##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2009
 OR
 o
    
    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: 0-26906
 ASTA FUNDING, INC.
  Delaware
(State or other jurisdiction 
of incorporation or organization)
    
    22-3388607
(IRS Employer
Identification No.)210 Sylvan Ave., Englewood Cliffs, New Jersey
(Address of principal executive offices)
    
    07632
(Zip Code)
 Registrants telephone number: (201) 567-5648
  þ o
 Yes o No o
   Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



Part I. Financial Information
    
    
    3Item 1. Condensed Consolidated Financial Statements
    
    
    3Condensed Consolidated Balance Sheets as of June 30, 2009 (unaudited) and September 30, 2008
    
    
    3Condensed Consolidated Statements of Operations for the nine and three month periods ended June 30, 2009 and 2008 (unaudited)
    
    
    4Condensed Consolidated Statement of Stockholders Equity for the nine month period ending June 30, 2009 (unaudited)
    
    
    5Condensed Consolidated Statements of Cash Flows for the nine month periods ended June 30, 2009 and 2008 (unaudited)
    
    
    6Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    26Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    35Item 4. Controls and Procedures
    
    
    36Part II. Other Information
    
    
    36Item 1. Legal Proceedings
    
    
    36Item 1A Risk Factors
    
    
    36Item 2. Unregistered Sale of Equity Securities and Use of Proceeds
    
    
    37Item 3. Defaults Upon Senior Securities
    
    
    37Item 4. Submission of Matters to a Vote of Security Holders
    
    
    37Item 5. Other Information
    
    
    37Item 6. Exhibits
    
    
    37Signatures
    
    
    38EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION
   2




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##### Table of Contents



ITEM 1.
    
    Financial Statements
  
  June 30,
    
    
    September 30,2009
    
    
    2008(Unaudited)ASSETSCash and cash equivalents
    
    $
    3,223,000
    
    
    $
    3,623,000Restricted cash
    
    
    2,256,000
    
    
    
    3,047,000Consumer receivables acquired for liquidation, (at net realizable value)
    
    
    356,264,000
    
    
    
    449,012,000Due from third party collection agencies and attorneys
    
    
    3,516,000
    
    
    
    5,070,000Income taxes receivable
    
    
    807,000
    
    
    
    Investment in venture
    
    
    119,000
    
    
    
    555,000Furniture and equipment, net
    
    
    511,000
    
    
    
    762,000Deferred income taxes
    
    
    22,593,000
    
    
    
    15,567,000Other assets
    
    
    2,877,000
    
    
    
    3,500,000Total assets
    
    $
    392,166,000
    
    
    $
    481,136,000LIABILITIES AND STOCKHOLDERS EQUITYLiabilitiesDebt
    
    $
    144,888,000
    
    
    $
    213,485,000Subordinated debt  related party
    
    
    8,246,000
    
    
    
    8,246,000Other liabilities
    
    
    1,980,000
    
    
    
    4,618,000Dividends payable
    
    
    285,000
    
    
    
    571,000Income taxes payable
    
    
    357,000
    
    
    
    6,315,000Total liabilities
    
    
    155,756,000
    
    
    
    233,235,000Commitments and contingenciesStockholders EquityPreferred stock, $.01 par value; authorized 5,000,000; issued and outstanding  none
    
    
    
    
    
    
    Common stock, $.01 par value; authorized 30,000,000 shares; issued and outstanding  14,271,924 at
June 30, 2009 and 14,276,158 at September 30, 2008
    
    
    143,000
    
    
    
    143,000Additional paid-in capital
    
    
    70,069,000
    
    
    
    69,130,000Accumulated other comprehensive loss
    
    
    (344,000
    )
    
    
    (297,000
    )Retained earnings
    
    
    166,542,000
    
    
    
    178,925,000Total stockholders equity
    
    
    236,410,000
    
    
    
    247,901,000Total liabilities and stockholders equity
    
    $
    392,166,000
    
    
    $
    481,136,000
   3




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##### Table of Contents



Three Months
    
    
    Three Months
    
    
    Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedJune 30, 2009
    
    
    June 30, 2008
    
    
    June 30, 2009
    
    
    June 30, 2008Revenues:Finance income, net
    
    $
    17,202,000
    
    
    $
    23,560,000
    
    
    $
    53,722,000
    
    
    $
    91,573,000Other income
    
    
    36,000
    
    
    
    12,000
    
    
    
    90,000
    
    
    
    156,00017,238,000
    
    
    
    23,572,000
    
    
    
    53,812,000
    
    
    
    91,729,000Expenses:General and administrative
    
    
    6,634,000
    
    
    
    7,615,000
    
    
    
    20,006,000
    
    
    
    20,544,000Interest
    
    
    1,655,000
    
    
    
    3,619,000
    
    
    
    6,522,000
    
    
    
    14,271,000Interest  Related Party
    
    
    128,000
    
    
    
    24,000
    
    
    
    385,000
    
    
    
    24,0000Impairments of consumer receivables acquired for liquidation
    
    
    6,364,000
    
    
    
    8,153,000
    
    
    
    46,208,000
    
    
    
    43,153,00014,781,000
    
    
    
    19,411,000
    
    
    
    73,121,000
    
    
    
    77,992,000Income (loss) before equity in earnings (loss) of venture and income taxes
    
    
    2,457,000
    
    
    
    4,161,000
    
    
    
    (19,309,000
    )
    
    
    13,737,000Equity (loss) in earnings of venture
    
    
    34,000
    
    
    
    (59,000
    )
    
    
    (21,000
    )
    
    
    (137,000
    )Income (loss) before income tax expense (benefit)
    
    
    2,491,000
    
    
    
    4,102,000
    
    
    
    (19,330,000
    )
    
    
    13,600,000Income tax expense (benefit)
    
    
    1,013,000
    
    
    
    1,662,000
    
    
    
    (7,803,000
    )
    
    
    5,553,000Net income (loss)
    
    $
    1,478,000
    
    
    $
    2,440,000
    
    
    $
    (11,527,000
    )
    
    $
    8,047,000Net income (loss) per share:Basic
    
    $
    0.10
    
    
    $
    0.17
    
    
    $
    (0.81
    )
    
    $
    0.57Diluted
    
    $
    0.10
    
    
    $
    0.17
    
    
    $
    (0.81
    )
    
    $
    0.55Weighted average number of shares outstanding:Basic
    
    
    14,271,946
    
    
    
    14,276,158
    
    
    
    14,271,931
    
    
    
    14,111,954Diluted
    
    
    14,445,572
    
    
    
    14,535,548
    
    
    
    14,271,931
    
    
    
    14,642,467
   4




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Additional
    
    
    
    
    
    
    AccumulatedCommon Stock
    
    
    Paid-In
    
    
    Retained
    
    
    Other ComprehensiveShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    TotalBalance, September 30, 2008
    
    
    14,276,158
    
    
    $
    143,000
    
    
    $
    69,130,000
    
    
    $
    178,925,000
    
    
    
    (297,000
    )
    
    $
    247,901,000Exercise of options
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restricted shares forfeited
    
    
    (4,334
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock based compensation expense
    
    
    
    
    
    
    
    
    
    
    865,000
    
    
    
    
    
    
    
    
    
    
    
    865,000Tax benefit arising from vesting of restricted stock
    
    
    
    
    
    
    
    
    
    
    74,000
    
    
    
    
    
    
    
    
    
    
    
    74,000Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (856,000
    )
    
    
    
    
    
    
    (856,000
    )Other comprehensive loss (net of tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (47,000
    )
    
    
    (47,000
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,527,000
    )
    
    
    
    
    
    
    (11,527,000
    )Balance, June 30, 2009
    
    
    14,271,924
    
    
    $
    143,000
    
    
    $
    70,069,000
    
    
    $
    166,542,000
    
    
    $
    (344,000
    )
    
    $
    236,410,000
  Nine Months
    
    
    Nine MonthsEnded
    
    
    EndedJune 30, 2009
    
    
    June 30, 2008Net (loss) income
    
    $
    (11,527,000
    )
    
    $
    8,047,000Other comprehensive (loss)
income, Net of tax  Foreign
Currency translation
    
    
    (47,000
    )
    
    
    607,000Comprehensive (loss) income
    
    $
    (11,574,000
    )
    
    $
    8,654,000
   5




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Nine Months Ended
    
    
    Nine Months EndedJune 30, 2009
    
    
    June 30, 2008Cash flows from operating activities:Net (loss) income
    
    $
    (11,527,000
    )
    
    $
    8,047,000Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    1,261,000
    
    
    
    915,000Deferred income taxes
    
    
    (7,026,000
    )
    
    
    111,000Impairments of consumer receivables acquired for liquidation
    
    
    46,208,000
    
    
    
    43,153,000Stock based compensation
    
    
    865,000
    
    
    
    731,000Changes in:Income taxes payable and receivable
    
    
    (6,765,000
    )
    
    
    (4,955,000
    )Due from third party collection agencies and attorneys
    
    
    1,554,000
    
    
    
    (197,000
    )Other assets
    
    
    (349,000
    )
    
    
    (478,000
    )Other liabilities
    
    
    (2,642,000
    )
    
    
    (2,695,000
    )Net cash provided by operating activities
    
    
    21,579,000
    
    
    
    44,632,000Cash flows from investing activities:Purchase of consumer receivables acquired for liquidation
    
    
    (16,501,000
    )
    
    
    (48,864,000
    )Principal collected on receivables acquired for liquidation
    
    
    57,545,000
    
    
    
    56,757,000Principal collected on receivable accounts represented by account sales
    
    
    5,317,000
    
    
    
    8,355,000Foreign exchange effect on receivable accounts acquired for liquidation
    
    
    126,000
    
    
    
    (782,000
    )Cash distributions received from venture
    
    
    436,000
    
    
    
    1,377,000Capital expenditures
    
    
    (38,000
    )
    
    
    (296,000
    )Net cash provided by investing activities
    
    
    46,885,000
    
    
    
    16,547,000Cash flows from financing activities:Proceeds from exercise of stock options
    
    
    
    
    
    
    425,000Tax benefit arising from vesting of restricted stock and exercise of non-qualified options
    
    
    74,000
    
    
    
    2,541,000Change in restricted cash
    
    
    791,000
    
    
    
    1,918,000Dividends paid
    
    
    (1,142,000
    )
    
    
    (1,685,000
    )Repayments of debt, net
    
    
    (68,574,000
    )
    
    
    (74,398,000
    )Advance under subordinated debt  related party
    
    
    
    
    
    
    8,270,000Net cash used in financing activities
    
    
    (68,851,000
    )
    
    
    (62,929,000
    )(Decrease) in cash
    
    
    (387,000
    )
    
    
    (1,750,000
    )Effect of foreign exchange on cash
    
    
    (13,000
    )
    
    
    42,000Cash at the beginning of period
    
    
    3,623,000
    
    
    
    4,525,000Cash at end of period
    
    $
    3,223,000
    
    
    $
    2,817,000Supplemental disclosure of cash flow information:Cash paid during the periodInterest
    
    $
    7,101,000
    
    
    $
    14,657,000Interest  Related Party
    
    
    386,000
    
    
    
    Income taxes
    
    $
    5,885,000
    
    
    $
    8,233,000
   6




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ASTA FUNDING, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 Note 1: Business and Basis of Presentation
       Recent Accounting Pronouncements
   7




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ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note 1: Business and Basis of Presentation (continued)
    Share-Based Payment
 Reclassifications
  Note 2: Principles of Consolidation
   8




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ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 3: Consumer Receivables Acquired for Liquidation
 The Company accounts for its investments in consumer receivable portfolios, using either:
 
    
    the interest method; or
    
    the cost recovery method.
        9




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ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 3: Consumer Receivables Acquired for Liquidation ( continued )
  
    
    same issuer/originator;
    
    same underlying credit quality;
    
    similar geographic distribution of the accounts;
    
    similar age of the receivable; and
    
    same type of asset class (credit cards, telecommunication, etc.)
  
    
    the number of collection agencies previously attempting to collect the receivables in the portfolio;
    
    the average balance of the receivables, as higher balances might be more difficult to collect while
low balances might not be cost effective to collect;
    
    the age of the receivables, as older receivables might be more difficult to collect or might be
less cost effective. On the other hand, the passage of time, in certain circumstances, might result
in higher collections due to changing life events of some individual debtors;
    
    past history of performance of similar assets;
    
    time since charge-off;
    
    payments made since charge-off;
    
    the credit originator and its credit guidelines;
    
    our ability to analyze accounts and resell accounts that meet our criteria for resale;
    
    the locations of the debtors, as there are better states to attempt to collect in and ultimately
the Company has better predictability of the liquidations and the expected cash flows. Conversely,
there are also states where the liquidation rates are not as favorable and that is factored into
our cash flow analysis;
    
    jobs or property of the debtors found within portfolios. In our business model, this is of
particular importance. Debtors with jobs or property are more likely to repay their obligation and
conversely, debtors without jobs or property are less likely to repay their obligation; and
    
    the ability to obtain timely customer statements from the original issuer.
   10




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ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 3: Consumer Receivables Acquired for Liquidation  ( continued )
  For The Nine Months Ended June 30, 2009CostInterest
    
    
    RecoveryMethod
    
    
    Method
    
    
    TotalBalance, beginning of period
    
    $
    203,470,000
    
    
    $
    245,542,000
    
    
    $
    449,012,000Acquisitions of receivable portfolios, net
    
    
    16,221,000
    
    
    
    280,000
    
    
    
    16,501,000Net cash collections from collections of
consumer receivables acquired for
liquidation
    
    
    (75,123,000
    )
    
    
    (33,619,000
    )
    
    
    (108,742,000
    )Net cash collections represented by
account sales of consumer receivables
acquired for liquidation
    
    
    (4,158,000
    )
    
    
    (3,684,000
    )
    
    
    (7,842,000
    )Transfer to cost recovery (1)
    
    
    (10,128,000
    )
    
    
    10,128,000
    
    
    
    Impairments of consumer receivables
acquired for liquidation
    
    
    (46,208,000
    )
    
    
    
    
    
    
    (46,208,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    (179,000
    )
    
    
    (179,000
    )Finance income recognized (2)
    
    
    52,366,000
    
    
    
    1,356,000
    
    
    
    53,722,000Balance, end of period
    
    $
    136,440,000
    
    
    $
    219,824,000
    
    
    $
    356,264,000Revenue as a percentage of collections
    
    
    66.1
    %
    
    
    3.6
    %
    
    
    46.1
    %
 (1)
    
    During the nine months ended June 30, 2009, three portfolios were
transferred from the interest method to the cost recovery method. Based
on the nature of these portfolios and the recent cash flows, our
estimates of the timing of expected cash flows became uncertain.(2)
    
    Includes $31.1 million derived from fully amortized interest method pools. For The Nine Months Ended June 30, 2008CostInterest
    
    
    RecoveryMethod
    
    
    Method
    
    
    TotalBalance, beginning of period
    
    $
    508,515,000
    
    
    $
    37,108,000
    
    
    $
    545,623,000Acquisitions of receivable portfolios, net
    
    
    25,622,000
    
    
    
    23,242,000
    
    
    
    48,864,000Net cash collections from collections of
consumer receivables acquired for
liquidation (1)
    
    
    (130,572,000
    )
    
    
    (10,633,000
    )
    
    
    (141,205,000
    )Net cash collections represented by
account sales of consumer receivables
acquired for liquidation
    
    
    (15,480,000
    )
    
    
    
    
    
    
    (15,480,000
    )Transfer to cost recovery (2)
    
    
    (208,693,000
    )
    
    
    208,693,000
    
    
    
    Impairments of consumer receivables
acquired for liquidation
    
    
    (43,153,000
    )
    
    
    
    
    
    
    (43,153,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    782,000
    
    
    
    782,000Finance income recognized (3)
    
    
    90,624,000
    
    
    
    949,000
    
    
    
    91,573,000Balance, end of period
    
    $
    226,863,000
    
    
    $
    260,141,000
    
    
    $
    487,004,000Revenue as a percentage of collections
    
    
    62.0
    %
    
    
    8.9
    %
    
    
    58.4
    %
 (1)
    
    Includes the put back of a portfolio purchased and returned to the seller
in the amount of $2.8 million in the first quarter of fiscal year 2008.(2)
    
    The Company purchased $6.9 billion in face value receivables for a
purchase price of $300 million in March 2007 (the Portfolio Purchase).
During the quarter ending June 30, 2008, the Company transferred the
interest method carrying value of the Portfolio Purchase from the
interest method to the cost recovery method.(3)
    
    Includes $34.2 million derived from fully amortized interest method pools.  11




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ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 3: Consumer Receivables Acquired for Liquidation  ( continued )
 For The Three Months Ended June 30, 2009CostInterest
    
    
    RecoveryMethod
    
    
    Method
    
    
    TotalBalance, beginning of period
    
    $
    137,497,000
    
    
    $
    230,726,000
    
    
    $
    368,223,000Acquisitions of receivable portfolios, net
    
    
    13,540,000
    
    
    
    273,000
    
    
    
    13,813,000Net cash collections from collections of
consumer receivables acquired for
liquidation
    
    
    (23,660,000
    )
    
    
    (12,766,000
    )
    
    
    (36,426,000
    )Net cash collections represented by
account sales of consumer receivables
acquired for liquidation
    
    
    (1,083,000
    )
    
    
    (112,000
    )
    
    
    (1,195,000
    )Impairments of consumer receivables
acquired for liquidation
    
    
    (6,364,000
    )
    
    
    
    
    
    
    (6,364,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    1,011,000
    
    
    
    1,011,000Finance income recognized (1)
    
    
    16,510,000
    
    
    
    692,000
    
    
    
    17,202,000Balance, end of period
    
    $
    136,440,000
    
    
    $
    219,824,000
    
    
    $
    356,264,000Revenue as a percentage of collections
    
    
    66.7
    %
    
    
    5.4
    %
    
    
    45.7
    %
 (1)
    
    Includes $10.5 million derived from fully amortized interest method pools. For The Three Months Ended June 30, 2008CostInterest
    
    
    RecoveryMethod
    
    
    Method
    
    
    TotalBalance, beginning of period
    
    $
    460,623,000
    
    
    $
    51,633,000
    
    
    $
    512,256,000Acquisitions of receivable portfolios, net
    
    
    5,467,000
    
    
    
    2,090,000
    
    
    
    7,557,000Net cash collections from collections of
consumer receivables acquired for
liquidation
    
    
    (42,869,000
    )
    
    
    (3,303,000
    )
    
    
    (46,172,000
    )Net cash collections represented by
account sales of consumer receivables
acquired for liquidation
    
    
    (2,826,000
    )
    
    
    
    
    
    
    (2,826,000
    )Transfer to cost recovery (1)
    
    
    (208,693,000
    )
    
    
    208,693,000
    
    
    
    Impairments of consumer receivables
acquired for liquidation
    
    
    (8,153,000
    )
    
    
    
    
    
    
    (8,153,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    782,000
    
    
    
    782,000Finance income recognized (2)
    
    
    23,314,000
    
    
    
    246,000
    
    
    
    23,560,000Balance, end of period
    
    $
    226,863,000
    
    
    $
    260,141,000
    
    
    $
    487,004,000Revenue as a percentage of collections
    
    
    51.0
    %
    
    
    7.4
    %
    
    
    48.1
    %
 (1)
    
    Represents the transfer of the carrying value of the Portfolio Purchase from the interest method to the cost recovery method.(2)
    
    Includes $10.4 million derived from fully amortized interest method pools.  12




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 3: Consumer Receivables Acquired for Liquidation  ( continued )
  September 30, 2009 (three months ending)
    
    $
    10,928,000September 30, 2010
    
    
    54,056,000September 30, 2011
    
    
    34,570,000September 30, 2012
    
    
    23,545,000September 30, 2013
    
    
    10,597,000September 30, 2014
    
    
    1,524,000September 30, 2015
    
    
    720,000September 30, 2016
    
    
    587,000136,527,000Cash collections in advance of projected amounts (deferred revenue)
    
    
    (87,000
    )Total
    
    $
    136,440,000
  Nine Months
    
    
    Nine MonthsEnded
    
    
    EndedJune 30, 2009
    
    
    June 30, 2008Balance at beginning of period
    
    $
    58,134,000
    
    
    $
    176,615,000Income recognized on finance receivables, net
    
    
    (52,366,000
    )
    
    
    (67,337,000
    )Additions representing expected revenue from purchases
    
    
    4,937,000
    
    
    
    9,237,000Transfers to cost recovery (1)
    
    
    (3,372,000
    )
    
    
    (100,475,000
    )Reclassifications from nonaccretable difference
    
    
    37,751,000
    
    
    
    51,530,000Balance at end of period
    
    $
    45,084,000
    
    
    $
    69,570,000
 Three Months
    
    
    Three MonthsEnded
    
    
    EndedJune 30, 2009
    
    
    June 30, 2008Balance at beginning of period
    
    $
    48,071,000
    
    
    $
    189,434,000Income recognized on finance receivables, net
    
    
    (16,510,000
    )
    
    
    (20,289,000
    )Additions representing expected revenue from purchases
    
    
    4,035,000
    
    
    
    1,915,000Transfers to cost recovery (1)
    
    
    
    
    
    
    (100,475,000
    )Reclassifications from nonaccretable difference
    
    
    9,488,000
    
    
    
    (1,015,000
    )Balance at end of period
    
    $
    45,084,000
    
    
    $
    69,570,000
 (1)
    
    The period ended June 30, 2008 amount represents the remaining
finance income expected on the Portfolio Purchase which was
transferred from the interest method to the cost recovery method
during the quarter.  13




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 3: Consumer Receivables Acquired for Liquidation  ( continued )
   For The Nine Months Ended June 30,2009
    
    
    2008Gross collections (1)
    
    $
    176,709,000
    
    
    $
    254,833,000Commissions and fees (2)
    
    
    60,125,000
    
    
    
    98,148,000Net collections
    
    $
    116,584,000
    
    
    $
    156,685,000
 For The Three Months Ended June 30,2009
    
    
    2008Gross collections (1)
    
    $
    53,484,000
    
    
    $
    78,145,000Commissions and fees (2)
    
    
    15,863,000
    
    
    
    29,147,000Net collections
    
    $
    37,621,000
    
    
    $
    48,998,000
 (1)
    
    Gross collections include: collections from
third-party collection agencies and attorneys,
collections from our in-house efforts and collections
represented by account sales. In the first quarter of
fiscal year 2008, the Company returned a portfolio to
the seller in the amount of $2.8 million, which is
included in the nine-month period ended June 30, 2008.(2)
    
    Commissions and fees are the contractual commission
earned by third party collection agencies and
attorneys, and direct costs associated with the
collection effort- generally court costs. Includes a
3% fee charged by a servicer on gross collections
received by the Company in connection with the
Portfolio Purchase. Note 4: Acquisition
  Note 5: Furniture and Equipment
  June 30,
    
    
    September 30,2009
    
    
    2008Furniture
    
    $
    310,000
    
    
    $
    310,000Leasehold improvements
    
    
    86,000
    
    
    
    105,000Equipment
    
    
    2,752,000
    
    
    
    2,714,0003,148,000
    
    
    
    3,129,000Less accumulated depreciation
    
    
    2,637,000
    
    
    
    2,367,000Balance, end of period
    
    $
    511,000
    
    
    $
    762,000
  14




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 6: Debt and Subordinated Debt  Related Party
 Credit Facility
          15




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ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 6: Debt and Subordinated Debt  Related Party ( continued)
  Receivables Financing Agreement
         16




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 6: Debt and Subordinated Debt  Related Party ( continued)
   Subordinated Debt 
Related Party
 Subordinated Debt  Related Party
     17




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note 6: Debt and Subordinated Debt  Related Party (continued)
  June 30, 2009Stated
    
    
    
    
    
    
    AverageJune 30,
    
    
    September 30,
    
    
    Interest
    
    
    
    
    
    
    Interest2009
    
    
    2008
    
    
    Rate
    
    
    
    
    
    
    Rate (1)Credit Facility
    
    $
    35,540,000
    
    
    $
    84,934,000
    
    
    
    
    
    
    
    5.00
    %
    
    
    
    
    
    
    
    
    
    
    4.32
    %Receivables Financing Agreement
    
    
    109,348,000
    
    
    
    128,551,000
    
    
    
    
    
    
    
    3.94
    %
    
    
    
    
    
    
    
    
    
    
    5.13
    %Total debt
    
    $
    144,888,000
    
    
    $
    213,485,000
    
    
    
    
    
    
    
    n/a
    
    
    
    
    
    
    
    
    
    
    
    4.87
    %Subordinated debt  related party
    
    $
    8,246,000
    
    
    $
    8,246,000
    
    
    
    
    
    
    
    6.25
    %
    
    
    
    
    
    
    
    
    
    
    6.25
    %
 (1)
    
    9-month average
 Note 7: Commitments and Contingencies
 Employment Agreements
  Leases
  Litigation
     18




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 8: Income Recognition, Impairments of Consumer Receivables Acquired for Liquidation and
Accretable Yield Adjustments
 Income Recognition
    Impairments and accretable yield adjustments
   19




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 8: Income Recognition, Impairments of Consumer Receivables Acquired for Liquidation and
Accretable Yield Adjustments (continued)
  
    
    the type of receivable, the location of the debtor and the number of
collection agencies previously attempting to collect the receivables in
the portfolio. We have found that there are better states to try to
collect receivables and we factor in both good and bad states when
establishing our initial cash flow expectations.
    
    the average balance of the receivables influence our analysis in that
lower average balance portfolios tend to be more collectible in the
short-term and higher average balance portfolios are more suitable for our
suit strategy and thus yield better results over the longer term. As we
have significant experience with both types of balances, we are able to
factor these variables into our initial expected cash flows;
    
    the age of the receivables, the number of days since charge-off, the
payments, if any, since charge-off, and the credit guidelines of the
credit originator also represent factors taken into consideration in our
estimation process since, for example, older receivables might be more
difficult to collect in amount and/or require more time to collect;
    
    past history and performance of similar assets acquired. As we purchase
portfolios of like assets, we accumulate a significant historical data
base on the tendencies of debtor repayments and factor this into our
initial expected cash flows;
    
    our ability to analyze accounts and resell accounts that meet our criteria;
    
    Jobs or property of the debtors found within portfolios. With our business
model, this is of particular importance. Debtors with jobs or property are
more likely to repay their obligation through the suit strategy and,
conversely, debtors without jobs or property are less likely to repay
their obligation. While we believe that debtors with jobs or property are
more likely to repay, we also believe that these debtors generally might
take longer to repay and that is factored into our initial expected cash
flows.
     20




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 8: Income Recognition, Impairments of Consumer Receivables Acquired for Liquidation and
Accretable Yield Adjustments (continued)
 Commissions and fees
  Note 9: Income Taxes
  Note 10: Net Income Per Share
   Nine Months Ended June 30,2009
    
    
    2008Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedNet
    
    
    Average
    
    
    Per Share
    
    
    Net
    
    
    Average
    
    
    Per ShareLoss
    
    
    Shares
    
    
    Amount
    
    
    Income
    
    
    Shares
    
    
    AmountBasic
    
    $
    (11,527,000
    )
    
    
    14,271,931
    
    
    $
    (0.81
    )
    
    $
    8,047,000
    
    
    
    14,111,954
    
    
    $
    0.57Effect of Dilutive
Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    530,513Diluted
    
    $
    (11,527,000
    )
    
    
    14,271,931
    
    
    $
    (0.81
    )
    
    $
    8,047,000
    
    
    
    14,642,467
    
    
    $
    0.55
   21




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 10: Net Income Per Share (continued)
 Three Months Ended June 30,2009
    
    
    2008Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedNet
    
    
    Average
    
    
    Per Share
    
    
    Net
    
    
    Average
    
    
    Per ShareIncome
    
    
    Shares
    
    
    Amount
    
    
    Income
    
    
    Shares
    
    
    AmountBasic
    
    $
    1,478,000
    
    
    
    14,271,946
    
    
    $
    0.10
    
    
    $
    2,440,000
    
    
    
    14,276,158
    
    
    $
    0.17Effect of Dilutive
Stock
    
    
    
    
    
    
    173,626
    
    
    
    
    
    
    
    
    
    
    
    259,390Diluted
    
    $
    1,478,000
    
    
    
    14,445,572
    
    
    $
    0.10
    
    
    $
    2,440,000
    
    
    
    14,535,548
    
    
    $
    0.17
  Note 11: Stock-Based Compensation
 Share-Based Payment (SFAS 123R). SFAS 123R,
  Risk-free interest rate
    
    
    0.18
    %Expected term (years)
    
    
    10.0Expected volatility
    
    
    111.7
    %Dividend yield
    
    
    1.45
    %
   Note 12: Stock Option Plans
 Equity Compensation Plan
     22




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 12: Stock Option Plans ( continued)
  2002 Stock Option Plan
    1995 Stock Option Plan
     Nine Months Ended June 30,2009
    
    
    2008Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding options at the beginning of period
    
    
    1,037,438
    
    
    $
    11.69
    
    
    
    1,337,438
    
    
    $
    9.39Options granted
    
    
    122,000
    
    
    
    2.95
    
    
    
    
    
    
    
    Options exercised
    
    
    (100
    )
    
    
    2.95
    
    
    
    (300,000
    )
    
    
    1.42Options forfeited
    
    
    (1,000
    )
    
    
    28.75
    
    
    
    
    
    
    
    Outstanding options at the end of period
    
    
    1,158,338
    
    
    $
    10.76
    
    
    
    1,037,438
    
    
    $
    11.69Exercisable options at the end of period
    
    
    1,082,345
    
    
    $
    11.31
    
    
    
    1,031,438
    
    
    $
    11.59
  23




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 12: Stock Option Plans ( continued)
 Three Months Ended June 30,2009
    
    
    2008Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding options at the beginning of period
    
    
    1,036,438
    
    
    $
    11.68
    
    
    
    1,037,438
    
    
    $
    9.37Options granted
    
    
    122,000
    
    
    
    2.95
    
    
    
    
    
    
    
    Options exercised
    
    
    (100
    )
    
    
    2.95
    
    
    
    
    
    
    
    Outstanding options at the end of period
    
    
    1,158,338
    
    
    $
    10.76
    
    
    
    1,037.438
    
    
    $
    11.69Exercisable options at the end of period
    
    
    1,082,345
    
    
    $
    11.31
    
    
    
    1,031,438
    
    
    $
    11.59
    Options Outstanding
    
    
    Options ExercisableWeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedRemaining
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageNumber
    
    
    Contractual
    
    
    Exercise
    
    
    Number
    
    
    ExerciseRange Of Exercise Price
    
    Outstanding
    
    
    Life (In Years)
    
    
    Price
    
    
    Exercisable
    
    
    Price$0.8125  $2.8750
    
    
    300,000
    
    
    
    1.2
    
    
    $
    2.63
    
    
    
    
    
    
    
    300,000
    
    
    $
    2.63$2.875001  $5.7500
    
    
    228,567
    
    
    
    6.8
    
    
    $
    3.78
    
    
    
    
    
    
    
    152,574
    
    
    $
    4.19$5.750001  $8.6250
    
    
    12,000
    
    
    
    2.4
    
    
    $
    5.96
    
    
    
    
    
    
    
    12,000
    
    
    $
    5.96$14.3750001  $17.2500
    
    
    218,611
    
    
    
    4.4
    
    
    $
    15.04
    
    
    
    
    
    
    
    218,611
    
    
    $
    15.04$17.250001  $20.1250
    
    
    382,160
    
    
    
    5.3
    
    
    $
    18.22
    
    
    
    
    
    
    
    382,160
    
    
    $
    18.22$28.7500  $28.7500
    
    
    17,000
    
    
    
    7.5
    
    
    $
    28.75
    
    
    
    
    
    
    
    17,000
    
    
    $
    28.751,158,338
    
    
    
    4.4
    
    
    $
    10.76
    
    
    
    
    
    
    
    1,082,345
    
    
    $
    11.31
  Nine Months Ended June 30,2009
    
    
    2008Weighted
    
    
    
    
    
    
    WeightedAverage Grant
    
    
    
    
    
    
    Average GrantDate Fair
    
    
    
    
    
    
    Date FairShares
    
    
    Value
    
    
    Shares
    
    
    ValueUnvested at the beginning of period
    
    
    80,667
    
    
    $
    23.06
    
    
    
    45,333
    
    
    $
    28.75Awards granted
    
    
    
    
    
    
    
    
    
    
    58,000
    
    
    $
    19.73Vested
    
    
    (40,995
    )
    
    $
    28.75
    
    
    
    (22,666
    )
    
    $
    28.75Forfeited
    
    
    (4,334
    )
    
    $
    21.81
    
    
    
    
    
    
    
    Unvested at the end of period
    
    
    35,338
    
    
    $
    19.73
    
    
    
    80,667
    
    
    $
    22.26
   24




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##### Table of Contents



ASTA FUNDING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  Continued  (Unaudited)
 Note 13: Stockholders Equity
  Note 14: Fair Value of Financial Instruments
    Note 15: Subsequent Events
   25




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Caution Regarding Forward Looking Statements
  www.astafunding.com. www.sec.gov
 Overview
  
    
    charged-off receivables accounts that have been
written-off by the originators and may have been
previously serviced by collection agencies;
    
    semi-performing receivables accounts where the
debtor is currently making partial or irregular
monthly payments, but the accounts may have been
written-off by the originators; and
    
    performing receivables accounts where the
debtor is making regular monthly payments that may
or may not have been delinquent in the past.
   
    
    our relationships with industry participants, collection agencies, investors and our financing sources;
    
    brokers who specialize in the sale of consumer receivable portfolios; and
    
    Other sources.
 Critical Accounting Policies
  
    
    the interest method; or
    
    the cost recovery method.
  26




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##### Table of Contents




    
    same issuer/originator
    
    same underlying credit quality
    
    similar geographic distribution of the accounts
    
    similar age of the receivable and
    
    same type of asset class (credit cards, telecommunications, etc.)
  
    
    the number of collection agencies previously attempting to collect the receivables in the portfolio;
    
    the average balance of the receivables;
    
    the age of the receivables (as older receivables might be more difficult to collect or might be
less cost effective);
    
    past history of performance of similar assets  as we purchase portfolios of similar assets, we
believe we have built significant history on how these receivables will liquidate and cash flow;
    
    number of months since charge-off;
    
    payments made since charge-off;the credit originator and their credit guidelines;
    
    the locations of the debtors as there are better states to attempt
to collect in and ultimately we have better predictability of the
liquidations and the expected cash flows. Conversely, there are
also states where the liquidation rates are not as good and that is
factored into our cash flow analysis;
    
    financial wherewithal of the seller;
    
    jobs or property of the debtors found within portfolios-with our
business model, this is of particular importance. Debtors with jobs
or property are more likely to repay their obligation and
conversely, debtors without jobs or property are less likely to
repay their obligation ; and
    
    the ability to obtain customer statements from the original issuer.
  27




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##### Table of Contents



Results of Operations
 The nine-month period ended June 30, 2009, compared to the nine-month period ended June 30,
2008
 Finance income
   28




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##### Table of Contents



Other income .
 General and Administrative Expenses
 Interest Expense
 Impairments.
 The three-month period ended June 30, 2009 as compared to the three month period ended June 30,
2008
 Finance income
  Other income .
  29




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##### Table of Contents



General and Administrative Expenses
 Interest Expense
 Impairments.
 Liquidity and Capital Resources
       30




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##### Table of Contents



31




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##### Table of Contents



For The Nine Months Ended June 30, 2009CostInterest
    
    
    RecoveryMethod
    
    
    Method
    
    
    TotalBalance, beginning of period
    
    $
    203,470,000
    
    
    $
    245,542,000
    
    
    $
    449,012,000Acquisitions of receivable portfolios, net
    
    
    16,221,000
    
    
    
    280,000
    
    
    
    16,501,000Net cash collections from collections of
consumer receivables acquired for
liquidation
    
    
    (75,123,000
    )
    
    
    (33,619,000
    )
    
    
    (108,742,000
    )Net cash collections represented by
account sales of consumer receivables
acquired for liquidation
    
    
    (4,158,000
    )
    
    
    (3,684,000
    )
    
    
    (7,842,000
    )Transfer to cost recovery (1)
    
    
    (10,128,000
    )
    
    
    10,128,000
    
    
    
    Impairments of consumer receivables
acquired for liquidation
    
    
    (46,208,000
    )
    
    
    
    
    
    
    (46,208,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    (179,000
    )
    
    
    (179,000
    )Finance income recognized (2)
    
    
    52,366,000
    
    
    
    1,356,000
    
    
    
    53,722,000Balance, end of period
    
    $
    136,440,000
    
    
    $
    219,824,000
    
    
    $
    356,264,000Revenue as a percentage of collections
    
    
    66.1
    %
    
    
    3.6
    %
    
    
    46.1
    %
 (1)
    
    During the nine months ended June 30, 2009, three portfolios were
transferred from the interest method to the cost recovery method. Based
on the nature of these portfolios and the recent cash flows, our
estimates of the timing of expected cash flows became uncertain.(2)
    
    Includes $31.1 million derived from fully amortized interest method pools. For The Nine Months Ended June 30, 2008CostInterest
    
    
    RecoveryMethod
    
    
    Method
    
    
    TotalBalance, beginning of period
    
    $
    508,515,000
    
    
    $
    37,108,000
    
    
    $
    545,623,000Acquisitions of receivable portfolios, net
    
    
    25,622,000
    
    
    
    23,242,000
    
    
    
    48,864,000Net cash collections from collections of
consumer receivables acquired for
liquidation (1)
    
    
    (130,572,000
    )
    
    
    (10,633,000
    )
    
    
    (141,205,000
    )Net cash collections represented by
account sales of consumer receivables
acquired for liquidation
    
    
    (15,480,000
    )
    
    
    
    
    
    
    (15,480,000
    )Transfer to cost recovery (2)
    
    
    (208,693,000
    )
    
    
    208,693,000
    
    
    
    Impairments of consumer receivables
acquired for liquidation
    
    
    (43,153,000
    )
    
    
    
    
    
    
    (43,153,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    782,000
    
    
    
    782,000Finance income recognized (3)
    
    
    90,624,000
    
    
    
    949,000
    
    
    
    91,573,000Balance, end of period
    
    $
    226,863,000
    
    
    $
    260,141,000
    
    
    $
    487,004,000Revenue as a percentage of collections
    
    
    62.0
    %
    
    
    8.9
    %
    
    
    58.4
    %
 (1)
    
    Includes the put back of a portfolio purchased and returned to the seller
in the amount of $2.8 million in the first quarter of fiscal year 2008.(2)
    
    The Company purchased $6.9 billion in face value receivables for a
purchase price of $300 million in March 2007 (the Portfolio Purchase).
During the quarter ending June 30, 2008, the Company transferred the
carrying value of the Portfolio Purchase from the interest method to the
cost recovery method.(3)
    
    Includes $34.2 million derived from fully amortized interest method pools.  32




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##### Table of Contents



For The Three Months Ended June 30, 2009CostInterest
    
    
    RecoveryMethod
    
    
    Method
    
    
    TotalBalance, beginning of period
    
    $
    137,497,000
    
    
    $
    230,726,000
    
    
    $
    368,223,000Acquisitions of receivable portfolios, net
    
    
    13,540,000
    
    
    
    273,000
    
    
    
    13,813,000Net cash collections from collections of
consumer receivables acquired for
liquidation
    
    
    (23,660,000
    )
    
    
    (12,766,000
    )
    
    
    (36,426,000
    )Net cash collections represented by
account sales of consumer receivables
acquired for liquidation
    
    
    (1,083,000
    )
    
    
    (112,000
    )
    
    
    (1,195,000
    )Impairments of consumer receivables
acquired for liquidation
    
    
    (6,364,000
    )
    
    
    
    
    
    
    (6,364,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    1,011,000
    
    
    
    1,011,000Finance income recognized (1)
    
    
    16,510,000
    
    
    
    692,000
    
    
    
    17,202,000Balance, end of period
    
    $
    136,440,000
    
    
    $
    219,824,000
    
    
    $
    356,264,000Revenue as a percentage of collections
    
    
    66.7
    %
    
    
    5.4
    %
    
    
    45.7
    %
 (1)
    
    Includes $10.5 million derived from fully amortized interest method pools. For The Three Months Ended June 30, 2008CostInterest
    
    
    RecoveryMethod
    
    
    Method
    
    
    TotalBalance, beginning of period
    
    $
    460,623,000
    
    
    $
    51,633,000
    
    
    $
    512,256,000Acquisitions of receivable portfolios, net
    
    
    5,467,000
    
    
    
    2,090,000
    
    
    
    7,557,000Net cash collections from collections of
consumer receivables acquired for
liquidation
    
    
    (42,869,000
    )
    
    
    (3,303,000
    )
    
    
    (46,172,000
    )Net cash collections represented by
account sales of consumer receivables
acquired for liquidation
    
    
    (2,826,000
    )
    
    
    
    
    
    
    (2,826,000
    )Transfer to cost recovery (1)
    
    
    (208,693,000
    )
    
    
    208,693,000
    
    
    
    Impairments of consumer receivables
acquired for liquidation
    
    
    (8,153,000
    )
    
    
    
    
    
    
    (8,153,000
    )Effect of foreign currency translation
    
    
    
    
    
    
    782,000
    
    
    
    782,000Finance income recognized (2)
    
    
    23,314,000
    
    
    
    246,000
    
    
    
    23,560,000Balance, end of period
    
    $
    226,863,000
    
    
    $
    260,141,000
    
    
    $
    487,004,000Revenue as a percentage of collections
    
    
    51.0
    %
    
    
    7.4
    %
    
    
    48.1
    %
 (1)
    
    Represents the transfer of the carrying value of the Portfolio Purchase from the interest method to the cost recovery method.(2)
    
    Includes $10.4 million derived from fully amortized interest method pools.  33




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##### Table of Contents



Additional Supplementary Information:
    CollectionsRepresented
    
    
    FinanceBy Account
    
    
    IncomePeriod
    
    Sales
    
    
    EarnedNine months ended June 30, 2009
    
    $
    7,842,000
    
    
    $
    2,525,000Three months ended June 30, 2009
    
    $
    1,195,000
    
    
    $
    734,000Nine months ended June 30, 2008
    
    $
    15,480,000
    
    
    $
    7,125,000Three months ended June 30, 2008
    
    $
    2,826,000
    
    
    $
    1,946,000
  NetCash
    
    
    
    
    
    
    
    
    
    
    Total estimatedCollections
    
    
    Estimated
    
    
    Total
    
    
    Collections as aPurchase
    
    
    Including Cash
    
    
    Remaining
    
    
    Estimated
    
    
    Percentage ofPurchase Period
    
    Price (2)
    
    
    Sales (3)
    
    
    Collections (4)
    
    
    Collections (5)
    
    
    Purchase Price2001
    
    $
    65,120,000
    
    
    $
    105,427,000
    
    
    $
    0
    
    
    $
    105,427,000
    
    
    
    162
    %2002
    
    
    36,557,000
    
    
    
    47,955,000
    
    
    
    0
    
    
    
    47,955,000
    
    
    
    131
    %2003
    
    
    115,626,000
    
    
    
    209,397,000
    
    
    
    1,641,000
    
    
    
    211,038,000
    
    
    
    183
    %2004
    
    
    103,743,000
    
    
    
    177,670,000
    
    
    
    1,098,000
    
    
    
    178,768,000
    
    
    
    172
    %2005
    
    
    126,023,000
    
    
    
    198,857,000
    
    
    
    22,828,000
    
    
    
    221,685,000
    
    
    
    176
    %2006
    
    
    163,392,000
    
    
    
    225,327,000
    
    
    
    49,204,000
    
    
    
    274,531,000
    
    
    
    168
    %2007
    
    
    109,235,000
    
    
    
    73,602,000
    
    
    
    73,937,000
    
    
    
    147,539,000
    
    
    
    135
    %2008
    
    
    25,622,000
    
    
    
    25,661,000
    
    
    
    14,638,000
    
    
    
    40,299,000
    
    
    
    157
    %2009
    
    
    16,221,000
    
    
    
    3,042,000
    
    
    
    18,179,000
    
    
    
    21,221,000
    
    
    
    131
    %
 (1)
    
    Total collections do not represent full collections of the Company with
respect to this or any other year. Excludes interest method portfolio
purchases subsequently transferred to cost recovery.(2)
    
    Purchase price refers to the cash paid to a seller to acquire a portfolio
less the purchase price refunded by a seller due to the return of
non-compliant accounts (also defined as put-backs).(3)
    
    Net cash collections include: net collections from our third-party
collection agencies and attorneys, net collections from our in-house
efforts and collections represented by account sales.(4)
    
    Does not include estimated collections from portfolios that are zero basis.(5)
    
    Total estimated collections refer to the actual net cash collections,
including cash sales, plus estimated remaining net collections.  34




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##### Table of Contents



Recent Accounting Pronouncements
     Share-Based Payment
 
 Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
   35




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##### Table of Contents



Item 4.
    
    Controls and Procedures
 a.
    
    Disclosure Controls and Procedures.
  b.
    
    Changes in Internal Controls Over Financial Reporting.
  
 PART II. OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
    
 Item 1A.
    
    Risk Factors
   
    
    acceleration of the payment of our outstanding indebtedness;
 
    
    cross defaults to and acceleration of the payment under our existing financing agreements;
 
    
    our inability to borrow additional amounts under our existing financing arrangements; and
 
    
    our inability to secure financing on favorable terms or at all from alternative sources.
    36




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##### Table of Contents



Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3.
    
    Defaults Upon Senior Securities
  
 Item 4.
    
    Submission of Matters to a Vote of Security Holders
  
 Item 5.
    
    Other Information
  
 Item 6.
    
    Exhibits
  31.1
    
    
    Certification of the Registrants Chief Executive Officer, Gary
Stern, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of the Registrants Chief Financial Officer, Robert J.
Michel, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of the Registrants Chief Executive Officer, Gary
Stern, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of the Registrants Chief Financial Officer, Robert J.
Michel, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  37




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##### Table of Contents



ASTA FUNDING, INC.
(Registrant)Date: August 7, 2009
    By:
    /s/ Gary SternGary Stern, Chairman, President,Chief Executive Officer
(Principal Executive Officer)Date: August 7, 2009
    By:
    /s/ Robert J. MichelRobert J. Michel, Chief Financial Officer(Principal Financial Officer and
Principal Accounting Officer)  38




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##### Table of Contents



ExhibitNo.
    
    Description31.1
    
    
    Certification of the Registrants Chief Executive Officer, Gary
Stern, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of the Registrants Chief Financial Officer, Robert
J. Michel, pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.32.1
    
    
    Certification of the Registrants Chief Executive Officer, Gary
Stern, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of the Registrants Chief Financial Officer, Robert
J. Michel, pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
  39