South Carolina | 57-0425114 | |||
(State or other jurisdiction of | (I.R.S. Employer Identification | |||
incorporation or organization) | Number) |
Large Accelerated Filer | Accelerated Filer x | |
Non-accelerated filer o (Do not check if a smaller reportingcompany) | Smaller reporting company o |
PART I - FINANCIAL INFORMATION
|
|||
Page
|
|||
Item 1.
|
Consolidated Financial Statements (unaudited):
|
||
3 | |||
4 | |||
5 | |||
6 | |||
|
|||
7
|
|||
Item 2. | Management's Discussion and Analysis of Financial Condition and results of Operations | 19 | |
Item 3.
|
24
|
||
Item 4.
|
25
|
||
PART II – OTHER INFORMATION
|
|||
Item 1.
|
26
|
||
Item 1A.
|
26
|
||
Item 2.
|
26
|
||
Item 5.
|
26
|
||
Item 6.
|
27
|
||
29
|
September 30, 2011
|
March 31, 2011
|
|||||||
ASSETS
|
||||||||
Cash and cash equivalents
|
$ | 13,060,903 | 8,030,580 | |||||
Restricted cash (See Note 12)
|
77,000,000 | - | ||||||
Gross loans receivable
|
964,955,462 | 875,045,680 | ||||||
Less:
|
||||||||
Unearned interest and fees
|
(258,484,255 | ) | (228,974,132 | ) | ||||
Allowance for loan losses
|
(54,164,473 | ) | (48,354,994 | ) | ||||
Loans receivable, net
|
652,306,734 | 597,716,554 | ||||||
Property and equipment, net
|
23,198,511 | 23,366,207 | ||||||
Deferred taxes
|
17,958,115 | 14,480,025 | ||||||
Other assets, net
|
9,309,118 | 10,804,113 | ||||||
Goodwill
|
5,634,586 | 5,634,586 | ||||||
Intangible assets
|
5,884,884 | 6,364,890 | ||||||
Total assets
|
$ | 804,352,851 | 666,396,955 | |||||
LIABILITIES & SHAREHOLDERS' EQUITY
|
||||||||
Liabilities:
|
||||||||
Senior notes payable
|
232,600,000 | 82,250,000 | ||||||
Convertible senior subordinated notes payable
|
77,000,000 | 77,000,000 | ||||||
Discount on convertible subordinated notes payable
|
- | (1,819,600 | ) | |||||
Net of discount
|
77,000,000 | 75,180,400 | ||||||
Junior subordinated note payable
|
50,000,000 | 30,000,000 | ||||||
Income taxes payable
|
11,615,103 | 13,097,419 | ||||||
Accounts payable and accrued expenses
|
20,493,944 | 23,293,967 | ||||||
Total liabilities
|
391,709,047 | 223,821,786 | ||||||
Shareholders' equity:
|
||||||||
Preferred stock, no par value
|
||||||||
Authorized 5,000,000, no shares issued or outstanding
|
- | - | ||||||
Common stock, no par value
|
||||||||
Authorized 95,000,000 shares; issued and outstanding 14,636,365 and 15,711,365 shares at September 30, 2011 and March 31, 2011, respectively
|
- | - | ||||||
Additional paid in capital
|
52,081,367 | 47,352,738 | ||||||
Retained earnings
|
365,509,693 | 395,086,232 | ||||||
Accumulated other comprehensive (loss) income
|
(4,947,256 | ) | 136,199 | |||||
Total shareholders' equity
|
412,643,804 | 442,575,169 | ||||||
Commitments and contingencies
|
||||||||
$ | 804,352,851 | 666,396,955 |
Three months ended
|
Six months ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Revenues:
|
||||||||||||||||
Interest and fee income
|
$ | 116,232,521 | 103,717,055 | 223,581,026 | 199,787,798 | |||||||||||
Insurance commissions and other income
|
15,906,450 | 14,348,036 | 31,714,007 | 28,675,457 | ||||||||||||
Total revenues
|
132,138,971 | 118,065,091 | 255,295,033 | 228,463,255 | ||||||||||||
Expenses:
|
||||||||||||||||
Provision for loan losses
|
30,057,269 | 27,275,104 | 52,896,383 | 46,973,312 | ||||||||||||
General and administrative expenses:
|
||||||||||||||||
Personnel
|
40,742,200 | 37,350,702 | 85,377,423 | 77,084,671 | ||||||||||||
Occupancy and equipment
|
8,719,513 | 7,893,050 | 16,938,624 | 15,081,808 | ||||||||||||
Advertising
|
2,698,483 | 2,606,815 | 5,481,742 | 5,069,131 | ||||||||||||
Amortization of intangible assets
|
434,208 | 510,186 | 866,997 | 1,016,822 | ||||||||||||
Other
|
8,869,095 | 7,729,991 | 17,312,004 | 15,135,835 | ||||||||||||
Total general and administrative expenses
|
61,463,499 | 56,090,744 | 125,976,790 | 113,388,267 | ||||||||||||
Interest expense
|
3,947,066 | 4,095,828 | 7,330,936 | 7,449,796 | ||||||||||||
Total expenses
|
95,467,834 | 87,461,676 | 186,204,109 | 167,811,375 | ||||||||||||
Income before income taxes
|
36,671,137 | 30,603,415 | 69,090,924 | 60,651,880 | ||||||||||||
Income taxes
|
13,367,213 | 10,369,185 | 25,604,902 | 21,702,938 | ||||||||||||
Net income
|
$ | 23,303,924 | 20,234,230 | 43,486,022 | 38,948,942 | |||||||||||
Net income per common share:
|
||||||||||||||||
Basic
|
$ | 1.56 | 1.29 | 2.86 | 2.45 | |||||||||||
Diluted
|
$ | 1.52 | 1.26 | 2.78 | 2.40 | |||||||||||
Weighted average common shares outstanding:
|
||||||||||||||||
Basic
|
14,915,026 | 15,653,612 | 15,196,871 | 15,890,720 | ||||||||||||
Diluted
|
15,327,695 | 16,023,071 | 15,618,842 | 16,235,868 |
Additional
Paid-in Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (Loss),
net
|
Total
Shareholders'
Equity
|
Total
Comprehensive
Income (Loss)
|
||||||||||||||||
Balances at March 31, 2010
|
$ | 27,112,822 | 357,179,568 | (1,344,436 | ) | 382,947,954 | ||||||||||||||
Proceeds from exercise of stock options (447,250 shares), including tax benefits of $1,923,628 related to these stock exercises
|
13,806,260 | - | - | 13,806,260 | ||||||||||||||||
Common stock repurchases (1,298,057 shares)
|
- | (53,342,516 | ) | - | (53,342,516 | ) | ||||||||||||||
Issuance of restricted common stock under stock option plan (54,951 shares)
|
1,485,359 | - | - | 1,485,359 | ||||||||||||||||
Stock option expense
|
3,855,348 | - | - | 3,855,348 | ||||||||||||||||
Proceeds from the sale of the call option and warrants associated with the convertible notes
|
1,092,949 | - | - | 1,092,949 | ||||||||||||||||
Other comprehensive income
|
- | - | 1,480,635 | 1,480,635 | 1,480,635 | |||||||||||||||
Net income
|
- | 91,249,180 | - | 91,249,180 | 91,249,180 | |||||||||||||||
Total comprehensive income
|
- | - | - | - | 92,729,815 | |||||||||||||||
Balances at March 31, 2011
|
$ | 47,352,738 | 395,086,232 | 136,199 | 442,575,169 | |||||||||||||||
Proceeds from exercise of stock options (68,700 shares), including tax benefit of $462,974 related to these stock exercises
|
1,658,189 | - | - | 1,658,189 | ||||||||||||||||
Common stock repurchases (1,153,700 shares)
|
- | (73,062,561 | ) | - | (73,062,561 | ) | ||||||||||||||
Issuance of restricted common stock under stock option plan (10,000 shares)
|
1,404,478 | - | - | 1,404,478 | ||||||||||||||||
Stock option expense
|
1,665,962 | - | - | 1,665,962 | ||||||||||||||||
Other comprehensive loss
|
- | - | (5,083,455 | ) | (5,083,455 | ) | (5,083,455 | ) | ||||||||||||
Net income
|
- | 43,486,022 | - | 43,486,022 | 43,486,022 | |||||||||||||||
Total comprehensive income
|
- | - | - | - | 38,402,567 | |||||||||||||||
Balances at September 30, 2011
|
$ | 52,081,367 | 365,509,693 | (4,947,256 | ) | 412,643,804 |
Six months ended
|
||||||||
September 30,
|
||||||||
2011
|
2010
|
|||||||
Cash flow from operating activities:
|
||||||||
Net income
|
$ | 43,486,022 | 38,948,942 | |||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Amortization of intangible assets
|
866,997 | 1,016,822 | ||||||
Amortization of loan costs and discounts
|
248,462 | 193,429 | ||||||
Provision for loan losses
|
52,896,383 | 46,973,312 | ||||||
Amortization of convertible note discount
|
1,819,600 | 1,820,988 | ||||||
Depreciation
|
3,210,782 | 2,927,274 | ||||||
Deferred income tax benefits
|
(3,786,627 | ) | (1,652,777 | ) | ||||
Compensation related to stock option and restricted stock plans
|
3,070,440 | 2,420,941 | ||||||
Unrealized gains on interest rate swap
|
(210,260 | ) | (712,313 | ) | ||||
Change in accounts:
|
||||||||
Other assets
|
1,162,445 | (1,887,468 | ) | |||||
Income taxes payable
|
(2,392,532 | ) | (11,077,054 | ) | ||||
Accounts payable and accrued expenses
|
(2,468,123 | ) | (434,980 | ) | ||||
Net cash provided by operating activities
|
97,903,589 | 78,537,116 | ||||||
Cash flows from investing activities:
|
||||||||
Increase in loans receivable, net
|
(109,594,808 | ) | (106,171,603 | ) | ||||
Net assets acquired from office acquisitions, primarily loans
|
(1,794,118 | ) | (2,155,336 | ) | ||||
Increase in intangible assets from acquisitions
|
(386,991 | ) | (514,196 | ) | ||||
Purchases of property and equipment, net
|
(3,474,906 | ) | (3,394,045 | ) | ||||
Net cash used in investing activities
|
(115,250,823 | ) | (112,235,180 | ) | ||||
Cash flow from financing activities:
|
||||||||
Proceeds from senior revolving notes payable, net
|
150,350,000 | 39,700,000 | ||||||
Increase in restricted cash
|
(77,000,000 | ) | - | |||||
Proceeds from junior subordinated note payable
|
20,000,000 | 30,000,000 | ||||||
Loan cost associated with junior subordinated note payable
|
- | (487,500 | ) | |||||
Proceeds from exercise of stock options
|
2,070,760 | 1,465,684 | ||||||
Repurchase of common stock
|
(73,062,561 | ) | (34,001,078 | ) | ||||
Excess tax benefit from exercise of stock options
|
462,974 | 387,343 | ||||||
Net cash provided by financing activities
|
22,821,173 | 37,064,449 | ||||||
Increase in cash and cash equivalents
|
5,473,939 | 3,366,385 | ||||||
Effects of foreign currency fluctuations on cash
|
(443,616 | ) | 13,729 | |||||
Cash and cash equivalents at beginning of period
|
8,030,580 | 5,445,168 | ||||||
Cash and cash equivalents at end of period
|
$ | 13,060,903 | 8,825,282 |
|
●
|
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
|
|
●
|
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 markets that are less active.
|
|
●
|
Level 3 – Unobservable inputs for assets or liabilities reflecting the reporting entity’s own assumptions.
|
Fair Value Measurements Using
|
||||||||||||||||
Quoted Prices in Active Markets for IdenticalAssets
|
Significant Other Observable Inputs
|
Significant Unobservable
Inputs
|
||||||||||||||
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||||||||||
Interest rate swap September 30, 2011
|
$ | 108,975 | $ | - | $ | 108,975 | $ | - | ||||||||
Interest rate swap March 31, 2011
|
$ | 319,235 | $ | - | $ | 319,235 | $ | - |
September 30,
|
March 31,
|
|||||||
2011
|
2011
|
|||||||
Book value:
|
||||||||
Senior Note Payable
|
$ | 232,600 | 82,250 | |||||
Junior Subordinated Note Payable
|
50,000 | 30,000 | ||||||
Convertible Notes
|
77,000 | 75,180 | ||||||
$ | 359,600 | 187,430 | ||||||
Estimated fair value:
|
||||||||
Senior Note Payable
|
$ | 232,600 | 82,250 | |||||
Junior Subordinated Note Payable
|
50,000 | 30,000 | ||||||
Convertible Notes
|
77,000 | 85,616 | ||||||
$ | 359,600 | 197,866 |
Three months ended
|
Six months ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Balance at beginning of period
|
$ | 576,994 | (2,229,566 | ) | 136,199 | (1,344,436 | ) | |||||||||
Unrealized income (loss) from foreign exchange translation adjustment
|
(5,524,250 | ) | 808,445 | (5,083,455 | ) | (76,685 | ) | |||||||||
Balance at end of period
|
$ | (4,947,256 | ) | (1,421,121 | ) | (4,947,256 | ) | (1,421,121 | ) |
Three months ended
|
Six months ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Balance at beginning of period
|
$ | 50,419,957 | 44,105,503 | 48,354,994 | 42,896,819 | |||||||||||
Provision for loan losses
|
30,057,269 | 27,275,104 | 52,896,383 | 46,973,312 | ||||||||||||
Loan losses
|
(28,249,131 | ) | (25,167,988 | ) | (51,405,944 | ) | (45,737,290 | ) | ||||||||
Recoveries
|
2,398,885 | 2,061,741 | 4,748,215 | 4,211,938 | ||||||||||||
Translation adjustment
|
(462,507 | ) | 69,061 | (429,175 | ) | (1,358 | ) | |||||||||
Balance at end of period
|
$ | 54,164,473 | 48,343,421 | 54,164,473 | 48,343,421 |
As of September 30,
|
As of March 31,
|
|||||||
2011
|
2011
|
|||||||
Bankruptcy
|
$ | 6,573,737 | 4,810,026 | |||||
91 days or more delinquent,excluding bankruptcy
|
18,366,885 | 16,393,955 | ||||||
Total loans individually evaluated for impairment
|
$ | 24,940,622 | 21,203,981 | |||||
Allowance for impaired loans
|
(18,954,411 | ) | (16,819,674 | ) | ||||
$ | 5,986,211 | 4,384,307 | ||||||
Total loans collectively evaluated for impairment
|
$ | - | - |
September 30,
|
March 31,
|
|||||||
2011
|
2011
|
|||||||
Credit risk profile by creditworthiness category
|
||||||||
Consumer loans- non-bankrupt accounts
|
$ | 958,381,725 | 870,235,654 | |||||
Consumer loans- bankrupt accounts
|
6,573,737 | 4,810,026 | ||||||
Total gross loans
|
$ | 964,955,462 | 875,045,680 | |||||
Consumer credit exposure
|
||||||||
Credit risk profile based on payment activity Performing
|
$ | 924,036,632 | 841,856,489 | |||||
Contractual non-performing, 61 or more days delinquent
|
40,918,830 | 33,189,191 | ||||||
Total gross loans
|
$ | 964,955,462 | 875,045,680 | |||||
Delinquent renewals
|
$ | 24,797,502 | 19,330,235 | |||||
Credit risk profile based on customer type
|
||||||||
New borrower
|
$ | 104,467,816 | 101,948,334 | |||||
Former borrower
|
85,763,898 | 68,628,863 | ||||||
Refinance
|
749,926,246 | 685,138,248 | ||||||
Delinquent refinance
|
24,797,502 | 19,330,235 | ||||||
Total gross loans
|
$ | 964,955,462 | 875,045,680 |
September 30,
|
March 31,
|
September 30,
|
||||||||||
2011
|
2011
|
2010
|
||||||||||
Recency basis:
|
||||||||||||
30-60 days past due
|
$ | 31,696,312 | 21,533,219 | 29,131,159 | ||||||||
61-90 days past due
|
18,683,495 | 12,894,240 | 16,731,697 | |||||||||
91 days or more past due
|
10,257,771 | 8,297,319 | 8,598,900 | |||||||||
Total
|
$ | 60,637,578 | 42,724,778 | 54,461,756 | ||||||||
Percentage of period-end gross loans receivable
|
6.3 | % | 4.9 | % | 6.3 | % | ||||||
Contractual basis:
|
||||||||||||
30-60 days past due
|
$ | 35,664,457 | 23,705,287 | 32,077,482 | ||||||||
61-90 days past due
|
22,243,803 | 16,564,121 | 19,777,796 | |||||||||
91 days or more past due
|
18,675,027 | 16,625,070 | 16,412,781 | |||||||||
Total
|
$ | 76,583,287 | 56,894,478 | 68,268,059 | ||||||||
Percentage of period-end gross loans receivable
|
7.9 | % | 6.5 | % | 7.9 | % |
Three months ended
|
Six months ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Basic:
|
||||||||||||||||
Weighted average common shares outstanding (denominator)
|
14,915,026 | 15,653,612 | 15,196,871 | 15,890,720 | ||||||||||||
Diluted:
|
||||||||||||||||
Weighted average common shares outstanding
|
14,915,026 | 15,653,612 | 15,196,871 | 15,890,720 | ||||||||||||
Dilutive potential common shares
|
||||||||||||||||
Stock options
|
403,060 | 369,459 | 404,051 | 345,148 | ||||||||||||
Conversion premium on convertible notes
|
9,609 | - | 17,920 | - | ||||||||||||
Weighted average diluted shares outstanding (denominator)
|
15,327,695 | 16,023,071 | 15,618,842 | 16,235,868 |
Shares
|
Weighted Average Exercise
Price
|
Weighted Average Remaining ContractualTerm
|
Aggregated Intrinsic Value
|
|||||||||||||
Options outstanding, beginning of year
|
1,178,600 | $ | 30.02 | |||||||||||||
Granted
|
- | - | ||||||||||||||
Exercised
|
(68,700 | ) | 30.14 | |||||||||||||
Forfeited
|
(17,100 | ) | 31.42 | |||||||||||||
Options outstanding, end of period
|
1,092,800 | $ | 29.99 | 6.78 | $ | 28,370,419 | ||||||||||
Options exercisable, end of period
|
298,200 | $ | 25.69 | 3.84 | $ | 9,022,964 |
2011
|
2010
|
|||||||
Three months ended
|
$ | 823,957 | $ | 1,353,962 | ||||
Six months ended
|
$ | 2,400,422 | $ | 1,810,018 |
Compounded
|
||||||
Vesting
|
Annual
|
|||||
Percentage
|
EPS Growth
|
|||||
100% |
15% or higher
|
|||||
67% | 12% - 14.99% | |||||
33% | 10% - 11.99% | |||||
0% |
Below 10%
|
Compounded
|
||||||
Vesting
|
Annual
|
|||||
Percentage
|
EPS Growth
|
|||||
100% |
15% or higher
|
|||||
67% | 12% - 14.99% | |||||
33% | 10% - 11.99% | |||||
0% |
Below 10%
|
Compounded
|
||||||
Vesting
|
Annual
|
|||||
Percentage
|
EPS Growth
|
|||||
100% |
15% or higher
|
|||||
67% | 12% - 14.99% | |||||
33% | 10% - 11.99% | |||||
0% |
Below 10%
|
Shares
|
Weighted Average Fair Value at
Grant Date
|
|||||||
Outstanding at March 31, 2011
|
59,836 | $ | 22.62 | |||||
Granted during the period
|
10,000 | 67.95 | ||||||
Vested during the period
|
(10,000 | ) | 67.95 | |||||
Cancelled during the period
|
- | - | ||||||
Outstanding at September 30, 2011
|
59,836 | $ | 22.62 |
Three months ended
|
Six months ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Share-based compensation related to equity classified units:
|
||||||||||||||||
Share-based compensation related to stock options
|
$ | 797,692 | 718,616 | 1,665,962 | 1,439,513 | |||||||||||
Share-based compensation related to restricted stock units
|
364,470 | 316,031 | 1,404,478 | 981,428 | ||||||||||||
Total share-based compensation related to equity classified awards
|
$ | 1,162,162 | 1,034,647 | 3,070,440 | 2,420,941 |
2011
|
2010
|
|||||||
Number of offices purchased
|
12 | 9 | ||||||
Merged into existing offices
|
11 | 5 | ||||||
Purchase Price
|
$ | 2,181,109 | 2,697,175 | |||||
Tangible assets:
|
||||||||
Net Loans
|
1,786,618 | 2,179,979 | ||||||
Furniture, fixtures & equipment
|
7,500 | 3,000 | ||||||
Excess of purchase prices over carrying value of net tangible assets
|
$ | 386,991 | 514,196 | |||||
Customer lists
|
336,991 | 453,203 | ||||||
Non-compete agreements
|
50,000 | 43,000 | ||||||
Goodwill
|
- | 17,993 | ||||||
Total intangible assets
|
$ | 386,991 | 514,196 |
Interest
|
||||
Rate Swap
|
||||
September 30, 2011:
|
||||
Accounts payable and accrued expenses
|
$ | 108,975 | ||
Fair value of derivative instrument
|
$ | 108,975 | ||
March 31, 2011:
|
||||
Accounts payable and accrued expenses
|
$ | 319,235 | ||
Fair value of derivative instrument
|
$ | 319,235 |
Three months ended
|
Six months ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Realized losses
|
||||||||||||||||
Interest rate swap - included as a component of interest expense
|
$ | (112,340 | ) | (447,812 | ) | (222,743 | ) | (893,623 | ) | |||||||
Unrealized gains
|
||||||||||||||||
Interest rate swap - included as a component of other income
|
$ | 110,947 | 346,823 | 210,260 | 712,313 |
Three months ended
|
Six months ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
(Dollars in thousands)
|
||||||||||||||||
Average gross loans receivable ¹
|
$ | 957,903 | 850,622 | 931,122 | 823,330 | |||||||||||
Average net loans receivable ²
|
699,978 | 625,104 | 682,096 | 606,448 | ||||||||||||
Expenses as a % of total revenue:
|
||||||||||||||||
Provision for loan losses
|
22.7 | % | 23.1 | % | 20.7 | % | 20.6 | % | ||||||||
General and administrative
|
46.5 | % | 47.5 | % | 49.3 | % | 49.6 | % | ||||||||
Total interest expense
|
3.0 | % | 3.5 | % | 2.9 | % | 3.3 | % | ||||||||
Operating margin ³
|
30.7 | % | 29.4 | % | 29.9 | % | 29.8 | % | ||||||||
Return on average assets (trailing 12 months)
|
13.7 | % | 13.4 | % | 13.7 | % | 13.4 | % | ||||||||
Offices opened or acquired, net
|
21 | 24 | 41 | 44 | ||||||||||||
Total offices (at period end)
|
1,108 | 1,034 | 1,108 | 1,034 |
Total Number
of Shares Purchased
|
Average
Price per
Share
|
Total Number of Shares Purchased
as part of Publicly Announced Plans
or Programs
|
Approximate
Dollar Value of Shares That May Yet be Purchased Under the Plans
or Programs
|
|||||||||||||
July 1 through July 31, 2011
|
- | $ | - | - | $ | 3,387,010 | ||||||||||
August 1 through August 31, 2011
|
200,000 | 61.79 | 200,000 | 16,028,700 | * | |||||||||||
September 1 through September 30, 2011
|
221,100 | 62.72 | 221,100 | 2,160,266 | ||||||||||||
Total for the quarter
|
421,100 | $ | 62.26 | 421,100 |
Exhibit
Number
|
Description |
Previous
Exhibit
Number
|
Company
Registration
No. or Report
|
|||
3.1 | Second Amended and Restated Articles of Incorporation of the Company, as amended | 3.1 | 333-107426 | |||
3.2 | Fourth Amended and Restated Bylaws of the Company | 99.1 | 8-03-07 8-K | |||
4.1 | Specimen Share Certificate | 4.1 | 33-42879 | |||
4.2 | Articles 3, 4 and 5 of the Form of Company's Second Amended and Restated Articles of Incorporation (as amended) | 3.1 | 333-107426 | |||
4.3 | Article II, Section 9 of the Company’s Fourth Amended and Restated Bylaws | 99.1 | 8-03-07 8-K | |||
4.4 | Amended and Restated Revolving Credit Agreement dated September 17, 2010 | 10.1 | 9-21-10 8-K | |||
4.5 | First Amendment to the Amended and Restated Revolving Credit Agreement dated September 17, 2010 | 10.1 | 9-1-11 8-K | |||
4.6 | Amended and Restated Company Security Agreement Pledge and Indenture of Trust, dated as of September 17, 2010 | 10.2 | 9-21-10 8-K | |||
4.7 | Amended and Restated Subsidiary Security Agreement, Pledge and Indenture of Trust (i.e. Subsidiary Security Agreement) | 10.3 | 9-21-10 8-K | |||
4.8 | Amended and Restated Guaranty Agreement dated as of September 17, 2010 (i.e., Subsidiary Guaranty Agreement) | 10.4 | 9-21-10 8-K | |||
4.9 | Subordination and Intercreditor Agreement, dated as of September 17, 2010, among World Acceptance Corporation,Wells Fargo Preferred Capital, Inc., individually and as agent, and Bank of Montreal, individually and as agent, and Harris N.A., as senior collateral agent | 10.5 | 9-21-10 8-K | |||
4.10 | Subordinated Credit Agreement, dated as of September 17, 2010, between World Acceptance Corporation and Wells Fargo Preferred Capital, Inc., as Agent and as Bank | 10.6 | 9-21-10 8-K | |||
4.11 | Subordinated Subsidiary Guaranty Agreement, dated as of September 17, 2010, by the subsidiaries of World Acceptance Corporation party thereto in favor of Wells Fargo Preferred Capital, Inc., as Collateral Agent | 10.7 | 9-21-10 8-K | |||
4.12 | Subordinated Security Agreement, Pledge and Indenture of Trust, dated as of September 17, 2010, between World AcceptanceCorporation and Wells Fargo Preferred Capital, Inc., as Collateral Agent | 10.8 | 9-21-10 8-K |
Exhibit
Number
|
Description |
Previous
Exhibit
Number
|
Company
Registration
No. or Report
|
|||
4.13 | Subordinated Security Agreement, Pledge and Indenture of Trust, dated as of September 17, 2010, among the subsidiaries of World Acceptance Corporation party thereto and Wells Fargo Preferred Capital, Inc., as Collateral Agent. | 10.9 | 9-21-10 8-K | |||
4.14 | Form of 3.00% Convertible Senior Subordinated Note due October 2011 | 4.1 | 10-12-06 8-K | |||
4.15 | Indenture, dated October 10, 2006 between the Company and U.S. Bank National Association, as Trustee | 4.2 | 10-12-06 8-K | |||
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 | * | ||||
101.1 | The following materials from the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2011, formatted in XBRL: (i) Consolidated Balance Sheets as of September 30, 2011 and March 31,2011; (ii) Consolidated Statements of Operations for the three and six months ended September 30, 2011 and September 30, 2010; (iii) Consolidated Statements of Cash Flows for the six months ended September 30, 2011 and September 30,2010; and (iv) Notes to Consolidated Financial Statements, tagged as blocks of text. |
WORLD ACCEPTANCE CORPORATION | |||
|
By:
|
/s/ A. Alexander McLean, III | |
A. Alexander McLean, III, Chief | |||
Executive Officer | |||
Date: November 1, 2011 | |||
By: | /s/ Kelly M. Malson | ||
Kelly M. Malson, Senior Vice President and | |||
Chief Financial Officer | |||
Date: November 1, 2011 |
EXHIBIT 31.1
|
CERTIFICATIONS
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of World Acceptance Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: November 1, 2011
|
/s/ A. A. McLean III | ||
A. A. McLean III | |||
Chief Executive Officer |
1.
|
I have reviewed this quarterly report on Form 10-Q of World Acceptance Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
c.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
d.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: November 1, 2011
|
|
/s/ Kelly M. Malson | |
Kelly M. Malson | |||
Senior Vice President and Chief Financial Officer |
(1)
|
the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2011, (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: November 1, 2011 | |||
/s/ A. A. McLean III | |||
A. A. McLean III | |||
Chief Executive Officer |
(1)
|
the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2011, (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: November 1, 2011
|
|
||
/s/ Kelly M. Malson | |||
Kelly M. Malson | |||
Senior Vice President and Chief Financial Officer |
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) | Sep. 30, 2011 | Mar. 31, 2011 |
---|---|---|
Shareholders; equity: | ||
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Common stock, shares authorized (in shares) | 95,000,000 | 95,000,000 |
Common stock, shares issued (in shares) | 14,636,365 | 15,711,365 |
Common stock, shares outstanding (in shares) | 14,636,365 | 15,711,365 |
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) | 3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Revenues: | ||||
Interest and fee income | $ 116,232,521 | $ 103,717,055 | $ 223,581,026 | $ 199,787,798 |
Insurance commissions and other income | 15,906,450 | 14,348,036 | 31,714,007 | 28,675,457 |
Total revenues | 132,138,971 | 118,065,091 | 255,295,033 | 228,463,255 |
Expenses: | ||||
Provision for loan losses | 30,057,269 | 27,275,104 | 52,896,383 | 46,973,312 |
General and administrative expenses: | ||||
Personnel | 40,742,200 | 37,350,702 | 85,377,423 | 77,084,671 |
Occupancy and equipment | 8,719,513 | 7,893,050 | 16,938,624 | 15,081,808 |
Advertising | 2,698,483 | 2,606,815 | 5,481,742 | 5,069,131 |
Amortization of intangible assets | 434,208 | 510,186 | 866,997 | 1,016,822 |
Other | 8,869,095 | 7,729,991 | 17,312,004 | 15,135,835 |
Total general and administrative expenses | 61,463,499 | 56,090,744 | 125,976,790 | 113,388,267 |
Interest expense | 3,947,066 | 4,095,828 | 7,330,936 | 7,449,796 |
Total expenses | 95,467,834 | 87,461,676 | 186,204,109 | 167,811,375 |
Income before income taxes | 36,671,137 | 30,603,415 | 69,090,924 | 60,651,880 |
Income taxes | 13,367,213 | 10,369,185 | 25,604,902 | 21,702,938 |
Net income | $ 23,303,924 | $ 20,234,230 | $ 43,486,022 | $ 38,948,942 |
Net income per common share: | ||||
Basic (in dollars per share) | $ 1.56 | $ 1.29 | $ 2.86 | $ 2.45 |
Diluted (in dollars per share) | $ 1.52 | $ 1.26 | $ 2.78 | $ 2.40 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 14,915,026 | 15,653,612 | 15,196,871 | 15,890,720 |
Diluted (in shares) | 15,327,695 | 16,023,071 | 15,618,842 | 16,235,868 |
Document And Entity Information (USD $) In Millions, except Share data | 6 Months Ended | |
---|---|---|
Sep. 30, 2011 | Mar. 31, 2011 | |
Entity Registrant Name | WORLD ACCEPTANCE CORP | |
Entity Central Index Key | 0000108385 | |
Current Fiscal Year End Date | --03-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Public Float | $ 44.16 | |
Entity Common Stock, Shares Outstanding | 14,642,565 | |
Document Fiscal Year Focus | 2011 | |
Document Fiscal Period Focus | Q2 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2011 |
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ALLOWANCE FOR LOAN LOSSES | 6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ALLOWANCE FOR LOAN LOSSES | NOTE 5 – ALLOWANCE FOR LOAN LOSSES The following is a summary of the changes in the allowance for loan losses for the periods indicated (unaudited):
The Company follows FASB ASC Topic 310, which prohibits carryover or creation of valuation allowances in the initial accounting of all loans acquired in a transfer that are within the scope of this accounting literature. The Company believes that a loan has shown deterioration if it is over 60 days delinquent. The Company believes that loans acquired since the adoption of FASB ASC Topic 310 have not shown evidence of deterioration of credit quality since origination, and therefore, are not within the scope of FASB ASC Topic 310 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 accounting literature and therefore, subsequent refinances or restructures of these loans would not be accounted for as a new loan. The following is a summary of loans individually and collectively evaluated for impairment for the period indicated:
The following is an assessment of the credit quality as of the period indicated:
The following is a summary of the past due receivables as of:
|
DERIVATIVE FINANCIAL INSTRUMENTS | 6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | NOTE 10 – 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. The fair value of the Company's interest rate derivative instrument is included in the Consolidated Balance Sheets as follows:
The interest rate swap is currently in a liability position, and as a result there is no significant risk of loss related to counterparty credit risk. The gains (losses) recognized in the Company's Consolidated Statements of Operations as a result of the interest rate swap are as follows:
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. The Company is currently not accounting for these derivative instruments using the cash flow hedge accounting provisions of FASB ASC Topic 815-10-15; therefore, the changes in fair value of the swaps 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. The Company manages the market risk associated with interest rate contracts 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 risk management activities is fully incorporated in the Company's market risk sensitivity analysis. |
BASIS OF PRESENTATION | 6 Months Ended |
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Sep. 30, 2011 | |
BASIS OF PRESENTATION [Abstract] | |
BASIS OF PRESENTATION | NOTE 1 – BASIS OF PRESENTATION The consolidated financial statements of the Company at September 30, 2011, and for the three and six months then ended were prepared in accordance with the instructions for Form 10-Q and are unaudited; however, in the opinion of management, all adjustments (consisting only of items of a normal recurring nature) necessary for a fair presentation of the financial position at September 30, 2011, and the results of operations and cash flows for the periods ended September 30, 2011 and 2010, have been included. The results for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period. Certain reclassification entries have been made for fiscal 2011 to conform to fiscal 2012 presentation. These reclassifications had no impact on shareholders' equity and comprehensive income (loss) or net income. The preparation of consolidated 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 amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. The consolidated financial statements do not include all disclosures required by U.S. generally accepted accounting principles and should be read in conjunction with the Company's audited consolidated financial statements and related notes for the fiscal year ended March 31, 2011, included in the Company's 2011 Annual Report to Shareholders. |
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STOCK-BASED COMPENSATION [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | NOTE 7 – STOCK-BASED COMPENSATION Stock Option Plans The Company has a 1994 Stock Option Plan, a 2002 Stock Option Plan, a 2005 Stock Option Plan, a 2008 Stock Option Plan and a 2011 Stock Option Plan for the benefit of certain directors, officers, and key employees. Under these plans, 6,350,000 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 and may be subject to certain vesting requirements, which are generally five years. Restricted stock granted under these plans is generally for directors and certain key officers with vesting requirements of up to three years. Stock options and restricted stock granted under these plans are priced at the market value of the Company's common stock on the date of the grant. At September 30, 2011, there were 1,737,244 shares available for grant under the plans. Stock based compensation is recognized as provided under FASB ASC Topic 718-10 and FASB ASC Topic 505-50. FASB ASC Topic 718-10 requires all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expense over the requisite service period (generally the vesting period) in the financial statements based on their fair values. The impact of forfeitures that may occur prior to vesting is also estimated and considered in the amount recognized. Stock option compensation is recognized as an expense over the unvested portion of all stock option awards granted based on the fair values estimated at grant date in accordance with the provisions of FASB ASC Topic 718-10. The Company has applied the Black-Scholes valuation model in determining the fair value of the stock option awards. Compensation expense is recognized only for those options expected to vest, with forfeitures estimated based on historical experience and future expectations. There were no option grants during the six months ended September 30, 2011 or September 30, 2010. Option activity for the six months ended September 30, 2011 was as follows:
The aggregate intrinsic value reflected in the table above represents the total pre-tax intrinsic value (the difference between the closing stock price on September 30, 2011 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 September 30, 2011. This amount will change as the stock's market price changes. The total intrinsic value of options exercised during the periods ended September 30, 2011 and 2010 was as follows:
As of September 30, 2011, total unrecognized stock-based compensation expense related to non-vested stock options amounted to approximately $7.8 million, which is expected to be recognized over a weighted-average period of approximately 3.3 years. Restricted Stock On April 29, 2011, the Company granted 10,000 shares of restricted stock (which are equity classified) with a grant date fair value of $67.95 per share to its independent directors. All of the shares granted vested immediately. On November 8, 2010, the Company granted 29,080 shares of restricted stock (which are equity classified), with a grant date fair value of $43.04 per share, to certain officers. One-third of the restricted stock vested immediately and one-third will vest on November 8, 2011 and 2012, respectively. On that same date, the Company granted an additional 15,871 shares of restricted stock (which are equity classified), with a grant date fair value of $43.04 per share, to certain executive officers. The 15,871 shares will vest on April 30, 2013 based on the Company's compounded annual EPS growth according to the following schedule:
On April 30, 2010, the Company granted 10,000 shares of restricted stock (which are equity classified) with a grant date fair value of $35.28 per share to its independent directors. All of the shares granted vested immediately. On November 9, 2009, the Company granted 41,346 shares of restricted stock (which are equity classified), with a grant date fair value of $26.73 per share, to certain officers. One-third of the restricted stock vested immediately, one-third vested on November 9, 2010 and the final third is scheduled to vest on November 9, 2011. On that same date, the Company granted an additional 23,159 shares of restricted stock (which are equity classified), with a grant date fair value of $26.73 per share, to certain executive officers. The 23,159 shares will vest on April 30, 2012 based on the Company's compounded annual EPS growth according to the following schedule:
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 officers. One-third of the restricted stock vested immediately, and one-third vested on November 10, 2009 and 2010, respectively. 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 certain executive officers. The 29,100 shares will vest on November 10, 2011 based on the Company's compounded annual EPS growth according to the following schedule:
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 approximately $364,000 and $316,000, respectively, of compensation expense for the three months ended September 30, 2011 and 2010 and recognized approximately $1.4 million and $981,000, respectively, for the six months ended September 30, 2011 and 2010 related to restricted stock, which is included as a component of general and administrative expenses in the Company's Consolidated Statements of Operations. All shares are expected to vest. As of September 30, 2011, there was approximately $939,000 of unrecognized compensation cost related to unvested restricted stock awards granted, which is expected to be recognized over the next 1.5 years. A summary of the status of the Company's restricted stock as of September 30, 2011, and changes during the six months ended September 30, 2011, are presented below:
Total share-based compensation included as a component of net income during the three months and six months ended September 30, 2011 and 2010 was as follows:
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SUBSEQUENT EVENT | 6 Months Ended |
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Sep. 30, 2011 | |
SUBSEQUENT EVENT [Abstract] | |
SUBSEQUENT EVENT | NOTE 12 – SUBSEQUENT EVENT Subsequent events have been evaluated through November 1, 2011, the date these unaudited consolidated financial statements were issued. 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. As of September 30, 2011 $77.0 million in aggregate principal amount of the Convertible Notes was outstanding. On September 30, 2011, the Company wired $77.0 million, which was considered restricted cash on the September 30, 2011 balance sheet, to the Trustee for the Convertible Notes in satisfaction of its obligation to repay the Convertible Notes at maturity. |
ACQUISITIONS | 6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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ACQUISITIONS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS | NOTE 8 – ACQUISITIONS The following table sets forth the acquisition activity of the Company for the six months ended September 30, 2011 and 2010:
The Company evaluates each acquisition to determine if the acquired assets meet the definition of a business. The acquired assets that meet the definition of a business are accounted for as a business combination under FASB ASC Topic 805-10 and all other acquisitions are accounted for as asset purchases. All acquisitions have been from 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 six months ended September 30, 2011, one acquisition was recorded as a business combination, which was purchased at a discount and resulted in no goodwill being recorded. 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 six months ended September 30, 2011, eleven acquisitions were recorded as asset acquisitions. The Company's acquisitions include tangible assets (generally loans, 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. 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 their fair values. 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 FASB ASC Topic 360-10-05. 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 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. |
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AVERAGE SHARE INFORMATION [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AVERAGE SHARE INFORMATION | NOTE 6 – AVERAGE SHARE INFORMATION The following is a summary of the basic and diluted average common shares outstanding:
During the three months and the six months ended September 30, 2011 and 2010, the warrants related to the convertible notes payable were not included in the computation of dilutive earnings per share because the effect of such instruments was anti-dilutive. The warrants have a strike price of $73.97 and are generally exercisable at any time through February 9, 2012. 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. During the three months ended September 30, 2011 and 2010 there were no anti-dilutive shares. During the six months ended September 30, 2011 there were no anti-dilutive shares. Options to purchase 804 shares of common stock at various prices were outstanding during the six months ended September 30, 2010, but were not included in the computation of diluted EPS because the options were anti-dilutive. |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS) (Unaudited) (Parenthetical) (USD $) | 6 Months Ended | 12 Months Ended |
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Sep. 30, 2011 | Mar. 31, 2011 | |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME (Unaudited) [Abstract] | ||
Proceeds from exercise of stock options (in shares) | 68,700 | 447,250 |
Proceeds from exercise of stock options, tax benfits | $ 462,974 | $ 1,923,628 |
Common stock repurchases (in shares) | 1,153,700 | 1,298,057 |
Issuance of restricted common stock under stock option plan (in shares) | 10,000 | 54,951 |
SUMMARY OF SIGNIFICANT POLICIES | 6 Months Ended |
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Sep. 30, 2011 | |
SUMMARY OF SIGNIFICANT POLICIES [Abstract] | |
SUMMARY OF SIGNIFICANT POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT POLICIES New Accounting Pronouncements Adopted Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses Accounting Standards Update No. 2010-20 (ASU 2010-20), “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses,” requires companies to provide more information in their disclosures about the credit quality of their financing receivables and the credit reserves held against them. ASU 2010-20 is intended to improve transparency in financial reporting by public and nonpublic companies that hold financing receivables, which include loans, lease receivables, and other long-term receivables. The disclosures required under ASU 2010-20 are included in Note 5. Intangibles – Goodwill and other In December 2010, the Financial Accounting Standards Board (FASB) issued an accounting pronouncement related to intangibles – goodwill and other (FASB Accounting Standards Codification (ASC) Topic 350), which requires a company to consider whether there are any adverse qualitative factors indicating that an impairment may exist in performing step 2 of the impairment test for reporting units with zero or negative carrying amounts. The provisions of this pronouncement are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010, with no early adoption. The adoption of this pronouncement beginning with the quarter ended June 30, 2011 did not have a material impact on the Company's consolidated financial statements. A Creditor's Determination of Whether a Restructuring Is a Troubled Debt Restructuring In April 2011, the FASB issued an accounting pronouncement (ASU 2011-02) related to when a creditor's determination is considered a troubled debt restructuring, which amends guidance for evaluating whether the restructuring of a receivable by a creditor is a troubled debt restructuring. ASU 2011-02 responds to concerns that creditors are inconsistently applying existing guidance for identifying troubled debt restructurings. ASU 2011-02 is effective for a public entity for the first interim or annual period beginning on or after June 15, 2011. Retrospective application is required for restructurings occurring on or after the beginning of the fiscal year of adoption for purposes of identifying and disclosing the troubled debt restructuring. At the same time, the Company will be required to disclose the activity-based information about troubled debt restructurings that was previously deferred by FASB ASU No. 2011-1, Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20. The adoption of this pronouncement beginning with the quarter ended June 30, 2011 did not have a material impact on the Company's consolidated financial statements. Recently Issued Accounting Pronouncements Fair Value Measurement In May 2011, the FASB issued an accounting pronouncement (ASU 2011-04) related to fair value measurement (FASB ASC Topic 820), which amends current guidance to achieve common fair value measurement and disclosure requirements in U.S. GAAP and International Financial Reporting Standards. The amendments generally represent clarification of FASB ASC Topic 820, but also include instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed. This pronouncement is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company will adopt this pronouncement for our fiscal year beginning April 1, 2012. The Company does not expect this pronouncement to have a material effect on our consolidated financial statements. Comprehensive Income In June 2011, the FASB issued an accounting pronouncement that provides new guidance on the presentation of comprehensive income (FASB ASC Topic 220) in financial statements. Entities are required to present total comprehensive income either in a single, continuous statement of comprehensive income or in two separate, but consecutive statements. Under the single-statement approach, entities must include the components of net income, a total for net income, the components of other comprehensive income and a total for comprehensive income. Under the two-statement approach, entities must report an income statement and, immediately following, a statement of other comprehensive income. Under either method, entities must display adjustments for items reclassified from other comprehensive income to net income in both net income and other comprehensive income. The provisions for this pronouncement are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted. The Company will adopt this pronouncement for our fiscal year beginning April 1, 2012. Testing Goodwill for Impairment ASU 2011-08, “Testing Goodwill for Impairment,” permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting unit's fair value is less than its carrying amount before applying the two-step goodwill impairment test. If an entity concludes it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it need not perform the two-step impairment test. The ASU is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. The Company will adopt this pronouncement for our fiscal year beginning April 1, 2012. |
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FAIR VALUE | NOTE 3 – FAIR VALUE Fair Value Disclosures The Company carries certain financial instruments (derivative assets and liabilities) at fair value on a recurring basis. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company determines the fair values of its financial instruments based on the fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. 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:
The following financial liabilities were measured at fair value on a recurring basis at September 30, 2011 and March 31, 2011:
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. Fair Value of Long-Term Debt The book value and estimated fair value of our long-term debt was as follows (in thousands):
The difference between the estimated fair value of long-term debt compared with its historical cost reported in our Condensed Consolidated Balance Sheets at March 31, 2011 relates primarily to market quotations for the Company's 3% Convertible Senior Subordinated Notes due October 1, 2011. Since the Convertible Senior Subordinated Notes matured October 1, 2011, the book value approximated the estimated fair value at September 30, 2011. The carrying value of the senior note payable and the junior subordinated note payable approximated the fair value as the notes payable are at a variable interest rate. There were no assets or liabilities measured at fair value on a non-recurring basis during the first six months of fiscal 2012 or fiscal 2011. |
INCOME TAXES | 6 Months Ended |
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Sep. 30, 2011 | |
INCOME TAXES [Abstract] | |
INCOME TAXES | NOTE 11 – INCOME TAXES The Company is required to assess whether the earnings of our two Mexican foreign subsidiaries, Servicios World Acceptance Corporation de México, S. de R.L. de C.V. (“SWAC”) and WAC de Mexico, S.A. de C.V., SOFOM ENR (“WAC”), 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 September 30, 2011, the Company has determined that approximately $629,000 of cumulative undistributed net earnings of SWAC and approximately $2.2 million of cumulative undistributed net earnings of WAC, as well as the future net earnings and losses of both foreign subsidiaries will be permanently reinvested. The Company adopted the provision of FASB ASC Topic 740-10 on April 1, 2007. As of September 30, 2011 and March 31, 2011, the Company had $2.3 million of total gross unrecognized tax benefits including penalties and interest, respectively. Approximately $1 million and $958,000, respectively, represents the amount of net unrecognized tax benefits that are permanent in nature and, if recognized, would affect the annual effective tax rate. At September 30, 2011, approximately $646,000 of gross unrecognized tax benefits are expected to be resolved during the next 12 months through the expiration of the statute of limitations and settlement of state tax liabilities. The Company's continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. As of September 30, 2011, the Company had $556,000 accrued for gross interest, of which $380,000 was a current period expense. The Company is subject to U.S. and Mexican income taxes, as well as taxes from 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 2007, although carryforward attributes that were generated prior to 2007 may still be adjusted upon examination by the taxing authorities if they either have been or will be used in a future period. |
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