UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549


_________________


Form
10-K


_________________


(Mark
One)
 x
                      ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
      EXCHANGE ACT OF 1934




For the
fiscal year ended March 31, 2009


OR


o
                    TRANSITION REPORT PURSUANT TO
      SECTION 13 OR 15(d) OFTHE
      SECURITIES EXCHANGE ACT OF 1934





For the
transition period from _______________ to _____________




Commission
file number 0-19599





WORLD
ACCEPTANCE


CORPORATION


(Exact
name of registrant as specified in its charter)





South
      Carolina
                
                570425114(State
      or other jurisdiction of incorporation or organization)
                
                (I.R.S.
      Employer Identification No.)108
      Frederick StreetGreenville, South Carolina
                
                29607(Address
      of principal executive offices)
                
                (Zip
      Code)





(864) 298-9800


(Registrant's
telephone number, including area code)





SECURITIES
REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:





Title of Each Class
              
              Name of Each Exchange on Which
      RegisteredCommon
      Stock, no par value
              
              The
      NASDAQ Stock Market LLC(NASDAQ
      Global Select Market)





SECURITIES
REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes oNo x





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





Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yesx
Noo





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).  Yes oNo
o





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





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


Large
accelerated filer o                                                     Accelerated
filer x


Non-accelerated filero                                                     Smaller reporting companyo


(Do not check if smaller reporting
company)





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





The
aggregate market value of voting stock held by non-affiliates of the registrant
as of September 30, 2008, computed by reference to the closing sale price on
such date, was $583,053,948.  (For purposes of calculating this amount
only, all directors and executive officers are treated as
affiliates.  This determination of affiliate status is not necessarily
a conclusive determination for other purposes.)  As of May 29, 2009,
16,230,259 shares of the registrant’s Common Stock, no par value, were
outstanding.





DOCUMENTS
INCORPORATED BY REFERENCE


Portions
of the Registrant's definitive Proxy Statement pertaining to the 2009 Annual
Meeting of Shareholders ("the Proxy Statement") and filed pursuant to Regulation
14A are incorporated herein by reference into Part III hereof.












WORLD
ACCEPTANCE CORPORATION


Form
10-K Report





Table of
Contents





Item No.
                  
                  
                  PagePART
      I1.
                  Business
                  
                  11A.
                  Risk
      Factors
                  
                  101B.
                  Unresolved
      Staff Comments
                  
                  172.
                  Properties
                  
                  173.
                  Legal
      Proceedings
                  
                  174.
                  Submission
      of Matters to a Vote of Security Holders
                  
                  17PART
      II5.
                  Market
      for Registrant's Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
                  
                  176.
                  Selected
      Financial Data
                  
                  197.
                  Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
                  
                  207A.
                  Quantitative
      and Qualitative Disclosures About Market Risk
                  
                  308.
                  Financial
      Statements and Supplementary Data
                  
                  319.
                  Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
                  
                  609A.
                  Controls
      and Procedures
                  
                  609B.
                  Other
      Information
                  
                  60PART
      III10.
                  Directors,
      Executive Officers and Corporate Governance
                  
                  6111.
                  Executive
      Compensation
                  
                  6112.
                  Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                  
                  6113.
                  Certain
      Relationships and Related Transactions, and Director
      Independence
                  
                  6114.
                  Principal
      Accountant Fees and Services
                  
                  62PART
      IV15.
                  Exhibits
      and Financial Statement Schedules
                  
                  63





Introduction





World Acceptance Corporation, a South
Carolina corporation, operates a small-loan consumer finance business in eleven
states and Mexico.  As used herein, the "Company,” “we,” “our,” “us,”
or similar formulations include World Acceptance Corporation and each of its
subsidiaries, except that when used with reference to the Common Stock or other
securities described herein and in describing the positions held by management
or agreements of the Company, it includes only World Acceptance
Corporation.  All references in this report to "fiscal 2009" are to
the Company's fiscal year ended March 31, 2009.





The Company maintains an Internet
website, “www.worldacceptance.com,” where
interested persons will be able to access free of charge, among other
information, the Company’s annual reports on Form 10-K, its quarterly reports on
Form 10-Q, and its current reports on Form 8-K, as well as amendments to these
filings, via a link to a third party website.  These documents are
available for access as soon as reasonably practicable after we electronically
file these documents with the SEC.  The Company files these reports
with the SEC via the SEC’s EDGAR filing system, and such reports also may be
accessed via the SEC’s EDGAR database at www.sec.gov.  The Company
will also provide either electronic or paper copies free of charge upon written
request to P.O. Box 6429, Greenville, SC 29606-6429.





PART
I.





Item
1.   Description of Business





General.  The
Company is engaged in the small-loan consumer finance business, offering
short-term small loans, medium-term larger loans, related credit insurance and
ancillary products and services to individuals.  The Company generally
offers standardized installment loans of between $130 and $3,000 through 944
offices in South Carolina, Georgia, Texas, Oklahoma, Louisiana, Tennessee,
Illinois, Missouri, New Mexico, Kentucky, Alabama and Mexico as of March 31,
2009.  The Company generally serves individuals with limited access to
consumer credit from banks, savings and loans, other consumer finance businesses
and credit card lenders.  In the U.S. offices, the Company also offers
income tax return preparation services and access to refund anticipation loans
through a third party bank to its customers and others.





Small-loan consumer finance companies
operate in a highly structured regulatory environment.  Consumer loan
offices are individually licensed under state laws, which, in many states,
establish allowable interest rates, fees and other charges on small loans made
to consumers and maximum principal amounts and maturities of these
loans.  The Company believes that virtually all participants in the
small-loan consumer finance industry charge the maximum rates permitted under
applicable state laws in those states with interest rate
limitations.





The small-loan consumer finance
industry is a highly fragmented segment of the consumer lending
industry.  Small-loan consumer finance companies generally make loans
to individuals of up to $1,000 with maturities of one year or
less.  These companies approve loans on the basis of the personal
creditworthiness of their customers and maintain close contact with borrowers to
encourage the repayment or refinancing of loans.  By contrast,
commercial banks, savings and loans and other consumer finance businesses
typically make loans of more than $1,000 with maturities of more than one
year.  Those financial institutions generally approve consumer loans
on the security of qualifying personal property pledged as collateral or impose
more stringent credit requirements than those of small-loan consumer finance
companies.  As a result of their higher credit standards and specific
collateral requirements, commercial banks, savings and loans and other consumer
finance businesses typically charge lower interest rates and fees and experience
lower delinquency and charge-off rates than do small-loan consumer finance
companies.  Small-loan consumer finance companies generally charge
higher interest rates and fees to compensate for the greater credit risk of
delinquencies and charge-offs and increased loan administration and collection
costs.





Expansion.  During
fiscal 2009, the Company opened 98 new offices.  Eleven other offices
were purchased and 3 offices were closed or merged into other existing offices
due to their inability to grow to profitable levels.  In fiscal 2010,
the Company plans to open or acquire at least 30 new offices in the United
States by increasing the number of offices in its existing market areas or
commencing operations in new states where it believes demographic profiles and
state regulations are attractive.  In addition, the Company plans to
open approximately 15 new offices in Mexico in fiscal 2010.  The
Company's ability to continue existing operations and expand its operations in
existing or new states is dependent upon, among other things, laws and
regulations that permit the Company to operate its business profitably and its
ability to obtain necessary regulatory approvals and licenses; however,
there can be no assurance that such laws and regulations will not change in ways
that adversely affect the Company or that the Company will be able to obtain any
such approvals or consents.  See Part 1, Item 1A, “Risk Factors” for a
further discussion of risks to our business and plans for
expansion.


1





The Company's expansion is also
dependent upon its ability to identify attractive locations for new offices and
to hire suitable personnel to staff, manage and supervise new
offices.  In evaluating a particular community, the Company examines
several factors, including the demographic profile of the community, the
existence of an established small-loan consumer finance market and the
availability of suitable personnel to staff, manage and supervise the new
offices.  The Company generally locates new offices in communities
already served by at least one other small-loan consumer finance
company.





The small-loan consumer finance
industry is highly fragmented in the eleven states in which the Company
currently operates.  The Company believes that its competitors in
these markets are principally independent operators with generally less than 100
offices.  The Company also believes that attractive opportunities to
acquire offices from competitors in its existing markets and to acquire offices
in communities not currently served by the Company will become available as
conditions in the local economies and the financial circumstances of the owners
change.





The following table sets forth the
number of offices of the Company at the dates indicated:





At
      March 31,State
                    
                    2000
                    
                    
                    2001
                    
                    
                    2002
                    
                    
                    2003
                    
                    
                    2004
                    
                    
                    2005
                    
                    
                    2006
                    
                    
                    2007
                    
                    
                    2008
                    
                    
                    2009South
      Carolina
                    
                    
                    63
                    
                    
                    
                    62
                    
                    
                    
                    62
                    
                    
                    
                    65
                    
                    
                    
                    65
                    
                    
                    
                    65
                    
                    
                    
                    68
                    
                    
                    
                    89
                    
                    
                    
                    92
                    
                    
                    
                    93Georgia
                    
                    
                    48
                    
                    
                    
                    48
                    
                    
                    
                    52
                    
                    
                    
                    52
                    
                    
                    
                    74
                    
                    
                    
                    76
                    
                    
                    
                    74
                    
                    
                    
                    96
                    
                    
                    
                    97
                    
                    
                    
                    100Texas
                    
                    
                    135
                    
                    
                    
                    135
                    
                    
                    
                    136
                    
                    
                    
                    142
                    
                    
                    
                    150
                    
                    
                    
                    164
                    
                    
                    
                    168
                    
                    
                    
                    183
                    
                    
                    
                    204
                    
                    
                    
                    223Oklahoma
                    
                    
                    43
                    
                    
                    
                    43
                    
                    
                    
                    46
                    
                    
                    
                    45
                    
                    
                    
                    47
                    
                    
                    
                    51
                    
                    
                    
                    58
                    
                    
                    
                    62
                    
                    
                    
                    70
                    
                    
                    
                    80Louisiana
                    
                    
                    21
                    
                    
                    
                    20
                    
                    
                    
                    20
                    
                    
                    
                    20
                    
                    
                    
                    20
                    
                    
                    
                    20
                    
                    
                    
                    24
                    
                    
                    
                    28
                    
                    
                    
                    34
                    
                    
                    
                    38Tennessee
                    
                    
                    35
                    
                    
                    
                    38
                    
                    
                    
                    40
                    
                    
                    
                    45
                    
                    
                    
                    51
                    
                    
                    
                    55
                    
                    
                    
                    61
                    
                    
                    
                    72
                    
                    
                    
                    80
                    
                    
                    
                    92Illinois
                    
                    
                    30
                    
                    
                    
                    30
                    
                    
                    
                    29
                    
                    
                    
                    28
                    
                    
                    
                    30
                    
                    
                    
                    33
                    
                    
                    
                    37
                    
                    
                    
                    40
                    
                    
                    
                    58
                    
                    
                    
                    61Missouri
                    
                    
                    18
                    
                    
                    
                    22
                    
                    
                    
                    22
                    
                    
                    
                    22
                    
                    
                    
                    26
                    
                    
                    
                    36
                    
                    
                    
                    38
                    
                    
                    
                    44
                    
                    
                    
                    49
                    
                    
                    
                    57New
      Mexico
                    
                    
                    13
                    
                    
                    
                    12
                    
                    
                    
                    12
                    
                    
                    
                    16
                    
                    
                    
                    19
                    
                    
                    
                    20
                    
                    
                    
                    22
                    
                    
                    
                    27
                    
                    
                    
                    32
                    
                    
                    
                    37Kentucky
                    
                    
                    4
                    
                    
                    
                    10
                    
                    
                    
                    22
                    
                    
                    
                    30
                    
                    
                    
                    30
                    
                    
                    
                    36
                    
                    
                    
                    41
                    
                    
                    
                    45
                    
                    
                    
                    52
                    
                    
                    
                    58Alabama
      (1)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    5
                    
                    
                    
                    14
                    
                    
                    
                    21
                    
                    
                    
                    26
                    
                    
                    
                    31
                    
                    
                    
                    35
                    
                    
                    
                    42Colorado
      (2)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    2
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Mexico
      (3)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    3
                    
                    
                    
                    15
                    
                    
                    
                    35
                    
                    
                    
                    63Total
                    
                    
                    410
                    
                    
                    
                    420
                    
                    
                    
                    441
                    
                    
                    
                    470
                    
                    
                    
                    526
                    
                    
                    
                    579
                    
                    
                    
                    620
                    
                    
                    
                    732
                    
                    
                    
                    838
                    
                    
                    
                    944








(1)
            The
      Company commenced operations in Alabama in January
  2003.


(2)
            The
      Company commenced operations in Colorado in August 2004 and ceased
      operations in April 2005.


(3)
            The
      Company commenced operations in Mexico in September
  2005.





Loan and Other
Products.  In each state in which it operates and in Mexico,
the Company offers loans that are standardized by amount and maturity in an
effort to reduce documentation and related processing costs.  All of
the Company's loans are payable in fully amortizing monthly installments with
terms of 4 to 36 months, and all loans are prepayable at any time without
penalty.  In fiscal 2009, the Company's average originated loan size
and term were approximately $1,011 and eleven months,
respectively.  State laws regulate lending terms, including the
maximum loan amounts and interest rates and the types and maximum amounts of
fees, insurance premiums and other costs that may be charged.  As of
March 31, 2009, the annual percentage rates on loans offered by the Company,
which include interest, fees and other charges as calculated for the purposes of
federal consumer loan disclosure requirements, ranged from 25% to 215% depending
on the loan size, maturity and the state in which the loan is
made.  In addition, in certain states, the Company sells credit
insurance in connection with its loans as agent for an unaffiliated insurance
company, which may increase its returns on loans originated in those
states.





Specific allowable charges vary by
state and, consistent with industry practice, the Company generally charges the
maximum rates allowable under applicable state law.  Statutes in Texas
and Oklahoma allow for indexing the maximum loan amounts to the Consumer Price
Index. Fees charged by the Company include origination and account maintenance fees and
monthly handling charges.


2


The Company, as an agent for an
unaffiliated insurance company, markets and sells credit life, credit accident
and health, credit property, and unemployment insurance in connection with its
loans in selected states where the sale of such insurance is permitted by
law.  Credit life insurance provides for the payment in full of the
borrower's credit obligation to the lender in the event of
death.  Credit accident and health insurance provides for repayment of
loan installments to the lender that come due during the insured's period of
income interruption resulting from disability from illness or
injury.  Credit property insurance insures payment of the borrower's
credit obligation to the lender in the event that the personal property pledged
as security by the borrower is damaged or destroyed by a covered
event.  Unemployment insurance provides for repayment of loan
installments to the lender that come due during the insured’s period of
involuntary unemployment.  The Company requires each customer to
obtain certain specific credit insurance in the amount of the loan for all loans
originated in Georgia, and encourages customers to obtain credit insurance for
loans originated in South Carolina, Louisiana, Alabama and Kentucky and on a
limited basis in Tennessee, Oklahoma, and New Mexico.  Customers in
those states typically obtain such credit insurance through the
Company.  Charges for such credit insurance are made at maximum
authorized rates and are stated separately in the Company's disclosure to
customers, as required by the Truth-in-Lending Act.  In South
Carolina, Georgia, Louisiana, Kentucky and Alabama, the Company also charges
non-file premiums in connection with certain loans in lieu of recording and
perfecting the Company’s security interest in the asset pledged.  The
premiums are remitted to a third party insurance company for non-file insurance
coverage. In the sale of insurance policies, the Company, as agent, writes
policies only within limitations established by its agency contracts with the
insurer.  The Company does not sell credit insurance to
non-borrowers.





The Company also markets automobile
club memberships to its borrowers in Georgia, Tennessee, New Mexico, Alabama and
Kentucky as an agent for an unaffiliated automobile club.  Club
memberships entitle members to automobile breakdown and towing reimbursement and
related services.  The Company is paid a commission on each membership
sold, but has no responsibility for administering the club, paying benefits or
providing services to club members.  The Company does not market
automobile club memberships to non-borrowers.





In fiscal 1995 the Company
implemented its World Class Buying Club and began marketing certain electronic
products and appliances to its Texas borrowers.  Since implementation,
the Company has expanded this program to Georgia, Tennessee, New Mexico, Alabama
and Missouri.  The program is not offered in the other states where
the Company operates, as it is not permitted by the state regulations in those
states.  Borrowers participating in this program can purchase a
product from a catalog available at a branch office or by direct mail and can
finance the purchase with a retail installment sales contract provided by the
Company.  Products sold through this program are shipped directly by
the suppliers to the Company's customers and, accordingly, the Company is not
required to maintain any inventory to support the program.  In fiscal
2004, on a limited basis, the Company began to maintain a few inventory items in
each of its branch offices participating in the program.  The Company
believes that having certain items on hand has enhanced sales and plans to
continue this practice on a limited basis in the future.





The Company also includes in its
product line larger balance, lower risk, and lower yielding individual consumer
loans.  These loans typically average $1,000 to $3,000, with terms of
generally 18 to 24 months, compared to $300 to $1,000, with terms generally of 8
to 12 month terms for the smaller loans.  The Company offers these
larger loans in all states except Texas, where they are not profitable under the
Company’s lending criteria and strategy.  Additionally, the Company
has purchased numerous larger loan offices and has made several bulk purchases
of larger loans receivable.  As of March 31, 2009, the larger class of
loans accounted for approximately $191.4 million of gross loans receivable, a
22.7% increase over the balance outstanding at March 31, 2008.  This
portfolio now represents 28.5% of the total loan balances as of the end of the
fiscal year.  Management believes that these loans provide lower
expense and loss ratios, thus providing positive contributions.





Another service offered by the
Company is income tax return preparation, electronic filing and access to refund
anticipation loans.  This program is provided in all but a few of the
Company’s offices.  The number of returns completed has grown from
16,000 in fiscal 2000 to approximately 63,000 in fiscal 2009, and the net
revenues to the Company from this service grew from approximately $800,000 to
$9.9 million over this same period.  The Company believes that this is
a beneficial service for its existing customer base, as well as non-loan
customers, and it plans to continue to promote and expand the
program.


3


Loan Activity and
Seasonality.  The following table sets forth the composition of
the Company's gross loans receivable by state at March 31 of each year from 2000
through 2009:





At March 31,State
                
                2000
                
                
                2001
                
                
                2002
                
                
                2003
                
                
                2004
                
                
                2005
                
                
                2006
                
                
                2007
                
                
                2008
                
                
                2009South
      Carolina
                
                
                21
                %
                
                
                21
                %
                
                
                19
                %
                
                
                15
                %
                
                
                14
                %
                
                
                12
                %
                
                
                11
                %
                
                
                13
                %
                
                
                12
                %
                
                
                11
                %Georgia
                
                
                15
                
                
                
                12
                
                
                
                12
                
                
                
                12
                
                
                
                13
                
                
                
                13
                
                
                
                13
                
                
                
                14
                
                
                
                15
                
                
                
                14Texas
                
                
                28
                
                
                
                25
                
                
                
                24
                
                
                
                23
                
                
                
                21
                
                
                
                20
                
                
                
                24
                
                
                
                23
                
                
                
                22
                
                
                
                21Oklahoma
                
                
                6
                
                
                
                6
                
                
                
                5
                
                
                
                5
                
                
                
                5
                
                
                
                5
                
                
                
                6
                
                
                
                5
                
                
                
                5
                
                
                
                6Louisiana
                
                
                3
                
                
                
                3
                
                
                
                3
                
                
                
                3
                
                
                
                3
                
                
                
                3
                
                
                
                3
                
                
                
                3
                
                
                
                3
                
                
                
                3Tennessee
                
                
                13
                
                
                
                11
                
                
                
                12
                
                
                
                14
                
                
                
                15
                
                
                
                18
                
                
                
                15
                
                
                
                15
                
                
                
                14
                
                
                
                14Illinois
                
                
                4
                
                
                
                5
                
                
                
                5
                
                
                
                5
                
                
                
                5
                
                
                
                5
                
                
                
                5
                
                
                
                6
                
                
                
                6
                
                
                
                6Missouri
                
                
                3
                
                
                
                4
                
                
                
                5
                
                
                
                5
                
                
                
                6
                
                
                
                6
                
                
                
                6
                
                
                
                5
                
                
                
                6
                
                
                
                6New
      Mexico
                
                
                3
                
                
                
                3
                
                
                
                3
                
                
                
                3
                
                
                
                3
                
                
                
                3
                
                
                
                3
                
                
                
                3
                
                
                
                3
                
                
                
                3Kentucky
                
                
                4
                
                
                
                10
                
                
                
                12
                
                
                
                13
                
                
                
                12
                
                
                
                12
                
                
                
                11
                
                
                
                9
                
                
                
                9
                
                
                
                9Alabama
      (1)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                2
                
                
                
                3
                
                
                
                3
                
                
                
                3
                
                
                
                3
                
                
                
                3
                
                
                
                4Mexico
      (2)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                1
                
                
                
                2
                
                
                
                3Total
                
                
                100
                %
                
                
                100
                %
                
                
                100
                %
                
                
                100
                %
                
                
                100
                %
                
                
                100
                %
                
                
                100
                %
                
                
                100
                %
                
                
                100
                %
                
                
                100
                %









(1)   The
Company commenced operations in Alabama in January 2003.


(2)   The
Company commenced operations in Mexico in September 2005.





The
following table sets forth the total number of loans and the average loan
balance by state at March 31, 2009:





Total
      Number
                  
                  
                  Average
      Gross Loanof Loans
                  
                  
                  BalanceSouth
      Carolina
                  
                  
                  78,872
                  
                  
                  $
                  977Georgia
                  
                  
                  79,541
                  
                  
                  
                  1,212Texas
                  
                  
                  191,509
                  
                  
                  
                  732Oklahoma
                  
                  
                  48,379
                  
                  
                  
                  826Louisiana
                  
                  
                  22,061
                  
                  
                  
                  758Tennessee
                  
                  
                  87,058
                  
                  
                  
                  1,107Illinois
                  
                  
                  39,339
                  
                  
                  
                  1,058Missouri
                  
                  
                  34,899
                  
                  
                  
                  1,091New
      Mexico
                  
                  
                  23,395
                  
                  
                  
                  783Kentucky
                  
                  
                  43,308
                  
                  
                  
                  1,355Alabama
                  
                  
                  28,717
                  
                  
                  
                  968Mexico
                  
                  
                  55,031
                  
                  
                  
                  367Total
                  
                  
                  732,109
                  
                  
                  $
                  917





For fiscal 2009, 2008 and 2007,
96.9%, 98.2% and 99.2%, respectively, of the Company’s revenues were
attributable to U.S. customers and 3.1%, 1.8% and 0.8%, respectively, were
attributable to customers in Mexico.  For further information
regarding potential risks associated with the Company’s operations in Mexico,
see Part I, Item 1A, “Risk Factors - Our use of derivatives exposes us to credit
and market risk” and “- Our continued expansion into Mexico may increase the
risks inherent in conducting international operations, contribute materially to
increased costs and negatively affect our business, prospects, results of
operations and financial condition,” as well as Part II, Item 7, “Management’s
Discussion and Analysis of Financial Condition and Results of Operations –
Quantitative and Qualitative Disclosures about Market Risk – Foreign Currency
Exchange Rate Risk.”





The Company's highest loan demand
occurs generally from October through December, its third fiscal
quarter.  Loan demand is generally lowest and loan repayment highest
from January to March, its fourth fiscal quarter.  Consequently, the
Company experiences significant seasonal fluctuations in its operating results
and cash needs.  Operating results from the Company's third fiscal
quarter are generally lower than in other quarters and operating results for its
fourth fiscal quarter are generally higher than in other
quarters.


4


Lending and Collection
Operations.  The Company seeks to provide short-term loans to
the segment of the population that has limited access to other sources of
credit.  In evaluating the creditworthiness of potential customers,
the Company primarily examines the individual's discretionary income, length of
current employment, duration of residence and prior credit
experience.  Loans are made to individuals on the basis of the
customer's discretionary income and other factors and are limited to amounts
that the customer can reasonably be expected to repay from that
income.  All of the Company's new customers are required to complete
standardized credit applications in person or by telephone at local Company
offices.  Each of the Company's local offices is equipped to perform
immediate background, employment and credit checks and approve loan applications
promptly, often while the customer waits. The Company's employees verify the
applicant's employment and credit histories through telephone checks with
employers, other employment references and a variety of credit
services.  Substantially all new customers are required to submit a
listing of personal property that will be pledged as collateral to secure the
loan, but the Company does not rely on the value of such collateral in the loan
approval process and generally does not perfect its security interest in that
collateral.  Accordingly, if the customer were to default in the
repayment of the loan, the Company may not be able to recover the outstanding
loan balance by resorting to the sale of collateral.  The Company
generally approves less than 50% of applications for loans to new
customers.





The Company believes that the
development and continual reinforcement of personal relationships with customers
improve the Company's ability to monitor their creditworthiness, reduce credit
risk and generate repeat loans.  It is not unusual for the Company to
have made a number of loans to the same customer over the course of several
years, many of which were refinanced with a new loan after two or three
payments.  In determining whether to refinance existing loans, the
Company typically requires loans to be current on a recency basis, and repeat
customers are generally required to complete a new credit application if they
have not completed one within the prior two years.





In fiscal 2009, approximately 84.0%
of the Company's loans were generated through refinancings of outstanding loans
and the origination of new loans to previous customers.  A refinancing
represents a new loan transaction with a present customer in which a portion of
the new loan proceeds is used to repay the balance of an existing loan and the
remaining portion is advanced to the customer.  The Company actively
markets the opportunity to refinance existing loans prior to maturity, thereby
increasing the amount borrowed and increasing the fees and other income
realized.  For fiscal 2009, 2008 and 2007, the percentages of the
Company's loan originations that were refinancings of existing loans were 75.0%,
73.3% and 74.3%, respectively.





The Company allows refinancing of
delinquent loans on a case-by-case basis for those customers who otherwise
satisfy the Company's credit standards.  Each such refinancing is
carefully examined before approval in an effort to avoid increasing credit
risk.  A delinquent loan may generally be refinanced only if the
customer has made payments which, together with any credits of insurance
premiums or other charges to which the customer is entitled in connection with
the refinancing, reduce the balance due on the loan to an amount equal to or
less than the original cash advance made in connection with the
loan.  The Company does not allow the amount of the new loan to exceed
the original amount of the existing loan.  The Company believes that
refinancing delinquent loans for certain customers who have made periodic
payments allows the Company to increase its average loans outstanding and its
interest, fee and other income without experiencing a significant increase in
loan losses.  These refinancings also provide a resolution to
temporary financial setbacks for these borrowers and sustain their credit
rating.  While allowed on a selective basis, refinancings of
delinquent loans amounted to approximately 2% of the Company’s loan volume in
fiscal 2009.





To reduce late payment risk, local
office staff encourage customers to inform the Company in advance of expected
payment problems.  Local office staff also promptly contact delinquent
customers following any payment due date and thereafter remain in close contact
with such customers through phone calls, letters or personal visits to the
customer's residence or place of employment until payment is received or some
other resolution is reached.  When representatives of the Company make
personal visits to delinquent customers, the Company's policy is to encourage
the customers to return to the Company's office to make
payment.  Company employees are instructed not to accept payment
outside of the Company's offices except in unusual circumstances.  In
Georgia, Oklahoma, and Illinois, the Company is permitted under state laws to
garnish customers' wages for repayment of loans, but the Company does not
otherwise generally resort to litigation for collection purposes, and rarely
attempts to foreclose on collateral.





Insurance-related
Operations.  In Georgia, Louisiana, South Carolina, Kentucky,
and on a limited basis, Alabama, New Mexico, Oklahoma, and Tennessee, the
Company sells credit insurance to customers in connection with its loans as an
agent for an unaffiliated insurance company.  These insurance policies
provide for the payment of the
outstanding balance of the Company's loan upon the occurrence of an insured
event.  The Company earns a commission on the sale of such credit
insurance, which is based in part on the claims experience of the insurance
company on policies sold on its behalf by the Company.


5





The Company has a wholly-owned,
captive insurance subsidiary that reinsures a portion of the credit insurance
sold in connection with loans made by the Company.  Certain coverages
currently sold by the Company on behalf of the unaffiliated insurance carrier
are ceded by the carrier to the captive insurance subsidiary, providing the
Company with an additional source of income derived from the earned reinsurance
premiums.  In fiscal 2009, the captive insurance subsidiary reinsured
approximately 2.6% of the credit insurance sold by the Company and contributed
approximately $1.2 million to the Company's total revenues.





The Company typically does not
perfect its security interest in collateral securing its smaller loans by filing
Uniform Commercial Code (“UCC”) financing statements.  Statutes in
Georgia, Louisiana, South Carolina, Tennessee, Missouri, Kentucky and Alabama
permit the Company to charge a non-file or non-recording insurance premium in
connection with certain loans originated in these states.  These
premiums are equal in aggregate amount to the premiums paid by the Company to
purchase non-file insurance coverage from an unaffiliated insurance
company.  Under its non-file insurance coverage, the Company is
reimbursed for losses on loans resulting from its policy not to perfect its
security interest in collateral pledged to secure the loans.  The
Company generally perfects its security interest in collateral on larger loan
transactions (typically greater than $1,000) by filing UCC financing
statements.





Monitoring and
Supervision.  The Company's loan operations are organized into
Southern, Central, and Western Divisions, and Mexico.  The Southern
Division consists of South Carolina, Georgia, Louisiana and Alabama; the Central
Division consists of Tennessee, Illinois, Missouri, and Kentucky; and the
Western Division consists of Texas, Oklahoma, and New Mexico.  Several
levels of management monitor and supervise the operations of each of the
Company's offices.  Branch managers are directly responsible for the
performance of their respective offices and must approve all credit
applications.  District supervisors are responsible for the
performance of 8 to 11 offices in their districts, typically communicate with
the branch managers of each of their offices at least weekly and visit the
offices at least monthly.  The Vice Presidents of Operations monitor
the performance of all offices within their states (or partial state in the case
of Texas), primarily through communication with district
supervisors.  These Vice Presidents of Operations typically
communicate with the district supervisors of each of their districts weekly and
visit each office in their states quarterly.





Senior management receives daily
delinquency, loan volume, charge-off, and other statistical reports consolidated
by state and has access to these daily reports for each branch
office.  At least six times per fiscal year, district supervisors
audit the operations of each office in their geographic area and submit
standardized reports detailing their findings to the Company's senior
management.  At least once per year, each office undergoes an audit by
the Company's internal auditors.  These audits include an examination
of cash balances and compliance with Company loan approval, review and
collection procedures and compliance with federal and state laws and
regulations.





The Company converted all of its loan
offices to a new computer system following its acquisition of Paradata Financial
Systems, a small software company located near St. Louis,
Missouri.  This system uses a proprietary data processing software
package developed by Paradata, and has enabled the Company to fully automate all
loan account processing and collection reporting.  The system provides
thorough management information and control capabilities.  The Company
also markets the system to other finance companies, but experiences significant
fluctuations from year to year in the amount of revenues generated from sales of
the system to third parties and does not expect such revenues to be
material.





Staff and
Training.  Local offices are generally staffed with three to
four employees.  The branch manager supervises operations of the
office and is responsible for approving all loan applications.  Each
office generally has one or two assistant managers who contact delinquent
customers, review loan applications and prepare operational
reports.  Each office also generally has a customer service
representative who takes loan applications, processes loan applications,
processes payments, assists in the preparation of operational reports, assists
in collection efforts, and assists in marketing activities.  Larger
offices may employ additional assistant managers and customer service
representatives.


6


New employees are required to review a detailed training manual that outlines
the Company's operating policies and procedures.  The Company tests
each employee on the training manual during the first year of
employment.  In addition, each branch provides in-office training
sessions once every week and training sessions outside the
office.  The Company has also implemented an enhanced training tool as
World University which provides more effective online training to all
locations.  This allows for more training available to all
employees.





Advertising.  The Company actively advertises through direct
mail, targeting both its present and former customers and potential customers
who have used other sources of consumer credit.  The Company obtains
or acquires mailing lists from third party sources.  In addition to
the general promotion of its loans for vacations, back-to-school needs and other
uses, the Company advertises extensively during the October through December
holiday season and in connection with new office openings.  The
Company believes its advertising contributes significantly to its ability to
compete effectively with other providers of small-loan consumer
credit.  Advertising expenses were approximately 3.3% of total
revenues in fiscal 2009, 3.7% in fiscal 2008 and 3.5% in 2007.





Competition.  The small-loan consumer finance industry is
highly fragmented, with numerous competitors.  The majority of the
Company's competitors are independent operators with generally less than 100
offices.  Competition from nationwide consumer finance businesses is
limited because these companies typically do not make loans of less than
$1,000.





The Company believes that competition between small-loan consumer finance
companies occurs primarily on the basis of the strength of customer
relationships, customer service and reputation in the local community, rather
than pricing, as participants in this industry generally charge comparable
interest rates and fees.  The Company believes that its relatively
larger size affords it a competitive advantage over smaller companies by
increasing its access to, and reducing its cost of, capital.  In
addition the Company’s in-house integrated computer system provides data
processing and the Company’s in-house print shop provides direct mail and other
printed items at a substantially reduced cost to the Company.





Several of the states in which the Company currently operates limit the size of
loans made by small-loan consumer finance companies and prohibit the extension
of more than one loan to a customer by any one company.  As a result,
many customers borrow from more than one finance company, enabling the Company,
subject to the limitations of various consumer protection and privacy statutes
including,  but not limited to the federal Fair Credit Reporting Act
and the Gramm-Leach-Bliley Act, to
obtain  information  on  the credit history of
specific customers from other consumer finance companies.





Government
Regulation.  Small-loan consumer finance companies are subject
to extensive regulation, supervision and licensing under various federal and
state statutes, ordinances and regulations.  In general, these
statutes establish maximum loan amounts and interest rates and the types and
maximum amounts of fees, insurance premiums and other fees that may be
charged.  In addition, state laws regulate collection procedures, the
keeping of books and records and other aspects of the operation of small-loan
consumer finance companies.  Generally, state regulations also
establish minimum capital requirements for each local office.  State
agency approval is required to open new branch offices.  Accordingly,
the ability of the Company to expand by acquiring existing offices and opening
new offices will depend in part on obtaining the necessary regulatory
approvals.





A
Texas regulation requires the approval of the Texas Consumer Credit Commissioner
for the acquisition, directly or indirectly, of more than 10% of the voting or
common stock of a consumer finance company.  A Louisiana statute
prohibits any person from acquiring control of 50% or more of the shares of
stock of a licensed consumer lender, such as the Company, without first
obtaining a license as a consumer lender.  The overall effect of these
laws, and similar laws in other states, is to make it more difficult to acquire
a consumer finance company than it might be to acquire control of a nonregulated
corporation.





Each of the Company's branch offices is separately licensed under the laws of
the state in which the office is located.   Licenses granted by
the regulatory agencies in these states are subject to renewal every year and
may be revoked for failure to comply with applicable state and federal laws and
regulations.  In the states in which the Company currently operates,
licenses may be revoked only after an administrative hearing.


7


The Company and its operations are
regulated by several state agencies, including the Industrial Loan Division of
the Office of the Georgia Insurance Commissioner, the Consumer Finance Division
of the South Carolina Board of Financial Institutions, the South Carolina
Department of Consumer Affairs, the Texas Office of the Consumer Credit
Commission, the Oklahoma Department of Consumer Credit, the Louisiana Office of
Financial Institutions, the Tennessee Department of Financial
Institutions, the Missouri Division of Finance, the Consumer Credit Division of
the Illinois Department of Financial Institutions, the Consumer Credit Bureau of
the New Mexico Financial Institutions Division,
the  Kentucky  Department  of  Financial  Institutions,
and the  Alabama  State Banking Department.  These
state regulatory agencies audit the Company's local offices from time to time,
and each state agency performs an annual compliance audit of the Company's
operations in that state.





Effective
May 1, 2008, World Acceptance Corporation de Mexico, S. de R.L. de C.V. was
converted to WAC de Mexico, S.A. de C.V., SOFOM, E.N.R. (“WAC de Mexico SOFOM”),
and due to such conversion, this entity is now organized as a Sociedad
Financiera de Objeto Múltiple, Entidad No Regulada (Multiple Purpose Financial
Company, Non-Regulated Entity or “SOFOM, ENR”). Mexico law provides for
administrative regulation of companies which are organized as SOFOM, ENRs. As
such, WAC de Mexico SOFOM is mainly governed by different federal statutes,
including the General Law of Auxiliary Credit Activities and Organizations, the
Law for the Transparency and Order of Financial Services, the General Law of
Credit Instruments and Operations, and the Law of Protection and Defense to the
User of Financial Services. SOFOM, ENRs are also subject to regulation by and
surveillance of the National Commission for the Protection and Defense of Users
of Financial Services (“CONDUSEF”).  CONDUSEF, among others, acts as
mediator and arbitrator in disputes between financial lenders and customers, and
resolves claims filed by loan customers. CONDUSEF also prevents unfair and
discriminatory lending practices, and regulates, among others, the form of loan
contracts, consumer disclosures, advertisement, and certain operating procedures
of SOFOM ENRs, with such regulations pertaining primarily to consumer protection
and adequate disclosure and transparency in the terms of borrowing. 
Neither CONDUSEF nor federal statutes impose interest rate caps on loans granted
by SOFOM, ENRs.   The consumer loan industry, as with most businesses
in Mexico, is also subject to other various regulations in the areas of tax
compliance, anti-money laundering, and employment matters, among others, by
various federal, state and local governmental agencies. Generally, federal
regulations control over the state statutes with respect to the consumer loan
operations of  SOFOM, ENRs.





The Company is also subject to state
regulations governing insurance agents in the states in which it sells credit
insurance.  State insurance regulations require that insurance agents
be licensed, govern the commissions that may be paid to agents in connection
with the sale of credit insurance and limit the premium amount charged for such
insurance.  The Company's captive insurance subsidiary is regulated by
the insurance authorities of the Turks and Caicos Islands of the British West
Indies, where the subsidiary is organized and domiciled.





The Company is subject to extensive
federal regulation as well, including the Truth-in-Lending Act, the Equal Credit
Opportunity Act and the Fair Credit Reporting Act and the regulations thereunder
and the Federal Trade Commission's Credit Practices Rule.  These laws
require the Company to provide complete disclosure of the principal terms of
each loan to the borrower, prior to the consummation of the loan transaction,
prohibit misleading advertising, protect against discriminatory lending
practices and proscribe unfair credit practices.  Among the principal
disclosure items under the Truth-in-Lending Act are the terms of repayment, the
final maturity, the total finance charge and the annual percentage rate charged
on each loan.  The Equal Credit Opportunity Act prohibits creditors
from discriminating against loan applicants on the basis of race, color, sex,
age or marital status.  Pursuant to Regulation B promulgated under the
Equal Credit Opportunity Act, creditors are required to make certain disclosures
regarding consumer rights and advise consumers whose credit applications are not
approved of the reasons for the rejection.  The Fair Credit Reporting
Act requires the Company to provide certain information to consumers whose
credit applications are not approved on the basis of a report obtained from a
consumer reporting agency. The Credit Practices Rule limits the types of
property a creditor may accept as collateral to secure a consumer
loan.  Violations of the statutes and regulations described above may
result in actions for damages, claims for refund of payments made, certain fines
and penalties, injunctions against certain practices and the potential
forfeiture of rights to repayment of loans.





Consumer finance companies are
affected by changes in state and federal statutes and
regulations.  The Company actively participates in trade associations
and in lobbying efforts in the states in which it operates.  As
discussed further in Part I, Item 1A, “Risk Factors,” there have been, and the
Company expects that there will continue to be, media attention, initiatives,
discussions and proposals regarding the entire consumer credit industry, as well
as our particular business, and possible significant changes to the laws and
regulations that govern our business.  In some cases, proposed or
pending legislative or regulatory changes have been introduced that would, if
enacted,  have a material adverse effect on, or possibly even
eliminate, our ability to continue our current business.  We can give
no assurance that the laws and regulations that govern our business will remain
unchanged or that any such future changes will not materially and adversely
affect or in the worst case, eliminate, the Company’s lending practices,
operations, profitability or prospects.  See Part I, Item 1A, “Risk
Factors – Unfavorable state legislative or regulatory actions or changes,
adverse outcomes in litigation or regulatory proceedings or failure to comply
with existing laws and regulations could force us to cease, suspend or modify
our operations in a
state, potentially resulting in a material adverse effect on our business,
results of operations and financial condition,” “– Federal legislative or
regulatory proposals, initiatives, actions or changes that are adverse to our
operations or result in adverse regulatory proceedings, or our failure to comply
with existing or future federal laws and regulations, could force us to modify,
suspend or cease part or all of our nationwide operations” and “– Media and
public perception of consumer installment loans as being predatory or abusive
could materially adversely affect our business, prospects, results of operations
and financial condition.”


8





Employees.  As of
March 31, 2009, the Company had 2,969 U.S. employees, none of whom were
represented by labor unions and 480 employees in Mexico, all of whom were
represented by a Mexican based labor union.  The Company considers its
relations with its personnel to be good.  The Company seeks to hire
people who will become long-term employees.  The Company experiences a
high level of turnover among its entry-level personnel, which the Company
believes is typical of the small-loan consumer finance industry.





Executive
Officers.  The names and ages, positions, terms of office and
periods of service of each of the Company's executive officers (and other
business experience for executive officers who have served as such for less than
five years) are set forth below.  The term of office for each
executive officer expires upon the earlier of the appointment and qualification
of a successor or such officers' death, resignation, retirement or
removal.





Period
      of Service as Executive Officer andPre-executive
      Officer Experience (if anName and Age
              
              Position
              
              Executive Officer for Less Than Five
      Years)A. Alexander McLean, III (57)
              
              Chief
      Executive Officer; Chairman and Director
              
              Chief
      Executive Officer since March 2006; Executive Vice President from August
      1996 until March 2006; Senior Vice President from July 1992 until August
      1996; CFO from June 1989 until March 2006; Director since June 1989; and
      Chairman since August 2007.Kelly
      M. Malson (38)
              
              Senior
      Vice President and Chief Financial Officer
              
              Senior
      Vice President and Chief Financial Officer since May 2009; Vice President
      and CFO from March 2006 to May 2009; Vice President of Internal Audit from
      September 2005 to March 2006; Financial Compliance Manager, Itron Inc.,
      from July 2004 to August 2005; Senior Manager, KPMG LLP from April 2002
      until July 2004.Mark
      C. Roland (52)
              
              President
      and Chief Operating Officer and Director
              
              President
      since March 2006; Chief Operating Officer since April 2005; Executive Vice
      President from April 2002 to March 2006; Senior Vice President from
      January 1996 to April 2002; Director since August 2007.Jeff
      L. Tinney (46)
              
              Senior
      Vice President, Western Division
              
              Senior
      Vice President, Western Division, since June 2007; Vice President,
      Operations – Texas and New Mexico from June 2001 to June 2007; Vice
      President, Operations – Texas and Louisiana from April 1998 to June 2001;
      Vice President, Operations - Louisiana from January 1997 to April
      1998.D.
      Clinton Dyer (36)
              
              Senior
      Vice President, Central Division
              
              Senior
      Vice President, Central Division since June 2005; Vice President,
      Operations – Tennessee and Missouri from April 2002 to June 2005;
      Supervisor of Nashville District from September 2001 to March 2002;
      Manager in Nashville from January 1997 to August 2001.James
      D. Walters (41)
              
              Senior
      Vice President, Southern Division
              
              Senior
      Vice President, Southern Division since April 2005; Vice President,
      Operations – South Carolina and Alabama from August 1998 to March
      2005.


9





Francisco Javier Sauza Del Pozo (54)
              
              Senior
      Vice President, Mexico
              
              Senior
      Vice President, Mexico since May 2008; Vice President of Operations from
      April 2005 to May 2008; President of Border Consulting Group from
      July 2004 to March 2005; Senior Manager of KPMG and BearingPoint
      Consulting from January 2000 to June 2004; Partner of Atlanta Consulting
      Group from February 1998 to January
2000.





Available
Information.  The information regarding our website and
availability of our filings with the SEC as described in the second paragraph
under “Introduction” above is incorporated by reference into this Item 1 of Part
I.





Item
1A.  Risk Factors





Forward-Looking
Statements





This
annual report contains various “forward-looking statements” within the meaning
of Section 21E of the Securities Exchange Act of 1934, that are based on
management’s beliefs and assumptions, as well as information currently available
to management.  Statements other than those of historical fact, as
well as those identified by the use of words such as “anticipate,” “estimate,”
“plan,” “expect,” “believe,” “may,” “will,” “should,” and similar expressions,
are forward-looking statements.  Although we believe that the
expectations reflected in any such forward-looking statements are reasonable, we
can give no assurance that such expectations will prove to be
correct.  Any such statements are subject to certain risks,
uncertainties and assumptions.  Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect, our
actual financial results, performance or financial condition may vary materially
from those anticipated, estimated or expected.  Among the key factors
that could cause our actual financial results, performance or condition to
differ from the expectations expressed or implied in such forward-looking
statements are the following:  changes in interest rates; risks
inherent in making loans, including repayment risks and value of collateral;
recently enacted, proposed or future legislation; the timing and amount of
revenues that may be recognized by the Company; changes in current revenue and
expense trends (including trends affecting charge-offs); changes in the
Company’s markets and general changes in the economy (particularly in the
markets served by the Company); and the unpredictable nature of
litigation.  These and other risks are discussed below in more detail
under “Risk Factors” and in the Company’s other filings made from time to time
with the Securities and Exchange Commission (“SEC”).  The Company does
not undertake any obligation to update any forward-looking statements it may
make.





Investors
should consider the following risk factors, in addition to the other information
presented in this annual report and the other reports and registration
statements we file from time to time with the SEC, in evaluating us, our
business and an investment in our securities.   Any of the
following risks, as well as other risks, uncertainties, and possibly inaccurate
assumptions underlying our plans and expectations, could result in harm to our
business, results of operations and financial condition and cause the value of
our securities to decline, which in turn could cause investors to lose all or
part of their investment in our Company. These factors, among others, could also
cause actual results to differ from those we have experienced in the past or
those we may express or imply from time to time in any forward-looking
statements we make.  Investors are advised that it is impossible to
identify or predict all risks, and that risks not currently known to us or that
we currently deem immaterial also could affect us in the future.





Unfavorable
state legislative or regulatory actions or changes, adverse outcomes in
litigation or regulatory proceedings or failure to comply with existing laws and
regulations could force us to cease, suspend or modify our operations in a
state, potentially resulting in a material adverse effect on our business,
results of operations and financial condition.





We are
subject to numerous state laws and regulations that affect our lending
activities.  Many of these regulations impose detailed and complex
constraints on the terms of our loans, lending forms and
operations.  Failure to comply with applicable laws and regulations
could subject us to regulatory enforcement action that could result in the
assessment against us of civil, monetary or other penalties.





During
the past year, several state legislative and regulatory proposals were
introduced which, had they become law, would have had a material adverse impact
on our operations and ability to continue to conduct business in the relevant
state.  Although to date none of these state initiatives have been
successful, state legislatures continue to receive pressure to adopt similar
legislation that would affect our lending operations.  In particular,
a legislative initiative to limit the accessibility of installment credit to
consumers in Illinois and to curb perceived abuses prevalent in some forms of
consumer lending remains under consideration by the Illinois
legislature.  At this point in time it is impossible to predict what
the ultimate legislative result, if any, of this initiative will
be.  See “—Media and public perception of consumer installment loans
as being predatory or abusive could materially adversely affect our business,
prospects, results of operations and financial condition”
below.


10





In
addition, any adverse change in existing laws or regulations, or any adverse
interpretation or litigation relating to existing laws and regulations in any
state in which we operate, could subject us to liability for prior operating
activities or could lower or eliminate the profitability of our operations going
forward by, among other things, reducing the amount of interest and fees we can
charge in connection with our loans.  If these or other factors lead
us to close our offices in a state, then in addition to the loss of net revenues
attributable to that closing, we would also incur closing costs such as lease
cancellation payments and we would have to write off assets that we could no
longer use.  If we were to suspend rather than permanently cease our
operations in a state, we may also have continuing costs associated with
maintaining our offices and our employees in that state, with little or no
revenues to offset those costs.





Federal
legislative or regulatory proposals, initiatives, actions or changes that are
adverse to our operations or result in adverse regulatory proceedings, or our
failure to comply with existing or future federal laws and regulations, could
force us to modify, suspend or cease part or all of our nationwide
operations.





In
addition to state and local laws and regulations, we are subject to numerous
federal laws and regulations that affect our lending
operations.  Although these laws and regulations have remained
substantially unchanged for many years, the laws and regulations directly
affecting our lending activities are under review and are subject to
change as a result of current economic conditions, changes in the make-up of the
current executive and legislative branches, and the political and media focus on
issues of consumer and borrower protection.  See “—Media reports and
public perception of consumer installment loans as being predatory or abusive
could materially adversely affect our business, prospects, results of operations
and financial condition” below.  Any changes in such laws and
regulations could force us to modify, suspend or cease part, or, in the worst
case, all of our existing operations.  It is also possible that the
scope of federal regulations could change or expand in such a way as to preempt
what has traditionally been state law regulation of our business
activities.  The enactment of one or more of such regulatory changes
could materially and adversely affect our business, results of operations and
prospects.





Various
legislative proposals addressing consumer credit transactions have been
introduced in the U.S. Congress within the past calendar year. One such
bill, affecting certain aspects of the credit card industry (H.R. 627), recently
passed both houses of Congress and was signed into law on May 22,
2009.Congressional members continue to receive pressure from consumer
advocates and other industry opposition groups to adopt legislation to
address various aspects of consumer credit transactions.  For
instance, on February 26, 2009, U.S. Senator Richard Durbin introduced a bill (S. 500) in
Congress to establish a federally defined, all inclusive rate cap of 36% per
year for all consumer credit transactions. Similar
bills (including, but not limited to, H. R. 1608 and H. R. 1640) have also been
introduced in the House of Representatives. Other recently proposed
federal legislation would create a new federal agency to oversee consumer credit
and regulate the types of consumer financial products on the market. The
proposed legislation would empower the new federal agency to effectively ban any
consumer credit products that it determined to involve “inappropriate consumer
credit practices.”  In addition to these bills, the Obama
Administration agenda states that U.S. President Barack Obama and Vice President
Joseph Biden seek to extend a 36% APR limit to all consumer credit
transactions.  Any federal legislative or regulatory action that
severely restricts or prohibits the provision of small-loan consumer credit and
similar services on terms substantially similar to those we currently provide
would, if enacted, have a material adverse impact on our business, prospects,
results of operations and financial condition.  Any federal law that
would impose a national 36% or similar annualized credit rate cap on our
services, such as that proposed in the Durbin bill in its current form or in
similar congressional bills would, if enacted, almost certainly eliminate
our ability to continue our current operations.





Media
and public perception of consumer installment loans as being predatory or
abusive could materially adversely affect our business, prospects, results of
operations and financial condition.





Consumer
advocacy groups and various other media sources continue to advocate for
governmental and regulatory action to prohibit or severely restrict our products
and services.  These critics frequently characterize our products and
services as predatory or abusive toward consumers.  If this negative
characterization of the consumer installment loans we make and/or and ancillary
services we provide becomes widely accepted by government policy makers or is
embodied in legislative, regulatory, policy or litigation developments that
adversely affect our ability to continue offering our products and services or
the profitability of these products and services, our business, results of
operations and financial condition would be materially and adversely
affected.  Negative perception of our products and services could also
result in increased scrutiny from regulators and potential litigants, encourage
restrictive local zoning rules and make it more difficult to obtain government
approvals necessary to open or acquire new offices.  Such trends could
materially adversely affect our business, prospects, results of operations and
financial condition.  See also, “—Unfavorable state legislative or
regulatory actions or changes, adverse outcomes in litigation or regulatory
proceedings or failure to comply with existing laws and regulations could force
us to cease, suspend or modify our operations in a state, potentially resulting
in a material adverse effect on our business, results of operations and
financial condition,” and “—Federal legislative or regulatory proposals,
initiatives, actions or changes that are adverse to our operations or result in
adverse regulatory proceedings, or our failure to comply with existing or future
federal laws and regulations, could force us to modify, suspend or cease part or
all of our nationwide operations.”


11





Our
continued expansion into Mexico may increase the risks inherent in conducting
international operations, contribute materially to increased costs and
negatively affect our business, prospects, results of operations and financial
condition.





Although
our operations in Mexico accounted for only 3.1% of our revenues and 3.0% of our
gross loans receivable for the year ended March 31, 2009, we intend to continue
opening offices and expanding our presence in Mexico.  In addition, if
to the extent that the state and federal regulatory climate in the U.S. changes
in ways that adversely affect our ability to continue profitable operations in
one or more U.S. states, we could become increasingly dependent on our
operations in Mexico as our only viable expansion or growth strategy. In doing so, we may
expose an increasing portion of our business to risks inherent in conducting
international operations, including currency fluctuations and devaluations,
unsettled political conditions, communication and translation errors due to
language barriers, compliance with differing legal and regulatory regimes and
differing cultural attitudes toward regulation and compliance.  Among
the additional risks potentially affecting our Mexican operations are changes in
local economic conditions, disruption from political unrest and difficulty in
enforcing agreements due to differences in the Mexican legal and regulatory
regimes compared to those of the U.S.  Our success in conducting
foreign operations will depend, in large part, on our ability to succeed in
differing economic, social and political conditions.  Among other
things, we face potential difficulties in staffing and managing local
operations, and we have to design local solutions to manage credit risks posed
by local customers.  We may not continue to succeed in developing and
implementing policies and strategies that are effective in each location where
we do business.





We have
devoted significant management time and financial resources to expanding our
operations into Mexico.  Our international operations have increased
the complexity of our organization and the administrative, operating and legal
cost of operating our business.  Penetrating new markets will likely
require additional marketing expenses and incremental start-up
costs.  We may, although we have no such current plans, decide to
reduce fees, or even temporarily operate loan offices at a loss, in order to
build brand recognition and establish a foothold in these new
markets.  Additionally, as a foreign business we are subject to local
regulations, tariffs and labor controls to which other domestic businesses may
not be subject.  Our financial results also may be negatively affected
by tax rates in Mexico or as a result of withholding requirements and tax
treaties with those countries.  Moreover, if political, regulatory or
economic conditions deteriorate or social unrest or the level of criminal
activity continues toincrease in Mexico, our
ability to expand and maintain our international operations could be impaired or
the costs of doing so could increase, either of which could further erode our
business, prospects, results of operations and financial condition.





We
are subject to interest rate risk resulting from general economic conditions and
policies of various governmental and regulatory agencies.





Interest
rates are highly sensitive to many factors that are beyond our control,
including general economic conditions and policies of various governmental and
regulatory agencies and, in particular, the Federal Reserve
Board.  Changes in monetary policy, including changes in interest
rates, could influence the amount of interest we pay on our revolving credit
facility or any other floating interest rate obligations we may incur, but such
changes could also affect our ability to originate loans.  If the
interest we pay on our revolving credit facility or any other debt increases,
our earnings would be adversely affected because the Company is generally
charging the maximum fees allowed by the respective state’s regulatory
agency.  Additional information regarding interest rate risk is
included in the section captioned “Management’s Discussion and Analysis of
Financial Condition and Results of Operations – Quantitative and Qualitative
Disclosures about Market Risk and Inflation.”





Our
use of derivatives exposes us to credit and market risk.





We use
derivatives to manage our exposure to interest rate risk and foreign currency
fluctuations.  We use interest rate swaps for interest rate risk
management and options to hedge foreign currency fluctuation risk.  By
using derivative instruments, the Company is exposed to credit and market
risk.  Additional information regarding our exposure to credit and
market risk is included in the section captioned “Management’s Discussion and
Analysis of Financial Condition and Results of Operations – Quantitative and
Qualitative Disclosures About Market Risk.”





We
depend to a substantial extent on borrowings under our revolving credit
agreement to fund our liquidity needs.





We have
an existing revolving credit agreement committed through September 2010 that
allows us to borrow up to $187.0 million, assuming we are in compliance with a
number of covenants and conditions.   Because we typically use
substantially all of our available cash generated from our operations to repay
borrowings on our revolving credit agreement on a current basis, we have limited
cash balances and we expect that a significant portion of our liquidity needs
will be funded primarily from borrowings under our revolving credit
agreement.   As of March 31, 2009, we had approximately $73.7
million available for future borrowings under this agreement, excluding the
seasonal line which expires each March 31.    Due to the
seasonal nature of our business, our borrowings are historically the highest
during the third quarter and the lowest during the fourth
quarter.    If our  existing sources  of
liquidity become insufficient  to  satisfy our financial
needs or our access to these sources
becomes unexpectedly restricted, we may need to try to raise additional debt or
equity in the future.  If such an event were to occur, we can give no
assurance that such alternate sources of liquidity would be available to us at
all or on favorable terms.  See “—Adverse conditions in the capital
and credit markets generally, any particular liquidity problems affecting one or
more members of the syndicate of banks that are members of the Company’s credit
facility, or other factors outside our control, could affect the Company’s
ability to meet its liquidity needs and its cost of capital,” “—Our revolving
credit agreement contains restrictions and limitations that could significantly
affect our ability to operate our business” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations—Liquidity and Capital
Resources” for further discussion of our liquidity
risks.


12





Our
revolving credit agreement contains restrictions and limitations that could
significantly affect our ability to operate our business.





Our
revolving credit agreement contains a number of significant covenants that could
adversely affect our business.  These covenants impose limitations on
the Company with respect to:





·
            Declaring
      or paying dividends or making distributions on or acquiring common or
      preferred stock or warrants or
options;


·      Redeeming
or purchasing or prepaying principal or interest on subordinated
debt;


·      Incurring
additional indebtedness; and


·      Entering
into a merger, consolidation or sale of substantial assets or
subsidiaries.





The
breach of any covenants or obligation in our revolving credit agreement will
result in a default.  If there were an event of default under our
revolving credit agreement, the lenders under the revolving credit agreement
could cause all amounts outstanding thereunder to become due and payable,
subject to applicable grace periods.  This could trigger
cross-defaults under our other existing or future debt
instruments.  As a result, our ability to respond to changing business
and economic conditions and to secure additional financing, if needed, may be
significantly restricted, and we may be prevented from engaging in transactions
that might further our growth strategy.  If we were unable to repay,
refinance or restructure our indebtedness under our revolving credit agreement,
the lenders under that agreement could proceed against the collateral securing
that indebtedness.  Our obligations under the revolving credit
agreement are guaranteed by each of our existing and future subsidiaries. The
borrowings under the revolving credit agreement and the subsidiary guarantees
are secured by substantially all of our assets and the assets of the subsidiary
guarantors.  In addition, borrowings under the revolving credit
agreement are secured by a pledge of substantially all of the capital stock, or
similar equity interests, of the subsidiary guarantors.  In the event
of our insolvency, liquidation, dissolution or reorganization, the lenders under
our revolving credit agreement and any other existing or future debt of ours
would be entitled to payment in full from our assets before distributions, if
any, were made to our shareholders.





Adverse
conditions in the capital and credit markets generally, any particular liquidity
problems affecting one or more members of the syndicate of banks that are
members of the Company’s credit facility or other factors outside our control,
could affect the Company’s ability to meet its liquidity needs and its cost of
capital.





The
severe turmoil that has persisted in the domestic and global credit and capital
markets and broader economy since last year has negatively affected corporate
liquidity, equity values, credit agency ratings and confidence in financial
institutions.


In
addition to cash generated from operations, the Company depends on borrowings
from institutional lenders to finance its operations, acquisitions and office
expansion plans.  Therefore, notwithstanding the Company’s belief that
its current liquidity position is adequate, the Company is not insulated from
the pressures and potentially negative consequences of the current financial
crisis.





The
Company has a $187.0 million base revolving credit facility with a syndicate of
banks.  The syndicate’s current commitment under this facility extends
through the end of September, 2010.  As a result of the recent
turmoil, there have been reports that some banks and other providers of credit
have been unable or unwilling to meet their existing commitments or undertake
new commitments to provide funds to commercial borrowers, which has forced some
of these borrowers to either curtail certain operations or to seek operating
capital from other, and likely more expensive, sources.  Should a
similar situation occur with one or more of the members of the syndicate of
banks under the Company’s revolving credit facility, the Company would be faced
with one or more undesirable alternatives, including the limitation or
curtailment of its lending operations, limitation or curtailment of its growth
and expansion plans, or an attempt to seek other, and likely more expensive,
sources of operating capital in either the corporate credit markets or the
equity markets, both of which are currently under significant
strain.


13





More
generally, our ability to meet our liquidity needs is subject to numerous risks
beyond our control.  These risks include, but are not limited to,
downturns, uncertainties or turmoil in the corporate credit and capital markets,
the broader economy, the financial services industry or our business operations,
as well as political or social unrest, acts of war or terrorism, natural
disasters or other such disruptive events.  The occurrence or
continuation of one or more of these events could negatively affect the
availability, amount or cost of our liquidity, which would adversely affect our
ongoing ability to service or refinance debt, meet contractual obligations, and
fund asset growth and new business transactions at a reasonable cost, in a
timely manner and without adverse consequences.  Any substantial,
unexpected and/or prolonged change in the availability, amount or cost of
liquidity could have a material adverse effect on our financial condition and
results of operations.  Additional information regarding our liquidity
risk is included under “—We depend to a substantial extent on borrowings under
our revolving credit agreement to fund our liquidity needs,” “—Our revolving
credit agreement contains restrictions and limitations that could significantly
affect our ability to operate our business” and in “Management’s Discussion and
Analysis of Financial Condition and Results of Operations – Liquidity and
Capital Resources.”





We
are exposed to credit risk in our lending activities.





There are
inherent risks associated with our lending activities.  Our ability to
collect on loans to individuals, our single largest asset group, depends on the
willingness and repayment ability of our borrowers.  Any material
adverse change in the ability or willingness of a significant portion of our
borrowers to meet their obligations to us, whether due to changes in economic
conditions, the cost of consumer goods, interest rates, natural disasters, acts
of war or terrorism, or other causes over which we have no control, would have a
material adverse impact on our earnings and financial condition.





In
particular, during times such as the challenging economic environment we are
currently experiencing, we expect that the continuation or worsening of
conditions that drive consumer confidence, spending and disposable income (such
as unemployment levels, energy costs and wage rates) will adversely affect the
levels of delinquencies and charge-offs we experience in our loan portfolio, our
provision for loan losses and, accordingly, our profitability.





The
concentration of our revenues in certain states could adversely affect
us.





We
currently operate consumer installment loan offices in 11 states in the United
States.  During the fiscal year ended March 31, 2009, our four largest
states (measured by total revenues) accounted for approximately 59.0% of our
total revenues.  While we believe we have a diverse geographic
presence, for the near term we expect that significant revenues will continue to
be generated by certain states, largely due to the currently prevailing
economic, demographic, regulatory, competitive and other conditions in those
states.  Nonetheless, changes to prevailing economic, demographic,
regulatory or any other conditions in the markets in which we operate could lead
to a reduction in our ability to profitably offer our products and services, a
decline in our revenues or an increase in our provision for doubtful accounts
that could result in a deterioration of our financial condition.  Any
adverse legislative or regulatory change in any one of our states but
particularly in any of our larger states could have a material adverse effect on
our business, prospects, results of operation or financial
condition.





We
have a significant amount of goodwill, which is subject to periodic review and
testing for impairment.





A portion
of our total assets at March 31, 2009 is comprised of goodwill.  Under
generally accepted accounting principles, goodwill is subject to periodic review
and testing to determine if it is impaired.  Unfavorable trends in our
industry and unfavorable events or disruptions to our operations resulting from
adverse legislative or regulatory actions or from other unpredictable causes
could result in significant goodwill impairment charges which, although not
affecting cash flow, could have a material adverse impact on our operating
results and financial position.





If
our estimates of loan losses are not adequate to absorb actual losses, our
provision for loan losses would increase.  This would result in a
decline in our future revenues and earnings, which also could have a material
adverse effect on our stock price.





We
maintain an allowance for loan losses for loans we make directly to
consumers.  To estimate the appropriate allowance for loan losses, we
consider the amount of outstanding loan balances owed to us, historical
delinquency and charge-off trends, and other factors discussed in our
consolidated financial statements.





As of
March 31, 2009, our allowance for loan losses was $38.0
million.  These amounts, however, are estimates.  If our
actual loan losses are greater than our allowance for loan losses, our provision
for loan losses would increase.  This would result in a decline in our
future revenues and earnings, which also could have a material adverse effect on
our stock price.


14


Controls
and procedures may fail or be circumvented.





Controls
and procedures are particularly important for small-loan consumer finance
companies.  Management regularly reviews and updates our internal
controls, disclosure controls and procedures, and corporate governance policies
and procedures.  Any system of controls, however well designed and
operated, is based in part on certain assumptions and can provide only
reasonable, not absolute, assurances that the objectives of the system are
met.  Any failure or circumvention of our controls and procedures or
failure to comply with regulations related to controls and procedures could have
a material adverse effect on our business, results of operations and financial
condition.





The
locations where we have offices may cease to be attractive as demographic or
economic patterns change.





The
success of our offices is significantly influenced by
location.  Current locations may not continue to be attractive as
demographic patterns change.  It is possible that the neighborhood or
economic conditions where our offices are located could change in the future,
potentially resulting in reduced revenues in those locations.





If
we lose the services of any of our key management personnel, our business could
suffer.





Our
future success significantly depends on the continued services and performance
of our key management personnel.  Our future performance will depend
on our ability to motivate and retain these and other key officers and key team
members, particularly divisional senior vice-presidents and regional
vice-presidents of operations.  Competition for these employees is
intense.  The loss of the services of members of our senior management
or key team members or the inability to attract additional qualified personnel
as needed could materially harm our business.





Regular
turnover among our managers and employees at our offices makes it more difficult
for us to operate our offices and increases our costs of operations, which could
have an adverse effect on our business, results of operations and financial
condition.





The
annual turnover as of March 31, 2009 among our office employees was
approximately 41.1%.  This turnover increases our cost of operations
and makes it more difficult to operate our offices.  If we are unable
to keep our employee turnover rates consistent with historical levels or if
unanticipated problems arise from our high employee turnover, our business,
results of operations and financial condition could be adversely
affected.





Our
ability to manage our growth may deteriorate, and our ability to execute our
growth strategy may be adversely affected.





We have
experienced substantial growth in recent years.  Our growth strategy,
which is based on opening and acquiring offices in existing and new markets, is
subject to significant risks.  We cannot assure you that we will be
able to expand our market presence in our current markets or successfully enter
new markets through the opening of new offices or
acquisitions.  Moreover, the start-up costs and the losses from
initial operations attributable to each newly opened office place demands upon
our liquidity and cash flow, and we cannot assure you that we will be able to
satisfy these demands.





In
addition, our ability to execute our growth strategy will depend on a number of
other factors, some of which are beyond our control, including:





·
            the
      prevailing laws and regulatory environment of each state in which we
      operate or seek to operate, and, to the extent applicable, federal laws
      and regulations, which are subject to change at any
  time;


·      our
ability to obtain and maintain any regulatory approvals, government permits or
licenses that may be required;


·      the
degree of competition in new markets and its effect on our ability to attract
new customers;


·      our
ability to compete for expansion opportunities in suitable
locations;


·      our
ability to recruit, train and retain qualified personnel;


·      our
ability to adapt our infrastructure and systems to accommodate our growth;
and


·      our
ability to obtain adequate financing for our expansion plans.





We cannot
assure you that our systems, procedures, controls and existing space will be
adequate to support expansion of our operations.  Our growth has
placed significant demands on all aspects of our business, including our
administrative, technical and financial personnel and
systems.  Additional expansion may further strain our management,
financial and other resources.  Our future results of operations will
substantially depend on the ability of our officers and key employees to manage
changing business conditions and to implement and improve our technical,
administrative, financial control and reporting systems.  In addition,
we cannot assure you that we will be able to implement our business strategy
profitably in geographic areas we do not currently serve.


15


We
currently lack product and business diversification; as a result, our revenues
and earnings may be disproportionately negatively impacted by external factors
and may be more susceptible to fluctuations than more diversified
companies.





Our
primary business activity is offering small consumer installment loans together
with, in some states in which we operate, related ancillary
products.  If we are unable to continue our small consumer installment
loan business and/or diversify our operations, our revenues and earnings could
decline.  Our current lack of product and business diversification
could inhibit our opportunities for growth, reduce our revenues and profits and
make us more susceptible to earnings fluctuations than many other financial
institutions who are more diversified and provide other services such as
mortgage lending, credit cards, auto financing or other similar
services.  External factors, such as changes in laws and regulations,
new entrants and enhanced competition, could also make it more difficult for us
to operate as profitably as a more diversified company could
operate.  Any internal or external change in our industry could result
in a decline in our revenues and earnings, which could have a material adverse
effect on our business, prospects, results of operations and financial
condition.





Interruption
of, or a breach in security relating to, our information systems could adversely
affect us.





We rely
heavily on communications and information systems to conduct our
business.  Each office is part of an information network that is
designed to permit us to maintain adequate cash inventory, reconcile cash
balances on a daily basis and report revenues and expenses to our
headquarters.  Any failure, interruption or breach in security of
these systems, including any failure of our back-up systems, could result in
failures or disruptions in our customer relationship management, general ledger,
loan and other systems.  The occurrence of any failures, interruptions
or security breaches of our information systems could damage our reputation,
result in a loss of customer business, subject us to additional regulatory
scrutiny, or expose us to civil litigation and possible financial liability, any
of which could have a material adverse effect on our financial condition and
results of operations.





Our
centralized headquarters functions are susceptible to disruption by catastrophic
events, which could have a material adverse effect on our business, results of
operations and financial condition.





Our
headquarters building is located in Greenville, South Carolina.  Our
information systems and administrative and management processes are primarily
provided to our offices from this centralized location, and they could be
disrupted if a catastrophic event, such as a tornado, power outage or act of
terror, destroyed or severely damaged our headquarters.  Any such
catastrophic event or other unexpected disruption of our headquarters functions
could have a material adverse effect on our business, results of operations and
financial condition.





Our
business is seasonal in nature, which causes our revenues, collection rates and
earnings to fluctuate.  These fluctuations could have a material
adverse effect on our results of operations and stock price.





Our
business is seasonal because demand for small consumer loans is highest in the
third quarter of each year, corresponding to the holiday seasons, and lowest in
the fourth quarter of each year, corresponding to our customers’ receipt of
income tax refunds.  Our provision for loan losses is historically
lowest as a percentage of revenues in the fourth quarter of each year,
corresponding to our customers’ receipt of income tax refunds, and increases as
a percentage of revenues for the remainder of each year.  This
seasonality requires us to manage our cash flows over the course of the
year.  If our revenues or collections were to fall substantially below
what we would normally expect during certain periods, our ability to service our
debt and meet our other liquidity requirements may be adversely affected, which
could have a material adverse effect on our results of operations and stock
price.





In
addition, our quarterly results have fluctuated in the past and are likely to
continue to fluctuate in the future because of the seasonal nature of our
business.  Therefore, our quarterly revenues and results of operations
are difficult to forecast, which, in turn could cause our future quarterly
results to not meet the expectations of securities analysts or
investors.  Our failure to meet such expectations could cause a
material drop in the market price of our common stock.





Absence
of dividends could reduce our attractiveness to investors.





Since
1989, we have not declared or paid cash dividends on our common stock and may
not pay cash dividends in the foreseeable future.  As a result, our
common stock may be less attractive to certain investors than the stock of
dividend-paying companies.


16


Various
provisions and laws could delay or prevent a change of control that shareholders
may favor.





Provisions
of our articles of incorporation, South Carolina law, and the laws in several of
the states in which our operating subsidiaries are incorporated could delay or
prevent a change of control that the holders of our common stock may favor or
may impede the ability of our shareholders to change our
management.  In particular, our articles of incorporation and South
Carolina law, among other things, authorize our board of directors to issue
preferred stock in one or more series, without shareholder approval, and will
require the affirmative vote of holders of two-thirds of our outstanding shares
of voting stock to approve our merger or consolidation with another
corporation.





Overall
stock market volatility may materially and adversely affect the market price of
our common stock.





World’s
common stock price has been and is likely to continue to be subject to
significant volatility.  A variety of factors could cause the price of
the common stock to fluctuate, perhaps substantially, including: general market
fluctuations resulting from factors not directly related to World’s operations
or the inherent value of its common stock; state or federal legislative or
regulatory proposals, initiatives, actions or changes that are, or are perceived
to be, adverse to our operations; announcements of developments related to our
business; fluctuations in our operating results and the provision for loan
losses; low trading volume in our common stock; general conditions in the
financial service industry, the domestic or global economy or the domestic or
global credit or capital markets; changes in financial estimates by securities
analysts; negative commentary regarding our Company and corresponding
short-selling market behavior; adverse developments in our relationships with
our customers; legal proceedings brought against the Company or its officers; or
significant changes in our senior management team.  Of late the stock
market in general, and the market for shares of equity securities of many
financial service companies in particular, have experienced extreme price
fluctuations that have at times been unrelated to the operating performance of
those companies.  Such fluctuations and market volatility based on
these or other factors may materially and adversely affect the market price of
our common stock.





Item
1B.   Unresolved Staff Comments





None.





Item
2.   Properties





The Company owns its headquarters
facility of approximately 21,000 square feet and a printing and mailing facility
of approximately 13,000 square feet in Greenville, South Carolina, and all of
the furniture, fixtures and computer terminals located in each branch
office.  As of March 31, 2009, the Company had 944 branch offices,
most of which are leased pursuant to short-term operating
leases.  During the fiscal year ended March 31, 2009, total lease
expense was approximately $14.3 million, or an average of approximately $15,900
per office.  The Company's leases generally provide for an initial
three- to five-year term with renewal options.  The Company's branch
offices are typically located in shopping centers, malls and the first floors of
downtown buildings.  Branches in the U.S. offices generally have a
uniform physical layout with an average size of 1,500 square feet and in Mexico
with an average size of 1,600 square feet.





Item
3.   Legal Proceedings





From time to time the Company is
involved in routine litigation relating to claims arising out of its operations
in the normal course of business in which damages in various amounts are
claimed.  However, the Company believes that it is not presently a
party to any pending legal proceedings that would have a material adverse effect
on its financial condition or results of operations.





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





There were no matters submitted to
the Company's security holders during the fourth fiscal quarter ended March 31,
2009.





PART
II.





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





Since November 26, 1991, the
Company's common stock has traded on NASDAQ, currently on the NASDAQ Global
Select Market ("NASDAQ"), under the symbol WRLD.   As of May 29,
2009, there were 81 holders of record of Common Stock and a significant number
of persons or entities who hold their stock in nominee or “street” names through
various brokerage firms.


17


Since April 1989, the Company has not
declared or paid any cash dividends on its common stock.  Its policy
has been to retain earnings for use in its business and on occasion, repurchase
its common stock on the open market.  In the future, the Company's
Board of Directors will determine whether to pay cash dividends based on
conditions then existing, including the Company's earnings, financial condition,
capital requirements and other relevant factors.  In addition, the
Company's credit agreements contain certain restrictions on the payment of cash
dividends on its capital stock.  See “Management’s Discussion and
Analysis of Financial Condition and Results of Operations Liquidity and Capital
Resources.”





The company did not repurchase any of
its common stock during the quarter ended March 31, 2009.





The table below reflects the stock
prices published by NASDAQ by quarter for the last two fiscal
years.  The last reported sale price on May 26, 2009 was
$18.69.





Market Price of Common
Stock





Fiscal 2009Quarter
                        
                        High
                        
                        
                        LowFirst
                        
                        $
                        45.99
                        
                        
                        $
                        31.91Second
                        
                        
                        43.50
                        
                        
                        
                        31.00Third
                        
                        
                        36.25
                        
                        
                        
                        13.44Fourth
                        
                        
                        22.90
                        
                        
                        
                        10.31





Fiscal 2008Quarter
                        
                        High
                        
                        
                        LowFirst
                        
                        $
                        45.74
                        
                        
                        $
                        39.27Second
                        
                        
                        43.16
                        
                        
                        
                        27.76Third
                        
                        
                        35.59
                        
                        
                        
                        26.40Fourth
                        
                        
                        35.50
                        
                        
                        
                        19.89


18


Item
6.   Selected Financial Data





Selected
Consolidated Financial and Other Data





(Dollars
in thousands, except per share amounts)


Years Ended March 31,2009
                          
                          
                          2008
                          
                          
                          2007
                          
                          
                          2006
                          
                          
                          2005Statement
      of Operations Data:Interest
      and fee income
                          
                          $
                          331,454
                          
                          
                          $
                          292,457
                          
                          
                          $
                          247,007
                          
                          
                          $
                          204,450
                          
                          
                          $
                          177,582Insurance
      commissions and other income
                          
                          
                          62,251
                          
                          
                          
                          53,590
                          
                          
                          
                          45,311
                          
                          
                          
                          38,822
                          
                          
                          
                          33,176Total
      revenues
                          
                          
                          393,705
                          
                          
                          
                          346,047
                          
                          
                          
                          292,318
                          
                          
                          
                          243,272
                          
                          
                          
                          210,758Provision
      for loan losses
                          
                          
                          85,476
                          
                          
                          
                          67,542
                          
                          
                          
                          51,925
                          
                          
                          
                          46,026
                          
                          
                          
                          40,037General
      and administrative expenses
                          
                          
                          200,216
                          
                          
                          
                          179,219
                          
                          
                          
                          153,627
                          
                          
                          
                          128,514
                          
                          
                          
                          112,223Interest
      expense
                          
                          
                          10,389
                          
                          
                          
                          11,569
                          
                          
                          
                          9,596
                          
                          
                          
                          7,137
                          
                          
                          
                          4,640Total
      expenses
                          
                          
                          296,081
                          
                          
                          
                          258,330
                          
                          
                          
                          215,148
                          
                          
                          
                          181,677
                          
                          
                          
                          156,900Income
      before income taxes
                          
                          
                          97,624
                          
                          
                          
                          87,717
                          
                          
                          
                          77,170
                          
                          
                          
                          61,595
                          
                          
                          
                          53,858Income
      taxes
                          
                          
                          36,921
                          
                          
                          
                          34,721
                          
                          
                          
                          29,274
                          
                          
                          
                          23,080
                          
                          
                          
                          19,868Net
      income
                          
                          
                          60,703
                          
                          
                          $
                          52,996
                          
                          
                          $
                          47,896
                          
                          
                          $
                          38,515
                          
                          
                          $
                          33,990Net
      income per common share (diluted)
                          
                          $
                          3.69
                          
                          
                          $
                          3.05
                          
                          
                          $
                          2.60
                          
                          
                          $
                          2.02
                          
                          
                          $
                          1.74Diluted
      weighted average shares
                          
                          
                          16,464
                          
                          
                          
                          17,375
                          
                          
                          
                          18,394
                          
                          
                          
                          19,098
                          
                          
                          
                          19,558Balance
      Sheet Data (end of period):Loans
      receivable, net of unearned and deferred fees
                          
                          $
                          498,433
                          
                          
                          $
                          445,091
                          
                          
                          $
                          378,038
                          
                          
                          $
                          312,746
                          
                          
                          $
                          267,024Allowance
      for loan losses
                          
                          
                          (38,021
                          )
                          
                          
                          (33,526
                          )
                          
                          
                          (27,840
                          )
                          
                          
                          (22,717
                          )
                          
                          
                          (20,673
                          )Loans
      receivable, net
                          
                          
                          460,412
                          
                          
                          
                          411,565
                          
                          
                          
                          350,198
                          
                          
                          
                          290,029
                          
                          
                          
                          246,351Total
      assets
                          
                          
                          531,254
                          
                          
                          
                          486,110
                          
                          
                          
                          411,116
                          
                          
                          
                          332,784
                          
                          
                          
                          293,507Total
      debt
                          
                          
                          208,310
                          
                          
                          
                          214,900
                          
                          
                          
                          171,200
                          
                          
                          
                          100,600
                          
                          
                          
                          83,900Shareholders'
      equity
                          
                          
                          290,386
                          
                          
                          
                          234,305
                          
                          
                          
                          215,493
                          
                          
                          
                          210,430
                          
                          
                          
                          189,711Other
      Operating Data:As
      a percentage of average loans receivable:Provision
      for loan losses
                          
                          
                          17.6
                          %
                          
                          
                          15.8
                          %
                          
                          
                          14.5
                          %
                          
                          
                          15.4
                          %
                          
                          
                          15.3
                          %Net
      charge-offs
                          
                          
                          16.7
                          %
                          
                          
                          14.5
                          %
                          
                          
                          13.3
                          %
                          
                          
                          14.8
                          %
                          
                          
                          14.6
                          %Number
      of offices open at year-end
                          
                          
                          944
                          
                          
                          
                          838
                          
                          
                          
                          732
                          
                          
                          
                          620
                          
                          
                          
                          579


19


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





General





The Company's financial performance
continues to be dependent in large part upon the growth in its outstanding loans
receivable, the ongoing introduction of new products and services for marketing
to its customer base, the maintenance of loan quality and acceptable levels of
operating expenses.  Since March 31, 2004, gross loans receivable have
increased at a 16.7% annual compounded rate from $310.1 million to $671.2
million at March 31, 2009.  The increase reflects both the higher
volume of loans generated through the Company's existing offices and the
contribution of loans generated from new offices opened or acquired over the
period.  During this same five-year period, the Company has grown from
470 offices to 944 offices as of March 31, 2009.  During fiscal 2010,
the Company plans to open or acquire approximately 30 new offices in the United
States and 15 new offices in Mexico.





The Company attempts to identify new
products and services for marketing to its customer base.  In addition
to new insurance-related products, which have been introduced in selected states
over the last several years, the Company sells and finances electronic items and
appliances to its existing customer base in many states where it
operates.  This program is called the “World Class Buying
Club.”  Total loan volume under this program was $13.0 million during
fiscal 2009, compared to $16.2 million in fiscal 2008.  World Class
Buying Club represents less than 2% of the Company’s total loan
volume.





The Company's ParaData Financial
Systems subsidiary provides data processing systems to 107 separate finance
companies, including the Company, and currently supports approximately
1,465  individual branch offices in 44 states and
Mexico.  ParaData’s revenue is highly dependent upon its ability to
attract new customers, which often requires substantial lead time, and as a
result its revenue may fluctuate greatly from year to year.  Its net
revenues from system sales and support amounted to $2.0 million, $2.2 million
and $2.5 million in fiscal 2009, 2008 and 2007,
respectively.  ParaData’s net revenue to the Company will continue to
fluctuate on a year to year basis.  ParaData continues to provide
state-of-the-art data processing support for the Company’s in-house integrated
computer system at a substantially reduced cost to the Company.





The Company also includes in its
product line larger balance, lower risk, and lower yielding individual consumer
loans.  These loans typically average $1,000 to $3,000, with terms of
generally 18 to 24 months, compared to smaller loans, which average $300 to
$1,000, with terms of generally 8 to 12 months.  The Company offers
the larger loans in all states except Texas, where they are not profitable under
our lending criteria and strategy.  Additionally, the Company has
purchased over the years numerous larger loan offices and has made several bulk
purchases of larger loans receivable.  As of March 31, 2009, the
larger loan category accounted for approximately $191.4 million of gross loans
receivable, a 22.7% increase over the balance outstanding at March 31,
2008.  At the end of the current fiscal year, this portfolio was 28.5%
of the total loan balances, a slight increase from the previous year mix of
26.0%.  Management believes that these loans provide lower expense and
loss ratios, and thus provide positive contributions.





The Company offers an income tax
return preparation and access to refund anticipation loan program in all but a
few of its offices.  Based on the results of this test, the Company
expanded this program in fiscal 2000 into substantially all of its
offices.  The Company prepared approximately 63,000, 65,000 and 60,000
returns in each of the fiscal years 2009, 2008 and 2007,
respectively.  Net revenue generated by the Company from this program
during fiscal 2009 amounted to approximately $9.9 million.  The
Company believes that this profitable business provides a beneficial service to
its existing customer base and plans to continue to promote and expand the
program in the future.


20


The following table sets forth
certain information derived from the Company's consolidated statements of
operations and balance sheets, as well as operating data and ratios, for the
periods indicated:





Years Ended March 31,2009
                
                
                2008
                
                
                2007(Dollars
      in thousands)Average
      gross loans receivable (1)
                
                $
                658,587
                
                
                
                576,050
                
                
                
                480,120Average
      net loans receivable (2)
                
                
                486,776
                
                
                
                426,524
                
                
                
                358,047Expenses
      as a percentage of total revenue:Provision
      for loan losses
                
                
                21.7
                %
                
                
                19.5
                %
                
                
                17.8
                %General
      and administrative
                
                
                50.9
                %
                
                
                51.8
                %
                
                
                52.6
                %Total
      interest expense
                
                
                2.6
                %
                
                
                3.3
                %
                
                
                3.3
                %Operating
      margin (3)
                
                
                27.4
                %
                
                
                28.7
                %
                
                
                29.7
                %Return
      on average assets
                
                
                11.6
                %
                
                
                11.3
                %
                
                
                12.5
                %Offices
      opened and acquired, net
                
                
                106
                
                
                
                106
                
                
                
                112Total
      offices (at period end)
                
                
                944
                
                
                
                838
                
                
                
                732





(1)
              Average
      gross loans receivable have been determined by averaging month-end gross
      loans receivable over the indicated
period.


(2)
              Average
      loans receivable have been determined by averaging month-end gross loans
      receivable less unearned interest and deferred fees over the indicated
      period.


(3)
              Operating
      margin is computed as total revenues less provision for loan losses and
      general and administrative expenses as a percentage of total
      revenues.





As
described below under “– Recently Issued Accounting Pronouncements – Convertible
Debt Instruments,” in the first quarter of fiscal 2010, we will be required to
adopt FASB Staff Position No. APB 14-1, “Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement)” (“FSP APB 14-1”), and apply it retrospectively to all periods
presented with a cumulative effect adjustment being made as of the earliest
period presented.  Adoption of FSP APB 14-1 will affect our fiscal
2009 and fiscal 2008 consolidated statements of operations and balance sheets as
reported in future periods to the extent described in Note 1, Summary of
Significant Accounting Policies in Part II, Item 8 of this report.





Comparison
of Fiscal 2009 Versus Fiscal 2008





Net income was $60.7 million during
fiscal 2009, a 14.5% increase over the $53.0 million earned during fiscal
2008.  This increase resulted from an increase in operating income
(revenues less provision for loan losses and general and administrative
expenses) of $8.7 million, or 8.8%, a reduction in the income tax effective rate
and a reduction in interest expense.





Total revenues increased to $393.7
million in fiscal 2009, a $47.7 million, or 13.8%, increase over the $346.0
million in fiscal 2008.   Revenues from the 727 offices open
throughout both fiscal years increased by 7.7%.  At March 31, 2009,
the Company had 944 offices in operation, an increase of 106 offices from March
31, 2008.





Interest and fee income during fiscal
2009 increased by $39.0 million, or 13.3%, over fiscal 2008.  This
increase resulted from an increase of $60.3 million, or 14.1%, in average net
loans receivable between the two fiscal years.  The increase in
average loans receivable was attributable to the Company acquiring approximately
$9.1 million in net loans and internal growth.  During fiscal 2009,
internal growth increased because the Company opened 98 new offices and the
average loan balance increased from $877 to $917.





Insurance commissions and other income
increased by $8.7 million, or 16.2%, over the two fiscal
years.  Insurance commissions increased by $2.0 million, or 6.7%, as a
result of the increase in loan volume in states where credit insurance is
sold.  Other income increased by $6.6 million, or 28.6%, over the two
years, primarily due to a $1.5 million gain on the sale of the foreign currency
option and a $5.5 million gain on the extinguishment of $15 million par value of
the Convertible Notes.  See Note 8 for further discussion regarding
this extinguishment of debt.  This increase was partially offset by
approximately a $0.8 million loss related to our interest rate
swap.


21


The provision for loan losses during
fiscal 2009 increased by $17.9 million, or 26.6%, from the previous
year.  This increase resulted from a combination of increases in both
the allowance for loan losses and the amount of loans charged
off.  Net charge-offs for fiscal 2009 amounted to $81.1 million, a
30.9% increase over the $62.0 million charged off during fiscal 2008. Net
charge-offs as a percentage of average loans increased from 14.5% to 16.7% when
comparing the two annual periods.  We believe the 2.2 percentage point
increase resulted from the difficult economic environment and higher energy cost
that our customers faced.  Delinquencies on a recency basis increased
from 2.6% to 2.7% and on a contractual basis increased from 4.0% to 4.2% at
March 31, 2008 and March 31, 2009, respectively.





General and administrative expenses
during fiscal 2009 increased by $21.0 million, or 11.7%, over the previous
fiscal year.  This increase was due primarily to costs associated with
the new offices opened or acquired during the fiscal year.  General
and administrative expenses, when divided by average open offices, remained flat
when comparing the two fiscal years and, overall, general and administrative
expenses as a percent of total revenues decreased from 51.8% in fiscal 2008 to
50.9% during fiscal 2009.  This decrease resulted from management’s
ongoing monitoring and control of expenses.





Interest expense decreased by $1.2
million, or 10.2%, during fiscal 2009, as compared to the previous fiscal year
as a result of a decrease in interest rates, partially offset by an increase in
average debt outstanding of 12.1%.  Average interest rates decreased
from 5.4% in fiscal 2008 to 4.4% in fiscal 2009.





Income tax expense increased $2.2
million, or 6.3%, primarily from an increase in pre-tax income.  The
decrease in the effective rate from 39.6% to 37.8% was a result of the prior
year tax examination discussed in Note 13 to our Consolidated Financial
Statements.  At this time, it is too early to predict the outcome on
this tax issue and any future recoverability of this
charge.   Until the tax issue is resolved, the Company expects to
accrue approximately $40,000 per quarter for interest and
penalties.





Comparison
of Fiscal 2008 Versus Fiscal 2007





Net income was $53.0 million during
fiscal 2008, a 10.6% increase over the $47.9 million earned during fiscal
2007.  This increase resulted from an increase in operating income of
$12.5 million, or 14.4%, partially offset by an increase in interest expense and
income taxes.





Total revenues increased to $346.0
million in fiscal 2008, a $53.7 million, or 18.4%, increase over the $292.3
million in fiscal 2007.   Revenues from the 645 offices open
throughout both fiscal years increased by 8.9%.  At March 31, 2008,
the Company had 838 offices in operation, an increase of 106 offices from March
31, 2007.





Interest and fee income during fiscal
2008 increased by $45.5 million, or 18.4%, over fiscal 2007.  This
increase resulted from an increase of $68.5 million, or 19.1%, in average net
loans receivable between the two fiscal years.  The increase in
average loans receivable was attributable to the Company acquiring approximately
$3.1 million in net loans and internal growth.  During fiscal 2008,
internal growth increased because the Company opened 95 new offices and the
average loan balance increased from $837 to $877.





Insurance commissions and other income
increased by $8.3 million, or 18.3%, over the two fiscal
years.  Insurance commissions increased by $6.0 million, or 24.5%, as
a result of the increase in loan volume in states where credit insurance is
sold.  Other income increased by $2.3 million, or 11.0%, over the two
years, primarily due to an increase in fees received from income tax return
preparation of $1.5 million, an increase in motor club product sales of $1.1
million and an $0.8 million increase in World Class Buying Club
sales.  This increase was partially offset by a $1.8 million loss
related to our interest rate swap.





The provision for loan losses during
fiscal 2008 increased by $15.6 million, or 30.1%, from the previous
year.  This increase resulted from a combination of increases in both
the allowance for loan losses and the amount of loans charged
off.  Net charge-offs for fiscal 2008 amounted to $62.0 million, a
29.8% increase over the $47.7 million charged off during fiscal 2007. Net
charge-offs as a percentage of average loans increased from 13.3% to 14.5% when
comparing the two annual periods.  This increase was mainly attributed
to a change in the bankruptcy laws which decreased the number of bankruptcy
filings in fiscal 2007.  However, in fiscal 2008 the bankruptcy
charge-offs returned to more historical levels.  This resulted in the
fiscal 2008 net charge-offs being  more in line with historical losses
of 14.8% in 2006, 14.6% in 2005, 14.7% in 2004 and 14.6% in
2003.  Delinquencies on a recency basis increased from 2.2% to 2.6%
and on a contractual basis increased from 3.6% to 4.0% at March 31, 2007 and
March 31, 2008, respectively.


22





General and administrative expenses
during fiscal 2008 increased by $25.6 million, or 16.7%, over the previous
fiscal year.  This increase was due primarily to costs associated with
the new offices opened or acquired during the fiscal year.  General
and administrative expenses, when divided by average open offices, decreased by
0.6% when comparing the two fiscal years and, overall, general and
administrative expenses as a percent of total revenues decreased from 52.6% in
fiscal 2007 to 51.8% during fiscal 2008.





Interest expense increased by $2.0
million, or 20.6%, during fiscal 2008, as compared to the previous fiscal year
as a result of an increase in average debt outstanding of 40.2%.  This
was offset by a decrease in average interest rates from 6.3% in fiscal 2007 to
5.4% in fiscal 2008.





Income tax expense increased $5.4
million, or 18.6%, primarily from an increase in pre-tax income and a charge of
$1.5 million related to a tax examination.  A state jurisdiction has
completed its examinations and issued a proposed assessment for tax years 2001
through 2006. In consideration of the proposed assessment, net income for fiscal
2008 was reduced by a charge of $1.5 million and the total gross unrecognized
tax benefits was increased by $2.3 million in fiscal 2008 as a result of this
examination.  As a result, the Company’s effective income tax rate
increased to 39.6% for the year ended March 31, 2008 from 37.9% for the year
ended March 31, 2007.





Critical
Accounting Policies





The Company’s accounting and reporting
policies are in accordance with U.S. generally accepted accounting principles
and conform to general practices within the finance company
industry.  The significant accounting policies used in the preparation
of the consolidated financial statements are discussed in Note 1 to the
consolidated financial statements.  Certain critical accounting
policies involve significant judgment by the Company’s management, including the
use of estimates and assumptions which affect the reported amounts of assets,
liabilities, revenues, and expenses.  As a result, changes in these
estimates and assumptions could significantly affect the Company’s financial
position and results of operations.  The Company considers its
policies regarding the allowance for loan losses and share-based compensation,
to be its most critical accounting policies due to the significant degree of
management judgment involved.





Allowance
for Loan Losses





The Company has developed policies and
procedures for assessing the adequacy of the allowance for loan losses that take
into consideration various assumptions and estimates with respect to the loan
portfolio.   The Company’s assumptions and estimates may be
affected in the future by changes in economic conditions, among other
factors.  For additional discussion concerning the allowance for loan
losses, see “Credit Quality” below.





Share-Based
Compensation





The Company measures compensation cost
for share-based awards at fair value and recognizes compensation over the
service period for awards expected to vest. The fair value of restricted stock
is based on the number of shares granted and the quoted price of our common
stock, and the fair value of stock options is determined using the Black-Scholes
valuation model. The Black-Scholes model requires the input of highly subjective
assumptions, including expected volatility, risk-free interest rate and expected
life, changes to which can materially affect the fair value estimate. In
addition, the estimation of share-based awards that will ultimately vest
requires judgment, and to the extent actual results or updated estimates differ
from our current estimates, such amounts will be recorded as a cumulative
adjustment in the period estimates are revised. The Company considers many
factors when estimating expected forfeitures, including types of awards,
employee class, and historical experience. Actual results, and future changes in
estimates, may differ substantially from our current estimates.





Credit
Quality





The Company’s delinquency and net
charge-off ratios reflect, among other factors, changes in the mix of loans in
the portfolio, the quality of receivables, the success of collection efforts,
bankruptcy trends and general economic conditions.





Delinquency is computed on the basis of
the date of the last full contractual payment on a loan (known as the recency
method) and on the basis of the amount past due in accordance with original
payment terms of a loan (known as the contractual method).  Management
closely monitors portfolio delinquency using both methods to measure the quality
of the Company's loan portfolio and the probability of credit
losses.


23


The
following table classifies the gross loans receivable of the Company that were
delinquent on a recency and contractual basis for at least 61 days at March 31,
2009, 2008, and 2007:





At March 31,2009
                  
                  
                  2008
                  
                  
                  2007(Dollars
      in thousands)Recency
      basis:61-90
      days past due
                  
                  $
                  11,304
                  
                  
                  
                  10,414
                  
                  
                  
                  7,73291
      days or more past due
                  
                  
                  6,661
                  
                  
                  
                  5,003
                  
                  
                  
                  3,495Total
                  
                  $
                  17,965
                  
                  
                  
                  15,417
                  
                  
                  
                  11,227Percentage
      of period-end gross loans receivable
                  
                  
                  2.7
                  %
                  
                  
                  2.6
                  %
                  
                  
                  2.2
                  %Contractual
      basis:61-90
      days past due
                  
                  $
                  14,223
                  
                  
                  
                  12,838
                  
                  
                  
                  9,68491
      days or more past due
                  
                  
                  13,673
                  
                  
                  
                  11,123
                  
                  
                  
                  8,209Total
                  
                  $
                  27,896
                  
                  
                  
                  23,961
                  
                  
                  
                  17,893Percentage
      of period-end gross loans receivable
                  
                  
                  4.2
                  %
                  
                  
                  4.0
                  %
                  
                  
                  3.5
                  %





Loans are charged off at the earlier of
when such loans are deemed to be uncollectible or when six months have elapsed
since the date of the last full contractual payment.  The Company’s
charge-off policy has been consistently applied and no significant changes have
been made to the policy during the periods reported. Management considers the
charge-off policy when evaluating the appropriateness of the allowance for loan
losses.





The Company experienced an increase in
contractual delinquency from 4.0% at March 31, 2008 to 4.2% at March 31,
2009.  The delinquency rate on a recency basis also increased from
2.6% at the end of fiscal 2008 to 2.7% at the end of the current fiscal
year.  Charge-offs as a percent of average loans increased from 14.5%
in fiscal 2008 to 16.7% in fiscal 2009.





In fiscal 2009, approximately 84.0% of
the Company’s loans were generated through refinancings of outstanding loans and
the origination of new loans to previous customers.  A refinancing
represents a new loan transaction with a present customer in which a portion of
the new loan proceeds is used to repay the balance of an existing loan and the
remaining portion is advanced to the customer.  For fiscal 2009, 2008,
and 2007, the percentages of the Company’s loan originations that were
refinancings of existing loans were 75.0%, 73.3% and 74.3%,
respectively.  The Company’s refinancing policies, while limited by
state regulations, in all cases consider our customer’s payment history and
require that our customer have made at least two payments on the loan being
considered for refinancing.  A refinancing is considered a current
refinancing if the customer is no more than 45 days delinquent on a contractual
basis.  Delinquent refinancings may be extended to customers that are
more than 45 days past due on a contractual basis if the customer completes a
new application and the manager believes that the customer’s ability and intent
to repay has improved.  It is the Company’s policy to not refinance
delinquent loans in amounts greater than the original amounts
financed.  In all cases, a customer must complete a new application
every two years.  During fiscal 2009, delinquent refinancings
represented 2.1% of the Company’s total loan volume compared to 1.9% in fiscal
2008.





Charge-offs, as a percentage of loans
made by category, are greatest on loans made to new borrowers and less on loans
made to former borrowers and refinancings.  This is as expected due to
the payment history experience available on repeat
borrowers.  However, as a percentage of total loans charged off,
refinancings represent the greatest percentage due to the volume of loans made
in this category.  The following table depicts the charge-offs as a
percent of loans made by category and as a percent of total charge-offs during
fiscal 2009:





Loan
      Volume
                  
                  
                  Percent
      of
                  
                  
                  Percent
      of Totalby Category
                  
                  
                  Total Charge-offs
                  
                  
                  Loans Made by CategoryRefinancing
                  
                  
                  75.0
                  %
                  
                  
                  73.0
                  %
                  
                  
                  5.4
                  %Former
      borrowers
                  
                  
                  9.0
                  %
                  
                  
                  5.9
                  %
                  
                  
                  4.0
                  %New
      borrowers
                  
                  
                  16.0
                  %
                  
                  
                  21.1
                  %
                  
                  
                  11.7
                  %100.0
                  %
                  
                  
                  100.0
                  %


24


The Company maintains an allowance for
loan losses in an amount that, in management’s opinion, is adequate to cover
losses inherent in the existing loan portfolio.  The Company charges
against current earnings, as a provision for loan losses, amounts added to the
allowance to maintain it at levels expected to cover probable losses of
principal.  When establishing the allowance for loan losses, the
Company takes into consideration the growth of the loan portfolio, the mix of
the loan portfolio, current levels of charge-offs, current levels of
delinquencies, and current economic factors.  In accordance with
Statement of Accounting Standards No. 5 “Accounting for Contingencies” (SFAS No.
5), the Company accrues an estimated loss if it is probable and can be
reasonably estimated.  It is probable that there are losses in the
existing portfolio.  To estimate the losses, the Company uses
historical information for net charge-offs and average loan
life.  This method is based on the fact that many customers refinance
their loans prior to the contractual maturity.  Average contractual
loan terms are approximately nine months and the average loan life is
approximately four months.  Based on this method, the Company had an
allowance for loan losses that approximated six months of average net
charge-offs at March 31, 2009, 2008, and 2007. Therefore, at each year end the
Company had an allowance for loan losses that covered estimated losses for its
existing loans based on historical charge-offs and average lives.  In
addition, the entire loan portfolio turns over approximately 3 times during a
typical twelve-month period.  Therefore, a large percentage of loans
that are charged off during any fiscal year are not on the Company’s books at
the beginning of the fiscal year.  The Company believes that it is not
appropriate to provide for losses on loans that have not been originated, that
twelve months of net charge-offs are not needed in the allowance, and that the
method employed is in accordance with generally accepted accounting
principles.





The Company records acquired loans at
fair value based on current interest rates, less an allowance for
uncollectibility and collection costs.





Statement of Position No. 03-3 (SOP
03-3), “Accounting for Certain Loans or Debt Securities Acquired in a Transfer,”
was adopted by the Company on April 1, 2005.  SOP 03-3 prohibits
carryover or creation of valuation allowances in the initial accounting of all
loans acquired in a transfer that are within the scope of the
SOP.  Management believes that a loan has shown deterioration if it is
over 60 days delinquent.  The Company believes that loans acquired
since the adoption of SOP 03-3 have not shown evidence of deterioration of
credit quality since origination, and therefore, are not within the scope of SOP
03-3 because there is no consideration paid for acquired loans over 60 days
delinquent.  For the years ended March 31, 2009, 2008 and 2007, the
Company recorded adjustments of approximately $0.5 million, $0.1 million and
$0.9 million, respectively, to the allowance for loan losses in connection with
acquisitions in accordance generally accepted accounting
principles.  These adjustments represent the allowance for loan losses
on acquired loans which are not within the scope of SOP 03-3.





The Company believes that its
allowance for loan losses is adequate to cover losses in the existing portfolio
at March 31, 2009.





The following is a summary of the
changes in the allowance for loan losses for the years ended March 31, 2009,
2008, and 2007:





March 31,2009
                
                
                2008
                
                
                2007Balance
      at the beginning of the year
                
                $
                33,526,147
                
                
                
                27,840,239
                
                
                
                22,717,192Provision
      for loan losses
                
                
                85,476,092
                
                
                
                67,541,805
                
                
                
                51,925,080Loan
      losses
                
                
                (88,728,498
                )
                
                
                (68,985,269
                )
                
                
                (53,979,375
                )Recoveries
                
                
                7,590,928
                
                
                
                6,989,297
                
                
                
                6,230,010Translation
      adjustment
                
                
                (306,340
                )
                
                
                18,135
                
                
                
                (956
                )Allowance
      on acquired loans
                
                
                462,441
                
                
                
                121,940
                
                
                
                948,288Balance
      at the end of the year
                
                $
                38,020,770
                
                
                
                33,526,147
                
                
                
                27,840,239Allowance
      as a percentage of loans receivable, net of unearned and deferred
      fees
                
                
                7.6
                %
                
                
                7.5
                %
                
                
                7.4
                %Net
      charge-offs as a percentage of average loans receivable (1)
                
                
                16.7
                %
                
                
                14.5
                %
                
                
                13.3
                %








(1)
            Average
      loans receivable have been determined by averaging month-end gross loans
      receivable less unearned interest and deferred fees over the indicated
      period.


25




Quarterly
Information and Seasonality





The Company's loan volume and
corresponding loans receivable follow seasonal trends.  The Company's
highest loan demand typically occurs from October through December, its third
fiscal quarter.  Loan demand has generally been the lowest and loan
repayment highest from January to March, its fourth fiscal
quarter.  Loan volume and average balances typically remain relatively
level during the remainder of the year.  This seasonal trend affects
quarterly operating performance through corresponding fluctuations in interest
and fee income and insurance commissions earned and the provision for loan
losses recorded, as well as fluctuations in the Company's cash
needs.  Consequently, operating results for the Company's third fiscal
quarter generally are significantly lower than in other quarters and operating
results for its fourth fiscal quarter are significantly higher than in other
quarters.





The following table sets forth, on a
quarterly basis, certain items included in the Company's unaudited consolidated
financial statements and shows the number of offices open during fiscal years
2009 and 2008.





At
      or for the Three Months Ended2009
                  
                  
                  2008First,
                  
                  
                  Second,
                  
                  
                  Third,
                  
                  
                  Fourth,
                  
                  
                  First,
                  
                  
                  Second,
                  
                  
                  Third,
                  
                  
                  Fourth,(Dollars
      in thousands)Total
      revenues
                  
                  $
                  88,421
                  
                  
                  
                  91,721
                  
                  
                  
                  99,656
                  
                  
                  
                  113,907
                  
                  
                  
                  76,389
                  
                  
                  
                  80,198
                  
                  
                  
                  88,043
                  
                  
                  
                  101,417Provision
      for loan losses
                  
                  
                  17,857
                  
                  
                  
                  23,307
                  
                  
                  
                  29,490
                  
                  
                  
                  14,822
                  
                  
                  
                  14,217
                  
                  
                  
                  18,416
                  
                  
                  
                  23,224
                  
                  
                  
                  11,685General
      and administrative expenses
                  
                  
                  48,790
                  
                  
                  
                  48,379
                  
                  
                  
                  51,716
                  
                  
                  
                  51,331
                  
                  
                  
                  42,191
                  
                  
                  
                  41,930
                  
                  
                  
                  47,470
                  
                  
                  
                  47,628Net
      income
                  
                  
                  12,052
                  
                  
                  
                  10,664
                  
                  
                  
                  10,004
                  
                  
                  
                  27,983
                  
                  
                  
                  10,850
                  
                  
                  
                  10,466
                  
                  
                  
                  7,288
                  
                  
                  
                  24,392Gross
      loans receivable
                  
                  $
                  632,715
                  
                  
                  
                  667,179
                  
                  
                  
                  736,234
                  
                  
                  
                  671,176
                  
                  
                  
                  544,964
                  
                  
                  
                  571,319
                  
                  
                  
                  663,217
                  
                  
                  
                  599,509Number
      of offices open
                  
                  
                  872
                  
                  
                  
                  907
                  
                  
                  
                  923
                  
                  
                  
                  944
                  
                  
                  
                  782
                  
                  
                  
                  817
                  
                  
                  
                  831
                  
                  
                  
                  838





Recently
Issued Accounting Pronouncements





Business
Combinations





In
December 2007, the Financial Accounting Standards Board issued
SFAS No. 141 (revised 2007), Business
Combinations, (“SFAS No. 141R”), which replaces
SFAS No. 141, Business Combinations.
SFAS No. 141R requires an acquirer to recognize the assets acquired,
the liabilities assumed, and any noncontrolling interest in the acquiree at the
acquisition date, measured at their fair values as of that date, with limited
exceptions. SFAS No. 141R also requires acquisition-related costs and
restructuring costs that the acquirer expected, but was not obligated to incur
at the acquisition date, to be recognized separately from the business
combination. In addition, SFAS No. 141R amends SFAS No. 109,
Accounting for Income Taxes,to require the acquirer to recognize changes in the amount of its
deferred tax benefits that are recognizable because of a business combination
either in income from continuing operations in the period of the combination or
directly in contributed capital. SFAS No. 141R applies prospectively
to business combinations in fiscal years beginning on or after December 15,
2008 and would therefore impact our accounting for future acquisitions beginning
in fiscal 2010.





Disclosures
about Derivative Instruments and Hedging Activities





Statement
161, which amends FASB Statement No. 133, “Accounting for Derivative Instruments
and Hedging Activities,“ requires companies with derivative instruments to
disclose information about how and why a company uses derivative instruments,
how derivative instruments and related hedged items are accounted for under
Statement 133, and how derivative instruments and related hedged items affect a
company's financial position, financial performance, and cash flows. The
required disclosures include the fair value of derivative instruments and their
gains or losses in tabular format, information about credit-risk-related
contingent features in derivative agreements, counterparty credit risk, and the
company's strategies and objectives for using derivative instruments. The
Statement expands the current disclosure framework in Statement 133. Statement
161 is effective prospectively for periods beginning on or after November 15,
2008.  See Note 9 to our Consolidated Financial
Statements.


26


Fair
Value Option for Financial Assets and Financial Liabilities





On
February 15, 2007, the FASB issued SFAS No. 159 (“SFAS 159”), “The
Fair Value Option for Financial Assets and Financial Liabilities,” which allows
an entity the irrevocable option to elect fair value for the initial and
subsequent measurement for certain financial assets and liabilities on a
contract-by-contract basis. Subsequent changes in fair value of these financial
assets and liabilities would be recognized in earnings when they occur. SFAS 159
further establishes certain additional disclosure requirements. SFAS 159 is
effective for the first fiscal period beginning after November 15,
2007.  The adoption of this standard did not have a material impact on
our Consolidated Financial Statements.





Convertible
Debt Instruments





On May 9,
2008, the FASB issued FASB Staff  Position No. APB 14-1, “Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)” (“FSP APB 14-1”).  FSP APB 14-1
applies to any convertible debt instrument that at conversion may be settled
wholly or partly with cash, requires cash-settleable convertibles to be
separated into their debt and equity components at issuance and prohibits the
use of the fair-value option for such instruments.  FSP APB 14-1 is
effective for the first fiscal period beginning after December 15, 2008 and must
be applied retrospectively to all periods presented with a cumulative effect
adjustment being made as of the earliest period presented.  We will be
required to adopt FSP APB 14-1 in the first quarter of fiscal
2010.  See Item 8, Financial Statements and Supplementary Data, Note
1:  Summary of Significant Accounting Policies for a description of
the impact on our Consolidated Financial Statements.





Instruments
Indexed to an Entity’s Own Stock





In June
2008, the FASB ratified EITF Issue 07-5, “Determining Whether an
Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock” (“EITF 07-5”). EITF 07-5
provides a new two-step model to be applied to any freestanding financial
instrument or embedded feature that has all the characteristics of a derivative
in paragraphs 6-9 of Statement No. 133, “Accounting for Derivative Instruments
and Hedging Activities,” (“SFAS 133”) in determining whether a financial
instrument or an embedded feature is indexed to an issuer’s own stock and thus
able to qualify for the SFAS 133 paragraph 11(a) scope exception. It also
clarifies on the impact of foreign currency denominated strike prices and
market-based employee stock option valuation instruments on the evaluation. EITF
07-5 also applies to any freestanding financial instrument that is potentially
settled in an entity’s own stock, regardless of whether the instrument has all
the characteristics of a derivative in paragraphs 6-9 of SFAS 133, for purposes
of determining whether the instrument is within the scope of EITF 00-19,
“Accounting for Derivative Financial Instruments Indexed to, and Potentially
Settled in, a Company’s Own Stock”. EITF 07-5 will be effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years. Early adoption is prohibited. The
Company is in the process of assessing the effect that the adoption of EITF 07-5
will have on our Consolidated Financial Statements.





Useful
Life of Intangible Assets





In April
2008, the FASB issued FASB Staff Position No. FAS 142-3,”Determination of the
Useful Life of Intangible Assets” (“FSP FAS 142-3”).  FSP FAS 142-3
applies to all recognized intangible assets and its guidance is restricted to
estimating the useful life of recognized intangible assets.  FSP FAS
142-3 is effective for the first fiscal period beginning after December 15, 2008
and must be applied prospectively to intangible assets acquired after the
effective date.  We will be required to adopt FSP FAS 142-3 to
intangible assets acquired beginning with the first quarter of fiscal
2010.





Liquidity
and Capital Resources





The Company has financed and
continues to finance its operations, acquisitions and office expansion through a
combination of cash flow from operations and borrowings from its institutional
lenders.  The Company has generally applied its cash flow from
operations to fund its increasing loan volume, fund acquisitions, repay
long-term indebtedness, and repurchase its common stock.  As the
Company's gross loans receivable increased from $310.1 million at March 31, 2004
to $671.2 million at March 31, 2009, net cash provided by operating activities
for fiscal years 2009, 2008 and 2007 was $153.9 million, $136.0 million and
$110.1 million, respectively.


27


The
Company's primary ongoing cash requirements relate to the funding of new offices
and acquisitions, the overall growth of loans outstanding, the repayment or
repurchase of long-term indebtedness and the repurchase of its common
stock.  In November 2007 and February 2008, the Board of Directors
authorized the Company to increase its share repurchase program by an additional
$10 million, respectively. As of March 31, 2009, 6,454,144 shares have been
repurchased since 2000 for respective aggregate purchase price of approximately
$149.7 million. During fiscal 2009 the Company repurchased 288,700 shares for
$7.8 million. During fiscal 2009, the Company repurchased $15.0 million par
value of its Convertible Senior Subordinated notes payable.  The
Company believes stock repurchases and debt repurchases to be a viable component
of the Company’s long-term financial strategy and an excellent use of excess
cash when the opportunity arises.  In addition, the Company plans to
open or acquire approximately 30 branches in the United States and 15 branches
in Mexico in fiscal 2010.  Expenditures by the Company to open and
furnish new offices generally averaged approximately $25,000 per office during
fiscal 2009.  New offices have also required from $100,000 to $400,000
to fund outstanding loans receivable originated during their first 12 months of
operation.





The Company acquired a net of 11
offices and a number of loan portfolios from competitors in 7 states in 14
separate transactions during fiscal 2009. Gross loans receivable purchased in
these transactions were approximately $10.9 million in the aggregate at the
dates of purchase.  The Company believes that attractive opportunities
to acquire new offices or receivables from its competitors or to acquire offices
in communities not currently served by the Company will continue to become
available as conditions in local economies and the financial circumstances of
owners change.





The Company has a $187.0 million base
credit facility with a syndicate of banks.  In addition to the base
revolving credit commitment, there is a $30 million seasonal revolving credit
commitment available November 15 of each year through March 31 of the
immediately succeeding year to cover the increase in loan demand during this
period.  The credit facility will expire on September 30,
2010.  Funds borrowed under the revolving credit facility bear
interest, at the Company's option, at either the agent bank's prime rate per
annum or the LIBOR rate plus 1.80% per annum.  At March 31, 2009, the
interest rate on borrowings under the revolving credit facility was
3.25%.   The Company pays a commitment fee equal to 0.375% per
annum of the daily unused portion of the revolving credit
facility.  Amounts outstanding under the revolving credit facility may
not exceed specified percentages of eligible loans receivable.  On
March 31, 2009, $113.3 million was outstanding under this facility, and there
was $73.7 million of unused borrowing availability under the borrowing base
limitations, excluding the seasonal line which expires each March
31.





The Company's credit agreements contain
a number of financial covenants including minimum net worth and fixed charge
coverage requirements.  The credit agreements also contain certain
other covenants, including covenants that impose limitations on the Company with
respect to (i) declaring or paying dividends or making distributions on or
acquiring common or preferred stock or warrants or options; (ii) redeeming or
purchasing or prepaying principal or interest on subordinated debt; (iii)
incurring additional indebtedness; and (iv) entering into a merger,
consolidation or sale of substantial assets or subsidiaries.  The
Company was in compliance with these agreements at March 31, 2009 and does not
believe that these agreements will materially limit its business and expansion
strategy.





On October 2, 2006, the Company amended
its senior credit facility in connection with the issuance of $110 million in
aggregate principal amount of its 3% convertible senior subordinated notes due
October 1, 2011.  See Note 7 to the Consolidated Financial Statements
included in this report for more information regarding this
transaction.


28


The following table summarizes the
Company’s contractual cash obligations by period (in thousands):





Fiscal Year Ended March 31,2010
                
                
                2011
                
                
                2012
                
                
                2013
                
                
                2014
                
                
                Thereafter
                
                
                TotalConvertible
      Senior Subordinated Notes Payable
                
                $
                -
                
                
                $
                -
                
                
                $
                95,000
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                95,000Maturities
      of Notes Payable
                
                
                -
                
                
                
                113,310
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                113,310Interest
      Payments on Convertible Senior Subordinated Notes Payable
                
                
                2,850
                
                
                
                2,850
                
                
                
                2,850
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                8,550Interest
      Payments on Notes Payable
                
                
                3,683
                
                
                
                1,841
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                5,524Minimum
      Lease Payments
                
                
                12,977
                
                
                
                8,416
                
                
                
                3,840
                
                
                
                843
                
                
                
                217
                
                
                
                -
                
                
                
                26,293Total
                
                $
                19,510
                
                
                $
                126,417
                
                
                $
                101,690
                
                
                $
                843
                
                
                $
                217
                
                
                $
                -
                
                
                $
                248,677




As of March 31, 2009, the Company’s
contractual obligations relating to FIN 48 included unrecognized tax benefits of
$3.9 million which are expected to be settled in greater than one
year.  While the settlement of the obligation is expected to be in
excess of one year, the precise timing of the settlement is
indeterminable.





The Company believes that cash flow
from operations and borrowings under its revolving credit facility will be
adequate for the next twelve months, and for the foreseeable future thereafter,
to fund the expected cost of opening or acquiring new offices, including
funding  initial operating losses of new offices and funding loans
receivable originated by those offices and the Company's other
offices.  Except as otherwise discussed in this report, including in
Part 1, Item 1A, “Risk Factors,” management is not currently aware of any
trends, demands, commitments, events or uncertainties that it believes will or
could result in, or are or could be reasonably likely to result in, the
Company’s liquidity increasing or decreasing in any material
way.  From time to time, the Company has needed and obtained, and
expects that it will continue to need on a periodic basis, an increase in the
borrowing limits under its revolving credit facility.  The Company has
successfully obtained such increases in the past and anticipates that it will be
able to do so in the future as the need arises; however, there can be no
assurance that this additional funding will be available (or available on
reasonable terms) if and when needed. See Part I, Item 1A, “Risk Factors,” for a
further discussion of risks and contingencies that could affect our business,
financial condition and liquidity.





Quantitative
and Qualitative Disclosures About Market Risk





Interest
Rate Risk





As of March 31, 2009, the Company’s
financial instruments consist of the following:  cash, loans
receivable, senior notes payable, convertible senior subordinated notes payable,
and an interest rate swap.  Fair value approximates carrying value for
all of these instruments, except the convertible senior subordinated notes
payable, for which the fair value of $61,701,550 represents the quoted market
price. Loans receivable are originated at prevailing market rates and have an
average life of approximately four months.  Given the short-term
nature of these loans, they are continually repriced at current market
rates.   The Company’s outstanding debt under its revolving
credit facility was $113.3 million at March 31, 2009.  Interest on
borrowings under this facility is based, at the Company’s option, on the prime
rate or LIBOR plus 1.80%.





Based on the outstanding balance at
March 31, 2009, a change of 1% in the LIBOR interest rate would cause a change
in interest expense of approximately $633,000 on an annual
basis.


29


In October 2005, the Company entered
into an interest rate swap to economically hedge the variable cash flows
associated with $30 million of its LIBOR-based borrowings.  This swap
converted the $30 million from a variable rate of one-month LIBOR to a fixed
rate of 4.755% for a period of five years.  In December 2008, the
Company entered into a $20 million interest rate swap to convert a variable rate
of one month LIBOR to a fixed rate of 2.4%.  In accordance with SFAS
133, the Company records derivatives at fair value, as other assets or
liabilities, on the consolidated balance sheets.  Since the Company is
not utilizing hedge accounting under SFAS 133, changes in the fair value of the
derivative instrument are included in other income.  As of March 31,
2009 the fair value of the interest rate swap was a liability of $2.4 million
and included in other liabilities.  The change in fair value from the
beginning of the year, recorded as an unrealized loss in other income, was
approximately $773,000.





On October 10, 2006, the Company issued
$110 million convertible senior subordinated notes due October 1, 2011 (the
“Convertible Notes”) to qualified institutional brokers in accordance with Rule
144A of the Securities Act of 1933.  Interest on the Convertible Notes
is fixed at 3% and is payable semi-annually in arrears on April 1 and October 1
of each year, commencing April 1, 2007.  During fiscal 2009, the
company repurchased and cancelled $15.0 million of the convertible senior
subordinated notes.  See Note 8 to the Consolidated Financial
Statements included in this report for more information regarding these
repurchases.





Foreign
Currency Exchange Rate Risk




In September 2005 the Company began
opening offices in Mexico, where local businesses utilize the Mexican peso as
their functional currency.  The consolidated financial statements of the
Company are denominated in U.S. dollars and are therefore subject to fluctuation
as the U.S. dollar and Mexican peso foreign exchange rate
changes.  International revenues were approximately 3.1% of total
revenues for the year ended March 31, 2009 and net loans denominated in Mexican
pesos were approximately $12.0 million (USD) at March 31, 2009.




The Company’s foreign currency exchange
rate exposures may change over time as business practices evolve and could have
a material effect on its financial results.  There have been, and there may
continue to be, period-to-period fluctuations in the relative portions of
Mexican revenues.





Because earnings are affected by
fluctuations in the value of the U.S. dollar against foreign currencies, an
analysis was performed assuming a hypothetical 10% increase or decrease in the
value of the U.S. dollar relative to the Mexican peso in which the Company’s
transactions in Mexico are denominated.   At March 31, 2009, the
analysis indicated that such market movements would not have had a material
effect on the consolidated financial statements.  The actual effects
on the consolidated financial statements in the future may differ materially
from results of the analysis for the year ended March 31, 2009.  The
Company will continue to monitor and assess the effect of currency fluctuations
and may institute further hedging alternatives.





Inflation





The Company does not believe that
inflation has a material adverse effect on its financial condition or results of
operations.  The primary impact of inflation on the operations of the
Company is reflected in increased operating costs.  While increases in
operating costs would adversely affect the Company's operations, the consumer
lending laws of two of the eleven states in which the Company operates allow
indexing of maximum loan amounts to the Consumer Price Index.  These
provisions will allow the Company to make larger loans at existing interest
rates in those states, which could partially offset the potential increase in
operating costs due to inflation.





Legal
Matters





As of March 31, 2009, the Company and
certain of its subsidiaries have been named as defendants in various legal
actions arising from their normal business activities in which damages in
various amounts are claimed.  Although the amount of any ultimate
liability with respect to such matters cannot be determined, the Company
believes that any such liability will not have a material adverse effect on the
Company’s consolidated financial condition or results of operations taken as a
whole.





Item
7A.  Quantitative and Qualitative Disclosures About Market
Risk





“Management’s Discussion and Analysis
of Financial Condition and Results of Operations – Quantitative and Qualitative
Disclosures about Market Risk” of this report is incorporated by reference in
response to this Item 7A.


30


Part
II





Item
8.  Financial Statements and Supplementary Data





CONSOLIDATED
BALANCE SHEETS


March 31,2009
                    
                    
                    2008AssetsCash
      and cash equivalents
                    
                    $
                    6,260,410
                    
                    
                    
                    7,589,575Gross
      loans receivable
                    
                    
                    671,175,985
                    
                    
                    
                    599,508,969Less:Unearned
      interest and deferred fees
                    
                    
                    (172,743,440
                    )
                    
                    
                    (154,418,105
                    )Allowance
      for loan losses
                    
                    
                    (38,020,770
                    )
                    
                    
                    (33,526,147
                    )Loans
      receivable, net
                    
                    
                    460,411,775
                    
                    
                    
                    411,564,717Property
      and equipment, net
                    
                    
                    23,060,360
                    
                    
                    
                    18,654,010Deferred
      income taxes
                    
                    
                    16,983,275
                    
                    
                    
                    22,134,066Other
      assets, net
                    
                    
                    9,970,016
                    
                    
                    
                    10,818,057Goodwill
                    
                    
                    5,580,946
                    
                    
                    
                    5,352,675Intangible
      assets, net
                    
                    
                    8,987,551
                    
                    
                    
                    9,997,327$
                    531,254,333
                    
                    
                    
                    486,110,427Liabilities
      and Shareholders' EquityLiabilities:Senior
      notes payable
                    
                    
                    113,310,000
                    
                    
                    
                    104,500,000Convertible
      senior subordinated notes payable
                    
                    
                    95,000,000
                    
                    
                    
                    110,000,000Other
      notes payable
                    
                    
                    -
                    
                    
                    
                    400,000Income
      taxes payable
                    
                    
                    11,253,460
                    
                    
                    
                    18,039,242Accounts
      payable and accrued expenses
                    
                    
                    21,304,466
                    
                    
                    
                    18,865,913Total
      liabilities
                    
                    
                    240,867,926
                    
                    
                    
                    251,805,155Shareholders'
      equity:Preferred
      stock, no par value Authorized 5,000,000 shares, no shares issued or
      outstanding
                    
                    
                    -
                    
                    
                    
                    -Common
      stock, no par value Authorized 95,000,000 shares; issued and outstanding
      16,211,659 and 16,278,684 shares at March 31, 2009 and 2008,
      respectively
                    
                    
                    -
                    
                    
                    
                    -Additional
      paid-in capital
                    
                    
                    2,420,916
                    
                    
                    
                    1,323,001Retained
      earnings
                    
                    
                    292,195,154
                    
                    
                    
                    232,812,768Accumulated
      other comprehensive income (loss), net of tax
                    
                    
                    (4,229,663
                    )
                    
                    
                    169,503Total
      shareholders' equity
                    
                    
                    290,386,407
                    
                    
                    
                    234,305,272Commitments
      and contingencies$
                    531,254,333
                    
                    
                    
                    486,110,427





See accompanying notes to consolidated financial statements.


31


CONSOLIDATED
STATEMENTS OF OPERATIONS





Years Ended March 31,2009
                    
                    
                    2008
                    
                    
                    2007Revenues:Interest
      and fee income
                    
                    $
                    331,453,835
                    
                    
                    
                    292,457,259
                    
                    
                    
                    247,007,668Insurance
      commissions and other income
                    
                    
                    62,251,485
                    
                    
                    
                    53,589,595
                    
                    
                    
                    45,310,752Total
      revenues
                    
                    
                    393,705,320
                    
                    
                    
                    346,046,854
                    
                    
                    
                    292,318,420Expenses:Provision
      for loan losses
                    
                    
                    85,476,092
                    
                    
                    
                    67,541,805
                    
                    
                    
                    51,925,080General
      and administrative expenses:Personnel
                    
                    
                    130,674,094
                    
                    
                    
                    119,483,185
                    
                    
                    
                    102,824,945Occupancy
      and equipment
                    
                    
                    25,577,437
                    
                    
                    
                    21,554,655
                    
                    
                    
                    17,397,672Data
      processing
                    
                    
                    2,307,172
                    
                    
                    
                    2,112,399
                    
                    
                    
                    2,159,712Advertising
                    
                    
                    13,067,079
                    
                    
                    
                    12,647,576
                    
                    
                    
                    10,277,796Amortization
      of intangible assets
                    
                    
                    2,454,872
                    
                    
                    
                    2,505,465
                    
                    
                    
                    2,885,202Other
                    
                    
                    26,136,095
                    
                    
                    
                    20,915,465
                    
                    
                    
                    18,081,517200,216,749
                    
                    
                    
                    179,218,745
                    
                    
                    
                    153,626,844Interest
      expense
                    
                    
                    10,388,510
                    
                    
                    
                    11,569,110
                    
                    
                    
                    9,596,116Total
      expenses
                    
                    
                    296,081,351
                    
                    
                    
                    258,329,660
                    
                    
                    
                    215,148,040Income
      before income taxes
                    
                    
                    97,623,969
                    
                    
                    
                    87,717,194
                    
                    
                    
                    77,170,380Income
      taxes
                    
                    
                    36,920,499
                    
                    
                    
                    34,721,036
                    
                    
                    
                    29,274,000Net
      income
                    
                    $
                    60,703,470
                    
                    
                    
                    52,996,158
                    
                    
                    
                    47,896,380Net
      income per common share:Basic
                    
                    $
                    3.74
                    
                    
                    
                    3.11
                    
                    
                    
                    2.66Diluted
                    
                    $
                    3.69
                    
                    
                    
                    3.05
                    
                    
                    
                    2.60Weighted
      average shares outstanding:Basic
                    
                    
                    16,239,883
                    
                    
                    
                    17,044,122
                    
                    
                    
                    18,018,370Diluted
                    
                    
                    16,464,403
                    
                    
                    
                    17,374,746
                    
                    
                    
                    18,393,728





See
accompanying notes to consolidated financial statements.


32


CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME


.


AccumulatedAdditional
                                
                                
                                
                                Other
                                
                                Total
                                
                                
                                TotalPaid-in
                                
                                Retained
                                
                                Comprehensive
                                
                                Shareholders’
                                
                                
                                ComprehensiveCapital
                                
                                Earnings
                                
                                Income
      (Loss), Net
                                
                                Equity
                                
                                
                                IncomeBalances
      at March 31, 2006
                                
                                $
                                1,209,358
                                
                                
                                209,270,853
                                
                                
                                (50,092
                                )
                                
                                210,430,119Proceeds
      from exercise of stock options (331,870 shares), including tax benefits of
      $2,937,122
                                
                                
                                6,423,279
                                
                                
                                -
                                
                                
                                -
                                
                                
                                6,423,279Common
      stock repurchases (1,209,395 shares)
                                
                                
                                (6,698,538
                                )
                                
                                (47,397,425
                                )
                                
                                -
                                
                                
                                (54,095,963
                                )Issuance
      of restricted common stock under stock option plan (33,442
      shares)
                                
                                
                                449,331
                                
                                
                                -
                                
                                
                                -
                                
                                
                                449,331Stock
      option expense
                                
                                
                                3,481,617
                                
                                
                                -
                                
                                
                                -
                                
                                
                                3,481,617Tax
      benefit from Convertible note
                                
                                
                                9,359,000
                                
                                
                                -
                                
                                
                                -
                                
                                
                                9,359,000Proceeds
      from sale of warrants associated with convertible notes
                                
                                
                                16,155,823
                                
                                
                                -
                                
                                
                                -
                                
                                
                                16,155,823Purchase
      of call option associated with convertible notes
                                
                                
                                (24,609,205
                                )
                                
                                -
                                
                                
                                -
                                
                                
                                (24,609,205
                                )Other
      comprehensive income
                                
                                
                                -
                                
                                
                                -
                                
                                
                                2,266
                                
                                
                                2,266
                                
                                
                                
                                2,266Net
      income
                                
                                
                                -
                                
                                
                                47,896,380
                                
                                
                                -
                                
                                
                                47,896,380
                                
                                
                                
                                47,896,380Total
      comprehensive income
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                
                                47,898,646Balances
      at March 31, 2007
                                
                                $
                                5,770,665
                                
                                
                                209,769,808
                                
                                
                                (47,826
                                )
                                
                                215,492,647Proceeds
      from exercise of stock options (116,282 shares), including tax benefits of
      $1,110,598
                                
                                
                                2,724,938
                                
                                
                                -
                                
                                
                                -
                                
                                
                                2,724,938Common
      stock repurchases (1,375,100 shares)
                                
                                
                                (12,458,946
                                )
                                
                                (29,403,198
                                )
                                
                                -
                                
                                
                                (41,862,144
                                )Issuance
      of restricted common stock under stock option plan (44,981
      shares)
                                
                                
                                1,348,419
                                
                                
                                -
                                
                                
                                -
                                
                                
                                1,348,419Stock
      option expense
                                
                                
                                3,937,925
                                
                                
                                -
                                
                                
                                -
                                
                                
                                3,937,925Cumulative
      effect of FIN 48
                                
                                
                                -
                                
                                
                                (550,000
                                )
                                
                                -
                                
                                
                                (550,000
                                )Other
      comprehensive income
                                
                                
                                -
                                
                                
                                -
                                
                                
                                217,329
                                
                                
                                217,329
                                
                                
                                
                                217,329Net
      income
                                
                                
                                -
                                
                                
                                52,996,158
                                
                                
                                -
                                
                                
                                52,996,158
                                
                                
                                
                                52,996,158Total
      comprehensive income
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                
                                53,213,487Balances
      at March 31, 2008
                                
                                $
                                1,323,001
                                
                                
                                232,812,768
                                
                                
                                169,503
                                
                                
                                234,305,272Proceeds
      from exercise of stock options (142,683 shares), including tax benefits of
      $1,320,974
                                
                                
                                2,975,335
                                
                                
                                -
                                
                                
                                -
                                
                                
                                2,975,335Common
      stock repurchases (288,700 shares)
                                
                                
                                (6,527,680
                                )
                                
                                (1,321,084
                                )
                                
                                -
                                
                                
                                (7,848,764
                                )Issuance
      of restricted common stock under stock option plan (78,592
      shares)
                                
                                
                                1,418,031
                                
                                
                                -
                                
                                
                                -
                                
                                
                                1,418,031Stock
      option expense
                                
                                
                                3,232,229
                                
                                
                                -
                                
                                
                                -
                                
                                
                                3,232,229Other
      comprehensive income
                                
                                
                                -
                                
                                
                                -
                                
                                
                                (4,399,166
                                )
                                
                                (4,399,166
                                )
                                
                                
                                (4,399,166
                                )Net
      income
                                
                                
                                -
                                
                                
                                60,703,470
                                
                                
                                -
                                
                                
                                60,703,470
                                
                                
                                
                                60,703,470Total
      comprehensive income
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                -
                                
                                
                                
                                56,304,304Balances
      at March 31, 2009
                                
                                $
                                2,420,916
                                
                                
                                292,195,154
                                
                                
                                (4,229,663
                                )
                                
                                290,386,407





See
accompanying notes to consolidated financial statements.


33


CONSOLIDATED
STATEMENTS OF CASH FLOWS


Years Ended March 31,2009
                                  
                                  
                                  2008
                                  
                                  
                                  2007Cash
      flows from operating activities:Net
      income
                                  
                                  $
                                  60,703,470
                                  
                                  
                                  
                                  52,996,158
                                  
                                  
                                  
                                  47,896,380Adjustments
      to reconcile net income to net cash provided by operating
      activities:Amortization
      of intangible assets
                                  
                                  
                                  2,454,872
                                  
                                  
                                  
                                  2,505,465
                                  
                                  
                                  
                                  2,885,202Amortization
      of loan costs and discounts
                                  
                                  
                                  745,031
                                  
                                  
                                  
                                  763,262
                                  
                                  
                                  
                                  379,634Provision
      for loan losses
                                  
                                  
                                  85,476,092
                                  
                                  
                                  
                                  67,541,805
                                  
                                  
                                  
                                  51,925,080Depreciation
                                  
                                  
                                  4,784,014
                                  
                                  
                                  
                                  3,760,461
                                  
                                  
                                  
                                  3,057,658Gain
      on the extinguishment of debt
                                  
                                  
                                  (5,520,248
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Deferred
      tax expense (benefit)
                                  
                                  
                                  5,128,126
                                  
                                  
                                  
                                  (3,127,924
                                  )
                                  
                                  
                                  (1,250,000
                                  )Compensation
      related to stock option and restricted stock plans
                                  
                                  
                                  4,650,260
                                  
                                  
                                  
                                  5,286,344
                                  
                                  
                                  
                                  3,930,948Loss
      on interest rate swap
                                  
                                  
                                  773,046
                                  
                                  
                                  
                                  1,762,662
                                  
                                  
                                  
                                  400,000Change
      in accounts:Other
      assets, net
                                  
                                  
                                  (361,495
                                  )
                                  
                                  
                                  (1,134,756
                                  )
                                  
                                  
                                  (262,450
                                  )Income
      taxes payable
                                  
                                  
                                  (6,875,999
                                  )
                                  
                                  
                                  4,973,728
                                  
                                  
                                  
                                  1,237,238Accounts
      payable and accrued expenses
                                  
                                  
                                  1,956,920
                                  
                                  
                                  
                                  695,405
                                  
                                  
                                  
                                  (111,497
                                  )Net
      cash provided by operating activities
                                  
                                  
                                  153,914,089
                                  
                                  
                                  
                                  136,022,610
                                  
                                  
                                  
                                  110,088,193Cash
      flows from investing activities:Increase
      in loans receivable, net
                                  
                                  
                                  (128,590,255
                                  )
                                  
                                  
                                  (125,822,271
                                  )
                                  
                                  
                                  (95,963,365
                                  )Net
      assets acquired from office acquisitions, primarily loans
                                  
                                  
                                  (9,153,680
                                  )
                                  
                                  
                                  (3,220,879
                                  )
                                  
                                  
                                  (16,269,811
                                  )Increase
      in intangible assets from acquisitions
                                  
                                  
                                  (1,673,367
                                  )
                                  
                                  
                                  (1,755,698
                                  )
                                  
                                  
                                  (2,123,853
                                  )Purchases
      of property and equipment, net
                                  
                                  
                                  (9,862,860
                                  )
                                  
                                  
                                  (7,976,013
                                  )
                                  
                                  
                                  (6,189,997
                                  )Net
      cash used in investing activities
                                  
                                  
                                  (149,280,162
                                  )
                                  
                                  
                                  (138,774,861
                                  )
                                  
                                  
                                  (120,547,026
                                  )Cash
      flows from financing activities:Net
      change in bank overdraft
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  1,544,231Proceeds
      (repayment) of senior revolving notes payable, net
                                  
                                  
                                  8,810,000
                                  
                                  
                                  
                                  43,900,000
                                  
                                  
                                  
                                  (39,200,000
                                  )Proceeds
      from convertible senior subordinated notes
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  110,000,000Repayment
      of convertible senior subordinated notes
                                  
                                  
                                  (9,179,752
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Repayment
      of other notes payable
                                  
                                  
                                  (400,000
                                  )
                                  
                                  
                                  (200,000
                                  )
                                  
                                  
                                  (200,000
                                  )Proceeds
      from exercise of stock options
                                  
                                  
                                  1,654,361
                                  
                                  
                                  
                                  1,614,340
                                  
                                  
                                  
                                  3,486,157Repurchase
      of common stock
                                  
                                  
                                  (7,848,764
                                  )
                                  
                                  
                                  (41,862,144
                                  )
                                  
                                  
                                  (54,095,963
                                  )Tax
      benefit from exercise of stock options
                                  
                                  
                                  1,320,974
                                  
                                  
                                  
                                  1,110,598
                                  
                                  
                                  
                                  2,937,122Proceeds
      from sale of warrants associated with convertible notes
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  16,155,823Loan
      cost associated with convertible notes
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (3,814,188
                                  )Purchase
      of call options associated with convertible notes
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (24,609,205
                                  )Net
      cash (used in) provided by financing activities
                                  
                                  
                                  (5,643,181
                                  )
                                  
                                  
                                  4,562,794
                                  
                                  
                                  
                                  12,203,977(Decrease)
      increase in cash and cash equivalents
                                  
                                  
                                  (1,009,254
                                  )
                                  
                                  
                                  1,810,543
                                  
                                  
                                  
                                  1,745,144Effect
      of foreign currency fluctuations on cash
                                  
                                  
                                  (319,911
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Cash
      and cash equivalents at beginning of year
                                  
                                  
                                  7,589,575
                                  
                                  
                                  
                                  5,779,032
                                  
                                  
                                  
                                  4,033,888Cash
      and cash equivalents at end of year
                                  
                                  $
                                  6,260,410
                                  
                                  
                                  
                                  7,589,575
                                  
                                  
                                  
                                  5,779,032




See
accompanying notes to consolidated financial statements.


34


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





(1)        Summary of Significant
Accounting Policies





The
Company's accounting and reporting policies are in accordance with U.S.
generally accepted accounting principles and conform to general practices within
the finance company industry.  The following is a description of the
more significant of these policies used in preparing the consolidated financial
statements.





Nature
of Operations





The
Company is a small-loan consumer finance company headquartered in Greenville,
South Carolina, that offers short-term small loans, medium-term larger loans,
related credit insurance products and ancillary products and services to
individuals who have limited access to other sources of consumer
credit.  It also offers income tax return preparation services and
access to refund anticipation loans (through a third party bank) to its customer
base and to others.





The
Company also markets computer software and related services to financial
services companies through its ParaData Financial Systems (“ParaData”)
subsidiary.





As of
March 31, 2009, the Company operated 881 offices in South Carolina, Georgia,
Texas, Oklahoma, Louisiana, Tennessee, Missouri, Illinois, New Mexico, Kentucky,
and Alabama.  The Company also operated 63 offices in
Mexico.  The Company is subject to numerous lending regulations that
vary by jurisdiction.





Principles
of Consolidation





The
consolidated financial statements include the accounts of World Acceptance
Corporation and its wholly owned subsidiaries (the
“Company”).  Subsidiaries consist of operating entities in various
states and Mexico, ParaData (a software company acquired during fiscal 1994),
WAC Insurance Company, Ltd. (a captive reinsurance company established in fiscal
1994) and Servicios World Acceptance Corporation de Mexico (a service company
established in fiscal 2006).  All significant intercompany balances
and transactions have been eliminated in consolidation.





The
financial statements of the Company’s foreign subsidiaries in Mexico are
prepared using the local currency as the functional currency.  Assets
and liabilities of these subsidiaries are translated into US dollars at the
current exchange rate and income and expense are translated at an average
exchange rate for the period.  The resulting translation gains and
losses are recognized as a component of equity in “Accumulated Other
Comprehensive Income (Loss).”





Use
of Estimates in the Preparation of Financial Statements





The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.  The
most significant item subject to such estimates and assumptions that could
materially change in the near term is the allowance for loan
losses.  Actual results could differ from those
estimates.





Business
Segments





The
Company reports operating segments in accordance with SFAS No. 131, “Disclosures about Segments of an
Enterprise and Related Information” (“SFAS 131”).  Operating
segments are components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and assess
performance.  SFAS 131 requires that a public enterprise report a
measure of segment profit or loss, certain specific revenue and expense items,
segment assets, information about the way that the operating segments were
determined and other items.


35





The
Company has one reportable segment, which is the consumer finance
company.  The other revenue generating activities of the Company,
including the sale of insurance products, income tax preparation, buying club
and the automobile club, are done in the existing branch network in conjunction
with or as a compliment to the lending operation.  There is no
discrete financial information available for these activities and they do not
meet the criteria under SFAS 131 to be reported separately.





ParaData
provides data processing systems to 107 separate finance companies, including
the Company.  At March 31, 2009 and 2008, ParaData had total assets of
$1.7 million, which represented less than 1% of total consolidated assets at
each fiscal year end.  Total net revenues (system sales and support)
for ParaData for the years ended March 31, 2009, 2008 and 2007 were $2.0
million, $2.2 million and $2.5 million, respectively, which represented less
than 1% of consolidated revenue for each year.  Although ParaData is
an operating segment under SFAS 131, it does not meet the criteria to require
separate disclosure.





Cash
and Cash Equivalents





For
purposes of the statement of cash flows, the Company considers all highly liquid
investments with a maturity of three months or less from the date of original
issuance to be cash equivalents.





Loans
and Interest Income





The
Company is licensed to originate direct cash consumer loans in the states of
Georgia, South Carolina, Texas, Oklahoma, Louisiana, Tennessee, Missouri,
Illinois, New Mexico, Kentucky, and Alabama.  In addition, the Company
also originates direct cash consumer loans in Mexico.  During fiscal
2009 and 2008, the Company originated loans generally ranging up to $3,000, with
terms of 24 months or less.  Experience indicates that a majority of
the direct cash consumer loans are refinanced, and the Company accounts for the
refinancing as a new loan.  Generally a customer must make multiple
payments in order to qualify for refinancing.  Furthermore, the
Company’s lending policy has predetermined lending amounts, so that in most
cases a refinancing will result in advancing additional funds.  The
Company believes that the advancement of additional funds constitutes more than
a minor modification to the terms of the existing loan, as the present value of
the cash flows under the terms of the new loan will be 10% or more of the
present value of the remaining cash flows under the terms of the original
loan.





Fees
received and direct costs incurred for the origination of loans are deferred and
amortized to interest income over the contractual lives of the
loans.  Unamortized amounts are recognized in income at the time that
loans are refinanced or paid in full.





Loans are
carried at the gross amount outstanding, reduced by unearned interest and
insurance income, net deferred origination fees and direct costs, and an
allowance for loan losses.  The Company generally calculates interest
revenue on its loans using the rule of 78’s, and recognizes the interest revenue
using the collection method, which is a cash method of recognizing the revenue.
The Company believes that the combination of these two methods does not differ
materially from the interest method, which is an accrual method for recognizing
the revenue.  Charges for late payments are credited to income when
collected.





The
Company generally offers its loans at the prevailing statutory rates for terms
not to exceed 24 months.  Management believes that the carrying value
approximates the fair value of its loan portfolio.





Allowance
for Loan Losses





The
Company maintains an allowance for loan losses in an amount that, in
management’s opinion, is adequate to cover losses inherent in the existing loan
portfolio.  The Company charges against current earnings, as a
provision for loan losses, amounts added to the allowance to maintain it at
levels expected to cover probable losses of principal.   When
establishing the allowance for loan losses, the Company takes into consideration
the growth of the loan portfolio, the mix of the loan portfolio, current levels
of charge-offs, current levels of delinquencies, and current economic
factors.   The allowance for loan losses has an allocated and an
unallocated component.  The Company uses historical and current
economic information for net charge-offs by loan type and average loan life by
loan type to estimate the allocated component of the allowance for loan
losses.


36





This
method is based on the fact that many customers refinance their loans prior to
the contractual maturity.  Average contractual loan terms are
approximately nine months and the average loan life is approximately four
months.   The allowance for loan loss model also reserves 100% of
the principal on loans greater than 90 days past due on a recency
basis.  Loans are charged off at the earlier of when such loans are
deemed to be uncollectible or when six months have elapsed since the date of the
last full contractual payment.  The Company’s charge-off policy has
been consistently applied and no significant changes have been made to the
policy during the periods reported. Management considers the charge-off policy
when evaluating the appropriateness of the allowance for loan
losses.





Statement
of Position No. 03-3 (SOP 03-3), “Accounting for Certain Loans or Debt
Securities Acquired in a Transfer,” prohibits carryover or creation of
valuation allowances in the initial accounting of all loans acquired in a
transfer that are within the scope of the SOP.  The Company believes
that loans acquired since the adoption of SOP 03-3 have not shown evidence of
deterioration of credit quality since origination, and therefore, are not within
the scope of SOP 03-3.  Therefore, the Company records acquired loans
(not within the scope of SOP 03-3) at fair value based on current interest
rates, less an allowance for uncollectibility.





Property
and Equipment





Property
and equipment are stated at cost less accumulated depreciation and
amortization.  Depreciation is recorded using the straight-line method
over the estimated useful life of the related asset as
follows:  building, 40 years; furniture and fixtures, 5 to 10 years;
equipment, 3 to 7 years; and vehicles, 3 years.  Amortization of
leasehold improvements is recorded using the straight-line method over the
lesser of the estimated useful life of the asset or the term of the
lease.  Additions to premises and equipment and major replacements or
improvements are added at cost.  Maintenance, repairs, and minor
replacements are charged to operating expense as incurred.   When
assets are retired or otherwise disposed of, the cost and accumulated
depreciation are removed from the accounts and any gain or loss is reflected in
the statement of operations.





Operating
Leases





The
Company’s office leases typically have a lease term of three years and contain
lessee renewal options and cancellation clauses in the event of regulatory
changes.  The Company typically renews its leases for one or more
option periods.  Accordingly, the Company amortizes its leasehold
improvements over the shorter of their economic lives, which are generally five
years, or the lease term that considers renewal periods that are reasonably
assured.





Other
Assets





Other
assets include cash surrender value of life insurance policies, prepaid
expenses, debt issuance cost and other deposits.





Derivatives
and Hedging Activities





The
Company uses interest rate swaps and foreign currency options to economically
hedge the variable cash flows associated with $50 million of its LIBOR-based
borrowings and currency fluctuations.  Interest rate swap agreements
and foreign currency options are carried at fair value.  Changes to
fair value are recorded each period as a component of the statement of
operations.  See Note 9 for further discussion related to the interest
rate swaps.  As of March 31, 2009, the Company did not have a foreign
currency option outstanding.





Intangible
Assets and Goodwill





Intangible
assets include the cost of acquiring existing customers, and the value assigned
to non-compete agreements. Customer lists are amortized on a straight line or
accelerated basis over their estimated period of benefit, ranging from 5 to 20
years with a weighted average of approximately 9 years.  Non-compete
agreements are amortized on a straight line basis over the term of the
agreement.




The
Company evaluates goodwill annually for impairment in the fourth quarter of the
fiscal year using the market value-based approach.  The Company has
one reporting unit, the consumer finance company, and the Company has multiple
components, the lowest level of which are individual offices.  Our
components are aggregated for impairment testing because they have similar
economic characteristics. The Company writes off goodwill when it closes an
office that has goodwill assigned to it.  As of March 31, 2009, the
Company had 83 offices with recorded goodwill.


37





Impairment
of Long-Lived Assets





The
Company assess impairment of long-lived assets, including property and equipment
and intangible assets, whenever changes or events indicate that the carrying
amount may not be recoverable.  The Company assesses impairment of
these assets generally at the office level based on the operating cash flows of
the office and our plans for office closings.  The Company will write
down such assets to fair value if, based on an analysis, the sum of the expected
future undiscounted cash flows is less than the carrying amount of the
assets.  The Company did not record any material impairment charges
for the fiscal years 2009, 2008 and 2007.





Fair Value of
Financial Instruments





SFAS No.
107, "Disclosures about the
Fair Value of Financial Instruments," requires disclosures about the fair
value of all financial instruments, whether or not recognized in the balance
sheet, for which it is practicable to estimate that value.  In cases
where quoted market prices are not available, fair values are based on estimates
using present value or other valuation techniques.  The Company’s
financial instruments consist of the following:  cash, loans
receivable, senior notes payable, convertible senior subordinated notes payable,
other note payables, foreign currency options and interest rate
swaps.  Fair value approximates carrying value for all of these
instruments, except the convertible subordinated notes
payable.   Loans receivable are originated at prevailing market
rates and have an average life of approximately four months.  Given
the short-term nature of these loans, they are continually repriced at current
market rates.  The Company’s revolving credit facility and other note
payables have a variable rate based on a margin over LIBOR and reprice with any
changes in LIBOR.  The fair value of convertible subordinated notes
payable is based on the current quoted market price which was $61,701,550 and
$88,385,000 as of March 31, 2009 and 2008, respectively. The carrying value of
the convertible subordinated notes payable was $95,000,000 and $110,000,000 at
March 31, 2009 and 2008, respectively.  The swaps and option are
valued based on information from a third party broker.





Insurance
Premiums





Insurance
premiums for credit life, accident and health, property and unemployment
insurance written in connection with certain loans, net of refunds and
applicable advance insurance commissions retained by the Company, are remitted
monthly to an insurance company.  All commissions are credited to
unearned insurance commissions and recognized as income over the life of the
related insurance contracts using a method similar to that used for the
recognition of interest income.





Non-file
Insurance





Non-file
premiums are charged on certain loans in lieu of recording and perfecting the
Company's security interest in the assets pledged. The premiums are remitted to
a third-party insurance company.  Such insurance and the related
insurance premiums, claims, and recoveries are not reflected in the accompanying
consolidated financial statements except as a reduction in loan losses (see Note
11).





Certain
losses related to such loans, which are not recoverable through life, accident
and health, property, or unemployment insurance claims are reimbursed through
non-file insurance claims subject to policy limitations.  Any
remaining losses are charged to the allowance for loan losses.





Income
Taxes





Income
taxes are accounted for under the asset and liability
method.  Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit
carryforwards.  Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or
settled.  The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.


38





Beginning
with the adoption of FASB Interpretation No. 48, “Accounting For Uncertainty in Income
Taxes” as of April 1, 2007, the Company recognizes the effect of income
tax positions only if those positions are more likely than not of being
sustained.  Recognized income tax positions are measured at the
largest amount that is greater than 50% likely of being
realized.  Changes in recognition or measurement are reflected in the
period in which the change in judgment occurs.  Prior to the adoption
of FIN 48, the Company recognized the effect of income tax positions only if
such positions were probably of being sustained.





Supplemental
Cash Flow
Information





For the
years ended March 31, 2009, 2008, and 2007, the Company paid interest of
$9,373,237, $10,788,530 and $9,686,128, respectively.





For the
years ended March 31, 2009, 2008, and 2007, the Company paid income taxes of
$37,302,456, $32,018,340 and $26,478,254, respectively.





Supplemental
non-cash financing activities for the years ended March 31, 2009, 2008, and
2007, consist of:





2009
                    
                    
                    2008
                    
                    
                    2007Tax
      benefit from convertible note
                    
                    $
                    -
                    
                    
                    
                    -
                    
                    
                    
                    9,359,000





Earnings
Per Share





Earnings
per share (“EPS”) are computed in accordance with SFAS No. 128, “Earnings per
Share.”  Basic EPS includes no dilution and is computed by
dividing net income by the weighted-average number of common shares outstanding
for the period.  Diluted EPS reflects the potential dilution of
securities that could share in the earnings of the Company.  Potential
common stock included in the diluted EPS computation consists of stock options,
restricted stock and warrants, which are computed using the treasury stock
method.  Potential common stock related to convertible senior notes
are included in the diluted EPS computation using the method prescribed by EITF
04-8 “The Effect of Contingently Convertible Instruments on Dilutive Earnings
Per Share.”





Reclassifications





Certain
reclassification entries have been made for fiscal 2008 and 2007 to conform with
fiscal 2009 presentation.  There was no impact on shareholders’ equity
or net income previously reported as a result of these
reclassifications.





Stock-Based
Compensation





In
December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS
No. 123R (“SFAS 123R”), “Share-Based Payment,” which requires companies to
recognize in the income statement the grant-date fair value of stock options and
other equity-based compensation issued to employees. SFAS 123R is an amendment
of SFAS No. 123 (“SFAS 123”), “Accounting for Stock-Based Compensation,”
and its related implementation guidance. SFAS 123R does not change the
accounting guidance for share-based payment transactions with parties other than
employees provided in SFAS 123. Under SFAS 123R, the way an award is classified
will affect the measurement of compensation cost. Liability-classified awards
are remeasured to fair value at each balance-sheet date until the award is
settled. Equity-classified awards are measured at grant-date fair value,
amortized over the subsequent vesting period, and are not subsequently
remeasured. The fair value of non-vested stock awards for the purposes of
recognizing stock-based compensation expense is the market price of the stock on
the grant date. The fair value of options is estimated on the grant date using
the Black-Scholes option pricing model (see Note 15).





At
March 31, 2009, the Company had several share-based employee compensation
plans, which are described more fully in Note 15. Effective April 1, 2006,
the Company adopted SFAS 123R using the modified prospective transition method.
Under that method of transition, compensation cost recognized during fiscal
years 2007, 2008 and 2009 includes: (a) compensation cost for all
share-based payments granted prior to, but not yet vested as of April 1,
2006, based on the grant date fair value estimated in accordance with the
original provisions of SFAS 123, and (b) compensation cost for all
share-based payments granted subsequent to April 1, 2006, based on the
grant-date fair value estimated in accordance with the provisions of SFAS 123R.
Since this compensation cost is based on awards ultimately expected to vest, it
has been reduced for estimated forfeitures. SFAS 123R requires forfeitures to be
estimated at the time of grant and revised, if necessary, in subsequent periods
if actual forfeitures differ from those estimates.  The Company has
elected to expense grants of awards with graded vesting on a straight-line basis
over the requisite service period for each separately vesting portion of the
award.


39




Comprehensive
Income





Total
comprehensive income consists of net income and other comprehensive income
(loss).  The Company’s other comprehensive income (loss) and
accumulated other comprehensive income (loss) are comprised of foreign currency
translation adjustments.





Concentration
of Risk





During
the year ended March 31, 2009, the Company operated in 11 states in the
United States as well as in Mexico. For the years ended March 31, 2009,
2008 and 2007, total revenues within the Company's four largest states (measured
by total revenues) accounted for approximately 59%, 62% and 62%, respectively,
of the Company's total revenues.





Recently
Issued Accounting Pronouncements





Business
Combinations





In
December 2007, the Financial Accounting Standards Board issued
SFAS No. 141 (revised 2007) (“SFAS 141R”), Business Combinations, which
replaces SFAS 141, Business Combinations.
 SFAS 141R requires an acquirer to recognize the assets acquired, the
liabilities assumed, and any noncontrolling interest in the acquiree at the
acquisition date,  measured  at  their  fair  values
 as of that date, with limited exceptions.  SFAS 141R also
requires


acquisition-related
costs and restructuring costs that the acquirer expected, but was not obligated
to incur at the acquisition date, to be recognized separately from the business
combination. In addition, SFAS 141R amends SFAS No. 109, Accounting for Income Taxes,to require the acquirer to recognize changes in the amount of its
deferred tax benefits that are recognizable because of a business combination
either in income from continuing operations in the period of the combination or
directly in contributed capital. SFAS 141R applies prospectively to
business combinations in fiscal years beginning on or after December 15,
2008 and would therefore impact our accounting for future acquisitions beginning
in fiscal 2010.





Disclosures
about Derivative Instruments and Hedging Activities





On March
19, 2008, the FASB adopted Statement of Financial Accounting Standards No. 161
(“SFAS 161”) “Disclosure About
Derivative Instruments and Hedging Activities,” which amends FASB
Statement No. 133, Accounting for Derivative Instruments and Hedging Activities
(“SFAS 133”).  SFAS 161 requires companies with derivative instruments
to disclose information about how and why a company uses derivative instruments,
how derivative instruments and related hedged items are accounted for under SFAS
133, and how derivative instruments and related hedged items affect a company's
financial position, financial performance, and cash flows. The required
disclosures include the fair value of derivative instruments and their gains or
losses in tabular format, information about credit-risk-related contingent
features in derivative agreements, counterparty credit risk, and the company's
strategies and objectives for using derivative instruments. SFAS 161 expands the
current disclosure framework in SFAS 133. SFAS 161 is effective prospectively
for periods beginning on or after November 15, 2008 (See Note 9).





Instruments
Indexed to an Entity’s Own Stock





In June
2008, the FASB ratified EITF Issue 07-5, “Determining Whether an Instrument
(or Embedded Feature) Is Indexed to an Entity’s Own Stock” (“EITF 07-5”).
EITF 07-5 provides a new two-step model to be applied to any freestanding
financial instrument or embedded feature that has all the characteristics of a
derivative in paragraphs 6-9 of SFAS 133, Accounting for Derivative
Instruments and Hedging Activities, in determining whether a financial
instrument or an embedded feature is indexed to an issuer’s own stock and thus
able to qualify for the SFAS 133 paragraph 11(a) scope exception. It also
clarifies on the impact of foreign currency denominated strike prices and
market-based employee stock option valuation instruments on the evaluation. EITF
07-5 also applies to any freestanding financial instrument that is potentially
settled in an entity’s own stock, regardless of whether the instrument has all
the characteristics of a derivative in paragraphs 6-9 of SFAS 133, for purposes
of determining whether the instrument is within the scope of EITF 00-19, Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company’s Own
Stock. EITF 07-5 will be effective for financial statements issued for
fiscal years beginning after December 15, 2008, and interim periods within
those fiscal years. Early adoption is prohibited. The Company is in the process
of assessing the effect that the adoption of EITF 07-5 will have on our
Consolidated Financial Statements.


40





Useful
Life of Intangible Assets





In April
2008, the FASB issued FASB Staff Position No. FAS 142-3, ”Determination of the Useful Life of
Intangible Assets” (“FSP FAS 142-3”).  FSP FAS 142-3 applies to
all recognized intangible assets and its guidance is restricted to estimating
the useful life of recognized intangible assets.  FSP FAS 142-3 is
effective for the first fiscal period beginning after December 15, 2008 and must
be applied prospectively to intangible assets acquired after the effective
date.  The Company will be required to adopt FSP FAS 142-3 to
intangible assets acquired beginning with the first quarter of fiscal
2010.





Convertible
Debt Instruments





In
May 2008, the FASB issued FASB Staff Position No. APB 14-1,
“Accounting for Convertible Debt Instruments That May Be Settled in Cash upon
Conversion” (“FSP APB 14-1”). FSP APB 14-1 specifies that issuers of convertible
debt instruments that may be settled in cash upon conversion (including partial
cash settlement) should separately account for the liability and equity
components in a manner that will reflect the entity’s nonconvertible debt
borrowing rate when interest cost is recognized in subsequent periods. FSP APB
14-1 is effective for the Company beginning April 1, 2009 and will be
applied restrospectively to all periods presented. The impact of FSP APB 14-1 to
the Company will be significant. Specifically, the Company’s 3.0% Convertible
Subordinated Notes, which were issued in October 2006 for total proceeds of
$110,000,000, fall into the scope of FSP APB 14-1 due to the fact that they may
be settled in cash, shares of the Company’s common stock or a combination of
cash or shares of the Company’s common stock at the Company’s election. As a
result, the Company will bifurcate the 3.0% Convertible Subordinated Notes
between its debt and equity components and then accrete the value of the debt
back to its face value through additional non-cash interest expense. The Company
estimates that this will result in approximately $11.3 million of additional
interest expense being recorded through 2012, of which approximately $4.3
million will be recorded during 2010.





Fair
Value Measurements





In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,”
(“SFAS No. 157”), which defines fair value, establishes a framework for
measuring fair value and expands disclosures about fair value
measurements.  SFAS No. 157 clarifies that fair value is the price
that would be received to sell an asset or the price paid to transfer a
liability in the principal or most advantageous market available to the entity
in an orderly transaction between market participants on the measurement
date.  SFAS No. 157 is required to be applied whenever another
financial accounting standard requires or permits an asset or liability to be
measured at fair value.  SFAS No. 157 does not expand the use of fair
value to any new circumstances.  Effective April 1, 2008, the first
day of fiscal 2009, the Company adopted Statement of Financial Accounting
Standards No. 159 ("SFAS 159"), “The Fair Value Option for Financial
Assets and Financial Liabilities.” SFAS 159 permits entities to choose to
measure many financial instruments and certain other items at fair value. The
Company did not elect the fair value reporting option for any assets and
liabilities not previously recorded at fair value.  See Note 17 “Fair
Value” in the “Notes to Consolidated Financial Statements” herein for additional
disclosures regarding the fair value of financial instruments.





(2)
              Accumulated Other
      Comprehensive Loss





The
Company applies the provision of FASB Statement of Financial Accounting
Standards No. 130, “Reporting
Comprehensive Income.”  The following summarizes accumulated
other comprehensive loss as of March 31, 2009, 2008 and 2007:





2009
                  
                  
                  2008
                  
                  
                  2007Balance
      at beginning of year
                  
                  $
                  169,503
                  
                  
                  $
                  (47,826
                  )
                  
                  
                  (50,092
                  )Unrealized
      gain (loss) from foreign exchange translation adjustment
                  
                  
                  (4,399,166
                  )
                  
                  
                  217,329
                  
                  
                  
                  2,266Total
      accumulated other comprehensive loss
                  
                  $
                  (4,229,663
                  )
                  
                  $
                  169,503
                  
                  
                  
                  (47,826
                  )




41





(3)
            Allowance
      for Loan Losses





The
following is a summary of the changes in the allowance for loan losses for the
years ended March 31, 2009, 2008, and 2007:


March 31,2009
                  
                  
                  2008
                  
                  
                  2007Balance
      at the beginning of the year
                  
                  
                  33,526,147
                  
                  
                  
                  27,840,239
                  
                  
                  
                  22,717,192Provision
      for loan losses
                  
                  
                  85,476,092
                  
                  
                  
                  67,541,805
                  
                  
                  
                  51,925,080Loan
      losses
                  
                  
                  (88,728,498
                  )
                  
                  
                  (68,985,269
                  )
                  
                  
                  (53,979,375
                  )Recoveries
                  
                  
                  7,590,928
                  
                  
                  
                  6,989,297
                  
                  
                  
                  6,230,010Translation
      adjustment
                  
                  
                  (306,340
                  )
                  
                  
                  18,135
                  
                  
                  
                  (956
                  )Allowance
      on acquired loans
                  
                  
                  462,441
                  
                  
                  
                  121,940
                  
                  
                  
                  948,288Balance
      at the end of the year
                  
                  $
                  38,020,770
                  
                  
                  
                  33,526,147
                  
                  
                  
                  27,840,239





The
Company follows Statement of Position No. 03-3 ("SOP 03-3"), "Accounting for Certain Loans or Debt
Securities Acquired in a Transfer," which prohibits carry over or
creation of valuation allowances in the initial accounting of all loans acquired
in a transfer that are within the scope of this SOP.  Management
believes that a loan has shown deterioration if it is over 60 days
delinquent.  The Company believes that loans acquired have not
shown  evidence of  deterioration
of  credit  quality  since origination, and
therefore, are not within the scope of SOP 03-3 because the Company did not pay
consideration for, or record, acquired loans over 60 days
delinquent.  Loans acquired that are more than 60 days past due are
included in the scope of SOP 03-3 and, therefore, subsequent refinances or
restructures of these loans would not be accounted for as a new
loan.





For the
years ended March 31, 2009, 2008 and 2007, the Company recorded adjustments of
approximately $0.5 million, $0.1 million and $0.9 million, respectively, to the
allowance for loan losses in connection with its acquisitions in accordance
generally accepted accounting principles.  These adjustments represent
the allowance for loan losses on acquired loans that do not meet the scope of
SOP 03-3 (also see Note 1).





(4)
            Property and
      Equipment





Property
and equipment consist of:





March 31,2009
                  
                  
                  2008Land
                  
                  $
                  250,443
                  
                  
                  
                  250,443Buildings
      and leasehold improvements
                  
                  
                  11,323,770
                  
                  
                  
                  9,584,129Furniture
      and equipment
                  
                  
                  31,086,255
                  
                  
                  
                  27,971,65642,660,468
                  
                  
                  
                  37,806,228Less
      accumulated depreciation and amortization
                  
                  
                  (19,600,108
                  )
                  
                  
                  (19,152,218
                  )Total
                  
                  $
                  23,060,360
                  
                  
                  
                  18,654,010





Depreciation
expense was approximately $4,784,000, $3,760,000 and $3,058,000 for the years
ended March 31, 2009, 2008 and 2007, respectively.





(5)
            Intangible
      Assets




The
following table provides the gross carrying amount and related accumulated
amortization of definite-lived intangible assets:


March
      31, 2009
                  
                  
                  March
      31. 2008Gross
      Carrying
                  
                  
                  Accumulated
                  
                  
                  Gross
      Carrying
                  
                  
                  AccumulatedAmount
                  
                  
                  Amortization
                  
                  
                  Amount
                  
                  
                  AmortizationCost
      of acquiring existing customers
                  
                  $
                  19,522,401
                  
                  
                  $
                  (10,827,445
                  )
                  
                  $
                  18,162,305
                  
                  
                  $
                  (8,614,957
                  )Value
      assigned to non-competeagreements
                  
                  $
                  7,956,643
                  
                  
                  
                  (7,664,048
                  )
                  
                  
                  7,871,643
                  
                  
                  
                  (7,421,664
                  )Total
                  
                  $
                  27,479,044
                  
                  
                  $
                  (18,491,493
                  )
                  
                  $
                  26,033,948
                  
                  
                  $
                  (16,036,621
                  )


42





The
estimated amortization expense for intangible assets for the years ended March
31 is as follows: $2.2 million for 2010; $1.7 million for 2011, $1.4 million for
2012; $1.1 million for 2013; $0.7 million for 2014; and an aggregate of $1.9
million for the years thereafter.





(6)
            Goodwill





The
following summarizes the changes in the carrying amount of goodwill for the year
ended March 31, 2009 and 2008:


March 31,2009
                  
                  
                  2008Balance
      at beginning of year
                  
                  $
                  5,352,675
                  
                  
                  
                  5,039,630Goodwill
      acquired during the year
                  
                  
                  228,271
                  
                  
                  
                  313,045Balance
      at March 31, 2009
                  
                  $
                  5,580,946
                  
                  
                  
                  5,352,675





The
Company performed an annual impairment test as of March 31, 2009, and determined
that none of the recorded goodwill was impaired.





(7)
            Notes
      Payable





The
Company's notes payable consist of:





Senior
Notes Payable $187,000,000 Revolving Credit Facility





This
facility provides for borrowings of up to $187 million, with $113,310,000
outstanding at March 31, 2009, subject to a borrowing base formula. An
additional $30 million is available as a seasonal revolving credit commitment
from November 15 of each year through March 31 of the immediately succeeding
year to cover the increase in loan demand during this
period.   The Company may borrow, at its option, at the rate of
prime or LIBOR plus 1.80%.  At March 31, 2009 and 2008, the Company’s
interest rate was 3.25% and 5.25%, respectively, andthe unused amount
available under the revolver at March 31, 2009 was $73.7 million, excluding the
$30 million dollar seasonal line which expires each March 31.  The
revolving credit facility has a commitment fee of 0.375% per annum on the unused
portion of the commitment.  Borrowings under the revolving credit
facility mature on September 30, 2010.





A member
of the Company’s Board of Directors served as a Director of The South Financial
Group, which is the parent of Carolina First Bank.  As of March 31,
2009, Carolina First Bank had committed to fund up to $25.9 million under the
credit facility, including $3.6 million for the seasonal line.





Substantially
all of the Company’s assets are pledged as collateral for borrowings under the
revolving credit agreement.





Convertible
Senior Notes




On
October 10, 2006, the Company issued $110 million aggregate principal amount of
its 3.0% convertible senior subordinated notes due October 1, 2011 (the
“Convertible Notes”) to qualified institutional brokers in accordance with Rule
144A of the Securities Act of 1933. Interest on the Convertible Notes is payable
semi-annually in arrears on April 1 and October 1 of each year, commencing April
1, 2007. The Convertible Notes are the Company’s direct, senior subordinated,
unsecured obligations and rank equally in right of payment with all existing and
future unsecured senior subordinated debt of the Company, senior in right of
payment to all of the Company’s existing and future subordinated debt and junior
to all of the Company’s existing and future senior debt.  The Convertible
Notes are structurally junior to the liabilities of the Company’s
subsidiaries.  The Convertible Notes are convertible prior to
maturity, subject to certain conditions described below, at an initial
conversion rate of 16.0229 shares per $1,000 principal amount of notes, which
represents an initial conversion price of approximately $62.41 per share,
subject to adjustment.  Upon conversion, the Company will pay cash up
to the principal amount of notes converted and deliver shares of its common
stock to the extent the daily conversion value exceeds the proportionate
principal amount based on a 30 trading-day observation period.




43




Holders
may convert the Convertible Notes prior to July 1, 2011 only if one or more of
the following conditions are satisfied:




•
            During
      any fiscal quarter commencing after December 31, 2006, if the last
      reported sale price of the common stock for at least 20 trading days
      during a period of 30 consecutive trading days ending on the last trading
      day of the preceding fiscal quarter is greater than or equal to 120% of
      the applicable conversion price on such last trading
  day;





•
            During
      the five business day period after any ten consecutive trading day period
      in which the trading price per note for each day of such ten consecutive
      trading day period was less than 98% of the product of the last reported
      sale price of the Company’s common stock and the applicable conversion
      rate on each such day; or





•
            The
      occurrence of specified corporate
transactions.





If the
Convertible Notes are converted in connection with certain fundamental changes
that occur prior to October 1, 2011, the Company may be obligated to pay an
additional make-whole premium with respect to the Convertible Notes
converted.  If the Company undergoes certain fundamental changes,
holders of Convertible Notes may require the Company to purchase the Convertible
Notes at a price equal to 100% of the principal amount of the Convertible Notes
purchased plus accrued interest to, but excluding, the purchase
date.





Holders
may also surrender their Convertible Notes for conversion anytime on or after
July 1, 2011 until the close of business on the third business day immediately
preceding the maturity date, regardless of whether any of the foregoing
conditions have been satisfied.




The
contingent conversion feature was not required to be bifurcated and accounted
for separately under the provisions of SFAS 133 “Accounting for Derivative
Instruments and Hedging Activities.”




The
aggregate underwriting commissions and other debt issuance costs incurred with
respect to the issuance of the Convertible Notes were approximately $3.6 million
and are being amortized over the period the convertible senior notes are
outstanding.




Convertible
Notes Hedge Strategy




Concurrent
and in connection with the sale of the Convertible Notes, the Company purchased
call options to purchase shares of the Company’s common stock equal to the
conversion rate as of the date the options are exercised for the Convertible
Notes, at a price of $62.41 per share. The cost of the call options totaled
$24.6 million. The Company also sold warrants to the same counterparties to
purchase from the Company an aggregate of 1,762,519 shares of the Company’s
common stock at a price of $73.97 per share and received net proceeds from the
sale of these warrants of $16.2 million. Taken together, the call option
and warrant agreements increased the effective conversion price of the
Convertible Notes to $73.97 per share. The call options and warrants must
be settled in net shares. On the date of settlement, if the market price per
share of the Company’s common stock is above $73.97 per share, the Company will
be required to deliver shares of its common stock representing the value of the
call options and warrants in excess of $73.97 per share.




The
warrants have a strike price of $73.97 and are generally exercisable at
anytime. The Company issued and sold the warrants in a transaction exempt
from the registration requirements of the Securities Act of 1933, as amended, by
virtue of section 4(2) thereof. There were no underwriting commissions or
discounts in connection with the sale of the warrants.





In
accordance with EITF. No. 00-19 “Accounting for Derivative Financial Instruments
Indexed to, and Potentially Settled in, the Company’s Own Stock,” the Company
accounted for the call options and warrants as a net reduction in additional
paid in capital, and is not required to recognize subsequent changes in fair
value of the call options and warrants in its consolidated financial
statements.





Debt
Covenants





The
various debt agreements contain restrictions on the amounts of permitted
indebtedness, investments, working capital, repurchases of common stock and cash
dividends.  At March 31, 2009, $38.7 million was available under these
covenants for the payment of cash dividends, or the repurchase of the Company's
common stock, or the repurchase of subordinated debt.  In addition,
the agreements restrict liens on assets and the sale or transfer of
subsidiaries.  The Company was in compliance with the various debt
covenants for all periods presented.


44





The aggregate annual
maturities of the notes payable for each of the fiscal years subsequent to March
31, 2009, are as follows: 2010, $0; 2011, $113,310,000; 2012, $95,000,000; 2013,
$0; and none thereafter.





(8)
            Extinguishment Of
      Debt





In
December 2008 and March 2009, the Company repurchased, in privately negotiated
transactions, an aggregate principal amount of $15 million of its convertible
senior subordinated notes due October 11, 2011 (the “Convertible Notes”) at an
average discount to face value of approximately 38.8%. The Company spent
approximately $9.2 million in the aggregate on these repurchases. The
repurchases left $95 million principal amount of the Convertible Notes
outstanding.  The transactions were treated as an extinguishment of debt
for accounting purposes.  The Company recorded a gain of approximately $5.5
million on the repurchase of the Convertible Notes, which was partially offset
by the write-off of $300,000 of deferred financing costs associated with the
repurchase and cancellation of Convertible Notes.





In May
2009, the Company repurchased, in a privately negotiated transaction, $10
million at an average discount to face value of approximately
33.0%.  The Company spent approximately $6.8 million and recorded a
gain of approximately $2.3 million, which was partially offset by the write-off
of $165,000 of deferred financing cost associated with the repurchase and
cancellation of Convertible Notes.  As of May 2009, $85.0 million
principal amount of the Convertible Notes was outstanding.





(9)
              Derivative
      Financial Instruments





On
December 8, 2008, the Company entered into an interest rate swap with a notional
amount of $20 million to economically hedge a portion of the cash flows from its
floating rate revolving credit facility.  Under the terms of the
interest rate swap, the Company pays a fixed rate of 2.4% on the $20 million
notional amount and receives payments from a counterparty based on the 1 month
LIBOR rate for a term ending December 8, 2011.  Interest rate
differentials paid or received under the swap agreement are recognized as
adjustments to interest expense.





On
October 5, 2005, the Company entered into an interest rate swap with a notional
amount of $30 million to economically hedge a portion of the cash flows from its
floating rate revolving credit facility.  Under the terms of the
interest rate swap, the Company will pay a fixed rate of 4.755% on the $30
million notional amount and receive payments from a counterparty based on the 1
month LIBOR rate for a term ending October 5, 2010.  Interest rate
differentials paid or received under the swap agreement are recognized as
adjustments to interest expense.





On May
15, 2008, the Company entered into a $10 million foreign currency exchange
option to economically hedge its foreign exchange risk relative to the Mexican
peso.  Under the terms of the option contract, the Company could
exchange $10 million U.S. dollars at a rate of 11.0 Mexican pesos per
dollar.  The option was sold in October 2008 and the Company recorded
a $1.5 million net gain.





The fair
value of the Company’s interest rate derivative instruments is included in
the Consolidated Balance Sheets as follows:





Interest
                    
                    
                    Foreign
      CurrencyRate Swaps
                    
                    
                    Exchange OptionMarch
      31, 2009:Accounts
      payable and accrued expenses
                    
                    $
                    (2,443,666
                    )
                    
                    $
                    -Fair
      value of derivative instrument
                    
                    $
                    (2,443,666
                    )
                    
                    $
                    -March
      31, 2008:Accounts
      payable and accrued expenses
                    
                    $
                    (1,670,618
                    )
                    
                    $
                    6,900Fair
      value of derivative instrument
                    
                    $
                    (1,670,618
                    )
                    
                    $
                    6,900





Both of
the interest rate swaps are currently in liability positions, therefore there is
no significant risk of loss related to counterparty credit
risk.


45





The gains
(losses) recognized in the Company’s Consolidated Statements of Operations
as a result of the interest rate swaps and foreign currency exchange option are
as follows:





Year EndedMarch
      31,
                    
                    
                    March
      31,2009
                    
                    
                    2008Realized
      gains (losses):Interest
      rate swaps – included as a component of interest expense
                    
                    $
                    (895,813
                    )
                    
                    $
                    39,042Foreign
      currency exchange option – included as a  Component of other
      income
                    
                    $
                    (1,548,500
                    )
                    
                    $
                    -Unrealized
      gains (losses) included as a component of other incomeInterest
      rate swaps
                    
                    $
                    (773,047
                    )
                    
                    $
                    (1,762,662
                    )Foreign
      currency exchange option
                    
                    $
                    -
                    
                    
                    $
                    6,900





The
Company does not enter into derivative financial instruments for trading or
speculative purposes.  The purpose of these instruments is to reduce
the exposure to variability in future cash flows attributable to a portion of
its LIBOR-based borrowings and to reduce variability in foreign cash
flows.  The Company is currently not accounting for these derivative
instruments using the cash flow hedge accounting provisions of SFAS 133;
therefore, the changes in fair value of the swap and option are included in
earnings as other income or expenses.





By using
derivative instruments, the Company is exposed to credit and market
risk.  Credit risk, which is the risk that a counterparty to a
derivative instrument will fail to perform, exists to the extent of the fair
value gain in a derivative.  Market risk is the adverse effect on the
financial instruments from a change in interest rates or implied volatility of
exchange rates.  The Company manages the market risk associated with
interest rate contracts and currency options by establishing and monitoring
limits as to the types and degree of risk that may be undertaken.  The
market risk associated with derivatives used for interest rate and foreign
currency risk management activities is fully incorporated in the Company’s
market risk sensitivity analysis.





(10)
            Insurance Commissions
      and other income





Insurance
commissions and other income for the years ending March 31, 2009, 2008 and 2007
consist of :





2009
                  
                  
                  2008
                  
                  
                  2007Insurance
      commissions
                  
                  $
                  32,340,496
                  
                  
                  
                  30,403,085
                  
                  
                  
                  24,420,121Tax
      return preparation revenue
                  
                  
                  9,868,849
                  
                  
                  
                  9,657,325
                  
                  
                  
                  8,126,504Gain
      on extinguishment of debt, net
                  
                  
                  5,520,248
                  
                  
                  
                  -
                  
                  
                  
                  -Auto
      club membership revenue
                  
                  
                  4,088,500
                  
                  
                  
                  4,297,327
                  
                  
                  
                  3,848,344World
      Class Buying Club revenue
                  
                  
                  3,780,851
                  
                  
                  
                  4,582,273
                  
                  
                  
                  3,734,453Other
                  
                  
                  6,652,541
                  
                  
                  
                  4,649,585
                  
                  
                  
                  5,181,330Insurance
      commissions and other income
                  
                  $
                  62,251,485
                  
                  
                  
                  53,589,595
                  
                  
                  
                  45,310,752





(11)
            Non-file
      Insurance





The
Company maintains non-file insurance coverage with an unaffiliated insurance
company.  The following is a summary of the non-file insurance
activity for the years ended March 31, 2009, 2008 and 2007:





2009
                    
                    
                    2008
                    
                    
                    2007Insurance
      premiums written
                    
                    $
                    5,768,316
                    
                    
                    
                    5,885,108
                    
                    
                    
                    5,356,161Recoveries
      on claims paid
                    
                    $
                    598,887
                    
                    
                    
                    553,035
                    
                    
                    
                    503,986Claims
      paid
                    
                    $
                    5,620,489
                    
                    
                    
                    5,987,181
                    
                    
                    
                    5,451,094




46





(12)
            Leases





The
Company conducts most of its operations from leased facilities, except for its
owned corporate office building.  The Company's leases typically have
a lease term of three years and contain lessee renewal
options.   A majority of the leases provide that the lessee pays
property taxes, insurance, and common area maintenance costs. It is expected
that in the normal course of business, expiring leases will be renewed at the
Company's option or replaced by other leases or acquisitions of other
properties.  All of the Company’s leases are operating
leases.





The
future minimum lease payments under noncancelable operating leases as of March
31, 2009, are as follows:





2010
                  
                  
                  12,976,6652011
                  
                  
                  8,416,2212012
                  
                  
                  3,840,1192013
                  
                  
                  843,2342014
                  
                  
                  216,515Thereafter
                  
                  
                  -Total
      future minimum lease payments
                  
                  $
                  26,292,754





Rental
expense for cancelable and noncancelable operating leases for the years ended
March 31, 2009, 2008 and 2007, was $14,257,168, $12,198,271 and $9,555,103,
respectively.





(13)
            Income
      Taxes





Income
tax expense (benefit) consists of:





Current
                        
                        
                        Deferred
                        
                        
                        TotalYear
      ended March 31, 2009:U.S.
      Federal
                        
                        $
                        27,210,458
                        
                        
                        
                        5,211,924
                        
                        
                        
                        32,422,382State
      and local
                        
                        
                        4,537,889
                        
                        
                        
                        (83,798
                        )
                        
                        
                        4,454,091Foreign
                        
                        
                        44,026
                        
                        
                        
                        -
                        
                        
                        
                        44,026$
                        31,792,373
                        
                        
                        
                        5,128,126
                        
                        
                        
                        36,920,499Year
      ended March 31, 2008:U.S.
      Federal
                        
                        $
                        33,113,415
                        
                        
                        
                        (2,280,364
                        )
                        
                        
                        30,833,051State
      and local
                        
                        
                        4,149,913
                        
                        
                        
                        (847,560
                        )
                        
                        
                        3,302,353Foreign
                        
                        
                        585,632
                        
                        
                        
                        -
                        
                        
                        
                        585,632$
                        37,848,960
                        
                        
                        
                        (3,127,924
                        )
                        
                        
                        34,721,036Year
      ended March 31, 2007:U.S.
      Federal
                        
                        $
                        26,532,000
                        
                        
                        
                        (1,256,000
                        )
                        
                        
                        25,276,000State
      and local
                        
                        
                        3,947,000
                        
                        
                        
                        39,000
                        
                        
                        
                        3,986,000Foreign
                        
                        
                        45,000
                        
                        
                        
                        (33,000
                        )
                        
                        
                        12,000$
                        30,524,000
                        
                        
                        
                        (1,250,000
                        )
                        
                        
                        29,274,000








Income
tax expense was $36,920,499, $34,721,036 and $29,274,000, for the years ended
March 31, 2009, 2008 and 2007, respectively, and differed from the amounts
computed by applying the U.S. federal income tax rate of 35% to pretax income
from continuing operations as a result of the following:





2009
                    
                    
                    2008
                    
                    
                    2007Expected
      income tax
                    
                    $
                    34,168,389
                    
                    
                    
                    30,701,018
                    
                    
                    
                    27,010,000Increase
      (reduction) in income taxes resulting from:State
      tax, net of federal benefit
                    
                    
                    2,895,159
                    
                    
                    
                    2,146,587
                    
                    
                    
                    2,591,000Change
      in valuation allowance
                    
                    
                    (405,425
                    )
                    
                    
                    (335,361
                    )
                    
                    
                    207,000Insurance
      income exclusion
                    
                    
                    (108,636
                    )
                    
                    
                    (117,834
                    )
                    
                    
                    (167,000
                    )Uncertain
      tax positions
                    
                    
                    539,211
                    
                    
                    
                    1,408,734
                    
                    
                    
                    -Other,
      net
                    
                    
                    (168,199
                    )
                    
                    
                    917,892
                    
                    
                    
                    (367,000
                    )$
                    36,920,499
                    
                    
                    
                    34,721,036
                    
                    
                    
                    29,274,000


47





The tax
effects of temporary differences that give rise to significant portions of the
deferred tax assets and deferred tax liabilities at March 31, 2009 and 2008 are
presented below:





2009
                    
                    
                    2008Deferred
      tax assets:Allowance
      for doubtful accounts
                    
                    $
                    14,167,863
                    
                    
                    
                    12,533,595Unearned
      insurance commissions
                    
                    
                    8,790,135
                    
                    
                    
                    7,794,408Accounts
      payable and accrued expenses primarily related to employee
      benefits
                    
                    
                    6,512,665
                    
                    
                    
                    4,223,506Accrued
      interest receivable
                    
                    
                    2,595,154
                    
                    
                    
                    2,450,352Convertible
      notes
                    
                    
                    4,029,411
                    
                    
                    
                    7,367,233Unrealized
      losses
                    
                    
                    909,896
                    
                    
                    
                    625,164Other
                    
                    
                    114,804
                    
                    
                    
                    172,944Gross
      deferred tax assets
                    
                    
                    37,119,928
                    
                    
                    
                    35,167,202Less
      valuation allowance
                    
                    
                    (1,214
                    )
                    
                    
                    (406,639
                    )Net
      deferred tax assets
                    
                    
                    37,118,714
                    
                    
                    
                    34,760,563Deferred
      tax liabilities:Fair
      value adjustment for loans
                    
                    
                    (13,669,377
                    )
                    
                    
                    (6,906,863
                    )Property
      and equipment
                    
                    
                    (2,342,782
                    )
                    
                    
                    (1,926,228
                    )Intangible
      assets
                    
                    
                    (1,845,039
                    )
                    
                    
                    (1,940,150
                    )Deferred
      net loan origination fees
                    
                    
                    (1,402,423
                    )
                    
                    
                    (1,267,454
                    )Prepaid
      expenses
                    
                    
                    (544,657
                    )
                    
                    
                    (585,802
                    )Other
                    
                    
                    (331,161
                    )
                    
                    
                    -Gross
      deferred liabilities
                    
                    
                    (20,135,439
                    )
                    
                    
                    (12,626,497
                    )Net
      deferred tax assets
                    
                    $
                    16,983,275
                    
                    
                    
                    22,134,066





The
valuation allowance for deferred tax assets as of March 31, 2009 and 2008 was
$1,214 and $406,639, respectively.  The valuation allowance against
the total deferred tax assets as of March 31, 2009 and 2008 relates to state net
operating losses.  In assessing the realizability of deferred tax
assets, management considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized.  The
ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income during the periods in which those temporary differences
become deductible.   Management considers the scheduled reversals
of deferred tax liabilities, projected future taxable income, and tax planning
strategies in making this assessment.   In order to fully realize
the deferred tax asset, the Company will need to generate future taxable income
prior to the expiration of the deferred tax assets governed by the tax
code.   Based upon the level of
historical  taxable  income  and  projections  for  future
taxable income over the periods in which the deferred tax assets are deductible,
management believes it is more likely than not the Company will realize the
benefits of these deductible differences, net of the existing valuation
allowances at March 31, 2009.   The amount of the deferred tax
asset considered realizable, however, could be reduced in the near term if
estimates of future taxable income during the carryforward period are
reduced.





We are
required to assess whether the earnings of our Mexican foreign subsidiary will
be permanently reinvested in the respective foreign jurisdiction or if
previously untaxed foreign earnings of the Company will no longer be permanently
reinvested and thus become taxable in the United States.  As of March
31, 2009, the Company has determined that $260,996 of cumulative undistributed
net earnings, as well as the future net earnings, of the Mexican foreign
subsidiary will be permanently reinvested.





The
Company adopted the provision of Financial Standards Accounting Board
Interpretation No. 48 Accounting for Uncertainty in Income Taxes (“FIN 48”), an
interpretation of FASB Statement No. 109, on April 1, 2007.  As a
result of the implementation of Interpretation 48, the Company recognized a
charge of approximately $550,000 to the April 1, 2007 balance of retained
earnings.  As of March 31, 2009 and March 31, 2008, the Company had
$4,715,681 and $8,764,255 of total gross unrecognized tax benefits including
interest, respectively.  Of this total, approximately $2,747,945 and
$2,208,734, respectively, represents the amount of unrecognized tax benefits
that are permanent in nature and, if recognized, would affect the annual
effective tax rate.


48





A
reconciliation of the beginning and ending amount of unrecognized tax benefits
is as follows:





Unrecognized
      tax benefits balance at April 1, 2008
                  
                  
                  7,524,920Gross
      increases for tax positions of prior years
                  
                  
                  726,545Gross
      increases for tax positions of current year
                  
                  
                  506,322Settlements
                  
                  
                  (4,843,589
                  )Lapse
      of statute of limitations
                  
                  
                  (42,173
                  )Unrecognized
      tax benefits balance at March 31, 2009
                  
                  
                  3,872,025





The
Company’s continuing practice is to recognize interest and penalties related to
income tax matters in income tax expense.  As of March 31, 2009, the
Company had $843,656 accrued for gross interest, of which $395,679 was a current
period benefit.  The Company has determined that it is possible that
the total amount of unrecognized tax benefits related to various state
examinations will significantly increase or decrease within twelve months of the
reporting date.  However, at this time, a reasonable estimate of the
range of possible change cannot be made until further correspondence has been
conducted with the state taxing authorities.





The
Company is subject to U.S. and Mexican income taxes, as well as various other
state and local jurisdictions.  With few exceptions, the Company is no
longer subject to U.S. federal, state and local, or non-U.S. income tax
examinations by tax authorities for years before 2004, although carryforward
attributes that were generated prior to 2004 may still be adjusted upon
examination by the taxing authorities if they either have been or will be used
in a future period.  The income tax returns (2001 through 2006) are
under examination by a state authority which has completed its examinations and
issued a proposed assessment for tax years 2001 and 2006.  In
consideration of the proposed assessment, the total gross unrecognized tax
benefit was increased by $2.7 million in fiscal 2008.  At this time,
it is too early to predict the final outcome on this tax issue and any future
recoverability of this charge.  Until the tax issue is resolved, the
Company expects to accrue approximately $40,000 per quarter for
interest.


49


(14)
            Earnings Per
      Share





The
following is a reconciliation of the numerators and denominators of the basic
and diluted EPS calculations:





For the year ended March 31, 2009Income
                    
                    
                    Shares
                    
                    
                    Per Share(Numerator)
                    
                    
                    (Denominator)
                    
                    
                    AmountBasic
      EPSIncome
      available to common shareholders
                    
                    $
                    60,703,470
                    
                    
                    
                    16,239,883
                    
                    
                    $
                    3.74Effect
      of Dilutive SecuritiesOptions
      and restricted stock
                    
                    
                    -
                    
                    
                    
                    224,520Diluted
      EPSIncome
      available to common shareholders plus assumed exercises of stock
      options
                    
                    $
                    60,703,470
                    
                    
                    
                    16,464,403
                    
                    
                    $
                    3.69





For the year ended March 31, 2008Income
                    
                    
                    Shares
                    
                    
                    Per Share(Numerator)
                    
                    
                    (Denominator)
                    
                    
                    AmountBasic
      EPSIncome
      available to common shareholders
                    
                    $
                    52,996,158
                    
                    
                    
                    17,044,122
                    
                    
                    $
                    3.11Effect
      of Dilutive SecuritiesOptions
      and restricted stock
                    
                    
                    -
                    
                    
                    
                    330,624Diluted
      EPSIncome
      available to common shareholders plus assumed exercises of stock
      options
                    
                    $
                    52,996,158
                    
                    
                    
                    17,374,746
                    
                    
                    $
                    3.05





For the year ended March 31, 2007Income
                    
                    
                    Shares
                    
                    
                    Per Share(Numerator)
                    
                    
                    (Denominator)
                    
                    
                    AmountBasic
      EPSIncome
      available to common shareholders
                    
                    $
                    47,896,380
                    
                    
                    
                    18,018,370
                    
                    
                    $
                    2.66Effect
      of Dilutive SecuritiesOptions
      and restricted stock
                    
                    
                    -
                    
                    
                    
                    375,358Diluted
      EPSIncome
      available to common shareholders plus assumed exercises of stock
      options
                    
                    $
                    47,896,380
                    
                    
                    
                    18,393,728
                    
                    
                    $
                    2.60




Options
to purchase 130,583, 183,030 and 77,556 shares of common stock at various prices
were outstanding during the years ended March 31, 2009, 2008 and 2007,
respectively, but were not included in the computation of diluted EPS because
the option exercise price was greater than the average market price of the
common shares.  The shares related to the convertible senior notes
payable (1,762,519) and related warrants were not included in the computation of
diluted EPS because the effect of such instruments was
antidilutive.





(15)
            Benefit
      Plans





Retirement
Plan





The
Company provides a defined contribution employee benefit plan (401(k) plan)
covering full-time employees, whereby employees can invest up to the maximum
designated for that year.  The Company makes a matching contribution
equal to 50% of the employees' contributions for the first 6% of gross
pay.  The Company's expense under this plan was $1,078,987, $1,078,896
and $948,519, for the years ended March 31, 2009, 2008 and 2007,
respectively.


50


Supplemental Executive Retirement
Plan





The
Company has instituted a Supplemental Executive Retirement Plan (“SERP”), which
is a non-qualified executive benefit plan in which the Company agrees to pay the
executive additional benefits in the future, usually at retirement, in return
for continued employment by the executive.  The Company selects the
key executives who participate in the SERP.  The SERP is an unfunded
plan, which means there are no specific assets set aside by the Company in
connection with the establishment of the plan.  The executive has no
rights under the agreement beyond those of a general creditor of the
Company.  For the years ended March 31, 2009, 2008 and 2007,
contributions of $806,792, $836,977 and $474,865, respectively were charged to
operations related to the SERP.  The unfunded liability was
$4,722,000, $4,000,000 and $2,989,000, as of March 31, 2009, 2008 and 2007,
respectively.





For the
three years presented, the unfunded liability was estimated using the following
assumptions; an annual salary increase of 3.5% for all 3 years; a discount rate
of 6% for all 3 years; and a retirement age of 65.





Executive
Deferred Compensation Plan





The
Company has an Executive Deferral Plan.  Eligible executives may elect
to defer all or a portion of their incentive compensation to be paid under the
Executive Incentive Plan.  As of March 31, 2009 and 2008, the balance
outstanding was $0 and $101,123, respectively, under this plan.





Stock
Option Plans





The
Company has a 1992 Stock Option Plan, a 1994 Stock Option Plan, a 2002 Stock
Option Plan and a 2005 Stock Option Plan for the benefit of certain directors,
officers, and key employees.  Under these plans, 6,010,000 shares of
authorized common stock have been reserved for issuance pursuant to grants
approved by the Compensation and Stock Option Committee of the Board of
Directors.  Stock options granted under these plans have a maximum
duration of 10 years, may be subject to certain vesting requirements, which are
generally one year for directors and five years for officers and key employees,
and are priced at the market value of the Company's common stock on the date of
grant of the option.  At March 31, 2009, there were 841,700 shares
available for grant under the plans.





The fair
value of the Company’s stock options granted is estimated at the date of grant
using the Black-Scholes option-pricing model. This model requires the input of
highly subjective assumptions, changes to which can materially affect the fair
value estimate. These assumptions include estimating the length of time
employees will retain their vested stock options before exercising them, the
estimated volatility of our common stock price over the expected term and the
number of options that ultimately will not complete their vesting
requirements.  Additionally, there may be other factors that would
otherwise have a significant effect on the value of employee stock options
granted but are not considered by the model. Accordingly, while management
believes that the Black-Scholes option-pricing model provides a reasonable
estimate of fair value, the model does not necessarily provide a precise single
measure of fair value for the Company’s employee stock options.





The
weighted-average fair value at the grant date for options issued during the
years ended March 31, 2009, 2008 and 2007 was $8.51, $14.41 and $26.44 per
share, respectively.  The following is a summary of the Company’s
weighted-average assumptions used to estimate the weighted-average per share
fair value of options granted on the date of grant using the Black-Scholes
option-pricing model:





2009
                  
                  
                  2008
                  
                  
                  2007Dividend
      yield
                  
                  
                  0
                  %
                  
                  
                  0
                  %
                  
                  
                  0
                  %Expected
      volatility
                  
                  
                  50.67
                  %
                  
                  
                  43.0
                  %
                  
                  
                  43.4
                  %Average
      risk-free interest rate
                  
                  
                  2.75
                  %
                  
                  
                  4.00
                  %
                  
                  
                  4.69
                  %Expected
      life
                  
                  5.9
      years
                  
                  
                  6.9
      years
                  
                  
                  7.5
      yearsVesting
      period
                  
                  5
      years
                  
                  
                  5
      years
                  
                  
                  5
      years




The
expected stock price volatility is based on the historical volatility of the
Company’s stock for a period approximating the expected life.  The
expected life represents the period of time that options are expected to be
outstanding after their grant date.  The risk-free interest rate
reflects the interest rate at grant date on zero-coupon U.S. governmental bonds
that have a remaining life similar to the expected optionterm.


51


Option
activity for the year ended March 31, 2009, was as follows:





2009WeightedWeighted
                                          
                                          AverageAverage
                                          
                                          Remaining
                                          
                                          AggregateExercise
                                          
                                          Contractual Term
                                          
                                          IntrinsicShares
                                          
                                          
                                          Price
                                          
                                          (in years)
                                          
                                          ValueOptions
      outstanding, beginning of year
                                          
                                          
                                          1,274,217
                                          
                                          
                                          $
                                          25.33Granted
                                          
                                          
                                          302,000
                                          
                                          
                                          $
                                          16.85Exercised
                                          
                                          
                                          (142,283
                                          )
                                          
                                          $
                                          11.58Forfeited
                                          
                                          
                                          (43,034
                                          )
                                          
                                          $
                                          27.03Options
      outstanding, end of year
                                          
                                          
                                          1,390,900
                                          
                                          
                                          $
                                          25.00
                                          
                                          7.18
                                          
                                          $
                                          1,668,680Options
      exercisable, end of year
                                          
                                          
                                          607,000
                                          
                                          
                                          $
                                          22.83
                                          
                                          5.49
                                          
                                          $
                                          1,593,367





The
aggregate intrinsic value reflected in the table above represents the total
pre-tax intrinsic value (the difference between the closing stock price on March
31, 2009 and the exercise price, multiplied by the number of in-the-money
options) that would have been received by option holders had all option holders
exercised their options  as of  March 31,
2009.  This amount will change as the market price per share
changes.  The total intrinsic value of options exercised during the
periods ended March 31, 2009, 2008 and 2007 were as follows:





2009
                      
                      2008
                      
                      
                      2007$
                      2,833,497
                      
                      $
                      2,503,399
                      
                      
                      $
                      8,078,143





As of
March 31, 2009, total unrecognized stock-based compensation expense related to
non-vested stock options amounted to approximately $6.3 million which is
expected to be recognized over a weighted-average period of approximately 3.5
years.





The
following table summarizes information regarding stock options outstanding at
March 31, 2009:




WeightedAverage
                    
                    
                    Weighted
                    
                    
                    
                    
                    
                    WeightedRemaining
                    
                    
                    Average
                    
                    
                    
                    
                    
                    AverageRange of
                    
                    Options
                    
                    
                    Contractual
                    
                    
                    Exercise
                    
                    
                    Options
                    
                    
                    ExerciseExercise Price
                    
                    Outstanding
                    
                    
                    Life
                    
                    
                    Price
                    
                    
                    Exercisable
                    
                    
                    Price$
      4.90 - $5.99
                    
                    
                    44,950
                    
                    
                    
                    1.06
                    
                    
                    $
                    5.19
                    
                    
                    
                    44,950
                    
                    
                    $
                    5.19$
      6.00 - $ 7.99
                    
                    
                    18,000
                    
                    
                    
                    2.06
                    
                    
                    $
                    6.75
                    
                    
                    
                    18,000
                    
                    
                    $
                    6.75$
      8.00 - $ 9.99
                    
                    
                    71,750
                    
                    
                    
                    2.93
                    
                    
                    $
                    8.47
                    
                    
                    
                    71,750
                    
                    
                    $
                    8.47$11.00
      - $11.99
                    
                    
                    31,500
                    
                    
                    
                    4.11
                    
                    
                    $
                    11.44
                    
                    
                    
                    31,500
                    
                    
                    $
                    11.44$15.00
      - $16.99
                    
                    
                    386,900
                    
                    
                    
                    8.51
                    
                    
                    $
                    16.71
                    
                    
                    
                    85,650
                    
                    
                    $
                    16.23$23.00
      - $23.99
                    
                    
                    83,300
                    
                    
                    
                    5.56
                    
                    
                    $
                    23.53
                    
                    
                    
                    57,900
                    
                    
                    $
                    23.53$25.00
      - $25.99
                    
                    
                    173,900
                    
                    
                    
                    6.84
                    
                    
                    $
                    25.07
                    
                    
                    
                    102,900
                    
                    
                    $
                    25.09$28.00
      - $28.99
                    
                    
                    370,050
                    
                    
                    
                    8.05
                    
                    
                    $
                    28.22
                    
                    
                    
                    110,450
                    
                    
                    $
                    28.24$43.00
      - $43.99
                    
                    
                    7,000
                    
                    
                    
                    8.13
                    
                    
                    $
                    43.00
                    
                    
                    
                    1,400
                    
                    
                    $
                    43.00$46.00
      - $49.00
                    
                    
                    203,550
                    
                    
                    
                    7.60
                    
                    
                    $
                    48.73
                    
                    
                    
                    82,500
                    
                    
                    $
                    48.72$
      4.90 - $49.00
                    
                    
                    1,390,900
                    
                    
                    
                    7.18
                    
                    
                    $
                    25.00
                    
                    
                    
                    607,000
                    
                    
                    $
                    22.83




52


Restricted
Stock





On
November 10, 2008, the Company granted 50,000 shares of restricted stock (which
are equity classified), with a grant date fair value of $16.85 per share, to
certain executive officers.  One-third of the restricted stock grant
vested immediately and one-third will vest on the first and second anniversary
of grant.  On that same date, the Company granted an additional 29,100
shares of restricted stock (which are equity classified), with a grant date fair
value of $16.85 per share, to the same executive officers.  The 29,100
shares will vest in three years based on the Company’s compounded annual EPS
growth according to the following schedule:





Vesting
                    Percentage
                  
                  Compounded
                    Annual
                    EPS Growth100%
                  
                  15%
      or higher67%
                  
                  
                  12%
      - 14.99
                  %33%
                  
                  
                  10%
      - 11.99
                  %0%
                  
                  Below
      10
                  %





On May
19, 2008 the Company granted 12,000 shares of restricted stock (which are equity
classified) with a grant date fair value of $43.67 per share to independent
directors and a certain officer.  One-half of the restricted stock
vested immediately and the other half will vest on the first anniversary of
grant.





On
November 28, 2007, the Company granted 20,800 shares of restricted stock (which
are equity classified), with a grant date fair value of $30.94 per share, to
certain executive officers.  One-third of the restricted stock vested
immediately and one-third will vest on the first and second anniversary of
grant.  The Company granted an additional 15,150 shares of restricted
stock (which are equity classified), with a grant date fair value of $30.94 per
share, to the same executive officers.  The 15,150 shares will vest in
three years based on the Company’s compounded annual EPS growth according to the
following schedule:





CompoundedVesting
                  
                  AnnualPercentage
                  
                  EPS Growth100%
                  
                  15%
      or higher67%
                  
                  
                  12%
      - 14.99
                  %33%
                  
                  
                  10%
      - 11.99
                  %0%
                  
                  Below
      10
                  %





On
November 12, 2007, the Company granted 8,000 shares of restricted stock (which
are equity classified), with a grant date fair value of $28.19 per share, to
certain officers.  One-third of the restricted stock vested
immediately and one-third will vest on the first and second anniversary of
grant.





Compensation
expense related to restricted stock is based on the number of shares expected to
vest and the fair market value of the common stock on the grant
date.  The Company recognized $1.7 million and $1.6 million of
compensation expense for the years ended March 31, 2009 and 2008, respectively,
related to restricted stock, which is included as a component of general and
administrative expenses in the Consolidated Statements of
Operations.  For purposes of accruing the expense, all shares are
expected to vest.





As of
March 31, 2009, there was approximately $1.2 million of unrecognized
compensation cost related to unvested restricted stock awards granted, which is
expected to be recognized over the next two years.





A summary
of the status of the Company’s restricted stock as of March 31, 2009, and
changes during the year ended March 31, 2009, are presented below:





Number of
                    Shares
                  
                  
                  Weighted Average Fair
                    Value at Grant DateOutstanding
      at March 31, 2008
                  
                  
                  50,533
                  
                  
                  $
                  35.41Granted
      during the period
                  
                  
                  91,100
                  
                  
                  
                  20.38Vested
      during the period, net
                  
                  
                  (48,879
                  )
                  
                  
                  32.30Cancelled
      during the period
                  
                  
                  (12,508
                  )
                  
                  
                  17.83Outstanding
      at March 31, 2009
                  
                  
                  80,246
                  
                  
                  $
                  22.94




53


Total
share-based compensation included as a component of net income during the years
ended March 31, were as follows:





2009
                  
                  
                  2008
                  
                  
                  2007Share-based
      compensation related to equity classified units:Share-based
      compensation related to stock options
                  
                  $
                  3,232,229
                  
                  
                  
                  3,937,925
                  
                  
                  
                  3,399,763Share-based
      compensation related to restricted stock units
                  
                  
                  1,685,616
                  
                  
                  
                  1,556,902
                  
                  
                  
                  1,088,387Total
      share-based compensation related to equity classified
    awards
                  
                  $
                  4,917,845
                  
                  
                  
                  5,494,827
                  
                  
                  
                  4,488,150





(16)
              Acquisitions





The
following table sets forth the acquisition activity of the Company for the last
three fiscal years:





2009
                      
                      
                      2008
                      
                      
                      2007($
      in thousands)Number
      of offices purchased
                      
                      
                      22
                      
                      
                      
                      25
                      
                      
                      
                      86Merged
      into existing offices
                      
                      
                      11
                      
                      
                      
                      12
                      
                      
                      
                      50Purchase
      Price
                      
                      $
                      10,826
                      
                      
                      
                      4,977
                      
                      
                      
                      18,394Tangible
      assets:Net
      loans
                      
                      
                      9,083
                      
                      
                      
                      3,086
                      
                      
                      
                      16,131Furniture,
      fixtures & equipment
                      
                      
                      68
                      
                      
                      
                      128
                      
                      
                      
                      139Other
                      
                      
                      2
                      
                      
                      
                      7
                      
                      
                      
                      -9,153
                      
                      
                      
                      3,221
                      
                      
                      
                      16,270Excess
      of purchase prices over carrying value of net tangible
    assets
                      
                      $
                      1,673
                      
                      
                      
                      1,756
                      
                      
                      
                      2,124Customer
      lists
                      
                      
                      1,360
                      
                      
                      
                      1,327
                      
                      
                      
                      1,696Non-compete
      agreements
                      
                      
                      85
                      
                      
                      
                      116
                      
                      
                      
                      68Goodwill
                      
                      
                      228
                      
                      
                      
                      313
                      
                      
                      
                      360Total
      intangible assets
                      
                      $
                      1,673
                      
                      
                      
                      1,756
                      
                      
                      
                      2,124





The
Company evaluates each acquisition to determine if the transaction meets the
definition of a business combination.  Those transactions that meet
the definition of a business combination are accounted for as such under SFAS
No. 141 and all other acquisitions are accounted for as asset
purchases.  All acquisitions have been with independent third
parties.





When the
acquisition results in a new office, the Company records the transaction as a
business combination, since the office acquired will continue to generate loans.
The Company typically retains the existing employees and the office
location.  The purchase price is allocated to the estimated fair value
of the tangible assets acquired and to the estimated fair value of the
identified intangible assets acquired (generally non-compete agreements and
customer lists).  The remainder is allocated to
goodwill.  During the year ended March 31, 2009, 11 acquisitions were
recorded as business combinations.





When the
acquisition is of a portfolio of loans only, the Company records the transaction
as an asset purchase. In an asset purchase, no goodwill is
recorded.  The purchase price is allocated to the estimated fair value
of the tangible and intangible assets acquired.  During the year ended
March 31, 2009, 11 acquisitions were recorded as asset
acquisitions.





The
Company’s acquisitions include tangible assets (generally loans and furniture
and equipment) and intangible assets (generally non-compete agreements, customer
lists, and goodwill), both of which are recorded at their fair values, which are
estimated pursuant to the processes described below.





Acquired
loans are valued at the net loan balance.  Given the short-term nature
of these loans, generally four months, and that these loans are subject to
continual repricing at current rates, management believes the net loan balances
approximate their fair value.


54





Furniture
and equipment are valued at the specific purchase price as agreed to by both
parties at the time of acquisition, which management believes approximates their
fair values.





Non-compete
agreements are valued at the stated amount paid to the other party for these
agreements, which the Company believes approximates the fair value. The fair
value of the customer lists is based on a valuation model that utilizes the
Company’s historical data to estimate the value of any acquired customer
lists.  In a business combination the remaining excess of the purchase
price over the fair value of the tangible assets, customer list, and non-compete
agreements is allocated to goodwill.  The offices the Company acquires
are small, privately owned offices, which do not have sufficient historical data
to determine attrition.  The Company believes that the customers
acquired have the same characteristics and perform similarly to its
customers.  Therefore, the Company utilized the attrition patterns of
its customers when developing the method.  This method is re-evaluated
periodically.





Customer
lists are allocated at an office level and are evaluated for impairment at an
office level when a triggering event occurs, in accordance with SFAS
144.  If a triggering event occurs, the impairment loss to the
customer list is generally the remaining unamortized customer list
balance.  In most acquisitions, the original fair value of the
customer list allocated to an office is generally less than $100,000, and
management believes that in the event a triggering event were to occur, the
impairment loss to an unamortized customer list would be
immaterial.





The
results of all acquisitions have been included in the Company’s consolidated
financial statements since the respective acquisition dates.  The pro
forma impact of these purchases as though they had been acquired at the
beginning of the periods presented would not have a material effect on the
results of operations as reported.





(17)
            Fair
      Value





Effective
April 1, 2008, the first day of fiscal 2009, the Company adopted the provisions
of Statement of Financial Accounting Standards No. 157 ("SFAS 157"), “Fair Value Measurements” for
financial assets and liabilities, as well as any other assets and liabilities
that are carried at fair value on a recurring basis in financial statements.
SFAS 157 defines fair value, establishes a framework for measuring fair value
and expands disclosures about fair value measurements.  SFAS 157
applies under other accounting pronouncements in which the Financial Accounting
Standards Board ("FASB") has previously concluded that fair value is the
relevant measurement attribute.    Accordingly, SFAS 157
does not require any new fair value measurements. The Company applied the
provisions of FSP FAS 157-2, "Effective Date of FASB Statement 157," which
defers the provisions of SFAS 157 for nonfinancial assets and
liabilities to the first fiscal period beginning after November 15,
2008. The deferred nonfinancial assets and liabilities include items such
as goodwill and other nonamortizable intangibles. The Company is required to
adopt SFAS 157 for nonfinancial assets and liabilities in the first quarter of
fiscal 2010 and the Company’s management is still evaluating the impact on
the Company’s Consolidated Financial Statements.





Financial
assets and liabilities measured at fair value are grouped in three levels. The
levels prioritize the inputs used to measure the fair value of the assets or
liabilities.  These levels are:





o
            Level
      1 – Quoted prices (unadjusted) in active markets for identical assets or
      liabilities.





o
              Level
      2 – Inputs other than quoted prices that are observable for assets and
      liabilities, either directly or indirectly. These inputs include quoted
      prices for similar assets or liabilities in active markets and quoted
      prices for identical or similar assets or liabilities in market that are
      less active.





o
            Level
      3 – Unobservable inputs for assets or liabilities reflecting the reporting
      entity’s own assumptions.





The
following financial liabilities were measured at fair value on a recurring basis
at March 31, 2009:





Fair Value Measurements UsingMarch 31,
                        
                        
                        Quoted Prices
                          in Active
                          Markets for
                          Identical
                          Assets
                        
                        
                        Significant
                          Other
                          Observable
                          Inputs
                        
                        
                        Significant
                          Unobservable
                          Inputs2009
                        
                        
                        (Level 1)
                        
                        
                        (Level 2)
                        
                        
                        (Level 3)Interest
      rate swaps
                        
                        $
                        (2,443,666
                        )
                        
                        $
                        -
                        
                        
                        $
                        (2,443,666
                        )
                        
                        $
                        -





The
Company’s interest rate swap was valued using the “income approach” valuation
technique.  This method used valuation techniques to convert future
amounts to a single present amount.  The measurement was based on the
value indicated by current market expectations about those future
amounts.


55





(18)
            Quarterly Information
      (Unaudited)





The
following sets forth selected quarterly operating data:





2009
                      
                      
                      2008First
                      
                      
                      Second
                      
                      
                      Third
                      
                      
                      Fourth
                      
                      
                      First
                      
                      
                      Second
                      
                      
                      Third
                      
                      
                      Fourth(Dollars
      in thousands, except earnings per share data)Total
      revenues
                      
                      $
                      88,421
                      
                      
                      
                      91,721
                      
                      
                      
                      99,656
                      
                      
                      
                      113,907
                      
                      
                      
                      76,389
                      
                      
                      
                      80,198
                      
                      
                      
                      88,043
                      
                      
                      
                      101,417Provision
      for loan losses
                      
                      
                      17,857
                      
                      
                      
                      23,307
                      
                      
                      
                      29,490
                      
                      
                      
                      14,822
                      
                      
                      
                      14,217
                      
                      
                      
                      18,416
                      
                      
                      
                      23,224
                      
                      
                      
                      11,685General
      and administrative expenses
                      
                      
                      48,790
                      
                      
                      
                      48,379
                      
                      
                      
                      51,716
                      
                      
                      
                      51,331
                      
                      
                      
                      42,191
                      
                      
                      
                      41,930
                      
                      
                      
                      47,470
                      
                      
                      
                      47,628Interest
      expense
                      
                      
                      2,480
                      
                      
                      
                      2,749
                      
                      
                      
                      2,787
                      
                      
                      
                      2,373
                      
                      
                      
                      2,336
                      
                      
                      
                      2,932
                      
                      
                      
                      3,338
                      
                      
                      
                      2,963Income
      tax expense
                      
                      
                      7,242
                      
                      
                      
                      6,622
                      
                      
                      
                      5,659
                      
                      
                      
                      17,398
                      
                      
                      
                      6,795
                      
                      
                      
                      6,454
                      
                      
                      
                      6,723
                      
                      
                      
                      14,749Net
      income
                      
                      $
                      12,052
                      
                      
                      
                      10,664
                      
                      
                      
                      10,004
                      
                      
                      
                      27,983
                      
                      
                      
                      10,850
                      
                      
                      
                      10,466
                      
                      
                      
                      7,288
                      
                      
                      
                      24,392Earnings
      per share:Basic
                      
                      $
                      .74
                      
                      
                      
                      .66
                      
                      
                      
                      .62
                      
                      
                      
                      1.73
                      
                      
                      
                      .62
                      
                      
                      
                      .61
                      
                      
                      
                      .43
                      
                      
                      
                      1.46Diluted
                      
                      $
                      .73
                      
                      
                      
                      .65
                      
                      
                      
                      .61
                      
                      
                      
                      1.72
                      
                      
                      
                      .61
                      
                      
                      
                      .60
                      
                      
                      
                      .43
                      
                      
                      
                      1.44





(19)
            Litigation





At March
31, 2009, the Company and certain of its subsidiaries have been named as
defendants in various legal actions arising from their normal business
activities in which damages in various amounts are claimed.  Although
the amount of any ultimate liability with respect to such matters cannot be
determined, the Company believes that any such liability will not have a
material adverse effect on the Company’s results of operations or financial
condition taken as a whole.


56


MANAGEMENT’S
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING





We are
responsible for establishing and maintaining adequate internal control over
financial reporting, as defined in Rules 13a – 15(f) under the Securities
Exchange Act of 1934.  We have assessed the effectiveness of internal
control over financial reporting as of March 31, 2009.  Our assessment
was based on criteria set forth by the Committee of Sponsoring Organizations of
the Treadway Commission, or COSO, Internal Control-Integrated
Framework.





Our
internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles.  Our internal control over
financial reporting includes those policies and procedures that:





(1)
              pertain
      to the maintenance of records that, in reasonable detail, accurately and
      fairly reflect our transactions and dispositions of the
      assets;





(2)
              provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with generally accepted
      accounting principles, and that our receipts and expenditures are being
      made only in accordance with authorizations of our management and board of
      directors: and





(3)
              provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use, or disposition of our assets that could
      have a material effect on our financial
  statements.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, any assumptions regarding
internal control over financial reporting in future periods based on an
evaluation of effectiveness in a prior period are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may
deteriorate.





Based on
using the COSO criteria, we believe our internal control over financial
reporting as of March 31, 2009 was effective.





Our
independent registered public accounting firm has audited the consolidated
financial statements included in this Annual Report and has issued an
attestation report on the effectiveness of our internal control over financial
reporting, as stated in their report.





/s/ A. A. McLean III
              
              /s/ Kelly M. MalsonA.
      A. McLean III
              
              Kelly
      M. MalsonChairman
      and Chief Executive Officer
              
              Senior
      Vice President and Chief Financial
Officer


57


REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





The Board
of Directors


World
Acceptance Corporation:





We have
audited World Acceptance Corporation and subsidiaries’ (the “Company’s”)
internal control over financial reporting as of March 31, 2009, based on
criteria established in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO).The Company’s
management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal
control over financial reporting, included in the accompanying Management’s
Report on Internal Control over Financial Reporting. Our responsibility is to
express an opinion on the Company’s internal control over financial reporting
based on our audit.





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





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





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.





In our
opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of March 31, 2009, based on criteria
established in Internal
Control –Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).





We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets of the Company
as of March 31, 2009 and 2008, and the related consolidated statements of
operations, shareholders’ equity and comprehensive income, and cash flows for
each of the years in the three-year period ended March 31, 2009, and our report
dated May 29, 2009 expressed an unqualified opinion on those consolidated
financial statements.











Greenville,
South Carolina


May 29,
2009


58


REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





The Board
of Directors


World
Acceptance Corporation:





We have
audited the accompanying consolidated balance sheets of World Acceptance
Corporation and subsidiaries (the “Company”) as of March 31, 2009 and 2008, and
the related consolidated statements of operations, shareholders’ equity and
comprehensive income, and cash flows for each of the years in the three-year
period ended March 31, 2009. These consolidated financial statements are the
responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.





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





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of World Acceptance Corporation
and subsidiaries as of March 31, 2009 and 2008, and the results of their
operations and their cash flows for each of the years in the three-year period
ended March 31, 2009, in conformity with U.S. generally accepted accounting
principles.





As
discussed in Note 1, the Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes effective April 1, 2007.





We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), World Acceptance Corporation’s internal control
over financial reporting as of March 31, 2009, based on criteria established in
Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO), and our report dated May 29, 2009 expressed an
unqualified opinion on the effectiveness of the Company’s internal control over
financial reporting.











Greenville,
South Carolina


May 29,
2009


59


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





The
Company had no disagreements on accounting or financial disclosure matters with
its independent registered public accountants to report under this Item
9.





Item 9A.
              Controls
      and Procedures





Disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the “Exchange Act”)) are our controls and other
procedures that are designed to ensure that information required to be disclosed
by us in the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission’s rules and forms.  Disclosure
controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.





We have
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures as of March 31, 2009.  Based on that
evaluation, the Chief Executive Officer and the Chief Financial Officer
concluded that our disclosure controls and procedures are effective in
recording, processing, summarizing, and timely reporting information required to
be disclosed in our reports to the Securities and Exchange
Commission.





Internal
control over Financial Reporting





Management
has assessed the effectiveness of our internal control over financial reporting
as of March 31, 2009.  Management’s report on internal control over
financial reporting can be found on page 57 of this Annual Report on Form
10-K.





Our
independent registered public accounting firm has issued an attestation report
on our internal control over financial reporting.  This report can be
found on page 58 of this Annual Report on Form 10-K.





Changes
in Internal Control





There was
no change in our internal control over financial reporting during the fourth
quarter of fiscal 2009 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial
reporting.





Item 9B.
              Other
      Information





None.


60


PART
III.





Item
10.   Directors, Executive Officers and Corporate
Governance





Information contained under the caption
“Election of Directors,” “Section 16(a) Beneficial Ownership Reporting
Compliance” and “Corporate Governance matters – Code of Business Conduct and
Ethics,” “-  Director Nominations” and “-Audit Committee Financial
Experts” in the Proxy Statement is incorporated herein by reference in response
to this Item 10.  The information in response to this Item 10
regarding the executive officers of the Company is contained in Item 1, Part I
hereof under the caption "Executive Officers."





Item
11.   Executive Compensation





Information contained under the
caption "Executive Compensation" in the Proxy Statement, except for the
information therein under the subcaption "Report of The Compensation and Stock
Option Committee," which shall be deemed furnished, but not filed herewith, is
incorporated herein by reference in response to this Item 11.





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





Information contained under the
captions “Executive Compensation – “Equity Plan Compensation Information,”
"Ownership of Shares by Certain Beneficial Owners" and "Ownership of Common
Stock of Management" in the Proxy Statement is incorporated by reference herein
in response to this Item 12.





Item
13.   Certain Relationships and Related Transactions and Director
Independence





The Company had no reportable related
person disclosures in response to this Item 13.  Information contained
under the captions “Election of Directors” and “Corporate Governance Matters –
Director Independence” in the Proxy Statement is incorporated by reference in
response to this Item 13.


61


Item
14.   Principal Accountanting Fees and Services





Information contained under the caption
“Appointment of Independent Registered Public Accountants,” in the Proxy
Statement except for the information therein under the subcaption “Report of the
Audit Committee of the Board of Directors,” is incorporated by reference herein
in response to this Item 14.





PART
IV.





Item
15.  Exhibits and Financial Statement Schedules





(1)
            The
      following consolidated financial statements of the Company and Report of
      Independent Registered Public Accounting Firm are filed
      herewith.





Consolidated
Financial Statements:





Consolidated
      Balance Sheets at March 31, 2009 and
2008





Consolidated
      Statements of Operations for the years ended March 31, 2009, 2008 and
      2007





Consolidated
      Statements of Shareholders' Equity and Comprehensive Income for the years
      ended March 31, 2009, 2008 and 2007





Consolidated
      Statements of Cash Flows for the years ended March 31, 2009, 2008 and
      2007





Notes
      to Consolidated Financial
Statements





Reports
of Independent Registered Public Accounting Firm





(2)
            Financial
      Statement Schedules





All
schedules for which provision is made in the applicable accounting regulations
of the Securities and Exchange Commission are not required under the related
instructions, are inapplicable, or the required information is included
elsewhere in the consolidated financial statements.


62


(3)
            Exhibits





The
following exhibits are filed as part of this report or, where so indicated, have
been previously filed and are incorporated herein by
reference.





Filed Herewith (*),Previously filed (+),oror Incorporated by
                
                CompanyExhibit
                
                
                
                Reference Previous
                
                RegistrationNumber
                
                Description
                
                Exhibit Number
                
                No. or Report3.1
                
                Second
      Amended and Restated Articles of Incorporation of theCompany,
      as amended
                
                3.1
                
                333-1074263.2
                
                Fourth
      Amended and Restated Bylaws of the Company
                
                99.1
                
                8-03-07
      8-K4.1
                
                Specimen
      Share Certificate
                
                4.1
                
                33-428794.2
                
                Articles
      3, 4 and 5 of the Form of Company's Second Amendedand
      Restated Articles of Incorporation (as amended)
                
                3.1
                
                333-1074264.3
                
                Article
      II, Section 9 of the Company’s Fourth AmendedAnd
      Restated Bylaws
                
                99.1
                
                8-03-07
      8-K4.4
                
                Amended
      and Restated Credit Agreement dated July 20, 2005
                
                4.4
                
                6-30-05
      10-Q4.5
                
                First
      Amendment to Amended and Restated Revolving CreditAgreement,
      dated as of August 4, 2006
                
                4.4
                
                6-30-06
      10-Q4.6
                
                Second
      Amendment to Amended and Restated Revolving CreditAgreement
      dated as of October 2, 2006
                
                10.1
                
                10-04-06
      8-K4.7
                
                Third
      Amendment to Amended and Restated Revolving CreditAgreement
      dated as of August 31, 2007
                
                10.1
                
                9-07-07
      8-K4.8
                
                Fourth
      Amendment to Amended and Restated Revolving Credit
                
                4.8
                
                6-30-08
      10-QAgreement
      dated as of August 4, 20084.9
                
                Fifth
      Amendment to Amended and Restated Revolving CreditAgreement
      dated as of January 28, 2009
                
                4.9
                
                12-31-08 10-Q/A4.10
                
                Subsidiary
      Security Agreement dated as of June 30, 1997, asamended
      through July 20, 2005
                
                4.5
                
                9-30-05
      10-Q4.11
                
                Company
      Security Agreement dated as of June 20, 1997, asamended
      through July 20, 2005
                
                4.6
                
                9-30-05
      10-Q4.12
                
                Fourth
      Amendment to Subsidiary Amended and RestatedSecurity
      Agreement, Pledge and Indenture of Trust(i.e.,
      Subsidiary Security Agreement)
                
                4.7
                
                6-30-05
      10-Q4.13
                
                Fourth
      Amendment to Amended and Restated SecurityAgreement,
      Pledge and Indenture of Trust, (i.e., CompanySecurity
      Agreement)
                
                4.10
                
                9-30-04
      10-Q4.14
                
                Fifth
      Amendment to Amended and Restated Security Agreement,Pledge
      and Indenture of Trust (i.e., Company Security Agreement)
                
                4.9
                
                6-30-05
      10-Q4.15
                
                Form
      of 3.00% Convertible Senior Subordinated Note due 2011
                
                4.1
                
                10-12-06
      8-K


63


Filed Herewith (*)or Incorporated by
                  
                  CompanyExhibit
                  
                  
                  
                  Reference Previous
                  
                  RegistrationNumber
                  
                  Description
                  
                  Exhibit Number
                  
                  No. or Report4.16
                  
                  Indenture,
      dated October 10, 2006 between the Companyand
      U.S. Bank National Association, as Trustee
                  
                  4.2
                  
                  10-12-06
      8-K4.17
                  
                  Amended
      and Restated Guaranty Agreement, dated
                    as of June 30, 1997 (i.e., Subsidiary Guaranty
      Agreement)
                  
                  *4.18
                  
                  First
      Amendment to Subsidiary Guaranty Agreement, datedas
      of August 4, 2008
                  
                  *10.1+
                  
                  Employment
      Agreement of A. Alexander McLean, III, effectiveMay
      21, 2007
                  
                  10.3
                  
                  2007
      10-K10.2+
                  
                  Employment
      Agreement of Mark C. Roland, effective as ofMay
      21, 2007
                  
                  10.4
                  
                  2007
      10-K10.3+
                  
                  Employment
      Agreement of Kelly M. Malson, effective as ofAugust
      27, 2007
                  
                  99.1
                  
                  8-29-07
      8-K10.4+
                  
                  Employment
      Agreement of Javier Sauza, effective as ofJune
      1, 2008
                  
                  *10.5+
                  
                  Securityholders'
      Agreement, dated as of September 19, 1991,between
      the Company and certain of its securityholders
                  
                  10.5
                  
                  33-4287910.6+
                  
                  Supplemental
      Income Plan
                  
                  10.7
                  
                  2000
      10-K10.7+
                  
                  Second
      Amendment to the Company’s SupplementalIncome
      Plan
                  
                  10.15
                  
                  12-31-07
      10-Q10.8+
                  
                  Board
      of Directors Deferred Compensation Plan
                  
                  10.6
                  
                  2000
      10-K10.9
                  
                  Second
      Amendment to the Company’s Board of DirectorsDeferred
      Compensation Plan (2000)
                  
                  10.13
                  
                  12-31-07
      10-Q10.10+
                  
                  1992
      Stock Option Plan of the Company
                  
                  4
                  
                  33-5216610.11+
                  
                  1994
      Stock Option Plan of the Company, as amended
                  
                  10.6
                  
                  1995
      10-K10.12+
                  
                  First
      Amendment to the Company’s 1992 and 1994Stock
      Option Plans
                  
                  10.10
                  
                  12-31-07
      10-Q10.13+
                  
                  2002
      Stock Option Plan of the Company
                  
                  Appendix A
                  
                  Definitive
      ProxyStatement
      onSchedule
      14Afor
      the 2002Annual Meeting10.14+
                  
                  First
      Amendment to the Company’s 2002 StockOption
      Plan
                  
                  10.11
                  
                  12-31-07
      10-Q10.15+
                  
                  2005
      Stock Option Plan of the Company
                  
                  Appendix B
                  
                  Definitive
      ProxyStatement
      onSchedule
      14Afor
      the 2005Annual Meeting10.16+
                  
                  First
      Amendment to the Company’s 2005 Stock Option Plan
                  
                  10.12
                  
                  12-31-07
      10-Q


64


Filed Herewith (*),Previously filed (+),oror Incorporated by
              
              CompanyExhibit
              
              
              
              Reference Previous
              
              RegistrationNumber
              
              Description
              
              Exhibit Number
              
              No. or Report10.17+
              
              The
      Company’s Executive Incentive Plan
              
              10.6
              
              1994
      10-K10.18+
              
              The
      Company’s Retirement Savings Plan
              
              4.1
              
              333-1439910.19+
              
              The
      Company Retirement Savings Plan Fifth Amendment
              
              10.1
              
              12-31-08
      10-Q10.20+
              
              Executive
      Deferral Plan
              
              10.12
              
              2001
      10-K10.21+
              
              Second
      Amendment to the Company’s Executive Deferral Plan
              
              10.14
              
              12-31-07
      10-Q10.22+
              
              First
      Amended and Restated Board of Directors 2005 DeferredCompensation
      Plan
              
              10.16
              
              12-31-07
      10-Q10.23+
              
              First
      Amended and Restated 2005 Executive Deferral Plan
              
              10.17
              
              12-31-07
      10-Q10.24+
              
              Second
      Amended and Restated Company 2005 SupplementalIncome
      Plan
              
              10.18
              
              12-31-07
      10-Q10.25+
              
              2008
      Stock Option Plan of the Company
              
              Appendix A
              
              Definitive
      ProxyStatement
      onSchedule
      14Afor
      The 2008Annual Meeting14
              
              Code
      of Ethics
              
              14
              
              2004
      10-K21
              
              Schedule
      of the Company’s Subsidiaries
              
              *23
              
              Consent
      of KPMG LLP
              
              *31.1
              
              Rule
      13a-14(a)/15d-14(a) Certification of Chief Executive
    Officer
              
              *31.2
              
              Rule
      13a-14(a)/15d-14(a) Certification of Chief Financial
    Officer
              
              *32.1
              
              Section
      1350 Certification of Chief Executive Officer
              
              *32.2
              
              Section
      1350 Certification of Chief Financial Officer
              
              *





+      Management
Contract or other compensatory plan required to be filed under Item 14(c) of
this report and Item 601 of Regulation 5-K of the Securities and Exchange
Commission.


65


SIGNATURES





Pursuant to the requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.





WORLD
      ACCEPTANCE CORPORATIONBy:
                  /s/  A. Alexander McLean
      IIIA.
      Alexander McLean, IIIChairman
      and Chief Executive OfficerDate:  May
      29, 2009By:
                  /s/ Kelly M. MalsonKelly
      M. MalsonSenior
      Vice President and Chief Financial OfficerDate:  May
      29, 2009





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





Signature/s/ A. Alexander McLean III
                    
                    /s/ Ken R. Bramlett Jr.A.
      Alexander McLean, III, Chairman of the Board and
                    
                    Ken
      R. Bramlett Jr., DirectorChief
      Executive Officer (Principal Executive Officer)Date;  May
      29, 2009
                    
                    Date:  May
      29, 2009/s/ Kelly M. Malson
                    
                    /s/ James R. GilreathKelly
      M. Malson, Senior Vice President and Chief
                    
                    James
      R. Gilreath, DirectorFinancial
      Officer (Principal Financial and Accounting Officer)Date:  May
      29, 2009
                    
                    Date:  May
      29, 2009/s/ William S. Hummers
                    
                    /s/ Charles D. WayWilliam
      S. Hummers, III, Director
                    
                    Charles
      D. Way, DirectorDate:  May
      29, 2009
                    
                    Date:  May
      29, 2009/s/ Mark C. Roland
                    
                    /s/ Darrell WhitakerMark
      C. Roland, President and COO; Director
                    
                    Darrell
      Whitaker, DirectorDate:  May
      29, 2009
                    
                    Date:  May
      29,
2009


66