most banks and other
lenders, including all of our funding sources, are lending selectively and are
charging much higher credit spreads. Credit spread is the percentage amount
lenders charge above a base market interest rate. Our cost of debt will increase
considerably as we obtain or renew financing if credit spreads persist at these
levels. The credit spread on our new and renewed asset securitization facilities
are higher than the credit spread we were previously charged.

     The U.S. government has taken unprecedented, drastic steps to support
credit markets and improve the flow of capital. The Federal Reserve has lowered
its target Federal Funds Rate ten times since September 2007 to between 0.00%
and 0.25%; the lowest level in history. This includes three decreases totaling
175 basis points in fiscal 2009. The government has also injected over $1.0
trillion into the financial system through several programs to prevent it from
failing and to encourage lending.

     Our available liquidity has increased by $339.0 million to $579.0 million
at July 31, 2009 from $240.0 million at July 31, 2007 (the approximate start of
the credit markets crisis). The increase resulted from significantly lower
receivable originations, our ability to obtain and renew financing and strong
operating cash flows. Our liquidity was $410.4 million after the August 2009
repayment of term notes. Based on the amount of our available liquidity, the
maturity and expiration dates of our debt and credit facilities, and receivable
originations and collections continuing at recent levels, we do not anticipate a
need for any new financing until the third quarter of fiscal 2011. We discuss
our liquidity and debt in the Liquidity and Capital Resources section.

     In addition, our cost of debt has decreased during the crisis because (i)
short-term market interest rates decreased significantly (ii) the relatively
small amount and timing of expiring credit facilities and maturing debt have
limited the impact of higher credit spreads and (iii) we have $455.0 million of
low-cost committed bank credit facilities without any restrictions on borrowing
the full amount. Our cost of debt was 4.12% in the fourth quarter of fiscal 2009
compared to 5.59% in the fourth quarter of fiscal 2007 (the quarter before the
crisis started). The repayment of $193.6 million of term notes in July and
August 2009 will lower our cost of debt in fiscal 2010, but we otherwise expect
our cost of debt to increase because short-term market interest rates are at
historic lows and we have been and will be charged higher credit spreads as we
renew or obtain  financing. We discuss our cost of debt in the Market Interest
Rate Risk and Sensitivity section.

     Maintaining conservative leverage and ample liquidity, having multi-year
committed bank credit facilities and term debt with staggered maturities, and
our approach to managing credit risk on our finance receivables (as discussed in
the Finance Receivables and Asset Quality section) have been integral to our
success during this difficult period.


CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Applying accounting principles generally accepted in the United States
requires judgment, assumptions and estimates to record the amounts in the
Consolidated Financial Statements and accompanying notes. We describe the
significant accounting policies and methods we use to prepare the Consolidated
Financial Statements in Note 1. Accounting policies involving significant
judgment, assumptions and estimates are considered critical accounting policies
and are discussed 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 receivables, net charge-off experience, impaired and
delinquent receivables and our current assessment of the risks inherent in our
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. We would need to record a $1.5 million provision for each 0.10%
required increase in the allowance. The allowance was $25.0 million (1.63% of
finance receivables) at July 31, 2009 including $1.1 million specifically
allocated to impaired receivables.

     The allowance includes amounts specifically allocated to impaired
receivables and an amount to provide for losses inherent in finance receivables
not impaired (the "general allowance"). We evaluate the fair values of impaired
receivables and compare them to the carrying amounts. The carrying amount is the
amount receivables are recorded at when we evaluate them and may include prior
write-downs or a specific allowance. If our fair value estimate is lower than

                                       2
<PAGE>

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
fair value estimate and (iii) the level and type of factors and items other than
the primary collateral supporting our fair value estimate, such as guarantees
and secondary collateral. We do not have a fixed formula or a pre-determined
period of past due status to record write-downs or specific reserves and we do
not write-off our entire net investment because our receivables are secured by
collateral that retains value, and we do not lend to consumers.

     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
do not use a loan grading system. We then adjust the calculated range of losses
for expected recoveries and 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. The adjusted calculated range of losses may differ from actual losses
significantly because we use significant estimates.

Non-Performing Assets

     We record impaired finance receivables and repossessed equipment (assets
received to satisfy receivables) at the lower of their current estimated fair
value or their carrying amount. We estimate fair value of these non-performing
assets by evaluating the market value and condition of the collateral or assets
and the expected cash flows of impaired receivables. 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 equipment would
require us to record a write-down. This would lower net income. Non-performing
assets were $87.0 million (5.7% of finance receivables) at July 31, 2009.

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 realize the full
amount of recorded residual values because of unexpected adverse changes in or
incorrect projections of future equipment values. This would lower net income.
Residual values were $31.5 million (2.0% of finance receivables) at July 31,
2009. Historically, we have realized recorded residual values on disposition.

Income Taxes

     We record a liability for uncertain income tax positions by (i) identifying
the uncertain tax positions we take on our income tax returns (ii) determining
if these positions would more likely than not be allowed by a taxing authority
and (iii) estimating the amount of tax benefit to record if these tax positions
pass the more-likely-than-not test. Therefore, we record a liability for tax
benefits from positions failing the test and from positions we do not expect to
realize all of the tax benefits. Identifying uncertain tax positions,
determining if they pass the test and determining the liability to record
requires significant judgment because tax laws are complicated and subject to
interpretation, and because we have to assess the likely outcome of hypothetical
challenges to these positions by taxing authorities. Actual outcomes of
challenges to these uncertain tax positions differing from our assessments
significantly and taxing authorities examining positions we did not consider
uncertain could require us to record additional income tax expense including
interest and penalties. This would lower net income. The gross liability
recorded for uncertain tax positions was $1.3 million at July 31, 2009 and we do
not expect this amount to change significantly in fiscal 2010.

Stock-Based Compensation

     We record compensation expense only for stock-based awards expected to
vest. Therefore, we must estimate expected forfeitures of stock awards. This
requires significant judgment and an analysis of historical data. We would need
to record more compensation expense for stock awards if expected forfeitures
exceed actual forfeitures. Our average expected annual rate of forfeitures on
all stock awards was 2.3% at July 31, 2009 resulting in 0.2 million stock awards
expected to be forfeited.


RESULTS OF OPERATIONS

     Two changes to GAAP requiring retrospective treatment were applied to the
fiscal years presented. This means the amounts affected by the new accounting
standards are different than reported originally. These changes are not
corrections of errors. We discuss the new accounting standards in Note 1
(Summary of Significant Accounting Policies) to the consolidated financial
statements. One standard required us to increase the amount of interest expense
we originally reported and the other required us to change how we calculated
earnings per common share resulting in lower earnings per common share.

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<PAGE>

COMPARISON OF FISCAL 2009 TO FISCAL 2008

     ==========================================================================
                                     Years Ended July 31,
     ($ in millions, except          --------------------
     per share amounts)                    2009      2008   $ Change   % Change
     ==========================================================================
     Finance income                      $157.5    $188.4    $ (30.9)      (16)%
     Interest expense                      53.7      79.1      (25.4)      (32)
     Net finance income before
       provision for credit losses        103.8     109.3       (5.5)       (5)
     Provision for credit losses            7.9       4.0        3.9        98
     Gain on debt retirement                1.3        --        1.3       100
     Salaries and other expenses           29.6      27.3        2.3         8
     Provision for income taxes            26.2      30.2       (4.0)      (13)
     Net income                            41.4      47.8       (6.4)      (13)

     Diluted earnings per common share     1.59      1.84      (0.25)      (14)
     Basic earnings per common share       1.59      1.85      (0.26)      (14)

     Return-on-equity                       9.5%     11.8%

     Excluding the debt retirement gain:
     -----------------------------------
       Net income                         $40.6     $47.8     $ (7.2)      (15)%

       Diluted earnings per common share   1.56      1.84      (0.28)      (15)
       Basic earnings per common share     1.56      1.85      (0.29)      (16)

       Return-on-equity                     9.3%     11.8%
     ==========================================================================

     Net income decreased by 13% to $41.4 million in fiscal 2009 from $47.8
million in fiscal 2008. Without the $0.9 million after-tax debt retirement gain,
net income decreased by 15%. Net income without the after-tax debt retirement
gain decreased because the effects of the 14% decrease in average receivables
and higher non-performing assets exceeded the effects of lower short-term market
interest rates.

     Finance income decreased by 16% to $157.5 million in fiscal 2009 from
$188.4 million in fiscal 2008 because (i) average finance receivables decreased
14% ($280.0 million) to $1.78 billion from $2.06 billion (ii) the yield on
finance receivables decreased to 8.84% from 9.14% mostly due to the prime rate
averaging 270 basis points (2.70%) lower and, to a lesser extent, (iii) higher
impaired receivables.

     Interest expense (incurred on debt used to fund finance receivables)
decreased by 32% to $53.7 million in fiscal 2009 from $79.1 million in fiscal
2008 because our average debt decreased 19% ($300.0 million) and our cost of
debt decreased to 4.17% from 4.99%. Lower short-term market interest rates
caused the decrease in our cost of debt because the interest rates on over 40%
of our debt were indexed to short-term market interest rates. We discuss this
in the Market Interest Rate Risk and Sensitivity section.

     Net finance income before provision for credit losses on finance
receivables decreased by 5% to $103.8 million in fiscal 2009 from $109.3 million
in fiscal 2008. Net interest margin (net finance income before provision for
credit losses expressed as a percentage of average finance receivables)
increased to 5.82% from 5.30% because of lower short-term market interest rates.

     The provision for credit losses on finance receivables was $7.9 million in
fiscal 2009 and $4.0 million in fiscal 2008. Net charge-offs (write-downs of
finance receivables less recoveries) increased to $7.7 million in fiscal 2009
from $3.2 million in fiscal 2008, and the loss ratio (net charge-offs expressed
as a percentage of average finance receivables) increased to 0.43% from 0.16%.
Net charge-offs have been increasing because of higher non-performing assets,
the recession and declining collateral values. We discuss the allowance and net
charge-offs further in the Finance Receivables and Asset Quality section.

     Salaries and other expenses increased by 8% to $29.6 million in fiscal 2009
from $27.3 million in fiscal 2008 because of higher non-performing asset costs
and, to a lesser extent, because we deferred a lower percentage of salary costs
as a result of the decrease in receivables originated. The expense ratio
(salaries and other expenses expressed as a percentage of average finance
receivables) worsened to 1.66% from 1.33% because expenses increased and
receivables decreased. The efficiency ratio (expense ratio expressed as a
percentage of net interest margin) worsened to 28.5% from 25.0% because expenses
increased and net finance income before provision for credit losses decreased.

                                       4
<PAGE>

     The provision for income taxes decreased to $26.2 million in fiscal 2009
from $30.2 million in fiscal 2008 because of the decrease in net income. Our
effective tax rate was 38.7% in fiscal 2009 and 2008.

     Diluted earnings per common share decreased by 14% to $1.59 in fiscal 2009
from $1.84 in fiscal 2008 and basic earnings per common share decreased by 14%
to $1.59 from $1.85 because of the decrease in net income. The $0.9 million
after-tax debt retirement gain increased diluted and basic earnings per common
share by $0.03 in fiscal 2009. Without this gain, diluted and basic earnings per
common share decreased by 15% and 16%, respectively.

     The amounts of net income, diluted and basic earnings per common share and
return-on-equity excluding the $0.9 million after-tax debt retirement gain are
non-GAAP financial measures. We believe presenting these financial measures is
useful to investors because they provide consistency and comparability with our
operating results for the prior period and a better understanding of the changes
and trends in our operating results.


COMPARISON OF FISCAL 2008 TO FISCAL 2007

     ==========================================================================
                                     Years Ended July 31,
     ($ in millions, except          --------------------
     per share amounts)                    2008      2007   $ Change   % Change
     ==========================================================================
     Finance income                      $188.4    $191.2      $(2.8)       (1)%
     Interest expense                      79.1      88.2       (9.1)      (10)
     Net finance income before
       provision for credit losses        109.3     103.0        6.3         6
     Provision for credit losses            4.0        --        4.0       100
     Salaries and other expenses           27.3      24.9        2.4        10
     Provision for income taxes            30.2      30.2         --        --
     Net income                            47.8      47.9       (0.1)       --

     Diluted earnings per common share     1.84      1.75       0.09         5
     Basic earnings per common share       1.85      1.77       0.08         5

     Return-on-equity                      11.8%     12.1%
     ==========================================================================

     Net income was $47.8 million in fiscal 2008 and $47.9 million in fiscal
2007 because the net positive effects of lower short-term market interest rates
and the negative effects of higher non-performing assets offset.

     Finance income decreased by 1% to $188.4 million in fiscal 2008 from $191.2
million in fiscal 2007 because the net yield on finance receivables declined
slightly to 9.14% in fiscal 2008 from 9.25% in fiscal 2007. The 325 basis point
(3.25%) decrease in the prime rate and higher non-accrual receivables caused the
decline. Decreases in the prime rate lower the net yield because 9% of our
receivables are indexed to the prime rate. The change in average receivables was
not significant.

     Interest expense decreased by 10% to $79.1 million in fiscal 2008 from
$88.2 million in fiscal 2007 because our cost of debt declined to 4.99% in
fiscal 2008 from 5.60% in fiscal 2007. Lower short-term market interest rates
caused the decline because 50% of our debt was indexed to short-term market
interest rates in fiscal 2008. The change in average debt was not significant.

     Net finance income before provision for credit losses on finance
receivables increased by 6% to $109.3 million in fiscal 2008 from $103.0 million
in fiscal 2007. Net interest margin increased to 5.30% in fiscal 2008 from 4.98%
in fiscal 2007 because of lower short-term market interest rates.

     We recorded a $4.0 million provision for credit losses on finance
receivables in fiscal 2008. We did not record a provision in fiscal 2007. 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. Net
charge-offs increased to $3.2 million in fiscal 2008 from $108,000 in fiscal
2007, and the loss ratio increased to 0.16% in fiscal 2008 from less than 0.01%
in fiscal 2007. Net charge-offs have been increasing because of higher
non-performing assets.

     Salaries and other expenses increased by 10% to $27.3 million in fiscal
2008 from $24.9 million in fiscal 2007. The increase resulted from higher
non-performing asset costs and, to a lesser extent, salary increases. The
expense ratio worsened to 1.33% in fiscal 2008 from 1.21% in fiscal 2007 because
of the increase in expenses. The efficiency ratio worsened to 25.0% in fiscal

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<PAGE>

2008 from 24.2% in fiscal 2007 because the percentage increase in expenses
exceeded the percentage increase in net finance income before provision for
credit losses.

     The provision for income taxes was $30.2 million in fiscal 2008 and 2007
and our effective tax rate was 38.7% in fiscal 2008 and 2007.

     Diluted earnings per common share increased by 5% to $1.84 in fiscal 2008
from $1.75 in fiscal 2007, and basic earnings per common share increased by 5%
to $1.85 in fiscal 2008 from $1.77 in fiscal 2007. Diluted and basic earnings
per common share increased although net income decreased because we repurchased
2.7 million shares of our common stock in the last six fiscal quarters.


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 of future net charge-offs
and non-performing assets.

     ========================================================================
                                     July 31,   July 31,
     ($ in millions)                   2009 *     2008 *   $ Change  % Change
     ========================================================================
     Finance receivables             $1,536.4   $1,940.8    $(404.4)      (21)%
     Allowance for credit losses         25.0       24.8        0.2         1
     Non-performing assets               87.0       46.7       40.3        86
     Delinquent finance receivables      38.0       22.9       15.1        66
     Net charge-offs                      7.7        3.2        4.5       138

     As a percentage of receivables:
     -------------------------------
     Allowance for credit losses         1.63%      1.28%
     Non-performing assets               5.67       2.41
     Delinquent finance receivables      2.47       1.18
     Net charge-offs  (loss ratio)       0.43       0.16
     ========================================================================
     * as of and for the year ended

     Finance receivables comprise installment sale agreements and secured loans
(collectively referred to as loans) and direct financing leases. Loans were 91%
($1.41 billion) of finance receivables and leases were 9% ($131 million) at July
31, 2009. Finance receivables decreased $404.4 million or 21% in fiscal 2009
because of lower originations.

     We originated $487.7 million of finance receivables in fiscal 2009 compared
to $923.8 million in fiscal 2008. Originations decreased because the recession
has reduced equipment financing demand significantly and because we are
approving transactions selectively to preserve asset quality. We collected
$861.9 million of finance receivables and repossessions in fiscal 2009 compared
to $1.08 billion in 2008. Collections decreased because of lower receivables,
fewer prepayments and the increase in delinquent receivables.

     Our primary focus is the credit quality of our receivables. We manage our
credit risk by adhering to disciplined and sound underwriting policies and
procedures, by monitoring our receivables closely, by handling non-performing
accounts effectively and by managing the size of our receivables portfolio. 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 also limit our credit exposure with any customer.
The limit was $40.0 million at July 31, 2009. Our ten largest customers
accounted for 8.0% ($125.0 million) of total finance receivables at July 31,
2009 compared to 6.4% ($125.0 million) at July 31, 2008.

     Our allowance for credit losses was $25.0 million at July 31, 2009 compared
to $24.8 million at July 31, 2008, and the allowance level increased to 1.63% of
finance receivables from 1.28%. The allowance is our estimate of losses inherent

                                       6
<PAGE>

in our finance receivables. 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. Our estimates of inherent losses increased during
fiscal 2009 because of higher net charge-offs, delinquencies and non-performing
assets.

     Net charge-offs of finance receivables (write-downs less recoveries) were
$7.7 million in fiscal 2009 compared to $3.2 million in fiscal 2008 and the loss
ratios were 0.43% and 0.16%. Net charge-offs have been increasing because the
recession is having an adverse impact on our customers' cash flows and
collateral values.

     The net investments in 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,                                                2009         2008
      =========================================================================
      Impaired receivables *                                $ 64.5       $ 33.5
      Repossessed equipment                                   22.5         13.2
      -------------------------------------------------------------------------
         Total non-performing assets                        $ 87.0       $ 46.7
      =========================================================================
      Delinquent receivables                                $ 38.0       $ 22.9
      =========================================================================
      Impaired receivables not delinquent                       60%          52%
      =========================================================================
      * before specifically allocated allowance of $1.1 million at July 31, 2009
        and $0.9 million at July 31, 2008

     We expect the trend of increases in net charge-offs, impaired and
delinquent receivables and repossessed equipment to continue because of the
recession's worsening impact on our customers. This could require us to record
higher provisions for credit losses.

     Our finance receivables contain 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 affected by
changes in economic or other conditions similarly. Our industry concentrations
were construction related-44%, road transportation-36% and refuse-13%, and our
U.S. regional geographic concentrations were Southwest-30%, Southeast-25%,
Northeast-19%, Central-13% and West-13% at July 31, 2009.


LIQUIDITY AND CAPITAL RESOURCES

     We describe our need for raising capital (debt and equity), our need to
maintain a substantial amount of liquidity (money currently available for us to
borrow), how we manage liquidity and our funding sources in this section. Key
indicators are leverage (the number of times debt exceeds equity), available
liquidity, credit ratings and debt maturities. Our leverage is low for a finance
company, we have ample liquidity available, we have been successful in issuing
debt and our debt is diversified with maturities staggered over five years. We
are not dependent on any of our funding sources or providers.

     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, we diversify our funding sources and we stagger our
debt maturities.

     Funding sources usually available to us include operating cash flow,
private and public issuances of term debt, committed unsecured revolving bank
credit facilities, conduit and term securitizations of finance receivables,
secured term financings, dealer placed and direct issued commercial paper and
sales of common and preferred equity. The external funding sources may not be
available to us currently or may only be available at unfavorable terms because
of credit markets conditions. However, we have $410.4 million available to
borrow under our committed revolving bank and asset securitization facilities
(after subtracting commercial paper outstanding) at July 31, 2009 (as adjusted
for the $168.6 million August 2009 repayment of term notes). Therefore, we do
not have a current need for additional financing.

                                       7
<PAGE>

     Changes in our liquidity for fiscal 2009 and 2008 are summarized below:

     ==========================================================================
     July 31,                                                 2009         2008
     ==========================================================================
     Liquidity - beginning of year                         $ 357.0      $ 240.3
       Decrease in receivables (excludes non-cash items)     374.2        158.9
       New financing                                         100.0        100.0
       Operating cash flow                                    54.0         72.8
       Debt repaid and expired credit facilities            (291.3)      (179.3)
       Dividends paid and common stock repurchased           (16.3)       (33.8)
       Other                                                   1.4         (1.9)
     --------------------------------------------------------------------------
     Liquidity - end of year                                 579.0        357.0
       Debt prepaid in August 2009                          (168.6)          --
     --------------------------------------------------------------------------
     Liquidity, as adjusted                                $ 410.4      $ 357.0
     ==========================================================================
     Increase in liquidity, as adjusted                    $  53.4      $ 116.7
     ==========================================================================

     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. Fitch affirmed these investment grade ratings in March
2009 and maintained its stable outlook. As a condition of our 'F2' credit
rating, commercial paper outstanding is limited to the unused amount of our
committed bank and securitization credit facilities. Our ability to obtain or
renew financing and our credit spreads can be dependent on these investment
grade credit ratings.

     We obtained all of our debt and credit facilities through our major
operating subsidiary except for the convertible debentures (issued by FFC). The
subsidiary's debt agreements have restrictive covenants limiting its
indebtedness, encumbrances, investments, sales of assets, mergers and other
business combinations, capital expenditures, interest coverage, net worth and
dividends and other distributions to FFC. The subsidiary has always complied
with all debt covenants and restrictions. None of the agreements or facilities
has a material adverse change clause and all of our debt is senior.

     Our leverage (debt-to-equity ratio) has decreased to 2.3 at July 31, 2009
from 3.5 at July 31, 2008 and from 4.2 at July 31, 2007 because we have remained
profitable while contracting during the credit markets crisis and recession. As
a result, debt decreased by 28% ($412.4 million) to $1.05 billion from $1.46
billion during fiscal 2009 and stockholders' equity increased by 9% ($35.4
million) to $452.0 million from $416.6 million. Our low leverage level allows
for substantial asset growth and equity distributions and repurchases.

     Debt comprised the following ($ in millions):

     ==========================================================================
                                          July 31, 2009           July 31, 2008
                                     ------------------      ------------------
                                       Amount   Percent        Amount   Percent
     ==========================================================================
     Term notes                      $  650.0        62%     $  675.0        46%
     Bank borrowings                    197.0        19         369.0        25
     Commercial paper                   104.0        10          79.0         5
     Asset securitization
       borrowings - term                101.0         9         169.0        12
     Convertible debentures (net of
       debt discount of $2.6)              --        --         172.4        12
     --------------------------------------------------------------------------
          Total debt                 $1,052.0       100%     $1,464.4       100%
     ==========================================================================

Term Notes

     We issued the term notes between fiscal 2005 and 2008. They are five and
seven year fixed rate notes with principal due at maturity between May 2010 and
April 2014. We prepaid $168.6 million of the term notes in August 2009. Interest
is payable semiannually. Maturity information for the notes is in the
Contractual Obligations section below.

Bank Credit Facilities

     We have $455.0 million of committed unsecured revolving credit facilities
from ten banks with original terms between two and five years, and $258.0
million was unused and available for us to borrow at July 31, 2009. The
facilities range from $15.0 million to $110.0 million. Borrowings under the
facilities can mature between 1 and 270 days. We borrow amounts for one day, one
week or one month depending on interest rates, and roll the borrowings over when

                                       8
<PAGE>

they mature depending on our financing needs and whether we issue or repay other
debt. Borrowings outstanding at July 31, 2009 matured in August 2009, were
reborrowed and remain outstanding. The facilities expire as follows
(in millions):

     ==========================================================================
     Fiscal:                    2010          2011           2012          2013
     ==========================================================================
                               $95.0         $85.0         $260.0         $15.0
     ==========================================================================

     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
immediately. None of the facilities are for commercial paper back-up only and
the facilities do not have usage fees. These facilities might be renewed,
extended or increased before they expire. Bank credit facility activity is
summarized below ($ in millions):

     ===========================================================================
     Years Ended July 31,                            2009                   2008
     ===========================================================================
                                                     # of                   # of
                                          Amount    Banks        Amount    Banks
     ===========================================================================
     Total - beginning of year           $ 480.0       10       $ 580.0       11
        Expired not renewed                (25.0)       1         (25.0)       1
        Converted into term notes             --       --         (75.0)       2
     -------------------------------------------                -------
     Total - end of year                 $ 455.0       10       $ 480.0       10
     ===========================================================================
     Renewed at expiration               $  30.0        1       $  25.0        1
     ===========================================================================
     Term extended before expiration     $  15.0        1       $  15.0        1
     ===========================================================================

Asset Securitization Borrowings

     We have $425.0 million of asset securitization facilities that provide for
committed revolving financing during their term and we can convert borrowings
into amortizing term debt if the facilities are not renewed. The amortizing term
debt would be repaid monthly from collections of securitized receivables and
would be repaid substantially within two years. The full amount of the
facilities was unused and available for us to borrow at July 31, 2009.
Borrowings under these facilities and the amortizing term debt are without
recourse.

     We converted $200.0 million of revolving asset securitization borrowings
into amortizing term debt in fiscal 2008 and are repaying the remaining $101.0
million monthly from collections of securitized receivables. The monthly
repayment amounts vary based on the amount of securitized receivables collected
and the amount borrowed under our $325.0 million facility, and would increase if
we borrow under this facility or convert it into amortizing term debt upon
nonrenewal. The term debt would be repaid substantially in two years based on
the amount of securitized receivables at July 31, 2009 and not borrowing under
this facility.

     Finance receivables included $167.0 million of securitized receivables at
July 31, 2009 and $410.0 million at July 31, 2008. The amount of receivables we
can securitize is limited to 50% of our major operating subsidiary's receivables
because of restrictions in its other debt agreements. This limit was $760.0
million at July 31, 2009. Borrowings under these facilities and the amortizing
term debt are limited to 90% of securitized receivables classified as eligible.
Securitized receivables classified as impaired or with terms outside of defined
limits are not eligible.

     These facilities would terminate if net charge-offs of securitized
receivables or if delinquent receivables exceed certain levels. This would
convert borrowings outstanding into amortizing term debt required to be repaid
monthly from collections of securitized receivables.

Commercial Paper

     We issue commercial paper direct and through a $500.0 million dealer
program with maturities between 1 and 270 days. The amount of commercial paper
we could issue is limited to the lower of $500.0 million and the unused amount
of our committed credit facilities ($683.0 million at July 31, 2009).

     There is still reduced demand for and higher credit spreads on our
commercial paper because of credit market conditions. As a result, our
commercial paper was $104.0 million at July 31, 2009 compared to $289.7 million
at July 31, 2007.

                                       9
<PAGE>

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

     ===========================================================================
     Years Ended July 31,                             2009       2008       2007
     ===========================================================================
     Maximum outstanding during the year           $ 446.0    $ 630.0    $ 393.7
     Average outstanding during the year             366.0      469.0      329.6
     Outstanding at end of year                      301.0      448.0      339.7
     ===========================================================================

Contractual Obligations

     Our long-term contractual obligations and other information at July 31,
2009 are summarized below ($ in millions):

<TABLE>
<CAPTION>
     ================================================================================================
                                                                         Payments Due by Fiscal Years
                                                                                     2015 -
                                2010       2011       2012       2013       2014       2020     Total
     ------------------------------------------------------------------------------------------------
<S>                          <C>       <C>        <C>        <C>        <C>        <C>        <C>
     Term notes              $ 225.0   $  185.0   $   75.0   $  115.0   $   50.0   $     --   $ 650.0
     Asset securitization
       borrowings - term        58.0       43.0         --         --         --         --     101.0
     Operating leases            1.4        1.6        1.1        0.6        0.5        2.1       7.3
     ------------------------------------------------------------------------------------------------
          Total payments     $ 284.4   $  229.6   $   76.1   $  115.6   $   50.5   $    2.1   $ 758.3
     ================================================================================================
     Percentage                   38%        30%        10%        15%         7%        --%      100%
     ================================================================================================
     Other debt              $ 301.0   $     --   $     --   $     --   $     --   $     --   $ 301.0
     ================================================================================================
     Cumulative payments     $ 585.4   $  815.0   $  891.1   $1,006.7   $1,057.2   $1,059.3
     ================================================================================================
     Cumulative scheduled
       collections of
       finance receivables   $ 621.4   $1,065.7   $1,352.3   $1,476.8   $1,519.5   $1,536.4
     ================================================================================================
</TABLE>

     The average maturity of our term notes (excluding the $168.6 million of
term notes prepaid in August 2009) was 2.5 years at July 31, 2009 and 2008. The
term notes and term asset securitization borrowings are discussed in Note 3 to
the Consolidated Financial Statements and operating leases in Note 10. Other
debt is bank borrowings and commercial paper that we can refinance under our
long-term committed bank and asset securitization credit facilities expiring on
various dates through fiscal 2013. As shown in the table, cumulative scheduled
collections of finance receivables exceed cumulative payments under contractual
obligations each year.

Stockholders' Equity

     We increased the amount authorized under our common stock and convertible
debt repurchase program by $58.5 million in fiscal 2009. We also purchased $42.3
million of our convertible debentures under the program for $40.6 million and
37,000 shares of our common stock for $0.8 million, leaving $43.9 million
authorized for future repurchases at July 31, 2009. We established the program
in fiscal 2007 and it does not have an expiration date. Repurchases are
discretionary and contingent upon many conditions.

     The amount of equity we can distribute to stockholders is limited,
indirectly, because the amount of funds we can obtain from our major operating
subsidiary is restricted by its debt agreements. As a result, the amount of
stockholders' equity we could distribute at July 31, 2009 was limited to $144.0
million.

     We paid $15.5 million and $15.4 million of cash dividends and we received
$1.3 million and $6.4 million from stock option exercises in fiscal 2009 and
2008, respectively.

                                       10
<PAGE>

MARKET INTEREST RATE RISK AND SENSITIVITY

     We discuss how changes in market interest rates and credit spreads 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,                            2009       2008       2007
     ==========================================================================
     Net yield of finance receivables                8.84%      9.14%      9.25%
     Cost of debt                                    4.17       4.99       5.60
     --------------------------------------------------------------------------
          Net interest spread                        4.67%      4.15%      3.65%
     ==========================================================================

     Our net interest spread was 52 basis points (0.52%) higher in fiscal 2009
compared to fiscal 2008 because decreases in market interest rates lowered our
cost of debt more than they lowered the net yield on our finance receivables as
explained below. Short-term market interest rates have decreased significantly
since July 2007 because the Federal Reserve lowered its target Federal Funds
Rate more than 500 basis points (5.00%) in response to credit market and
economic conditions. Short-term LIBOR rates decreased on average 490 basis
points (4.90%) with overnight LIBOR decreasing more than 500 basis points to
0.23% at July 31, 2009. Interest rates on most of our floating rate debt are
indexed to short-term LIBOR rates. This is the primary reason our cost of debt
decreased in fiscal 2009. Decreases in short-term market interest rates also
lowered the net yield because the rates on our floating rate receivables are
indexed to the prime rate. The prime rate also decreased by 500 basis points
since July 2007. Long-term market interest rates also decreased significantly.
Lower long-term market interest rates normally would decrease the cost of new
fixed-rate term debt and result in lower yields on finance receivable
originations, but these effects have been offset largely by significantly higher
credit spreads.

     Our net interest spread is sensitive to changes in short 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 and decreases in short-term rates increase
it 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 38% of our debt is
floating rate compared to floating rate receivables of only 8%.

     Credit spreads also affect our net interest spread. Changes in credit
spreads affect the yield on our receivables when originated and the cost of our
debt when issued. Credit spreads have increased significantly since the crisis
in credit markets began. Our cost of debt will increase considerably as we
obtain or renew financing if credit spreads remain high.

     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 largely 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 a flat or inverted yield curve by issuing
long-term fixed rate debt.

     Our income is subject to the risk of rising short-term market interest
rates and changes in the yield curve because floating rate debt exceeded
floating rate receivables by $279.8 million at July 31, 2009 as shown in the
table below and by $448.4 million as adjusted for the $168.6 million August 2009
repayment of fixed rate term notes. The terms and prepayment experience of fixed
rate receivables mitigate this risk. We collect receivables monthly over short
periods of two to five years. Fixed rate receivables have an average remaining
life excluding prepayments of approximately eighteen months at July 31, 2009 and
scheduled collections of $570.0 million (40%) in fiscal 2010. Historically,
annual collections have exceeded 50% of average receivables because of
prepayment activity. We do not match the maturities of our debt to our
receivables.

     We monitor our exposure to potential adverse changes in market interest
rates by comparing the fixed and floating rate percentages of our receivables
and debt and by determining the potential impact adverse changes in market
interest rates could have on our net income. We may hedge our exposure to this
interest rate risk by entering into derivatives on existing debt or debt we
expect to issue, and we may change the proportion of our fixed and floating rate
debt. We do not speculate with or trade derivatives. We had no derivatives
outstanding in fiscal 2009.

                                       11
<PAGE>

     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 $1.3 million at July 31, 2009 based on the scheduled repricing of
floating rate debt, fixed rate debt maturing within one year, the expected
effects on the yield of new receivables and including the prepayment of $168.6
million of fixed rate term notes in August 2009. This amount increases to $2.6
million excluding the effects on the yield of new receivables. We believe these
amounts are acceptable considering the cost of floating rate debt is lower than
fixed rate debt. Actual future changes in market interest rates and their effect
on net income may differ from these amounts materially. Other factors that may
accompany an actual immediate 100 basis point rise in market interest rates were
not considered in the calculation. These hypothetical reductions of net income
at July 31, 2008 were $1.5 million with the effects on the yield of new
receivables and $3.0 million without the effects on the yield of new
receivables. The impact of this hypothetical increase in rates was lower at July
31, 2009 because our floating rate debt decreased by 35% to $402.0 million from
$617.0 million at July 31, 2008.

     The fixed and floating rate amounts and percentages of our receivables and
capital at July 31, 2009 follow ($ in millions):

     ===========================================================================
                                    Fixed Rate        Floating Rate
                             -----------------      ---------------
                               Amount  Percent      Amount  Percent        Total
     ===========================================================================
     Finance receivables     $1,414.2       92%     $122.2        8%    $1,536.4
     ===========================================================================
     Debt *                  $  650.0       62%     $402.0       38%    $1,052.0
     Stockholders' equity       452.0      100          --       --        452.0
     ---------------------------------------------------------------------------
        Capital *            $1,102.0       73%     $402.0       27%    $1,504.0
     ===========================================================================
     *  the percentages of fixed and floating rate debt are 46% and 54%,
        respectively, after the August 2009 prepayment of $168.6 million of
        fixed rate term notes, and the percentages of fixed and floating rate
        capital are 62% and 38%, respectively.

     The fixed and floating rate amounts and percentages of our receivables and
capital at July 31, 2008 follow ($ in millions):

     ===========================================================================
                                    Fixed Rate        Floating Rate
                             -----------------      ---------------
                               Amount  Percent      Amount  Percent        Total
     ===========================================================================
     Finance receivables     $1,772.0       91%     $168.8        9%    $1,940.8
     ===========================================================================
     Debt                    $  847.4       58%     $617.0       42%    $1,464.4
     Stockholders' equity       416.6      100          --       --        416.6
     ---------------------------------------------------------------------------
        Capital              $1,264.0       67%     $617.0       33%    $1,881.0
     ===========================================================================

     Floating rate debt comprises bank borrowings, commercial paper and term
asset securitization borrowings, and reprices (interest rates change based on
current short-term market interest rates) after July 31, 2009 as follows: $357.0
million (89%) in one month and $45.0 million (11%) in two to three months.
Floating rate receivables only reprice when the prime rate changes. Repricing
frequencies of floating rate debt follow ($ in millions):

     ===========================================================================
                                  Balance          Repricing Frequency
     ===========================================================================
     Bank borrowings              $ 197.0          1 to 30 days
     Commercial paper               104.0          1 to 90 days (30 day average)
     Asset securitization
       borrowings - term            101.0          1 to 30 days
     ===========================================================================

                                       12
<PAGE>

NEW ACCOUNTING STANDARDS

     Refer to Note 1 (Summary of Significant Accounting Policies) to the
consolidated financial statements.


FORWARD-LOOKING STATEMENTS

     Statements in this report containing the words or phrases "expect,"
"anticipate," "may," "might," "believe," "appears," "intend," "estimate,"
"could," "should," "would," "will," "if," "outlook," "likely," "unlikely" and
other words and phrases expressing our expectations are "forward-looking
statements." Actual results could differ from those contained in the
forward-looking statements materially because they involve various assumptions
and known and unknown risks and uncertainties. Information about risk factors
that could cause actual results to differ materially is discussed in Part I,
Item 1A Risk Factors and other sections of this report. 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,
higher credit spreads, 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 do not guarantee our future performance and apply
only as of the date made. We are not required to update or revise them for
future or unanticipated events or circumstances.

                                       13
<PAGE>