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, 2000 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, 2001. Common Stock, no par value 18,652,973 -------------------------- ------------------- (Class) (Outstanding) 1
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, 2000, and March 31, 2000 3 Consolidated Statements of Operations for the three-month periods and nine-month periods ended December 31, 2000, and December 31, 1999 4 Consolidated Statements of Shareholders' Equity for the year ended March 31, 2000, and the nine-month period ended December 31, 2000 5 Consolidated Statements of Cash Flows for the three-month periods and nine-month periods ended December 31, 2000, and December 31, 1999 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, 2000, and December 31, 1999 8 Item 3. Quantitative and Qualitative Disclosures about market risk 11 PART II - OTHER INFORMATION Item 1. Legal Proceedings 12 Item 2. Changes in Securities 12 Item 6. Exhibits and Reports on Form 8-K 13 Signatures 15 2
WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, March 31, 2000 2000 ------------ ----------- ASSETS (Unaudited) Cash $ 1,720,060 1,690,676 Gross loans receivable 235,531,800 173,609,123 Less: Unearned interest and fees (56,185,987) (37,949,381) Allowance for loan losses (13,027,281) (10,008,257) ------------ ----------- Loans receivable, net 166,318,532 125,651,485 Property and equipment, net 6,752,501 6,752,791 Other assets, net 8,922,253 8,269,399 Intangible assets, net 13,686,938 11,108,477 ------------ ----------- $197,400,284 153,472,828 ============ =========== LIABILITIES & SHAREHOLDERS' EQUITY Liabilities: Senior notes payable 115,400,000 77,900,000 Other note payable 482,000 482,000 Income taxes payable 1,547,159 2,059,441 Accounts payable and accrued expenses 4,732,821 4,839,001 ------------ ----------- Total liabilities 122,161,980 85,280,442 ------------ ----------- Shareholders' equity: Common stock, no par value - - Additional paid-in capital - 267,958 Retained earnings 75,238,304 67,924,428 ------------ ----------- Total shareholders' equity 75,238,304 68,192,386 ------------ ----------- $197,400,284 153,472,828 ============ =========== See accompanying notes to consolidated financial statements. 3
WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) <TABLE> <CAPTION> Three months ended Nine months ended December 31, December 31, ----------------------- ---------------------- 2000 1999 2000 1999 ---- ---- ---- ---- <S> <C> <C> <C> <C> Revenues: Interest and fee income $26,265,723 22,701,793 74,043,425 64,728,962 Insurance and other income 3,614,595 4,228,754 11,389,997 12,041,417 ----------- ---------- ---------- ---------- Total revenues 29,880,318 26,930,547 85,433,422 76,770,379 ----------- ---------- ---------- ---------- Expenses: Provision for loan losses 7,038,705 5,540,330 16,106,118 13,152,128 ----------- ---------- ---------- ---------- General and administrative expenses: Personnel 10,566,842 9,605,213 31,836,793 29,111,530 Occupancy and equipment 1,931,412 1,745,307 5,622,941 5,154,222 Data processing 393,668 387,004 1,097,677 1,117,031 Advertising 1,848,957 1,660,173 3,315,532 3,226,004 Amortization of intangible assets 476,682 378,153 1,322,574 1,092,756 Other 2,338,167 2,109,706 7,088,120 6,208,258 ----------- ---------- ---------- ---------- 17,555,728 15,885,556 50,283,637 45,909,801 ----------- ---------- ---------- ---------- Interest expense 2,303,843 1,582,876 6,217,342 4,401,605 ----------- ---------- ---------- ---------- Total expenses 26,898,276 23,008,762 72,607,097 63,463,534 ----------- ---------- ---------- ---------- Income before income taxes 2,982,042 3,921,785 12,826,325 13,306,845 Income taxes 1,007,000 1,336,000 4,400,000 4,536,000 ----------- ---------- ---------- ---------- Net income $ 1,975,042 2,585,785 8,426,325 8,770,845 =========== ========== ========== ========== Net income per common share: Basic $ .11 .14 .45 .46 =========== ========== ========== ========== Diluted $ .11 .14 .45 .46 =========== ========== ========== ========== Weighted average common shares outstanding: Basic 18,627,573 19,019,703 18,676,840 19,017,616 =========== ========== ========== ========== Diluted 18,748,298 19,140,205 18,804,146 19,177,901 =========== ========== ========== ========== </TABLE> See accompanying notes to consolidated financial statements. 4
WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) <TABLE> <CAPTION> Additional Paid-in Retained Capital Earnings Total ---------- ----------- ---------- <S> <C> <C> <C> Balances at March 31, 1999 $ 935,921 53,755,909 54,691,830 Proceeds from exercise of stock options (15,000 shares), including tax benefit of $11,932 55,682 - 55,682 Common stock repurchases (144,000 shares) (723,645) - (723,645) Net income - 14,168,519 14,168,519 ---------- ---------- ---------- Balances at March 31, 2000 $ 267,958 67,924,428 68,192,386 Proceeds from exercise of stock options (15,000 shares), including tax benefit of $9,756 53,506 - 53,506 Common stock repurchases (275,000 shares) (321,464) (1,112,449) (1,433,913) Net income for the nine months - 8,426,325 8,426,325 ---------- ---------- ---------- Balances at December 31, 2000 $ - 75,238,304 75,238,304 ========== ========== ========== </TABLE> See accompanying notes to consolidated financial statements. 5
WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) <TABLE> <CAPTION> Three months ended Nine months ended December 31, December 31, --------------------------- -------------------------- 2000 1999 2000 1999 ---- ---- ---- ---- <S> <C> <C> <C> <C> Cash flows from operating activities: Net income $ 1,975,042 2,585,785 8,426,325 8,770,845 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 7,038,705 5,540,330 16,106,118 13,152,128 Amortization of intangible assets 476,682 378,153 1,322,574 1,092,756 Amortization of loan costs and discounts 50,192 24,076 77,430 73,918 Depreciation 397,917 390,039 1,179,900 1,095,649 Change in accounts: Other assets, net 78,143 (156,588) (730,284) (818,108) Income taxes payable (192,707) (562,970) (502,526) (1,640,646) Accounts payable and accrued expenses 519,951 547,655 (106,180) (367,084) ------------ ----------- ----------- ----------- Net cash provided by operating activities 10,343,925 8,746,480 25,773,357 21,359,458 ------------ ----------- ----------- ----------- Cash flows from investing activities: Increase in loans, net (24,739,997) (18,234,709) (41,134,291) (32,608,353) Net assets acquired from office acquisitions, primarily loans (263,648) (706,473) (15,653,874) (3,256,510) Purchases of premises and equipment (265,568) (357,464) (1,164,610) (1,523,905) Purchases of intangible assets (237,687) (185,000) (3,901,035) (1,305,800) ------------ ----------- ----------- ----------- Net cash used by investing activities (25,506,900) (19,483,646) (61,853,810) (38,694,568) ------------ ----------- ----------- ----------- Cash flows from financing activities: Proceeds of senior notes payable, net 12,450,000 16,200,000 39,500,000 23,100,000 Repayment of term notes - (4,000,000) (2,000,000) (4,000,000) Proceeds from exercise of stock options - 26,250 43,750 26,250 Common stock repurchases - - (1,433,913) - ------------ ----------- ----------- ----------- Net cash provided by financing activities 12,450,000 12,226,250 36,109,837 19,126,250 ------------ ----------- ----------- ----------- Increase (decrease) in cash (2,712,975) 1,489,084 29,384 1,791,140 Cash, beginning of period 4,433,035 1,538,363 1,690,676 1,236,207 ------------ ----------- ----------- ----------- Cash, end of period $ 1,720,060 3,027,447 1,720,060 3,027,347 ============ =========== =========== =========== Supplemental disclosure of cash flow information: Cash paid for interest expense $ 2,215,446 1,226,879 5,719,655 4,075,510 Cash paid for income taxes 1,199,707 1,898,970 4,902,526 6,176,646 Supplemental schedule of noncash financing activities: Tax benefits from exercise of stock options - 6,495 9,756 6,495 </TABLE> See accompanying notes to consolidated financial statements. 6
WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000 NOTE 1 - BASIS OF PRESENTATION - ------------------------------ The consolidated financial statements of the Company at December 31, 2000, and for the periods 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 December 31, 2000, and the results of operations and cash flows for the three and nine-month periods then ended, have been included. The results for the three and nine-month periods ended December 31, 2000, are not necessarily indicative of the results that may be expected for the full year or any other interim period. These consolidated financial statements do not include all disclosures required by generally accepted accounting principles and should be read in conjunction with the Company's audited financial statements and related notes for the year ended March 31, 2000, included in the Company's 2000 Annual Report to Shareholders. NOTE 2 - COMPREHENSIVE INCOME - ----------------------------- The Company applies the provision of Financial Accounting Standards Board's (FASB) Statement of Financial Accounting Standards (SFAS) No. 130 "Reporting Comprehensive Income." The Company has no items of other comprehensive income; therefore, net income equals comprehensive income. NOTE 3 - ALLOWANCE FOR LOAN LOSSES - ---------------------------------- The following is a summary of the changes in the allowance for loan losses for the periods indicated (unaudited): <TABLE> <CAPTION> Three months Nine months ended December 31, ended December 31, ------------------------ -------------------------- 2000 1999 2000 1999 ---- ---- ---- ---- <S> <C> <C> <C> <C> Balance at beginning of period $12,589,573 9,602,961 10,008,257 8,769,367 Provision for loan losses 7,038,705 5,540,330 16,106,118 13,152,128 Loan losses (6,340,570) (5,046,411) (15,387,615) (12,518,389) Recoveries 355,270 332,346 1,065,853 975,775 Allowance on acquired loans, net of specific charge-offs (615,697) 36,495 1,234,668 86,840 ----------- ---------- ----------- ----------- Balance at end of period $13,027,281 10,465,721 13,027,281 10,465,721 =========== ========== =========== =========== </TABLE> 7
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): <TABLE> <CAPTION> Three months Nine months ended December 31, ended December 31, -------------------- -------------------- 2000 1999 2000 1999 ---- ---- ---- ---- (Dollars in thousands) <S> <C> <C> <C> <C> Average gross loans receivable /(1)/ $ 218,017 168,244 201,123 161,532 Average loans receivable /(2)/ 165,945 130,663 154,054 124,930 Expenses as a % of total revenue: Provision for loan losses 23.6% 20.6% 18.9% 17.1% General and administrative 58.8% 59.0% 58.9% 59.8% Total interest expense 7.7% 5.9% 7.3% 5.7% Operating margin (3) 17.7% 20.4% 22.3% 23.1% Return on average assets (annualized) 4.2% 6.8% 6.4% 8.1% Offices opened or acquired, net 2 5 16 25 Total offices (at period end) 426 404 426 404 </TABLE> /(1)/ Average gross loans receivable have been determined by averaging month- end gross loans receivable over the indicated period. /(2)/ Average loans receivable have been determined by averaging month-end gross loans receivable less unearned interest and deferred fees over the indicated period. /(3)/ Operating margin is computed as total revenues less provision for loan losses and general and administrative expenses, as a percentage of total revenues. Comparison of Three Months Ended December 31, 2000, Versus - ---------------------------------------------------------- Three Months Ended December 31, 1999 - ------------------------------------ Net income amounted to $2.0 million for the three months ended December 31, 2000, a 23.6% decrease from the $2.6 million earned during the corresponding three-month period of the previous year. This decrease resulted from a decrease in operating income (revenues less provision for loan losses and general and administrative expenses) of $219,000, or 4.0%, combined with an increase in interest expense and offset by a decrease in income taxes. Interest and fee income for the quarter ended December 31, 2000, increased by $3.6 million, or 15.7%, over the same period of the prior year. This increase resulted primarily from the $35.3 million increase, or 27.0%, in average loans receivables over the two corresponding periods. The increase in interest and fees was less than the increase in average balances outstanding due to a reduction in the overall yield in the loan portfolio, which was due to lower interest rates charged on larger loans made in certain states. Insurance commissions and other income decreased by $614,000 million, or 14.5%, over the two quarters primarily as a result of a decrease in revenue at the Company's ParaData computer subsidiary. Insurance commissions decreased by $71,000, or 3.3%, when comparing the two quarterly periods. This decrease was largely due to a change in the Tennessee statute governing loans less than $1,000. The change in the statute, which the Company believes will ultimately be revenue neutral, increased the interest and fees that can be charged on these loans, but eliminated the sale of all insurance products in conjunction with these loans. The decline in insurance income resulting from the change was partially offset by the growth in loans in states where credit insurance may be sold, primarily Kentucky. Other income decreased by $543,000, or 26.2%, over the two quarterly periods as a result of the decrease in net revenue from ParaData. This subsidiary attracted several new customers during the prior fiscal year, which resulted in an excellent prior year third quarter that was not expected to be duplicated during the current third quarter. 8
WORLD ACCEPTANCE CORPORATION MANAGEMENTS' DISCUSSION AND ANALYSIS, CONTINUED ----------------------------------------------- Total revenues rose to $29.9 million during the quarter ended December 31, 2000, an 11.0% increase over the $26.9 million in total revenues for the same quarter of the prior year. Revenues from the 372 offices open throughout both three-month periods increased by approximately 2.2%. At December 31, 2000, the Company had 426 offices in operation, a net increase of 2 offices during the current quarter, and 16 offices since the beginning of the fiscal year. The provision for loan losses amounted to $7.0 million during the quarter ended December 31, 2000, representing a 27.0% increase over the $5.5 million during the same quarter of the prior fiscal year. This increase resulted from an increase in net loans charged off during the quarter due primarily to the growth in the loan portfolio. As a percentage of average loans receivable outstanding, net charge-offs remained the same at 14.4% when comparing the two quarterly periods. The Company expected to see a decline in this loss ratio during the period due to the growth in the larger loan portfolio, which generally sustains less losses than the smaller loans; however, the net charge- off percentage on the small loan portfolio rose from 14.5% for the three months ended December 31, 1999, to 16.9% for the most recent quarter. Although the Company's management remains concerned over the rise in the level of charge-offs on its smaller loans and continues to focus on strict adherence to the Company's lending and collection guidelines and policies by all branch personnel, there can be no assurance that this trend will not continue, or that earnings will not be negatively affected as a result in future quarters. The charge-off percentage on the larger loan portfolio remained in line with management's expectations at 6.7% during the most recent quarter. General and administrative expenses for the quarter ended December 31, 2000, increased by $1.7 million, or 10.5%, over the same quarter of fiscal 2000. This increase resulted primarily from the additional expenses associated with the 25 new offices opened or acquired between December 31, 1999, and December 31, 2000. During the same 12-month period, the Company has also sold or merged three offices. These were offices that had not grown as expected to a profitable size within a reasonable period of time. As a percentage of total revenues, total general and administrative expenses decreased from 59.0% for the quarter ended December 31, 1999, to 58.8% for the most recent quarter. Additionally, excluding the expenses associated with ParaData, overall general and administrative expenses when divided by the average open offices increased by 4.8% when comparing the two periods. Interest expense increased by $721,000, or 45.5%, when comparing the two corresponding quarterly periods. This increase resulted from an increase in the level of debt, which grew from $90.7 million at December 31, 1999, to $115.9 million at December 31, 2000, combined with an increase in interest rates over the two periods. Comparison of Nine Months Ended December 31, 2000, - -------------------------------------------------- Versus Nine Months Ended December 31, 1999 - ------------------------------------------ For the nine month period ending December 31, 2000, net income amounted to $8.4 million. This represents a decrease of $345,000, or 3.9% when comparing the two nine-month periods. Operating income increased by $1.3 million, or 7.5%, over the two periods; however, this was more than offset by a $1.8 million increase in interest expense. Total revenues amounted to $85.4 million during the current nine-month period, an increase of $8.7 million, or 11.3%, over the prior-year period. This increase resulted from an increase in interest and fee income of 14.4%, offset by a decrease in insurance and other income of 5.4%. Revenues from the 372 offices open throughout both nine-month periods increased approximately 4.2%. Interest and fee income rose by $9.3 million during the two corresponding nine-month periods primarily as a result of increases in loan balances outstanding. Average loans receivable were $154.1 million during the nine months ended December 31, 2000, representing a 23.3% increase over the average balances of the prior year. Other income decreased by 5.4%, decreased gross profits from ParaData of $882,000, partially offset by increased insurance commissions The provision for loan losses increased by $3.0 million, or 22.5%, during the current nine month period when compared to the same period of fiscal 2000. This increase was due primarily to the growth in the loan portfolio. As a percentage of average loans, net charge-offs on an annualized basis grew slightly from 12.3% for the nine months ended December 31, 1999, to 12.4% for the most recent nine month period. 9
WORLD ACCEPTANCE CORPORATION MANAGEMENTS' DISCUSSION AND ANALYSIS, CONTINUED ----------------------------------------------- General and administrative expenses increased by $4.4 million, or 9.5%, during the most recent nine-month period. As a percentage of total revenues, these expenses decreased from 59.8% during the prior year nine-month period to 58.9% during the current period. Excluding the expenses associated with ParaData, overall general and administrative expenses, when divided by the average open offices, increased by only 2.7% when comparing the two nine-month periods. Interest expense increased by $1.8 million when comparing the two nine-month periods, an increase of 41.3%. This increase reflects the 25.8% increase in the average level of debt outstanding when comparing the two nine month periods combined with a rise in interest rates over these periods. Liquidity and Capital Resources - ------------------------------- The Company's primary sources of funds are cash flow from operations and borrowings under its revolving credit agreement. The Company's primary ongoing cash requirements are funding the opening and operation of new offices, funding overall growth of loans outstanding (including acquisitions), the repayment of existing debt and the repurchase of its common stock. The Company has a $105.0 million revolving credit agreement, (temporarily increased to $120.0 million), and $8.0 million of subordinated notes. The revolving credit facility expires on September 30, 2002, and bears interest, at the Company's option, at the agent's prime rate or LIBOR plus 1.75%. At December 31, 2000, the weighted average interest rate under the facility was 8.51%, and the Company's outstanding balance was $107.4 million, leaving $12.6 million in borrowing availability under existing borrowing base limitations (based on eligible loans receivable). The Company received a temporary increase in availability under the revolving credit facility of $15.0 million for the period beginning June 28, 2000, through March 31, 2001. The subordinated notes provide for interest payments to be made quarterly at a fixed rate of 10.0%. Annual principal payments of $2.0 million are due each June 1, with a final maturity date of June 1, 2004. Borrowings under the revolving credit agreement and the senior subordinated notes are secured by a lien on substantially all the tangible and intangible assets of the Company and its subsidiaries pursuant to various security agreements. The Company believes that cash flow from operations and borrowings under its revolving credit facility will be adequate to fund the continuing growth of the Company's loan portfolio, the principal payments due under the subordinated notes, the repurchase of the Company's common stock on a limited basis and the expected cost of opening and operating new offices, including funding initial operating losses of new offices and loans receivable originated by those offices and the Company's other offices. 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 six 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. 10
WORLD ACCEPTANCE CORPORATION MANAGEMENTS' DISCUSSION AND ANALYSIS, CONTINUED ----------------------------------------------- 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. 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. When used in this document, the words "anticipate," "estimate," "expect," and similar expressions may identify 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 charge-offs); changes in the Company's markets and general changes in the economy (particularly in the markets served by the Company); and other matters discussed in this Report and the Company's other filings with the Securities and Exchange Commission. The Company is a party to certain legal proceedings. See Part II, Item 1. Item 3. Quantitative and Qualitative Disclosures About Market Risk ---------------------------------------------------------- The Company's outstanding debt under its revolving credit facility was $107.4 million at December 31, 2000. Interest on borrowings under this facility is based, at the Company's option, on the prime rate or LIBOR plus 1.75%. Based on the outstanding balance at December 31, 2000, a change of 1% in the interest rate would cause a change in interest expense of approximately $1.07 million on an annual basis. 11
WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES PART II. OTHER INFORMATION Item 1. Legal Proceedings ----------------- From time to time the Company is involved in other 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 other pending legal proceedings that would have a material adverse effect on its financial condition. Item 2. Changes in Securities --------------------- The Company's credit agreements contain certain restrictions on the payment of cash dividends on its capital stock. 12
WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES PART II. OTHER INFORMATION, CONTINUED Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits: <TABLE> <CAPTION> Filed Herewith (*) or Previous Company Exhibit Exhibit Registration Number Description Number No. or Report - --------- -------------------------------------------------------------- --------------- ------------- <S> <C> <C> <C> 3.1 Second Amended and Restated Articles of Incorporation of the 3.1 1992 10-K Company 3.2 First Amendment to Second Amended and Restated Articles 3.2 1995 10-K of Incorporation 3.3 Amended Bylaws of the Company 3.4 33-42879 4.1 Specimen Share Certificate 4.1 33-42879 4.2 Articles 3, 4 and 5 of the Form of Company's Second 3.1, 3.2 1995 10-K Amended and Restated Articles of Incorporation (as amended) 4.3 Article II, Section 9 of the Company's Second Amended 3.2 1995 10-K and Restated Bylaws 4.4 Amended and Restated Revolving Credit Agreement, dated as 4.4 9-30-97 10-Q of June 30, 1997, between Harris Trust and Savings Bank, the Banks signatory thereto from time to time and the Company 4.5 Note Agreement, dated as of June 30, 1997, between Principal 4.7 9-30-97 10-Q Mutual Life Insurance Company and the Company re: 10% Senior Subordinated Secured Notes 4.6 Amended and Restated Security Agreement, Pledge and Indenture 4.8 9-30-97 10-Q of Trust, dated as of June 30, 1997, between the Company and Harris Trust and Savings Bank, as Security Trustee 10.1 Employment Agreement of Charles D. Walters, effective April 1, 10.1 1994 10-K 1994 10.2 Employment Agreement of A. Alexander McLean, III, effective 10.2 1994 10-K April 1, 1994 10.3 Employment Agreement of Douglas R. Jones, effective August * 16, 1999 10.4 Settlement Agreement dated as of April 1, 1999, between the 10.3 1999 10-K Company and R. Harold Owens, </TABLE> 13
<TABLE> <CAPTION> <S> <C> <C> <C> 10.5 Securityholders' Agreement, dated as of September 19, 1991, 10.5 33-42879 between the Company and certain of its securityholders 10.6 World Acceptance Corporation Supplemental Income Plan 10.7 2000 10-K 10.7 Board of Directors Deferred Compensation Plan 10.6 2000 10-K 10.8 1992 Stock Option Plan of the Company 4 33-52166 10.9 1994 Stock Option Plan of the Company, as amended 10.6 1995 10-K 10.10 The Company's Executive Incentive Plan 10.6 1994 10-K 10.11 World Acceptance Corporation Retirement Savings Plan 4.1 333-14399 </TABLE> # Omitted from filing -- substantially identical to immediately preceding exhibits, except for the parties thereto and the principal amount involved. (b) Reports on Form 8-K. There were no reports filed on Form 8-K during the quarter ended December 31, 2000. 14
WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES 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 Dated: February 14, 2001 /s/ C. D. Walters ------------------------------------------- C. D. Walters, Chief Executive Officer Dated: February 14, 2001 /s/ A. A. McLean III ------------------------------------------- A. A. McLean III, Executive Vice President and Chief Financial Officer 15