10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

Form 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2008

or

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT of 1934

For the transition period from to

Commission File Number: 0-19599

WORLD ACCEPTANCE CORPORATION

(Exact name of registrant as specified in its charter.)

South Carolina	57-0425114
(State or other jurisdiction of	(I.R.S. Employer Identification
incorporation or organization)	Number)

108 Frederick Street

Greenville, South Carolina 29607

(Address of principal executive offices)

(Zip Code)

(864) 298-9800

(registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period than the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark 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 ¨	Accelerated Filer x
Non-accelerated filer ¨ (Do not check if a smaller reporting company)	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 ¨ No x

The number of outstanding shares of the issuer’s no par value common stock as of August 5, 2008 was 16,364,043.

WORLD ACCEPTANCE CORPORATION

AND SUBSIDIARIES

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (unaudited):
	Consolidated Balance Sheets as of June 30, 2008 and March 31, 2008	3
	Consolidated Statements of Operations for the three months ended June 30, 2008 and June 30, 2007	4
	Consolidated Statements of Shareholders' Equity and Comprehensive Income for the year ended March 31, 2008 and the three months ended June 30, 2008	5
	Consolidated Statements of Cash Flows for the three months ended June 30, 2008 and June 30, 2007	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
Item 4.	Controls and Procedures	20
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 6.	Exhibits	22
Signatures		24

2

WORLD ACCEPTANCE CORPORATION

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unudited)

	June 30,			March 31,
	2008			2008
ASSETS
Cash and cash equivalents	$	8,098,525			7,589,575
Gross loans receivable		632,715,266			599,508,969
Less:
Unearned interest and fees		(165,208,801	)		(154,418,105	)
Allowance for loan losses		(35,288,061	)		(33,526,147	)
Loans receivable, net		432,218,404			411,564,717
Property and equipment, net		20,100,045			18,654,010
Deferred tax benefit		18,047,487			22,134,066
Other assets, net		10,538,303			10,818,057
Goodwill		5,379,008			5,352,675
Intangible assets, net		10,275,201			9,997,327
Total assets	$	504,656,973			486,110,427
LIABILITIES & SHAREHOLDERS' EQUITY
Liabilities:
Senior notes payable		116,900,000			104,500,000
Convertible senior subordinated notes payable		110,000,000			110,000,000
Other notes payable		200,000			400,000
Income taxes payable		11,661,721			18,039,242
Accounts payable and accrued expenses		15,960,797			18,865,913
Total liabilities		254,722,518			251,805,155
Shareholders' 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 16,360,543 and 16,278,684 shares at June 30, 2008 and March 31, 2008, respectively		-			-
Additional paid-in capital		4,439,016			1,323,001
Retained earnings		244,864,508			232,812,768
Accumulated other comprehensive income		630,931			169,503
Total shareholders' equity		249,934,455			234,305,272
Commitments and contingencies
	$	504,656,973			486,110,427

See accompanying notes to consolidated financial statements.

3

WORLD ACCEPTANCE CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three months ended
	June 30,
	2008		2007
Revenues:
Interest and fee income	$	76,349,486		65,389,322
Insurance and other income		12,071,545		10,999,774
Total revenues		88,421,031		76,389,096
Expenses:
Provision for loan losses		17,856,913		14,216,510
General and administrative expenses:
Personnel		33,315,775		28,856,263
Occupancy and equipment		6,053,650		4,933,090
Data processing		589,447		549,805
Advertising		2,709,965		2,451,389
Amortization of intangible assets		600,347		614,687
Other		5,520,671		4,784,836
		48,789,855		42,190,070
Interest expense		2,480,161		2,336,387
Total expenses		69,126,929		58,742,967
Income before income taxes		19,294,102		17,646,129
Income taxes		7,242,362		6,795,121
Net income	$	12,051,740		10,851,008
Net income per common share:
Basic	$	0.74		0.62
Diluted	$	0.73		0.61
Weighted average common equivalent shares outstanding:
Basic		16,270,939		17,510,229
Diluted		16,573,100		17,916,288

See accompanying notes to consolidated financial statements.

4

WORLD ACCEPTANCE CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME

(Unaudited)

							Accumulated
							Other
	Additional						Comprehensive			Total			Total
	Paid-in			Retained			Income			Shareholders’			Comprehensive
	Capital			Earnings			(Loss),			Equity			Income
Balances at March 31, 2007	$	5,770,665			209,769,808			(47,826	)		215,492,647
Cumulative effect of FIN 48		-			(550,000	)		-			(550,000	)
Proceeds from exercise of stock options (116,282 shares), including tax benefits of $1,110,598		2,724,938			-			-			2,724,938
Common 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			-			-			1,348,419
Stock option expense		3,937,925			-			-			3,937,925
Other comprehensive income		-			-			217,329			217,329			217,329
Net income		-			52,996,158			-			52,996,158			52,996,158
Total comprehensive income		-			-			-			-			53,213,487
Balances at March 31, 2008	$	1,323,001			232,812,768			169,503			234,305,272
Proceeds from exercise of stock options (70,183 shares), including tax benefits of $520,763		1,668,695			-			-			1,668,695
Issuance of restricted common stock under stock option plan (12,000 shares)		497,175			-			-			497,175
Stock option expense		950,145			-			-			950,145
Other comprehensive income		-			-			461,428			461,428			461,428
Net income		-			12,051,740			-			12,051,740			12,051,740
Total comprehensive income		-			-			-			-			12,513,168
Balances at June 30, 2008	$	4,439,016			244,864,508			630,931			249,934,455

See accompanying notes to consolidated financial statements.

5

WORLD ACCEPTANCE CORPORATION

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three months ended
	June 30,
	2008			2007
Cash flows from operating activities:
Net income	$	12,051,740			10,851,008
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangible assets		600,347			614,687
Amortization of loan costs and discounts		190,816			190,816
Provision for loan losses		17,856,913			14,216,510
Depreciation		1,053,303			841,573
Deferred tax expense (benefit)		4,086,579			(303,627	)
Compensation related to stock option and restricted stock plans		1,447,320			1,350,035
Unrealized gains on interest rate swap		(830,884	)		(388,460	)
Change in accounts:
Other assets, net		550,816			(197,473	)
Income taxes payable		(6,377,521	)		(3,982,585	)
Accounts payable and accrued expenses		(2,074,232	)		(2,681,661	)
Net cash provided by operating activities		28,555,197			20,510,823
Cash flows from investing activities:
Increase in loans receivable, net		(32,158,828	)		(35,886,826	)
Assets acquired from office acquisitions, primarily loans		(6,380,722	)		(1,828,907	)
Increase in intangible assets from acquisitions		(904,554	)		(1,340,306	)
Purchases of property and equipment, net		(2,470,838	)		(1,984,927	)
Net cash used in investing activities		(41,914,942	)		(41,040,966	)
Cash flows from financing activities:
Net change in bank overdraft		-			(125,911	)
Proceeds of senior revolving notes payable, net		12,400,000			21,950,000
Repayment of other notes payable		(200,000	)		(200,000	)
Proceeds from exercise of stock options		1,147,932			377,254
Excess tax benefit from exercise of stock options		520,763			137,051
Net cash provided by financing activities		13,868,695			22,138,394
Increase in cash and cash equivalents		508,950			1,608,251
Cash and cash equivalents at beginning of period		7,589,575			5,779,032
Cash and cash equivalents at end of period	$	8,098,525			7,387,283

See accompanying notes to consolidated financial statements.

6

WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2008 and 2007

(Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The consolidated financial statements of the Company at June 30, 2008, and for the three 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 June 30, 2008, and the results of operations and cash flows for the periods ended June 30, 2008 and 2007, 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 2008 to conform with fiscal 2009 presentation. These reclassifications had no impact on shareholders’ equity and comprehensive income or net income.

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. Actual results could differ from those estimates.

These 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, 2008, included in the Company's 2008 Annual Report to Shareholders.

NOTE 2 – SUMMARY OF SIGNIFICANT POLICIES

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.

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 Condensed Consolidated Financial Statements.

Our 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 during the three months ended June 30, 2008:

	Fair Value Measurements Using
				Quoted Prices in Active Markets for  Identical Assets		Significant Other  Observable  Inputs			Significant  Unobservable  Inputs
	June 30, 2008			(Level 1)		(Level 2)			(Level 3)
Interest rate swap	$	(839,734	)	$	-	$	(839,734	)	$	-

7

There have been no other material changes to the Company’s significant accounting policies and estimates from the information provided in Note 1 of the Company’s Consolidated Financial Statements included in the Form 10-K for the fiscal year ended March 31, 2008.

NOTE 3 – COMPREHENSIVE INCOME

The Company applies the provisions of Financial Accounting Standards Board’s (FASB) Statement of Financial Accounting Standards (SFAS) No. 130 “Reporting Comprehensive Income.” The following summarizes accumulated other comprehensive income (loss) as of June 30:

	2008		2007
Balance at beginning of year	$	169,503	$	(47,826	)
Unrealized gain from foreign exchange translation adjustment	$	461,428	$	55,041
Total accumulated other comprehensive income	$	630,931	$	7,215

NOTE 4 - ALLOWANCE FOR LOAN LOSSES

The following is a summary of the changes in the allowance for loan losses for the periods indicated (unaudited):

	Three months ended June 30,
	2008			2007
Balance at beginning of period	$	33,526,147			27,840,239
Provision for loan losses		17,856,913			14,216,510
Loan losses		(18,173,143	)		(13,982,867	)
Recoveries		1,748,113			1,560,803
Allowance on acquired loans		330,031			47,596
Balance at end of period	$	35,288,061			29,682,281

The Company adopted 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. 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 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 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 quarters ended June 30, 2008 and 2007, the Company recorded adjustments of approximately $330,000 and $48,000, respectively, to the allowance for loan losses in connection with acquisitions in accordance with generally accepted accounting principles. These adjustments represent the allowance for loan losses on acquired loans which do not meet the scope of SOP 03-3.

NOTE 5 – AVERAGE SHARE INFORMATION

The following is a summary of the basic and diluted average common shares outstanding:

	Three months ended June 30,
	2008		2007
Basic:
Average common shares outstanding (denominator)		16,270,939		17,510,229
Diluted:
Average common shares outstanding		16,270,939		17,510,229
Dilutive potential common shares		302,161		406,059
Average diluted shares outstanding (denominator)		16,573,100		17,916,288

8

Options to purchase 38,639 and 74,841 shares of common stock at various prices were outstanding during the three months ended June 30, 2008 and 2007, respectively, but were not included in the computation of diluted EPS because the options are antidilutive. The shares related to the convertible senior notes payable (1,762,519) and related warrants were also not included in the computation of diluted EPS because the effect of such instruments was antidilutive.

NOTE 6 – STOCK-BASED COMPENSATION

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, 5,010,000 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 between two 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 June 30, 2008, there were 222,123 shares available for grant under the plans.

Effective April 1, 2006, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 123 (Revised 2004), “Share-Based Payment” (“SFAS” 123-R), using the modified prospective transition method, and did not retroactively adjust results from prior periods. Under this transition method, stock option compensation is recognized as an expense over the remaining unvested portion of all stock option awards granted prior to April 1, 2006, based on the fair values estimated at grant date in accordance with the original provisions of SFAS 123. 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 quarter ended June 30, 2008. The weighted-average fair value at the grant date for options issued during the three months ended June 30, 2007 was $22.35. This fair value was estimated at grant date using the weighted-average assumptions listed below.

	Three months ended June 30,
	2007
Dividend yield		0	%
Expected volatility		42.90	%
Average risk-free interest rate		4.78	%
Expected life		6.89 years
Vesting period		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 having a remaining life similar to the expected option term.

9

Option activity for the three months ended June 30, 2008 was as follows:

	Weighted					Weighted
	Average					Average
	Exercise					Remaining		Aggregated
	Shares			Price		Contractual Term		Intrinsic Value
Options outstanding, beginning of year		1,274,217		$	25.33
Granted		-			-
Exercised		(70,183	)		16.36
Forfeited		(500	)		6.69
Options outstanding, end of period		1,203,534		$	25.86		6.84	$	12,624,443
Options exercisable, end of period		490,984		$	17.10		4.72	$	8,770,425

The aggregate intrinsic value reflected in the table above represents the total pre-tax intrinsic value (the difference between the closing stock price on June 30, 2008 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 June 30, 2008. This amount will change as the stock’s market price changes. The total intrinsic value of options exercised during the period ended June 30, 2008 and 2007 was as follows:

	2008		2007
Three months ended	$	1,705,060		474,016

As of June 30, 2008, total unrecognized stock-based compensation expense related to non-vested stock options amounted to approximately $5.3 million, which is expected to be recognized over a weighted-average period of approximately 2.9 years.

Restricted Stock

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 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. On that same date, 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:

	Compounded
Vesting	Annual
Percentage	EPS Growth
100%		15% or higher
67%		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 $511,324 and $426,620, respectively, of compensation expense for the quarters ended June 30, 2008 and 2007 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 June 30, 2008, there was approximately $1.0 million of unrecognized compensation cost related to unvested restricted stock awards granted, which is expected to be recognized over the next two years.

10

A summary of the status of the Company’s restricted stock as of June 30, 2008, and changes during the quarter ended June 30, 2008, is presented below:

	Number of Shares			Weighted Average Fair Value at Grant Date
Outstanding at March 31, 2008		51,100			35.46
Granted during the period		12,000			43.67
Vested during the period		(9,676	)		43.36
Cancelled during the period		(324	)		43.67
Outstanding at June 30, 2008		53,100		$	35.83

Total share-based compensation included as a component of net income during the quarters ended June 30, 2008 and 2007 was as follows:

	Three months ended
	June 30,
	2008		2007
Share-based compensation related to equity classified units:
Share-based compensation related to stock options	$	950,145	$	923,415
Share-based compensation related to restricted stock units		511,324		426,620
Total share-based compensation related to equity classified awards	$	1,461,469	$	1,350,035

NOTE 7 – ACQUISITIONS

The following table sets forth the acquisition activity of the Company for the quarters ended June 30, 2008 and 2007:

	2008		2007
Number of offices purchased		11		16
Merged into existing offices		4		4
Purchase Price	$	7,285,276	$	3,169,213
Tangible assets:
Net loans		6,351,772		1,699,093
Furniture, fixtures & equipment		28,500		123,000
Other		450		6,814
Excess of purchase prices over carrying value of net tangible assets	$	904,554	$	1,340,306
Customer lists		837,221		959,354
Non-compete agreements		41,000		83,000
Goodwill		26,333		297,952
Total intangible assets	$	904,554	$	1,340,306

The Company evaluates each acquisition to determine if the acquired enterprise meets the definition of a business. Those acquired enterprises that meet the definition of a business are accounted for as a business combination under SFAS No. 141 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 quarter ended June 30, 2008, seven acquisitions were recorded as business combinations.

11

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 quarter ended June 30, 2008, four 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.

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 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.

NOTE 8 – DERIVATIVE FINANCIAL INSTRUMENTS

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 pays a fixed rate of 4.755% on the $30 million notional amount and receives 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.

At June 30, 2008, the Company recorded a liability related to the interest rate swap of approximately $840,000 and at June 30, 2007, the Company recorded an asset of approximately $481,000, which represented the fair value of the interest rate swap at that date. An unrealized gain of $830,884 and $388,460 was recorded as other income for the quarters ended June 30, 2008 and 2007. During the quarter ended June 30, 2008 interest expense was increased by approximately $156,000, as a result of new payments under the terms of the interest rate swap. In 2007 interest expense was decreased by approximately $43,000, as a result of net receipts under the terms of the interest rate swap.

On May 15, 2008, the Company entered into a $10 million foreign exchange currency option to economically hedge its foreign exchange risk relative to the Mexican peso. Under the terms of the option contract, the Company can exchange $10 million U.S. dollars at a rate of 11.0 Mexican pesos per dollar on May 15, 2009. The fair value of the option at June 30, 2008 was not significant.

12

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 fair value of the interest rate swap and currency option is recorded on the consolidated balance sheets as an other asset or other liability. 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. Credit risk is created when the fair value of a derivative contract is positive, since this generally indicates that the counterparty owes the Company. When the fair value of a derivative is negative, no credit risk exists since the Company would owe the counterparty. 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.

NOTE 9 – ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, 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 June 30, 2008 and March 31, 2008, the Company had $4,414,887 and $8,764,255 of total gross unrecognized tax benefits including interest, respectively. Of this total, approximately $2,175,123 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. The decrease in the total gross unrecognized tax benefit including interest during the quarter ending June 30, 2008 is primarily attributable to the revaluation of a prior period uncertain tax position which resulted in a decrease of $4,083,782 to the gross liability; additionally, the interest benefit accrued at the quarter comprises the remaining portion of the change in the unrecognized tax benefit.

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 2003, although carryforward attributes that were generated prior to 2003 may still be adjusted upon examination by the IRS if they either have been or will be used in a future period. The federal income tax returns (2005, 2006, and 2007) are currently under examination by the taxing authorities. In addition, 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 through 2006. The Company is in the very initial process of responding to the Jurisdiction. In consideration of the proposed assessment, the total gross unrecognized tax benefit was increased by $2.3 million. 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 $50,000 per quarter for interest.

The Company's continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. As of June 30, 2008, the Company had approximately $973,749 accrued for interest and penalties, of which $265,586 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.

13

WORLD ACCEPTANCE CORPORATION

AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

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 (unaudited):

	Three months
	ended June 30,
	2008			2007
	(Dollars in thousands)
Average gross loans receivable(1)	$	614,196			525,881
Average loans receivable(2)		454,312			390,549
Expenses as a % of total revenue:
Provision for loan losses		20.2	%		18.6	%
General and administrative		55.2	%		55.2	%
Total interest expense		2.8	%		3.1	%
Operating margin(3)		24.6	%		26.2	%
Return on average assets (annualized)		9.7	%		10.2	%
Offices opened or acquired, net		34			50
Total offices (at period end)		872			782

(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 revenue.

Comparison of Three Months Ended June 30, 2008, Versus

Three Months Ended June 30, 2007

Net income increased to $12.1 million for the three months ended June 30, 2008, or 11.1%, from the three month period ended June 30, 2007. Operating income (revenues less provision for loan losses and general and administrative expenses) increased approximately $1.8 million, or 9.0%, and was offset partially by an increase in interest expense and an increase in income taxes.

Total revenues rose to $88.4 million during the quarter ended June 30, 2008, a 15.8% increase over the $76.4 million for the corresponding quarter of the previous year. This increase was attributable to new offices and an increase in revenues from offices open throughout both quarterly periods. Revenues from the 730 offices open throughout both quarterly periods increased by approximately 10.1%. At June 30, 2008, the Company had 872 offices in operation, an increase of 34 offices from March 31, 2008.

Interest and fee income for the quarter ended June 30, 2008 increased by $11.0 million, or 16.8%, over the same period of the prior year. This increase resulted from an $88.3 million increase, or 16.8%, in average gross loans receivable over the two corresponding periods.

Insurance commissions and other income increased by $1.1 million, or 9.7%, between the two quarterly periods. Insurance commissions increased by $731,000, or 10.6%, during the most recent quarter when compared to the prior year quarter due to the increase in loans in those states where credit insurance is sold in conjunction with the loan. Other income increased by approximately $341,000, or 8.3%, over the two corresponding quarters primarily due to an increase in unrealized gain on the fair value of the interest rate swap.

14

The provision for loan losses during the quarter ended June 30, 2008 increased by $3.6 million, or 25.6%, from the same quarter last year. Delinquencies and charge-offs continued to increase during the first quarter as a result of the ongoing economic environment. Accounts that were 61 days or more past due increased from 2.6% to 2.9% on a recency basis and from 3.7% to 4.0% on a contractual basis when comparing the two quarter end statistics. Net charge-offs as a percentage of average net loans increased from 12.7% (annualized) during the prior year first quarter to 14.5% (annualized) during the most recent quarter. The 14.5% is the highest charge-off ratio that the Company has ever experienced during a first fiscal quarter. Previous high charge-off ratios for the first fiscal quarter were 13.9% in June 2005, 13.4% in June 2003 and 13.5% in June 2002. While the Company’s management hoped to see this rising trend in charge-offs begin to level off during the current quarter, the 14.5% is not far out of line with the Company’s expectations given the current economic environment. Additionally, the Company’s management does not believe that the Company will see reduced ratios for several more quarters.

General and administrative expenses for the quarter ended June 30, 2008 increased by $6.6 million, or 15.6% over the same quarter of fiscal 2008. Overall, general and administrative expenses, when divided by average open offices, increased by approximately 2.8% when comparing the two periods. During the first quarter of fiscal 2009, the Company opened 28 branches compared to 38 branches in the first quarter of fiscal 2008. The total general and administrative expense as a percent of total revenues was 55.2% for the three months ended June 30, 2007 and the three months ended June 30, 2008.

Interest expense increased by approximately $144,000 when comparing the two corresponding quarterly periods as a result of increases in the average outstanding debt balance, offset in part by a decrease in the average interest rate.

The Company’s effective income tax rate decreased slightly to 37.5% for the quarter ended June 30, 2008 from 38.5% for the prior year quarter. This decrease related to the FIN 48 adjustment discussed in Note 9 of the consolidated financial statements.

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. Certain 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. Additional information concerning the allowance for loan losses is discussed under “Management’s Discussion and Analysis of Financial Conditions and Results of Operations - Credit Quality” in the Company’s report on Form 10-K for the fiscal year ended March 31, 2008.

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 the Company’s 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 the Company’s 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 the Company’s current estimates.

Income Taxes

Management uses certain assumptions and estimates in determining income taxes payable or refundable, deferred income tax liabilities and assets for events recognized differently in its financial statements and income tax returns, and income tax expense. Determining these amounts requires analysis of certain transactions and interpretation of tax laws and regulations. Management exercises considerable judgment in evaluating the amount and timing of recognition of the resulting income tax liabilities and assets. These judgments and estimates are re-evaluated on a continual basis as regulatory and business factors change.

15

No assurance can be given that either the tax returns submitted by management or the income tax reported on the Consolidated Financial Statements will not be adjusted by either adverse rulings by the U.S. Tax Court, changes in the tax code, or assessments made by the Internal Revenue Service (“IRS”). The Company is subject to potential adverse adjustments, including but not limited to: an increase in the statutory federal or state income tax rates, the permanent non-deductible amounts currently considered deductible either now or in future periods, and the dependency on the generation of future taxable income, including capital gains, in order to ultimately realize deferred income tax assets.

The Company adopted FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes,” on April 1, 2007. Under FIN 48, the Company will include the current and deferred tax impact of its tax positions in the financial statements when it is more likely than not (likelihood of greater than 50%) that such positions will be sustained by taxing authorities, with full knowledge of relevant information, based on the technical merits of the tax position. While the Company supports its tax positions by unambiguous tax law, prior experience with the taxing authority, and analysis that considers all relevant facts, circumstances and regulations, management must still rely on assumptions and estimates to determine the overall likelihood of success and proper quantification of a given tax position. 

Liquidity and Capital Resources

The Company has financed its operations, acquisitions and office expansion through a combination of cash flow from operations and borrowings from its institutional lenders. The Company's primary ongoing cash requirements relate to the funding of new offices and acquisitions, the overall growth of loans outstanding, the repayment of indebtedness and the repurchase of its common stock. As the Company's gross loans receivable increased from $416.3 million at March 31, 2006 to $599.5 million at March 31, 2008, net cash provided by operating activities for fiscal years 2006, 2007 and 2008 was $98.0 million, $110.1 million and $136.0 million, respectively.

The Company believes stock 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. As of August 1, 2008, the Company has $11.0 million in aggregate remaining repurchase capacity under all of the Company’s outstanding repurchase authorizations.

The Company plans to open or acquire at least 70 branches in the United States and 25 branches in Mexico during fiscal 2009. Expenditures by the Company to open and furnish new offices averaged approximately $25,000 per office during fiscal 2008. 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 7 offices and 4 loan portfolios from competitors in 3 states in 5 separate transactions during the first quarter of fiscal 2009. Gross loans receivable purchased in these transactions were approximately $7.1 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 $30.0 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. On August 4, 2008, the credit facility expiration date was amended to 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 June 30, 2008, the interest rate on borrowings under the revolving credit facility was 5.0%. 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 June 30, 2008, $116.9 million was outstanding under this facility, and there was $70.1 million of unused borrowing availability under the borrowing base limitations.

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 believes that it was in compliance with these agreements as of June 30, 2008, and does not believe that these agreements will materially limit its business and expansion strategy.

16

The Company’s contractual obligations as of June 30, 2008 relating to FIN 48 included unrecognized tax benefits of $4.4 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 or other sources will be adequate 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 and the scheduled repayment of the other notes payable (for the next 12 months and for the foreseeable future beyond that). Management is not currently aware of any trends, demands, commitments, events or uncertainties related to the Company’s operations that it believes will result in, or are 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 obtain such increases or secure other sources of financing 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.

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 three of the eleven states in which the Company currently 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, which could partially offset the effect of inflationary increases in operating costs.

Quarterly Information and Seasonality

The Company's loan volume and corresponding loans receivable follow seasonal trends. The Company's highest loan demand occurs each year from October through December, its third fiscal quarter. Loan demand is generally the lowest and loan repayment is highest from January to March, its fourth fiscal quarter. Loan volume and average balances remain relatively level during the remainder of the year. This seasonal trend causes fluctuations in the Company's cash needs and quarterly operating performance through corresponding fluctuations in interest and fee income and insurance commissions earned, since unearned interest and insurance income are accreted to income on a collection method. Consequently, operating results for the Company's third fiscal quarter are significantly lower than in other quarters and operating results for its fourth fiscal quarter are generally higher than in other quarters.

Recently Issued Accounting Pronouncements

Business Combinations

In December 2007, the Financial Accounting Standards Board issued SFAS No. 141 (revised 2007), Business Combinations, 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.

17

Noncontrolling Interest in consolidated Financial Statements

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51” (“SFAS 160”). SFAS 160 clarifies the accounting for noncontrolling interests and establishes accounting and reporting standards for the noncontrolling interest in a subsidiary, including classification as a component of equity. SFAS 160 is effective for fiscal years beginning after December 15, 2008, our fiscal 2010. The Company is in the process of determining the effect, if any, that the adoption of SFAS 160 will have on our Consolidated Financial Statements.

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 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 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. SFAS 161 is effective prospectively for periods beginning on or after November 15, 2008.

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 and are currently assessing the impact 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.

18

Forward-Looking Information

This report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may contain various “forward-looking statements,” within the meaning of Section 21E of the Securities Exchange Act of 1934, that are based on management’s belief and assumptions, as well as information currently available to management. Statements other than those of historical fact, as well as those identified by the words “anticipate,” “estimate,” “plan,” “expect,” “believe,” “may,” “will,” and “should” any variation of the foregoing and similar expressions are forward-looking statements. Although the Company believes that the expectations reflected in any such forward-looking statements are reasonable, it 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, the Company’s actual financial results, performance or financial condition may vary materially from those anticipated, estimated or expected. Among the key factors that could cause the Company’s 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 or proposed legislation; the timing and amount of revenues that may be recognized by the Company; changes in current revenue and expense trends (including trends affecting delinquencies and charge-offs); changes in the Company’s markets and general changes in the economy (particularly in the markets served by theCompany); and other matters discussed in this Report in Part I, Item 1A, “Risk Factors” in the Company’s most recent annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) and the Company’s other reports filed with, or furnished to, the SEC from time to time. The Company does not undertake any obligation to update any forward-looking statements it makes.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

The Company’s financial instruments consist of the following: cash, loans receivable, senior notes payable, convertible senior subordinated notes payable, an other note payable, an interest rate swap and a foreign currency option. Fair value approximates carrying value for all of these instruments, except the convertible notes payable, for which the fair value 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 $116.9 million at June 30, 2008. 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 June 30, 2008, a change of 1% in the interest rates would cause a change in interest expense of approximately $871,000 on an annual basis.

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 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 June 30, 2008 the fair value of the interest rate swap was a liability of approximately $840,000 and is included in other liabilities. The change in fair value from the beginning of the fiscal year, recorded as an unrealized gain in other income, was approximately $831,000.

The Company has another note payable which has a balance of $200,000 at June 30, 2008, and carries an interest rate equal to LIBOR + 2.00%.

19

Foreign Currency Exchange Rate Risk

In September 2005 the Company began opening offices in Mexico, where its 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 rates change. International revenues were less than 5% of the Company’s total revenues for the quarter ended June 30, 2008 and net loans denominated in Mexican pesos were approximately $11.0 million (USD) at June 30, 2008.

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

On May 15, 2008, the Company economically hedged its foreign exchange risk by purchasing a $10 million foreign exchange currency option with a strike rate of 11.00 Mexican peso per US dollar. This option expires on May 15, 2009. Changes in the fair value of this option are recorded as a component of earnings since the Company does not intend to apply hedge accounting under SFAS 133.

Because its earnings are affected by fluctuations in the value of the U.S. dollar against foreign currencies, the Company has performed an analysis 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 June 30, 2008, the analysis indicated that such market movements would not have had a material effect on the Company’s consolidated financial statements. The actual effects on the consolidated financial statements in the future may differ materially from results of the analysis for the quarter ended June 30, 2008. The Company will continue to monitor and assess the effect of currency fluctuations and may institute further hedging alternatives.

Item 4.Controls and Procedures

An evaluation was carried out under the supervision and with the participation of the Company’s management, including its Chief Executive Officer (“CEO”) and Chief Financial Officer ("CFO"), of the effectiveness of the Company's disclosure controls and procedures as of June 30, 2008.  Based on that evaluation, the Company's management, including the CEO and CFO, has concluded that the Company's disclosure controls and procedures are effective as of June 30, 2008. During the first quarter of fiscal 2009, there was no change in the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

20

PART II. OTHER INFORMATION

Item 1.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. The Company believes that it is not presently a party to any such pending legal proceedings that would have a material adverse effect on its financial condition.

Item 1A.Risk Factors

There have been no material changes to the risk factors previously disclosed under Part I, Item 1A (page 9) of the Company’s Annual Report on Form 10-K for the year ended March 31, 2008.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

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.

21

WORLD ACCEPTANCE CORPORATION

AND SUBSIDIARIES

PART II. OTHER INFORMATION, CONTINUED

Item 6. Exhibits

		Previous	Company
Exhibit		Exhibit	Registration
Number	Description	Number	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 Credit Agreement dated July 20, 2005	4.4	6-30-05 10-Q
4.5	First Amendment to Amended and Restated Revolving Credit Agreement, dated as of August 4, 2006	4.4	6-30-06 10-Q
4.6	Second Amendment to Amended and Restated Revolving Credit Agreement dated as of October 2, 2006	10.1	10-04-06 8-K
4.7	Third Amendment to Amended and Restated Revolving Credit Agreement dated as of August 31, 2007	10.1	9-7-07 8-K
4.8	Fourth Amendment to Amended and Restated Revolving Credit Agreement dated as of August 4, 2008	*
4.9	Subsidiary Security Agreement dated as of June 30, 1997, as Amended through July 20, 2005	4.5	9-30-05 10-Q
4.10	Company Security Agreement dated as of June 20, 1997, as amended through July 20, 2005	4.6	9-30-05 10-Q
4.11	Fourth Amendment to Subsidiary Amended and Restated Security Agreement, Pledge and Indenture of Trust (i.e. Subsidiary Security Agreement)	4.7	6-30-05 10-Q
4.12	Fourth Amendment to Amended and Restated Security Agreement, Pledge and Indenture of Trust, dated as of June 30, 1997 (i.e., Company Security Agreement)	4.10	9-30-04 10-Q
4.13	Fifth Amendment to Amended and Restated Security Agreement, Pledge and Indenture of Trust (i.e. Company Security Agreement)	4.9	6-30-05 10-Q
4.14	Form of 3.00% Convertible Senior Subordinated Note due 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

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		Previous	Company
Exhibit		Exhibit	Registration
Number	Description	Number	No. or Report
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	*

*Filed or furnished herewith.

23

SIGNATURES

Pursuant to the requirements 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 CORPORATION
By:	/s/ A. Alexander McLean, III
A. Alexander McLean, III, Chief
Executive Officer
Date: August 5, 2008
By:	/s/ Kelly M. Malson
Kelly M. Malson, Vice President and
Chief Financial Officer
Date: August 5, 2008

24

EX-4.5

First Amendment to Amended and Restated Guaranty Agreement

Reference is hereby made to that certain Amended and Restated Guaranty Agreement dated as of June 30, 1997 (as amended, modified, or supplemented, the “Subsidiary Guaranty Agreement”), from World Acceptance Corporation of Alabama, World Acceptance Corporation of Missouri, World Finance Corporation of Georgia, World Finance Corporation of Louisiana, World Acceptance Corporation of Oklahoma, Inc., World Finance Corporation of South Carolina, World Finance Corporation of Tennessee, World Finance Corporation of Texas, WFC Limited Partnership, WFC of South Carolina, Inc., World Finance Corporation of Illinois, World Finance Corporation of New Mexico, World Finance Corporation of Kentucky, WFC Services, Inc., and World Finance Corporation of Colorado(the “Guarantors” and individually a “Guarantor”). Capitalized terms not otherwise defined herein shall have the meaning set forth in the Subsidiary Guaranty Agreement.

Subsequent to the delivery of the Subsidiary Guaranty Agreement, (a) the Senior Secured Notes were paid in full and (a) the Guarantors have agreed to guarantee the payment of the Hedging Liability (as such term is defined in the Revolving Credit Agreement). Pursuant to Section 15 of the Subsidiary Guaranty Agreement, the Guarantors and the Security Trustee now desire to amend the Subsidiary Guaranty Agreement to reflect such changes and to make certain other amendment to the Subsidiary Guaranty Agreement as provided for herein.

Section 1. Amendments.

Upon the execution and delivery hereof by the Guarantors party hereto and the Security Trustee, the Subsidiary Guaranty Agreement shall be and is hereby amended as follows:

1.1.On or about December 31, 1999, the Senior Secured Notes were paid in full and are no longer outstanding. Accordingly, for the sake of clarity, any and all references in the Subsidiary Guaranty Agreement to the terms “Senior Note Agreements” and “Senior Secured Notes” shall be deleted.

1.2.Recital I to the Subsidiary Guaranty Agreement shall be amended and restated in its entirety to read as follows:

I.The Company entered into that certain Amended and Restated Revolving Credit Agreement, dated as of July 20, 2005, as the same may from time to time be amended or restated pursuant to the terms thereof (the “Revolving Credit Agreement”) with Bank of Montreal, as Agent for the financial institutions party thereto as Banks, which provides for borrowings, whether or not such borrowings are evidenced by promissory notes and as the same may from time to time be amended or restated pursuant to the terms thereof and any note executed in replacement thereof (the “Revolving Credit Notes”). The Revolving Credit Notes are hereinafter collectively referred to as the “Notes.”

1.3.Section 1 of the Subsidiary Guaranty Agreement shall be amended and restated to read as follows:

The Guarantors hereby jointly and severally unconditionally guarantee to the Security Trustee for the benefit of each and every holder of a Note from time to time outstanding under the Revolving Credit Agreement (collectively “Holders” and individually “Holder”) together with their Affiliates with respect to any Hedging Liability (1) the due and punctual payment at maturity, whether at stated maturity, by acceleration, by notice of prepayment or otherwise, of the principal of and premium, if any, and interest on the Notes and of all Hedging Liability (as such term is defined in the Revolving Credit Agreement) in accordance with the terms and conditions of such Notes, the Revolving Credit Agreement, each Security Agreement, and any agreement entered into in connection with any Hedging Liability, (2) the prompt performance and compliance by the Company with each of its other obligations under the Revolving Credit Agreement and the Company Security Agreement and by the Company or any Guarantor of any agreement entered into in connection with any Hedging Liability and, (3) the prompt performance and compliance by each other Guarantor of each of its obligations under the Subsidiary Security Agreement, (4) the due and punctual payment of any other amounts due under the Revolving Credit Agreement and each Security Agreement and any agreement entered into in connection with any Hedging Liability. Such guaranty is an absolute, unconditional, present and continuing guaranty of payment and not of collectibility and is in no way conditioned or contingent upon any attempt to collect from the Company or from any other Guarantor or upon any other condition or contingency. If the Company shall fail to pay punctually any amount guaranteed hereby, when and as the same shall become due and payable, the Guarantors will upon demand immediately pay the same to the holders of the Notes and the Hedging Liability to whom such payment is payable.

Section 2. Representations, Warranties, and Covenants.

Each Guarantor hereby repeats and reaffirms all of its covenants, agreements, representations and warranties contained in the Subsidiary Guaranty Agreement, each and all of which shall be applicable to all of the guaranteed indebtedness after giving effect to this Amendment.

Section 3. Miscellaneous.

3.1.No reference to this Amendment need be made in any note, instrument or other document at any time referring to the Subsidiary Guaranty Agreement, any reference in any of such to the Subsidiary Guaranty Agreement to be deemed to reference to the Subsidiary Guaranty Agreement as amended hereby.

3.2.Except as specifically amended hereby, all the terms and conditions of the Subsidiary Guaranty Agreement shall stand and remain unchanged and in full force and effect.

3.3.This Amendment may be executed in any number of counterparts, and by the different parties on different counterpart pages, all of which taken together shall constitute one and the same agreement. Any of the parties hereto may execute this Amendment by signing any such counterpart and each of such counterparts shall for all purposes be deemed to be an original. This Amendment shall be governed by the laws of the State of South Carolina.

[Signature Pages to Follow]

This First Amendment to Amended and Restated Guaranty Agreement is dated as of August 4, 2008.

World Acceptance Corporation of Alabama
World Acceptance Corporation of Missouri
World Finance Corporation of Georgia
World Finance Corporation of Louisiana
World Acceptance Corporation of Oklahoma, Inc.
World Finance Corporation of South Carolina
World Finance Corporation of Tennessee
WFC of South Carolina, Inc.
World Finance Corporation of Illinois
World Finance Corporation of New Mexico
World Finance Corporation of Kentucky
WFC Services, Inc.
World Finance Corporation of Colorado
By		/s/ A. Alexander McLean III
A. Alexander McLean III
Its Executive Vice President
WFC Limited Partnership
By	WFC of South Carolina, Inc., as sole general partner
	By:	/s/ A. Alexander McLean III
		A. Alexander McLean III
		Its Executive Vice President

World Finance Corporation of Texas
By	/s/ Jeff L. Tinney
	Jeff L. Tinney
	Its President
Harris N.A., as Security Trustee
By	/s/ Michael S. Cameli
Name	Michael S. Cameli
Title	Director

EX-4.8

Fourth Amendment to Amended and Restated Revolving Credit Agreement

This Fourth Amendment to Amended and Restated Revolving Credit Agreement (herein, the “Amendment”) is entered into as of August 4, 2008, by and among World Acceptance Corporation, a South Carolina corporation (the “Borrower”), the Banks party hereto, Bank of Montreal, as Agent for the Banks (the “Agent”).

Preliminary Statements

A.The Borrower, the Banks, JPMorgan Chase Bank as Co-Agent, and the Agent are parties to a certain Amended and Restated Revolving Credit Agreement, dated as of July 20, 2005, as amended (the “Credit Agreement”). All capitalized terms used herein without definition shall have the same meanings herein as such terms have in the Credit Agreement.

B.The Borrower has requested that the Banks extend the Termination Date, amend certain provisions relating to investments in non-Restricted Subsidiaries, and make certain other amendments to the Credit Agreement, and the Banks are willing to do so under the terms and conditions set forth in this Amendment.

Now, Therefore, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

Section 1. Amendments.

Subject to the satisfaction of the conditions precedent set forth in Section 2 below, the Credit Agreement shall be and hereby is amended as follows:

1.1.Subsection (d) of the second paragraph of Section 3.5 of the Credit Agreement (Place and Application of Payments) shall be amended and restated to read as follows:

(d)fourth, to the Agent and the Banks (and, in the case of Hedging Liability, their Affiliates) ratably in accord with the amounts of any other indebtedness, obligations or liabilities of the Borrower owing to each of them and secured by the Collateral Documents (including, without limitation, Hedging Liability) unless and until all such indebtedness, obligations and liabilities have been fully paid and satisfied;

1.2.The first sentence of Section 4.1 of the Credit Agreement (The Collateral) shall be amended and restated to read as follows:

The Obligations shall be secured by valid and perfected first priority Liens pursuant to the Company Security Agreement and the Subsidiary Security Agreement in favor of the Security Trustee for the benefit of the Banks on all of the Borrower’s and each of its Restricted Subsidiaries’ (other than the Insurance Subsidiary’s) now existing and hereafter arising or acquired accounts, general intangibles, instruments, documents, chattel paper, investment property, inventory, equipment, deposit accounts, and other goods together with all records and proceeds relating thereto as well as on all capital stock or other equity interests of each Subsidiary and all proceeds thereof; provided, however, that the lien on the Voting Stock of the Insurance Subsidiary and any other Foreign Subsidiary shall be limited to 66% of the total outstanding Voting Stock of the Insurance Subsidiary and any other Foreign Subsidiary.

1.3.Section 4.2 of the Credit Agreement (Subsidiary Guaranties) shall be amended and restated to read as follows:

Section 4.2.Subsidiary Guaranties. Payment of the Obligations shall at all times be guarantied by each of the Restricted Subsidiaries (other than the Insurance Subsidiary) pursuant to the Subsidiary Guaranty Agreement.

1.4.Section 5.1 of the Credit Agreement (Definitions) shall be amended by (a) adding in appropriate alphabetical order a definition of “Hedging Liability” and (b) amending and restating the definitions of “Collateral Documents,” “Obligations,” and“Termination Date” which shall instead read as follows:

“Collateral Documents” means the Company Security Agreement, the Subsidiary Security Agreement, and all other security agreements, financing statements and other documents as shall from time to time secure or relate to the Obligations or any part thereof.

“Hedging Liability” means the liability of the Borrower or any Restricted Subsidiaries party to the Subsidiary Guaranty Agreement to any of the Banks, or any Affiliates of such Banks, in respect of any interest rate, foreign currency, and/or commodity swap, exchange, cap, collar, floor, forward, future or option agreement, or any other similar interest rate, currency or commodity hedging arrangement, as the Borrower or such Restricted Subsidiary, as the case may be, may from time to time enter into with any one or more of the Banks party to this Agreement or their Affiliates.

“Obligations” means all unpaid principal of and accrued and unpaid interest on the Notes, all Hedging Liability, all accrued and unpaid fees and all other obligations of the Borrower or any Restricted Subsidiary to the Banks or any Bank or the Agent or the Security Trustee arising under the Loan Documents, in each case whether now existing or hereafter arising, due or to become due, direct or indirect, absolute or contingent, and howsoever evidenced, held or acquired.

“Termination Date” means September 30, 2010, or such later date to which the Commitments are extended pursuant to Section 3.4 hereof, or such earlier date on which the Commitments are terminated in whole pursuant to Sections 2.9, 9.3 or 9.4 hereof.

1.5.Section 8.9(e) of the Credit Agreement (Permitted Indebtedness) shall be amended and restated in its entirety to read as follows:

-2-

(e)other unsecured Indebtedness for Borrowed Money to any Person (other than to the Borrower or another Restricted Subsidiary) in an aggregate amount for the Borrower and all Restricted Subsidiaries not exceeding $5,000,000 at any time outstanding.

1.6.Section 8.18(g) of the Credit Agreement (Investments) shall be amended and restated in its entirety and a new subsection (h) shall be added immediately thereafter, to read as follows:

(g)Investments by the Borrower in WAC de México, S.A. de C.V., SOFOM, ENR and Servicios World Acceptance Corporation de México, S. de R.L. de C.V. (collectively, the “Mexican Subsidiaries”) in an aggregate amount not to exceed $35,000,000 at any one time outstanding; and

(h)other Investments (in addition to those permitted in clauses (a) through (g) above), including for purposes hereof Investments in all Unrestricted Subsidiaries other than the Mexican Subsidiaries set forth in subsection (g) above, provided that (i) the aggregate amount of Investments in all Unrestricted Subsidiaries organized outside of the United States of America (other than the Mexican Subsidiaries set forth in subsection (g) above) shall not at any time exceed 3% of Consolidated Adjusted Net Worth and (ii) the aggregate amount of all such other Investments (including Investments in Unrestricted Subsidiaries other than the Mexican Subsidiaries set forth in subsection (g) above) shall not at any time exceed 10% of Consolidated Adjusted Net Worth.

1.7.Section 11 of the Credit Agreement (The Agent) shall be amended by (a) amending and restating Section 11.11 in its entirety and (b) adding a new Section 11.13, each of which shall read as follows:

Section 11.11.Authorization to Release or Subordinate or Limit Liens. The Agent is hereby irrevocably authorized by each of the Banks to authorize the Security Trustee to (a) release any Lien covering any Collateral that is sold, transferred, or otherwise disposed of in accordance with the terms and conditions of this Agreement and the relevant Collateral Documents (including a sale, transfer, or disposition permitted by the terms of Section 8.13 hereof or which has otherwise been consented to in accordance with Section 12.11 hereof), (b) release or subordinate any Lien on Collateral consisting of goods financed with purchase money indebtedness or under a Capital Lease to the extent such purchase money indebtedness or Capitalized Lease Obligation, and the Lien securing the same, are permitted by Sections 8.9, 8.10, and 8.11 hereof, (c) reduce or limit the amount of the indebtedness secured by any particular item of Collateral to an amount not less than the estimated value thereof to the extent necessary to reduce mortgage registry, filing and similar tax and (d) release Liens on the Collateral following termination or expiration of the Commitments and payment in full in cash of the Obligations.

-3-

Section 11.13.Hedging Liability. By virtue of a Bank’s execution of this Agreement or an assignment agreement pursuant to Section 12.10 hereof, as the case may be, any Affiliate of such Lender with whom the Borrower or any Restricted Subsidiary has entered into an agreement creating Hedging Liability shall be deemed a Bank party hereto for purposes of any reference in a Loan Document to the parties for whom the Agent or the Security Trustee is acting, it being understood and agreed that the rights and benefits of such Affiliate under the Loan Documents consist exclusively of such Affiliate’s right to share in payments and collections out of the Collateral and the Subsidiary Guaranty Agreement as more fully set forth in Section 3.5 hereof. In connection with any such distribution of payments and collections, or any request for the release of the Subsidiary Guaranty Agreement and the Security Trustee’s Liens in connection with the termination of the Commitments and the payment in full of the Obligations, the Agent and the Security Trustee shall be entitled to assume no amounts are due to any Bank or its Affiliate with respect to Hedging Liability unless such Bank has notified the Agent and the Security Trustee in writing of the amount of any such liability owed to it or its Affiliate prior to such distribution or payment or release of Subsidiary Guaranty Agreement and Liens.

1.8.Schedule 6.2 to the Credit Agreement (Subsidiaries) shall be amended by striking reference to the Subsidiary by the name of “World Acceptance Corporation de México, S. de R.L. de C.V.” and inserting in its place the name “WAC de México, S.A. de C.V., SOFOM, ENR” which shall be accompanied by the following information:

Name	Jurisdiction of  Organization	Owner	Percentage  Ownership
WAC de México, S.A. de C.V.,  SOFOM, ENR	Mexico	World Acceptance Corporation (99%)  and WFC Services, Inc., a South  Carolina corporation (1%)	100%

Section 2.Conditions Precedent.

The effectiveness of this Amendment is subject to the satisfaction of all of the following conditions precedent:

2.1.The Borrower and the Required Banks shall have executed and delivered this Amendment.

2.2.The Restricted Subsidiaries parties to the Subsidiary Guaranty Agreement shall have executed and delivered to the Agent their consent to this Amendment in the form set forth below.

-4-

2.3.The Restricted Subsidiaries and the Security Trustee shall have executed a First Amendment to the Subsidiary Guaranty Agreement in the form attached hereto as Annex A (and each of the Banks hereby authorize and instruct the Security Trustee to execute and delver the First Amendment to the Subsidiary Guaranty Agreement in the form attached hereto as Annex A).

2.4.Legal matters incident to the execution and delivery of this Amendment shall be satisfactory to the Agent and its counsel.

Section 3. Representations.

In order to induce the Banks to execute and deliver this Amendment, the Borrower hereby represents to the Agent, the Security Trustee, and the Banks that as of the date hereof, after giving effect to the amendments set forth in Section 1 above, (a) the representations and warranties set forth in Section 6 of the Credit Agreement and in the other Loan Documents are and shall be and remain true and correct (except that the representations contained in Section 6.6 shall be deemed to refer to the most recent financial statements of the Borrower delivered to the Agent) and (b) the Borrower and the Guarantors are in compliance with the terms and conditions of the Credit Agreement and the other Loan Documents and no Default or Event of Default exists or shall result after giving effect to this Amendment.

Section 4. Miscellaneous.

4.1.Except as specifically amended herein, the Credit Agreement shall continue in full force and effect in accordance with its original terms. Reference to this specific Amendment need not be made in the Credit Agreement, the Notes, or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to or with respect to the Credit Agreement, any reference in any of such items to the Credit Agreement being sufficient to refer to the Credit Agreement as amended hereby.

4.2.The Borrower heretofore executed and delivered, among other things, the Company Security Agreement and hereby acknowledges and agrees that the security interests and liens created and provided for therein secure the payment and performance of the Obligations as amended hereby, which are entitled to all of the benefits and privileges set forth therein. Without limiting the foregoing, the Borrower acknowledges that the “Secured Indebtedness” as defined in the Company Security Agreement includes all Hedging Liability in addition to all other Obligations as originally defined therein.

4.3.The Borrower agrees to pay on demand all costs and expenses of or incurred by the Agent in connection with the negotiation, preparation, execution and delivery of this Amendment and the other instruments and documents to be executed and delivered in connection herewith, including the fees and expenses of counsel for the Agent.

-5-

4.4.This Amendment may be executed in any number of counterparts, and by the different parties on different counterpart signature pages, all of which taken together shall constitute one and the same agreement. Any of the parties hereto may execute this Amendment by signing any such counterpart and each of such counterparts shall for all purposes be deemed to be an original. Delivery of a counterpart hereof by facsimile transmission or by e-mail transmission of an Adobe Portable Document Format File (also known as an “PDF”file) shall be effective as delivery of a manually executed counterpart hereof. This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of Illinois (without regard to principles of conflicts of laws).

[Signature Page to Follow]

-6-

This Fourth Amendment to Amended and Restated Revolving Credit Agreement is entered into as of the date and year first above written.

	World Acceptance Corporation
	By:	/s/ A. Alexander McLean, III
		Name:   A. Alexander McLean, III
		Title:     Chief Executive Officer
Accepted and agreed to.
	Bank of Montreal, in its capacity as Agent
	By:	/s/ Michael S. Cameli
		Name:   Michael S. Cameli
		Title:     Director
	BMO Capital Markets Financing, Inc.

By	/s/ Michael S. Cameli
	Name	Michael S. Cameli
	Title	Director

JPMorgan Chase Bank, N.A.
By:	/s/ Michael Tolentino
	Name:   Michael Tolentino
	Title:     Vice President
Bank of America, N.A.
By:	/s/ Deirdra Sikora
	Name:   Deirdra Sikora
	Title:     Vice President

-7-

Capital One, National Association
By:	/s/ Lori Mitchell
	Name:   Lori Mitchell
	Title:     Executive Vice President
Wells Fargo Financial Preferred Capital, Inc.
By:	/s/ William Laird
	Name:   William Laird
	Title:     Senior Vice President
Carolina First Bank
By:	/s/ Luke E. Barnett
	Name:   Luke E. Barnett
	Title:     Vice President

-8-

Acknowledgement and Consent

Each of the undersigned is a Restricted Subsidiary of World Acceptance Corporation who has executed and delivered to the Security Trustee, the Agent, and the Banks the Subsidiary Guaranty Agreement and the Subsidiary Security Agreement. Each of the undersigned hereby acknowledges and consents to the Fourth Amendment to Amended and Restated Revolving Credit Agreement set forth above and confirms that the Loan Documents executed by it, and all of its obligations thereunder, remain in full force and effect, and that the security interests and liens created and provided for therein continue to secure the payment and performance of the Obligations of the Borrower under the Credit Agreement after giving effect to the Amendment. Without limiting the foregoing, each of the undersigned acknowledges that the “Secured Indebtedness” as defined in the Subsidiary Security Agreement includes all Hedging Liability in addition to all other Obligations as originally defined therein. Each of the undersigned acknowledges that the Security Trustee, the Agent, and the Banks are relying on the foregoing in entering into the Amendment.

Dated as of August 4, 2008.

World Acceptance Corporation of Alabama

World Acceptance Corporation of Missouri

World Finance Corporation of Georgia

World Finance Corporation of Louisiana

World Acceptance Corporation of Oklahoma, Inc.

World Finance Corporation of South Carolina

World Finance Corporation of Tennessee

WFC of South Carolina, Inc.

World Finance Corporation of Illinois

World Finance Corporation of New Mexico

World Finance Corporation of Kentucky

WFC Services, Inc., a South Carolina corporation

World Finance Corporation of Colorado

By	/s/  A. Alexander McLean, III
	A. Alexander McLean, III
	Its Chief Executive Officer
WFC Limited Partnership
By	WFC of South Carolina, Inc., as sole general partner

By	/s/ A. Alexander McLean, III
	A. Alexander McLean, III
	Its Chief Executive Officer

World Finance Corporation of Texas
By	/s/ Jeff L. Tinney
	Jeff L. Tinney
	Its President

-2-

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, A. A. McLean III, certify that:

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 13(a)–15(e) and 15(d)–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.

Dated:     August 5, 2008	/s/ A. A. McLean III
	A. A. McLean III
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

I, Kelly M. Malson, certify that:

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 13(a)–15(e) and 15(d)–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.

Dated:     August 5, 2008	/s/ Kelly M. Malson
	Kelly M. Malson
	Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF PERIODIC REPORT

I, A. A. McLean III, of World Acceptance Corporation (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that (to my knowledge):

(1) the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2008, (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:        August 5, 2008

/s/ A. A. McLean III

A. A. McLean III

Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF PERIODIC REPORT

I, Kelly M. Malson, of World Acceptance Corporation (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that (to my knowledge):

(1) the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2008, (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:August 5, 2008

/s/ Kelly M. Malson

Kelly M. Malson

Vice President and Chief Financial Officer