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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 10-Q

 

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

 

For the quarterly period ended December 31, 2002

 

or

 

¨   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND 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.

 

     X      Yes                     No

 

Indicate the number of shares outstanding of each of issuer’s classes of common stock, as of the latest practicable date, February 14, 2003.

 

Common Stock, no par value

(Class)

  

17,526,478

(Outstanding)

 

1

Table of Contents

 

WORLD ACCEPTANCE CORPORATION

AND SUBSIDIARIES

 

TABLE OF CONTENTS

 

PART I—FINANCIAL INFORMATION

 

         

Page

Item 1.

   

Consolidated Financial Statements (unaudited):

     
    

Consolidated Balance Sheets as of December 31, 2002, and March 31, 2002

  

3

    

Consolidated Statements of Operations for the three-month periods and nine-month periods ended December 31, 2002, and December 31, 2001

  

4

    

Consolidated Statements of Shareholders’ Equity for the year ended March 31, 2002, and the nine-month period ended December 31, 2002

  

5

    

Consolidated Statements of Cash Flows for the three-month periods and nine-month periods ended December 31, 2002, and December 31, 2001

  

6

    

Notes to Consolidated Financial Statements

  

7

Item 2.

   

Management’s Discussion and Analysis of Financial Condition and Results of Operations for the three-month periods and nine-month periods ended December 31, 2002, and December 31, 2001

  

9

Item 3.

   

Quantitative and Qualitative Disclosures about market risk

  

14

Item 4.

   

Controls and Procedures

  

14

PART II—OTHER INFORMATION

Item 1.

   

Legal Proceedings

  

15

Item 2.

   

Changes in Securities

  

15

Item 6.

   

Exhibits and Reports on Form 8-K

  

16

Signatures

   

18

 

2

Table of Contents

WORLD ACCEPTANCE CORPORATION

AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

 

    

December 31,
2002

     

March 31,
2002

  
    

(Unaudited)

         

ASSETS

                

Cash

   

$

3,703,417

 

   

3,222,266

 

Gross loans receivable

   

 

300,751,024

 

   

226,306,409

 

Less:

                

Unearned interest and fees

   

 

(74,136,259

)

   

(53,669,912

)

Allowance for loan losses

   

 

(17,816,857

)

   

(12,925,644

)

    
  

Loans receivable, net

   

 

208,797,908

 

   

159,710,853

 

Property and equipment, net

   

 

7,591,893

 

   

6,920,824

 

Other assets, net

   

 

12,609,044

 

   

11,425,691

 

Intangible assets, net

   

 

15,097,337

 

   

13,967,315

 

    
  
    

$

247,799,599

 

   

195,246,949

 

    
  

LIABILITIES & SHAREHOLDERS’ EQUITY

                

Liabilities:

                

Senior notes payable

   

 

131,650,000

 

   

76,900,000

 

Subordinated notes payable

   

 

4,000,000

 

   

6,000,000

 

Other note payable

   

 

482,000

 

   

482,000

 

Accounts payable and accrued expenses

   

 

6,894,727

 

   

9,431,569

 

    
  

Total liabilities

   

 

143,026,727

 

   

92,813,569

 

    
  

Shareholders’ equity:

                

Common stock, no par value

                

Authorized 95,000,000 shares; issued and outstanding 17,526,478 and 18,879,218 shares at December 31, 2002 and March 31, 2002, respectively

   

 

—  

 

   

—  

 

Additional paid-in capital

   

 

—  

 

   

681,354

 

Retained earnings

   

 

104,772,872

 

   

101,752,026

 

    
  

Total shareholders’ equity

   

 

104,772,872

 

   

102,433,380

 

    
  
    

$

247,799,599

 

   

195,246,949

 

    
  

 

See accompanying notes to consolidated financial statements.

 

 

3

Table of Contents

WORLD ACCEPTANCE CORPORATION

AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

    

Three months ended

December 31,

   

Nine months ended

December 31,

    

2002

   

2001

   

2002

   

2001

Revenues:

                      

Interest and fee income

   

$

33,442,181

   

30,326,909

   

95,779,269

   

84,831,265

Insurance and other income

   

 

5,592,430

   

4,437,658

   

14,220,005

   

11,651,559

    
  
  
  

Total revenues

   

 

39,034,611

   

34,764,567

   

109,999,274

   

96,482,824

    
  
  
  

Expenses:

                      

Provision for loan losses

   

 

10,208,829

   

8,571,870

   

24,176,710

   

20,677,551

    
  
  
  

General and administrative expenses:

                      

Personnel

   

 

13,363,907

   

12,356,922

   

40,074,632

   

35,368,746

Occupancy and equipment

   

 

2,215,309

   

1,999,989

   

6,567,163

   

5,939,927

Data processing

   

 

447,284

   

428,097

   

1,315,765

   

1,262,017

Advertising

   

 

2,850,176

   

2,282,279

   

4,864,873

   

4,031,508

Amortization of intangible assets

   

 

530,440

   

537,084

   

1,616,921

   

1,450,253

Other

   

 

3,044,517

   

2,672,521

   

8,403,380

   

7,456,282

    
  
  
  
    

 

22,451,633

   

20,276,892

   

62,842,734

   

55,508,733

    
  
  
  

Interest expense

   

 

1,175,831

   

1,243,662

   

3,376,744

   

4,363,684

    
  
  
  

Total expenses

   

 

33,836,293

   

30,092,424

   

90,396,188

   

80,549,968

    
  
  
  

Income before income taxes

   

 

5,198,318

   

4,672,143

   

19,603,086

   

15,932,856

Income taxes

   

 

1,846,000

   

1,633,000

   

6,959,000

   

5,565,000

    
  
  
  

Net income

   

$

3,352,318

   

3,039,143

   

12,644,086

   

10,367,856

    
  
  
  

Net income per common share:

                      

Basic

   

$

19

   

16

   

71

   

55

    
  
  
  

Diluted

   

$

19

   

16

   

69

   

54

    
  
  
  

Weighted average common shares outstanding:

                      

Basic

   

 

17,550,523

   

18,771,555

   

17,860,101

   

18,780,498

    
  
  
  

Diluted

   

 

17,936,993

   

19,229,989

   

18,304,976

   

19,375,945

    
  
  
  

 

 

See accompanying notes to consolidated financial statements.

 

4

Table of Contents

 

WORLD ACCEPTANCE CORPORATION

AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

 

    

Additional
Paid-in
Capital

     

Retained Earnings

     

Total

  

Balances at March 31, 2001

   

$

313,655

 

   

82,412,879

 

   

82,726,534

 

Proceeds from exercise of stock options (442,136 shares), including tax benefit of $526,469

   

 

2,546,634

 

   

—  

 

   

2,546,634

 

Common stock repurchases (251,891 shares)

   

 

(2,178,935

)

   

—  

 

   

(2,178,935

)

Net income

   

 

—  

 

   

19,339,147

 

   

19,339,147

 

    
  
  

Balances at March 31, 2002

   

 

681,354

 

   

101,752,026

 

   

102,433,380

 

Proceeds from exercise of stock options (260,909 shares), including tax benefit of $275,914

   

 

1,696,399

 

   

—  

 

   

1,696,399

 

Common stock repurchases (1,623,549 shares)

   

 

(2,377,753

)

   

(9,623,240

)

   

(12,000,993

)

Net income for the nine months

   

 

—  

 

   

12,644,086

 

   

12,644,086

 

    
  
  

Balances at December 31, 2002

   

$

—  

 

   

104,772,872

 

   

104,772,872

 

    
  
  

 

See accompanying notes to consolidated financial statements.

 

 

5

Table of Contents

WORLD ACCEPTANCE CORPORATION

AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

    

Three months ended
December 31,

     

Nine months ended
December 31,

  
    

2002

     

2001

     

2002

     

2001

  

Cash flows from operating activities:

                              

Net income

   

$

3,352,318

 

   

3,039,143

 

   

12,644,086

 

   

10,367,856

 

Adjustments to reconcile net income to net cash provided by operating activities:

                              

Provision for loan losses

   

 

10,208,829