Company Quick10K Filing
World Acceptance
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 9 $1,504
10-Q 2019-11-07 Quarter: 2019-09-30
10-Q 2019-08-07 Quarter: 2019-06-30
10-K 2019-05-24 Annual: 2019-03-31
10-Q 2019-02-11 Quarter: 2018-12-31
10-Q 2018-11-08 Quarter: 2018-09-30
10-Q 2018-08-09 Quarter: 2018-06-30
10-K 2018-06-13 Annual: 2018-03-31
10-Q 2018-02-06 Quarter: 2017-12-31
10-Q 2017-11-08 Quarter: 2017-09-30
10-Q 2017-08-08 Quarter: 2017-06-30
10-K 2017-06-29 Annual: 2017-03-31
10-Q 2017-02-06 Quarter: 2016-12-31
10-Q 2016-11-04 Quarter: 2016-09-30
10-Q 2016-08-05 Quarter: 2016-06-30
10-K 2016-06-01 Annual: 2016-03-31
10-Q 2016-02-05 Quarter: 2015-12-31
10-Q 2015-11-06 Quarter: 2015-09-30
10-Q 2015-07-30 Quarter: 2015-06-30
10-K 2015-06-02 Annual: 2015-03-31
10-Q 2015-02-06 Quarter: 2014-12-31
10-Q 2014-11-10 Quarter: 2014-09-30
10-Q 2014-08-06 Quarter: 2014-06-30
10-K 2014-06-12 Annual: 2014-03-31
10-Q 2014-02-05 Quarter: 2013-12-31
10-Q 2013-11-01 Quarter: 2013-09-30
10-Q 2013-08-06 Quarter: 2013-06-30
10-K 2013-06-14 Annual: 2013-03-31
10-Q 2013-02-08 Quarter: 2012-12-31
10-Q 2012-11-02 Quarter: 2012-09-30
10-Q 2012-08-06 Quarter: 2012-06-30
10-K 2012-05-29 Annual: 2012-03-31
10-Q 2011-11-01 Quarter: 2011-09-30
10-Q 2011-08-03 Quarter: 2011-06-30
10-K 2011-06-03 Annual: 2011-03-31
10-Q 2011-01-31 Quarter: 2010-12-31
10-Q 2010-10-29 Quarter: 2010-09-30
10-Q 2010-08-03 Quarter: 2010-06-30
10-K 2010-06-08 Annual: 2010-03-31
10-Q 2010-02-01 Quarter: 2009-12-31
8-K 2019-12-20 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2019-10-31 Earnings, Regulation FD, Exhibits
8-K 2019-08-22 Shareholder Vote
8-K 2019-07-25 Earnings, Regulation FD, Exhibits
8-K 2019-06-07 Enter Agreement, Off-BS Arrangement, Other Events, Exhibits
8-K 2019-05-09 Earnings, Regulation FD
8-K 2019-04-15 Officers, Other Events, Exhibits
8-K 2019-01-31 Earnings, Regulation FD, Exhibits
8-K 2018-12-14 Enter Agreement, Off-BS Arrangement, Other Events, Exhibits
8-K 2018-11-01 Earnings, Regulation FD, Exhibits
8-K 2018-10-15 Officers, Exhibits
8-K 2018-08-24 Shareholder Vote
8-K 2018-08-01 Enter Agreement, Exhibits
8-K 2018-07-26 Earnings, Regulation FD, Exhibits
8-K 2018-07-13 Other Events, Exhibits
8-K 2018-06-27 Officers, Exhibits
8-K 2018-06-01 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-05-04 Earnings, Regulation FD, Officers, Exhibits
8-K 2018-01-26 Earnings, Regulation FD, Exhibits
8-K 2018-01-18 Officers, Other Events, Exhibits
8-K 2018-01-04 Amend Bylaw, Other Events, Exhibits
8-K 2018-01-01 Officers, Exhibits
WRLD 2019-09-30
Part I. Financial Information
Note 1 - Basis of Presentation
Note 3 - Summary of Significant Policies
Note 4 - Fair Value
Note 5 - Finance Receivables and Allowance for Loan Losses
Note 6 - Leases
Note 7 - Average Share Information
Note 8 - Stock-Based Compensation
Note 9 - Acquisitions
Note 10 - Debt
Note 11 - Income Taxes
Note 12 - Commitments and Contingencies
Note 13 - Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.01 wrld09302019ex3101.htm
EX-31.02 wrld09302019ex3102.htm
EX-32.01 wrld09302019ex3201.htm
EX-32.02 wrld09302019ex3202.htm

World Acceptance Earnings 2019-09-30

WRLD 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
PFSI 1,747 8,398 6,619 752 0 228 456 1,515 0% 3.3 3%
WINS 1,587 309 35 0 0 0 0 1,545 0%
WD 1,580 2,994 2,030 787 0 170 367 1,486 0% 4.1 6%
WRLD 1,504 1,041 491 560 0 67 123 1,495 0% 12.1 6%
BCOR 1,461 1,236 530 616 328 63 99 1,734 53% 17.5 5%
YRD 1,293 7,519 2,398 0 0 0 0 -646 0%
PRAA 1,221 4,165 3,010 729 0 67 258 1,116 0% 4.3 2%
ENVA 771 1,383 977 1,185 567 84 111 1,468 48% 13.3 6%
CURO 722 1,085 1,028 641 338 -7 91 1,364 53% 15.0 -1%
ATAX 445 1,001 586 81 0 42 46 457 0% 10.0 4%

Document
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

__________________________________
 Form 10-Q
__________________________________

(Mark One)

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

For the quarterly period ended September 30, 2019
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:  000-19599

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

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

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, no par value
WRLD
The NASDAQ Stock Market LLC
(NASDAQ Global Select Market)
 
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 has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨



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

 
Large Accelerated filer
x


 
Accelerated filer


 
 
 
 
 
 
 
 
 
Non-accelerated filer
o

 
Smaller reporting company
 
 
 
 
 
 
 
 
 
 
 
 
Emerging growth company
 

If an emerging growth company, indicate by check mark if registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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 October 25, 2019 was 7,915,217.
 




 WORLD ACCEPTANCE CORPORATION
FORM 10-Q

TABLE OF CONTENTS

Item No.
Contents
Page
 
GLOSSARY OF DEFINED TERMS
 
 
 
PART I - FINANCIAL INFORMATION
 
1.
Consolidated Financial Statements (unaudited):
 
Consolidated Balance Sheets as of September 30, 2019 and March 31, 2019
 
Consolidated Statements of Operations for the three and six months ended September 30, 2019 and September 30, 2018
 
Condensed Consolidated Statements of Comprehensive Income for the three and six months ended September 30, 2019 and September 30, 2018
 
Consolidated Statements of Shareholders' Equity for the three and six months ended September 30, 2019 and September 30, 2018
 
Consolidated Statements of Cash Flows for the six months ended September 30, 2019 and September 30, 2018
 
Notes to Consolidated Financial Statements
2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
3.
Quantitative and Qualitative Disclosures about Market Risk
4.
Controls and Procedures
 
 
 
 
PART II - OTHER INFORMATION
 
1.
Legal Proceedings
1A.
Risk Factors
2.
Unregistered Sales of Equity Securities and Use of Proceeds
3.
Defaults Upon Senior Securities
4.
Mine Safety Disclosures
5.
Other Information
6.
Exhibits
 
 
 
 
EXHIBIT INDEX
 
 
 
SIGNATURES

Introductory Note: As used herein, the "Company," "we," "our," "us," or similar formulations include World Acceptance Corporation and each of its subsidiaries, unless otherwise expressly noted or the context otherwise requires that it include only World Acceptance Corporation.  All references in this report to "fiscal 2020" are to the Company’s fiscal year ending March 31, 2020; all references in this report to "fiscal 2019" are to the Company's fiscal year ended March 31, 2019; and all references to "fiscal 2018" are to the Company’s fiscal year ended March 31, 2018.


3

Table of Contents

GLOSSARY OF DEFINED TERMS

The following terms may be used throughout this Report, including consolidated financial statements and related notes.

Term
Definition
ASU
Accounting Standards Update
CEO
Chief Executive Officer
CFO
Chief Financial Officer
CFPB
U.S. Consumer Financial Protection Bureau
Compensation Committee
Compensation and Stock Option Committee
DOJ
U.S. Department of Justice
Exchange Act
Securities Exchange Act of 1934, as amended
FASB
Financial Accounting Standards Board
FCPA
U.S. Foreign Corrupt Practices Act of 1977, as amended
G&A
General and administrative
GAAP
U.S. generally accepted accounting principles
IRC
Internal Revenue Code of 1986, as amended
IRS
U.S. Internal Revenue Service
LIBOR
London Interbank Offered Rate
Option Measurement Period
The 6.5 year performance period beginning on September 30, 2018 and ending on March 31, 2025 over which the Performance Options are eligible to vest, following certification by the Compensation Committee of achievement
Purchasers
Jointly, Astro Wealth S.A. de C.V. and Astro Assets S.A. de C.V.
Performance Share Measurement Period
The 6.5 year performance period beginning on September 30, 2018 and ending on March 31, 2025 over which the Performance Shares are eligible to vest, following certification by the Compensation Committee of achievement
Performance Options
Performance-based stock options
Performance Shares
Service- and performance-based restricted stock awards
Restricted Stock
Service-based restricted stock awards
SEC
U.S. Securities and Exchange Commission
Service Options
Service-based stock options
SWAC
Servicios World Acceptance Corporation de México, S. de R.L. de C.V, a former subsidiary of World Acceptance Corporation
WAC de Mexico
WAC de México, S.A. de C.V., SOFOM, E.N.R., a former subsidiary of World Acceptance Corporation


4

Table of Contents

PART I.  FINANCIAL INFORMATION

WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
September 30, 2019
 
March 31, 2019
ASSETS
 
 
 
Cash and cash equivalents
$
10,224,755

 
$
9,335,433

Gross loans receivable
1,274,146,794

 
1,127,957,383

Less:
 

 
 

Unearned interest, insurance and fees
(334,326,349
)
 
(290,813,752
)
Allowance for loan losses
(101,469,313
)
 
(81,519,624
)
Loans receivable, net
838,351,132

 
755,624,007

Right-of-use asset (Note 6)
119,403,263

 

Property and equipment, net
27,075,833

 
25,424,183

Deferred income taxes, net
31,898,939

 
23,830,899

Other assets, net
16,151,630

 
18,398,935

Goodwill
7,262,146

 
7,034,463

Intangible assets, net
27,448,670

 
15,340,153

Total assets
$
1,077,816,368

 
$
854,988,073

 
 
 
 
LIABILITIES & SHAREHOLDERS' EQUITY
 

 
 

 
 
 
 
Liabilities:
 

 
 

Senior notes payable
$
518,831,400

 
$
251,940,000

Income taxes payable
1,521,276

 
11,550,197

Lease liability (Note 6)
120,130,417

 

Accounts payable and accrued expenses
42,389,238

 
39,381,251

Total liabilities
682,872,331

 
302,871,448

 
 
 
 
Commitments and contingencies (Note 12)

 

 


 
 
Shareholders' equity:
 

 
 

Preferred stock, no par value Authorized 5,000,000, no shares issued or outstanding

 

Common stock, no par value Authorized 95,000,000 shares; issued and outstanding 7,945,842 and 9,284,118 shares at September 30, 2019 and March 31, 2019, respectively

 

Additional paid-in capital
218,135,573

 
198,125,649

Retained earnings
176,808,464

 
353,990,976

Total shareholders' equity
394,944,037

 
552,116,625

 
 
 
 
Total liabilities and shareholders' equity
$
1,077,816,368

 
$
854,988,073


See accompanying notes to consolidated financial statements.


5

Table of Contents

WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 
Three months ended September 30,
 
Six months ended September 30,
 
2019
 
2018
 
2019
 
2018
Continuing operations
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
Interest and fee income
$
126,091,032

 
$
113,490,097

 
$
249,001,181

 
$
221,934,475

Insurance income, net and other income
15,482,084

 
13,625,666

 
31,013,918

 
27,971,273

Total revenues
141,573,116

 
127,115,763

 
280,015,099

 
249,905,748

 
 
 
 
 
 
 
 
Expenses:
 

 
 
 
 

 
 

Provision for loan losses
52,968,036

 
40,358,696

 
94,259,107

 
70,949,315

General and administrative expenses:
 
 
 
 
 

 
 

Personnel
49,610,802

 
39,906,459

 
102,070,247

 
80,700,309

Occupancy and equipment
13,554,466

 
11,901,403

 
26,910,768

 
23,709,581

Advertising
6,269,734

 
5,116,301

 
12,379,561

 
9,955,599

Amortization of intangible assets
1,257,953

 
275,496

 
2,212,594

 
538,948

Other
7,759,428

 
7,736,189

 
16,655,576

 
17,808,766

Total general and administrative expenses
78,452,383

 
64,935,848

 
160,228,746

 
132,713,203

 
 
 
 
 
 
 
 
Interest expense
6,327,817

 
4,157,999

 
10,731,145

 
8,383,000

Total expenses
137,748,236

 
109,452,543

 
265,218,998

 
212,045,518

 
 
 
 
 
 
 
 
Income from continuing operations before income taxes
3,824,880

 
17,663,220

 
14,796,101

 
37,860,230

 
 
 
 
 
 
 
 
Income taxes (benefit)
(395,121
)
 
3,604,153

 
1,967,701

 
8,163,498

 
 
 
 
 
 
 
 
Income from continuing operations
4,220,001

 
14,059,067

 
12,828,400

 
29,696,732

 
 
 
 
 
 
 
 
Discontinued operations (Note 2)
 
 
 
 
 
 
 
Income from discontinued operations before disposal of discontinued operations and income taxes

 

 

 
2,341,825

Gain (loss) on disposal of discontinued operations

 
628,921

 

 
(38,377,623
)
Income taxes

 
150,343

 

 
626,583

Loss from discontinued operations

 
478,578

 

 
(36,662,381
)
 
 
 
 
 
 
 
 
Net income (loss)
$
4,220,001

 
$
14,537,645

 
$
12,828,400

 
$
(6,965,649
)
 
 
 
 
 
 
 
 
Net income per common share from continuing operations:
 
 
 
 
 
 
 
Basic
$
0.54

 
$
1.55

 
$
1.57

 
$
3.28

Diluted
$
0.51

 
$
1.51

 
$
1.50

 
$
3.20

Net income (loss) per common share from discontinued operations:
 
 
 
 
 
 
 

6

Table of Contents

Basic
$

 
$
0.05

 
$

 
$
(4.05
)
Diluted
$

 
$
0.05

 
$

 
$
(3.95
)
Net income (loss) per common share:
 

 
 
 
 

 
 

Basic
$
0.54

 
$
1.60

 
$
1.57

 
$
(0.77
)
Diluted
$
0.51

 
$
1.56

 
$
1.50

 
$
(0.75
)
Weighted average common shares outstanding:
 
 
 
 
 

 
 

Basic
7,807,229

 
9,072,160

 
8,155,263

 
9,063,524

Diluted
8,201,597

 
9,292,886

 
8,532,012

 
9,273,104


See accompanying notes to consolidated financial statements.


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Table of Contents

WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

 
Three months ended September 30,
 
Six months ended September 30,
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
Net income (loss)
$
4,220,001

 
$
14,537,645

 
$
12,828,400

 
$
(6,965,649
)
Foreign currency translation adjustments

 

 

 
(5,235,838
)
Reclassification of cumulative foreign currency translation adjustments due to sale of Mexico business

 
31,290,918

 

 
31,290,918

Comprehensive income
$
4,220,001

 
$
45,828,563

 
$
12,828,400

 
$
19,089,431


See accompanying notes to consolidated financial statements.


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Table of Contents

 
WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
 
Three months ended September 30, 2019
 
Common Stock
 
 
 
 
 
 
 
 
 
Shares
 
Additional Paid-in Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Loss, net
 
Total Shareholders' Equity
Balances at June 30, 2019
9,181,305

 
$
208,876,263

 
340,783,798

 

 
549,660,061

Proceeds from exercise of stock options
15,706

 
977,522

 

 

 
977,522

Common stock repurchases
(1,251,103
)
 

 
(168,195,335
)
 

 
(168,195,335
)
Restricted common stock expense under stock option plan, net of cancellations ($8,481)
(66
)
 
6,677,016

 

 

 
6,677,016

Stock option expense

 
1,604,772

 

 

 
1,604,772

Net income

 

 
4,220,001

 

 
4,220,001

Balances at September 30, 2019
7,945,842

 
$
218,135,573

 
176,808,464

 

 
394,944,037

 
 
 
 
 
 
 
 
 
 
 
Three months ended September 30, 2018
 
Common Stock
 
 
 
 
 
 
 
 
 
Shares
 
Additional Paid-in Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Loss, net
 
Total Shareholders' Equity
Balances at June 30, 2018
9,140,273

 
$
178,791,182

 
369,772,411

 
(31,290,918
)
 
517,272,675

Proceeds from exercise of stock options
4,446

 
386,468

 

 

 
386,468

Common stock repurchases

 

 

 

 

Restricted common stock expense under stock option plan
8,426

 
963,559

 

 

 
963,559

Stock option expense

 
539,410

 

 

 
539,410

Other comprehensive loss

 

 

 

 

Reclassification of cumulative foreign currency translation adjustments due to sale of Mexico Business

 

 

 
31,290,918

 
31,290,918

Net loss

 

 
14,537,645

 

 
14,537,645

Balances at September 30, 2018
9,153,145

 
$
180,680,619

 
384,310,056

 

 
564,990,675

 
 
 
 
 
 
 
 
 
 

9

Table of Contents

 
Six months ended September 30, 2019
 
Common Stock
 
 
 
 
 
 
 
 
 
Shares
 
Additional Paid-in Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Loss, net
 
Total Shareholders' Equity
Balances at March 31, 2019
9,284,118

 
$
198,125,649

 
353,990,976

 

 
$
552,116,625

Proceeds from exercise of stock options
55,472

 
3,654,097

 

 

 
3,654,097

Common stock repurchases
(1,392,180
)
 

 
(190,010,912
)
 

 
(190,010,912
)
Restricted common stock expense under stock option plan, net of cancellations ($246,650)
(1,568
)
 
13,129,717

 

 

 
13,129,717

Stock option expense

 
3,226,110

 

 

 
3,226,110

Net income

 

 
12,828,400

 

 
12,828,400

Balances at September 30, 2019
7,945,842

 
$
218,135,573

 
176,808,464

 

 
$
394,944,037


 
Six months ended September 30, 2018
 
Common Stock
 
 
 
 
 
 
 
 
 
Shares
 
Additional Paid-in Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Loss, net
 
Total Shareholders' Equity
Balances at March 31, 2018
9,119,443

 
$
175,887,227

 
391,275,705

 
(26,055,080
)
 
$
541,107,852

Proceeds from exercise of stock options
25,276

 
1,815,406

 

 

 
1,815,406

Restricted common stock expense under stock option plan
8,426

 
1,914,349

 

 

 
1,914,349

Stock option expense

 
1,063,637

 

 

 
1,063,637

Other comprehensive loss

 

 

 
(5,235,838
)
 
(5,235,838
)
Reclassification of cumulative foreign currency translation adjustments due to sale of Mexico business

 

 

 
31,290,918

 
31,290,918

Net loss

 

 
(6,965,649
)
 

 
(6,965,649
)
Balances at September 30, 2018
9,153,145

 
$
180,680,619

 
384,310,056

 

 
$
564,990,675


See accompanying notes to consolidated financial statements.


10

Table of Contents

WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

11

Table of Contents

 
Six months ended September 30,
 
2019
 
2018
Cash flow from operating activities:
 
 
 
Net income (loss)
$
12,828,400

 
$
(6,965,649
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 

 
 

Loss on sale of discontinued operations

 
38,377,623

Amortization of intangible assets
2,212,594

 
538,948

Amortization of debt issuance costs
261,392

 
320,588

Provision for loan losses
94,259,107

 
70,949,315

Depreciation
3,499,067

 
3,296,860

Loss (gain) on sale of property and equipment
(101,774
)
 
123,852

Deferred income tax benefit
(8,068,040
)
 
(2,717,297
)
Compensation related to stock option and restricted stock plans, net of taxes and adjustments
16,602,477

 
2,977,986

Change in accounts:
 

 
 

Other assets, net
3,704,467

 
(7,806,866
)
Income taxes payable
(10,028,921
)
 
(532,236
)
Accounts payable and accrued expenses
3,007,987

 
(3,299,779
)
Net cash provided by operating activities
118,176,756

 
95,263,345

Cash flows from investing activities:
 

 
 

Increase in loans receivable, net
(130,033,384
)
 
(132,314,528
)
Net assets acquired from branch acquisitions, primarily loans
(47,021,848
)
 
(9,264,527
)
Increase in intangible assets from acquisitions
(14,548,794
)
 
(2,751,345
)
Purchases of property and equipment
(5,132,987
)
 
(4,609,927
)
Proceeds from sale of property and equipment
153,044

 
159,031

Proceeds from sale of Mexico business

 
37,494,505

Net cash used in investing activities
(196,583,969
)
 
(111,286,791
)
Cash flow from financing activities:
 

 
 

Borrowings from senior notes payable
358,191,400

 
130,190,000

Payments on senior notes payable
(91,300,000
)
 
(144,900,000
)
Debt issuance costs associated with senior notes payable
(991,400
)
 
(240,000
)
Proceeds from exercise of stock options
3,654,097

 
1,815,406

Payments for taxes related to net share settlement of equity awards
(246,650
)
 

Repurchase of common stock
(190,010,912
)
 

Net cash provided by (used in) financing activities
79,296,535

 
(13,134,594
)
Effects of foreign currency fluctuations on cash and cash equivalents

 
2,667,447

Net change in cash and cash equivalents
889,322

 
(26,490,593
)
Cash and cash equivalents at beginning of period from continuing operations
9,335,433

 
12,473,833

Cash and cash equivalents at beginning of period from discontinued operations

 
19,612,471

Cash and cash equivalents at end of period
$
10,224,755

 
$
5,595,711

Cash and cash equivalents at end of period from continuing operations
$
10,224,755

 
$
5,595,711

Cash and cash equivalents at end of period from discontinued operations
$

 
$

 
 
 
 
Supplemental Disclosures:
 
 
 
Interest paid during the period
$
9,303,060

 
$
7,878,609

Income taxes paid during the period
$
17,683,191

 
$
12,261,977


See accompanying notes to consolidated financial statements.

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Table of Contents

WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)

NOTE 1 – BASIS OF PRESENTATION

The consolidated financial statements of the Company at September 30, 2019, and for the three and six months then ended were prepared in accordance with the instructions for Form 10-Q and are unaudited; however, in the opinion of management all adjustments (consisting only of items of a normal, recurring nature) necessary for a fair presentation of the financial position at September 30, 2019, and the results of operations and cash flows for the periods ended September 30, 2019 and 2018, 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.

The preparation of consolidated financial statements in conformity with GAAP 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 consolidated financial statements and the reported amount of revenue and expenses during the reporting period. Actual results could differ from those estimates.

The consolidated financial statements do not include all disclosures required by GAAP and should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the fiscal year ended March 31, 2019, included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2019, as filed with the SEC.

NOTE 2 – DISCONTINUED OPERATIONS

As previously disclosed, the Company sold all of the issued and outstanding capital stock and equity interest of WAC de Mexico and SWAC to the Purchasers, effective as of July 1, 2018, for a purchase price of approximately $44.36 million. The Company has provided, and may continue to provide, limited ParaData systems and software training to the Purchasers, as requested. The Company has not and will not have any other involvement with the Mexico operations subsequent to the sale's effective date.

There were no assets or liabilities of discontinued operations at September 30, 2019 and March 31, 2019.

The following table reconciles the major classes of line items constituting loss from discontinued operations to the amounts presented in the consolidated statements of operations:
 
Three months ended September 30,
 
Six months ended September 30,
 
2018
 
2018
 
 
 
 
Revenues

 
$
9,693,367

Provision for loan losses

 
1,809,059

General and administrative expenses

 
5,542,483

Income from discontinued operations before disposal of discontinued operations and income taxes

 
2,341,825

Gain (loss) on disposal of discontinued operations
628,921

 
(38,377,623
)
Income taxes
150,343

 
626,583

Loss from discontinued operations
478,578

 
$
(36,662,381
)


13

Table of Contents


The following table presents operating, investing and financing cash flows for the Company’s discontinued operations:
 
 
Six months ended September 30,
 
 
2019
 
2018
 
 
 
 
 
Cash provided by operating activities:
 
$

 
$
3,553,854

Cash provided by investing activities:
 

 
1,138,084

Cash provided by (used in) financing activities:
 
$

 
$
(17,126,000
)


NOTE 3 – SUMMARY OF SIGNIFICANT POLICIES

Nature of Operations

The Company is a small-loan consumer finance company headquartered in Greenville, South Carolina that offers short-term small loans, medium-term larger loans, related credit insurance products and ancillary products and services to individuals who have limited access to other sources of consumer credit. The Company offers income tax return preparation services to its loan customers and other individuals.

Seasonality

The Company's loan volume and corresponding loans receivable follow seasonal trends. The Company's highest loan demand generally occurs from October through December, its third fiscal quarter. Loan demand is generally lowest and loan repayment highest from January to March, its fourth fiscal quarter. Loan volume and average balances remain relatively level during the remainder of the year. Consequently, the Company experiences significant seasonal fluctuations in its operating results and cash needs. Operating results for the Company's third fiscal quarter are generally lower than in other quarters and operating results for its fourth fiscal quarter are generally higher than in other quarters.

Reclassification

Certain prior period amounts have been reclassified to conform to the current presentation. Such reclassifications had no impact on previously reported net income or shareholders' equity.

Recently Adopted Accounting Standards

Leases

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The ASU, as amended by ASU 2018-01, ASU 2018-10, and 2018-11, requires lessees to recognize assets and liabilities from leases with terms greater than 12 months and to disclose information related to the amount, timing and uncertainty of cash flows arising from leases, including various qualitative and quantitative requirements. The amendments of this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018.

Upon adoption of this guidance on April 1, 2019 the Company removed its deferred rent expense balance of $0.4 million, recorded a right-of-use asset of $92.3 million, and recorded a lease liability of $92.7 million. Amounts recorded upon adoption of Topic 842 were adjusted from what was reported in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2019 due to the Company finalizing its implementation since that filing. In conjunction with adoption the Company made the following elections as outlined in ASU 2016-02 and its amendments:

The Company elected to apply the new guidance retrospectively at the beginning of the period of adoption, and, as a result, the adoption date is the beginning of the reporting period in which the Company first applies the guidance in Topic 842. The Company has not adjusted comparative years in the consolidated financial statements or make the new required disclosures for periods before the adoption date. The new required disclosures are only presented in the period of adoption and subsequently thereafter.


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Table of Contents

The Company elected, by class of underlying asset, to expense short-term leases on a straight-line basis over the life of the lease rather than applying the recognition requirements in Topic 842 according to the following table:
Class of Underlying Asset
Election? Yes/No
Buildings (Office Space)
No
Office Equipment
Yes

The Company elected, by class of underlying asset, not to separate non-lease components from lease components and instead account for each separate lease component and the non-lease components associated with those lease components as a single lease component according to the following table:
Class of Underlying Asset
Election? Yes/No
Buildings (Office Space)
Yes
Office Equipment
Yes

The Company elected the following practical expedients, which must be elected as a package, when applying Topic 842 to leases that commenced before the adoption date:
1.
Not to reassess whether any expired or existing contracts are or contain leases;
2.
Not to reassess the lease classification for any expired or existing leases (that is, all existing leases that were classified as operating leases in accordance with Topic 840 are classified as operating leases, and all existing leases that were classified as capital leases in accordance with Topic 840 are classified as finance leases); and,
3.
Not to reassess initial direct costs for any existing leases.

The Company elected to use hindsight in determining the lease term (that is, when considering lessee options to extend or terminate the lease and to purchase the underlying asset) and in assessing impairment of the its right-of-use assets when applying Topic 842 to leases that commenced before the adoption date.

Adoption of the standard did not impact the Company's consolidated statements of operations nor did adoption require the Company to alter its revolving credit facility to remain in compliance with its debt covenants.

Recently Issued Accounting Standards Not Yet Adopted

Simplifying the Test for Goodwill Impairment

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates Step 2 from the goodwill impairment test. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. The amendments in this update are effective for public entities who are SEC filers for fiscal years beginning after December 15, 2019. Early adoption is permitted. We are currently evaluating the impact the adoption of this guidance will have on our consolidated financial statements.

Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses. The amendment seeks to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in this ASU replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For public business entities the amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact the adoption of this guidance will have on our consolidated financial statements. The adoption of this ASU could have a material impact on the provision for loan losses in the consolidated statements of operations and allowance for loan losses in the consolidated balance sheets.

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Table of Contents


We reviewed all other newly issued accounting pronouncements and concluded that they are either not applicable to our business or are not expected to have a material effect on the consolidated financial statements as a result of future adoption.

NOTE 4 – FAIR VALUE

Fair Value Disclosures

The Company may carry certain financial instruments and derivative assets and liabilities measured at fair value on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Company determines the fair values of its financial instruments based on the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Fair value measurements are grouped in three levels. The levels prioritize the inputs used to measure the fair value of the assets or liabilities. These levels are:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices that are observable for assets and liabilities, either directly or indirectly. These inputs include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are less active.
Level 3 – Unobservable inputs for assets or liabilities reflecting the reporting entity’s own assumptions.

The Company’s financial instruments consist of the following: cash and cash equivalents, loans receivable, and senior notes payable. Fair value approximates carrying value for all of these instruments. Loans receivable are originated at prevailing market rates and have an average life of approximately eight months. Given the short-term nature of these loans, they are continually repriced at current market rates. The Company’s revolving credit facility has a variable rate based on a margin over LIBOR and reprices with any changes in LIBOR. The Company also considers its creditworthiness in its determination of fair value.

The carrying amounts and estimated fair values of the Company's financial instruments are summarized below.
 
 
 
September 30, 2019
 
March 31, 2019
 
Input Level
 
Carrying Value
 
Estimated Fair Value
 
Carrying Value
 
Estimated Fair Value
ASSETS
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
1
 
$
10,224,755

 
10,224,755

 
$
9,335,433

 
9,335,433

Loans receivable, net
3
 
838,351,132

 
838,351,132

 
755,624,007

 
755,624,007

 
 
 
 
 
 
 
 
 
 
LIABILITIES
 
 
 
 
 
 
 
 
 
Senior notes payable
3
 
518,831,400

 
518,831,400

 
251,940,000

 
251,940,000



There were no significant assets or liabilities measured at fair value on a non-recurring basis as of September 30, 2019 or March 31, 2019.

NOTE 5 – FINANCE RECEIVABLES AND ALLOWANCE FOR LOAN LOSSES

The following is a summary of gross loans receivable as of:
 
September 30,
2019
 
March 31,
2019
 
September 30,
2018
 
 
 
 
 
 
Small loans
$
839,609,690

 
$
736,643,663

 
$
762,471,067

Large loans
433,389,225

 
383,686,372

 
363,884,295

Tax advance loans
1,147,879

 
7,627,348

 
436,834

Total gross loans
$
1,274,146,794

 
$
1,127,957,383

 
$
1,126,792,196



16

Table of Contents


The following is a summary of the changes in the allowance for loan losses for the periods indicated:
 
Three months ended September 30,
 
Six months ended September 30,
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
Balance at beginning of period
$
87,353,087

 
68,029,622

 
$
81,519,624

 
$
66,088,139

Provision for loan losses
52,968,036

 
40,358,696

 
94,259,107

 
70,949,315

Loan losses
(42,604,434
)
 
(32,572,205
)
 
(82,128,421
)
 
(65,013,346
)
Recoveries
3,752,624

 
3,494,262

 
7,819,003

 
7,286,267

Balance at end of period
$
101,469,313

 
$
79,310,375

 
$
101,469,313

 
$
79,310,375



The following is a summary of loans individually and collectively evaluated for impairment for the period indicated:
September 30, 2019
Loans individually
evaluated for
impairment
(impaired loans)
 
Loans collectively
evaluated for
impairment
 
Total
 
 
 
 
 
 
Gross loans in bankruptcy, excluding contractually delinquent
$
5,919,237

 

 
5,919,237

Gross loans contractually delinquent
67,515,456

 

 
67,515,456

Loans not contractually delinquent and not in bankruptcy

 
1,200,712,101

 
1,200,712,101

Gross loan balance
73,434,693

 
1,200,712,101

 
1,274,146,794

Unearned interest and fees
(15,408,232
)
 
(318,918,117
)
 
(334,326,349
)
Net loans
58,026,461

 
881,793,984

 
939,820,445

Allowance for loan losses
(52,358,792
)
 
(49,110,521
)
 
(101,469,313
)
Loans, net of allowance for loan losses
$
5,667,669

 
832,683,463

 
838,351,132


March 31, 2019
Loans individually
evaluated for
impairment
(impaired loans)
 
Loans collectively
evaluated for
impairment
 
Total
 
 
 
 
 
 
Gross loans in bankruptcy, excluding contractually delinquent
$
4,644,203

 

 
4,644,203

Gross loans contractually delinquent
59,633,541

 

 
59,633,541

Loans not contractually delinquent and not in bankruptcy

 
1,063,679,639

 
1,063,679,639

Gross loan balance
64,277,744

 
1,063,679,639

 
1,127,957,383

Unearned interest and fees
(14,319,795
)
 
(276,493,957
)
 
(290,813,752
)
Net loans
49,957,949

 
787,185,682

 
837,143,631

Allowance for loan losses
(45,511,124
)
 
(36,008,500
)
 
(81,519,624
)
Loans, net of allowance for loan losses
$
4,446,825

 
751,177,182

 
755,624,007



17

Table of Contents

September 30, 2018
Loans individually
evaluated for
impairment
(impaired loans)
 
Loans collectively
evaluated for
impairment
 
Total
 
 
 
 
 
 
Gross loans in bankruptcy, excluding contractually delinquent
$
5,002,410

 

 
5,002,410

Gross loans contractually delinquent
54,677,031

 

 
54,677,031

Loans not contractually delinquent and not in bankruptcy

 
1,067,112,755

 
1,067,112,755

Gross loan balance
59,679,441

 
1,067,112,755

 
1,126,792,196

Unearned interest and fees
(12,519,916
)
 
(285,178,637
)
 
(297,698,553
)
Net loans
47,159,525

 
781,934,118

 
829,093,643

Allowance for loan losses
(42,369,717
)
 
(36,940,658
)
 
(79,310,375
)
Loans, net of allowance for loan losses
$
4,789,808

 
744,993,460

 
749,783,268



The average net balance of impaired loans was $53.4 million and $44.2 million, respectively, for the six month periods ended September 30, 2019, and 2018. It is not practical to compute the amount of interest earned on impaired loans.
 
The following is an assessment of the credit quality of loans for the period indicated:
 
September 30,
2019
 
March 31,
2019
 
September 30,
2018
Credit risk
 
 
 
 
 
Consumer loans- non-bankrupt accounts
$
1,266,666,753

 
$
1,121,895,834

 
$
1,120,466,940

Consumer loans- bankrupt accounts
7,480,041

 
6,061,549

 
6,325,256

Total gross loans
$
1,274,146,794

 
$
1,127,957,383

 
$
1,126,792,196

 
 
 
 
 
 
Consumer credit exposure
 

 
 

 
 
Credit risk profile based on payment activity, performing
$
1,171,654,200

 
$
1,039,774,448

 
$
1,042,501,191

Contractual non-performing, 61 or more days delinquent (1)
102,492,594

 
88,182,935

 
84,291,005

Total gross loans
$
1,274,146,794

 
$
1,127,957,383

 
$
1,126,792,196

 
 
 
 
 
 
Credit risk profile based on customer type
 

 
 

 
 
New borrower
$
152,893,420

 
$
138,140,479

 
$
130,010,547

Former borrower
143,234,099

 
116,242,182

 
134,554,113

Refinance
954,842,006

 
854,880,194

 
843,003,017

Delinquent refinance
23,177,269

 
18,694,528

 
19,224,519

Total gross loans
$
1,274,146,794

 
$
1,127,957,383

 
$
1,126,792,196


_______________________________________________________
(1) Loans in non-accrual status.


18

Table of Contents

The following is a summary of the past due receivables as of:
 
September 30,
2019
 
March 31,
2019
 
September 30,
2018
Contractual basis:
 

 
 

 
 

30-60 days past due
$
55,199,165

 
40,300,574

 
44,729,889

61-90 days past due
34,977,138

 
28,549,394